Read on Twitter
Listened to the full interview because I think Michael is an honorable person and smarter than me, so when he sees an iceberg dead ahead from his lookout post that I don't, I take a few days and dive into it, notes are below https://twitter.com/profplum99/status/1343043910944243713
@HiddenForcesPod and @rohangrey did a great job on the interview
I have different values than Rohan, but I respect the sacrifice he made leaving his home for the US
You only do that if you deeply believe in what you are doing
I know, spent a decade overseas
I have different values than Rohan, but I respect the sacrifice he made leaving his home for the US
You only do that if you deeply believe in what you are doing
I know, spent a decade overseas
My goal isn't to focus on differences, but instead on the ven diagram where I think Rohan's and Michael's concerns overlap
Namely the systemic risk which will be posed in the future by allowing companies to issue digital stablecoins outside of federal banking deposit regulation
Namely the systemic risk which will be posed in the future by allowing companies to issue digital stablecoins outside of federal banking deposit regulation
I used to think of US dollar stablecoins as a solution in search of a problem, no doubt this view was shaped by being an American with access to dollars
Would bet most Americans feel the same, and don't pay much attention to it, even those involved with bitcoin
Would bet most Americans feel the same, and don't pay much attention to it, even those involved with bitcoin
Then @RaoulGMI said dollar stablecoins are the 21st century eurodollar equivalent, and I did a deep dive on that because I never thought too much about how dollars got from the US to foreign banks or realized how big the eurodollar market is ($14 trillion)
Eurodollars are a rabbit hole in and of themselves, so when Rohan and Michael are trying to warn people that we absolutely do not want to let private companies build another eurodollar market in stablecoins, it is hard to understand why that would be a global threat
The very short version of why the eurodollar market exists (dollars outside the United States) is for trade, first as part of the Bretton Woods Agreement in 1944 then after the gold window closed in 1971, underpinned by oil for dollars from 1974 onward
Billions of people's lives improved using the dollar for global trade, so what is the problem with the eurodollar market?
It requires US dollars to function but is not regulated by the US, and during times of global uncertainty, the US has to backstop it or markets melt down
It requires US dollars to function but is not regulated by the US, and during times of global uncertainty, the US has to backstop it or markets melt down
In effect, world trade and global markets are now at the mercy of eurodollars being available when needed
Which is why the US Fed extends swap lines
Send dollars to every corner of the earth in order to keep global trade from seizing during times of market stress
Which is why the US Fed extends swap lines
Send dollars to every corner of the earth in order to keep global trade from seizing during times of market stress
So if the eurodollar market requires the US to backstop during times of uncertainty why use it?
It is the best we've come up with so far
Read Lords of Finance and When Money Dies, the world without a flexible global trade currency wasn't a pleasant place for a lot of people
It is the best we've come up with so far
Read Lords of Finance and When Money Dies, the world without a flexible global trade currency wasn't a pleasant place for a lot of people
So the eurodollar market has grown into a huge unregulated US liability at $14 trillion, and takes ever increasing amounts of dollar liquidity from the central bank of the sole superpower to stabilize world markets during times of uncertainty
Not sure what a better solution is to the current eurodollar market, but think Rohan and Michael have a valid point seeing stablecoins built by private companies and not wanting to fall under federal deposit regulation as an emerging threat instead of a positive solution
Dollar backed stablecoins are not a systemic threat now, what happens when yield curves are built out and instead of a $14 trillion market like eurodollars they are a $25 trillion market as anyone with a cellphone now holds them and everyone looks to the Fed when things go wrong?
Rohan didn't get into this, but I can see the MMT connection from here. If dollar backed stablecoins want to stay unregulated, but rely on Fed backing like eurodollars, why not just go direct, everyone has an account at the Fed and cut out the billionaires and banks all together?
I don't want that world either, but when the flow of eurodollars stopping is enough for the US Fed Chairman to say his "QE Infinity" safe word, letting big tech build eurodollar 2.0 even bigger, faster, with no privacy or accountability is an existential threat
Big tech and social media already act as a law unto themselves while driving engagement at the cost of our humanity
Does anyone honestly think letting them build eurodollar 2.0 - instant, no privacy, and making billions while Fed and military backstops them is a good idea?
Does anyone honestly think letting them build eurodollar 2.0 - instant, no privacy, and making billions while Fed and military backstops them is a good idea?
I agree with Rohan and Michael
After being blown up in Afghanistan and watching houses go up 500% while overseas, am well acquainted with the receiving end of socialized losses
Allowing unregulated stablecoins to grow into eurodollar 2.0 is a mistake
After being blown up in Afghanistan and watching houses go up 500% while overseas, am well acquainted with the receiving end of socialized losses
Allowing unregulated stablecoins to grow into eurodollar 2.0 is a mistake
Suggest listening to the interview, they covered a lot of ground, also found the thought of a dollar being a dollar important vs the value of what a dollar can buy to be interesting, always opportunity to grow wealth no matter what is happening in the world
