Arthur Hayes: AI and Stablecoins to Fund US Debt, Reshape Global Finance

A paradigm shift in global finance, driven by the confluence of artificial intelligence and the proliferation of stablecoins, is poised to reshape America’s economic landscape and potentially redefine its elite class. This is the provocative thesis put forth by Arthur Hayes, co-founder of BitMEX, who suggests that the traditional pillars of U.S. financial power are facing an unprecedented challenge from technological and monetary innovations.

• Arthur Hayes posits that AI will render obsolete a segment of the American elite reliant on “worthless credentials” and prestige jobs.
• U.S. Treasury Secretary Scott Bessent is alleged to be orchestrating a strategy to dismantle the Eurodollar system, re-routing trillions through stablecoins to finance U.S. debt.
• Stablecoin issuers are expected to become “price-insensitive buyers” of Treasury bills, granting the Treasury significant control over the U.S. yield curve.
• The strategy involves the global enforcement of stablecoin adoption, leveraging U.S. economic power and foreign policy.
• Stablecoins are envisioned to integrate into social media wallets, decentralized finance (DeFi), and everyday spending, challenging traditional central bank control.

Hayes argues that the rise of AI will render obsolete a segment of the American elite – those reliant on what he terms “worthless credentials” acquired through debt-fueled education, chasing prestige jobs. According to this perspective, the utility of this class, which historically derived power from their specialized knowledge and institutional affiliations, is diminishing. Machines capable of complex tasks without demanding high salaries or Ivy League degrees are increasingly positioned to displace them. This technological evolution, Hayes posits, will fundamentally alter the economic utility of traditional human capital within established financial systems.

Strategic Recalibration of Global Dollar Flows

Central to Hayes’s analysis is the alleged strategy of U.S. Treasury Secretary Scott Bessent, whom Hayes metaphorically dubs “Buffalo Bill” for his anticipated role in dismantling the Eurodollar system. This offshore financial network, estimated to hold between $10 trillion and $13 trillion in U.S. dollars outside direct American regulatory control since the Cold War, represents a significant pool of capital that, Hayes asserts, is not adequately funding U.S. Treasury debt. Bessent’s purported plan seeks to re-route this vast capital through dollar-backed stablecoins, thereby integrating it directly into the American debt financing mechanism.

The mechanism involves stablecoins, such as Tether’s USDT, operating akin to narrow banks. These entities accept dollar deposits and subsequently invest the vast majority of these funds into short-term U.S. Treasury bills. Hayes highlights that stablecoin issuers, driven by the need to generate yield on their reserves, would become “price-insensitive buyers” of Treasury debt. This dynamic, he contends, would grant the Treasury Secretary substantial control over the front end of the U.S. yield curve, potentially circumventing the Federal Reserve’s traditional influence on monetary policy. In this scenario, should the Federal Reserve resist, the Treasury could leverage stablecoin demand to achieve its debt financing objectives independently.

Moreover, this strategy extends beyond domestic financial control to encompass a broader geopolitical dimension. Hayes suggests that the U.S. could enforce the adoption of these stablecoin systems globally, leveraging its economic power. He illustrates this with an example where foreign governments, like the Philippines, might face retaliation if they attempt to block stablecoins, with the implicit threat of freezing offshore wealth or imposing other sanctions. This demonstrates a potential future where financial technology merges with foreign policy to exert significant international influence.

Stablecoins and the Future of Digital Finance

The vision articulated by Hayes involves social media platforms, such as WhatsApp, transforming into digital wallets, particularly in the Global South. This integration would enable widespread adoption of stablecoins for remittances and transactions, challenging the traditional control of central banks over money supply. Hayes suggests that efforts to curb this trend by regulators would be difficult, citing precedents where the Trump administration allegedly threatened tariffs against the EU over attempts to block U.S. tech companies on privacy and competition grounds, indicating a protective stance towards these digital platforms.

Hayes estimates that up to $34 trillion in capital, originating from deposits in the Global South and from European markets, could eventually migrate into these stablecoin ecosystems. Even a fraction of this capital would provide the U.S. Treasury with a robust buyer base to sustain its debt issuance. The underlying principle, as Hayes starkly puts it, is that nations must embrace the dollar-backed stablecoin system or face potential economic sanctions, thereby reinforcing U.S. financial hegemony in a digitally reconfigured global economy.

The integration of stablecoins is also expected to significantly impact decentralized finance (DeFi). Funds flowing into stablecoins could then transition into DeFi applications, facilitating activities such as staking, where users earn yield, and using interest-bearing stablecoins as collateral for trading, borrowing, and derivatives. Beyond DeFi, Hayes envisions stablecoins becoming integral to everyday spending, with products enabling their use wherever traditional payment networks like Visa are accepted, suggesting a seamless user experience comparable to conventional financial instruments.

Ultimately, Hayes concludes that President Trump’s administration is unlikely to prioritize spending cuts or fiscal restraint. Instead, Treasury Secretary Bessent is anticipated to aggressively promote stablecoin adoption, with major technology firms playing a critical role in their global dissemination. This outlook portends new policy initiatives, including increased oversight on Eurodollars, pressure on foreign governments to open markets for U.S. tech, and potential mandates requiring stablecoin issuers to hold all reserves in U.S. banks or Treasury bills, consolidating a new era of digital financial control.