Post by @opulent.ventures

I think we have the answer on how the U.S is going to solve its $40 TRILLION debt problem...nAnd you're not going to believe how wild this is...nLet us explain in full detail...nHOW AMERICA SECRETLY SOLVES $40 TRILLION OF DEBT:nFirst, let's establish what the U.S. debt actually is:nImagine you have an enormous credit card balance that you NEED to add to every month, and you just can't pay it off because of your spending needsnThe interest on that payment just keeps growing with each passing cycle. One day you're paying $30 in interest, and pretty soon it's over $300nThat's exactly what's happening with the U.S. debt today, just on a hundred BILLION dollar scale...nSpending on Net Interest and Other Federal Programs, FY 2025 (billions of dollars)nNet Interest $970nNational Defense $917nMedicaid $668nVeterans' Benefits and Services $377nFood and Nutrition Services $148nTransportation $88nNatural Resources and Environment $69nSupplemental Security Income $45nInternational Affairs $42nScience, Space, and Technology $21nEnergy $0nSource: U.S. Department of the Treasury.nTreasury Secretary Scott Bessent just said there is a "very good chance" the fiscal deficit has already peaked.nOn the surface, that sounds almost impossible. Federal debt has now crossed $40 trillion, the government is still running enormous deficits, and interest on that debt is already costing around $1 trillion a year.nBut put four things the Trump administration is doing beside each other: Stablecoins, T-bills, Treasury buybacks, or lower interest rates.nAnd you have exactly how they're going to try to solve the debt problem... HERE'S HOW IT'S DONE:nCNBCnSTREAM CNBC+nU.S. 10 YEAR TREASURYn4.680%nYIELD CHG +0.027nSTEP #1: BUILD A MASSIVE NEW BUYER FOR SHORT-TERM U.S. DEBTnThis is where stablecoins become important.nThe GENIUS Act created a federal framework for payment stablecoins.nUnder the law, regulated issuers generally have to maintain at least 1-for-1 reserves using highly liquid assets such as cash, short-term Treasury securities, and Treasury-backed repo.nOld and New Forms of MoneynA range of digital tokens are trying to compete with fiat currenciesnFlat currencynCryptocurrencynStablecoinnAlgorithmic stablecoinnSo here's how it would play out: Someone wants digital dollars. The stablecoin issuer receives their money. Part of the reserve pool can then be invested in short-term Treasury assets.nThat means stablecoin growth can create another large source of demand for Treasury bills. Exactly what the government wants.nBessent has already talked publicly about exactly this relationship. He has said that as stablecoins grow, demand for Treasury bills should grow alongside them, and Treasury could adjust its issuance strategy if these changes in demand become structural.nTreasury Secretary Scott Bessentn@SecScottBessentn.@POTUS and Congress delivered the GENIUS Act, establishing a landmark framework and clear rules of the road for payment stablecoins, and Treasury is moving quickly to implement that framework.n@USTreasury welcomes input from stakeholders as we work to provide the regulatory certainty businesses need to innovate and grow in America, cement the role of the U.S. dollar as the world's reserve currency, and keep America the crypto capital of the world.n4:54 PM Aug 17, 2026 191.4K ViewsnSTEP #2: STABLECOINS GROW TO BECOME ENORMOUSLY POPULARnPer the government's directive, and with incentives, the stablecoin market eventually grows from a few hundred billion dollars into several trillion dollars.nThat would mean stablecoin issuers would collectively need an enormous amount of safe, short-term reserve assets.nNot all of that would represent brand-new Treasury demand. Some people buying stablecoins could simply be moving money out of money-market funds that already own Treasuries. But international adoption is where this becomes much more interesting...nStablecoinnUSDCnUSDTnFDUSDnPYUSDnSupplynJan 2019nAug 2019nOct 2020nDec 2020nFeb 2021nJul 2021nDec 2021nFeb 2022nJul 2022nDec 2022nFeb 2023nJul 2023nDec 2023nFeb 2024nJul 2024nNov 2024nDatenImagine someone in Argentina, Turkey or another country with an unstable currency wants to hold U.S. dollars.nInstead of opening an American bank account, they buy a regulated dollar stablecoin. The stablecoin issuer then holds the reserves supporting those digital dollars in safe assets, including short-term U.S. government securities.nYou just created a workaround for one of the most sought-after currencies in the world, along with being able to buy directly into the strongest country in the world...nTop 20 Countries by Adoption Rankingn(JAN-JUL 2025)nUnited StatesnMexiconBrazilnArgentinanVenezuelanNigerianUnited KingdomnUkrainenTurkeynEgyptnPakistannIndianThailandnKoreanVietnamnPhilippinesnIndonesianRussianJapannGlobal demand for dollars becomes stablecoin demand, and stablecoin growth creates demand for short-term U.S. government assets.nAmerica would not just be exporting the dollar. It would increasingly be exporting a digital dollar system that can also help finance the U.S. government.nThis is just the beginning of the strategy, so if you've made it this far, stick with me just a bit longer...nGLOBAL DEMAND FOR DOLLARSnBECOMES STABLECOIN DEMAND, WHICH CREATES DEMANDnFOR SHORT-TERM U.S. GOVERNMENT ASSETS.n1. GLOBAL DEMANDnFOR DOLLARSnPeople and businesses aroundnthe world demand stabilitynof U.S. dollars.nARGENTINAnTURKEYnNIGERIAnSOUTHEAST ASIAnINDIAn2. STABLECOIN SYSTEM GROWSnMay buy regulated dollar stablecoinsn(e.g., USDC, USDG, etc.) on trusted platforms.n$)nSTABLECOINSnDigital dollars 1:1 backed.nRESERVE REQUIREMENTnIssue a 1-for-1 reserve innhigh-quality liquid assets.n3. RESERVES CREATE DEMANDnFOR U.S. ASSETSnStablecoin issuers hold reserves innsafe, liquid assets including:nU.S. TREASURY BILLSn(3 MONTH, 6 MONTH, ETC.)nMORE STABLECOIN GROWTH =nMORE DEMAND FOR T-BILLSnAMERICA DOESN'T JUST EXPORT THE DOLLAR.nAMERICA EXPORTS A DIGITAL DOLLAR SYSTEMnTHAT ALSO HELPS FINANCE THE U.S. GOVERNMENT.nHelps finance the U.S. governmentnand supports dollar strength.nSTEP #3: THE TREASURY STARTS TAKING ADVANTAGE OF THE DEMANDnThe U.S. government currently borrows money across many different maturities. It sells 3-month and 6-month Treasury bills, but it also sells 2-year, 5-year, 10-year, 20-year, and 30-year debt.nLong-term debt gives the government certainty. If Treasury borrows money for 30 years at a fixed interest rate, that borrowing cost is locked in for decades.nA Treasury bill works differently. A 3-month T-bill matures quickly, meaning Treasury has to continually refinance it.nHOW THE U.S. GOVERNMENT BORROWSnTREASURY ISSUES DEBT ACROSS DIFFERENT MATURITIESnSHORT-TERM: TREASURY BILLSn3-MONTHnT-BILLnMATURES INn3 MONTHSn6-MONTHnT-BILLnMATURES INn6 MONTHSnMATURESnQUICKLYnTREASURY REFINANCESnOVER AND OVER AND OVERnLONGER-TERM: NOTES & BONDSn2-YEARnNOTEnMATURES INn2 YEARSn5-YEARnNOTEnMATURES INn5 YEARSn10-YEARnNOTEnMATURES INn10 YEARSn20-YEARnBONDnMATURES INn20 YEARSn30-YEARnBONDnMATURES INn30 YEARSnLESS CERTAINTY, BUT RATESnRESET FREQUENTLYnMORE CERTAINTY, LOCKS INnTODAY'S INTEREST RATEnFOR YEARS OR DECADESnTREASURY USES A MIX OF SHORT-TERM BILLS AND LONGER-TERM NOTES & BONDSnTO FINANCE THE NATION.nThink about the difference between a 30-year fixed-rate mortgage and an adjustable-rate loan that constantly resets.nNormally, you wouldn't want too much of your debt floating like that because it creates additional risk.nBut imagine Bessent believes interest rates are eventually going much lower.nSuddenly, shorter-term financing becomes much more interesting...nTHE CHOICE: HOW THE GOVERNMENT FINANCES ITS DEBTn30-YEAR FIXED-RATE MORTGAGEnLike Long-Term Treasury BondsnRATE LOCKED IN FOR DECADESn4.50%nINTEREST RATEnPayments stay the samenProtects against rate stabilitynProtects against rising ratesnCERTAINTY TODAYnLess flexibility, but no surprisesnADJUSTABLE-RATE LOANnLike Short-Term Treasury BillsnCURRENT RATEn4.00%nWILL RESET SOONnNEXT RESETn3 MONTHSnRATE RESETSnEVERY 3 MONTHSnCan go down quickly when rates fallnMore flexibility, but more risknPayments can fall as rates go upnOPPORTUNITY TOMORROWnPotentially much lower costs if rates fallnIF INTEREST RATES ARE EXPECTED TO FALL,nSHORT-TERM FINANCING CAN SAVE THE GOVERNMENT BILLIONS.nIf stablecoins and other investors create huge demand for Treasury bills...nThen the Treasury could gradually allow more of America's borrowing needs to be financed at the short end of the market.nNot all of it, and of course, not all at once, but enough to meaningfully change the government's exposure to interest rates.nMORE DEMAND FOR T-BILLSnLEADS TO MORE BORROWING AT THE SHORT ENDn1. HUGE DEMANDnFOR T-BILLSn2. TREASURY LEANSnSHORTERn3. EXPOSURE TO INTERESTnRATES CHANGESnSTABLECOINS, MONEY MARKETnFUNDS AND INVESTORS CREATEnMASSIVE DEMAND FORnSHORT-TERM TREASURIES.nTHE TREASURY GRADUALLYnFINANCES MORE OF AMERICA'SnBORROWING NEEDS AT THEnSHORT END OF THE MARKET.nMOREnLONGER-TERMnDEBTnBEFOREnNOT ALL AT ONCE, BUT ENOUGHnTO MEANINGFULLY CHANGEnRATE EXPOSURE.nMORE SHORT-TERM DEBTnAFTER (GRADUAL SHIFT)nLESSnLONGER-TERMnDEBTnLESSnSHORT-TERMnDEBTnMORE SHORT-TERM BORROWING TODAY =nMORE OF AMERICA'S DEBT REPRICES FASTER WHEN RATES FALL.nSTEP #4: REDUCE THE PRESSURE ON LONG-TERM TREASURY BONDSnAt the same time as all else, the Treasury can try to prevent the market from becoming overheated with 10-year, 20-year and 30-year bonds.nSo far this year, this is what's worried investors most. Deficits, inflation, and massive government borrowing mean investors can demand much higher yields to own long-term Treasury debt. That's what everyone's been shouting about all through August so far.nUS Long Bond Yield Hits Fresh Cycle HighsnCost of borrowing has surged in recent yearsnYield on 30-year US Treasuriesn6%n5%n4%n3%n2%n1%n2008n2010n2012n2014n2016n2018n2020n2022n2024n2026nSource: BloombergnThese yields are extremely important because they essentially run the entire U.S. economy.nWhen yields rise, like we've seen this year, mortgage rates rise, corporate borrowing becomes much more expensive, stock valuations get pressured hard, and the Treasury itself eventually has to pay more to issue new long-term debt.nSo how is pressure taken off these yields? This is where Treasury buybacks come into play...nWHEN BOND YIELDS RISE...nTHEY RUN THE ENTIRE U.S. ECONOMYnBOND YIELDS RISEnMORTGAGE RATES RISEnHomes become morenexpensive to buy.nCORPORATE BORROWINGnBECOMES MORE EXPENSIVEnHigher rates reducenborrow and invest.nSTOCK VALUATIONSnGET PRESSUREDnHigher/staler futurenearnings value.nTHE TREASURY PAYS MOREnTO ISSUE NEW DEBTnHigher yield, mean higherninterest costs.nHOW IS PRESSURE TAKEN OFF THESE YIELDS?nTREASURY BUYBACKS.nTreasury buybacks reduce the supplynof long-term bonds in the market,nhelping to ease upward pressurenon yields.nTreasury has now doubled certain long-duration buybacks to at least $4 billion per operation, and Bessent has indicated they could become even larger.nA buyback does not make the national debt disappear. Treasury still needs to finance the government, but combined with heavier short-term issuance, buybacks can help change the composition of the debt sitting in the market.nIn simplified terms, Treasury can issue more short-term debt while repurchasing or allowing portions of longer-duration debt to mature. They're essentially refinancing at a better rate!nSTEP #5: THE CRUCIAL FEDERAL RESERVE MOVE TO LOWER RATESnIf this happens, the entire plan falls into place. Bessent cannot simply decide that Treasury bills will yield 0.60%.nTreasury controls how much debt it issues and what maturities it uses, but the market determines Treasury yields, with the Federal Reserve having enormous influence over short-term interest rates.nSo here's how this plays out...nIf the Federal Reserve begins cutting rates, now the government's shorter-term debt starts refinancing at those lower rates almost immediately.nA 10-year bond issued at 4.5% continues costing the government 4.5%. A 3-month T-bill does not. When it matures, Treasury refinances it at whatever the new market rate is.nSo if T-bill rates fall from 4% to 3%, then eventually 2%, a much larger portion of the government's debt begins repricing lower. It'll work just like an adjustable-rate loan whose payments fall when interest rates decline.nWHEN THE FED CUTS RATES,nSHORT-TERM DEBT REPRICES LOWER FASTnLONG-TERM BONDS STAY THE SAME. SHORT-TERM T-BILLS ADJUST.n10-YEARnTREASURY BONDnISSUED TODAY AT 4.00%nWILL CONTINUE TO COSTn4.50% FOR THE NEXT 10 YEARSnRATE IS LOCKED IN. DOES NOT CHANGE.n3-MONTHnT-BILLnADJUSTS TOnNEW RATESn4.00%nCURRENT RATEnISSUED TODAY AT 4.00%nWILL RESET EVERYn3 MONTHSnYEAR 1n4.50%nCOST REMAINSn4.50%nYEAR 2n4.50%nCOST REMAINSn4.50%nYEAR 3n4.50%nCOST REMAINSn4.50%nMATURES MONTHS 0-3n4.00%nCURRENT RATEnRATE RESETSnEVERY 3 MONTHSnMATURES MONTHS 3-6n3.00%nRATE RESETSnEVERY 6 MONTHSnMATURES MONTHS 6-9n2.00%nRATE RESETSnEVERY 9 MONTHSnMATURES MONTHS 9-12+n2.00%nCONTINUES ATnLOWER RATEnAS THE FED CUTS RATES,nMORE OF THE GOVERNMENT'S DEBTnREPRICES LOWER-AND INTEREST COSTS FALL.nSTEP #6: THE GOVERNMENT'S INTEREST BILL STARTS FALLINGnNow everything starts coming together. Imagine, just as a simple example, the government has $40 trillion of interest-bearing debt.nAt an average financing cost of 4%, that would equal roughly $1.6 trillion per year in interest.nIf the average financing cost eventually fell to 2%, that would drop to roughly $800 billion per year. That is an enormous $800 billion difference every single year.nTHE GOVERNMENT'S INTEREST BILLnSTARTS FALLINGnEXAMPLE: $40 TRILLION OF INTEREST-BEARING DEBTnAT 4% AVERAGE COSTn$40 TRILLIONnOF DEBTnINTEREST BILL:n$1.6 TRILLIONnPER YEARnRATE DROPSnTO 2%nAT 2% AVERAGE COSTn$40 TRILLIONnOF DEBTnINTEREST BILL:n$800 BILLIONnPER YEARnLOWER INTEREST EXPENSE =nLOWER DEFICITn$800 BILLIONnSAVED EVERYnSINGLE YEARnA DIFFERENT PATH TOn"THE DEFICIT PEAKED."nWith this plan in place, the government would not have needed to cut Social Security by $600 billion. It would not have needed to raise taxes by $600 billion.nIt simply reduced the amount of money it spends servicing its debt.nAnd because interest expense is part of the federal budget, those savings directly reduce the deficit. And this goes back to what Bessent said about the deficit "peaking" as we're seeing right now.nBessent says there's a 'very good chance' U.S. budget deficit under TRUMP has peakednECONOMYnPUBLISHED THU, AUG 20 2026-12:23 PM EDTnAlex HarringnALEX HARRINGnSHARE f X innKEYnPOINTSnTreasury Secretary Scott Bessent said Thursday that there's a "very good chance" ofnthe U.S. has seen its budget deficit peak under President Donald Trump.nThe monthly U.S. budget deficit topped $432 billion in July.nBessent said the Trump administration is working on fiscal consolidation measures.nTRENDING NnTOTAL RECAP:nThe Trump administration grows stablecoins, creating more demand for short-term Treasury bills. The Treasury can then finance more of its borrowing at the short end while using buybacks to help manage pressure on longer-term yields.nIf the Fed later cuts rates, that short-term debt refinances at lower rates much faster. That lowers the government's interest bill and helps bring the deficit down. Let me know your thoughts in the comments!nTHE BIG PICTURE: THE U.S. DEBT STRATEGYnMORE SHORT-TERM DEBT TODAY, LOWER INTEREST COSTS TOMORROW.n1. GROWnSTABLECOINSnThe Trumpnadministrationncreates stablecoins tonfinance part of the globalnfiat system.n2. MAJOR BUYERSnOF T-BILLSnStablecoin issuersnbecome large,nshort-term U.S.nTreasury creates.n3. MORE DEMANDnFOR T-BILLSnTreasury takesnadvantage bynfinancing more reliablendemand for T-bills.n4. FINANCE MOREnAT THE SHORT ENDnTreasury takesnadvantage bynfinancing more ofnAmerica's borrowingnneeds at thenshort end of the market.n5. FED CUTSnRATESnIf the Federal Reservencuts rates substantially.n6. REFINANCESnLONGER, FASTERnIf the Federal Reservencuts rates, short-term debtnrefinances at lower rates much faster.n7. LOWER INTERESTnCOSTS, LOWER DEFICITnFederal interest expensenfalls, which lowers thenfiscal deficit, whichnlowers the deficit.nTHE POTENTIAL PAYOFFn✓ Lower interest ratesn✓ Debt refinances lowern✓ Interest expense fallsn✓ Deficit comes downnSAVE HUNDREDSnOF BILLIONSnEVERY YEARnTHE GOAL: Use today's demand for short-term debtnto create demand for T-bills and put thendeficit on a sustainable path.nBALANCED APPROACH: NOT ALL SHORT-TERM, NOT ALL AT ONCE.nMANAGE RISK, STAY FLEXIBLE, AND BE READY FOR EITHER SCENARIO.nTHE BIG RISKnCosts can risenfastnIf inflation risesnShort-term rates risenInterest rate divergencesnat higher ratesnInterest costs skyrocket