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Will the Federal Reserve stop raising interest rates next month? For bitcoin investors, the answer doesn’t really matter.
According to Arthur Hayes, co-founder of BitMEX, the price of bitcoin and inflation will definitely increase due to aggressive central bank policy – contrary to what modern monetary theory suggests.
How Rising Rates Will Increase Inflation
on thursday blog post Titled “Patience is Beautiful,” Hayes outlines why the economy’s ever-increasing debt-to-GDP ratio will cause traditional economic “laws” to “break down.” This includes the idea that rising interest rates reduce the money supply and lead to inflation. He writes:
“Whichever path the Fed chooses, whether to raise or cut rates, they will accelerate inflation and catalyze a general rush to exit the parasitic fiat money financial system.”
data from US debt watch Shows that the United States government is currently $31.8 trillion in debt. This is a far cry from the country’s $26.4 trillion GDP and its relatively meager $4.6 trillion in annual tax revenue.
President Joe Biden and House Speaker Kevin McCarthy recently unveiled a draft bill to stop the influx debt crisis after the nation reached its $31.4 trillion debt limit in January. The deal would suspend the debt ceiling entirely until 2025, but a number of cost-cutting measures are needed to ensure it doesn’t get out of hand by then.
Hayes predicted that the debt ceiling would indeed be lifted sometime this summer, at which point the US Treasury “must issue trillions of dollars of debt.” This would raise interest rates on short-term government debt, encouraging bank depositors to withdraw their holdings as they are encouraged to lend to the government rather than the bank.
As such, the Federal Reserve would be forced to cut rates, which would again make banks profitable, but would result in increased inflation. Alternatively, the Fed could continue to raise rates – but this would only encourage more bank failures, which would be paid for by the Federal Deposit Insurance Corporation with more money printing.
“Gold, bitcoin, AI tech stocks, etc. will all be beneficiaries of this “money” that is printed by the government and paid out as interest,” Hayes said.
Be patient, says Hayes
In the short term, Hayes said he expects bitcoin to remain stable – but a bull market will likely begin towards the end of the third/fourth quarter of the year.
He wrote, “Money printing, yield curve control, bank failures, etc. will all end.” “Between now and then, calm the fuck down…” Because this fall, you better be strapped into your mercenary spacecraft, ready for liftoff.
Last month, Hayes Said He doesn’t expect bitcoin to soar to a new all-time high ($70,000) before the end of the year, but that 2024 is “going to be a good year.”
His opinion echoes that of on-chain market analysis firm CryptoQuant, which told Crypto Potato in April that institutional investors watch bitcoin for later this year. He added that a new all-time high could be achieved by the second quarter of 2024.
Binance Free $100 (Exclusive): Use this link to register and get $100 free and 10% off on Binance Futures for the first month. (terms).
PrimeXBT SPECIAL OFFER: Use this link to register and enter the code CRYPTOPOTATO50 to receive up to $7,000 on your deposit.
[ad_1]
Will the Federal Reserve stop raising interest rates next month? For bitcoin investors, the answer doesn’t really matter.
According to Arthur Hayes, co-founder of BitMEX, the price of bitcoin and inflation will definitely increase due to aggressive central bank policy – contrary to what modern monetary theory suggests.
How Rising Rates Will Increase Inflation
on thursday blog post Titled “Patience is Beautiful,” Hayes outlines why the economy’s ever-increasing debt-to-GDP ratio will cause traditional economic “laws” to “break down.” This includes the idea that rising interest rates reduce the money supply and lead to inflation. He writes:
“Whichever path the Fed chooses, whether to raise or cut rates, they will accelerate inflation and catalyze a general rush to exit the parasitic fiat money financial system.”
data from US debt watch Shows that the United States government is currently $31.8 trillion in debt. This is a far cry from the country’s $26.4 trillion GDP and its relatively meager $4.6 trillion in annual tax revenue.
President Joe Biden and House Speaker Kevin McCarthy recently unveiled a draft bill to stop the influx debt crisis after the nation reached its $31.4 trillion debt limit in January. The deal would suspend the debt ceiling entirely until 2025, but a number of cost-cutting measures are needed to ensure it doesn’t get out of hand by then.
Hayes predicted that the debt ceiling would indeed be lifted sometime this summer, at which point the US Treasury “must issue trillions of dollars of debt.” This would raise interest rates on short-term government debt, encouraging bank depositors to withdraw their holdings as they are encouraged to lend to the government rather than the bank.
As such, the Federal Reserve would be forced to cut rates, which would again make banks profitable, but would result in increased inflation. Alternatively, the Fed could continue to raise rates – but this would only encourage more bank failures, which would be paid for by the Federal Deposit Insurance Corporation with more money printing.
“Gold, bitcoin, AI tech stocks, etc. will all be beneficiaries of this “money” that is printed by the government and paid out as interest,” Hayes said.
Be patient, says Hayes
In the short term, Hayes said he expects bitcoin to remain stable – but a bull market will likely begin towards the end of the third/fourth quarter of the year.
He wrote, “Money printing, yield curve control, bank failures, etc. will all end.” “Between now and then, calm the fuck down…” Because this fall, you better be strapped into your mercenary spacecraft, ready for liftoff.
Last month, Hayes Said He doesn’t expect bitcoin to soar to a new all-time high ($70,000) before the end of the year, but that 2024 is “going to be a good year.”
His opinion echoes that of on-chain market analysis firm CryptoQuant, which told Crypto Potato in April that institutional investors watch bitcoin for later this year. He added that a new all-time high could be achieved by the second quarter of 2024.
Binance Free $100 (Exclusive): Use this link to register and get $100 free and 10% off on Binance Futures for the first month. (terms).
PrimeXBT SPECIAL OFFER: Use this link to register and enter the code CRYPTOPOTATO50 to receive up to $7,000 on your deposit.
