In his latest essay, "Love Language," published on Substack, Arthur Hayes, the former CEO of BitMEX and a prominent crypto commentator, delivers a scathing yet insightful analysis of the Federal Reserve's latest monetary maneuver.
Hayes argues that Quantitative Easing (QE) - the infamous policy of central bank asset purchases that ballooned balance sheets and fueled inflation - has become politically radioactive. Instead, the Fed has rebranded its money-printing operations as "Reserve Management Purchases" (RMP), a seemingly innocuous term that masks the same inflationary mechanics.
Drawing on recent Fed announcements and economic trends, Hayes warns that this shift not only sustains massive U.S. deficits but could ignite a global race to debase fiat currencies, ultimately supercharging assets like Bitcoin.
The Toxicity of QE and the Birth of RMP
QE, first unleashed during the 2008 financial crisis, involved the Fed creating reserves to buy long-term Treasury bonds, effectively injecting liquidity into the economy.
However, as Hayes notes, it became synonymous with runaway inflation, wealth inequality, and asset bubbles. Politicians and the public now view it as a direct cause of rising prices, making it untenable for the Fed to revive it outright.
Enter RMP: Announced by the Federal Reserve on December 10, 2025, this program involves purchasing short-term Treasury bills to maintain "ample reserves" in the banking system. The New York Fed plans to start with approximately $40 billion in purchases, beginning December 12, 2025, and elevate them for a few months to accommodate seasonal fluctuations.
Hayes contends that RMP is QE in disguise - both create money ex nihilo to finance government debt. The key difference? RMP lacks predefined limits or expiration dates, allowing indefinite expansion without congressional oversight or public fanfare.
How RMP Works: A Familiar Mechanism in New Clothing
Hayes breaks down the transmission channels, illustrating how RMP mirrors QE's effects. Under QE, the Fed buys bonds from banks like JP Morgan, which then recycle the new reserves into more Treasury purchases, funding government spending and inflating asset prices.
RMP targets money market funds (MMFs), crediting them with balances via the Reverse Repo Program (RRP). These funds can then buy new T-bills or lend in the repo market, providing cash to hedge funds for bond acquisitions.
The Treasury absorbs this liquidity, spends it into the economy, and perpetuates the cycle. As Hayes emphasizes, this enables the Treasury to buy back longer-term debt like 10-year notes, suppressing yields and mortgage rates to bolster housing and consumption.
Recent Fed data supports this: The program addresses pressures in overnight lending markets, with gross T-bill issuance projected to hit $500 billion weekly in 2026, up from $400 billion in 2024. Unlike QE's focus on duration-rich assets, RMP's bill-centric approach still transmits easing, potentially reducing 10-year yields and fueling broader inflation.
Structural Deficits and the Fed's Enabling Role
Hayes argues that U.S. deficits - now exceeding $2 trillion annually - are structural, driven by entitlements, defense, and political handouts. RMP effectively lets the Fed foot the bill, allowing unchecked spending without market backlash. This "yield curve control" hands the Treasury tools to manage rates covertly, insulating politicians from fiscal discipline.
Globally, this weakens the dollar, compelling peers like the European Central Bank (ECB), Bank of Japan (BOJ), and People's Bank of China (PBOC) to expand credit. Hayes predicts a 2026 fiat debasement race, harming exporters in China, Germany, and Japan amid tariffs, while supporting U.S. re-industrialization.
Market Implications: Crypto's Waiting Game
Markets haven't fully grasped RMP's QE equivalence, Hayes says, trapping Bitcoin in a $80,000–$100,000 range post-announcement (with a 6% dip since launch, while gold rose 2%). Once recognized, he forecasts Bitcoin reclaiming $124,000 and surging toward $200,000, ending the four-year halving cycle as perpetual liquidity takes hold.
Altcoins, battered by recent liquidations, offer selective opportunities. Hayes spotlights Ethena (ENA), a protocol for synthetic dollars (USDe), as a prime beneficiary. Falling fiat rates and rising liquidity could widen basis yields, boosting ENA through protocol fees and token buybacks. Ethena's USDe supply has already grown significantly, signaling potential sharp gains.
In conclusion, Hayes' essay portrays RMP as QE's stealth successor—a "love language" of monetary illusion that sustains debt while eroding fiat value. As the Fed's balance sheet expands anew, investors in hard assets like crypto stand to gain, but only if they decode the Fed's rebranded playbook. With structural deficits locked in and global responses looming, 2026 could mark the acceleration of fiat's demise.
Also read:
- Tom Lee Predicts Bitcoin Could Double by End of January 2026 Amid Economic Revival
- US Crypto Regulation Reboot: Senate Confirms Pro-Crypto Leaders for CFTC and FDIC
- Tether's PearPass: A Revolutionary Cloud-Free Password Manager for Ultimate Privacy
Author: Slava Vasipenok
Founder and CEO of QUASA (quasa.io) - Daily insights on Web3, AI, Crypto, and Freelance. Stay updated on finance, technology trends, and creator tools - with sources and real value.
Innovative entrepreneur with over 20 years of experience in IT, fintech, and blockchain. Specializes in decentralized solutions for freelancing, helping to overcome the barriers of traditional finance, especially in developing regions.
This is not financial or investment advice. Always do your own research (DYOR).
