YouSaid · the spoken record

Arthur Hayes

lines on the record: 60
first: 2025-04-23
most recent: 2025-04-23
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“I actually don't think that they're mentally prepared for that sort of leap. They understand goal. They've been training goal. They read history books about gold. I think, you know, the most likely outcome would be just do something what China is doing, right? 20% of the hash rate comes from China. You can't privately mine Bitcoin in China. It's all the governments and state-owned entities doing it. So if you have a surplus of energy, then you save it in Bitcoin. some countries in the UAE are doing that, oil exporting nations, all that kind of thing. So I think it's more likely that you say, okay, well, I'm producing excess energy. I'm going to store that in Bitcoin versus I'm going to buy Bitcoin with my dollar earnings. Of course, there's smaller countries that I'll sell. I don't want to do this. I'm talking about like major economic powers. Central banks say I'm going to buy some Bitcoin and hold it. Again, that's just my view. Maybe I could rip me wrong. I guess they understand gold.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah. So if we extrapolate this theme that reserve managers at central banks are trying to diversify away from being overweight U.S. and obviously get into gold and into other currencies. How do we feel about extrapolating that to Bitcoin? It feels like one of those golden gooses that”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“The Trump administration refused to renew dollar swap lines and cripple the EU because they didn't do something he wanted them to do. Right again, that's just another part and parcel of a treasury bond is not risk free. There is risk. You have to start asking yourself, what if? And when you start asking yourself, what if, then you might as well own gold because there's no what if in gold. I home the gold in my vault. I've got a guy with a gun guarding it. I know that I've been able to buy oil and seeds and whatever for thousands of years with this shiny gold, this shiny metal, it's going to last longer than a U.S. Treasury bond. I'm going to own some of this. That is the structural bid behind gold.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Do you want to keep buying that, or do you want to buy gold, which has always been for 10,000 years sort of this neutral, stateless asset where people save energy for human civilization? Well, I want to buy more gold. And that's what they've been doing. Central banks around the world, especially in the global south and current account surplus countries, have been increasing their purchases of gold. Obviously, China's doing so other countries as well. you know, even like Poland and the EU, they have an explicit target they want to bring it up to something like, I don't know, 15 or 20% of their central bank reserves. So everybody understands that treasuries are no longer a risk-free asset. Yes, the government can, US government can print nominal dollars to pay you back. That's if they want to pay you back. If you're Russia, they don't want to pay you back. If you piss the, there's a research piece by some Deutsche Bank strategist a few weeks ago stating that, oh, could”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Two events in the gold market of the last few years was February 2022 when the Biden administration decided to steal Russia's assets and freeze them. And destroy property rights. I mean, properties are already kind of destroyed, but to take the largest commodity producer in the world and say, okay, we're going to take your shit, that's a different sort of escalation. And then Trump rolled out these maximalist tariffs on everything except for gold and some commodities, which is tell in terms of where the system's going. So if you're a central bank manager or some sort of sovereign wealth individual and you've got all these dollars coming in, do you want to make the problem worse of owning these treasuries that you can't sell? The liquidity has declined. If you piss off the president, they sanction you and you no longer have access to your money.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“I mean, first off, Bitcoin has performed better than gold. If you take a look at your spot, any type frame. So, this is more of a relative thing, you know, people see it going up and all that stuff. And I own lots of gold. That's a great trade. At the end of the day, I think the big.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“100%. Okay, so I want to shift finally here into just digging deeper into your Bitcoin framework and how you're thinking about it for the rest of the year. And I want to start with what's been going on with gold, which has just been on an absolute tear, hitting all-time highs every day. And Bitcoin was lagging there for a little bit. It started to wake up recently, especially the last couple days, which is exciting to see. But yeah, I would love to first off just hear what do you think has been driving gold so much? How do you think about that in contrast to the digital version, i.e. Bitcoin?”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. And they already have the tools, right? There's the central bank swaps, the Fed can essentially print infinite amounts of money, hand it to the BOJ, and the BOJ can basically take these bonds off the private sector and warehouse them. And then the Federal just continue to roll it alone. They've done it before during the 2008 financial crisis. They don't like to talk about it, but that's all these things were created. And so I would imagine that's the simplest way for them to do it. And again, it's not considered quantitative easing per se because it's not the technical definition of it, how the general layperson understands it. And so people would be oblivious to exactly why is the market going up? Why is my coffee? Why is it coconut water $20 now? I thought they weren't printing money. No, they are printing money. It's just in a way that you don't understand.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that's what seems so confusing is that I don't think it's a coincidence that the first place Scott Besson is going to negotiate on trade is Japan. And to your point, Yenna 140, and if they're talking about wanting a weaker dollar, that almost certainly means a stronger yen. But if they have a stronger yen, if we lose that 140 level, for example, that's going to have some pretty significant impacts on yields. Do you think they're thinking about this in terms of, okay, if we get some sort of currency agreement where we strengthen the yen, there needs to be that other side of the impulse, which covers the yield side of things. We're also seeing just all blows up.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“So, this is the unwind of Japan Inc.'s massive carry trade position as a country is probably the biggest risk to the biggest catalyst to the resumption of QE and explicit yield curve control. Because if Japan is going to repatriate the trillions of dollars of capital, Specifically in the United States, then they're going to have to have some accommodation from the Fed and the Treasury to make sure they don't blow up the U.S. financial system.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“When the end strengthens, people have to unwind these assets. They have to sell stuff. They have to sell bonds specifically. And so if we get a chaotic ship head unwind because Trump wants a weaker dollar, so the yen has to strengthen, well, if the yen is strengthening and the BOD is raising rates, they have a Japanese person who's borrowed yen to buy stocks or bonds or whatever, I have to sell it and cover immediately because I'm about to lose money. Or if I'm a Japanese person, now I can buy a Japanese government bond and it yields enough so they don't have to take that FX risk and go into treasuries.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“The most obvious one, but not necessarily going to be the most likely is a carry trade unwind out of Japan. So obviously Japan has a staunch ally of the US. They do whatever they're told. And if a weak dollar is necessary so that the US can reindustrialize, Japan is the largest holder of treasury debt. It's not China. It's Japan. And the yen is weak, they keep it weak. The BOJ has been printing money for 30 years to solve their balance sheet recession that started in 1989. So at the end of the day, the world has financed itself with GPN. Yen went to 140 or below 140 yesterday.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I'm trying to just figure out where would this potential outcome of an actual QE impulse come from? What would trigger them to want to do it? Because it feels to me like the big reason is more so this like political one, which is we don't want the long bond above 5%. And that to me gets into the realm of almost like yield curve control. So I'm just curious, like, how do you think is the catalyst factor here? Is it just yields being too high or is it like an actual, you know, some esoteric part of the monetary plumbing world going no bid and seizing up? How do you think about all of that?”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, 100%. Okay, so as we keep nerding out here on monetary acronyms. Digging into the QE side of things. So obviously that to me is just yeah, the outright permanent purchase and swap of a bond for central bankers versus a lot of these other ones feel like more loan facilities or temporary, obviously like BTFP was one where it was like a loan that was temporary of sorts but still provided this liquidity impulse and when I look at you know”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Divorce of trade where the US treasury bond no longer is the global reserve asset. Then who's going to buy this stuff? The banking system is the only person who can buy it, especially if the Fed is doing quantitative tightening or not doing QE to the level at which is necessary to mop up all of the supply of debt being issued. And it certainly isn't going to be the private sector because they spend all their COVID money on cars and wash machines. Everyone's fucking broke.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Guess what it'll lend to SP 500 or Fortune 500 companies because that's safer. So if I can borrow cheaply, if I'm too big to fail bank and I essentially my deposit rates are much lower than where the treasuring market rates are, I borrow short and I just go buy government debt. You don't have to put up any equity capital against this debt. Whereas if I bought, if I had a personal loan or a car loan or corporate debt, I have an equity charge. It costs me money to originate that loan. I have to put some of my own skin in the game. But it's a US government that says no more skin in the game. You can buy as much of this stuff as you want. Great. I have a positive net income margin as a bank. And I guess fucking ram that shit through infinite leverage. My stock price goes up. Cobranings go up. Everybody's happy. So the banks want SLR because they're going to make a fuck ton of money doing this. And the banks are going to get it because at the end of the day, if Trump is serious about this.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Jamie Diamond, guess what Jamie Diamond wants? Jamie Diamond wants SLR exemption. Very simply, a bank borrows at the short end from depositors and lends long. Now, banks don't like to take risk, as anyone who knows who had a risky business proposition or personal loan, they need to go to the bank. And the bank said, ah, I don't know about that.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“I think it's going to happen. And even Jamie Diamond, if Jamie Diamond said that it happened, if Jamie Diamond wants it, then Jamie Diamond gets it. He gets it. Right? As soon as Jamie Diamond went on TV saying Trump's trade policies were bad, Trump changed immediately.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it's so funny. It feels like. Know obviously they try to have a lot of focus on the Fed funds rate and what they're doing there, but in reality and in practice, a lot of the marginal moves and liquidity happens throughout these facilities. You mentioned SLR in there, the SLR exemption, which has been something really interesting. You've been on top of it. But if I just think back to, obviously during 2021, et cetera, they had the SLR exemption in there just because there was so much debt being issued and they just needed somebody to come and mop it up. They then reversed out of it. They canceled the SLR exemption. And it sounded like a lot of the talk that was coming out of there, especially in relation to Ali Basel 3 endgame stuff, is that there was no plan to ever have that happen again. There was no plan to run the SLR exemption ever again. And we've seen a very notable shift in the last few months where we have Treasury Secretary Scott Besson talking about the SLR exemption. We have Powell saying it's time to review it. We have Fed Governor Bowman talking about it, who just got nominated to the Vice Chair of Supervision.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“And so I think people are getting too hung up on the words. Just look at the actions every time bond market volatility spikes, the Fed does something. It might not be QE in the traditional form of what we believe QE is, but they have so many other tools. They have supplemental leverage ratio. They have, you know, how fast they're going to do quantitative tightening. They have other sorts of Basel III implementation things that can slow down or completely cancel in the banking system. So they have a lot of these tools that the uninitiated public would not consider money printing that lead to the same outcome.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Reactive to the market, right? Let's go back to 2023, the Silicon Valley Bank banking crisis, three banks failed in two weeks. And we had the bank term funding program released overnight between Powell and Yellen. Powell is supposedly supposed to be tidying Monterey supply. If you look at the week after they announced his programs, their balance sheet blew up like by like $400 billion, right? Quantitative tightening happens as long as there's nothing wrong going on on the market. As soon as something is fucking up, the Fed is right there ready to do what they need to do, right? You got Susan Collins and the Financial Times, you know, during the heat of the tariff tantrum saying the Fed is stands ready to do what is necessary to keep the market functioning. What does that mean? The Fed stands ready to create some alphabet letter gobbledygook that isn't Q and E that prints money. That's what it is.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“That would on its own be obviously a huge signal to be quite dovish. It obviously isn't because of this concern for the inflationary potential impulse from tariffs. But overall, I would love to dig into how you're thinking about the Fed right now. So you've been mentioning that you feel like regardless of what Powell says in Senate testimonies where he says, we won't do QE until rates are at least at zero, which is a long way off. We need a lot more pain to get rates at zero at first before we've even thinking about QE. But I believe you're of the mind that regardless of what he says there, some form of QE needs to happen. So how are you thinking about Powell and the Federate now?”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, absolutely. I mean, that really gets to the meat of it here, which is people like you and I that are also like, you know, fundamentally bullish Bitcoin, not just as a speculative trading vehicle. It's that, yeah, you can't taper Ponzi. The can will always get kicked. And so here we are looking at here comes the next big can kicking. Tokenization isn't just a buzzword. It's the most efficient way to reimagine how financial assets are owned, traded, and managed. Ondo is bringing traditional assets like stocks and bonds on-chain, unlocking trillions in value, and creating open global financial markets. They're not just dreaming big, they're building the platforms, assets, and infrastructure to make it happen. Head tondo.finance, o-n-d-o.f-in-a-n-c and see how they're bringing capital markets on chain. Restriction supply. Hey everyone, this episode is sponsored by Ledger. For the past decade, Ledger has been the global leader in digital asset security trusted to secure more than 20% of the world's crypto assets.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. I mean, maybe in 20 or 30 years there's some massive change in global architecture. But for whatever reason, the Trump administration couldn't take the pain to pursue this maximalist position in quickly reversing the current account deficit, probably because people are like, I can't get re-elected if I do this, you know. And that's just the... Just the math, unfortunately.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“So, if you have Doge going from a trillion to $150 billion, negligible at this point, increased deficits, tax cuts, you have Scott Essen, who was a huge critic of what Yellen was doing, but is looking more likely like he's going to repeat the same things of just keeping the party going in some form or another. It feels like a lot of this is a huge fade in that, you know, the party goes on, does it not?”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Tax receipts might come in a bit light because of capital gains receipts. Taxes are low because the market's been taking. And so and government outlays continue apace because of the structural social security defense, all these sort of things that you continue and have to spend money. Plus you have Trump tax tax cuts, which pillar of the Republican platform looks like they're going to pass them. That's going to increase the deficit as well. So Bess is going to have to issue more bonds. The market's not going to like it. He needs someone to step up and buy these things. There are hedge funds are there. They just need more capacity on the bank balance sheets. This buyback program, if done in a sufficient size, gives him the ability to buy more bonds. And because the purchasing of bonds doesn't come from actual savings, it's stimulative. The government is printing money to do stuff, goods and services, which will increase the amount of credit, money in the system, which increases the quantity of money and Bitcoin.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Correct. And we know that the debt, well, I believe that in his next quarterly refunding announcement, we should come on, I think, May 1st next week. Bessa will announce that he needs to borrow more than the market thinks, mainly because, as you mentioned in the outset, Elon Musk doge. I think I read a New York Times article. He said he was going to do a trillion. He thinks it's going to be more like $150 billion in terms of cuts.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Interesting. So he doesn't even need to do the twist style thing. It's just the fact of ramping up that swapping the authorance for the on-runs, that's enough to make for this meaningful increase in the marginal buyer debt, correct?”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Those will change in the future. But under the current rules, if he can free up balance sheet so that these RV hedge funds can increase the amount of bonds they can buy, then they can act as the marginal buyer of debt as he continues to increase issuance of debt going forward. And again, it's because the off-the-run bond is more illiquid and therefore carries a higher capital charge, higher margin requirement. And so by leaving a system of this supply and possibly even pushing off rent bonds into a premium, then these RV hedge funds can facilitate more buying on the margin of the increased issuance of treasury debt.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“So I think, and this is for me talking to some of my friends who are really in the weeds on the work at large bond hedge funds, it's what you describe the former. So it's, okay, I'm a relative value hedge fund. I've bought an on-the-run bond and I've sold a bond, futures contract waiting for that basis to converge. Obviously, as time passes, the online run becomes the off the run while I'm waiting for this basis to converge. But once the bond becomes off the run, then my bank says I need more collateral against that repurchase agreement, which means I can do less and less trading or have to reduce my positions. And so if Bessant can free up leverage, free up bank balance sheet to lend more under the current rules, which again, he thinks are too strict.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“I would love to the way I see buybacks there is that there's two different routes that they can take they can take the traditional route which they've been doing which is keeping the duration even where they just you know Basically, sell on the rents and then buy back off the rents, which is the most illiquid part of the bonds. And so the duration doesn't really change. But what I've been thinking a bit about is, okay, well, what if they tried to do some sort of like operation twist style thing where they issue bills, but then they buy bonds potentially? Do you see that as potentially being the next step here?”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, yeah. Okay, so there's a couple points there I wanted to dig into on the available leverage. So obviously the one that you mentioned that Yellen pulled, which was shifting issuance towards the bill side and having that be funded by the reverse repo, that's sort of a one-time gig that you can do because that was happening when that started when it was at a one and a half trillion. We're at $100 billion now. So there isn't, you can't run that same game again. Now, obviously, there's the Treasury buyback scenario that you're talking about, which To be fair has something that was actually started under Yellen, but for the most part, it was very small size”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Do they move money from a sterilized pool on some central bank balance sheet into the general market, which can be releveraged through the banking system? So we have to be a little bit more, I guess, indirect in our thinking of how the quantity of money changes as treasury officials all across the world sort of take control from the central banks. Because the central banker says, I want to be independent. I care about the value of the fiat currency, blah, blah, blah, blah, blah. Right. That's what they believe. But the Treasury official says this government's broke. The politicians want to spend the money. I work for the politicians. Therefore, I will make sure the government could fund itself at an affordable level.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“They can do it without input from the Fed. And so that's kind of where we're at. Eventually, the Fed will come around, they've already indicated that, you know, quantity of tightening is tapering. They might do some sort of like balance runoff where mortgage-backed securities, the maturing work of sacked securities, that money is in purchasing fresh new treasuries. So there's lots of things that you can do that aren't quantitative easing because that's a bad word. The plebs know what quantitative easing is. They know that means inflation. You can't do that anymore. You got to be more creative. So I think we have to be flexible in our mental models of what quantitative easing mean, what money printing means. Look at the second order and third order effects of, okay, well, if they do this, how does the other market participants react? Do they buy more bonds?”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Help market conditions. And he said, I've got plenty of tools specifically treasury buybacks. And so again, it was increased bills versus bonds under Yellen, stealth quantity of easing. Best is going with treasury buybacks, another form of stealth quantitative easing. Both of these programs require no input from the Fed, no input from Congress. They can implement them as and when they please. And so I believe that was a seminal moment in sort of this risk-off situation. And to me, that this feels like November of 2022 in that there's lots of reasons to hate the market in Bitcoin at that period of time. But if the Treasury is going to print two and a half trillion dollars, shit's going up. If Scott Besson is going to do Treasury buybacks till the cows come home, shit's going up and it has gone up since he made that announcement. They haven't started increasing the pace yet, but they will do because.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“But not really printed. It's not technically quantitative easing. And so people get caught up on this, oh, it's not QE. So the market's not going to go up. Yeah, but it's still released at $2.5 trillion into the market. So that was a September 2022 until sort of early 2025 situation. And that was a monster rally in Bitcoin. Bitcoin went up 6.6 in that period of time. Focusing on what Powell is doing was correct in the last cycle, but now it's a treasury show. The treasury runs the show. They dictate policy. So what do we get out of the news secretary Besson's mouth recently? He sat up down with a Bloomberg interviewer.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“There's two and a half trillion dollars sitting in this reverse repo program that doesn't really circulate within the economy. How do we get that money to come out of the reverse repo and into these bonds that we need to sell? Because we have a large deficit. I know. We're going to increase the amount of treasury bills as a treasury debt security with less than one-year maturity. And if the yield is a few basis points higher than the reverse repo, then the money market fund is going to pull the money out of the reverse repo and put it in the treasury bill. The treasury bill gets relevered throughout the system and therefore liquidity goes up, stock market goes up, right? Now Paul's over here doing is I'm a Paul Voker impersonation. I'm going to go and keep these monetary conditions tight. I really care about fighting inflation. On the other hand.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“After the little bit of inflation that the world experienced and every central bank raised rates, the community was like, okay, well, we know QE equals number go up. So where's the QE? And from 2022 until the current moment, Paolo really, I mean, they cut a few times, but we haven't seen in quantitative tightening has reduced a bit. But we haven't seen a 2008 to 2019 style quantitative easing program from the Fed. And that's left a lot of people saying, oh, no, the Fed's being really, really tight. Therefore, I can't buy risk assets. So I'm going to sit on the sidelines and I don't know what you do. But you're not in Bitcoin. You're not in Nasdaq. You're not in these things. Now, obviously, that was the wrong trait because people forgot about the other side of the equation of what can the treasury do unilaterally without the Fed. And so we've learned, you know, yelling, bad girl yelling, or some staffer at the Treasury Department said, oh.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“We all were very well trained from 2008 to 2019 that the Fed does QE. It prints money every week to buy bonds. Stock market goes up, right? That was the game. We got conditioned. Where's the QE? Stock market goes up. Bitcoin goes up. Everything goes up, right? And so post 2020.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“I want to bring into this discussion the liquidity situation for, especially how to think about it through Bitcoin. So obviously right now it feels like the big narrative is trying to understand who's really driving this. Is it Paul on one side who's sitting on his hands and trying to remain resolute, hawkish versus Secretary Brescent on the Treasury side of things, who is obviously going to be political because he's part of the Trump administration. And there's a lot of different moving parts there. So I would love to hear first off, let's dig into the fiscal side of things and what's going on with Treasury Secretary Scott Besson and some of the signals that we can derive there to understand where is the liquidity backdrop headed and what levers can be pulled on the fiscal side of things to drive that.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“It's just a leaders of the last cycle become the laggards of the current cycle, and that being US tech. And Bitcoin continues to outperform because global liquidity continues to rise.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Bad boogeyman, but we're going to find a deal, then everything goes up. Bitcoin goes up more, but everything goes up. And so we don't really get a test of this. Bitcoin just high beta NASDAQ in the short term. Now, in the long term, I think that US tech exceptionalism as a narrative is dead. There are cheaper ways to do AI. You don't need to spend all this money. There's obviously deep seek and some other really cool LLMs coming out of China. It's questionable whether all this CapEx is being used. You know, we're starting to hear reports from different channel checks on Amazon and Microsoft and them canceling leases on some of these data centers and whatnot. So again, big US tech spend a bunch of CapEx just like they did in 2001. We know what happened to Cisco. We've done 90 something freaking percent. Not to say that Google's going out of business, but I don't see structurally how these companies are going to be the leaders of the next rally. So it might not be that there's some sort of dislocation due to a divorce of US and China and sort of trade.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Think it's an early signal, but. We might not get the demonstrative validation that we like because Trump backed off from the maximalist position so quickly. So obviously in the first few days after Liberation Day, stocks crashed, Bitcoin crashed. Okay, stocks just high beta NASDAQ fits the narrative. Then the yield started ripping as basis trading hedge funds were getting margin called and people were afraid that there was being an unwind of all these positions and front running that trade. And the market stress started to increase move index went to 172 in today. And Bitcoin started to rally. But then because, you know, Trump and the team pivoted so quickly, then we got back to business as usual and everything just goes up together. It's just a question of how much. And so if, you know, further to today's press conference, if it's no longer, I'm going to file Powell, it's no longer China's big.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“I've been thinking a lot about the decoupling thing because, yeah, to your point, if they do reduce the trade deficit, it means a lot less flows into US dollar-denominated assets. At the same time, that China's going to print a lot of money. We've already established that. We've already seen some interesting reaction functions from Europe where they're looking to, you know, we've had Germany take off the debt break and start talking about running a higher fiscal deficit, which is obviously going to be positive for Bitcoin as well. Yeah, like how do we validate this idea of the decoupling? Because obviously, you know, if we just look at market price action for the last couple weeks of comparing the US tech equities, which have just been doing terribly versus Bitcoin has been holding up really strong, is that an early signal of this or how do we validate that?”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Think so, therefore, we get a printing money function in Bitcoin benefits, it finally decouples from tech because of the structural flows and what needs to happen from an affordability standpoint for the US government.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Sure, and China's not alone. It's every major economy needs to print a bunch of money to basically cushion the effects. But at the end of the day Yeah, they're going to print money. Bitcoin benefits. Now the reciprocal of the current account deficit in the US is a financial account surplus. And so all these dollars I got earned, the trillion dollars that got earned selling stuff to America got recycled into treasury bonds and stocks and MAG 7, all the other big US tech stocks. So mathematically, if Trump is serious about reducing the credit count to zero, then foreigners have to sell stocks. Period. There's no, it's just math. And then the question is, okay, well, can the US government Survive financially if there's a big decline in capital gains taxes because the market's not going up.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“So the goods are going to find their way to America at the end of the day. People are going to cheat and do all this things. There might be some like, you know, secret pathways that are allowed that face-saving measures so that both sides can claim that no trade is happening. But if you really dig through the details, there's trade happening. It's just more expensive. You just increase the cost of the good. But the good that's still going to get there because China is the only one who can make it. Until that's not the case, then these tariffs will be effective in making things more expensive around the world, but ineffective from actually decoupling the world trade ecosystem.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“So I think at the end of the day, the world needs Chinese cheap goods, cheap and high quality goods, I should say. They're very high quality these days. It's the most advanced manufacturing setup in the world, which is why everyone makes their stuff there. Period. And the statement, there's no debating that. So, okay, so what happens when you make something more expensive, but there is an imperative for lots of parties that still want the good, like illegal drugs in most countries, right? There's a demand. There's this function that says they're illegal. But the drug's still good get consumed. Same thing. There are imports from China that are necessary for every single good in the world. They're cheap and they're high quality. No one else can, even if America completely was successful in this terror thing, they're not going to have factories to replicate the Chinese ecosystem from, you know, maybe five, ten, fifteen, twenty years, right? It took China 30 years to build this situation.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, totally. And it feels like that's where the game theory is at now, which is how do they navigate that? So, you know, as it stands today, with how high the tariffs are between the US and China, if we take them at face value, it's effectively an embargo between the two largest economies in the world. And I'm curious, how do you think about if that stays constant? And, you know, to your point that Xi Jinping cannot just relent here is that they And they also have a lot more time on their side than I would say is like a traditional four-year election cycle. So they're not in a rush. So if we're in this current situation where there's just this embargo between the two largest economies, how do you think about the effect of that on the global economy? Like if we take the assumption that the rest of the countries will come to some sort of at least marginal deal on tariffs, but the tension with China remains, can we have that and not have a recession?”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT
“Of things. And so for him to sit up there and just take that diet from Trump not only makes him look weak domestically, makes him look weak amongst all the Asian countries, which used to be vassals of China during imperial times. So again, I don't think that China can come to a deal or a deal to the magnitude that is necessary to rebalance trade, which leads to, well, then what can they do because they're locked in a balance sheet recession and they need to print a bunch of money to solve their own problems internally.”
2025-04-23 · Forward Guidance · The System Is Too Levered To Take Real Pain | Arthur Hayes · IDENTIFIED FROM THE TRANSCRIPT