Arthur Hayes: Fed Rate Hikes May Expand Money Supply Amid High Debt

Arthur Hayes suggested that in a high-debt environment, Federal Reserve rate hikes could act as a stimulus. Higher interest on bank reserves and Treasury yields increase income for asset holders, potentially driving consumption and financial asset allocation. Hayes noted that despite the end of asset purchases, the expansion of bank balance sheets continues to increase the total money supply, which may support a continued upward trend for financial assets.