Can stablecoins really 'create dollars out of thin air' to resolve national debt?
There is a popular saying that after Tether issues USDT, it uses the dollars paid by users to buy U.S. Treasury bonds, while USDT continues to circulate in the market. This is equivalent to 'one dollar becoming two': one USDT and one bond. At first glance, this seems plausible, but there is actually a misunderstanding in this logic.
USDT is not a new currency created out of thin air, but rather a tokenized form of the dollar; essentially, it is more like a debt certificate from Tether to its users. The dollars that Tether receives do not disappear but are converted into Treasury bond assets, while USDT circulates on the blockchain. Although USDT is used 'like cash', it is merely a transfer of rights to dollar assets, not an increase in base currency.
This mechanism does not automatically lead to inflation because as long as USDT primarily circulates in the crypto market, rather than in the U.S. daily consumption system, it belongs to 'offshore dollars', with limited impact. However, once USDT is widely used for payments within the United States, it could begin to challenge the traditional financial system and even affect monetary policy.
The idea of 'using stablecoins to resolve national debt' is also unfounded. Tether's purchase of Treasury bonds is a normal investment behavior and does not signify a successful reduction of U.S. debt. Interest is paid by the Treasury, assets belong to Tether shareholders, and the essence of the debt has not changed; it has merely changed hands.
However, this does reflect a trend: stablecoins have increased the efficiency of dollar circulation and have promoted dollarization globally without relying on central banks. If in the future, the U.S. relaxes regulations and allows USDT-like stablecoins to circulate legally domestically, it could indeed become a form of 'shadow currency' or even develop into a national-level digital dollar system.
Therefore, Tether is not creating 'double dollars', but rather plays the role of a highly efficient dollar transporter in the crypto world. Its influence comes from institutional gaps, not magic.
