The Most Important Monetary Development Since The End Of The Gold Standard? | Brent Johnson

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**Brent Johnson** (0:31)
I think that these stable coins will ultimately be as transformative to the monetary system as Bretton Woods was and as when we left the gold standard. I think, you know, whether we look back five, ten, fifteen years from now, I don't know exactly the timing, but I think we will look back at this technology as one of the most important financial innovations in history.

**Adam Taggart** (1:01)
Welcome to Thoughtful Money. I'm Thoughtful Money Founder and your host, Adam Taggart, welcoming you here for a special discussion with the milkshake man himself, Brent Johnson. Hey, Brent, how are you doing?

**Brent Johnson** (1:11)
I'm good, thanks for having me.

**Adam Taggart** (1:12)
Yeah, I know, you're probably sick of being introduced as the dollar milkshake guy, but I'm sorry, buddy, that's going to fall you to your grave, I think.

**Brent Johnson** (1:19)
For better or worse, right?

**Adam Taggart** (1:20)
Yeah, well, you might start getting being known as the stablecoin guy, and that's actually what we're going to talk about here, folks. Many of you watchers may recall back in November, Brent and I recorded a discussion where he had just released a really seminal piece on stablecoins, which Brent, you called what? Empire by Code. And really what this did was send a word to the reader that stablecoins aren't a fad, they're not a distant niche in the crypto community, that they're a real game changer in a way that actually may advance your dollar milkshake theory, that may actually not only help protect the US from the world de-dollarizing, but they actually might help the US increasingly dollarize the rest of the world. So we had that discussion, totally mind-blowing. I think I used that adjective several times in that discussion. A lot of great feedback from that. Well, you've now done it again. You've released a new report that is, what, titled Stablecoin Wars. And it's about kind of, you know, all right, now that we understand what these things are, how are they being used? And I think one of the main things that you're saying here is, we're now not just in the origin or, you know, introductory phase of stable coins, we're now in the conflict phase where there's already $200 billion, or $200 billion worth of tokenized dollars out there in the world. And yet most of the financial industry still treats this like kind of a niche phenomenon, many aren't really even paying that much attention to it. And this raises a whole bunch of key questions. I'm just going to read a few that you have here at the intro to your report. Who captures the yield on that stable coin collateral? What happens to bank funding models if deposits start migrating much more quickly than they have in the past? How does voluntary digital dollarization reshape emerging market risk? What is AI-driven commerce due to settlement velocity? And how does regulatory design determine who controls this infrastructure? These are all really big questions. And again, your report here is not just about curiosity. It's really about kind of the whole plumbing underlining the macro system here. So we're going to talk about that today. Brent, if we can, I'd love to just kind of have you give a quick recap of Empire by Code, meaning what's the 22nd description of what a stablecoin is? Why should we care about it? And why do you think the street is so far behind the curve right now?

**Brent Johnson** (4:08)
Sure. And first of all, you did a great job of setting that up. So thank you. And thank you for having me on to talk about this, because I think this is actually a very big deal. And as I said in our first talk on this, I initially missed it. It kind of went right past me and I kind of dismissed it.
And when I took another look, and the reason I took another look was the Genius Act. And so if anybody's not familiar with the Genius Act, I would encourage them to go look at that, because the passage of the Genius Act forced me to take a look at it again, even though I didn't really want to. And at that point, it all just kind of clicked. And essentially what is happening is there is a parallel system that has, that was started to be built by the private market as a private innovation to kind of escape the power of the state. But the state, in my opinion, has done a pretty good job or is in the process of doing a good job of co-opting that private market innovation into a system that they can use themselves to not only, you know, embolden or strengthen the system they already have, but to potentially even grow it much bigger than they already have. So with that as a setup, what essentially what it is is a stable coin is a digital representation of something else. Now, in this case, we're talking about a digital representation of a dollar, but it could be a digital representation of gold. It could be a digital representation of a painting. It could be a digital representation of a stock or a bond or really anything. And then people will say, well, we already have digital dollars. That is true, but those trade and those transfer and those exist in an old system, which the United States has some control over, but not complete control over. And my thesis is that this new system, this new parallel system that is being built now, has the potential to become the new system and have all the old stuff migrate from the old system to the new system over time. And it will be a system in which the United States would have more control over it than it does the current system. So I'm not sure if that totally answers your question or not, but that's essentially what we're talking about. And when you understand how big that is, as you said earlier, it is a little bit mind-blowing because it is not just a couple hundred billion in size. It's potentially tens of trillions, if not hundreds of trillions in size. So it's really, we're talking about the very foundational base of the entire monetary system that is kind of up for grabs.