BitMEX founder Arthur Hayes today released a new long article titled "Black or White?", which delves into the changes and developments in US financial policy and explores the potential economic measures that the Trump administration may take.
The article points out that the US has long since deviated from pure capitalism, with the government using multiple rounds of quantitative easing and fiscal stimulus measures to protect the interests of the wealthy and address the wealth gap. Facing new economic challenges, the Trump administration is expected to strengthen fiscal intervention, promote the return of manufacturing and economic growth, and thereby narrow the wealth gap.
Bitcoin Poised to Reach $1 Million
Hayes also mentioned in the article that the Trump administration will pursue a "dollar-weakening" policy and provide the necessary funding for the return of US industry. Furthermore, Hayes believes that the Republican Party will also subsidize companies through legislation similar to the Biden administration's "Chip Act", and allow a surge in bank credit growth:
The Republicans will first pass legislation to incentivize key commodity and materials manufacturers to expand domestic production. These will be similar to the Chip Act, Infrastructure Act, and Green New Deal passed by the Biden administration. As companies accept government subsidies and obtain loans, bank credit growth will experience explosive growth.
Until a certain point, the Federal Reserve will announce its surrender, at least exempting US government debt and central bank reserves from the SLR burden. Hayes said that at that time, the path to unlimited quantitative easing will be unobstructed.
The combination of industrial policy legislation and SLR exemption will lead to a massive influx of bank credit. Regarding this, Hayes said:
The performance of the crypto market will be similar to the bull market from March 2020 to November 2021, or even better.
In addition, Hayes also pointed out that the US had previously injected about $4 trillion in credit during the COVID-19 pandemic, and the current situation may be even more severe, with the growth rate of spending in the defense and medical sectors already exceeding the nominal GDP growth, coupled with the increasing geopolitical and demographic aging issues, future spending growth may gradually intensify.
Regarding labor, if the government wants to shift productivity from the low-cost labor of China to the US, Hayes predicts that the financing cost to achieve this goal will be around $6-14 trillion.
Hayes then stated that the US spent $4 trillion to reduce the debt-to-nominal GDP ratio from 132% to 115%, and if the US further reduces the ratio to the 70% level of September 2008, it will require the creation of $10.5 trillion in credit to achieve the target.
For all the above reasons, Hayes boldly predicts that Bitcoin will reach $1 million under the wave of investment hedging by various countries.
Arthur Hayes' Investment Portfolio
On the other hand, Arthur Hayes also mentioned that in the future, individuals who hold long-term bonds and savings deposits may suffer losses in their yields due to the deliberate control of the US government.
However, Hayes also shared a corresponding investment portfolio:
Do not use fiat bonds or bank deposits to save, but instead purchase gold (the financial repression hedge for the Baby Boomer generation) or Bitcoin (the financial repression hedge for the Millennial generation).
Hayes further explained that the hierarchical structure of his investment portfolio starts with Bitcoin, followed by other cryptocurrencies and cryptocurrency-related equity, then gold, and finally stocks. As for fiat currency, Hayes said he will keep a small amount in money market funds to pay his American Express bills:
I will keep a small amount of dirty fiat in money market funds to pay my American Express bills.
