Overview of Stablecoins - Stablecoins bridge the gap between crypto and the US dollar, becoming a key component of digital finance [1] - Unlike volatile cryptocurrencies, stablecoins are backed by reserves like cash or US short-term treasuries to maintain a fixed value [1] - Stablecoins facilitate movement between volatile assets within crypto markets without needing to cash out to banks [1] Functionality and Usage - Stablecoins operate 24/7 and offer quick settlement [2] - They are used for cross-border payments, digital commerce, and trade [2] - Stablecoins can generate yields when lent out on exchanges or decentralized finance platforms [2] - They provide a convenient option in countries with unstable currencies or limited access to US dollars [2] Market Domination and Regulation - Tether (USDT) and Circle (USDC) control over 80% of the global stablecoin market [3] - The majority of the backing for these coins is parked in US Treasury bills [3] - The US government encourages the use of stablecoins and has passed legislation creating guard rails for the industry [3] Impact on US Treasury Market - Stablecoin issuers have become major buyers of short-term government debt [4] - This creates new demand for treasuries and extends the reach of the US dollar worldwide [4]

Market Trends & Global Financial System - Investors are wary of longer-dated debt due to market volatility [1][4] - The financial system is repricing from a unipolar to a multipolar system [2] - Central banks are prioritizing financial stability over price stability, leading to higher inflation [3] Investment Strategies & Asset Allocation - Investors should consider hard assets like gold and private credit [3][4] - It's better to stay closer to home and position for upside in markets like equities or commodities [5] US Economic Outlook & Fiscal Policy - Tariffs won't generate enough capital to sustain the deficit [2] - The US may face austerity measures, including spending cuts, potentially starting in 2026 [2][5] - Voters are showing less tolerance for fiscal profligacy [6] - The US can continue spending at a clip of 6-7%, but eventually needs to find ways to fund the Treasury, cut spending, or depreciate the currency [7]