Economist Peter Schiff claimed that the narrative adopted by everyone, including the Trump administration, was wrong. Schiff opposed some common views on the impact of stablecoins on US treasury bonds. In particular, the belief that stablecoins contributed to the treasury demand is not correct, he said.
Stablecoins and bond relationship
The role of crypto assets in financial markets is growing. Stablecoins are crypto assets, which are fixed to beings such as US dollars, and their interest in circulatory supply is expanding. They were thought to increase the demand for US Treasury bonds. However, Peter Schiff opposed this view and made a remarkable assessment.
Schiff questioned the impact of the Stablecoin market on treasury bonds in his share in the social media platform X. According to him, the funds towards stablecoins cause the displacement of the existing liquidity rather than providing a new liquidity. This may not lead to a structural increase in treasury bond purchases. Crypto investors’ application – the reason will surprise you!
Another prominent element in Schiff’s assessment was possible effects on long -term bond returns. According to the determination of the economist, when there is a change in liquidity flow, the balance of bond supply and demand may be adversely affected. This action may lead to an increase in long -term interest rates.
Peter Schiff: “Liquidity that shifted to the stablecoins does not create a new demand, it replaces the existing.
The economist argued that the new demand for stablecoins is a zero -total change in terms of total financial sector liquidity. According to Schiff’s opinion, especially in this process, housing loan interest rates may be increased.
Stablecoins give rise to bond requests
Essentially, no one cares about Peter’s comments. Schiff, who likes to share negative assessments related to crypto currencies, has been doing this for years. What we have to look at is what the US does. The Trump administration clearly supports the stablecoins and said that the Treasury minister supports the dollar of stablecoins this week and said that it increases bond requests. Compared to the US Treasury minister, we can say that these opposite statements do not go beyond assumption.
Imagine that after an investor in Germany purchased 100 thousand USDC, Circle has received a bond of 100,000 dollars to support 1: 1. This actually means that the investor in Germany receives bonds worth 100 thousand dollars. Did that citizen already have a US bond? Was not. Has the new bond request was born? He was born. So Peter speaks empty.
While discussions on the effects of fixed coins on US treasury bonds, Peter Schiff’s evaluations are found on the agenda of the financial circles. Schiff said that fixed coin currents do not create a new fund and only direct existing resources to different fields. This analysis shows that care for investors and policy makers should be careful when observing fixed coin markets. It is also emphasized that fixed coins can lead to fluctuations in long -term returns and loan interest rates. Readers are advised to understand the possible effects on the existing financial structure when evaluating the potential benefits and risks of fixed coins.
Responsibility Rejection: The information contained in this article does not contain investment advice. Investors should be aware that crypto currencies carry high volatility and thus risk and carry out their operations in line with their own research.
