It would slow down the network for a while, as miners stop mining, but the miners will simply start buying up those penny bitcoins instead of spending their electricity money on mining. Some math:

Let's assume the market is perfectly liquid, and there isn't a shortage of sellers on the market, so buying and selling itself does not affect the price (in reality, as coins are bought, each successive coin is more expensive, until coins available on the market dry up, and the price is extremely high)

$100Mil worth of bitcoin bought at $140/BTC -> Gov now has 714,285 bitcoins
Gov starts selling coins for $0.01 each. Total amount needed to buy everything they have to sell is 714,285/100 = $7,142.85
Bitcoin miners themselves spend, what, a few $100k worth on electricity a day? If they see that price, they will stop mining, and that $7k in coins will get snapped up *instantly*.

Let's say gov sells it for $1usd. That's still only $71,428.50 worth for people to buy up. Government would have to buy billions of dollars worth (currently impossible), and sell for not too low prices just to make the effect be more than a momentary blip. in the market.