The Dollar Endgame Is Not What You Think | Peruvian Bull

— Dollar dominance persists despite fiscal problems because of relative strength of US assets, embedded global dollar debt ($200+ trillion in the eurodollar system), and structural demand from international trade and finance. The dollar's collapse is unlikely to happen as most doomers predict.

— Japan as a cautionary macro laboratory: The BOJ pioneered QE, yield curve control, and negative rates, yet 30+ years of these tools failed to generate growth. Zombie companies, demographic collapse, and deflation persisted. The West has adopted Japan's playbook without learning its lessons.

— Stablecoins accelerate dollar dominance by creating crypto-native eurodollar markets with higher velocity. They shift from debt-based to asset-backed (US Treasury) systems, potentially adding $2–3 trillion in treasury demand and extending dollar hegemony into emerging markets.

— The yen carry trade ($4–5 trillion notional, $10+ trillion with derivatives) unwound painfully when the Fed hiked in 2022. Japan burned $120 billion in interventions and eventually raised rates, but structural debt (263% debt-to-GDP) makes normalization unsustainable long-term.

— Bitcoin's path to reserve currency status requires both the attractive force of superior money and the repellent force of fiat collapse. Until severe monetary system failure, Bitcoin remains a store of value, not a primary medium of exchange. Foreigners have shifted from financing US deficits to divesting treasuries—a key early warning signal.

— Central banks will invent new liquidity tools (BTFP, SLR exemptions, regulatory mandates for treasury holdings) to avoid traditional QE, delaying but not preventing eventual monetary instability.

— Monitor treasury divestment carefully: Foreign central banks divesting long-dated bonds (30-year, 20-year) rather than FX trade data is the earliest warning of reserve currency transition. Watch Chinese and Russian treasury balances; this precedes dollar collapse.

— Stablecoin adoption is a tailwind for Bitcoin long-term: As stablecoins penetrate emerging markets and create new dollar demand, they compress US yields temporarily but expose the system's fragility. Bitcoin's non-censorable nature becomes clearer when nations (Iran) lose access to stablecoins. Accumulate through cycles; this is a multi-decade macro shift.

— Prepare for financial repression or inflation, not hyperinflation tomorrow: The US can extend its debt cycle 10–20 years via yield curve control, deposit mandates, and regulatory tools. Traditional QE is one of many tools in the central bank arsenal. Expect secular inflation, negative real rates, and asset-price volatility rather than sudden currency collapse.