ECON 101 Is a ‘stablecoin’ the solution to rising federal deficits?
By Robert Eyler
A s the federal fiscal year closed in September 2025 and debate raged about the next fiscal year and beyond, concerns categories include but are not limited to: (1) the final budget creates larger federal fiscal deficits and debt (2) additional tariff revenue will not be enough to reduce deficits (3) projected deficits should have financial markets betting on more upward pressure on federal debt interest rates, especially longer-term Treasury notes. The accompanying graphic represents the latest (as of July 2025) projection by the Congressional Budget Office
for the annual change through 2034, with respect to new federal debt entering the market. The federal debt- to-Gross Domestic Product (GDP) ratio is expected to increase as deficits create more debt during a time of slow economic growth. One implication of this progression is that by 2034, one in every six dollars of federal government revenue will be allocated to interest payments on the federal debt. There may be a new (ish) way to pay down this debt (or at least find initial financing for it) through stablecoins. A stablecoin is a cryptocurrency that lives in an old-school currency environment with a value that is fixed or “pegged” to another currency (think of the latter-period gold standard, from 1944 to 1971). In many ways, a stablecoin
18 NorthBaybiz
November 2025
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