So the President is starting a stable coin that is backed by U.S treasuries and he is Joined by Binance who’s founder was just released from Prison. Will the madness never end? What happens if the stable coin fails? Will the Feds have to prop it up? This is a whole new level of unethical and conflicting behavior, as in a conflict of interest.
7 Likes
Yeah, things are bonkers.
4 Likes
What happens when a different party is in the WH and they completely divest of any of this nonsense?
7 Likes
Sounds like it’s pegged to the dollar and backed by short-term treasuries, US dollar deposits, and other cash equivalents. If there’s a run on USD1 and lots of people sell, it will impact US treasuries . The larger the run, the larger the impact.
Well, then US treasuries backing USD1 would be sold to cover the divestment. Run.
If our government is convinced to invest in these shenanigans as part of a crypto reserve, it seems like some sort of twisted US government debt circle jerk.
I’m no expert, just trying to piece things together.
2 Likes
This is the first thing that truly scares me. I expect the wholesale disrupting of things will have deleterious effects of course. Tariffs will produce higher prices. Higher prices will dampen consumption. Dampened consumption means recession, perhaps severe recession.
But the ability of crypto bros to invest fictitious money and have it backed by US guarantees, even second or third hand (systemic risk! We must bail it out!), especially with monstrous conflict-of-interest in those running the US financial system, seems ripe for the kind of debacle we saw in 2008, or perhaps 1929.
While I’ve been slowly moving out of more volatile issues over the past 6 months while holding onto stalwarts, I am going to rethink whether those moves are enough - and consider other alternatives, including metals.
What a world.
8 Likes
So you are saying? Buy buy buy?
Or bye bye bye?
No.
2 Likes
Lots to be alarmed about as a citizen with regard to prez piggy eyes/lascivious lips, but as an investor, well
Damn!
I am so out of here (or rather “there” as I am a permanent resident of Mexico and about to become a dual citizen). The dollar at risk of becoming as dodgy as the peso?!!
4 Likes
The dollar is okay. Or at least safe from this for now. The way crypto works is that you buy it and then hope a greater fool comes along to buy your bags.
There is an added bonus with crypto though. Figures vary, but something like 70% of transactions are wash trades. Perhaps fewer than 500 people are responsible for $3.2 trillion of crypto trading.
The market price of say, Bitcoin and Ethereum are jacked up beyond all reasonable market forces by fake transactions.
The problem though is exit liquidity, especially if you have a substantial amount. To sell Bitcoin in almost all cases you must first exchange for a stablecoin, then exchange to a real currency.
The problem with this is that stablecoins themselves are backed by cryptocurrencies. So whales can’t exit crypto without taking down the whole house of cards.
But if the US government were to become the ultimate bagholder by issuing its own stablecoin, then whales could have exit liquidity.
And it is even better than that, the government wants to use gold reserves to buy Bitcoin, which pumps the whale’s bags before they get tossed to the taxpayer.
It is all happening in front of us, in plain sight.
8 Likes
With USD1 being pegged to the dollar at 1:1, if the dollar goes down, more USD1 must be sold to drive down its cost to match a lower dollar. More USD1 on the market requires them to hold more treasuries and cash equivalents to back what’s on the market.
That’s assuming they will maintain enough reserves to cover all the USD1 in the market. Transparency through audits helps. But we can trust these guys, right?
I can’t believe this stuff is legal.
7 Likes
How hard is it to be dual citizen? I thought, in many cases, the US made that difficult.
As far as I have seen, the USA has not and does not make it difficult, rather, multiple other countries do make it difficult by requiring sole allegiance. But Mexico is just fine with it.
Where will you head? Euros? The second reserve currency? Which will grow as a reserve currency in leaps and bounds.