BitMEX Co-Founder Warns Treasury Bond Auction Cancellation Could Print Money

Arthur Hayes, the co-founder of BitMEX, recently expressed his concerns about the potential actions of the U.S. Treasury Department. He warned that if the Treasury decides to cancel the upcoming 10-year and 30-year Treasury bond auctions, it could be seen as a covert form of money printing. This is because canceling the auctions would effectively draw down the Treasury General Account (TGA), which could help stabilize the market in the short term.

Hayes' comments came in response to a recent surge in the 30-year U.S. Treasury bond yield, which exceeded 5% for the first time since 2020. This increase, which amounted to approximately 40 basis points over the past three trading days, has led to a global rise in bond yields. Hayes' tweet also included a critical remark directed at Federal Reserve Chair Jerome Powell, suggesting that Powell might resort to loose monetary policy under pressure.

Hayes' analysis highlights the potential implications of the Treasury's actions on monetary policy. By canceling bond auctions, the Treasury could effectively increase the money supply, which could exacerbate inflationary pressures. This move could be seen as a form of "stealth QE" (quantitative easing), where the central bank indirectly injects money into the economy without explicitly announcing it. Such actions could have significant implications for the broader financial markets and the economy as a whole.

Hayes' critique of Powell's potential actions underscores the delicate balance that central banks must maintain between stabilizing the economy and controlling inflation. If the Treasury were to cancel bond auctions, it could provide temporary relief to the markets but at the cost of long-term economic stability. This move could also be seen as a form of intervention that bypasses the usual channels of monetary policy, raising questions about transparency and accountability.

In summary, Arthur Hayes' comments highlight the potential risks associated with the Treasury's actions regarding bond auctions. By canceling these auctions, the Treasury could inadvertently exacerbate monetary expansion, leading to further inflationary pressures. This move could also be seen as a form of covert money printing, raising concerns about transparency and the long-term stability of the economy. As the financial markets continue to navigate these challenges, it will be crucial for policymakers to act with caution and transparency to maintain economic stability.