1/ Trump’s got it backward on US trade imbalances. The real “export” powerhouse isn’t cars or tech—it’s the US Dollar itself. Let’s break it down through a crypto analogy.

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2/ Imagine an app called “US Government” offering products & services via annual subscription fees—aka “taxes.” There’s also a separate & independent (😉) “Foundation Group” called the Federal Reserve, which issues a token: $USD.

4/ Investors aren’t flooding in as hoped, and raising tax rates isn’t exactly popular. So, the US Gov App creates a plan where it sells Treasuries to the Federal Reserve for fresh $USD to fund operations. This works as long as the demand for dollars remains huge.

5/ The previous tweet was possible because of the Marshall Plan or “USD Ventures.” The US invests globally and ties other platforms’ “native tokens” to the dollar. Initially, this was backed by the Bretton Woods gold peg. Then came a massive marketing campaign (aka “defense spending”) to bolster $USD worldwide.

6/ Demand got so wild that foreign banks created “wrapped” USD—the Eurodollar—spawning new use cases and an entire market around $USD. Treasuries turned from being simply investments into a product: the go-to yield account for $USD.

7/ Today, 60% of all other Foundations (called “central banks”) hold $USD as their main reserve token. $USD represents 58% of all global foreign reserves. In weaker economies, people ditch their failing local token and just use dollars.

8/ $USD then turned into the payment layer for the global economy:

9/ This system means infinite demand for both $USD and US Treasuries. The US Gov can effectively keep issuing Treasuries (i.e., growing federal debt) and printing dollars to fund operations and service older debt. Infinite money printer unlocked.

10/ So, when people talk about the US trade imbalance, remember: The biggest US export is the $USD & US Treasuries as their yield account.

 Obviously, the situation is a lot more complex than how I described it, but I think the example drives home some key points. 

Do you think the collapse of the USD system is a good or a bad thing? RT and drop a comment.

/END THREAD

3/ The US Gov App creates demand for $USD by only accepting it for subscription fees (taxes). But the app’s revenue can’t cover operating costs. So, it issues an investment contract called “US Treasuries” to investors. But that’s still not enough…