As a non-finance person who’s done work in crypto, I’ve come across something I think worth sharing from a product perspective. Part of what we do as product managers is look around corners. We can’t help it. We try to understand what happens when systems interact, dependencies change, and something in one place creates unintended consequences elsewhere. One thing we learn is that optimizing one part of a system doesn’t necessarily optimize the whole thing. In fact, sometimes making one aspect tremendously successful can create unintended consequences elsewhere. That’s especially interesting when the products themselves start becoming part of critical infrastructure. And that’s what’s increasingly happening with stablecoins.
What interests me here is there are three worlds that don’t seem to get discussed together in general business or product management circles. These are: government fiscal policy, traditional banking, and digital assets. There’s increasing attention in specialized finance research. But I suspect most general businesspeople and even product folks working in the space don’t necessarily encounter this info. And there’s dependencies emerging that I don’t think get enough attention.
Most people still think of stablecoins as “crypto stuff” and U.S. debt as “government economics or politics.” But what happens when growing worldwide demand for digital dollars also creates demand for U.S. government debt? And what happens when that same process shifts funding away from traditional banks or creates new channels through which financial stress can spread? That’s what I want to explore. Not as a prediction of an impending crisis, but as a series of connections that I think deserve more attention, especially among those who create products or services in this area. So I’m going to try to untangle this.
What prompted me to write this was this post from famed investor Ray Dalio called The Numbers Behind the Bond Bear Market. Some aspects may be disturbing. This article might be as well. Personally, I’m an optimist. However, some of what I’m going to present suggests some potential storm clouds. Maybe not. Either way, it’s worth understanding the connections to have a sense of which way things can lean as we see trends in one place put pressure in other areas. In any case, here we go.
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