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Arthur Hayes on the Crypto Market’s Link to US Government Debt
Arthur Hayes, former CEO of BitMEX, warns that the US economy is shifting into a wartime footing, with stablecoins — not Bitcoin or Ether — playing a key financial role. As the Trump administration plans to flood the economy with credit to boost defense production, Hayes predicts stablecoin issuers like Tether will quietly purchase trillions in Treasury bills to finance this massive wave of debt.
Trump’s “Fascist Credit” Model Explained
The US government is emulating China’s strategy by guaranteeing profits for critical industries such as semiconductors, rare earths, and weapons. Banks lend money confidently knowing the Department of Defense backs the deals. Hayes highlights the example of MP Materials, which secured a $1 billion loan from JPMorgan and Goldman Sachs to build a rare earth processing plant, guaranteed by the Pentagon’s involvement. This cycle creates new fiat money, funds military production, and enriches banks, government, and contractors alike — a “QE for poor people” according to Hayes.
Inflation and Financial Bubbles: The Hidden Cost
While this credit expansion fuels growth, it also leads to inflation. Wages rise, goods get more expensive, and those outside government and banking circles suffer. To soften this blow, Hayes argues the government will encourage a financial bubble, similar to China’s housing market, but this time with crypto.
Crypto Market Booms with Credit Growth — Stablecoins Buy the Debt
Hayes’ research shows a direct link between US credit growth and Bitcoin’s price, with Bitcoin soaring as fiat currency doubles. The Trump administration is aware of this “orange-pilled” effect — more Americans own crypto than stocks, spreading wealth perception widely. Additionally, crypto-friendly policies like tax cuts and allowing 401(k) plans to hold crypto fuel this trend.
The master plan? As the crypto market cap grows, a significant portion — around 9% — flows into stablecoins, which then invest heavily in short-term US Treasury bills. Hayes predicts if crypto hits $100 trillion by 2028, stablecoins will buy $9 trillion in Treasury debt, massively funding the military-industrial complex.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
