- Anthony Pompliano thinks turning to stablecoins could help the U.S. solve its debt crisis.
- The U.S. debt is not only getting bigger but is doing so at a faster rate.
- Stablecoin issuers use acquired deposits to earn yield by converting them into treasuries.
Anthony Pompliano, known for his outspoken views on Bitcoin, suggests stablecoins could address the escalating U.S. debt crisis by providing a reliable and expanding source of demand for U.S. treasuries.
Pompliano outlined the reasons behind his belief during an interview with Phil Rosen, co-founder of Opening Bell Daily.
Pompliano emphasized the factors contributing to the U.S. debt crisis, including the acceleration of the debt value. According to the investor, the U.S. debt is not only growing but is doing so at an increasingly rapid pace. This raises complications regarding who will purchase all of the debt.
The financial analyst noted that other countries, including China and Japan, have been buyers of U.S. debt. However, he observed a decrease in rates from some traditional buyers. Since the U.S. will not cease issuing debt, Pompliano believes the challenge is to find an alternative and suitable buyer.
Notably, Pompliano highlighted that stablecoin issuers have discovered, through free market economics, that the best way to monetize is to accept deposits from individuals who want stablecoins in exchange for the stablecoins. They then use the acquired deposits to earn yield by converting them into treasuries.
Pompliano considers the actions of stablecoin issuers crucial, noting that they earn interest from holding the treasuries and are not prone to selling off, unlike their institutional buyer counterparts who may sell the treasuries depending on interest rate fluctuations.
In essence, Pompliano argues that the U.S. government seeks net new demand for its debt, but not demand that is interest rate sensitive. According to him, stablecoin issuers are interest rate insensitive, making them an ideal potential solution to the U.S. debt problems and the type of net new demand the government desires.
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