Arthur Hayes says Scott Bessent is becoming Janet Yellen through Treasury liquidity. Arthur opens “Same Same But Different” with a night at Pacha. Scott, his “Buffalo Bill,” runs into Yellen.
Yellen mocks him because his buyback increase calmed yields for only one session. Arthur’s point is that Scott sounded different from Yellen, yet both reach for liquidity when Washington keeps spending and Treasury yields push higher. Arthur wrote:
“I saw that. Don’t let the haters get you down. The crypto community is with you. You had no choice; we love you. Keep it up! Don’t stop printing money because if the markets go down, there will be no free shit for all the rich people and everyone else in America who believes that if they just believe hard enough in capitalism, they will get rich too. If there isn’t any free shit, then AOC is going to raise our taxes, oy vey.”
Yellen unlocked $2.4 trillion while the Fed kept rates near 5.3%
Arthur starts in late 2023. Yellen sold more Treasury bills and fewer longer bonds. Bills mature within one year, so money-market funds treat them like cash.
Those funds could use the Fed’s Reverse Repo Program, or RRP, which pays near the federal funds rate. Treasury bills had to offer more yield because congressional funding fights can delay repayment.
The RRP held about $2.5 trillion. More bill supply pushed yields enough to pull money-market cash out of the Fed. By January 20, 2025, when Scott took office, $100 billion remained.
Arthur counts the $2.4 trillion drop as liquidity released into markets. Bitcoin and the Nasdaq 100 rose, while the 10-year yield backed away from 5%. Arthur wrote:
“If you don’t understand why Bitcoin and risk assets pumped even as the Fed held rates at the highest level since 2008 and simultaneously shrank its balance sheet, then you will miss the next bull market that just began. This is the reason academics coined the term Activist Treasury Issuance (ATI) to describe the sorcery Bad Gurl Yellen wielded.”
The 5% level matters because 10-year Treasuries feed into mortgages, corporate bonds and consumer credit. Arthur says both secretaries want financing costs below that point.
Scott raises buybacks while Arthur watches Bitcoin for the next liquidity wave
The issue for Scott is federal debt issuance, and for Treasury, it is cheap funding. Bills can easily be marketed due to the desire of investors to get short-term, dollar-denominated instruments.
Cryptocurrencies are linked with this trend via the USDT issued by Tether and the USDC by Circle Internet Group (NYSE: CRCL).
According to Arthur, the Federal Reserve can facilitate the demand through the reserves management program, through making bank reserves as well as purchasing bills.
He further states that the process is controlled by John Williams from the Federal Reserve of New York. Scott can sell off bills and then purchase back long-term securities using the proceeds.
On August 19, Scott added $20 billion to planned long-end buybacks. Ten-year yields fell and Bitcoin rallied for two days, but yields soon moved above their pre-announcement level.
Arthur says $20 billion is tiny against roughly $40 trillion of federal debt. Scott also backed wider FIMA use, letting foreign holders, including Japan, borrow Fed-created dollars against Treasuries instead of selling them. Arthur wrote:
“The best case for Bitcoin would be for Scott to announce a BOJ style bond market manipulation where he informs the market he will conduct unlimited buy-backs of 10-year plus tenors if the yield is >5%. Initially, 10-year bonds would pump and yields dump as the market showed Scott some fucking respect. But as with all uneconomical market manipulation schemes, the market will test Scott and see if he is ready to back up his words with a dollar bazooka.”
Arthur believes that small-scale buybacks will take place unless the stress level rises to become severe, and uses the MOVE Index level above 130 as one of the indicators.
The Treasury could also empty its Treasury General Account of around $1 trillion for buying purposes.
Arthur expects Bitcoin to keep rising but also sees violent pullbacks. He says non-full-time traders should avoid leverage and hold their crypto exposure while watching Scott’s liquidity moves.
