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

Key Concepts

• Economic Statecraft: The prioritization of national interests and geopolitical goals over traditional macroeconomic policy, driving US economic strategy.
• Dollar Stablecoins as Geopolitical Tools: The potential use of US dollar-backed stablecoins to reinforce dollar dominance, circumvent traditional financial institutions, and direct capital flows.
• Disruption of the Eurodollar System: The possibility of stablecoins inducing a “Eurodollar squeeze” by reducing FX reserves and incentivizing further stablecoin adoption.
• Potential for Global Financial Fragmentation: The risk of a fractured global financial system with competing currency blocs (US dollar/stablecoin vs. gold-backed).
• Shift in Fed Independence: The perceived subordination of the Federal Reserve to the Treasury Department under the current administration.

Macroeconomic & Geopolitical Landscape (February 2026)

As of February 18th, 2026, the macroeconomic snapshot reveals a mixed picture. The S&P 500 was down 86 basis points to 68,881, trading within a range above support. The US Dollar Index rose 96 basis points to 97.72, while WTI Crude Oil (March contract) increased 65 basis points to $65.05, driven by geopolitical tensions. Conversely, Gold (April contract) fell 175 basis points to $5,09, and Copper (March contract) dropped 268 basis points to $5.80. Uranium (February contract) saw a slight increase of six basis points to $88.75. The US 10-Year Treasury Yield decreased nine basis points to 4.08%, nearing the 4% level. Key upcoming data releases include the Core PCE price index, PPI inflation numbers, and Nvidia earnings. Approximately 80% of US bank loans do not go into productive capital investment.

The Rise of Economic Statecraft & the Reshaping of US Policy

Traditional macroeconomic analysis is becoming increasingly irrelevant, superseded by “economic statecraft” – a deliberate reshaping of the US economy and its global position prioritizing national interests. This shift involves a strategic subordination of the Federal Reserve to the Treasury Department, exemplified by the appointment of Kevin Worsh as Fed chair, chosen for loyalty to the administration and ties to Scott Besson rather than conventional monetary policy expertise. This is not a new phenomenon, as the Fed’s independence has always been intertwined with statecraft, particularly during wartime, with a primary function of maintaining high asset prices to attract foreign capital.

Leveraging Stablecoins for Geopolitical Advantage

A central thesis is the potential for the US to leverage dollar-backed stablecoins as a powerful instrument of economic statecraft. This could involve incentivizing foreign investment in specific US sectors, controlling capital flows, and bypassing traditional financial institutions. The proposed transaction flow involves local currency being exchanged for stablecoins, a central bank swap for dollars, dollars invested in US Treasury bills, and finally, the stablecoin reaching the individual. This process could disrupt the existing Eurodollar system, potentially creating a “Eurodollar squeeze” in countries reliant on it. Latin America is identified as a prime target, given widespread distrust in local currencies and limited access to USD. Chile is specifically mentioned as a country with demand for US dollar savings despite access restrictions. A potential business venture involving Don Jr. suggests a political dimension to this strategy.

The Potential for a Fragmented Global Financial System

The introduction of dollar-denominated stablecoins could lead to a fragmented global financial system, with competing currency blocs. A US dollar/stablecoin bloc could emerge alongside a potential gold-backed bloc led by China and Russia, resulting in limited trade and clearing between these blocs, reminiscent of the Cold War era. The speakers question the logic of investing in gold when a readily accessible, dollar-denominated alternative (stablecoins) exists, especially if backed by US Treasury bills.

Market Implications & Upcoming Catalysts

Nvidia’s upcoming earnings report is a critical event for the semiconductor sector and the broader market, potentially dictating the next leg of the market’s direction. Nvidia constitutes 20% of the Semiconductor ETF (SMH). The US midterm elections introduce uncertainty, with a Democratic sweep potentially increasing political pressure on the administration and a Republican hold emboldening more aggressive economic policies. Technical analysis of copper reveals key support/resistance levels, while a recent correction in precious metals (gold and silver) followed the Worsh nomination. Fibonacci retracement levels (61.8% & 38.2%) are being monitored as potential support/resistance points. The MAG 7 companies remain significant players in the market.

Conclusion

The discussion highlights a significant shift in US economic policy towards “economic statecraft,” with dollar-backed stablecoins emerging as a potentially powerful tool for reinforcing dollar dominance and reshaping the global financial landscape. While the strategy faces resistance, particularly from Europe, the US possesses significant leverage. The potential for a fragmented global financial system and the disruption of the Eurodollar system are key concerns. Market participants should closely monitor upcoming data releases, Nvidia’s earnings, and the outcome of the midterm elections, as these events will likely shape the trajectory of the global economy and financial markets. The overall tone is one of cautious optimism tempered by significant geopolitical and economic uncertainty.