31 sats \ 7 replies \ @Undisciplined OP 13 Aug \ parent \ on: Tether's Circle of Death econ
These aren't my views, unless I'm Matt Krattert in disguise. They are the video description.
To your first point, there is a perception around the world that transacting in other currencies gets you overthrown; a la Gadhafi or Hussein. True or not, that's a far cry from legitimate demand.
To your third point, I get that it's a small share of the total debt, but they auction bonds in the hopes of people buying them, so this is clearly aiding that effort. Perhaps it's of an insignificant magnitude at the moment, but that can change.
My bad I misread your comments! I am at work was I was only able to read what you had said and I had written recently about this very thing since Tether owns more Treasuries than Germany for example.
For every Gadhafi, there is also India which has long played the game of using its own currency for trade with Russia even during the Cold War. China and Saudi have also done the same off and on but the issue remains that they are much more volatile compared to the USD so esp. for international trade it is a safer bet to go with the stable one.
US debt/treasuries are an interesting issue because still the US Public owns as of Jan 1 of this year 79% of them. Now its not the public as you would think but below is a breakdown. Could it be an issue in the future of course but I think we have much more pressing needs to be addressed
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I agree with you that there is a lot of organic dollar demand, from other countries managing their currencies even more poorly than the Fed does.
My preference would be that no one lend to the state, because I think they generally use those resources to make the world worse. If the video is somewhat hyperbolic, that is still the basic point.
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As someone who works for the state I can tell you the state is way way to big at the moment. There are numerous issues that if you had at your company you would either be fired or go bankrupt. By far the biggest one in my eyes is how there is currently a fight going on over clawing back unused COVID funds. Republicans want to use these unused funds that are sitting around for various other things while Dems are stonewalling so the government is having to take out even more loans to be able to do pretty basic crap. It is wild and annoying as all get out.
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I'm curious if you expect to see financial regulations, at some point, that will require large public funds (like pensions or university endowments) to hold some minimum amount of treasuries. That seems like an obvious place to look to temporarily prop up this debt situation.
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I am not sure if we will see regulation to require it so to speak. Currently a ton of retirement funds hold these already and continue to purchase them. They are the target funds that people will by or that their 401k automatically puts money into for when you target to retire.
Its my belief that that already serves to prop it up as it is. Stablecoins are just another avenue to find a place that is hungry for them. It will be interesting though that as the working force shrinks how it will affect US bonds because there might not be as much internal demand if that makes sense.
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That makes sense.
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There was also the rush last year for I bonds in October or November I think because they would pay out a minimum of I want to say 4% or so no matter if the Fed slashed it down to zero again or not. That created a Treasury surge for sure I remember reading the website crashed because of the demand.
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