BlockBeats News, on June 3rd, Arthur Hayes, co-founder and former CEO of BitMEX, stated in a post that he believes inflation will reach a cyclical low point this summer and accelerate again by the end of the year. The Federal Reserve's 2% core inflation target will not be achieved in 2023.
In terms of debt, Arthur Hayes believes that due to the massive welfare spending, the US federal government will not only be unable to reduce the deficit, but the number will continue to rise. It is estimated that the annual deficit of 1 to 2 trillion US dollars will become the norm for the next decade. Foreigners will gradually become net sellers of US Treasury bonds (UST), and the marginal demand for the US dollar and UST will gradually decrease. If a large amount of debt is to be sold, it cannot rely on non-US investors to purchase.
In the banking industry, Arthur Hayes believes that banks can only sell assets (USTs, mortgages, car loans, commercial real estate loans, etc.) at huge losses and then raise deposit rates to attract customers back to the bank. Alternatively, they can do nothing and when depositors flee, they are forced to exchange the bank's assets for newly printed US dollars with the Federal Reserve.
货币政策 In terms of monetary policy, Arthur Hayes believes that the Federal Reserve is currently struggling. Under the current environment and policies, raising interest rates may be equivalent to increasing the money supply, which would actually increase inflation.
Arthur Hayes based his analysis on the above judgment of the economic situation and predicted that the US debt ceiling will be raised this summer. This will allow the US Treasury to issue bonds to provide funds for the government. As the Treasury General Account (TGA) balance increases, bond issuance may temporarily consume US dollar liquidity. However, as the Treasury begins to spend money, the TGA will decrease and US dollar liquidity will increase. Inflation will bottom out and begin to slowly rise. This means that the Federal Reserve may pause its rate hikes in June, but will resume them at the July meeting, and the policy rate may be close to 6% when the Jackson Hole central bank conference is held in late August.
Bank users will continue to deposit money into those large, too-big-to-fail banks. The big banks will deposit any additional funds they receive with the Federal Reserve, which will increase the amount of currency printed by the Fed. The new currency will be used to pay interest on the money held in these facilities, and the amount of USD liquidity injected into the system each day will continue to grow. When wealthy asset holders have more money than they need, they will invest in risky assets such as gold, bitcoin, artificial intelligence technology stocks, and other assets.
Arthur Hayes expects Bitcoin to stabilize at its current price and does not believe the price will retest $20,000 or anywhere near that price. As funds slowly flow into the global risk asset market, a strong support base will be formed. The volatility and trading volume this summer will be disappointing, causing frustrated investors to temporarily exit the cryptocurrency market. He will gradually increase his allocation to Bitcoin after buying the dip in TGA.