Arthur Hayes, co-founder of BitMEX, expects financial asset prices to continue rising as the amount of money in the financial system is increasing despite interest rate hikes by the U.S. Federal Reserve.
In a post on X on the 17th, Hayes argued that when government debt is high, interest rate hikes can instead have a stimulative effect. He explained that higher interest income from banks’ reserves and increased returns for holders of short-term U.S. Treasuries could expand spending, particularly on financial assets.
Hayes analyzed that although the Fed halted reserve management purchases (RMP) in mid-August, the Fed’s and banks’ total assets are still increasing and creating money when the expansion of banks’ balance sheets is included.
“Even if interest rates, the price of money, rise, financial assets will continue to rise if the quantity of money increases along with them,” Hayes forecast.