March 12, 2025 (EIRNS)—Stablecoins have quietly become a tour de force in the global cryptocurrency market, representing more than two-thirds of the trillions of dollars worth of cryptocurrency transactions recorded in recent months. Unlike most private cryptocurrencies, which can often be subject to dramatic price swings, stablecoins are supposedly pegged 1:1 to less volatile assets, such as fiat currencies or commodities, in order to maintain a consistent, predictable value. But there is nothing that ensures such stability, other than the (unaudited) word of the private issuer of the stablecoin. The total market capitalization of stablecoins, including those backed by U.S. Treasury Bonds, has increased substantially, recently surpassing $200 billion.
The way this policy was “sold” to heads of state and and government was the toxic illusion that “money,” whether backed by a state or not, be it from dope, prostitution, speculation or gambling, creates waves of growth and that at the end of the day, wealth will “trickle down” to the population as a whole. And since crypto is not legal tender, it doesn’t explode inflation statistics.
There is a major historical precedent for such a policy: the rearmament of Germany in preparation for World War II. Weighed down by war reparations imposed by the Treaty of Versailles and living in fear of a return to Weimar hyperinflation, Berlin engaged in creative bookkeeping to meet the challenge.
A year after coming to power, Hitler appointed German banker Hjalmar Schacht as Minister Plenipotentiary for the “War Economy.” Anglo-American finance, whether it was the brothers John Foster and Allen Dulles in the United States or Montagu Norman, Governor of the Bank of England, knew Schacht’s inventiveness and gave him carte blanche to arm Germany in the perspective of a war against Russia. If Nazis and Bolsheviks could massacre each other in the East, it would be all profit for the City of London and Wall Street, they believed.
By creating the “Mefo Bills,” Schacht earned his title of “financial wizard.” In reality, Schacht was simply reviving an old trick tried and tested during the French Revolution. With no money, the French government had confiscated the Catholic Church’s property, whose resale was supposed to bring in fresh cash. But buyers were not forthcoming. In the meantime, the government paid its suppliers with “assignats,” IOUs it transformed into a temporary means of payment. Guaranteed by the French state, the suppliers could, in turn, use the assignats to settle their expenses. When it became clear that these were nothing more than scraps of paper, the assignat pyramid collapsed.
So, what did Schacht do in 1934? Under his instructions, the Reichsbank and four of the largest arms manufacturers (Krupp, Siemens, Gutehoffnungshütte and Rheinmetall), created a shell company called Metal Forschungsinstitut GmbH (Mefo), or Metal Research Institute. Instead of paying its suppliers in reichsmarks, this institution issued “Mefo bills” to pay its suppliers, who, in turn, could pay their own expenses in Mefo bills. The scheme worked because banks could rediscount Mefo bills with the Reichsbank at any time within three months of their first maturity. Thus, Mefo bills provided a balloon of oxygen for the war economy, perfectly outside the official monetary system.
