Hayes predicts that Yellen’s actions, in collaboration with the US Federal Reserve, will result in a net injection of liquidity of $1 trillion into global financial markets
In a recent essay titled ‘Bad Gurl’, Arthur Hayes, a renowned crypto expert and former CEO of BitMEX, delves into the intricate world of finance, highlighting the influential figure of US Treasury Secretary Janet Yellen. Hayes characterizes Yellen as the orchestrator of financial maneuvers capable of shaping the global economic landscape.
Janet Yellen, according to Hayes, has significant influence over the global financial system, capable of imposing sanctions that can exile individuals, companies or entire nations from the Pax Americana financial network.
As overseer of the rules and regulations governing the fiat financial system, Yellen’s decisions resonate globally, shaping the world of credit and, consequently, the structure of the global economy.
‘Bad Gurl’ Yellen’s Power and Influence
Yellen’s role goes beyond mere policymaking; She exercises the authority to impose sanctions, which some see as a financial death sentence. This power is rooted in its responsibility to regulate the rules of the fiat financial system, which, in turn, influences the structure of the global economy.
One of Yellen’s most critical tasks is managing the financing of the US government, especially given the recent rise in deficits. However, as Hayes noted, the market seems skeptical of Yellen’s strategy, evident in the bearish slope of the yield curve. This financial phenomenon poses a significant threat to the banking system, a concern explored in Hayes’ previous essay, “The Periphery.”
To address these challenges, Yellen faces a daunting task list, as Hayes describes in his essay, including injecting liquidity into the system, stimulating demand for long-term debt, balancing the injection of liquidity to avoid spikes in oil prices and fool the market into expecting rate cuts.
By creating the illusion of imminent rate cuts, Yellen seeks to alleviate selling pressure on “not too big to fail” (TBTF) banks.
Implications for Global Financial Markets
Hayes predicts that Yellen’s actions, in collaboration with the US Federal Reserve, will result in a net injection of liquidity of $1 trillion into global financial markets, which is expected to boost the growth of the US stock market, cryptocurrencies, gold and other fixed supply financial assets.
Additionally, the essay anticipates an upward tilt of the US Treasury yield curve, which will prevent a market fire sale of non-TBTF bank stocks. However, Hayes warns that Yellen’s influence has limits and that potential market turmoil could return in late 2024.
Hayes pointed out the uncertainties and possible obstacles in Yellen’s possible strategies that aim to stabilize the economy, issue short-term bills and manage the balance between the Reverse Repurchase Program (RRP) and the Treasury General Account (TGA).
Hayes argues that the subsequent influx of liquidity, along with the actions of other major global central banks, could result in a depreciation of the dollar. The discussion implies that the combined impact of Yellen’s strategies and the resulting increase in fiat credit globally could contribute to a weakening of the dollar.
Arthur Hayes concludes by stating the importance of monitoring net liquidity in the markets and remaining flexible in response to potential changes. Despite the initial impact of Yellen’s strategies, the essay suggests that Bitcoin (BTC), with its remarkably thriving ecosystem, will reassert itself as a real-time indicator of the health of the fiat financial system, underscoring the dynamic nature of global finance. and the intricate dance orchestrated by Bad Gurl’ Yellen.
By Leonardo Perez
