Democrats may secretly print dollars to boost the stock market ahead of the presidential election.
In a new essay, the BitMEX founder argues that Kamala Harris' presidential campaign will likely receive a significant boost if the stock market rises.
But a tightening of speculative yen trading led to a $6.4 trillion global stock market crash last week, with the S&P 500 index suffering its worst trading day since 2022.
In Japan, crowds of investors borrowed cheap yen and invested in risky assets that have the potential for high growth, such as stocks, to generate profits. But when Japan's central bank raised interest rates late last month, the yen rose, forcing investors to sell risky assets, buy yen and pay back what they had borrowed.
Increased demand for the yen pushed the currency higher, forcing more investors to close positions as the rising yen threatened to eat into their profits. The dynamic led to more selling pressure as people panicked and sold their holdings.
Hayes argues that Harris can stop the stock market crash by instructing Treasury Secretary Janet Yellen to rescue Japanese investors with a secret operation in which the Fed lends the Bank of Japan (BOJ) in U.S. dollars using yen as collateral.
Hayes said the operation would allow the Bank of Japan to keep the value of the yen under control by printing more currency to borrow U.S. dollars. Hayes said the newly printed dollars in the U.S. would spark a rally in stock and bond markets, putting Harris in a better position to win the election.
"The most important thing is that U.S. stocks and bonds [go] up in price because the Fed is printing dollars. The added bonus is that Japanese banks can issue endless amounts of yen-denominated loans against the newly minted JGBs. This trade redistributes the system in both the U.S. and Japan."
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