2min chapter

Odd Lots cover image

Younger and Menand Explain How We Got the Modern Banking System

Odd Lots

CHAPTER

Is There a Crypto Bailout?

Right now, what they have is a whole little world that just exists on the internet. The purpose of finance is to help us allocate real resources in the real world. And here's crypto, and they're doing it except they're not allocating any resources in thereal world. There's no only point of connection between the crypto world... stablecoins are how you get in and out"

00:00
Speaker 4
So the
Speaker 2
crypto ecosystem is, I think, eager for, and if they're not eager for it, they should be some official sector recognition that will allow ordinary financial institutions to hold and trade and deal in cryptocurrencies. Because right now, what they have is a whole little world that just exists on the internet is completely divorced from any economic activity in the real world. It's like the apotheosis of finance. The purpose of finance is to help us allocate real resources in the real world. And here's crypto, and they're doing it except they're not allocating any resources in the real world. There's no only point of connection between the
Speaker 3
crypto world, the only significant point of connection with the crypto world right now. And real economy is stablecoins, which is the bridge. It's how you get in and out. And so the stablecoin issues actually have real dollar assets. They're the
Speaker 2
only ones. And so the way you avoid ever having a crypto bailout is you keep it that way.
Speaker 3
You don't have the actual economy ever become
Speaker 2
reliant or exposed to the value of these tokens. And you don't end up with massive stablecoin issuers that are issuing stablecoins that people use to buy real goods and services. If the only use of a stablecoin is to buy a token with no value, then
Speaker 3
it's just not a real risk. But if people are using stablecoins to buy actual stuff, then it becomes part of the money supply. And if all those stablecoins disappear, you get contractionary pressures that have to be counteracted by some official sector action. And it doesn't have necessarily be a bailout. But a bailout is often the most efficient means. It would have been easier to have bail that Lehman Brothers than to try to get the money supply expanding through other central bank actions.

Get the Snipd
podcast app

Unlock the knowledge in podcasts with the podcast player of the future.
App store bannerPlay store banner

AI-powered
podcast player

Listen to all your favourite podcasts with AI-powered features

AI-powered
podcast player

Listen to all your favourite podcasts with AI-powered features

Discover
highlights

Listen to the best highlights from the podcasts you love and dive into the full episode

Discover
highlights

Listen to the best highlights from the podcasts you love and dive into the full episode

Save any
moment

Hear something you like? Tap your headphones to save it with AI-generated key takeaways

Save any
moment

Hear something you like? Tap your headphones to save it with AI-generated key takeaways

Share
& Export

Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more

Share
& Export

Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more

AI-powered
podcast player

Listen to all your favourite podcasts with AI-powered features

AI-powered
podcast player

Listen to all your favourite podcasts with AI-powered features

Discover
highlights

Listen to the best highlights from the podcasts you love and dive into the full episode

Discover
highlights

Listen to the best highlights from the podcasts you love and dive into the full episode