Arthur Hayes: The longer the US fights Iran, the more the Federal Reserve prints money, and the higher Bitcoin rises
Under the instruction of the most "peaceful" U.S. president in history—Donald J. Trump—the Department of Defense has teamed up with OpenAI to launch an offensive proxy AI weapon: a deadly new version of Apple iOS.
Once this operating system is uploaded into a country's network infrastructure, it will attempt to carry out regime change.
Regime change is usually accompanied by indiscriminate bombing of military and civilian infrastructure, causing large-scale casualties, with the minimum costs often reaching hundreds of billions or even trillions of dollars.
After destroying the existing political resistance forces, a new political elite controlled by the U.S. takes power, extracting funds from U.S. taxpayers and local populations, and depositing these funds into their private wealth accounts at JPMorgan Chase.
Subsequently, the public gradually becomes dissatisfied with this kind of American-backed "Vichy regime" style rule, ultimately leading to violent revolution—a repressive, bloodthirsty domestic government reasserts control.
This marks the end of a complete sales cycle.
OpenAI can then begin selling the next-generation version.
Are you already looking forward to the OpenAI IPO priced with a future P/E ratio of "infinity"?
Since my consciousness began recording the human world in 1985, the so-called "Pax Americana" for "just" expeditions against Middle Eastern oil-producing or strategic energy corridor countries has never stopped.
Take a look at this chart created by the newly launched Perplexity Computer model.
From a macro perspective, this chart shows the human cost of war:
- The proportion of U.S. federal budget spent on Veterans Affairs (VA)
- Total federal expenditure
- Real federal funds rate
It also marks U.S. missile strikes or full-scale wars against Middle Eastern countries (indicative, not an exhaustive list).
The rising cost of caring for veterans is twice the overall growth rate of the federal budget.
Most importantly for this article: after the U.S. initiates Middle Eastern wars, the Federal Reserve often quickly lowers interest rates (i.e., cuts rates).
No matter how U.S. presidents try to convince the public—that these Middle Eastern wars, which look like video games in evening news, won't cause real pain—
The data clearly shows that this obsession with military adventures in the Middle East is destroying American lives in extremely costly ways.
The so-called "Ovarian Lottery" has placed me in this land divided by fictional borders—the human race calls it America.
And in my forty years of life, whether it was a Republican red team president or a Democratic blue team president, each has launched missile strikes or full-scale wars against some "deserving" Middle Eastern country.
It's as if once you become president, senior officials will take you into a super-secret room, clamp your testicles in tongs, and make you swear: during your term, at least one Middle Eastern country must feel the "burning flame of democracy"... or face the consequences.
Whether you believe the current popular conspiracy theories—trying to explain why the U.S. bombs this or that country—at least in my lifetime, this chart clearly shows:
Since 1985, every U.S. president has taken military action against one or more Middle Eastern countries.
Therefore, when President Trump expressed concern about the alleged assassination attempt on Iran's Supreme Leader Ayatollah Khamenei and publicly supported a "people's revolution" against this theocratic state, what we investors really need to consider is:
When Trump embarks on the "rite of passage" that every U.S. president must go through—the Middle Eastern war—what will happen to our investment portfolios?
Given that I am just an ordinary crypto brother infected with "toxic masculinity," I use a very simple rule of thumb to judge whether Bitcoin will rise or fall:
The rule is: the longer Trump continues this extremely expensive "nation-building" operation in Iran, the more likely the Federal Reserve will lower interest rates (cut rates) and increase the money supply to support "Pax Americana" in the Middle East.
To verify this hypothesis, let's review the history of Federal Reserve policy actions after major Middle Eastern wars since 1985.
1990 Gulf War — "Father"
(President: George H. W. Bush)
In the first meeting after the war broke out, the Fed kept rates unchanged but clearly hinted that if the war lasted too long, an accommodative monetary policy would become necessary.
Below is an excerpt from the original FOMC statement retrieved by Perplexity.
August 21, 1990: "The heightened uncertainty resulting from the Middle East situation, and the potential for deterioration in economic performance, make it extremely difficult to formulate effective monetary policy."
"Several members believe that, ultimately, policy easing will be needed to offset the economic softening that was already evident before the rise in oil prices."
Subsequently, the Fed officially cut rates in November and December 1990, describing the war as an important factor influencing decision-making in a somewhat diplomatic manner.
The war ended in March 1991.
Another statement noted: "A sharp decline in business and consumer confidence reflects developments in the Middle East and concerns about the uncertainty and its impact on oil prices."
In other words: even if inflation is exacerbated by rising oil prices, the Fed still chooses to loosen monetary policy.
2001 Global War on Terror (GWOT) — "Son"
(President: George W. Bush)
After 9/11 caused the collapse of the World Trade Center in New York, the global war on terror was immediately launched. Soon, Iraq and Afghanistan became military targets under the "judgment" of cruise missiles.
The Fed wasted no time, rapidly accelerating rate cuts to restore market and economic confidence.
In an emergency meeting after the attacks, then-Fed Chairman Alan Greenspan stated: "It is clear that the events of last week have caused significant fear and uncertainty, which are exerting downward pressure on asset prices and increasing the risk of deflation, thereby impacting the overall economy. Therefore, I propose lowering the federal funds rate target by 50 basis points."
The core logic is straightforward: if the confidence in the "Pax Americana" economy wavers, leading to falling asset prices, the Fed must act immediately.
And the solution, as always: cheaper, more money.
Another statement also conveyed an important signal: when the country needs it, the Fed will assist the government in financing the war machine.
November 6, 2001 FOMC statement: "The reallocation of resources for security purposes may temporarily suppress productivity growth, but in the long run, productivity and economic prospects remain good."
2009 Surge — "Holy Spirit"
(President: Barack Obama)
Ordinary people in Iraq, Syria, and Afghanistan might have thought that a Nobel Peace Prize-winning president wouldn't pour fire on their countries.
But they were terribly wrong. False hope itself is a deadly weapon.
Although Obama did not initiate new large-scale Middle Eastern wars, he expanded troop levels in Afghanistan ("Surge") and considered it a "just war."
Since the Fed had already cut rates to zero and started large-scale money printing via quantitative easing (QE) at the end of 2008, when Obama expanded troop deployments in the Middle East, the Fed essentially had no more policy space to respond further.
Because at that point—funds were nearly free, and supply was almost unlimited. America's war machine and contractors enjoyed it all.
Iran 2026 — "Savior"
(President: Donald Trump)
Fate has a twisted sense of humor: after surviving an assassination attempt during the 2024 presidential campaign, Trump almost seems "resurrected."
As Kanye said—Jesus walks.
Can I talk about Kanye now? After all, he has already "bowed and obeyed"... right? Trump's presidency, and the chances of his Republican (red team) lawmakers winning re-election in November, will largely depend on:
- Whether financial asset markets go up or down
- Whether oil prices fall or rise
In other words:
Asset rise, oil fall → political success
Asset fall, oil rise → political failure
Since the fall of the Shah in 1979, promoting regime change in Iran has been a long-standing fantasy of U.S. bipartisan political elites.
Therefore, the Fed now has ample political reasons to significantly ease monetary policy.
If the Fed refuses to fulfill its duty—namely, to finance Iran's reconstruction as a U.S. client state by providing cheaper, more abundant funds—it would be seen as "unpatriotic."
Trading Tactics
At this point today, we don't know how long Trump will continue to invest hundreds of billions or even trillions of dollars to reshape Iran's political system according to his will;
nor do we know how much pain in geopolitics or financial markets he will endure before he decides to withdraw.
Therefore, the most prudent approach is to wait and see.
The real time to "go all-in" is when the Fed begins to cut rates or start printing money to support the U.S. strategic goals in Iran.
At that moment, it would be wise to decisively buy Bitcoin and high-quality altcoins like $HYPE.
Take care, brothers.
