Arthur Hayes, former BitMEX CEO and prominent voice in the crypto world has made a bold claim: Donald Trump’s potential re-election could mark the beginning of the end for the US dollar as we know it.
In a recent essay, Hayes argues that Trump’s economic policies would shift toward a state-controlled economy, undermining free-market principles and ushering in an era of unprecedented monetary intervention.
A shift toward a “command economy”
If implemented, Hayes predicts that Trump’s policies will move the United States closer to a “command economy” model, echoing some of the practices seen in China. He points to Trump’s past economic decisions, particularly during the COVID-19 pandemic, where massive stimulus packages flooded the economy with cash. Hayes describes this approach as “QE for poor people on steroids” and anticipates more of the same if Trump returns to office.
Under Trump, Hayes expects a resurgence of government-driven industrial policies, with tax incentives and subsidies aimed at reshoring critical industries. He believes the government will dominate in selecting which industries thrive, effectively sidelining free-market competition. While this strategy could temporarily boost jobs and wages, Hayes warns it will come at a steep cost, especially for bondholders and savers who could see their wealth eroded by rising inflation.
Inflation and the demise of trickle-down economics
Hayes argues that Trump’s stimulus measures during the pandemic dealt a final blow to traditional trickle-down economics. By directly injecting cash into the hands of everyday Americans, the economy experienced a short-term surge in spending and growth. However, this also triggered supply chain bottlenecks and inflation, as demand outpaced the supply of goods and services.
To curb inflation, the Federal Reserve raised interest rates, a move Hayes interprets as a reaction to protect the wealthy. He notes that this cycle of stimulus and inflation will likely repeat if Trump pursues aggressive economic interventions. Workers may initially benefit, but sustained wage inflation and rising costs could create long-term financial instability.
Hayes’ strategy: bitcoin and hard assets
Hayes emphasizes that these developments highlight the importance of hard assets like Bitcoin, gold, and specific equities tied to government-backed industries. He believes Bitcoin will become the ultimate hedge against economic uncertainty and currency debasement. While he acknowledges the short-term gains for workers and industries under Trump’s policies, Hayes remains focused on the broader implications for savers and bondholders.
In Hayes’ view, the financial system faces significant risks as government debt and monetary easing expand. Bitcoin represents a refuge amid these challenges, reinforcing his belief that it will dominate in the face of global economic shifts.
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