Crypto veteran Arthur Hayes says Democrats can secretly print dollars to spark stock market rallies before the presidential election.
In a new essay, the founder of BitMEX says say Kamala Harris’ presidential campaign is likely to get a big boost if the stock market booms.
But the expiration of the carry trade has left the yen worth $6.4 trillion the global stock market has been wiped out Last week, the S&P 500 witnessed its worst trading day since 2022.
In Japan, large numbers of investors have borrowed cheap yen and invested the money in risky assets with the potential for high growth, such as stocks to generate profits. But when Japan’s central bank raised interest rates late last month, the yen rose in value, prompting investors to sell risky assets, buy yen and pay back what they borrowed.
Increased demand for the yen pushed the currency higher, forcing more investors to unwind their positions as the appreciating yen threatened to eat away at their gains. The momentum led to more selling pressure as people panic-sold their assets.
Hayes says Harris can stem the stock market turmoil by ordering Treasury Secretary Janet Yellen to bail out Japanese investors in a stealth operation in which the Fed lends U.S. dollars to the Bank of Japan (BOJ) using the yen as collateral.
According to Hayes, the operation will allow the BOJ to control the value of the yen by printing more currency to borrow U.S. dollars. For the US, Hayes believes the newly printed dollars will lead to rallies in the stock and bond markets, putting Harris in a better position to win the election.
“Most importantly: US stocks and bonds [rise] in price due to the Fed’s printing of dollars. An added bonus is that Japanese banks can issue an infinite amount of yen loans with their new JGB collateral. This trade is breathing new life into the system in both the US and Japan.”
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Generated image: Midjourney