MacroVoices #520 Michael Every: USD Stablecoins in The Age of Economic Statecraft

Key Concepts

• Economic Statecraft: The US is shifting towards using economic tools, particularly stablecoins, to achieve geopolitical objectives.
• Reshaping the Federal Reserve: The Fed is expected to become subordinate to the Treasury, prioritizing statecraft over traditional monetary policy.
• Dollar Stablecoins & Global Influence: US dollar stablecoins could facilitate “digital dollarization,” attracting capital flows to the US and potentially disrupting existing financial systems.
• Fragmented Global Financial System: The emergence of competing currency blocs – a US-led stablecoin block and a potential gold-backed bloc – is a significant risk.
• Disruption of the Eurodollar System: Stablecoins could drain dollars from foreign economies, creating a “Eurodollar squeeze” and increasing their appeal.
• AI & Market Volatility: Artificial Intelligence is a growing source of market uncertainty and potential investment opportunities.

Economic Statecraft & the Future of the Federal Reserve (February 19th, 2026)

The discussion, recorded February 19th, 2026, centers on a potential paradigm shift in US economic policy, moving beyond traditional monetary policy focused on inflation and employment towards “economic statecraft.” This involves strategically utilizing economic tools to achieve geopolitical goals, with US dollar stablecoins identified as a potentially revolutionary instrument. The appointment of Kevin Worsh as Fed Chair is viewed not as a hawkish or dovish decision, but as a strategic one based on loyalty to Trump and close ties to Scott Bessent, signaling a reshaping of the Fed’s role. The Fed is envisioned as transitioning from an independent entity to an instrument of economic statecraft, working under the direction of the Treasury.

The S&P 500 was down 86 basis points to 68,881, the US Dollar Index was up 96 basis points to 97.72, March WTI Crude Oil was up 65 basis points to $65.05, April Gold Contract was down 175 basis points to $5,09, and the US 10-year Treasury Yield was down 9 basis points to 4.08% as of February 18th, 2026. Approximately 20% of US bank loans go into productive capital investment.

Leveraging Stablecoins for Dollar Dominance & Systemic Disruption

The core argument revolves around the potential for the US to leverage stablecoins to reinforce dollar dominance, particularly appealing to countries with distrust in their own currencies and restricted access to USD. This would involve a direct relationship between individuals and the US government/banking system, bypassing traditional intermediaries. Don Jr.’s potential business venture was mentioned as a possible vehicle for this. The introduction of dollar-denominated stablecoins could disrupt the existing Eurodollar system, with local currency being exchanged for stablecoins, leading to dollars being “sucked out” of foreign economies and replaced by stablecoins. This reduces FX reserves and potentially creates a “Eurodollar squeeze,” making stablecoins even more attractive.

A detailed transaction flow was outlined: local currency -> stablecoin issuer -> central bank swap for dollars -> US Treasury issues T-bill -> stablecoin to individual. This process could attract capital flows back to the US, funding Treasury debt at lower rates. The strategy is seen as potentially beneficial for Trump politically, particularly in Latin America, potentially shifting voting patterns among immigrant communities. The segment highlighted the widespread distrust of local currencies in Latin America and the preference for holding US dollars, with restrictions on accessing USD accounts driving the appeal of stablecoins.

Gold, Bitcoin & the Potential for a Fragmented Financial System

The discussion contrasted the current enthusiasm for gold as a safe haven with the potential for dollar-backed stablecoins to fulfill a similar role, arguing that stablecoins, backed by US Treasury bills, offer a more direct and potentially more effective alternative. However, a key concern is the possibility of a fragmented global financial system, with competing currency blocs – a US-led dollar stablecoin block and a potential gold-backed block (potentially led by Russia and China). This would lead to limited trade and clearing between the blocs, reminiscent of the Cold War era.

Bitcoin was mentioned as a potential alternative, with the US potentially directing those who resist dollarization towards it, though its current performance raises questions about its viability. The segment also touched on technical analysis, referencing Fibonacci Retracement and Stochastics. The June 15th, 2026 6E euro futures contract was trading around 11850, and the April 3rd, 2026 120x 122 bull call spread costs spot 0030 or about $375 per contract.

AI, Market Volatility & Concluding Thoughts

The increasing impact of Artificial Intelligence (AI) was identified as a significant source of market volatility, independent of Trump’s policies, creating uncertainty and potential investment opportunities. The discussion concluded with a sense of anticipation regarding the implementation of these policies and the potential for significant disruption in financial markets and the global economic order. The segment suggests a radical departure from traditional economic thinking and a willingness to embrace unconventional strategies to achieve US strategic objectives, challenging the traditional notion of Fed independence and questioning the relevance of traditional economic metrics like GDP. The US is presented as strategically considering using stablecoins to reassert financial dominance and counter perceived corruption globally.