MORE KICKING THE CAN DOWN THE ROAD
MODERN METHOD OF EXPANDING DEBT
While many understand that the debt problem in the United States cannot be solved without a change in fiscal policy, a change requiring more responsibility, it seems the latest scheme is to finance more debt by the use of Stablecoin.
This law was passed in July 2025 and the idea is that those licensed to promote Stablecoin, big banks, will issue 1 Stablecoin for 1 dollar, not a real coin, but a digital entry for as many coins that one wants to purchase. It is in reality a digital coin or crypto currency that can be used to purchase items or services from anyone who is willing to accept them. Its positive is that it could allow users to skip using credit cards that has fees to the receiver in electronic transactions. I would expect the government will encourage it use and allow it to be used for government transactions.
These stable coins would be exchanged for dollars on demand from the issuer. The issuers would have to keep the reserves in dollars or U.S. treasury debt. The issuer would be able to profit by the interest earned on the assets held.
The plan is hoped to allow the U.S. to continue engaging in deficit spending by opening up a new approach for finding buyer for U.S. debt. Stablecoin buyers would provide the financing and the providers would earn the interest, at least as long as those payments can be made.
One wonders what may happen when debt is bought by the providers and suddenly many want to exchange their Stablecoins for dollars, thus requiring a sale of Treasury debt.
The other part of the plan is that it will require the use of dollars and also hope to prop up the use the dollar as an international currency.
Again, it is hoped to support the ability of the government to continue to engage in deficit spending that will continue to increase the debasement of the currency and hence a rise in inflation. It also hopes to encourage the demand for those increased dollars for use in the scheme rather than making the dollar a sound store of value.
Time will tell if this plan will be successful, while it does have the power and influence of the U.S. government to promote this, many are now aware of such ideas and it will become common knowledge around the world in a short time.
Sooner or later the debt crisis will need to be addressed, hopefully in a responsible and moral way. It seems no one is willing to endure the pain that responsibility may require and all efforts to kick the can down the road will just make solutions more difficult and more painful.