Through most of American economic history, moments of fiscal crisis have triggered coordinated monetary interventions that fundamentally altered the dollar’s value and the architecture of global finance.
Roosevelt’s 1933 gold confiscation created a 69% overnight devaluation. Nixon’s 1971 closure of the gold window set in motion the dollar’s eventual 96% purchasing power decline. The 1985 Plaza Accord orchestrated a deliberate 25% dollar weakening through international coordination.
Now, as the United States grapples with $37.85 trillion in debt that will exceed fifty trillion by 2033, three simultaneous developments suggest a far more sophisticated devaluation strategy could be unfolding: the establishment of a Strategic Bitcoin Reserve, the not-so-subtle promotion of Treasury-backed stablecoins, and the accelerating global flight from dollar reserves into gold. The question is whether these are isolated policy choices or integrated strategies for what could be the largest currency reset since 1971’s Bretton Woods collapse.
The Review by Ajay Raju: The rising tide is lifting mainly yachts (October 20, 2025)
This conspiracy thesis is provocative, unconfirmed and complicated, but increasingly plausible: is the United States engineering a controlled dollar devaluation while simultaneously creating new mechanisms to continue selling Treasury debt to a world that no longer wants it? The potential playbook involves revaluing Bitcoin upward (like Roosevelt did with gold), channeling global liquidity into stablecoins that must hold US Treasuries (creating captive demand), and allowing traditional reserve holders to flee into gold (reducing their dollar holdings and justifying the currency reset). The result would be debt reduction through debasement while maintaining Treasury market functionality through crypto-mediated demand.
The unsustainable debt crisis
The scale of America’s debt predicament transcends political rhetoric and enters mathematical certainty. With debt reinstated at $37.85 trillion as of October 2025 and private investors holding $24.4 trillion of that burden as of March 2025, the Congressional Budget Office projects debt-service costs will rise by $718 billion over the 2025-2034 period. Morgan Stanley estimates US economic growth will slow to just 1.5% in 2025 and 1% in 2026, down from 2.8% in 2024, eliminating any hope of growing out of the debt.
Traditional solutions (spending cuts, tax increases, sustained growth) face insurmountable obstacles. Spending cuts would require politically impossible reductions to entitlements and defense. Tax increases face fierce opposition and diminishing returns as rates rise. Economic growth remains elusive amid trade tensions, monetary tightening legacies, and structural productivity challenges.
The Review by Ajay Raju: Last longer than 30 seconds (
History teaches that when conventional options fail, governments turn to monetary manipulation. The question isn’t whether a reset will occur, but how it will be engineered and who will bear the costs.
The bitcoin reserve
In March 2025, President Trump signed an Executive Order establishing the Strategic Bitcoin Reserve and US Digital Asset Stockpile, following Senator Cynthia Lummis’s BITCOIN Act proposing acquisition of 1,000,000 BTC over five years through annual purchases of 200,000 BTC. This represents approximately 5% of Bitcoin’s total supply. The U.S. government already holds approximately 325,000 BTC from criminal seizures, which equates to more than 3.5% of its gold reserves. That makes the U.S. Government the second largest Bitcoin holder after Michael Saylor’s bitcoin treasury firm Strategy.
Multiple states are joining the movement. Texas introduced legislation to accept taxes and donations in Bitcoin, holding them for minimum five-year periods. Ohio Representative Derek Merrin proposed the Ohio Bitcoin Reserve Act in December 2024. This distributed accumulation has the added benefit of preventing market panic while governments build positions.
The 1933 Roosevelt parallel
The 1933 gold confiscation offers a potential template. Roosevelt required Americans to surrender gold at $20.67 per ounce, then immediately revalued it to $35—capturing the entire 69% devaluation windfall for the government. Citizens were paid in pre-devaluation dollars while the government held the post-devaluation asset.
The Review by Ajay Raju: Underperforming American school systems must become AI-powered innovation hubs (October 6, 2025)
The Bitcoin reserve strategy could operate on similar logic without requiring confiscation. In other words, the government would accumulate Bitcoin at current prices, then benefit as Bitcoin appreciates—driven partly by the legitimacy of government adoption and reduced circulating supply.
More significantly, if Bitcoin becomes a recognized reserve asset, its revaluation upward would effectively devalue the dollar relative to Bitcoin. This mechanically reduces the real burden of dollar-denominated debt while the government profits from Bitcoin appreciation.
The strategy gains potency as other nations consider Bitcoin reserves. Countries including Brazil, Russia, Poland, Switzerland, the Czech Republic, and Japan are exploring or proposing national Bitcoin reserves. El Salvador pioneered sovereign Bitcoin adoption despite mixed economic results.
This creates a Nash equilibrium: if other nations accumulate Bitcoin for reserves, the United States must do so to avoid falling behind. If the US accumulates Bitcoin, it legitimizes the asset and pressures other nations to follow. The result is a coordinated global Bitcoin revaluation that reduces dollar-denominated debt burdens worldwide while appearing to be competitive positioning rather than coordinated debasement.
Stablecoins—Captive Treasury demand
Perhaps the most ingenious element of the strategy involves stablecoins—digital tokens pegged to the dollar and backed primarily by U.S. Treasury securities. Stablecoins grew from $2 billion outstanding in 2019 to over $300 billion today.
The Review by Ajay Raju: Are you prepared to live a longer and healthier life? (September 29, 2025)
In July, 2025, the US Senate Banking Committee passed the GENIUS Act, establishing a regulatory framework for dollar stablecoins. The legislation requires stablecoins to be backed 1-to-1 by reserves comprising cash, deposits, repurchase agreements, or Treasury bills, notes, or bonds with remaining maturity of 93 days or less.
Since the Genius Act passed, the assets under management of stablecoin companies have grown by 32%. As of June 2025, Tether alone held approximately $127 billion in US Treasuries—representing about 0.42% of the $30.28 trillion privately held Treasury debt. This may seem small, but the trajectory is revealing: stablecoins are handling trillions in annual settlement volume and powering real-time payments, DeFi, cross-border commerce, and international transactions.
Here’s where the strategic brilliance emerges. Traditional Treasury buyers—China, Japan, and European central banks—have been steadily reducing their dollar reserve holdings. As of mid-2025, Japan remains the largest foreign holder of U.S. Treasuries at roughly $1.15 trillion, followed by the United Kingdom at about $875 billion and China at roughly $760 billion, according to U.S. Treasury data. Collectively, these three nations hold around $2.8 trillion, representing approximately 8–9 % of total outstanding U.S. Treasury securities (and about 30 % of all foreign-held Treasuries)—down sharply from more than 15 % a decade ago.
This steady drawdown underscores a broader diversification trend: central banks are reallocating reserves toward gold, non-dollar assets, and, increasingly, sovereign wealth funds and domestic investment vehicles.
The Review by Ajay Raju: Architects of mass political mobilization(September 22, 2025)
Stablecoins replace this fleeing demand with a new class of structurally compelled buyers. Every dollar of stablecoin issuance requires corresponding Treasury purchases to maintain the regulatory backing requirements. As stablecoins proliferate globally for payments, trading, and commerce, they automatically generate Treasury demand without requiring any sovereign to make a political decision to support US debt.
A Bank for International Settlements study from May 2025 found that a 2-standard deviation inflow into stablecoins lowers 3-month Treasury yields by 2-2.5 basis points within 10 days, demonstrating direct impact on Treasury pricing. The Treasury Secretary described it as “a win-win-win for everyone involved: stablecoin users, stablecoin issuers, and the U.S. Treasury Department.”
The elegance of the stablecoin mechanism becomes apparent when combined with dollar devaluation. For example, if the dollar loses 30% of its purchasing power through Bitcoin revaluation, inflation, or coordinated intervention, here’s what happens:
- Existing dollar debts decline in real value by 30%—the standard devaluation benefit;
- Stablecoin holders experience real losses—they hold dollar-pegged assets that devalue along with the dollar;
- New Treasury demand continues—because stablecoins must maintain dollar peg and Treasury backing regardless of the dollar’s external value; and
- Global liquidity flows into a devaluing currency—users worldwide adopt stablecoins for transaction efficiency, not as a store of value, so they tolerate gradual devaluation.
In essence, stablecoins create a mechanism to sell Treasury debt to the world even as the dollar is being deliberately devalued. It’s a way to maintain the “exorbitant privilege” of dollar seigniorage while escaping the discipline that privilege traditionally required.
Read more columns from The Review by Ajay Raju
The strategic gold flight
Parallel to the rise of Bitcoin reserves and the proliferation of stablecoins, sovereign nations are executing the largest wave of official gold accumulation in generations. While the dollar remains dominant, the erosion of its monopoly as the global reserve anchor has become unmistakable.
Central-bank demand for gold remains extraordinary. The World Gold Council (WGC) reports that official institutions added 290 tonnes of gold in the first quarter of 2024 and more than 1,000 tonnes over the full year—one of the three largest annual totals ever recorded. Buying momentum carried into 2025, with 244 tonnes added in Q1 alone and steady net purchases continuing through mid-year. The 2025 WGC Central Bank Gold Reserves Survey found that 95 percent of central banks expect global gold holdings to increase over the next twelve months; 43 percent plan to raise their own holdings in that window; 76 percent anticipate gold will comprise a higher share of reserves within five years; and 73 percent foresee moderate or significant declines in U.S. dollar holdings over the same period.
Traditional analysis interprets central-bank gold accumulation as portfolio diversification or geopolitical hedging—an effort to insulate reserves from sanctions risk, currency volatility, and monetary missteps by major issuers. That may be accurate but is it also incomplete? Gold’s revival could also reflect an emerging awareness—both in Washington and abroad—of the political mechanics of a potential dollar reset.
When Roosevelt revalued gold in 1933–34, the U.S. government itself held the world’s largest stockpile, capturing the entire windfall from the higher gold price. Today, the United States’ share of global official gold is far smaller. Should the dollar undergo a major devaluation—whether through inflationary erosion, a coordinated monetary adjustment, or a re-pricing of assets in digital or commodity terms—foreign central banks already holding larger gold buffers would suffer less mark-to-market loss on their remaining dollar assets. Their gold would appreciate as the dollar weakened, acting as a global shock absorber.
The Review by Ajay Raju: Buy what everyone wants, what nobody can stop, and what few understand (September 1, 2025)
From this perspective, the worldwide shift from Treasuries into gold can be viewed as an unofficial pressure-release valve for the next monetary transition: it allows nations to hedge against dollar debasement while reducing the geopolitical backlash that might accompany any future U.S.-led reset. There is no public evidence that Washington is orchestrating this dynamic, but the outcome—an orderly diffusion of currency-risk exposure through gold—serves the pragmatic interests of both the issuer of the dollar and the custodians of global reserves.
Thesis killers
Viewed independently, each development appears reactive or opportunistic. Bitcoin reserves seem like political pandering to crypto advocates. Stablecoin regulation appears to be inevitable oversight of growing payment systems. Gold accumulation looks like rational diversification by nervous central banks. Viewed together, they form a coherent architecture for managed dollar devaluation with minimized disruption.
READ: America first or left behind? US, under Trump, embraces economic isolation (
But there are challenges. Bitcoin’s price volatility poses obvious risks. If Bitcoin crashes 80% (as occurred multiple times historically), the government faces massive paper losses rather than gains. However, government accumulation itself may stabilize Bitcoin by removing supply from volatile trading and signaling long-term commitment. Additionally, the strategy only requires Bitcoin appreciation over a 5-10 year timeframe, not immediate returns.
Similarly, Stablecoins have experienced runs and collapses (notably Terra/Luna in 2022). If a major stablecoin like Tether collapses, it could trigger fire sales of Treasuries, exactly the crisis the strategy aims to prevent. Treasury Department analysis from October 2024 highlighted this concern, noting that stablecoin runs have been common and a Tether collapse could destabilize short-dated Treasury markets.
However, the GENIUS Act regulatory framework addresses this by requiring robust backing and oversight. The legislation effectively transforms major stablecoins into quasi-governmental entities with strict reserve requirements—similar to money market funds but with even tighter constraints. This reduces but doesn’t eliminate systemic risk.
Deliberate dollar devaluation would damage creditors worldwide—including allies, domestic bondholders, and institutional investors. The political and diplomatic costs could be severe, potentially accelerating de-dollarization and undermining American financial hegemony permanently.
This concern has merit but may be overstated. First, the devaluation occurs gradually over years rather than overnight, making it harder to identify and protest. Second, foreign creditors are already fleeing voluntarily (hence the gold accumulation), suggesting they anticipate dollar weakness regardless. Third, the stablecoin mechanism maintains some dollar utility even amid devaluation, preserving transaction network effects. Finally, the Bitcoin reserve provides an alternative narrative: the US is “innovating” and “adapting” rather than explicitly defaulting.
Last word
The genius of the three-pronged strategy lies in its distributed appearance. No single policy explicitly devalues the dollar or defaults on debt. Whether this represents deliberate strategy or emergent pattern—intentional design or fortuitous alignment—matters less than recognizing the structural dynamics. The incentives, mechanisms, and historical precedents all point toward significant dollar devaluation within the next 5-10 years, facilitated by Bitcoin revaluation and cushioned by stablecoin demand.
For policymakers facing almost $38 trillion in debt, slowing growth, and exhausted conventional tools, the crypto-monetary architecture offers an escape hatch. For creditors, bondholders, and dollar savers, it represents a subtle but substantial wealth transfer disguised as technological progress. For historians, it may eventually be recognized as the moment when the United States adapted Roosevelt’s 1933 playbook to the digital age: revalue the new reserve asset (Bitcoin instead of gold), ensure continued funding despite devaluation (stablecoins instead of captive domestic savings), allow traditional holders to exit gracefully (gold accumulation instead of confiscation), and reduce debt burdens through currency debasement while avoiding explicit default.
The question isn’t whether dollar devaluation serves US interests—history demonstrates it clearly does when debt becomes unbearable. The question is whether this particular architecture can accomplish devaluation without triggering the financial instability that traditionally accompanies currency crises. Stablecoins backed by Treasuries provide the answer: structural demand that persists through devaluation, maintaining market stability while the currency resets.
If successful, this represents an elegant sovereign debt reduction strategy. If unsuccessful, it could trigger the very Treasury market collapse and dollar crisis it aims to prevent, with stablecoin runs amplifying rather than cushioning the shock.