Bessent's Dollar-Yen Plan Could Force Fed to Print Money

US Treasury Secretary Scott Bessent may be planning to use the dollar-yen exchange rate to force the Federal Reserve into printing money, according to Arthur Hayes. In his essay 'Yen-Quake', Hayes argues that Japan could use its US Treasury holdings as collateral for dollars borrowed from the Fed through the FIMA Repo Facility.

The borrowed dollars would be used to buy yen in the currency market, which would then be invested in Japanese government bonds and domestic stocks. This process would create a large amount of new dollar liquidity, potentially feeding into Bitcoin, Ether, gold, miners, and other financial assets.

Hayes estimates that Japan's government owns $1.143 trillion in US Treasuries, while GPIF holds another $230 billion. He believes that if the Fed allows Japan to borrow dollars through FIMA, it would have to create new money to supply the loans, expanding its balance sheet.

Hayes sees this as a potential Bitcoin thesis, citing the large collateral pool and the potential for the Fed's balance sheet to grow with increased borrowing. He also mentions that Ether could be a major large-cap crypto alternative due to its narrative and future security layer role.