The most creative junkie in the world

No legal advice … is a monthly column by Zachary Kelman, General Counsel for Cointelegraph. He is a licensed New York lawyer special...



No legal advice is a monthly column by Zachary Kelman, General Counsel for Cointelegraph. He is a licensed New York lawyer specializing in policy, legal, and regulatory matters relating to Bitcoin, digital currencies, and blockchain technology.

For two decades, the presidents of the United States kept the US military in Afghanistan to support the fragile local government, charged with keeping the Taliban at bay. Earlier this month, the US military left and the US-backed Afghan government collapsed like a pitched tent with the mast removed. It was obvious to all observers that fundamental change in Afghanistan was still impossible, and US military intelligence had to know this inevitable reality. What is not clear is why, at this particular moment, the United States ultimately withdrew.

The answer may lie in an increasingly powerful, but often overlooked, force affecting decision-making in Washington, DC: the risk of US sovereign debt. With $ 28 trillion in gross national debt, unprecedented silver print and quantitative easing, along with decades of low interest rates, America has spent most of its monetary ammunition over the past decade. It has prompted policymakers to break the glass and release billions of dollars in emergency spending, scaring those US sovereign debt holders who suddenly have more reason to fear the once unthinkable prospect of a sovereign debt collapse. American. Into this void enter President Joe Biden and the 117th US Congress.

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You might think that the obvious method of allaying creditors’ concerns lies in the balance sheet, by raising tax rates or cutting expenses. However, tax hikes and budget cuts are like shutting down an open bar at a house party just when it gets fun. The winning political formula here is always the IOU – raising taxes upsets voters and hurts market optimism, while cutting spending prevents politicians from keeping their promises and reduces their access to the gravy train. However, just like a smart junkie, America can always find a way to reassure the pesky Treasury holders and creditors that America is still “good for her.”

Ending the war in Afghanistan may not directly result in a reduction in the military budget, but it signals an end to the attitude that caused America’s relentless foreign interventionism after 9/11. By ending the war, America is effectively telling the world that it has ended the co-dependent relationship that contributes to its addiction, without having to stop the cold turkey altogether.

Likewise, budget hawks allege that creating the arguably impossible crypto tax reporting requirements outlined in the amendment to the recent US infrastructure bill will allow the federal government to earn tens of billions of dollars in “lost” revenue without having to raise tax rates. Since raising taxes sends a negative market signal that undermines economic stability, and spending trillions of dollars in spending without so-called “pay-fors” sends a signal Negative to suspicious American debt holders, it offers policymakers the opportunity to have their cake and eat it too. Threatening to turn the US crypto community upside down and shake it up until tens of billions of dollars are rolled out – even if their unpaid tax bills are only a fraction of that – can bring an impact. temporary relief to worried creditors, who are likely crypto neophytes themselves, without the heinous burden of actual fiscal responsibility.

Related: Let’s be clear: Blockchain technology is an infrastructure

Anyone who has had family or close friends with a drug or gambling addiction knows the difference between a real change in an addict’s habits and the superficial promises and decisions they use to cover up their continued addiction. . We know how important our support and optimism can be and keep our hopes up until we are burned several times as it becomes evident that no fundamental change has taken place. As the old tools of monetary policy rust and wear out and America shifts to wild quantitative easing and unprecedented public spending, holders of US debt have good reason to hope that the nation has found a way to keep moving forward, especially as the dollar positions itself in the global monetary system. For America’s sake, let’s pray that he can remain the most creative junkie in history for years to come – hopefully without having to throw the crypto industry under the bus again.

This article is for general information purposes and is not intended to be and should not be construed as legal advice.

Zachary Kelman acts as general advisor to Cointelegraph. He is an attorney who focuses on the regulatory environment surrounding digital currency and fintech, from securing licenses and designing compliance policies to meet newly developed laws in the Philippines or to meet and develop policy with Caribbean regulators. Prior to co-founding Kelman PLLC, he managed the Coins.ph compliance program. Zachary has represented and advised entrepreneurs on legal best practices for their business in the fintech space.

The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.