US Debt Strategy Taps Gold and Bitcoin Assets

By Doug Young – 23 September 2025

Introduction

The United States is confronting a mounting national debt crisis that has reached unprecedented levels in 2025. As of early September, the gross national debt stands at approximately $37.43 trillion, marking an increase of $2.09 trillion over the previous year.

This staggering figure translates to a debt burden of about $110,020 per person or $283,098 per household.

The rapid growth of debt and its associated interest costs increasingly consume taxpayer dollars, constraining government spending flexibility and posing significant economic challenges.

Amid persistent budget deficits and ongoing borrowing needs, policymakers are exploring innovative strategies to address the fiscal shortfall. Among the most noteworthy is a multifaceted plan leveraging the nation’s gold reserves and burgeoning cryptocurrency assets such as Bitcoin.

The Debt Challenge Facing the US Government

The federal government routinely spends more than it collects in tax revenues, resulting in budget deficits that must be financed through borrowing.

These borrowings primarily take the form of Treasury securities which are purchased by domestic investors, foreign governments, and the Federal Reserve.

The Federal Reserve plays a dual role by occasionally purchasing debt through newly created money, effectively monetizing deficits. While this process provides short-term financing relief, it risks stoking inflation and devaluing the currency if unchecked.

As debt levels soar, interest payments absorb an increasing share of federal revenues, adding pressure to fiscal sustainability and raising concerns about future economic stability.

Component One: Gold Revaluation Plan

A foundational element of the debt management strategy involves the revaluation of the United States’ substantial gold reserves.

Currently, the Treasury reports holding approximately 261 million ounces of gold valued conservatively at $42.22 per ounce and totally $11 billion on official financial statements. In contrast, market prices currently hover around $3,700 per ounce, which would place the total gold valuation around $965 billion.

By adjusting the accounting valuation to reflect more current market prices, the government could increase the reported value of its gold assets dramatically.

This accounting maneuver would enable the issuance of certificates to the Federal Reserve, which in turn could exchange these asset-backed certificates for dollars, effectively providing funding without traditional borrowing.

Historically, a similar approach was used during the Great Depression under President Franklin D. Roosevelt when the gold price was revalued from $20 to $35 per ounce, freeing substantial fiscal resources for economic recovery.

However, this approach carries risks should gold prices decline after revaluation, potentially impairing the Federal Reserve’s balance sheet and public confidence in fiscal management.

Component Two: Bitcoin Reserve Strategy

In a pioneering move, an executive order established a strategic Bitcoin reserve using cryptocurrency seized from illicit activities. Estimates place the government’s Bitcoin holdings between 30,000 and 200,000 coins.

Shifting from previous policies, the government now intends to hold these assets long-term rather than liquidate them immediately. By valuing Bitcoin around current prices, for example, $100,000 per coin, the government can pledge the digital assets as collateral to the Federal Reserve and obtain liquidity without issuing new debt.

This measure provides an unconventional source of fiscal support and aligns with contemporary trends in digital finance.

Nonetheless, Bitcoin’s historically high volatility introduces comparable risks to those of gold revaluation — should Bitcoin’s market valuation fall substantially, it could undermine the Federal Reserve’s financial position and shake investor confidence.

Component Three: The Genius Act and Stablecoin Regulation

Further complementing the debt strategy is the Genius Act, enacted in July 2025, which establishes a regulatory framework for stablecoins pegged to gold or Bitcoin.

These asset-backed cryptocurrencies are authorized to circulate as alternative currencies within the U.S. economy, potentially expanding the effective money supply without increasing federal debt.

The act includes provisions for oversight, aiming to ensure stability and mitigate systemic financial risks arising from growing digital asset use.

While stablecoins present novel opportunities to streamline monetary transactions and provide additional liquidity, they also introduce complexities regarding valuation stability, regulatory enforcement, and integration with traditional financial systems.

Financial and Economic Risks of the Plan

The proposed strategies, though innovative, entail significant financial risks.

A key concern centers on the implications for the Federal Reserve’s balance sheet if pledged assets, whether gold or Bitcoin, depreciate substantially. Such a scenario would diminish the value of the Federal Reserve’s collateral, potentially reducing its credibility and weakening confidence in government debt obligations.

Inflationary pressures may intensify if monetary bases expand rapidly without corresponding economic growth.

Historical price fluctuations reveal considerable volatility in gold during various periods and even more acute swings in Bitcoin’s value, underscoring the inherent instability in relying on these assets for fiscal support.

Fiscal prudence and diversification remain essential to balance potential rewards against risks.

Broader Economic Context and Projections

The U.S. debt-to-GDP ratio exceeded 119% in mid-2025, a level regarded by many economists as points of elevated concern for long-term fiscal health.

Without significant changes in spending, revenue, or economic growth, forecasts suggest continuing increases in debt and deficit spending.

Recent legislative developments, such as the One Big Beautiful Bill Act signed in July 2025, introduce tax and budgetary changes that will influence these trends.

Comprehensive fiscal policy, including bipartisan cooperation and structural reforms, is widely viewed as necessary to ensure debt sustainability and preserve economic stability.

Conclusion

The strategy to tap into gold and Bitcoin assets reflects an ambitious approach to navigating the United States’ pressing debt challenges.

By revaluing gold reserves, leveraging cryptocurrency holdings, and regulating new forms of digital currency, the government aims to access new funding streams without conventional debt increases.

These steps are marked by both potential advantages and considerable uncertainties. Taxpayers, policymakers, and market participants should closely monitor developments and maintain a thorough understanding of the economic impacts.

While these assets offer new fiscal tools, prudent management remains paramount to safeguard trust in financial systems and secure long-term prosperity.

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