{"id":141957,"date":"2023-09-01T20:33:16","date_gmt":"2023-09-01T15:03:16","guid":{"rendered":"https:\/\/dripp.zone\/news\/?p=141957"},"modified":"2023-09-01T20:33:16","modified_gmt":"2023-09-01T15:03:16","slug":"bitcoin-wins-while-fed-prints-more-fiat-toilet-paper-says-arthur-hayes-crypto-news","status":"publish","type":"post","link":"https:\/\/dripp.zone\/news\/bitcoin-wins-while-fed-prints-more-fiat-toilet-paper-says-arthur-hayes-crypto-news\/","title":{"rendered":"Bitcoin Wins While Fed Prints More ‘Fiat Toilet Paper’, Says Arthur Hayes – Crypto News"},"content":{"rendered":"
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BitMEX co-founder Arthur Hayes believes the Federal Reserve will lose its quest to beat inflation, ultimately benefiting \u201crisk assets of finite supply,\u201d such as Bitcoin.<\/p>\n

In a blog post<\/a> published on Wednesday, the essayist argued that the Fed is sucking money from one area of the economy while injecting money into another.<\/p>\n

As long as the Fed\u2019s strategy to combat inflation remains \u201cquixotic,\u201d assets like Bitcoin will likely rise in the long run.<\/p>\n

\u201cBitcoin has a finite supply<\/a>, and therefore as the denominator of fiat toilet paper grows, so will Bitcoin\u2019s value in fiat currency terms,\u201d Hayes wrote. Aside from big tech and crypto, the ex-CEO believes nothing will yield a better return for investors besides parking their money at Fed and earning nearly 6% yield.<\/p>\n

He went on to explain why the Fed\u2019s tactics have been flawed.<\/p>\n

Specifically, by continually raising its Reverse Repo Program (RRP) and Interest on Reserve Balances (IORB), the central bank is forced to pay out billions more per month to depositors, which counteracts the Fed\u2019s effect on the money supply from quantitative tightening (QT; selling bonds on the open market).<\/p>\n

\u201cIf the Fed believes that to kill inflation it must both raise interest rates and reduce the size of its balance sheet, then it is cutting its nose to spite its face,\u201d wrote Hayes.<\/p>\n

The central bank\u2019s approach differs from Paul Volcker \u2013 a former central bank chairman credited with crushing inflation in the 1980s through hawkish monetary policy. As Hayes explained, while the Fed in the 1980s may have adjusted its policy rate, it did not micromanage RRP and IORB rates to match it.<\/p>\n

\u201cThe only variable that changed from the Fed\u2019s perspective was the size of its balance sheet,\u201d said Hayes.<\/p>\n

At present, the Fed is draining $80 billion per month from the market through QT, while injecting $22.53 billion into banks<\/a>. Though this still appears \u201crestrictive,\u201d Hayes estimated that the rising interest expense on U.S. government debt is putting another $80 billion per month back into the economy. \u201cI estimate that ~$23 billion in liquidity is net injected every month,\u201d he said.<\/p>\n

Eventually, Hayes said he expects the Fed to reverse course on QT as the U.S. Treasury becomes replete with alternative buyers of its debt, and grows desperate to avoid a cataclysmic default. That said, the market doesn\u2019t seem to acknowledge this as imminent, and thus hasn’t moved its capital into Bitcoin \u2013 yet.<\/p>\n

\u201cWe gotta go down to go up,\u201d concluded Hayes. \u201cI\u2019m not going to fight the market, but just sit tight and accept my stimmies.\u201d<\/p>\n

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<\/p>\n

Stay on top of crypto news, get daily updates in your inbox.<\/h3>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

BitMEX co-founder Arthur Hayes believes the Federal Reserve will lose its quest to beat inflation, ultimately benefiting \u201crisk assets of finite supply,\u201d such as Bitcoin. In a blog post published on Wednesday, the essayist argued that the Fed is sucking money from one area of the economy while injecting money into another. As long as […]<\/p>\n","protected":false},"author":2,"featured_media":141958,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[230,225,221,227,226,228,229,60,223,224,222],"class_list":["post-141957","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-brave","tag-coinbase","tag-crypto","tag-decentralised","tag-decentralized","tag-decentralized-exchange","tag-erc-20","tag-featured","tag-meme-coin","tag-robinhood","tag-solana"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/141957","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=141957"}],"version-history":[{"count":2,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/141957\/revisions"}],"predecessor-version":[{"id":146794,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/141957\/revisions\/146794"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/141958"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=141957"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=141957"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=141957"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}