Money · Shadow Dollar
Stablecoin supply snapshot
Composite level
Component contributions
Per-chain composition (USDT vs USDC)
Stablecoin issuers vs. sovereign UST holders
Methodology
The thesis. Stablecoins are the cleanest contemporary read on the "shadow dollar" — the stock of dollar-denominated liabilities issued outside the US banking system. The canonical non-sovereign Eurodollar was the 1960s–2000s interbank market; its 21st-century form is 24/7, publicly-viewable on-chain, and collateralized in T-bills rather than correspondent claims. When this stock grows, when it skews offshore (USDT over USDC), and when it concentrates on EM rails (Tron), the monetary repricing of the dollar system is active — and it routes around the Fed's direct policy reach.
Three components, one z each.
| Component | Proxy | What it measures |
|---|---|---|
| Shadow Dollar Stock Growth | 12-month log-change in total stablecoin supply | The raw expansion rate of the non-sovereign dollar stock |
| EM Penetration | USDT circulating on Tron ÷ total USDT supply | Where the offshore dollar is being used — Tron is the dominant EM-retail rail |
| Offshore Preference | USDT supply ÷ (USDT + USDC) supply | The mix between offshore-regulated (Tether) and US-regulated (Circle) stablecoin issuance |
Issuer T-bill footprint. The "implied stablecoin T-bill" figures apply published reserve multipliers (Tether attestations, Circle 10-Qs) to circulating supply. They are estimates, not reported positions — reported separately, not mixed into the composite.
Z-score convention. Walk-forward (expanding-window) z-score, minimum 24 months, ±4σ winsor — same discipline as the Dollar System sub-indices. Percentile rank is computed on the expanding composite history and drives the regime labels.
Canon
Gorton & Zhang (2023, Vanderbilt L. Rev.) — stablecoins as a return to free-banking structure; BIS WP #905 (Bech, Garratt, Lee, 2024) — token-based money and the evolution of settlement; Gorton (2010, Slapped by the Invisible Hand) — historical parallels with antebellum bank-note issue and shadow-bank runs; FSB (2023) global stablecoin regulatory framework for offshore-vs-onshore split.
Credit-cycle complement
Money pillar tracks the parallel monetary base (stablecoins as private dollars). The Credit-Cycle Melt-Up Monitor tracks the broader credit-cycle complex (HY/CCC compression, public + private debt aggregates, equity multiple expansion, margin debt) including a 5-lens composite calibrated against forward 12m equity returns. The two are complementary: stablecoins measure what's happening outside the regulated banking + Treasury financing system; CCMI measures what's happening inside it.
Inflation channel
The M2 channel was tested as a candidate input for the Inflation Nowcast composite but was dropped — the rolling-origin validation found PPI YoY + Core PCE 6m annualized (z_pipeline) outperformed the 12-input composite that included M2. Money supply growth correlates with inflation at long horizons but the relationship is regime-dependent (the 2020-2022 M2 surge → CPI surge was historically distinct), and pipeline-stage indicators dominated the OOS comparison. M2 still lives in the BCI panel as a business-cycle input.