How Crypto Fixes U.S. Debt | Speaker Paul Ryan

welcome to bankless where today we explore how crypto can saave off a US debt crisis this is Ryan Sean Adams I'm here with David Hoffman and we are here to help you become more bankless now it's been a while since Paul Ryan has been in the public Spotlight let's say but it turns out that this former speaker of the house is bullish on crypto in fact he says in today's episode crypto is necessary to saave off a US debt CR crisis we get into the core of that argument and we also talk about

a few other things like America's debt crisis and why it matters the loss of the US Reserve currency status and what that means how crypto can help the US win against China why the left has been so anti crypto and how we can make crypto bipartisan and crypto in a trump White House versus a kamla Harris White House I think this episode is emblematic of how crypto is becoming such a big deal for almost anyone in Capital Hill anyone related to to governance uh Paul Ryan I did not know that he was a crypto

person no no one knew that he was a crypto person until he wrote this oped about the potential of alignment between the United States and stable coins back in June of this year uh and I think this is slowly emblematic of how every single politician is going to ultimately have to have an opinion about crypto uh and here today on the episode you're going to hear about Paul Ryan's opinion about stable coins and what we can do with them in the United States so let's go ahead and get right into that episode but first a moment to talk about some of these fantastic sponsors that make this show possible especially where a place

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then Donald Trump and more recently and I think of uh interest to bank list listener today he wrote this fantastic oped in the Wall Street Journal talking about stable coins talking about crypto how uh these Technologies could help Stave off US debt problems so we're obviously going to talk about that we're also going to get his takes on crypto legislation I think he knows a thing or two about what how the legislative process works and the 2024 election uh Paul welcome to bankless hey Ryan David thanks for having me great to be with you guys somehow since you left politics

have got has has just like gotten even Messier and more divisive I don't even know how that's possible um what's your take on why just at the highest level here uh the internet easy easy answer uh digitalization has changed the way we get information it is brought people down rabbit holes where they are basically hanging out in their information biased you know culdesac where the algorithm is pumping back to you your bias your beliefs and it's um playing people off of each other so

polarization is an easier cell in the digital you know Marketplace and that's and you you basically take moral relativism which is Alive and Well in society you add an accelerate like digitalization to it and there in lies you know polarized politics explains a lot of it not all of it but a lot of it do you think uh like what's the solution to this do you think it works itself out over time do you believe kind of free market solution I think yeah we're going you know we're we're in a new era where most of us you know I mean I grew up without the internet again I'm 54 years old so we're

just it's a new era of human development we'll we'll find our sweet spot we'll stabilize but right now we're on the beginnings of this and so I think I think the world and the country will become polarized fatigued hopefully they'll think that problems going unsolved are no longer you know good and that they'll demand you know political leaders that get stuff done that solve problems and I think people get sick of hating each other and they'll find new ways and I think Reviving Civil Society the space between ourselves and our government where we actually live our

lives in reality can be revised and I think that can help as an antidote against sort of this digital polarization that we have I think it will get better um I think you know it it will because it has to and I think I think again stuff not getting done the debt is a what a big issue of mine spent my whole career on it um that issue is going to have to get solved hopefully we do it ahead of ahead of schedule and ahead of an ugliness but it could get ugly as well that's one of the reasons why I talk about stable coins yeah may maybe some of this ugliness like uh like we'll be with us for for this election

cycle but hopefully it does get better and you mentioned your age which might actually be a relevant Factor here because um uh you you mentioned yourself being sort of they like older but actually it's super young with respect like you know us politicians and maybe maybe that factors into uh your your sentiment on on crypto and why you're bullish but but before we get there too I I just want to ask you about sort of being inside the belly of the Beast like what's it like to be speaker of the house is that I mean it seems like a really hard job and I I think that comes

into play as we're we're trying to understand in the crypto Community how legislation uh gets done actually and that seems like one of the toughest jobs that exists in government it is it's I mean after the president's I think it's the hardest job the president's harder because just the weight of responsibility solely Rush on your shoulders for your branch of government the speaker is the head of the legislative branch of government another separate coleal branch of government um what's the job like you basically I came into the job as a policy person very

different there's two tracks in Congress a policy track or a leadership track people who want to be in elected leadership run for you know conference chair Deputy whip whip Majority Leader speaker that wasn't my bit I was chair of the budget committee then I was chair of the Ways and Means Committee economics is my background um when we had a speaker turmoil I was drafted into the job because I was the consensus candidate um and so I I took the job a job I wasn't looking for so I got this job very very differently than most

people get the job as a result I looked at the job a little differently which was I wanted to decentralize power in Congress I like empowering committees and committee chairs who are experts in their Community jurisdiction to write the policy in those areas that's fairly non-typical um for leadership who typically not necessarily today with Mike Johnson but typically want to consolidate power long story short the job of the speaker of the house is to identify political objectives what are

your objectives in law writing what are your objectives you know politically winning elections and then you move the the the entire institution to reach those objectives what really the speaker job is Du is there's laws you got to pass because of deadlines there's laws you want to pass because of your policy priorities and you have to Marshall the institution to work toward those ends so with with web 3 with crypto with stable coins with Market structures all these bills um I would say and I don't want to get too out of your questions it's going

to happen because it has to happen because wed3 is here the question for Americans is are we going to do it here or is it going to just be done over overseas and given that we're the world's you know Reserve currency kind of makes sense we got to have a law governing all of this stuff it's it's just drives me nuts that you've got US dollar denominated stable coin laws in place just not in this country the country that issues the US dollar so there's an example of a speaker needs to move toward that end get this stuff done

there's an effort of foot I think it will eventually get done um but that's an example just for your audience of of what you do as Speaker you have an objective you got to move the entire institution toward it and it's very very very different than a parliamentary system which are like Europe you know our parliamentary systems they're done with their law those are faster in a parliamentary system you pass one bill and it's done you know the prime minister is the head of the party just like the speaker is in the house and it's one and done not so in our country

you pass the house then you pass the Senate then you reconcile those different is then hopefully the president will be willing to sign it so three stops along that legislative path much different much slower I would argue it's better because we don't do big things unless we have a lot of consensus in this country and as a result we have stayed more Tethered to our Constitution and its founding principles than say other parliamentary democracies so it's a little frustrating it's kind of agonizingly slow but it's it's really

good compared to the other systems in my opinion uh Paul not really long ago last June you wrote this oped in the Wall Street Journal titled crypto could save off a US debt crisis and it it was a focus on stable coins uh and it touched on a lot of different talking points about stable coins that Us in the industry have been like beating the drum for a good number of years now mainly just the expansion of dollar dominance competitiveness with with China and inside of the crypto industry whenever somebody outside of the crypto industry especially somebody with influence

starts saying like our word starts chanting chant and we always kind of like perk up and saying oh like they've they've been paying attention this is these are nuanced points that you are making about stable coins I'm wondering just about like the the motivation behind writing the oped and how long you have been like tapped into the world of stable coins and the crypto industry I so I spent most of my life in of my adult life in Congress I got elected I 28 I was always um before that I was a I was a staff Economic Policy analyst like

an economist I'm I'm not a PhD Economist but spent my early days in economics um working at think tanks and for a guy named Jack Kemp who was one of the original supply side economists so I believe in supply side free market economics I come from the Austrian sort of Chicago School of thought hyek me's Milton Freedman the rest and so that economic school of thought is very Pro crypto um from a philosophical ideological standpoint so that's one point second point is um in my time in

Congress um my I I was chair of the budget committee I wrote a bunch of budgets back in those days when I chaired the budget committee to balance the budget pay off the debt uh to get us off of the path of a debt crisis where we are now and when I was w means chair I I I Advanced those goals the big public policy goal I had I did not reach which was get a debt consolidation plan underway because I'm very worried about a debt crisis it's what I spent most of my time on and so I do spend spend my

time now that I'm in Academia the think tanks and the private markets looking at our bond markets looking at our debt markets looking at the dollar as Reserve currency um it is an enormous privilege that we the dollar had the reserve currency status it gives huge advantages to Americans and so when I look at the situation I'm I'm very concerned that a we could lose dollar dominance because of a lot of things China embridge digitalization we're blow on the reforms

and because of our debt and so when I take a look at um what a debt crisis could look like um you don't have to go far to talk to bond Traders and bond market Vigilantes who used to exist as Vigilantes who probably will come back and the long story about it and that's why I wanted to write this opet is we need to find more demand for our our bills bonds or notes for our treasuries because other sovereigns are reducing their appetite for our treasuries that is reducing the dollars

reach into the world and not only is digitization good for getting the dollar more embedded into the global economy as it digitizes that's first point second point is stable coins produce a natural new source of demand for our debt that needs to replace decreasing Demand by other sovereigns I just put Pro the chart of this morning if um stable coins were a country you take out the the Luxenberg and the Cayman out of here uh it'd be the 13th largest purchaser of

our debt if it were a sovereign and that's without having a law so my point in writing this oped was stable coins are a perfect um supplement for demand of us treasuries if imagine if we go from 139 billion today to trillions if we actually have a law governing stable coins um that would help um defer a failed treasury auction when people look at a debt crisis like me

that think about it I could see a situation when when the fed's done cutting interest rates let's just say after 2026 or whatever that's going to happen it's not inconceivable that we get have some Bond auction failures that's when the Federal Reserve would then step in fulfill that auction and then we're monetizing debt not for monetary policy mechanisms but we're monetizing debt simply for the sake of monetizing debt that is when you could have the bond market vigilante reconstitute themselves have run of the dollar and you could have a debt crisis in your hands and so not wanting to see

that happen because inocent citizens will get hurt under a debt crisis that's very bad for the dollar and for our country creating new sources of demand for our debt would be a good thing to do stable coins does that in addition I think having stable coins um having a law that Governor stable point so that they're more deployed around the world further deeply embeds the dollar in the Global architecture as it's digitizing um there's a whole Freedom versus tyranny argument here we probably should get into that US versus China and the

rest that I think is a big issue that a lot of policy makers just aren't giving enough thought to that's why I wanted to write sort of an up and sort of poking policy makers to get moving on this issue do you remember what your first uh touch point was with like the topics of stable coins did it first come on to your radar as like legislation maybe your kids are playing in crypto like how did you first discover them it was lunch with Mark andreon um in 2019 so Mark's an old friend of mine he's from Wisconsin Andre Horwitz Mark

andreon you know I spent most of my time in fiscal policy uh I'm a free market supply side you know limited government advocate so Mark and I went to lunch I want to say maybe a month after I left the speakership probably February 2019 I'm just guessing and he said look you know fiscal policy you're a free market guy but you don't know much about crypto I said well I've read about it it's interesting I read satoshi's nakamoto's white paper I thought that was pretty interesting he said you need to learn more about crypto because crypto doesn't

know government and the people who who who are interested in crypto like me need people like you who are sympathetic to our school of thought and to know a lot about government so I want you to read up on crypto so he sent me a bunch of stuff to read and got me really intrigued and interested in crypto actually so it was really from a conversation with Mark that got me into this so I just read everything I could as a result um I spend some time in the space I'm I'm on the policy Council Paradigm um you know Vel gar at over Electric Capital is a very dear friend so and the and horwood guys I know

pretty well so I I spent a little bit of time in this area Katy H I've known for many years um and just I see it as a Confluence of the future of money the future I think web 3 is is is a wonderful thing for society and I think it's it's one of the best things you can do to to to preserve Liberty and freedom in the 21st century when we're facing down tyranny the likes of which China is presenting to the world so it sort of ticks every box in my mind free markets Free People self-determination privacy

Liberty uh and economic development and disruption that is that is a good thing that provides more Prosperity so that's why I spent a little bit of my time in this space because I think it's it's it's just really really interesting so P I think that was a great uh you know overview of the argum that you made in the Obed and I want to take uh the these things maybe one by one and dig into them at at another level so so the first is this idea of a an impending debt crisis that that may come right and the idea being that um a stable coin is more induced demand for uh treasuries more

induced demand for us bonds more induced demand for the dollar and that is good for uh the US's position as the global Reserve currency status let's dig into that argument a little bit more the first is debt crisis I mean it's since you left Speaker of the House US debt has only you know like piled on more we haven't hit this crisis point is this and we've been hearing about debt crisis for a very long time is this not kind of a chicken little type of you know debt debt is happening like why why are we in

a more crisis and why do you think like 2026 could be a year like why can't we just ignore this we and sweep it the rug we've been doing it for 10 years at least it's a really good question and I don't I hate sounding like chicken little because I've been talking about this stuff for more than 10 years for you know 25 years I think it's because there is going to be an end point in which the markets conclude the Americans don't have the political stuff that it takes to get their debt under control

and therefore they're just going to monetize their debt if that moment ever comes then our we won't deserve to be the reserve currency we won't be the reserve currency and then that means our government will debase our currency what does that mean that means we will wipe out the savings of people who live down who live on our dollars it means that the social safety that that we depend upon I call the social contract the social contract is health and retirement security for all Americans and a safety

net for the poor in general speaking and that's something that we agonized and debated over the 20th century we've come to consensus in the 21st century that we want these things nobody running for president is saying I'm going to get rid of these things nobody is no political party is saying we're going to shred the social contract they're all saying we're going to preserve it now we as Republicans have different ways of doing it than they may be Democrats but we operate under this consensus we want our social contract problem is that social

contract was written in the 20th century in a way that proves unsustainable in the 21st century and we're not the only country in the same boat all the other first world countries have the same problem which are demographically based pay as you go programs where current workers pay their taxes to finance the benefits of current retirees and when these programs grow in cost far faster than your economy or revenues grow you know like 6 to 8% a year and you're doubling the amount of consumers retirees on these programs

with the retirement of the Baby Boomers and our birth rates are lower there in lies a compounding problem and so America is leading on this problem but all the other sovereigns in the first world had the same problem Japan Europe Australia so on and so forth so they all have aging Baby Boomers they're all going to the debt markets trying to finance the deficits to make good on this social contract and because all of that is now starting to happen and our boomers are retired for the most part or

retiring this kind of brings it to a to a height to a to a pivot point to a to a data moir and that is why I think this is different than say the last 10 years when we were pre Peak retirement at the same time we have all these debt projections that show our debt is going up like a hockey stick and never coming down because of what I just said and so if there comes a moment where the the the markets conclude we just aren't going to get our hands around this stuff we're just going to

monetize that is when we debase that is when we truly shake the confidence in the dollar as the world's Reserve currency okay just toose what I just said with the fact that China is on the rise and they are rapidly deplo deploying their digital R&B they don't like the Swifts system they don't like the sanctions that come with it so they're teaming up I mean mbridge is what Hong Kong China Saudi Arabia UAE and I think Thailand maybe I

correct me if I'm wrong on this but there are already experiments out there playing with digital money digital payment rails outside of the dollar denominated system and and and what what danger that presents to us is twofold number one it means there are there's digital architecture being designed to circumvent the dollar system which which removes our our status as the r Reserve currency or challenges it I don't think anybody else can really replace it

frankly but but you see my point the second problem this presents the world is um freedom and liberty versus tyranny in privacy so if the Chinese are able to hook their client states in the one belt you know World up or or other other countries up to a digital R&B it's as if they're going around the world offering tyranny in a box to other countries and other dictators here's your digital currency with full surveillance power so

you can surveil how your population is spending their money you can control how they spend their money and oh by the way here's your smart City system with a nice surveillance system and all these other things it is up to us as the largest free country in the world a democracy a republic specifically to offer the world something better to offer the world a digital currency that is complete with our values Freedom privacy Liberty

self-determination so I think at an epist at a at a epistemological level meaning philosophical level and from just a plumbing of the of the Global Financial system and the ability for us to be able to borrow money at an affordable rate to finance our our social safety net and our social contract this is really really important and all of it is under duress because we're not showing the world that we're going to get our house in order that we're going to get our fiscal house in order that we're going to pay our bills

that we're going to pay all our bills bonds and notes back without monetizing our debt I still think it's not too late to do that we can do that I regret nobody running for president is proposing that we do that but I still do believe at the end of the day that we can get it together uh that we will solve this problem probably a fiscal commission or something like that and to buy us more time to get our politics right to stop a debt crisis it wouldn't it be nice as we digitized to have some

more Demand on our bonds to buy us a little more time and that is why I think among many many reasons why stable coins is a good idea let's sharpen one other point of your uh argument here which is like uh the point that having the position as the global Reserve currency is actually like good for America because there are also those that would would argue that it's uh it's actually not that you know triffin dilemma stuff we've our chief export is the dollar and so this is also exported manufacturer uh like to other markets and you know is

attributed to the kind of the rise of of populism we've been on this this morphine drip for too long and the healthiest thing for America at this point would actually be to lose the global Reserve currency status granted we don't want another Nation to take over particularly a nation that um you know exports Financial surveillance and control you know something like an authoritarian China but maybe it wouldn't be so bad for the us to lose its position as the uh Global Currency reserve of the world and for for the dollar to to fall so much so who cares we can just monetize all of it that's the end destination right I mean I so

I'm familiar with the argument uh which that just means we make all of ourselves much poor that means anybody living on fixed incomes just gets their living standards wiped out by that amount that which you you you debase you you uh you you you reduce your your purchasing power so I agree we're not acting like a country that should be a reserved currency because we are running Perpetual deficits with no end in sight that doesn't mean we should just spite off you know bite off our noses despite our face that doesn't mean we should just basically debase our currency make

us live under you know more stct more structure and more discipline I would rather get to that discipline voluntarily than debasing our currency and by the way propping up some other currency that does not share our freedom values our values of privacy of Liberty of freedom of selfdetermination so I think that idea I've heard that from from Libertarians tell me this like let's just forget it who cares it's been like you say a morphine trip we been irresponsible yes but we still can get responsible and if we all of a sudden say let's just trade in the reserve

currency for something better what is better than this what what is better than being able to be you know in charge of our own destiny what is better than being able to you know basically Finance our our our economy all the things we want to buy at lower prices that's a good thing and by the way don't forget the fact that at the end of the day there are very critical principles involved here tyranny versus freedom on top of them and that that point I want to touch on um right now you mentioned

just the way that China has been making investments into the Emerging Markets uh with the digital R&B uh there is a growing sphere of influence which is the Chinese digital R&B where a lot of like Emerging Markets are using it as dominant payment rails uh and it's becoming a very large payment network over in the East very far away from our sphere of control uh and it's really just like throwing in the face the the power of the Petro dollar meanwhile the on the United States front of things conversations or Investments around our

digital cbdc have gone nowhere uh to the point where it's like kind of kind of a joke about like any conversations or progress around the digital cbdc for United States yet nonetheless basically every single stable coin uh the stable coin market share of US dollar stable coins is like 95 plus percent uh so when it comes to the world of like emerging markets and foreign investments and Foreign Relations how how would you say like stable coins play a role for our interests our uh like National Security interest abroad yeah so so all these other countries are are flirting with

cbdcs you know everybody else is looking at doing their own Central Bank digital currency um what's great about us being in the catb seat meaning having the reserve currency means stable coins can be our answer to a cbdc and we don't have to go down the path of debating a cbdc um If I Were King For Life I would have a cbdc that is a two-tier system so that the FED never is is in the in the business of of giving retail dollars so that should let's just say some you know

Progressive Elizabeth Warren becomes treasury secretary or fed share and then and then you know our ESG scores aren't good enough you would never want to go down the path of the government having the ability to micromanage our our money um but that could happen so we because we're the dollar because cbdcs can be I mean because excuse me stable coins can be they can be our substitute for a cbdc and no other country could do that like we can so the entire good and legitimate

debate about whether or not you have a central bank digital currency you don't have to go down this pathway Because by the way no one's King for life you're king for a while and that means today's two-tier system could be collapsed into a oncee system theoretically and you could lose your your sovereignty you could lose your privacy you could lose your freedom and this is a really good debate to have we don't have to have it because stable coins can be our answer to Central Bank digital currency because we're the world's Reserve currency and by the way