The New Liquidity Play: How Stablecoins Are Rewiring Monetary Power From the Fed to Treasury—and Toward Bitcoin For over a century, the Federal Reserve has been the dominant engine of U.S. monetary policy. It controlled liquidity cycles, governed the expansion of the dollar, and served as the final arbiter of global dollar access. But a new infrastructure layer—regulated stablecoins—may be on the verge of triggering the largest shift in monetary power since the Fed’s founding. We are about to witness something remarkable: a transfer of liquidity, issuance power, and global dollar distribution away from the Federal Reserve and big banks … and toward the U.S. Treasury and Bitcoin. Stablecoins are the catalyst. Treasury, Not the Fed, Becomes the Liquidity Engine of This Cycle The GENIUS Act sets up a simple but profound dynamic: - Regulated U.S. dollar stablecoins must hold short-term Treasury bills. - Issuers will scale to meet global demand for digital dollars. - Each additional dollar of stablecoin supply requires an additional dollar of T-Bills. That means Treasury—not the Fed—becomes the primary liquidity engine. The more global markets demand stablecoins, the more T-Bills must be purchased. Banks, instead of manufacturing credit and liquidity through traditional lending, become the transmission mechanism that pipes Treasury-backed stablecoins into global circulation. This flips the 20th-century model entirely on its head. The Fed prints reserves; Treasury issues the assets. Stablecoins tie those assets directly to global dollar demand. In the next cycle, Treasury issuance + stablecoin adoption = new global dollar supply. Bessent’s Bet: Stablecoins Will Create a Continuous Bid for T-Bills The GENIUS Act creates one of the strongest structural demand forces for U.S. debt in modern history. Bessent's case is straightforward: - The world still wants dollars. - The world increasingly wants them in digital, programmable form. - Regulated stablecoins will be the cleanest, safest, most accessible way to hold dollars. That means global users will effectively acquire dollars via Treasury bills—not via Fed-created bank reserves. The Fed’s Marginalization: QE Without a Central Bank Under this model, the Fed’s traditional balance-sheet role becomes less relevant. Not gone—but diminished. The key insight: Stablecoin-driven T-Bill demand creates an infinite-money-printing dynamic that does not require the Fed to expand its balance sheet. When stablecoin issuers buy short-term Treasuries: - They inject liquidity into the global dollar system. - They do so without the Fed creating new reserves. - They enable global dollar access without expanding bank balance sheets. For the first time ever, Treasury can scale dollar liquidity independently of the Federal Reserve. If Treasury becomes the liquidity engine, the Fed becomes—at best—a risk manager. Its historic monopoly over global dollar creation evaporates. This is the quiet end of monetary independence. The Bitcoin Knock-On Effect: The Parallel Liquidity System And here’s the geopolitical twist: If Treasury successfully asserts itself as the new liquidity engine, it accelerates the erosion of monetary independence between the Executive branch and the Federal Reserve. Such a breakdown has a predictable market outcome: ➡️ Capital flees toward non-sovereign money. ➡️ Bitcoin becomes the parallel liquidity system. Why? Because as Treasury takes the wheel, markets will increasingly hedge against political control over the dollar. Bitcoin becomes the natural release valve—the neutral asset with no issuer, no fiscal agenda, and no political capture. This is how stablecoins and Bitcoin stop being competitors. They become complements. That is why I've been saying: Stack in Sats Spend in Stables Make your wallet your bank.