Krugman's ongoing Cassandra routine about crypto makes an interesting parallel. Stable coins are effectively the same as 19th century banknotes. Back before we had a Federal Reserve and FDIC, banks were effectively unregulated. What's more, currency was specie - which is to say: gold and silver coins. Because those coins were limited, they were valuable...but also limited. Paper money was issued by banks, based on their own reserves of specie.
The relentless crushing cycle of boom-bust during the Gilded Age was caused by the gold standard, but today, we are not longer wearing "golden fetters." Instead, we now have an unregulated currency in addition to a fiat currency. That, of course, doesn't make sense. The point of a fiat currency is its flexibility. You can boost inflation during a recession and spur a recovery, or restrict the money supply if inflation gets out of control. Having "digital bank notes" is completely pointless.
Krugman does point out a possible motive for this, which is that crypto can be a bit harder to trace, which of course has made it the dream currency of drug traffickers and money launderers. That also makes it a great vehicle for bribery. Allegations/revelations that Steve Witkoff is knee deep in Tether, a stable coin, combined with his clear stenography of Russian victory demands as a peace deal...man, I would not be shocked if he or Trump or both are making serious (stable)coin from all this.
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