The second clause of the document is devoted to \u201cpromoting and protecting the sovereignty of the US dollar, including through actions to globally facilitate the development and growth of regulated, dollar-backed stablecoins\u201d.<\/p>\n
This is reinforced by a ban on all forms of development and promotion of a central bank digital currency (CBDC). Together the two points signal an intent to clear the way for private stablecoins whose issuers buy up US Treasuries.<\/p>\n
Elsewhere the order offers no clear guidance on other cryptocurrencies, including bitcoin. Although digital gold was clearly a flagship of campaign rhetoric, it is not singled out in the final document.<\/p>\n
Nixon\u2019s example<\/h2>\n
To understand the logic of Mr Trump\u2019s team, recall 1971, when US president Richard Nixon ended the dollar\u2019s link to gold. The American leader took such measures because of a relentlessly growing budget deficit and the colossal outlays<\/span> on the Vietnam war.<\/p>\n Despite the \u201cNixon shock\u201d, the dollar was preserved as the global currency for international settlements. Abandoning the gold standard allowed the government to print virtually unlimited quantities of money.<\/p>\n Ending the standard aggravated a powerful crisis in energy markets. In 1973 Arab states triggered it by imposing an embargo on oil supplies to countries that supported Israel in the Yom Kippur War<\/a>. By 1974 prices for black gold had risen roughly sevenfold, and by the end of the decade twentyfold.<\/p>\n Already in 1973 the term \u201cpetrodollars\u201d appeared, denoting the particular importance of the US currency in energy trade: the whole world needed oil, and it was being sold only for dollars. That gave the United States room to issue unlimited amounts of debt for which there would still be a queue.<\/p>\n Things spun out of control during the covid-19 pandemic. Since then US public debt has been steadily increasing by several trillion dollars a year. In parallel, demand for Treasuries has fallen as some market participants turn to alternative settlements. America\u2019s leadership is facing economic problems reminiscent of 1971.<\/p>\n The key task for the government now is not to shrink public debt, but to raise demand for new obligations. And if you recall that Tether ranks among the top 20 largest buyers of US government debt, which it uses to issue USDT, the picture looks most convenient. Now the authorities of the world\u2019s biggest economy say plainly that they support stablecoins around the globe\u2014on one condition: that they are backed by dollars.<\/p>\n Of course, this is not quite the petrodollar of the 1970s, but the correlation is certainly there. Especially if you look at inflation, which rose from the 1960s to the 1980s after long years of stability following the second world war.<\/p>\n Officials, however, say this time is different. For example, former Federal Reserve chairman Ben Bernanke noted<\/a> that today the American central bank has sufficient independence to take strategic decisions based solely on economic data, not short-term political considerations.<\/p>\n With Mr Trump\u2019s return, however, the Fed may find itself highly dependent on officials. The US president has already said<\/a> he understands monetary policy better than those who set it.<\/p>\n \u201cI will demand an immediate reduction in interest rates,\u201d Trump said on January 24 at the World Economic Forum in Davos.<\/p>\n<\/blockquote>\nOil, stablecoins, inflation<\/h2>\n
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