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In his latest essay titled “The Easy Button,” Arthur Hayes, founder of the crypto exchange BitMEX, delves into the dynamics of global monetary policies and their consequential ties to what he describes as the impending ‘Crypto Valhalla.’ Hayes analyzes the policy maneuvers of the world’s major economies, notably Japan, the United States, and China, and their effects on the crypto landscape. The Dawn Of Crypto Valhalla Hayes outlines the Federal Reserve’s potential strategy in coordination with the US Treasury to engage in unlimited dollar-for-yen swaps with the Bank of Japan (BOJ). This measure aims to manipulate exchange rates to stabilize the yen without causing disruptive economic shifts. Hayes states, “The Fed, acting on orders from the Treasury, can legally swap dollars for yen in unlimited amounts for as long as they wish with the BOJ.” This tactic, according to Hayes, is designed to avert immediate financial crises by deferring hard economic decisions. Related Reading The implications for Japan’s economy are stark, with Hayes predicting severe consequences should the BOJ decide to raise interest rates: “If the BOJ raises interest rates, it commits seppuku,” Hayes notes, using the Japanese term for ritual suicide to underscore the potential self-destructive economic impact, given that the BOJ is the largest holder of Japanese Government Bonds (JGBs) and would incur massive losses. The devaluation of the yen has also significant ramifications for China’s global economic competitiveness, especially in exports. Hayes discusses how a weaker yen harms China’s export economy by making Japanese goods cheaper internationally, directly competing with Chinese products. He suggests that the People’s Bank of China might respond by devaluing the yuan to maintain competitive balance. “If the yen keeps weakening, China will respond by devaluing the yuan,” Hayes predicts, outlining a potential economic tit-for-tat that could destabilize global markets. Hayes further theorizes…

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Filed under: News - @ May 21, 2024 9:14 pm