SnakeEyes

Now the chief concern is how Washington keeps flooding the market with debt. In order to fight this tariff wa r and industrial war with China, the US will have to borrow money to essentially buy commodities. Now, thanks to Trump's tariffs, prices have gone ballistic, hitting nearly $5,000 a ton. They'll keep buying up commodity companies whose cost of production is elevated. It means the spending or issuance of bonds is not going to stop. Now in Q3, the US borrowed over a trillion dollars or issued a trillion dollars worth of bonds. In Q4, Besson will issue 570 billion more. Now, if he was willing to give Argentina a $40 billion bailout to block China, we best believe he won't stop spending. In other words, the US is borrowing money from the world to buy up commodities. The traditional way of borrowing money for 10 to 30 years through long-term bonds is simply not possible. So, issuing more long-term bonds is near impossible. It will push the 10-year yield well above 4%, which will doom every single borrowing rate in the US. Now, despite the market asking Besson to issue longerterm bonds, he simply can't. He dodged the question and only hinted at gradual adjustments to issue long-term bonds. We will continue issuing more short-term bills because there's no other alternative left. Today, T bills or short-term debt makes up over 20% of the entire market. This is extremely risky and locks Besson into an issuance trap. For the U.S.A. They just refinance the debt by issuing a new 10-year bond. So, the crisis is 10 years away. But if all your debt needs refinancing or payment every 30 days, you are in big trouble. Basically, will there be any suckers or clowns around the corner willing to buy US bonds? The underlying asset of the bonds, the currency itself will be worth much less.

It tells you how Scott Besson is trapped and why he needs to find a way out of this mess. Every four weeks, the Treasury will have to convince the market to lend them $600 billion more to keep the shell game going. The real threat is the refinancing volumes, the quantity of money. Over time, this amount is going to grow to a trillion dollars. How is the US going to find buyers every week or every month to get the money? Even Japan could buy less if every week the Treasury hits a funding crisis. The dollar could continue to fall. He's hoping for the tariff war to reverse the fortunes of the US economy. I I think we are going to see a substantial acceleration in the economy in the first second quarter and I think we are als we're already s seeing on many prices uh you know as as I said we're bending bending that curve down and the increase in real incomes I think Americans are going to feel it in Besson is back pitching the idea of stable coins saving the US Treasury market. Now, according to Besson, stable coins will grow 10fold and this will lift demand for US treasuries. He believes the stable coin market will grow to $3 trillion and as a result there will be an explosive demand for US bonds as a result. But before we continue, let's quickly define what the stable coin is. Now stable coins are cryptocurrencies designed to hold a steady value. So the value of the coin won't change and because it is tied to the dollar, it has to be backed by an asset. Now Scott Besson wants that asset to be US treasuries. In fact, stable coins only buy short-term T bills. If they don't, the coins can literally implode.

He will get a good excuse to issue more T bills to relieve pressure or long-term bonds. Coins could end up being one of the largest buyers of US treasuries or T- bills. So all of a sudden if you are using a stable coin in Nigeria that's backed by the US dollar. I think there's a very good chance that crypto is actually one of the things that locks in dollar supremacy. The world, especially those that are banked, will rush in and dump all their currencies for US dollar stable coins. Now, the argument is that the world would just rush to transact in the coins. But let's really understand why Besson's argument collapses on itself. Now, stable coin buyers are not structural or dependable buyers. Central banks and commercial banks are stable coin buyers are also heavily impacted by the crypto markets and Bitcoin. If we get a crypto meltdown, it will most definitely impact stable coin holders. We get the dollars to pay back stable coin holders. We could have the exact opposite effect of what Scott Besson wants. He desires a constant demand stream for US bonds. But stable coins are risk on money. At least many central banks today hold their bonds to maturity or they are simply too scared to dump all their holdings. But stable coin users don't really care. Should a mass dump happen, we could have short-term yields suddenly spike up. Then hundreds of billions of dollars monthly will face a big refinancing crisis. Even if rates are slammed down to zero, it could spike up above 1 or 2% in a hurry. The US Treasury market will be dependent on crypto cycles, which is absolutely insane. Another problem is the size of the stable coin market relative to the debt and deficits of the US government. There just aren't enough stable coin users around. The current stable coins Ted and USDC have around 260 billion in coins floating. Even if we 10x demand and assume a 100% reserve ratio, you have 2.6 trillion in demand for US bonds. The US needs to issue around 2 trillion per year in deficits. Unless stable coins keep growing by $2 trillion a year and more, it will be quite meaningless. And this vortex is only going to grow thanks to the trade war and the AI bubble. We still haven't talked about the threat of sanctions as stable coins can be indeed punished. Scott Pess can always force issuers to freeze wallets associated with a particular country or restrict redemptions. Now, as long as you hold on to any dollar asset, you are at risk. So I can't possibly see the fastest growing region in the world which is bricks adopting stable coins to any serious degree. In reality real demand for US bonds is collapsing. Central banks the real structural buyers are not adding as much anymore. As a reserve asset gold has exceeded treasuries 4.7 trillion versus 3.9 trillion. This is where the real structural demand is. Gold buying is not going to vanish. Stable coins, however, is a coin horse at best.