How come I haven’t thought of that? Fifteen years of my everyday agony culminated in the ultimate financial capitulation. I settled the score with my bank. No more mortgage. No more family apartment. What could I have done instead?
Well, I could’ve simply erased what I owed to the bank and called it the perfect day. In a nutshell, this is what the Great Crypto Reset is all about.
“Anton Kobyakov, a senior adviser to Russian President Vladimir Putin, made a bold claim that the US is preparing to use crypto to wipe out its massive $35 trillion national debt.”
You’ve probably heard about this “plan,” as have I, as have I, oh my. “Is this the real life? Is this just fantasy?” Let’s find out.
US Economy for Dummies
So, the home of the free and the land of the brave has 35 trillion reasons to be creative. Or, is it $37T of debt? It doesn’t matter. The situation is so bad that you’re free to guess. Here’s the interesting part. Let’s do hocus pocus, and the US debt will be trapped in stablecoins, like a genie in a bottle. Then, something called devaluation is going to happen, and America will get a fresh debt-free start. Or, is it better to say - restart?
The national debt has doubled in the last ten years. Mr. Dollar has lost a lot of weight during the same time.
Can the US say to the national debt collectors: Hey, how about stablecoins instead of dollars? I wanted to write articles to pay off my mortgage instead of Euros. My bank wasn’t full of understanding. So, is this really doable?
Well, technically and financially speaking, the GENIUS Act is already a thing. The catch is that behind every stablecoin, there has to be a dollar to back it up. There are quite a few additional things about compliance and this and that, but the 1:1 “golden” ratio is the most important one. Is this a good or a bad thing?
My price isn’t fixed, and my feelings are mixed. I guess it’s nice to get a crypto participation trophy from the highest place. At the same time, I have this we-are-in-this-together creepy feeling. That’s my dramatizing of a scene where a dollar is hugging stablecoin(s) and whispering these words by pulling everybody down.
Wait? Where’s Bitcoin? “Senator Cynthia Lummis said in May that Bitcoin “is the only solution” to the US’s $36 trillion debt. She promoted the BITCOIN Act, which urges the government to buy 1 million Bitcoin in the next five years and hold it for 20 years.” Sounds like a plan. Is it enough?
“Michael Saylor has proposed that the United States government acquire up to 25% of Bitcoin's total supply.” I don’t know about you, but my head hurts from this game of big numbers.
Talking about the Russians, who’re using the crypto reset story as a scarecrow, weren’t they triggered the reset of the global reserve currency? The New Kids On The Block, also known as the BRICS, aren’t particularly dollar-friendly. So, why should Putin worry about what Trump does in his free crypto time?
I was going through the transcript of Kobyakov’s speech about the US crypto reset conspiracy. One line caught my eye: “As in the 1930s and the 1970s, the US plans to solve its financial problems at the world’s expense.” I don’t know what the US did during and after the Great Depression at the world’s expense, but I remember that the star of the first gate, Watergate, loosened up the whole stick-to-gold dollar situation. We can argue whether or not the world pays for America’s plays, but if the US hits the pause button, the music stops all over the globe.
Why bother with all these plans and conspiracy theories when the most powerful country in the world, from a military perspective among others, can simply say, forget about it? We owe you nothing. America could F-bomb the world. If anyone complains, the real bombs could get into play. Not to mention A-and-AI-bombs. But, that’s not how the countries work. There’s a saying that you can do whatever you want, but not as long as you want. Something along those lines. I tried to ignore my mortgage, and I lost my home. America could try to be creative with its debt, but it could risk the whole country.
What If the Crypto Reset Works?
Writing about the economy is exhausting. It’s no wonder I studied law. When I said that the ratio between dollars and stablecoins is and should always be 1:1, I forgot to mention Treasury securities. “A thriving stablecoin ecosystem will drive demand from the private sector for US Treasuries, which back stablecoins. This newfound demand could lower government borrowing costs and help rein in the national debt.” This sounds great. So, the debt problem is solved. Well, there’s a catch.
You can print money. You can’t print Bitcoin, but you can “flex” stablecoins. The more the better, at the moment. The whole stablecoin don’t worry story is based on two surprisingly simple presumptions. The first one is as old as time. You should be able to get dollars for your stablecoins when you want. Yup, the good old conversion. The second one is more about preferences. Nobody knows what’s going to happen with the popularity contest that includes stablecoins. It’s all a matter of perspective. We can say that we live in an era of stablecoins, but the fact is that credit transactions aren’t giving up. The ratio of transactions (monthly) is 1:100 in favor of Visa over stablecoins.
This situation can change. What if something goes wrong? Terribly wrong. If “stablecoins are secure because they’re backed by US Treasury securities,” then who’s going to have the Treasury’s back? Uncle Sam, you say. That’s the problem. Stablecoins are an opportunity, but also an additional risk for the Treasury market.
Everybody likes to play. Nobody likes to pay. But, someone will eventually have to do it. The US taxpayers or the world, or both. Crypto is an invaluable concept to be compromised by some creative national debt evasion solution, regardless of how doable it is.