What Bitcoin Did
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.