Arthur Hayes says Trump’s Bessent wants to use dollar-yen exchange rate to force the Fed into printing money

Arthur Hayes believes US Treasury Secretary Scott Bessent is preparing a way to strengthen the yen that could also force the Federal Reserve to create a large amount of new dollar liquidity. Arthur’s case centers on the Fed’s FIMA Repo Facility.

In his latest essay titled ‘Yen-Quake,’ Arthur said that Japan could place its US Treasury holdings with the Fed as collateral, borrow dollars, sell those dollars for yen, and then use the yen to buy Japanese assets.

However, what Arthur perceives to be important about the setup is the creation of dollars because a larger balance sheet at the Fed may feed directly into Bitcoin, Ether, gold, miners, and other financial assets.

Arthur says rate hikes and foreign asset sales would create pain Japan and the US want to avoid

Arthur lays out three ways Japan could strengthen the yen. The BOJ could raise rates aggressively. The government could push GPIF and other institutions to sell overseas assets and bring the cash back home.

Or the Ministry of Finance could borrow dollars from the Fed through FIMA and use those dollars to buy yen. Arthur believes the third choice is the one Washington and Tokyo can live with.

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