BitMEX founder and Maelstrom co-founder Arthur Hayes released a new lengthy article titled 《Trump Truth》 today (18th), describing how the newly elected US President Trump may quickly boost the US economy by depreciating the US Dollar, but ultimately this may lead to a new round of QE and inflation as major global economies' currencies depreciate in turn.
The following is a summary of the key points in the article:
Letting the US Dollar Depreciate to Boost the US Economy
Arthur Hayes believes that Trump needs to deliver results as his first-year policy achievement after taking office. Therefore, he speculates that Trump will immediately push for a US Dollar depreciation upon taking office.
Hayes then stated that Trump has discussed the necessity of weakening the US Dollar to achieve US economic goals with the new US Treasury Secretary Scott Bessent. The question is, against what the US Dollar should depreciate, and how to implement the weakening. On this, Hayes said:
Apart from the US, the world's largest exporting countries are China (currency: CNY), the European Union (currency: EUR), the UK (currency: GBP), and Japan (currency: JPY). The US Dollar must depreciate against these currencies to encourage companies to relocate production facilities back to the US.
Hayes then said that since the US does not have the ability to unilaterally determine other countries' exchange rates against the US Dollar, and using tariffs to coerce other countries to agree to a US Dollar depreciation would incur a lot of diplomatic and time costs. Therefore, he proposed the path of least resistance: "Depreciation of the US Dollar against GOLD".
Gold Becoming the Implicit Tool for the US to Adjust Exchange Rates
Hayes then stated that gold has already become the true currency of global commerce, so the US government can create US Dollars through legislation, and then change the holding cost of gold, using these US Dollars to purchase goods and services, which is the definition of fiat currency depreciation:
Since all other fiat currencies also imply a conversion ratio against the value of the government's gold holdings, these currencies will automatically appreciate against the US Dollar. The US can achieve significant depreciation against its major trading partners' currencies without negotiating with other countries.
Hayes added that other countries could theoretically use the same depreciation method to retaliate against the US, but they are not the global reserve currency and cannot compete with the US Dollar, and their outcome may lead to hyperinflation.
On this, Hayes predicts that the US Dollar will continue to depreciate against GOLD in the first half of 2025.
BITCOIN Will Benefit from the 'US Dollar Depreciation'
Next, Hayes mentioned the Bitcoin Strategic Reserve (BSR), stating that the US support for BSR is similar to hoarding GOLD:
It allows the US to maintain financial hegemony in both the digital and physical realms. If BITCOIN is the hardest currency ever, then the central bank with the most BITCOIN will be the strongest fiat currency.
Hayes further stated that if the US government creates more US Dollars through "US Dollar depreciation against GOLD" actions and uses a portion to purchase BITCOIN, this will drive up the BITCOIN price and further stimulate other countries to scramble to buy BITCOIN, a situation that will lead to an exponential rise in the BITCOIN price.
Hayes then said that although he does not believe the US government will buy BITCOIN, this does not affect his optimistic outlook on the BITCOIN price:
Ultimately, the depreciation of GOLD will create a large amount of US Dollars, and these US Dollars must eventually flow into physical goods, services, and financial assets. We have empirical data showing that the fiat price of BITCOIN has risen much faster than the growth rate of the global US Dollar supply, due to BITCOIN's limited supply and the gradually decreasing circulating supply.
The Crypto Market is Expected to Crash Around January 20
It is worth mentioning that Arthur Hayes emphasized at the end of the article that before the crypto bull market enters the "crack-up boom" stage, the crypto market will experience a crash around Trump's inauguration on January 20. On this, he stated that his family office Maelstrom will reduce positions in advance before this, and then re-enter at the low price point afterwards.
However, Arthur Hayes also added:
If the bull market lasts until January 20, we will also acknowledge the forecast error and buy back in, re-boarding the crypto bull market.
