A recent research paper by the Federal Reserve Bank of Minneapolis suggests that assets such as Bitcoin should be taxed or banned to help governments maintain deficits.
In an economy where the government tries to maintain permanent deficits using nominal debt, the presence of Bitcoin BTC$66,910 creates problems for policy implementation, the Minneapolis Fed said in a working paper released on Oct. 17.
Bitcoin introduces a “balanced budget trap,” an alternative state where the government is forced to balance its budget, the Fed wrote.
The researchers used Bitcoin as an example of a fixed-supply “private-sector security” without “real resource claims.” They concluded that it should be banned or taxed to solve the conundrum.
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