Arthur Hayes says Scott Bessent will force the Fed under Treasury control

According to Arthur Hayes in his latest essay Four, Seven, Scott Bessent is ready to do what hasn’t been done since World War II; pull the Federal Reserve under the boot of the Treasury and reshape the U.S. economy by force.

Arthur says that Scott wants to rip credit creation from the hands of the Fed and private equity and shove it into regional banks, then drown the financial system in new debt and money printing. Arthur says the goal is to stop America’s slide from a global empire to just another strong country.

Back in 1942, the Treasury made the Fed cap short-term yields at 0.675% and long-term ones at 2.5%. Arthur points out that the wartime yield curve was steeper than today’s flat or inverted mess. That curve made it safe and profitable for small banks to lend. Scott wants that back.

But instead of using war as a reason, he’s using populism and political control. He plans to manipulate yields again, this time with modern tools, and drag America back into industrial dominance using what Arthur called “QE 4 Poor People.”

Trump pushes Fed toward yield curve control

The Fed doesn’t get to make every decision on its own. Two boards run things: the Federal Reserve Board of Governors (FBOG) and the Federal Open Market Committee (FOMC). Arthur explains the FBOG sets the interest on reserves (IORB) and discount window (DW) lending.

The FOMC controls SOMA, the actual mechanism for buying bonds with printed money. Right now, the Fed isn’t playing along. So Trump is stacking the FBOG with loyalists ready to serve Scott’s plan.

With four of seven votes, Trump’s Fed governors can slash the interest on banking reserves (IORB), triggering an arbitrage flood where banks borrow at the discount window and lend at higher SOFR rates. This bleeds the Fed until the FOMC caves and lowers the fed funds rate.

And once the Board controls who gets nominated as district bank presidents, they can approve only doves who’ll toe the line. Five district bank presidents vote on the FOMC each year, and Arthur notes 2026 is a reset year.

The FOMC’s rotating voting districts for 2026 are New York, Cleveland, Minneapolis, Dallas, and Philadelphia. Arthur points out that their boards are stacked with wealthy industrialists who would benefit from loose money.

If they want a seat at the table, they’ll send candidates the Board will approve; those aligned with Scott’s push for more printing and easier policy. With just three of four of those picks, plus New York and the four Trump-aligned FBOG votes, the FOMC is under control.

Treasury uses the Fed to flood the system with cheap debt

With both boards under his thumb, Scott can flip the switch. The FOMC uses SOMA to buy treasuries, capping long-term yields. The Fed prints, buys, repeats. That lets the Treasury issue as much debt as it wants without driving up interest costs. Arthur says this kills the federal deficit and slashes interest expenses, but trashes the dollar.

Cheaper dollars mean American manufacturers can export more, competing with China, Germany, and Japan in the Global South. Regional banks, now free from overregulation, lend to real factories, not to apps or stock buybacks.

With Trump’s Team Red facing midterms in 2026, control must be locked in fast. If Democrats retake the Senate, they’ll block new appointments. Arthur says this is the last window to get full Fed control. That’s why the plan is moving now, not later.

Arthur then does the math. Between now and 2028, the Treasury will need to issue $15.32 trillion in debt; $2 trillion in yearly deficits plus rollovers. During COVID, the Fed bought 40% of new debt. Arthur expects 50% now. He says foreign central banks won’t touch this junk, knowing Trump plans to print nonstop.

Commercial banks will pump out another $7.569 trillion in loans, based on the COVID period’s $2.523 trillion over three years. That puts total new credit at $15.229 trillion. Arthur calculates that for every trillion of credit, Bitcoin rose 19% during COVID. Apply the same ratio, and Bitcoin hits $3.4 million by 2028.

“Do I think Bitcoin will rise to $3.4 million by 2028? No,” Arthur says. “But I believe the number will be markedly higher than the ~$115,000 that it trades at today. My goal is to get the direction of travel correct and be confident that I’m betting on the fastest horse, assuming that Trump is serious about printing trillions of dollars to achieve his policy goals. This model does just that.”

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