The GENIUS Act, the Stable Con: a Revisit of the Petrodollar as Illustrated in Michael Hudson’s Super Imperialism
Essays 1 and 2 (scroll past references from essay 1 to reach essay 2)
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These two essays are from J. Matson Heininger and Alice Ingersoll. They are the result of research after reading the substack post by Karl Sanchez
The GENIUS Act, the Stable Con: A Revisit of the Petrodollar as Illustrated in Michael Hudson’s Super Imperialism
In 1971, Nixon’s abandonment of the gold standard allowed the United States to offload inflation and the real costs of its mounting debts onto the rest of the world. Michael Hudson exposed this dynamic in his 1972 classic, Super Imperialism, arguing that US supremacy was maintained less by productivity or gold reserves than by creative manipulation of global trust in the dollar 1.
Now, half a century later, history appears on the verge of repeating, albeit in digital form. The passage of the GENIUS Act in July 2025 by Congress—firmly supported by the Trump administration—heralds a new era for American monetary innovation, or, as several critics contend, a new monetary con 2, 3, 4, 5, 6, 7.
What Are Stablecoins, and What Is the GENIUS Act?
Stablecoins are digital tokens pegged 1:1 to the US dollar, supposedly providing a safe, accessible method for payment and “store of value” in the digital economy.
Under the GENIUS Act, all stablecoin issuers must maintain full reserves in US Treasuries or cash, be federally regulated, and comply with stringent rules on transparency, capital, and anti-money laundering 2, 3, 4, 5, 7, 8.
The official pitch is seductive: Stablecoins will bolster consumer confidence, strengthen the US dollar’s global dominance, drive demand for US Treasury debt, and modernize the financial system 4, 7.
But the practical implications are far more complex—and potentially hazardous.
The Debt Scheme: Rolling Over the Unsustainable
The heart of the new “con,” as described by financial historians and contemporary critics (including Michael Hudson), is that stablecoins don’t just modernize finance—they provide a mechanism for rolling over unsustainable US debt, shifting much of its risk to anyone holding these digital tokens 1, 9, 10, 11.
Foreign central banks (like Japan’s), institutional investors, and even retail users are being courted to park vast stores of value in stablecoins. As global Treasury holders move their claims to the digital dollar, the US not only lowers its borrowing cost but builds a buffer: any future devaluation or inflation will be absorbed, in large part, by stablecoin holders 9, 10, 12.
In essence, America shifts the pain of a dollar decline onto holders of its digital surrogate—potentially allowing the dollar to fall in real terms while maintaining the system’s facade and liquidity 1, 13, 14.
Stablecoin owners receive none of the yield of Treasury bonds and remain exposed to the risk of dollar devaluation.The Russian Critique: “Cloud Reset” and Imperial GamesThis plan has now drawn explicit fire from the Kremlin. Anton Kobyakov, economic adviser to President Putin, labeled the program a global “cloud reset.” In his assessment, the US is moving to digitalize its debts, then orchestrate a “soft devaluation” of both dollar and stablecoin claims—effectively allowing the Treasury to start over while the rest of the world absorbs the loss 15, 16, 17, 18, 19.
Russian commentators cast the new US stablecoin regime not just as financial innovation, but as imperial manipulation—a digital rerun of America’s departure from gold. Policymakers in Moscow warn this transformation could trigger international monetary instability, especially for countries structurally tied to the dollar 17, 18, 19.
Echoes of Super Imperialism
Michael Hudson and a chorus of skeptics argue that stablecoins—like Nixon’s gold shock—hide a shell game. Risks and rewards have been privatized, depositors are pushed into digital dollars offering no yield, and the US gains enormous new leverage to manage or inflate away its debt 1, 20.
The shift to digital is not primarily about innovation or inclusion, but about securing the next chapter of US dominance—however precarious.
Conclusion
Stablecoins are not a purely technological leap; they are the scaffolding for the next round of American monetary strategy. Their global proliferation may ensure short-term dollar dominance, but the costs (and eventual reckoning) are likely to fall on those abroad—just as happened when the gold window closed.
References
World Economic Forum: How will the GENIUS Act work in the US and impact the world?
1 https://www.weforum.org/stories/2025/07/stablecoin-regulation-genius-act/Sidley: The GENIUS Act: A Framework for U.S. Stablecoin Issuance
2 https://www.sidley.com/en/insights/newsupdates/2025/07/the-genius-act-a-framework-for-us-stablecoin-issuanceWhite House: Fact Sheet—GENIUS Act Into Law
3 https://www.whitehouse.gov/fact-sheets/2025/07/fact-sheet-president-donald-j-trump-signs-genius-act-into-law/Morgan Lewis: GENIUS Act Passes: US Stablecoin Law Explained
4 https://www.morganlewis.com/pubs/2025/07/genius-act-passes-in-us-congress-a-breakdown-of-the-landmark-stablecoin-lawArnold & Porter: What You Need to Know About the New Stablecoin Legislation
5 https://www.arnoldporter.com/en/perspectives/advisories/2025/07/new-stablecoin-legislation-analyzing-the-genius-actLatham & Watkins: The GENIUS Act of 2025 Stablecoin Legislation
6 https://www.lw.com/en/insights/the-genius-act-of-2025-stablecoin-legislation-adopted-in-the-usPaul Hastings: The GENIUS Act: A Comprehensive Guide
7 https://www.paulhastings.com/insights/crypto-policy-tracker/the-genius-act-a-comprehensive-guide-to-us-stablecoin-regulationCBH: GENIUS Act Rules for Stablecoin Issuers
8 https://www.cbh.com/insights/articles/genius-act-new-rules-for-stablecoin-issuers/Congress.gov: Stablecoin Legislation Overview
9 https://www.congress.gov/crs-product/IN12553US Treasury: Guiding and Ensuring National Innovation Using Stablecoins
10 https://home.treasury.gov/news/press-releases/sb0228Michael Hudson: Understanding the Great Rip Off
11 https://michael-hudson.com/2025/06/understanding-the-great-rip-off/Michael Hudson: The Challenge to Dollar Hegemony and Global Debt
12 https://michael-hudson.com/2025/07/the-challenge-to-dollar-hegemony-and-global-debt/Michael Hudson: Today’s Civilizational Conflict
13 https://www.nakedcapitalism.com/2025/07/michael-hudson-todays-civilizational-conflict.htmlForbes: Trump’s Stablecoin Strategy
14 https://www.forbes.com/sites/jonegilsson/2025/03/27/trumps-stablecoin-strategy-to-reinforce-us-dollar-dominance/CryptoSlate: Putin adviser accuses US of planning stablecoin scheme
15 https://cryptoslate.com/putin-adviser-accuses-us-of-planning-stablecoin-scheme-to-eliminate-35-trillion-debt/Mitrade: ‘Crypto Cloud Reset’—Putin Adviser Accuses US
16 https://www.mitrade.com/au/insights/news/live-news/article-3-1108586-20250909Nordic Times: Putin’s adviser: The US is conspiring with crypto and gold
17 https://nordictimes.com/economy/putins-advisor-the-us-is-conspiring-with-crypto-and-gold/Press TV: US plan to use bitcoin to dodge debt threatens global stability
18 https://www.presstv.ir/Detail/2025/09/09/754669/us-plan-use-bitcoin053trillion-debt-threatens-global-crypto-stabilityCoinTelegraph: Putin adviser claims US using stablecoins, gold to devalue debt
19 https://cointelegraph.com/news/us-is-using-stablecoins-devalue-debt-putin-advisorABA Banking Journal: How Stablecoins Could Affect Borrowing Costs
20 https://bankingjournal.aba.com/2025/07/how-stablecoins-could-affect-borrowing-costs-for-the-government-businesses-and-households/
Why GENIUS Act Success Is Far from Guaranteed
While the GENIUS Act aims to enforce a new era of dollar dominance using regulatory stablecoins, there is no assurance this gambit will succeed globally. The BRICS countries, joined by other skeptical nations, are mounting strong countermeasures—strategies grounded in their own digital currency systems, multipolar assets, and “de-dollarization” campaigns.
Their actions could undermine the West’s ambitions, shrink the dollar’s empire, and even turn Western allies into more vulnerable, dollar-dependent vassals.BRICS Defiance Is Real and Growing
The BRICS bloc (Brazil, Russia, India, China, South Africa) is actively developing alternatives to dollar-based payment and reserves, including sovereign digital currencies, regional clearinghouses, and stablecoin competitors that bypass US channels and surveillance 21, 22.
The September 2025 BRICS forum officially promoted non-dollar digital instruments for trade and settlement—a direct rebuke to the GENIUS Act vision 21.Fragmentation: The World Will Not ConvergeThere is little historical reason to assume “universal” adoption of US-backed stablecoins. China, Russia, and India in particular are pushing their domestic digital systems, establishing regional preferences, and signing bilateral agreements outside the US financial orbit 21, 23. The EU and Gulf countries, wary of surrendering sovereignty, are also dabbling in multi-currency trade platforms rather than joining the stablecoin model 23.
Damage to Western Economies Is PossibleIronically, mandated stablecoin adoption may deepen financial dependencies among US allies, forcing their banks, companies, and governments into even tighter technological co-dependency, with reduced flexibility to escape dollar shocks 24, 25.
If the GENIUS Act inadvertently accelerates capital flight, asset bubbles, or triggers instability in compliant Western economies, the ultimate losers could be the US itself and its close partners 24, 25.
Outsiders May Flourish By refusing to participate in the “digital dollar con,” the dissenting countries may enjoy greater freedom to innovate, build partnerships, and exploit new trade routes that sidestep dollar-based constraints entirely 21, 23.
This fragmentation is likely to benefit local economies and strengthen non-Western blocs while making US leverage less relevant.No Guaranteed OutcomeInstead of strengthening dollar global dominance, the GENIUS Act may only ossify existing dependencies, pushing willing partners into greater exposure while empowering those who opt out. The greatest risk: the prospect that stablecoin policy turns out to be a self-limiting Western project—one that empowers rivals and weakens the system it was meant to save.
References
21 BRICS Forum Champions Stablecoins to Defy Dollar Control
22 https://www.livebitcoinnews.com/brics-forum-champions-stablecoins-to-defy-dollar-control/The stablecoin time bomb hidden in Trump’s GENIUS Act | Yanis Varoufakis
23 https://www.yanisvaroufakis.eu/2025/06/25/the-stablecoin-time-bomb-hidden-in-trumps-genius-act-prepare-for-the-next-financial-meltdown-unherd-19-june-2025/Reuters: Amundi warns US stablecoin policy could destabilize global payment system
24 https://www.reuters.com/business/finance/amundi-warns-us-stablecoin-policy-could-destabilise-global-payments-system-2025-07-03/Atlantic Council: Stablecoins are trending, but what frictions and risks are getting overlooked?
25 https://www.atlanticcouncil.org/blogs/econographics/stablecoins-are-trending-but-what-frictions-and-risks-are-getting-overlooked/Allied VC: How GENIUS Act 2025 Transforms Stablecoins
26 https://www.allied.vc/articles/genius-act-2025-stablecoin-regulation-global-finance