The Fed's intervention in funding markets, while not officially labeled Quantitative Easing, directly helps the Treasury finance its debt, effectively monetizing it and providing critical liquidity to markets.

The U.S. is approving stablecoins for a strategic reason: they require reserves, which must be U.S. treasuries. This policy creates a massive, new, non-traditional buyer for government debt, helping to finance enormous and growing fiscal deficits with a structural source of demand.

Politicians will continue running large deficits as long as the bond market tolerates it by keeping interest rates low. The ultimate correcting mechanism for government spending isn't political discipline, but the bond market's impersonal decision to raise rates, forcing fiscal responsibility.

Manny Roman argues that debt-to-GDP is an incomplete metric for debt sustainability. He suggests comparing national debt to total household savings, which reveals a vast, taxable pool of private wealth in countries like the US and Japan. This lens makes current high debt levels appear more manageable.

To extend the solvency of U.S. debt, create a one-to-one stablecoin backed by treasuries. This would grant global citizens, particularly in countries with unstable currencies, a direct way to save in a dollar-denominated asset. This new demand could lengthen the runway for U.S. fiscal policy.

Historically, citizens accepted exceptionally high tax rates when they felt a deep sense of patriotism and belief in their country's greatness. Eroding this national narrative makes unpopular but necessary fiscal policies nearly impossible to implement.

By making T-bill-backed assets easily accessible to retail investors worldwide via smartphones, stablecoins could unlock a massive new pool of capital. This would create trillions in indirect demand for US Treasury paper, helping to finance US debt at lower rates while simultaneously advancing US geopolitical goals.

With debt-to-GDP at 130%, the implicit policy is to use inflation to devalue the debt burden. This is becoming explicit, with proposals like using tariff money for direct stimulus checks. This strategy favors risk assets and creates a 'full on euphoria tech bubble' if real yields go negative again.

Citing the 1940s playbook, future administrations may force the Fed to fix interest rates at low levels. This makes government borrowing cheap, enabling massive spending to revitalize industry and defense, similar to how war efforts were financed.