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one thing with these stablecoins is they're pushing to buying of 'us-debt'. congrats if you buy a stablecoin - you've effectively financed the US gvt at 0%. n

by dzonga 1y ago

one thing with these stablecoins is they're pushing to buying of 'us-debt'. congrats if you buy a stablecoin - you've effectively financed the US gvt at 0%. now the US gvt can inflate away that debt at 0 cost to them, and pass on the cost to you. that's why a bunch of these stablecoin companies are pushing it as a way to save for people in distressed economies. what a way to steal from the poor. that's why the crypto act was called GENIUS act.

mothballed 1y ago
US govt is financed at whatever rate the stable-coin issuer finances at, which is likely a mixture of T-bills, fed overnight interest rates (via bank accounts), and other assets.
attila-lendvai 1y ago
didn't you just explain the USD game? (fleecing the poor worldwide through inflation...) stablecoins don't change much in this.
- bilbo0s 1y ago
  ...fleecing the poor worldwide...stablecoins don't change much in this Just Devil's Advocate, but isn't that a reason not to use stablecoins? I mean, I can participate in the fleecing of the poor without changing anything at all apparently.
  - scotty79 1y ago
    It's a reason not to use dollars in any form if you are outside of US (and probably inside as well).
    - gus_massa 1y ago
      Usually the local money is even worst. (Hi from Argentina! Not so bad this year so far...)
      - ethbr1 1y ago
        This is the worry of globally-available USD stablecoins. By swapping the volatility from crypto to lower USD volatility, they effectively create a funnel from riskier currencies into dollars. Which is the same state that previously existed... except now facilitated by the crypto industry's global accessibility/UX and with less international regulation. Blessing USD stablecoins at the US federal level was a smart move (from the US-perspective) as it creates a much bigger demand for dollars, and if the US didn't do it then China or OPEC would have eventually gotten around to it as an end-run around dollar hegemony. Winners: - Crypto industry (more volume to skim) - US Treasury (more demand for debt) Losers: - Countries with less-stable currencies (lose further control of monetary policy) - China / OPEC (miss opportunity to push dedollarization further) TBD: - Money laundering (once volume grows, KYC and traceability will follow)
      - attila-lendvai 1y ago
        sure, but there's something twisted in ripping off e.g. poor africans from the other side of the world... sure, it couldn't happen without the local warlords, but still...
      - vid 1y ago
        Is it really "usually?" I think that people often think of the worse cases (Argentina, etc). Looking at https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG?most_recent_value_desc=true https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG?most_rec..., the US is at 103, there are 102 countries with worse inflation, and 215 with better. From https://www.macrotrends.net/global-metrics/countries/wld/world/inflation-rate-cpi https://www.macrotrends.net/global-metrics/countries/wld/wor..., the Global Average Inflation rate for 2023 was 5.7%, more than the US but not out of control. I don't know what the effect is called, but suddenly some unrest in some country or inflation in another calls for creating a whole new money system. It seems unreasonable and I'm a bit suspicious of where it comes from.
        gus_massa 1y ago
        "Usually" in the countries that need it. The problem with the 102 countries with less inflation is that some years it may be less, but other much more. IIRC in hindsight at the beginning of 2024 the best was to exchange all your saved dollars to pesos, invest them in bonds or the bank, and exchange them for dollars at the end of the year. Probably you can get a 20% yoy increase. But there was a risk or many unexpected problems that would let you with a lot of monopoly money that is worth only a 50% of the initial value... So the safe option was to keep your savings in dollars. Euros are another safe option. Pounds are very difficult to exchange. The money of nearby countries is sometimes better, but they may have unexpected surprises too. > I don't know what the effect is called, but suddenly some unrest in some country or inflation in another calls for creating a whole new money system. It seems unreasonable and I'm a bit suspicious of where it comes from. I agree.
- scotty79 1y ago
  Aren't they sort of printing new dollars privately accelerating the fleecing? Or am I wrong?
  - toast0 1y ago
    Not anymore than a USD deposit account. Just with extra steps.
    - JumpCrisscross 1y ago
      > Not anymore than a USD deposit account These typically pay interest. (Or have retail servicing costs attached.)
      - toast0 1y ago
        Oh yeah, if you get a USD savings account from major nationwide banks you'll be getting exciting interest rates of up to 0.02% [1], assuming you have a 'relationship bonus'. BofA gets up to 0.04% [2], with the right tiers. [1] https://www.chase.com/personal/savings/interest-savings/interest-rates https://www.chase.com/personal/savings/interest-savings/inte... [2] https://www.bankofamerica.com/deposits/savings/savings-accounts/ https://www.bankofamerica.com/deposits/savings/savings-accou...
      - 1oooqooq 1y ago
        not anymore, this is not guaranteed in the "app age". and the interest was always negligible.
- jcfrei 1y ago
  Having access to USD is still a lot better than whatever local currency most of these countries have. All those without any real central bank independence (though FED independence has become more questionable in the US as well).
this_user 1y ago
That's not how any of this works. You may not receive any interest on your stablecoin balance, but the issuer certainly does. Why would they offer to lend money to the US government at zero when they can get the market rate and pocket it? What's more, these are mostly short-term instruments This means any increase in inflation will be reflected in their yield.
- JumpCrisscross 1y ago
  > You may not receive any interest on your stablecoin balance, but the issuer certainly does A bunch of zero marginal cost capital funding purchases of U.S. debt would absolutely push down rates, possibly lower than inflation, because if you’re a stablecoin issuer you’re not constrained by yield. This is a dumb-money venture. And if there is this much money that is this dumb, Treasuries aren’t the worst place for it to go.
  - NoahZuniga 1y ago
    All those trilions and trilions of dollars of stablecoins sure are bringing down the us' cost to borrow.
    - JumpCrisscross 1y ago
      > those trilions and trilions of dollars of stablecoins sure are bringing down the us' cost to borrow If you think trillions of dollars in de novo price-insensitive demand doesn’t move a market, even one as deep as the Treasury market, I’ve got a stablecoin to sell you.
      - NoahZuniga 1y ago
        Yes, trillions of dollars of new price-insensitive demand would move the treasury market. That's why I named that number! But, there just isn't that much value in stablecoins.
  - cortesoft 1y ago
    Even if every dollar of market cap for every crypto currency in the world was invested into us treasuries, it would still be a drop in the bucket and wouldn't drastically change rates.
alphazard 1y ago
> congrats if you buy a stablecoin - you've effectively financed the US gvt at 0%. USDC on Coinbase yields interest. The USDC people make a little spread on it, but you aren't financing the US government at 0%, you're financing them at market rates. There is counterparty risk just like with a bank. Unlike a bank, there are liquid markets onchain for other fungibles.
- ecommerceguy 1y ago
  It doesn't cost a stablecoin anything but a bit of electricity to manufacture a "coin". The coin is valued at whatever the peg is, but it doesn't move the m2 needle or any other measure of circulation, until they purchase a treasury (or whatever they claim is backing). How much did it cost mr stablecoin to do all that? And you better believe the US Gov NEEDS this to happen. Russia's take on the system is correct and we're seeing ASIANs and BRICS run away as fast as possible from $. Ways out include total protectionism/mercantilism or war. Gold is parabolic now. 10k by March is completely doable.
graeme 1y ago
The total stablecoin marketcap is not that high relative to US debt, and open question whether they're actually buying all the treasuries they claim. Tether has never been audited.
- DennisP 1y ago
  Times are changing: > The GENIUS Act requires permitted payment stablecoin issuers to maintain reserves backing outstanding payment stablecoins on at least a one-to-one basis, and provides that reserves may only consist of certain specified assets, including US dollars, federal reserve notes, funds held at certain insured or regulated depository institutions, certain short-term Treasuries and Treasury-backed reverse repurchase agreements, and money market funds. > In addition, the GENIUS Act requires stablecoin issuers to provide monthly public reporting as to the composition of their reserve portfolios on their website, and requires larger issuers (with more than $50 billion in consolidated total outstanding issuance) to publish annual audited financial statements. These monthly reports must be examined by a registered public accounting firm, and the CEO and CFO of a permitted payment stablecoin issuer must certify the accuracy of these reports to the primary federal payment stablecoin regulator or state payment stablecoin regulator, as applicable. https://www.lw.com/en/insights/the-genius-act-of-2025-stablecoin-legislation-adopted-in-the-us https://www.lw.com/en/insights/the-genius-act-of-2025-stable...
  - btouellette 1y ago
    With regard to Tether none of this is applicable as they aren't compliant with the GENIUS Act. They are in fact attempting to launch a totally separate stablecoin to try to get some of that market: https://www.reuters.com/sustainability/boards-policy-regulation/tether-unveils-usat-stablecoin-boost-us-market-presence-2025-09-12/ https://www.reuters.com/sustainability/boards-policy-regulat...
    - ecommerceguy 1y ago
      Right, and who is looking at it anyways? Let's not kid ourselves, noone at the SEC will be enforcing "genius" act. Does anyone realistically think otherwise?
tcgv 1y ago
It’s actually more of a win-win situation if you look closely. Stablecoin issuers earn yield from holding U.S. Treasuries, which sustains their business model. Meanwhile, people in distressed economies get practical access to a digital dollar, often cheaper and faster than navigating restrictive exchange rules or paying steep conversion fees at money-changers. That’s meaningful when local currencies are unstable or losing value. Of course, not all stablecoin issuers are trustworthy, and some governments under economic distress may ban or limit these instruments. But when the setup works, both sides benefit.
- kipchak 1y ago
  The foreign individual is likely better off in game theory terms, but their country is collectively likely worse off due to a reduction in their central bank's independence and ability to perform seigniorage/print money. Difficult to ban for the foreign nation, and probably results in a greater need for dollars for their government also.
  - kragen 1y ago
    Probably not. You would be right if we were talking about honest, competent central bankers. But most people live in poor countries. Why are those countries poor? Every country is different, but poor countries are mostly poor because they are governed by kleptocrats, generally including their central bankers, and hyperinflation in particular is a constant menace. When the central bankers aren't directly kleptocratic themselves, they are very often incompetent but loyal, similar to most of Trump's nominees. In this situation, generally speaking, things that put power over individuals' lives back in the hands of those individuals, instead of the kleptocrats' hands, will improve the situation not just of the individuals but of their whole country.
    - kipchak 1y ago
      I agree that kleptocracy and incompetence are a important factor, but I'm not sure it's the only one. There's a correlation between corruption indices and low GDP but I'm not sure it's causal. For example the US scores only moderately in corruption index terms, but does quite well in GDP terms. Arguably GDP growth rates are a better measure, in which case there's possibly a inverse correlation. For example China, India and Malaysia have grown quite substantially are not particularly transparent, but they are alike in their resistance to dollarization. On the other hand Ecuador and El Salvador are examples of countries that have fully embraced dollarization with less than great outcomes. There are examples in the middle as well, but there is not a clear trend that it's necessarily a change for the better of the country and it's citizens. To me it seems like a continuation of the IMF's dollarization as described by Joseph Stiglitz in 'Globalization and its discontents', in terms of mechanisms and effects on recipient countries. From this perspective it's less like transferring power from kleptocrats to the people, and more like choosing kleptocrats that are offering a better deal.
ecommerceguy 1y ago
Stable coins can print anytime they want, there's no one at the SEC that will regulate it in this admin. As a matter of fact it's pretty well accepted in some circles, especially on subreddits, that Tether did exactly that, printed usdt, purchased btc at effectively 0 cost basis, inflating bitcoin prices by decreasing supply and then turned around and purchased treasuries. Cantor Fitzgerald ran that for them. Further, stable coins / crypto are almost certainly being used to slop up as much liquidity as possible and has essentially so far pulled 4 trillion out of circulation. If not for that sleight of hand trick, hyperinflation, at least in the USA, would have already happened. Probably still will as there's only so much can kicking that can occur. I know of 30 year olds that literally live in mom's basement and dump nearly all of their just above minimum wage checks straight into Robinhood to blindly purchase crypto. Will forever beat inflation is the mentality. Sure looks like there's going to be lots of pain for poor and middle class people in the next 5 years.
berns 1y ago
> congrats if you buy a stablecoin - you've effectively financed the US gvt at 0%. As MMT teaches us, a government that issues its own currency does not need to borrow to finance itself, as it can create the money it needs, though it may still issue debt for other reasons.
- NoahZuniga 1y ago
  I mean if the US gov moderately lowers the amount of debt it issues (and starts printing more to cover the difference), inflation will go way up, which seems pretty bad.

by dzonga 1y ago

mothballed 1y ago

US govt is financed at whatever rate the stable-coin issuer finances at, which is likely a mixture of T-bills, fed overnight interest rates (via bank accounts), and other assets.

attila-lendvai 1y ago

didn't you just explain the USD game? (fleecing the poor worldwide through inflation...) stablecoins don't change much in this.

bilbo0s 1y ago
...fleecing the poor worldwide...stablecoins don't change much in this Just Devil's Advocate, but isn't that a reason not to use stablecoins? I mean, I can participate in the fleecing of the poor without changing anything at all apparently.
- scotty79 1y ago
  It's a reason not to use dollars in any form if you are outside of US (and probably inside as well).
  - gus_massa 1y ago
    Usually the local money is even worst. (Hi from Argentina! Not so bad this year so far...)
    - ethbr1 1y ago
      This is the worry of globally-available USD stablecoins. By swapping the volatility from crypto to lower USD volatility, they effectively create a funnel from riskier currencies into dollars. Which is the same state that previously existed... except now facilitated by the crypto industry's global accessibility/UX and with less international regulation. Blessing USD stablecoins at the US federal level was a smart move (from the US-perspective) as it creates a much bigger demand for dollars, and if the US didn't do it then China or OPEC would have eventually gotten around to it as an end-run around dollar hegemony. Winners: - Crypto industry (more volume to skim) - US Treasury (more demand for debt) Losers: - Countries with less-stable currencies (lose further control of monetary policy) - China / OPEC (miss opportunity to push dedollarization further) TBD: - Money laundering (once volume grows, KYC and traceability will follow)
    - attila-lendvai 1y ago
      sure, but there's something twisted in ripping off e.g. poor africans from the other side of the world... sure, it couldn't happen without the local warlords, but still...
    - vid 1y ago
      Is it really "usually?" I think that people often think of the worse cases (Argentina, etc). Looking at https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG?most_recent_value_desc=true https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG?most_rec..., the US is at 103, there are 102 countries with worse inflation, and 215 with better. From https://www.macrotrends.net/global-metrics/countries/wld/world/inflation-rate-cpi https://www.macrotrends.net/global-metrics/countries/wld/wor..., the Global Average Inflation rate for 2023 was 5.7%, more than the US but not out of control. I don't know what the effect is called, but suddenly some unrest in some country or inflation in another calls for creating a whole new money system. It seems unreasonable and I'm a bit suspicious of where it comes from.
      - gus_massa 1y ago
        "Usually" in the countries that need it. The problem with the 102 countries with less inflation is that some years it may be less, but other much more. IIRC in hindsight at the beginning of 2024 the best was to exchange all your saved dollars to pesos, invest them in bonds or the bank, and exchange them for dollars at the end of the year. Probably you can get a 20% yoy increase. But there was a risk or many unexpected problems that would let you with a lot of monopoly money that is worth only a 50% of the initial value... So the safe option was to keep your savings in dollars. Euros are another safe option. Pounds are very difficult to exchange. The money of nearby countries is sometimes better, but they may have unexpected surprises too. > I don't know what the effect is called, but suddenly some unrest in some country or inflation in another calls for creating a whole new money system. It seems unreasonable and I'm a bit suspicious of where it comes from. I agree.
scotty79 1y ago
Aren't they sort of printing new dollars privately accelerating the fleecing? Or am I wrong?
- toast0 1y ago
  Not anymore than a USD deposit account. Just with extra steps.
  - JumpCrisscross 1y ago
    > Not anymore than a USD deposit account These typically pay interest. (Or have retail servicing costs attached.)
    - toast0 1y ago
      Oh yeah, if you get a USD savings account from major nationwide banks you'll be getting exciting interest rates of up to 0.02% [1], assuming you have a 'relationship bonus'. BofA gets up to 0.04% [2], with the right tiers. [1] https://www.chase.com/personal/savings/interest-savings/interest-rates https://www.chase.com/personal/savings/interest-savings/inte... [2] https://www.bankofamerica.com/deposits/savings/savings-accounts/ https://www.bankofamerica.com/deposits/savings/savings-accou...
    - 1oooqooq 1y ago
      not anymore, this is not guaranteed in the "app age". and the interest was always negligible.
jcfrei 1y ago
Having access to USD is still a lot better than whatever local currency most of these countries have. All those without any real central bank independence (though FED independence has become more questionable in the US as well).

this_user 1y ago

That's not how any of this works. You may not receive any interest on your stablecoin balance, but the issuer certainly does. Why would they offer to lend money to the US government at zero when they can get the market rate and pocket it? What's more, these are mostly short-term instruments This means any increase in inflation will be reflected in their yield.

JumpCrisscross 1y ago
> You may not receive any interest on your stablecoin balance, but the issuer certainly does A bunch of zero marginal cost capital funding purchases of U.S. debt would absolutely push down rates, possibly lower than inflation, because if you’re a stablecoin issuer you’re not constrained by yield. This is a dumb-money venture. And if there is this much money that is this dumb, Treasuries aren’t the worst place for it to go.
- NoahZuniga 1y ago
  All those trilions and trilions of dollars of stablecoins sure are bringing down the us' cost to borrow.
  - JumpCrisscross 1y ago
    > those trilions and trilions of dollars of stablecoins sure are bringing down the us' cost to borrow If you think trillions of dollars in de novo price-insensitive demand doesn’t move a market, even one as deep as the Treasury market, I’ve got a stablecoin to sell you.
    - NoahZuniga 1y ago
      Yes, trillions of dollars of new price-insensitive demand would move the treasury market. That's why I named that number! But, there just isn't that much value in stablecoins.
- cortesoft 1y ago
  Even if every dollar of market cap for every crypto currency in the world was invested into us treasuries, it would still be a drop in the bucket and wouldn't drastically change rates.

alphazard 1y ago

> congrats if you buy a stablecoin - you've effectively financed the US gvt at 0%. USDC on Coinbase yields interest. The USDC people make a little spread on it, but you aren't financing the US government at 0%, you're financing them at market rates. There is counterparty risk just like with a bank. Unlike a bank, there are liquid markets onchain for other fungibles.

ecommerceguy 1y ago
It doesn't cost a stablecoin anything but a bit of electricity to manufacture a "coin". The coin is valued at whatever the peg is, but it doesn't move the m2 needle or any other measure of circulation, until they purchase a treasury (or whatever they claim is backing). How much did it cost mr stablecoin to do all that? And you better believe the US Gov NEEDS this to happen. Russia's take on the system is correct and we're seeing ASIANs and BRICS run away as fast as possible from $. Ways out include total protectionism/mercantilism or war. Gold is parabolic now. 10k by March is completely doable.

graeme 1y ago

The total stablecoin marketcap is not that high relative to US debt, and open question whether they're actually buying all the treasuries they claim. Tether has never been audited.

DennisP 1y ago
Times are changing: > The GENIUS Act requires permitted payment stablecoin issuers to maintain reserves backing outstanding payment stablecoins on at least a one-to-one basis, and provides that reserves may only consist of certain specified assets, including US dollars, federal reserve notes, funds held at certain insured or regulated depository institutions, certain short-term Treasuries and Treasury-backed reverse repurchase agreements, and money market funds. > In addition, the GENIUS Act requires stablecoin issuers to provide monthly public reporting as to the composition of their reserve portfolios on their website, and requires larger issuers (with more than $50 billion in consolidated total outstanding issuance) to publish annual audited financial statements. These monthly reports must be examined by a registered public accounting firm, and the CEO and CFO of a permitted payment stablecoin issuer must certify the accuracy of these reports to the primary federal payment stablecoin regulator or state payment stablecoin regulator, as applicable. https://www.lw.com/en/insights/the-genius-act-of-2025-stablecoin-legislation-adopted-in-the-us https://www.lw.com/en/insights/the-genius-act-of-2025-stable...
- btouellette 1y ago
  With regard to Tether none of this is applicable as they aren't compliant with the GENIUS Act. They are in fact attempting to launch a totally separate stablecoin to try to get some of that market: https://www.reuters.com/sustainability/boards-policy-regulation/tether-unveils-usat-stablecoin-boost-us-market-presence-2025-09-12/ https://www.reuters.com/sustainability/boards-policy-regulat...
  - ecommerceguy 1y ago
    Right, and who is looking at it anyways? Let's not kid ourselves, noone at the SEC will be enforcing "genius" act. Does anyone realistically think otherwise?

tcgv 1y ago

It’s actually more of a win-win situation if you look closely. Stablecoin issuers earn yield from holding U.S. Treasuries, which sustains their business model. Meanwhile, people in distressed economies get practical access to a digital dollar, often cheaper and faster than navigating restrictive exchange rules or paying steep conversion fees at money-changers. That’s meaningful when local currencies are unstable or losing value. Of course, not all stablecoin issuers are trustworthy, and some governments under economic distress may ban or limit these instruments. But when the setup works, both sides benefit.

kipchak 1y ago
The foreign individual is likely better off in game theory terms, but their country is collectively likely worse off due to a reduction in their central bank's independence and ability to perform seigniorage/print money. Difficult to ban for the foreign nation, and probably results in a greater need for dollars for their government also.
- kragen 1y ago
  Probably not. You would be right if we were talking about honest, competent central bankers. But most people live in poor countries. Why are those countries poor? Every country is different, but poor countries are mostly poor because they are governed by kleptocrats, generally including their central bankers, and hyperinflation in particular is a constant menace. When the central bankers aren't directly kleptocratic themselves, they are very often incompetent but loyal, similar to most of Trump's nominees. In this situation, generally speaking, things that put power over individuals' lives back in the hands of those individuals, instead of the kleptocrats' hands, will improve the situation not just of the individuals but of their whole country.
  - kipchak 1y ago
    I agree that kleptocracy and incompetence are a important factor, but I'm not sure it's the only one. There's a correlation between corruption indices and low GDP but I'm not sure it's causal. For example the US scores only moderately in corruption index terms, but does quite well in GDP terms. Arguably GDP growth rates are a better measure, in which case there's possibly a inverse correlation. For example China, India and Malaysia have grown quite substantially are not particularly transparent, but they are alike in their resistance to dollarization. On the other hand Ecuador and El Salvador are examples of countries that have fully embraced dollarization with less than great outcomes. There are examples in the middle as well, but there is not a clear trend that it's necessarily a change for the better of the country and it's citizens. To me it seems like a continuation of the IMF's dollarization as described by Joseph Stiglitz in 'Globalization and its discontents', in terms of mechanisms and effects on recipient countries. From this perspective it's less like transferring power from kleptocrats to the people, and more like choosing kleptocrats that are offering a better deal.

ecommerceguy 1y ago

Stable coins can print anytime they want, there's no one at the SEC that will regulate it in this admin. As a matter of fact it's pretty well accepted in some circles, especially on subreddits, that Tether did exactly that, printed usdt, purchased btc at effectively 0 cost basis, inflating bitcoin prices by decreasing supply and then turned around and purchased treasuries. Cantor Fitzgerald ran that for them. Further, stable coins / crypto are almost certainly being used to slop up as much liquidity as possible and has essentially so far pulled 4 trillion out of circulation. If not for that sleight of hand trick, hyperinflation, at least in the USA, would have already happened. Probably still will as there's only so much can kicking that can occur. I know of 30 year olds that literally live in mom's basement and dump nearly all of their just above minimum wage checks straight into Robinhood to blindly purchase crypto. Will forever beat inflation is the mentality. Sure looks like there's going to be lots of pain for poor and middle class people in the next 5 years.

berns 1y ago

> congrats if you buy a stablecoin - you've effectively financed the US gvt at 0%. As MMT teaches us, a government that issues its own currency does not need to borrow to finance itself, as it can create the money it needs, though it may still issue debt for other reasons.

NoahZuniga 1y ago
I mean if the US gov moderately lowers the amount of debt it issues (and starts printing more to cover the difference), inflation will go way up, which seems pretty bad.