How will central banks be forced to print money again? BitMex founder answers

How will central banks be forced to print money again? BitMex founder answers

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Answer How will central banks be forced to print money again? BitMex founder answers

Arthur Hayes, co-founder of cryptocurrency exchange BitMex, published a lengthy blog post Thursday arguing that central banks will be forced to return to the option of printing money due to various economic pressures.

He argued that printing money would create inflation that would raise the prices of alternative forms of money, such as cryptocurrencies and gold.

Inevitable inflation:

in statement Hayes, titled “The Contagion,” the former CEO began by highlighting the immediate difficulties the global economy is facing in the wake of major central banks’ decision to tighten monetary policy.

He explained:

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The markets that were hardest hit were the sovereign bond markets, with the bond market rout that was nearly the worst in recorded human and financial history.

With the impact of quantitative tightening, bond yields have risen to an unsustainable extent in some markets.

Last month, the Bank of England was forced to revert to quantitative easing to suppress the rapidly rising yields on its 10- and 30-year bonds, nearly causing many UK pension funds to go bankrupt.

Hayes argued that other central banks would eventually succumb to similar measures to address similar problems.

For example, the European Central Bank is already buying bonds for some weak member states.

In particular, the European Union suffers from a shortage of affordable energy due to Germany’s current energy policy.

According to Hayes, this could hurt Germany’s economic production and its position as an exporter, causing countries with which it trades to stop buying their products in euros, which are already weaker against the dollar.

Hayes added:

Without cheap energy, Germany will have to try to find its way out of its troubles.

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And like any other country, they will issue more bonds to cover remittances.

With Germany issuing more bonds, the co-founder said its yields will rise significantly, as is already the case in the UK.

Thus, the EU will extend its quantitative easing policy to Germany and all other EU bond markets.

Crypto and gold are the main beneficiaries:

Given his thesis that most major central banks are on their way to controlling the yield curve, Hayes added that global risky, fungible assets, such as gold and cryptocurrencies, would benefit.

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He added:

Since the gold and cryptocurrency markets are much smaller than the volume of trillions of fiat money to be printed, these assets will rise in currencies other than the dollar.

Even in the face of a hawkish Fed, Hayes asserted that bitcoin would rise from the combined efforts of other central banks.

This is due to the arbitrage opportunity that will appear across the foreign exchange markets for both bitcoin and gold, which will eventually lead to an appreciation of the dollar for each.

He concluded that this process would not be immediate, but rather once politicians began implementing the policies needed to satisfy their constituents.

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