The United States Federal Reserve has come under renewed scrutiny after launching a programme known as Reserve Management Purchases, which some analysts argue amounts to covert monetary expansion.
The initiative was announced on 10 December following a Federal Open Market Committee meeting that also delivered a 25 basis point interest rate cut.
Federal Reserve Chair Jerome Powell described the programme as a technical tool designed to “maintain an adequate level of bank reserves” with “no connection with the orientation of monetary policy”.
Under the scheme, the Fed will purchase short-term Treasury bills, beginning with roughly $40 billion in the first month of operations.
Officials say the purchases are intended to ease pressure in money markets, particularly during periods of heavy liquidity demand around year-end funding deadlines.
Arthur Hayes, former chief executive of crypto derivatives exchange BitMEX, has publicly challenged the Fed’s explanation in a sharply worded essay published on Substack.
The RMP is a barely disguised way for the Fed to cash government checks, Arthur Hayes said.
Hayes argues that despite avoiding the language of quantitative easing, the economic impact of the programme closely mirrors traditional money printing.
He claims the direct absorption of short-term government debt injects liquidity into the financial system without creating corresponding productive output.
According to Hayes, the resulting increase in bank reserves risks fuelling hidden inflation over time while shielding the policy from public scrutiny.
The former exchange executive also suggested the Fed is effectively returning to interventionist practices while attempting to maintain the appearance of political neutrality.
Hayes believes renewed liquidity creation disproportionately benefits holders of scarce assets that historically outperform during periods of currency debasement.
I love quantitative easing because it amounts to money creation, and fortunately, I hold financial assets like gold, shares of gold and silver mining companies and bitcoin, Arthur Hayes said.
In his view, bitcoin (CRYPTO:BTC) and precious metals stand to gain as investors seek protection from the long-term erosion of fiat purchasing power.
Hayes also warned that monetary expansion deepens structural inequality by transferring wealth towards those who already own appreciating assets.
He argued that workers and savers without asset exposure face declining real wages and diminishing links between productivity and prosperity.
The critique comes amid broader uncertainty over the future direction of US monetary policy and renewed political pressure on the Federal Reserve.
Hayes suggested that if similar liquidity measures expand further, crypto markets could interpret them as a signal for another speculative upswing driven by distrust in traditional finance.
At the time of reporting, Bitcoin price was $88,116.88.