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Planning lower taxes and higher military/homeland security spending with the U.S. federal debt already a bubble, the Trump Administration continues to face the potential of a reignition of inflation and a renewed spike in interest rates. “Crypto to the rescue” is a “remedy” that could only be thought of by a “government of billionaires.”

The United States Financial Stability Oversight Committee (FSOC), in its 2024 Annual Report issued Dec. 6 said: “As the Council has stated over the last several years, stablecoins continue to represent a potential risk to financial stability because they are acutely vulnerable to runs absent appropriate risk management standards.” In fact, in 2022, TerraUSD, then stablecoin number-2 in size, “broke the buck” and crashed to $0.09. Another stablecoin, called USDCoin, “broke the buck” in 2023 because it was linked to Silicon Valley Bank and Signature Bank, both of which suffered runs and had to be sold off with FDIC bailouts. Tether, by far the biggest stablecoin, itself paid $41 million to settle with the Commodity Futures Trading Commission in 2021, that it had falsified its reserves of hard currency assets backing its “stability.”

Tether, as the FSOC pointed out in its report, has still not had any third-party audit of its claimed $118 billion in assets and its liabilities: It and other stablecoins “publish attestations … that include limited or no information on their custodians, counterparties, or bank account providers. Attestations … differ in what they disclose, making period-to-period and issuer-to-issuer comparisons difficult. There is also no assurance that these types of attestations comply with auditing standards.… If Tether continues its alleged current rate of Treasury purchases, it could become a significant holder of U.S. Treasuries and could present risks to the stability of the Treasury market if it [Tether] experienced a run.”