Trump is discreetly utilizing two significant strategies to bypass the Federal Reserve.
Donald Trump has been working in a calculated manner to diminish the influence of The Federal Reserve by advocating for stablecoins and low-cost oil. According to Nigel Green, the CEO of a leading independent financial advisory firm, Trump’s approach to economic control involves more than just the widely publicized tariffs and trade disputes; it also includes overlooked strategies that grant him significant power.
Green highlights two key strategies that Trump is employing to maintain economic dominance and limit the Fed’s interference. Firstly, Trump is utilizing stablecoins and tokenized Treasuries to solidify the supremacy of the dollar on a global scale. By keeping interest rates low and enhancing the attractiveness of US debt to investors, stablecoins play a crucial role in Trump’s economic agenda. These digital assets, unlike traditional stablecoins, offer returns through tokenized Treasury bills, thus increasing demand for the dollar and US Treasuries internationally.
The second lever Trump is pulling involves driving down oil prices to maintain low inflation and robust growth. This is achieved through strategies such as boosting domestic oil production, applying diplomatic pressure, and manipulating markets. By suppressing oil prices, Trump aims to keep inflation in check and support economic expansion. Green characterizes these two strategies as essential components of Trump’s economic policy, referring to them as “digital monetary dominance” and “physical price suppression.”
In the realm of stablecoins, Trump views them as tools to fortify US financial supremacy. These assets enhance the demand for the dollar and make US Treasuries more appealing globally. Unlike regular stablecoins that retain their value, yield-bearing stablecoins provide returns, typically from tokenized Treasury bills. This innovative approach enables a broad range of users, including retail investors and DeFi platforms, to hold dollar-based assets that generate interest automatically, bolstering the Trump administration’s economic goals.
According to Green, the use of stablecoins aligns with Trump’s broader agenda in multiple ways. Firstly, it augments the demand for US debt, especially as the US deficit escalates and foreign central banks decrease their holdings. Secondly, by promoting stablecoins, Trump aims to avoid high-interest rates, a point of contention during his first term. By fostering a market where yield-bearing stablecoins produce decentralized yield, the Trump administration seeks to offer an alternative to conventional practices and maintain control over the economy.