MacroVoices #520 Michael Every: USD Stablecoins in The Age of Economic Statecraft
Michael Every discusses how the Trump administration is implementing economic statecraft through Fed restructuring and USD stablecoins. He argues that Kevin Warsh's Fed nomination signals a shift toward using monetary policy as a tool of economic strategy rather than maintaining traditional independence.
Summary
This interview explores the concept of economic statecraft under the Trump 2.0 administration, focusing on how monetary policy and digital assets are being repositioned as tools of national strategy. Every argues that Kevin Warsh's nomination as Fed chair represents a fundamental shift away from traditional central bank independence toward alignment with Treasury's economic statecraft agenda under Scott Besant. The Fed would become subordinate to Treasury's strategic objectives rather than maintaining its theoretical independence.
A major focus is the potential revolutionary use of USD stablecoins as instruments of economic statecraft. Every describes how these digital tokens, backed by Treasury bills, could create massive new demand for US debt while offering global users a way to hold dollar-denominated assets directly on their phones. This system would bypass traditional banking and could potentially dollarize much of the global economy, particularly in emerging markets where people distrust their local currencies. The stablecoins would be backed by T-bills, creating a flood of Treasury demand that could lower short-term borrowing costs for the US government.
The discussion covers geopolitical implications, including potential military action against Iran and how economic statecraft plays into midterm election strategy. Every suggests that Trump's radical policies create a high-stakes scenario where losing the midterms could result in impeachment and gridlock. The conversation also touches on how this new monetary architecture could fragment the global financial system into different blocks, similar to the 1930s, with some countries using USD stablecoins and others potentially developing gold-backed alternatives led by China and Russia.
Key Insights
- Every argues that Kevin Warsh was nominated as Fed chair primarily for loyalty to Trump and friendship with Treasury Secretary Besant, not for traditional monetary policy credentials
- The analyst claims the Fed will become subordinate to Treasury under economic statecraft, abandoning its theoretical independence to serve strategic national objectives
- Every contends that only 20% of US bank loans go toward productive capital investment, with 80% going to consumption or financial speculation
- The strategist argues that USD stablecoins could create trillions in new Treasury demand by allowing global users to hold dollar-denominated assets directly on mobile devices
- Every suggests that USD stablecoins could bypass traditional banking systems and dollarize emerging economies where people distrust local currencies
- The analyst claims that stablecoins backed by T-bills could lower US government borrowing costs while extending American financial influence globally
- Every argues that Trump's radical policies create a binary midterm outcome where losing Congress would result in impeachment and gridlock
- The strategist suggests that economic statecraft prioritizes reshaping the US economy over traditional market-friendly policies like rate cuts
- Every claims that early signs show US manufacturing pickup driven by domestic freight movement rather than imports, indicating successful reshoring
- The analyst argues that a stablecoin system could fragment the global financial system into competing blocks, similar to 1930s currency arrangements
- Every suggests that the US could use stablecoins to enforce capital controls and restrict transactions with adversary nations through digital mechanisms
- The strategist claims that precious metals declined on the Warsh nomination because markets misunderstood it as hawkish rather than recognizing the statecraft implications
Topics
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