Yves here. While this piece teases out an interesting thesis ‘splaining apparent Trump economic madness, IMHO Varoufakis gets off on the wrong foot by depicting Trump and his team as interested in or capable of pursuing any grand scheme. Even if one can rationalize where Trump’s crypto touting seems to be going, the ideas below are very unlikely to represent the operative truth.
Mind you, it is generally true that given that crypto is a private currency, and private currencies at best have narrow acceptance (frequent flier miles are the prototypical example), one top tax expert colleague has argued for some time that buying crypto has the effect of destroying currency, here dollars, and draining liquidity. That does not seem to be happening on the scale to have that effect, but even if it were, your humble blogger knows of no way to track that activity systematically.
First, as we have said repeatedly, Trump is all tactics, no strategy. To put it a smidge more charitably, he is obsessively transactional and also attributes great value to being wildly unpredictable, apparently out of his belief that it’s positive to put his counterparties off balance and that his out-of-bounds behavior also creates more options (irrespective of whether those options actually have any value).
So if Trump’s crypto winds up in the neighborhood of Varoufakis’ view, the process is not a grand design but an ant pushing a grain of rice around a table and having it accidentally fall in a hole.
Second, crypto bros were major donors to the Trump campaign. Moreover, the stereotypical crypto player (putting the considerable number of crooks and rug-pull artists aside) is an actual tech bro or tech bro adjacent, meaning risk-seeking and self-identified-as-macho. Aside from the weight of donations. psychographically this cohort would tend to be very Trump loyal.
Third, despite the point immediately above, Trump’s personal grifting dismayed crypto promoters, who keenly want their pet project to become mainstream. A president and his wife burning naifs with memecoins is antithetical to trying to make crypto look more legit.
By Yanis Varoufakis, an economist and former Minister of Finance of Greece. Originally published at Unherd; cross posted from his website
After dismissing Bitcoin as a scam during his first White House stint, Trump warmed to cryptocurrencies during his re-election campaign. To complete his conversion, on the 6th of March the 47th President signed an executive order to set up a “Strategic Bitcoin Reserve and a US Digital Asset Stockpile”.
The United States government sensibly stockpiles a number of materials that it may need during an emergency, including oil, military gear, medical supplies and, of course, gold. But, if you own the printing presses of the world’s reserve currency, what’s the point of hoarding – on some government owned hard drive – crypto currencies lacking any intrinsic utility? Especially if you have constrained yourself, as Trump has done in the aforementioned executive order, never to sell the crypto you stashed away? The logic of strongarming the Federal Reserve to create a crypto stash, as in the case of every Trump pronouncement, is one part self-serving bluster, one part trolling of his opponents but, also, one part strategy.
The self-serving bluster part was made painfully obvious as Donald and Melania Trump pocketed tens of millions of dollars from the otherwise pointless meme-coins they issued three days before his inauguration. The trolling of his opponents part was also on display as he was signing the executive order forcing the Fed to hold and maintain a cryptocurrency reserve. While ceremoniously putting his exorbitant signature on the order’s dotted line, he beamed with the grin of a cheeky peasant who had just broken into the Baron’s pristine drawing room, spoiling the splendour of its Persian rugs with his muddied boots. That’s how Democrats and mainstream Republicans felt watching Trump elevate the crypto currencies favoured by libertarians, cranks and criminals to the lofty status previously reserved for solid gold and US Treasury bills.
However, in the midst of this cacophony of creepy profiteering, triumph and despair, it is easy to lose sight of the interesting role that Trump’s strategic crypto reserve plays in his broader economic masterplan. And that would be our mistake. Trump’s economic team has a two-pronged strategy by which to recast the global economic order in America’s long-term interests: To devalue the dollar while maintaining its global dominance.
This seemingly contradictory strategy, that would boost US exports (as the dollar becomes cheaper) while pushing down the US government’s borrowing costs (as foreign wealth piles into US long-term debt) is intended to extend US hegemony while also bringing back manufacturing to America. Tariffs, in this context, are the chief weapon by which to pressurise America’s friends and foes to unload their dollar speculative holdings while also buying even more long-dated US Treasury bills.
Be that as it may, what does crypto have to do with any of this? To get a whiff of the answer, take the case of Japanese institutions that hold in excess of $1 trillion of dollars, the result of decades of Japanese net exports to the United States. To drive the dollar down, but avoid strengthening the pretensions to reserve currency status of either the euro or China’s renminbi up, Trump would like to bully Tokyo to dump most of these dollars in the money markets but not convert them into euros or renminbi. What could do the trick? How about convincing, with an element of strongarming, the Japanese to swap their dollars for crypto? That would work, especially if the Federal Reserve dominated the crypto scene. What else could Trump have meant, in the text of his 6th March executive order, when commenting that, while the US already owns considerable crypto assets (the result of confiscations), it “has not maximized its strategic position as a unique store of value in the global financial system”?
More intriguingly, four days later, on the 10th of March, Trump endorsed stablecoins, going out of his way to express his “strong support for the efforts of lawmakers in Congress as they work on bills to provide regulatory certainty for dollar-backed stablecoins and the digital assets market.” In so doing, he added a fascinating new dimension to the idea of forcing non-American institutional investors into moves that serve his economic masterplan.
What are these stablecoins and why does Trump’s economic team look at them as particularly promising tools in the pursuit of their twin strategy? Stablecoins are, by design, a contradiction in terms. The whole point of Bitcoin, the first cryptocurrency, was to stick it to the man – to central bankers and their fiat currencies, the dollar chiefly. But, confusingly, stablecoins are marketed as crypto versions of the dollar. For example, Tether (USDT), USD Coin (USDC) and Binance USD (BUSD) are dollar-denominated crypto currencies that offer you the anonymity, versatility and universality of Bitcoin while also claiming to guarantee full convertibility to the dollar on a one-for-one basis. Indeed, some of the world’s largest banks and non-bank financial institutions are scrambling to launch stablecoins, hoping to capture a slice of a cross-border payments market. Last month, Bank of America signalled it was working on such a stablecoin, following the example of PayPal, Revolute, Stripe and many others.
What makes stablecoins of particular interest to Trump is their promise to keep their value tethered to the dollar. But, how can they promise this and is their promise credible? In theory, this promise can be met if the stablecoin issuer holds, in some vault, one dollar for every token it issued. But, of course, holding zero-interest bearing dollars in a vault would be anathema to any self-respecting financier. So, even if the stablecoin issuer truly owns an equal amount of dollars to the tokens it has issued, it will immediately trade these dollars for some safe, interest-bearing, dollar-denominated asset – like 10-year US Treasury Bills. This way the issuer is true to their word of backstopping their tokens with real bucks while, at the same time, earning interest. It is an arrangement after Donald Trump’s heart and, I believe, at the centre of the idea of his strategic crypto reserve.
By setting up a US crypto reserve containing dollar-backed stablecoins, the US authorities are signalling to dollar-holding foreign dollar holders that the US government is endorsing their ownership of these coins. During the negotiations that Trump plans to have with various governments, with tariffs dangling like a Damocles sword above their head, subtle hints will be dropped that the President will be mightily pleased were foreign investors to buy these stablecoins using their own dollars. If they do buy them, the dollar supply will increase, the dollar exchange rate will dip, no other fiat currency will emerge as a potential suitor to the dollar’s reserve currency status, and dollar-denominated stablecoins will rise in value. As these tokens will now be worth more than a dollar, their issuer will have an incentive to issue more tokens to restore the one-to-one exchange rate with the dollar. In the process, they will buy, with proceeds from the additional tokens they issue and sell, more long-dated US Treasuries to backstop their increased token supply. Bingo! Trump’s twin strategy is served: the dollar will have devalued while demand for long-term US government debt will rise, thus pushing down US Treasury yields and his government’s debt servicing costs.
Upon hearing this, deafening alarm bells should be sounding in our heads. For if this strategy works, and stablecoins become a pillar of the New Hegemony Trump envisages, a timebomb will have been planted in the foundations of the global monetary system. Monetary history is littered with the corpses of outfits guaranteeing the convertibility of some newfangled currency with a time-honoured store of value. The Gold Standard itself was such a scheme, the post-war Bretton Woods system another.
Take Bretton Woods as an example, the Gold Standard’s last evolution and a system whose functioning coincided with capitalism’s Golden Age – the 1950s and 1960s. The idea was that the West’s currencies would be tethered, with fixed exchange rates to the dollar. Moreover, the dollar itself would be anchored to gold at a fixed conversion rate of $35 to an ounce of the magic metal. As long as the US remained a surplus economy, exporting to Europe and Japan goods and services of great dollar value than that of its imports, the system worked fine: America’s surplus dollars were sent to Europe and Japan (in the form of aid, direct investment and loans) and were recycled back to the US with every Boeing jet or Westinghouse refrigerator that European and Japanese customers purchased using the dollars that had come their way.
Alas, by the late 1960s, this recycling system broke down irreparably. The US had turned into a deficit economy, which meant that it began continually to flood Europe and Japan (later China too) with more and more dollars minted to finance US net imports. As long as non-Americans were happy to hoard their dollars, there was no problem. But, the more dollars they had the more sceptical they became that the US government would honour its promise to hand over an ounce of gold to anyone with $35: the makings of a run on gold. Indeed, when several runs on America’s gold took place (the most famous of which involved a French naval vessel arriving in New Jersey laden with greenbacks, to be converted into Fort Knox gold), President Nixon tore up the Bretton Woods agreement, ended the dollar’s convertibility to US government gold and messaged the Europeans, in Trumpian style, “the dollar is our currency but it is your problem”.
So, here is the point: If the mighty US Empire, at the height of its world hegemony, could not honour the fixed conversion rate (of $35-to-one-ounce-of-gold) that was the feted postwar financial system’s anchor, what gives us the confidence to imagine that a private outfit, like Tether or Binance, can do it sustainably? Nothing! Indeed, logic dictates the opposite because of the structure of the incentives Trump is planting with his strategic crypto reserve. Think about it: The more dollars go into stablecoins, the lower the yields on US Treasury bills and the stronger the stablecoin issuers’ incentives to invest in riskier assets – even to issue additional tokens without backing them with additional dollar-denominated safe assets. The more this goes on, the greater the reliance of the US government, and of the global monetary system, on privateers acting responsibly when their incentives are to act less responsibly. Does this classic case of moral hazard remind you of anything? If not, watch The Big Short again!
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Thank you. I’m immediately reminded of the “loophole” I used for years in Sydney. Medicare would reimburse me to my bank at a fixed rate for a given appointment. IIRC twas $300 per visit to the shrink. My shrink charged a bit more (IIRC $320 so $20 excess was no biggie).
HOWEVER I paid on my credit card which accrued Airmiles with Singapore Airlines. In the end I got little out of it. SQ know they’re the best on the Kangaroo route (their A380s were the bees’ knees) so are very stingy with how many Airmiles will get you an upgrade to biz class. I think over several years I managed it twice at the cost of a herniated L4/5 disc for the huge amount of coach class flights. But I was very aware of the use of pseudo-currencies even back then.
“an ant pushing a grain of rice around a table and having it accidentally fall in a hole.”
😂😂👍
Thanks much for this intriguing article. To add a bit to the crazy, there is now this:
White House Says Gold Reserves May Be Used to Purchase Bitcoin
https://finance.yahoo.com/news/white-house-says-gold-reserves-213421472.html
Regarding Yaroufakis’ argument, I would be curious to hear more about how, specifically, Trump is going to bully Japan et alia into this scheme. Recall that Trump recently warned the BoJ not to try and devalue the yen:
Trump, claiming Japan guiding yen lower, hints at fresh tariffs
https://www.japantimes.co.jp/business/2025/03/04/economy/japan-china-currencies-trump/
However, as the linked article notes, Finance Minister Kato Katanobu repeated that this has not been BoJ policy. If anything, the BoJ interventions have been to use their dollar stockpile to buy JPY, i.e., in order to make JPY stronger, not weaker. I.e., the increase in USDJPY — JPY becoming dramatically weaker against the dollar over the past few years — has been more due to BoJ policy to end NIRP/ZIRP, ending the carry trade, and then market forces due to perceived lackluster Japanese economic performance. Moreover, I can tell you from first-hand experience that commodity prices are now rising significantly in Japan and the proverbial Ms. Watanabe is getting worried about household expenses. E.g., the price of rice in Japanese markets has gone up over 100% year-on-year.
Returning to Yaroufakis, indeed it seems that Trump plans to use the threat of tariffs as a weapon to pressure the vassals (e.g., Japan) into strengthening their currencies against the dollar. The further twist that Yaroufakis proposes is that this could be accomplished by persuading the vassal CBs to buy cryptos. Honestly, this seems like something of a stretch, so I would be curious to hear more about how this “strong-arming” would happen. I.e., what leverage does the US actually have to pressure Japan to pursue this course?
The next point I don’t quite follow is the argument that if, for example, the BoJ bought a yuge amount of stablecoins, “the dollar exchange rate will dip, no other fiat currency will emerge as a potential suitor to the dollar’s reserve currency status, and dollar-denominated stablecoins will rise in value.” Probably I am just missing something here, but how would the invariant of the dollar’s reserve status cause the stablecoins to rise in value? To me, it just sounds like the exchange rate would dip and aside from the usual speculative market forces — which dominate FX transactions anyway — there would be nothing to make it go up again. What am I missing here?
How does buying a stablecoin backed by Treasury securities weaken the dollar relative to directly buying Treasury securities?
In addition, there can be JPY or EUR stablecoins, so that any Forex volatility is paralleled in crypto…
Why do I still get the feeling that ‘the plan’ is to profit wildly on the rebuilding necessary after the destruction of the county’s vital systems?
After all, they’d get to remake all of government in ways that create a permanent tilt in their economic favor?
I think it possible the ideology is simply necessary to keep the otherwise ignorant storm-troops marching in the same direction, while at the top of the heap it’s simply a rational for rapacious greed.
“… deafening alarm bells sounding in our heads…”
convertibility from a fiat contrivance to a ‘representative store of value’ that has universally recognized utility hence an objective store of value. Gold? Silver? Both have utility industrial value.
In the era of tech and electricity, seems like copper, some rare earths, and molded lead and/or bismuth in the form of bullets arguably are ‘where it’s at’. Potable water and arable land are elemental, but not portable.
My mom used to say, “place your bet’s – that’s what makes horse-races! ”
I am amazed at how much faith and resources are piling in to AI and cryptocurrencies, which have no discernable value, other than plucking loose dollars from greedy hands to then stuff into offshore accounts, or locally, to buy arable land, potable water, molded lead, a private retired military protective force, and the local and state government (montanny:exhibit 1 )
Smoke, mirrors, and fumes. Precarity for the bazillions.
I’m convinced by the immediate and frankly obvious grift (which, if I understand it correctly, has already been accomplished), but I am more skeptical about this wider project Yanis proposes — too many moving parts and unpredictable actors for my liking. Not that it’s impossible so much as it is improbable.
Keep saying this… although I’m not sure that creating more options is fully in the mix. Unless options is limited to grift.
The Easter event is gobsmackingly crass, even for Trump.
And what’s the price tag on the Amazon Prime documentary about the First Lady (who may have been less in the public eye than any FLOTUS of the last 100 years if not all time.) (Trump may have been partially inspired by various TV events starring HRC and Chelsea.)
Tactics all the way down.
‘Trump is all tactics, no strategy.’
I think that our hostess is alluding to that section from Sun Tzu’s “Art of War” that says-
‘Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before the defeat.’
This is not accurate, only foreign governments & central banks could exchange greenbacks for all that glitters-not just anyone with $35 kicking around.
My understanding is that De Gaulle’s demand for gold for the French government’s dollars was what convinced Nixon to “close the gold window.” Doesn’t that qualify as a “run”?
Though for obvious reasons I loathe Nixon, there are two things I think he deserves credit for.
First, getting us all off the pseudo gold standard.
Second, the white house tapes of him and Kissinger getting really really annoyed at how the Zionist Israeli tail was increasingly wagging the USA dog. Now in public we know Nixon was all in favour of Israel but his private tapes tell another story. They’re on YouTube.
He gets credit for more. He created Revenue Sharing, which was the Federal government giving $ to states and municipalities, with only anti-fraud controls. The idea was the Feds were more efficient at revenue collection, while states and localities were closer to citizens’ needs and could be more responsive and targeted. Reagan discontinued it.
Nixon started the Environmental Protection Agency and the Occupational Health and Safety Organization.
He was in favor of a minimum annual income (a UBI).
He lowered the voting age to 18.
He supported Title IX, which prevented gender discrimination at colleges receiving Federal aid, which helped promote women’s sports
Voting age was lowered because of the draft, which lasted until Dedember 1972. Likewise most states lowered the drinking age for the same reason.
The mass democratic upsurges of the era should get most of the credit for those advances, as they were fundamentally concessions from the ruling class to stabilize what it saw (re: the Powell Memo, et. al.) as its threatened position. Nixon deserves credit for being realistic enough to recognize the necessity of it, and having the political wherewithal to implement it.
For example, I doubt whether Nixon cared much about occupational safety and health for working people, but OSHA was a response to the political realities of the time. The law was signed less than a year after the NYC Hardhat Riot, and Nixon was seeking support from the AFL-CIO, which he got in part with the Federation’s non-backing of McGovern in 1972.
I have read that Nixon wanted to implement a Single Payer national health insurance program, but could not get legislative cooperation because Edmund Kennedy, confident that he would be elected President in ’76, wanted to get the credit for that and so prevented the proposal from gaining traction in the Senate.
RN looks better and better, compared with what we have put up with for that last nearly 50 years.
I think that Yanis Varoufakis gets the Trump strategy right: “This seemingly contradictory strategy, that would boost US exports (as the dollar becomes cheaper) while pushing down the US government’s borrowing costs (as foreign wealth piles into US long-term debt) is intended to extend US hegemony while also bringing back manufacturing to America. Tariffs, in this context, are the chief weapon by which to pressurise America’s friends and foes to unload their dollar speculative holdings while also buying even more long-dated US Treasury bills.”
Unfortunately, that strategy is also “postmodern economy run as additions and subtractions.”
So I also think that Yves Smith’s skepticism is warranted. Things have changed from the nineteenth century, when the vast majority of the U.S. population lived on the land, and manufacturing was in the first / second industrial revolutions of textiles (spinning mills), foundries, ironworks, barely mechanized printing presses, and shipbuilding. The U.S. government could put tariffs on agricultural products, cloth, manufactured goods, and luxuries. Physical objects are easy to tariff.
But the U S of A is now in the swamp of the globalized economy that U.S. elites wanted, with capital flying around like raptors, hankering after easy prey. Further, unlike ye good olde days of tariffs, the U S of A is a service economy. How does one place tariffs on services?
As Yves Smith has pointed out repeatedly, the U.S. industrial base is so wrecked that it would take years to bring it back. But the workforce no longer has the training: How many tool-and-dye makers are left in the U S of A? Twelve. The U.S. management class has little interest in agriculture and manufacturing, and the U.S. bachelor’s degree in businesss is worthless, four years of slogans and babysitting.
As to crypto: It is a well-known scam. What I find strange reading above about the welter of issuers is the vu jà day that I felt. We have been there before, lots of city-states issuing coins that had to be converted by a layer of bankers and moneychangers.
So you have the prospect of the reintroduction of an unreliable currency. (Whether you like fiat currencies is a separate question.) Or unreliable bag of currencies, much like what a medieval merchant would have had. And then there have to be intermediaries, moneychangers, and others charging fees and nicking the coins.
In short, neoliberalism is in crisis, as Perry Anderson’s “Regime Change” essay posted yesterday explains. What is the response of these fish who think that neoliberalism is water? A tulip craze.
What could possibly go wrong?
PS: When Elon Musk trotted out Ponzi scheme to refer to Social Security, it seems that he was referring to something else. Paging Herr Doktor Freud…
CBDCs, Tokenized Assets, etc. could all facilitate tariffs on services and digital goods. Could be part of the push for these things, more control of the digital economy (or metaverse one might say). I think we’ve moved past the point of crypto being a scam. It’s legitimized through BlackRock ETFs, this new reserve, CBDC adoption, etc. Everything could be considered a scam until it’s legitimized in some way.
“We have been there before, lots of city-states issuing coins that had to be converted by a layer of bankers and moneychangers.”
I honestly think this is the direction we are going again with the talk around “Freedom Cities”.
Having an ETF does not = not a scam. High leverage ETFs (triple longs and shorts) are also scams. They have such high convexity that they are suitable only for very short term speculation, which is not socially productive.
DJG, Reality Czar
LOL
Not. A. Word. Wasted.
My only nitpick would be the word “decades” to replace “years” for added emphasis.
I keep harping on the notion that’s it’s as if every foreign policy official of the US government just got extracted from a suspended animation time capsule from circa 1957 – both sides of the aisle.
> What I find strange reading above about the welter of issuers is the vu jà day that I felt. We have been there before, lots of city-states issuing coins that had to be converted by a layer of bankers and moneychangers.
Exactly. And what do we say about those who fail to learn from history? ::Gary Oldman Smiley Voice:: Yes … I know.
If I’m being blunt, I don’t think we’ll get a new 5h1tC0iN currency. What we’ll get is irrationally exuberant crypto investment picking off the suckas born on successive yesterdays as the rug pulls roll in like waves at high tide. It will be interesting to see if there is any meaningful regime change in two or four years. Of particular interest to me is whether crypto policies will be allowed to persist – at the urging of the Benevolent Billionaires on team blue, of course (retch noises).
Poor Yannis! He must be kicking himself. He was furiously trying to architect a third currency to save Greece from getting Schäuble’d by the Troika. If only he had gone crypto! Greek tragedy be damned.
The kicker in all this – is – at the end of the day – the token[tm] which all parties agree on to satisfy a contract is all that matters. Seems crypto has and never will be such a thing, hence what is its real function in social economic terms, does it even have one, other than sucking up fiat which would better be deployed for productive means other than pure speculation = wins the lotto … for the mopes or hyper skimming/scamming for the elites.
Its like a doco I saw where upper class boys were getting high on a tank of BBQ gas in the lounge room, until one lit a cigarette, one boy opined that whilst it was happening he knew his face was melting but, felt no pain or urgency to shut the supply of gas of at the bottle …. the surrealist of the experience had overtaken his executive functions.
On that note I question heaps of people in power and their impaired executive functions, environmental conditions, imbibing in mood altering drugs, you name it, even borderline psychological conditions yet still deemed functional[tm] from a Market place economic perception e.g. screw society at large.
ChrisRUEcon: Thanks.
As ever, you can turn a phrase: “I keep harping on the notion that it’s as if every foreign policy official of the US government just got extracted from a suspended animation time capsule from circa 1957 – both sides of the aisle.”
Yes, we are getting economic analysis that would be quite sharp for, ohhhh, 1847. And we’re getting foreign policy from the 1950s. These time-capsulists think that they are overthrowing Mossadegh again and bossing around the Mexicans. Times have changed.
This process of degradation has gone on for some time. I am reminded of George Will (sorry to trigger your PTSD!), who wrote about taking the U S of A back to about 1880. He thought that he would have a great estate in Asheville next to Biltmore. He was too blinkered to understand that he would have time-capsuled into some packing plant in the Chicago Stockyards where he would spend his days trying to avoid getting a couple of fingers ground up in a batch of kielbasa.
Treasury Secretary Scott Bessent is widely considered, within the finance community, as highly capable when it comes to the levers of global finance. MAGA world ignores his tight connections to great demon George Soros. I believe Trump is willing to let Bessent drive the economic bus for awhile. The biggest current problem they face is that Yellen was financing everything on the short end of the curve, where liquidity exists but with frequent roll over, and they need to drive deficits out into longer durations at lower rates. Stablecoins are part of that plan.
Isn’t this strategic bitcoin/stablecoin reserve simply “payback” to those cypto-bros for their generous campaign contributions?
All tactics and no strategy — just another transaction. Too Much and Never Enough because Mommy didn’t love him. Somebody should write a book about it…
If I remember right, early in 2024 the global banks started expressing an interest in Bitcoin. If that really happened, it would make sense for a Trump administration to do them a favour and put a price floor under the Bitcoin that they picked up.
Queuing the EO Fact Sheet: Under ADDRESSING A CRYPTO MANAGEMENT GAP: Bitcoin, the original cryptocurrency, is referred to as “digital gold” because of its scarcity and security, having never been hacked. Which is total BS.
Cointelegraph reports: “Mt. Gox fell into bankruptcy in early 2014 after suffering an 850,000 Bitcoin loss in one of the biggest crypto hacks ever recorded. Before the security breach, it was the largest Bitcoin exchange, handling around 70-80% of trades.” Mt. Gox was hacked in 2011. And yet it took years to fall into bankruptcy. This is, apparently, the forever bankruptcy because it’s still shifting ‘coins’ from wallet-to-wallet.
Based on the Silvergate Bank fiasco, we can expect the Federal Reserve to again backstop the tech-bros in the next calamity.
Ignoring the possibility that every gold bar in Fort Knox may already be leveraged, with 10 or so different entities thinking they have a claim on each and every bar. Trump would not have to sell the gold to leverage off it.
The bars are currently pegged at $42 an ounce, and gold is trading around $3000 an ounce. If he decrees that going forward every ounce will be valued at $3,000 he can claim a 71.4 fold increase in government assets. Voila, he has just found something like $759 Billion that can be used to finance tax cuts for his Billionaire buddies.
From the Treasury Direct website, on attempt to login to manage owned treasuries:
Important message:
WARNING WARNING WARNING You are accessing a U.S. Government information system (which includes computers, computer networks, and all devices and storage media attached to a Treasury network or to a computer on such network) that is provided for U.S. Government- authorized use only. By using this system, you understand and consent that there is no reasonable expectation of privacy regarding any communications or information transiting, stored on, or traveling to or from this system. The government routinely monitors and may, for any lawful government purpose, intercept, search, and seize any communication or information transiting, stored on, or traveling to or from this information system and such information may be disclosed or
used for any lawful government purpose.
Wait, you mean Bitcoin and crypto aren’t the anonymous, decentralized and anti-State currency first advertised?
Bait, meet Switch…
Crypto first and foremost was envisioned as a work-a- round to sovereign fiat, zero democracy, zero political exposure to social pressures, atomistic individualism writ large, that is how it was sold to the unwashed or previously indoctrinated ideologically acolytes.
Drama with this is scale, low/middling sorts or whales, not that the monied class already have tax havens and tax offsets. Best part is Trumps posse is chocker block with rusted on libertarians and like minded social engineers that view everything as a Market problem [Hayek et al] and the only solution is shaping the Market so consumers have to behave accordingly or head shrink the next generation it to normalizing its agenda.
Its no different to me than watching how primary RE for shelter, family formation, security, became a financial asset and how during the 80s promoted as ones retirement fund w/a side of equities in the stonk markets. All to put the onus on – the individual – in determining ones outcomes later in life. Meanwhile the financial elite skim off all this without any real social productivity and when they take things too far … it all blows up and they are made whole and then some.
It just blows me away to think the rational agent model is the corner stone to all this … a completely fabricated pejorative notion that is forced on everyone dogmatically … then when reality does not conform its the humans fault … I digress ..
I think that Yanis is improperly using terms interchangably. The opening paragraph recognizes that the executive order creates a “Strategic Bitcoin Reserve and a US Digital Asset Stockpile.” These are two different things. Later in the article three times he refers to a “strategic crypto reserve.” This is something different — the EO says nothing about a “strategic crypto reserve.” The point of the EO is to treat Bitcoin differently than other digital assets. Bitcoin is regarded as the only “strategic” asset to be held on the balance sheet — with the possibility of increasing the amount over time, but without selling. Everything else is just part of a “stockpile” — which might be sold, exchanged or leveraged.
How could Bitcoin be used to leverage and promote stablecoins? I do not see how.
The whole point of promoting stablecoins to support the dollar is because these create demand for US treasuries. That might create demand for the US dollar in the short to medium term, but does not solve the structural problem of Triffin’s Dilemna in the long run. Yes, there is an incentive for the issuer to issue more stablecoins than are actually backed by dollars or US treasuries — which is why there is a need for regulation and transparency if these are permitted to exist. But none of this has anything to do with the plan to hold Bitcoin on the balance sheet. There is no “strategic crypto reserve.”
This is not three dimensional chess – more like a two dimensional Ponzi scheme, along with the likely heavily hinted threat that “nice little country/industry you have here – pity if something happened to it…..”
The end of the Empire is approaching rapidly.