The GENIUS Act — My analysis. This bill is a big deal. [What I think many people are missing.]

When you deposit money in a bank, much of it gets lent by the bank to the US government in the form of purchasing US treasuries. The bank then sits on those treasuries and earns some interest when the treasury matures.

The GENIUS act makes it so that now they will be able to use those treasuries as reserves to legally mint their own stablecoins, and they will definitely do so — it would be insane not to; they’re being given permission to mint stablecoins out of thin air. so it’s pretty much guaranteed to pump a shitload of bank-created stablecoins into the blockchain ecosystem, which will prop up bitcoin (and the rest of the market, too, but it’s looking like most of the smart money is going to bitcoin) in the same way that Tether currently does.

it’ll be massively inflationary on basically a global scale (it’s literally just banks who own treasuries now being able to magically [and legally] mint huge amounts of stablecoins out of thin air) but the synthetic money created by it will exert more inflationary pressure on crypto prices vs any other asset class (including goods and services) because it will exist on the blockchain — it’ll mostly be used to buy crypto, at least in the beginning. (eventually you’ll probably carry a credit card linked to your bank’s proprietary stablecoin, and vendors will accept that stablecoin. I think it’s entirely realistic that in 10-20 years it’ll be common for people to accept stablecoins in exchange for real estate.)

the trump administration is doing this because a) they know exactly what it’s going to do to crypto prices, so them and all their cronies are loading up on crypto, but more importantly b) banks will be massively incentivized to buy treasuries (instead of lending to home buyers and businesses) because they can print free synthetic money with those treasuries and do whatever they want with it (like, lend it out via DeFi or even just buy bitcoin)…so they get your money, buy treasuries with it and get interest from that, and then mint stablecoins and lend those out on DeFi and get interest from THAT, so it’s like they get to double-lend your money now…so it keeps the market for US debt strong, and thus interest rates on US debt low. The banks, in a sense, are going to bail out the government. (That seems to be what the govt is hoping for, anyway.)

That’s the grand plan to “solve” the US debt crisis without taxing wealth. It’s possible it’ll work. I kinda don’t think it will long-term because there’s a limit to how much deposits the banks can collect in order to keep buying treasuries…but whatever. Who knows. Society’s probably collapsing anyway in the next century IMO so what does it matter if we just let the global debt explode. Meh. I wish we could just fucking tax wealth and try to intelligently manage the global debt, but the billionaires don’t like that idea, so it won’t happen, so I guess we’re fucked. 🙁

it has the unfortunate effect that banks won’t want to lend to home buyers anymore, because buying treasuries and minting stablecoins out of thin air will be more attractive than lending to retail borrowers, so interest rates for houses will rise, while home prices are also rising due to the inflation caused by all of the synthetic dollars being minted. home ownership will be a distant dream for our children and grandchildren.

I’m not telling you with 100% confidence that this is exactly how things will play out. There could be legislation passed by future administrations that slow or halt the process I’ve described above. I could just be wrong in my analysis.

But it’s clear to me that some smart economists somewhere looked at the debt crisis, said to themselves “how do we solve this without taxing the rich”, came up with this plan, and convinced the trump administration (and the tech bros) that this is the way to go.

TBH, I’m scared shitless about what this scheme of theirs means for the world, and I don’t know exactly how it will all play out. But I do know that right now…I’m buying bitcoin.