The Genius Act

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The U.S. Treasury is likely to need to borrow approximately $15 trillion over the next decade. As incredible as that seems, the U.S. Treasury cares about the price of that debt, and therefore, since they are the seller, they need to attract as many buyers as possible to keep the cost of that debt as low as possible. Basic supply and demand at work. Reliable treasury bond buyers are pulling back, primarily China and, to a certain degree, Japan. The Genius Act permits private entities to issue their own stablecoins, provided they are fully backed by U.S. treasuries. That will open up a new set of investors for the U.S. Treasury as it issues its required bonds. On the one hand, it’s an interesting solution because the Treasury can access an expanding market that exists outside the banking system. Expect to see much more international capital flows in US dollars, as well as significantly increased shadow banking among large US-based corporate entities that engage in business with each other and internationally.

The Hitchhiker’s Guide - Nicholas Mitsakos

The Hitchhiker’s Guide to The Metaverse

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It has taken over 30 years for the overnight sensation of the Metaverse, but now hype, money, and large technology companies are charging in. Most obvious and conspicuous is Facebook’s maneuver to change its name to Meta Platforms and commit $10 billion. Microsoft is making a $70 billion acquisition of Activision to mostly focus on Metaverse platform development. Following on top of these two elephants is tens of billions of dollars of venture capital. The opportunity is considered comparable to the original iPhone. None of the iPhone’s component services – mobile phone, computer, camera, and operating system, were new or distinct. The iPhone revolution is the convergence into a single device (or platform) and, most importantly, the entrepreneurial spark that lit millions of application developers to create value from the iPhone platform. The Metaverse can best be thought of as the intersection of technologies and users. It combines virtual and augmented worlds, virtual assets, digital assets, and gaming into a single platform. However, there doesn’t seem to be anything too disruptive about the Metaverse or Web 3.0. It’s reasonable to be skeptical, and while there is an economic opportunity within the specific creation of Metaverse assets, the real opportunity remains with the infrastructure, intermediaries, picks, shovels, and “the arms dealers” of global digital war.