Odaily Planet Daily News: The plan proposed by US Senator Cynthia Lummis to fund Bitcoin purchases relies in part on the large amount of gold heritage owned by the United States, which was left behind in an era when the US dollar was pegged to precious metals and US dollar holders could exchange it for gold at a fixed price. Although the US dollar has not been convertible into gold since the early 1970s, the Treasury and Federal Reserve still hold approximately 8100 metric tons of gold. The government values these gold at a price of $42 per ounce, far below the current market price of $2650.
Cynthia Lummis hopes that the Ministry of Finance can reassess these gold at the current market price and use paper profits to fund the purchase of Bitcoin without having to raise taxes or issue new treasury bond. However, critics point out that this operation is not a free lunch and will require the Federal Reserve Bank to pay the difference between the gold certificates held by the Treasury Department and the new valuation through a combination of money printing and asset sales.
Monetary economist George Selgin argues that this operation is equivalent to the government's "backdoor lending". In order to avoid new debt, bypass the regular funding process, and cover up the truth, the Lummis Act relies heavily on gilded magic. George Selgin said, "What better way to win public support than to make people believe that this plan won't cost a penny
