Hayes predicts that Yellen’s actions, in collaboration with the US Federal Reserve, will result in a net liquidity injection 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, spotlighting 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.
The Power and Influence of ‘Bad Gurl’ Yellen
Janet Yellen, according to Hayes, holds significant sway over the global financial system, capable of wielding sanctions that can exile individuals, companies, or entire nations from Pax Americana’s financial network. As the overseer of 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.
Yellen’s role extends beyond mere policymaking; she wields the authority to impose sanctions, which some view as a financial death sentence. This power is rooted in her responsibility to regulate the fiat financial system’s rules, which, in turn, influences the structure of the global economy.
One of Yellen’s most critical tasks is managing the funding of the US government, especially given the recent surge in deficits. However, as Hayes noted, the market seems skeptical of Yellen’s strategy, evident in the bear steepening 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 outlined by Hayes in his essay, which includes injecting liquidity into the system, stimulating demand for long-term debt, balancing liquidity injection to avoid oil price spikes, and deceiving the market into expecting rate cuts. By creating the illusion of impending rate cuts, Yellen seeks to alleviate selling pressure on “not-Too Big To Fail” (TBTF) banks.
Implications for the Global Financial Markets
Hayes predicts that Yellen’s actions, in collaboration with the US Federal Reserve, will result in a net liquidity injection of $1 trillion into global financial markets. This injection is expected to drive growth in the US stock market, cryptocurrencies, gold, and other fixed-supply financial assets.
Furthermore, the essay anticipates a bull steepening of the US Treasury yield curve, preventing a market fire sale of non-TBTF bank stocks. However, Hayes warns that Yellen’s influence has limits, and the potential market upheaval could return by the end of 2024.
Arthur Hayes concludes by asserting the importance of monitoring the net liquidity in the markets and staying flexible in response to potential changes. Despite the initial impact of Yellen’s strategies, the essay suggests that Bitcoin (BTC) with its notably thriving ecosystem will reassert itself as a real-time indicator of the fiat financial system’s health, underlining the dynamic nature of global finance and the intricate dance orchestrated by ‘Bad Gurl’ Yellen.