March 25, 2025 | Read Online

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"After law itself, there is nothing of greater consequence than the title, value, and measure of coins."

— Jean Bodin, On Sovereignty (1576)

The president's personal seignorage

The first documented instance of "seignorage" dates back to about 600 BCE when the King of ancient Lydia, Alyattes, earned a profit by issuing coins with a face value slightly higher than their metallic content.

This was such a lucrative innovation that it helped King Alyattes' son, Croesus, become history's most iconic symbol of wealth: The phrase "as rich as Croesus" has been synonymous with extreme riches since antiquity.

Heads of state have been following the Lydian King's example ever since, financing their activities with profits earned from issuing money with a face value above its intrinsic value.

For centuries, the money came in the form of coins, typically imprinted with the visage of the head of state that issued it.

This practice reflected the reality that seignorage profits accrued directly to the ruler depicted on the coin — for centuries there was no meaningful distinction between a state's finances and those of its sovereign.

(Louis XIV spoke for rulers through the ages when he declared, "L'état, c'est moi.")

In the 11th century, China's Song Dynasty did Croesus one better by issuing the world's first paper currency — printing paper is cheaper than minting coins, so the seignorage profits are higher.

Paper money also increased seignorage profits by allowing governments to arbitrarily print currency in excess of the assets they claim to hold as backing.

Modern governments, of course, would end up issuing paper money with no backing at all, achieving seignorage profit margins of near 100%.

And central banks eke out that last bit of margin by dispensing with paper and issuing money electronically.

It's a good business to be in, which is why governments are careful about who gets to be in it.

Governments allow banks to collect seignorage as an incentive to do the complex job of providing an economy with a flexible supply of money and credit.

Retailers collect seignorage, too: Any gift card you forget to redeem is pure profit to the retailer that issued it.

(You might say the same about US dollars, which are a kind of gift card used to pay taxes.)

And the modern airline industry is largely funded by the seignorage earned from selling frequent flier miles (created at no cost) to partner companies like credit card issuers and hotel chains.

(Here's a fun story about a guy that earned four million air miles by using his credit card to buy commemorative coins directly from the government — a kind of seignorage earned from seignorage.)

But this exclusive club of money creators is about to expand by one: The GENIUS Act, expected to be ready for the president's signature soon, will officially recognize stablecoin issuers' right to collect seignorage by issuing digital dollars.

Stablecoin issuers have been collecting those profits without explicit permission for some time now, of course — Tether earned $13 billion by creating its KYC-free form of money last year.

The GENIUS Act will formally recognize this new kind of seignorage.

But here's the more interesting thing: This new kind of seignorage has enabled the reemergence of the original one.

As of this morning, the president of the United States is personally collecting seignorage earned by issuing (digital) dollars — the president and his family will take a large cut of the profits that World Liberty Financial earns issuing its new stablecoin, USD1.

(Named like Air Force One, I assume: whatever dollar POTUS is using is officially USD1.)

Making feudalism great again

Seigniorage profits stopped being personal income when political systems evolved to treat the state as an entity distinct from the sovereign.

The US Constitution, for example, granted the power to coin money to Congress, not the executive — so President Trump cannot instruct the US mint to put his face on dollar bills and then claim the profits.

But now he can do the next best thing: He can print as many USD1 as he can convince people to buy, invest the proceeds into the debt issued by his government and keep the interest income for himself.

(World Liberty's statement that it will avoid "complex yield-generating mechanisms" suggests it doesn't intend to share any of that interest income with token holders.)

That neat trick won't have the same 100% profit margin achieved when the Fed electronically prints new dollars.

But the 4.3% earned by holding risk-free government debt is still a profit fit for a king.

Literally.

Archeologists have found that the gold coins issued by King Croesus weighed approximately 8.05 grams, which was about 3.5% less than the standard of 8.33 grams set in Persia.

The difference between the two — 3.5% — was the King's seigniorage profit.

3.5% was a modest take by the standards of the day and it may have been larger if, like Ceasar, Croesus had thought to put his visage on the coin instead of Lydian lions.

There's no word yet as to whether the president will be imprinting his visage into USD1's smart-contract metadata (in the same way, for example, that WIF memecoins are imprinted with a picture of a dog with a hat).

But the great money issuers of history would probably tell him he should.

It might make him even richer than Croesus.

— Byron Gilliam

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The Secret To Maintaining Dollar Dominance

Joseph Wang and Austin Campbell discuss the EM-ification of the USA and how stablecoins play into the continuation of US dollar hegemony. Tune in for insights around the case against the Strategic Bitcoin Reserve.

Listen to Forward Guidance on Spotify, Apple Podcasts or YouTube.

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Ben Strack 🟪 @strack_ben

Another big fish vying for a Solana ETF now, with Fidelity jumping into the race.

Franklin Templeton did so earlier this month.

4:15 PM • Mar 25, 2025

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Emperor Osmo 🐂 🎯 @Flowslikeosmo

$AVAX looks amazing here.

> +32% over the past 2 weeks.
> Gaming is kicking off with @playoffthegrid and @MaplestoryU activity popping off.
> Institutional money building (BlackRock's BUIDL).
> eERC going live bringing onchain privacy.
> $KET back above $250M

Not to mention, 5K