How Central Banks Will Be Forced to Print Money Again: Arthur Hayes

Arthur Hayes, co-founder of crypto trading platform BitMex, published a lengthy blog post on Thursday arguing that central banks will be forced to “print money” again due to various economic pressures.

This money printing, he argued, will create inflation that will drive up the price of alternative forms of money, such as crypto and gold.

Inevitable inflation

Hayes’s posTitled “Contagion,” the former CEO began by highlighting the immediate difficulties facing the global economy following the decision by major central banks to tighten monetary policy.

“The hardest hit markets were sovereign debt markets, with a bond market crash that has been nearly the worst in recorded human financial history,” he explained.

With quantitative tightening in place, bond yields have soared unsustainably in some markets. Last month, the Bank of England was forced to return to quantitative easing to suppress rapidly rising yields on its 10- and 30-year gilts, which nearly caused several UK pension funds to become insolvent .

Hayes claimed that other central banks will eventually “succumb” to similar measures to address similar problems. The European Central Bank (ECB), for example, is already buying bonds for some of its weaker member states.

In particular, the EU suffers from a lack of affordable energy due to Germany’s current energy policy. According to Hayes, this could hurt Germany’s economic output and position as an exporter, causing countries it trades with to stop buying its products in euros, which are already weakening against the dollar.

“Without cheap energy, Germany will have to try to print its way out of its problems,” Hayes said. “And just like any other nation, they will issue more bonds to cover tax transfers.”

As Germany issues more bonds, the co-founder said yields will soar, as has already happened in the UK. Thus, the EU will extend its quantitative easing policy to Germany and all other bond markets in the union.

Crypto and Gold

In keeping with his thesis that most major central banks are “on their way” to yield curve control, Hayes added that “fungible global risk assets” such as gold and cryptowill benefit

“Since the gold and crypto markets are much smaller than the trillions of fiat money that will be printed, in non-USD currency terms, these assets will appreciate,” he said.

Even in front of one stubbornly hawk Federal Reserve, Hayes argues that Bitcoin will rise from the combined efforts of other central banks. This is due to an arbitrage opportunity that will arise in the currency markets for both Bitcoin and Gold, which will ultimately increase the USD value of each.

“This process will not be immediate,” he concluded. “Once politicians have put in place the policies needed to appease their electorate, the bond markets will have none of it.”


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