• 15 June, 2024

100x’s Arthur Hayes on Western Finance, SBF, & China’s New Financial System

100x Group’s Arthur Hayes’ Entrepreneur’s Handbook essay explains his views on the Western finance’s corruption and the SBF-FTX saga. Hayes advocates the emergence of China’s financial system in the article. But Sam Bankman-Fried (SBF) does not seem to endorse Hayes’ views.

The past is Western exceptionalism, the future is Eurasia,

says BitMEX’s co-founder, Arthur Hayes.

Sharing his essay in question on January 6, Arthur Hayes tweeted:

Hayes refers to the West (America, Western Europe, and their allies) as Pax Americana. He refers to China and Russia as Eurasia (or the ROW—the rest of the world). Under that milieu, via the lens of the SBF-FTX saga, Hayes attempts to explain a broader point to his Medium blog readers.

SBF, though, expressed his disagreement to Hayes’ views via a reply tweet:

The trade and commodities’ geopolitics these nations have is already playing. Hayes keeps these countries’ economic terms of trade (USD, RMB, gold, etc.) aside, to deal with the sentiment equation. He argues that the SBF-FTX scandal left the Global East and South (the ROW) as the ones suffering the most.

The next decades of the financial markets, states Hayes, require us to analyze a vital hypothesis. Hayes asks, would the West (as the consumer of things), or the ROW (as the producer of things), would give better returns to investors. Hayes sees the ROW getting confident in negotiating their stance and thwarting unfair treatment.

He views the FTX scam as a fitting illustration of the behavior that annoys (and imbalances) the ROW. The result, per Hayes, would be an even more firm stance of the ROW against the West.

Hayes states investors allocating funds in western instruments and businesses would be possible, but there’s a catch.

Above-average returns from the instruments and businesses would have the producers getting to set the terms of trade in their favor as a reasonability. After all, Eurasia has the world’s humans and critical natural resources (hydrocarbons, cobalt, lithium, nickel, copper, etc.).

Hayes doubts if SBF was all about Effective Altruism (EA), but states he had nothing to do with the ethos of crypto. Hayes isn’t surprised that the western financial system asked no tough questions to SBF when they put their funds in FTX. FTX customers’ funds are almost irrecoverable. But Hayes says SBF’s New York City federal courtroom trial would be a Pax Americana delight.

The FTX scandal, as Hayes puts it, is a

Western-sponsored financial fraud of epic proportions.

But Hayes sees a China-led Eurasia charting an alternative financial system for the non-aligned Global South nations of the world. He asks, will these nations still favor Western financial institutions and scamming people (SBF and FTX)?

Per Hayes, the extent to which the resource-rich countries trade with the West or China would depend upon the sentiment and price appropriation. Sentiment matters a lot today, says Hayes, given that trade options are opening up for non-aligned nations.

A financial system based on the RMB (renminbi) seems incoming to Hayes. More so for the non-aligned ROW nations feeling cheated by the Western world’s SBF deceit looting their citizens. No wonder why, when China can offer finished goods, Russia has commodities, and gold reserves are abundant with China and Russia.

Analyzing the longer-term trend lines on the Bloomberg Commodities Index, Hayes seals the dossier with a spoiler. He says the West is en route for a “massive underperformance vs. the Global East and South.”

Gone are the days of cheap critical inputs. Hayes flags Saudi Arabia’s reported refusal in February (2022) to President Biden’s request of pumping oil production on command with midterms approaching.

Hayes has set his 2023 calendar to work towards constructing a portfolio of government bonds, Bitcoin / Crypto that grows.

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