Arthur Hayes: Are We About to See a Stealth Money Printer Surge?

Enter the Bank of Japan (BOJ) and the Fed's Foreign and International Monetary Authorities (FIMA) repo facility. To prevent a sell-off that would spike UST yields and disrupt global markets, the BOJ is likely to buy these bonds and use the FIMA repo facility. This allows central banks to pledge USTs in exchange for freshly printed dollars, increasing the global dollar supply.

This maneuver sidesteps the free market, preventing a bond market collapse from a sudden UST influx. However, it comes at a price: more dollars in circulation, fueling inflation—the hallmark of the "brrrr" scenario.

For the Fed, it's about stability. By providing liquidity to the BOJ, it ensures USTs aren't dumped, which would drive up yields and make U.S. borrowing more expensive. Yet, this also devalues the currency, leading to inflationary pressures.

In an election year, with high political stakes, Treasury Secretary Janet Yellen and the Fed will likely prioritize market stability over inflation concerns. This environment favors Bitcoin and other cryptocurrencies, which thrive on fiat currency weakness. As money printers go "brrrr," cryptocurrencies' scarcity and value proposition become more attractive, potentially driving prices higher.