Author: Arthur Hayes

Compiled by: Deep Tide TechFlow

Introduction: Hayes' core argument in this article is simple: from the Gulf War in 1990 to the War on Terror in 2001, the Federal Reserve chose to cut interest rates after every US-led Middle East war. He believes the 2026 Iran war will repeat this historical logic, and that will be the time to increase Bitcoin holdings. The viewpoint is clear and the logic is sound; you don't have to agree after reading, but it's worth taking seriously.

The full text is as follows:

(All views expressed in this article are the author's personal opinions and do not constitute investment advice or recommendations for participating in investment transactions.)

At the behest of Donald J. Trump, arguably the most peace-loving president in American history, the U.S. War Department, in collaboration with OpenAI, launched an offensive agent AI weapon—a lethal new Apple iOS. Once uploaded to a country's network infrastructure, this operating system would trigger regime change. Regime change is typically accompanied by indiscriminate bombing of military and civilian infrastructure, causing massive casualties and costing anywhere from hundreds of billions to trillions of dollars. After eliminating resistance, the new political elite installed by the U.S. could then siphon off funds from American taxpayers and the local population, depositing the money into JPMorgan Chase's private wealth accounts. Public discontent with this Middle Eastern Vichy-style pro-American regime would accumulate, ultimately leading to the violent establishment of a reactionary, often oppressive and bloodthirsty, domestic political structure. The sales cycle would then be complete, and OpenAI could begin marketing the next version. Are you already eagerly anticipating OpenAI's IPO, priced at an infinitely high P/E ratio?

Since my awakening in 1985 and the beginning of my imprinting on the quantum continuum, the American crusade for justice against Middle Eastern oil-producing nations—and the geostrategically vital oil and gas pipeline routes—has never ceased. Enjoy this beautiful chart created using the new Perplexity Computer model:

From a macro perspective, the chart illustrates the humanitarian costs of war: the percentage of the federal budget allocated to Veterans Affairs (VA), the total nominal size of federal spending, and the effective federal funds rate. The chart highlights instances of US missile strikes or full-scale wars against Middle Eastern countries for illustrative purposes only, not as an exhaustive list. As shown, the cost of caring for military personnel is growing at twice the rate of the federal budget. Most importantly, whenever the United States initiates a Middle East war, the Federal Reserve immediately lowers its funding costs. While every US president in my lifetime has attempted to deceive the public by claiming that the Middle East wars depicted in evening television games do not cause suffering for American soldiers, the data clearly shows that this obsession with Middle Eastern military adventures is destroying American lives at an extremely high cost.

My ovarian lottery gave me birth to this land, defined by fictional, curving lines, which humanity calls America. In my forty years of existence, every president—both the Red Team Republican and the Blue Team Democratic—has launched missiles or waged a full-scale war against some Middle Eastern country. It's as if once you become president, senior bureaucrats take you to a top-secret room, clamp your testicles in pliers, and force you to swear: during your term, at least one Middle Eastern country will feel the heat of democracy… or else face the consequences.

Whether you believe the currently popular conspiracy theories explaining why the US bombs certain countries or not, at least in my lifetime, the charts clearly show that every US president since 1985 has used force against one or more Middle Eastern countries. Therefore, when President Trump gleefully celebrates the apparent assassination of Iran's Supreme Leader Khamenei and endorses a popular revolution to overthrow this theocratic state, we investors must consider: what will happen to our portfolios as Trump embarks on the same path his predecessors have taken?

Given that I am just a simple-minded crypto bro infected with toxic masculinity, I use a very simple heuristic to judge the rise and fall of Bitcoin: the longer Trump invests in the extremely costly activity of state-building in Iran, the higher the likelihood that the Federal Reserve will lower the price of money and increase the money supply to support the latest round of Middle Eastern adventurism in American rule.

To test my hypothesis, let’s examine the history of the Federal Reserve’s actions following each major Middle East war since 1985.

The 1990 Gulf War – Father (President George H.W. Bush)

At its first meeting after the outbreak of war, the Federal Reserve kept interest rates unchanged but hinted that it might need to ease monetary policy if the war dragged on.

The following is a direct quote from the FOMC statement, retrieved for me by Perplexity.

August 21, 1990:

"The increased uncertainty brought about by the events in the Middle East, and the resulting poor economic outlook, have greatly complicated the formulation of effective monetary policy."

"Several committee members believe that the situation is likely to develop in the direction of needing to ease policies at some point in order to counter the economic weakening trend that had already formed before the rise in oil prices."

Subsequently, the Federal Reserve cut interest rates at its November and December 1990 meetings, euphemistically referring to the war as a confusing factor influencing decision-making. The war ended in March 1991.

"The sharp decline in business and consumer confidence may not only reflect the evolving situation in the Middle East, but also the uncertainty surrounding developments in the region and their impact on oil prices."

The Federal Reserve eased monetary policy amid inflationary pressures triggered by soaring oil prices.

The 2001 Global War on Terror (GWOT) – Son (President George W. Bush)

The GWOT was activated immediately after the collapse of the Twin Towers at the World Trade Center in New York. Iraq and Afghanistan were almost immediately subjected to the cruise missile tribunal's interrogation. The Federal Reserve did not hesitate to accelerate interest rate cuts to help restore economic confidence.

At an emergency meeting following the attack, the master himself, Chairman Alan Greenspan, announced:

"Clearly, the events of last week have created a great deal of fear and uncertainty, putting considerable downward pressure on asset prices and increasing the probability of asset price deflation, the impact of which on the economy is evident. Therefore, I propose a 50-basis-point reduction in the target federal funds rate."

Essentially, if a decline in confidence in the American economy leads to a drop in asset prices, the Federal Reserve must act immediately. The remedy remains the same: cheaper and more abundant money.

Another statement from the Federal Reserve was equally intriguing, indicating that the Fed would fulfill its duty to help the government finance its war machine when needed.

November 6, 2001 – FOMC Statement:

"While the necessary reallocation of resources to enhance security may dampen productivity gains for some time, the long-term outlook for productivity growth and the economy remains positive."

Troop increases in 2009 – Holy Spirit (President Barack Obama)

The unfortunate civilians in Iraq, Syria, and Afghanistan may have thought that a Nobel Peace Prize-winning president wouldn't unleash hell on their countries. But they were sorely mistaken; false hope can indeed be deadly. While Obama didn't launch any major new wars in the Middle East, he did increase troop deployments in what he considered a just war in Afghanistan.

Given that the Federal Reserve had already lowered interest rates to zero and begun printing money through quantitative easing at the end of 2008, they had no room for maneuver in the face of Obama's troop surge. The money was free, and the supply was unlimited. The American war machine and its contractors had feasted.

Iran in 2026 – Messiah (President Donald Trump)

Fate has played a cruel trick on Trump; after surviving an assassination attempt during the 2024 presidential campaign, he nearly rose from the dead. As Kanye said, Jesus is walking. Now I can talk about Kanye, because he's given in, right…?

Trump's presidency, and the chances of his Red Team Republicans winning re-election in November, will depend on the rise and fall of financial asset markets and oil prices, respectively. Given that regime change in Iran has been a bipartisan dream for American politicians since the fall of the Shah in 1979, the Federal Reserve has the political cover to significantly ease monetary policy. To fail to fulfill its duty to provide cheaper and more abundant funding for the reconstruction of Iran into a US vassal state would be unpatriotic.

Trading Strategies

Sitting here today, we don't know how long Trump will maintain his interest in spending billions or even trillions of dollars to reshape Iranian politics to his liking, nor how much geopolitical and financial market pain he can endure before he withdraws. The prudent approach is to wait and see. The opportune time to go all-in on Bitcoin and high-quality altcoins like $HYPE is immediately after the Federal Reserve cuts interest rates and/or prints money to support the government's Iran objectives.

Take care, everyone.

Federal Reserve's Collins still believes there are reasons to be cautious about a December rate cut.

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