You can’t fight bonds and win this way. The BoJ needs to raise rates significantly to bring back money into the country. Inflation is running wild and countries that rely heavily on imports are getting less and less for their money
The issue is the new Japanese PM who basically promised more spending and less taxes which is what triggered the current bond crisis (on top of the Iran war, and the trade war).
Thatcherism/Reaganism is what got us into service based economies, more of the same is ultimately going to hit bonds, because lenders want their fucking money.
All of this economic theory at this level is honestly out of my league, but, at a basic level, it’s difficult to believe that we managed, as a world (and the conservative governments in particular) to not increase productivity to unheard of gains yet somehow managed to make unsustainable levels of debt and banking fuckery.
People spending a lot on dumb shit, yeah (but also actually gets churned back into economy). How is it that life for many people was far more stable in the pre 80s and debt was managed and people could not spend a million dollars for college, all while working and producing an actual sliver of what we produce today? I get that we all have big screen TVs now but it just seems like bankers and tarot economists have gambled with our systems and we all lost (well, except that 1% that seem to have absorbed all the wealth). Life is somewhat better in developing nations, I guess, to some degree, but why do my kids have to face this type of shit while being able to do the work of 10 people from the 70s?
Low tax and banking fuckery, it seems. Is there a path out beyond higher tax on those that have absorbed all our gains over decades?
Ironically, lenders are also borrowers. While they want premium for their money, they also want lower short term interest rates.
This economy is weird and not text book, my bet is that future economic studie will have this era as the " everything all at once " economy.
Truss is genuinely a nut. Years later on some podcast she complained about how the bank of england wouldn't get out of the way so politicans could run the show. She literally learned nothing from her time in office.
No, the bigger issue is that the entire Japanese housing market depends on adjustable-rate mortgages. If interest rates rise, their housing market will collapse.
Japan is the biggest holder of US treasuries. Because until August 2024, it costs $0 to borrow yen and use it to buy things like stocks or US treasuries for guaranteed returns. But now if the yen is weakened, Japan may need to sell the treasuries. Furthermore, a weakened yen may prompt investors to sell Japanese government bonds. No one would hold yen if it kept falling
The problem with the Yen devaluing reletive to the Dollar is that Japan is an energy net heavy importer, meaning that if the Yen keeps losing value to the Dollar then it becomes more and more expensive for Japan to buy energy.
You have to bear in mind that the rates are already extremely low, their overnight rate (the one everyone uses as the benchmark when talking about central bank rates) is just 1%.
Also Japan's economy is based around near zero inflation, it works for them because the central bank rate is also so low, this enables massive government debt at what are ultimately negligible interest rates. Their private investment spending also seems to function just fine despite the negligible inflation, contrary to conventional wisdom in other countries.
The Yen acts as a extremely low interest source of credit for many countries, particularly the US, any increase of rates would impact the rates the US pays on it's debt, and because that debt is astronomical that is a big deal.
Like pretty much all modern financial systems it is a house of cards and any dramatic change at all (even if that change is not objectively bad) risks a catastrophic collapse of systems that relied on the status quo.
Sometimes, necessary corrections brings pain to the consumers, like since a lot of food is imported, a weak yen may result in food costs rising disproportionately compared to non-imported goods, and to struggling households that may lead to financial pain, which can be seen from the way they removed food tax to alleviate some of it
Exports. That’s what. A weaker yen sounds good if you’re based on selling your stuff to larger markets.
But the problem is, Japan doesn’t do that as much as it used to since China and South Korea rose up in manufacturing.
Now that weak Yen means that Japanese have lower purchasing power within Japan itself while inflation slowly rises. But at the same time the Yen will keep getting weaker as tourism takes the front seat since it’s incredibly cheap, even now, to visit Japan.
The yen carry trade relies on low Japanese interest rates. It’s one of the big reasons for yen devaluation (as borrowing increases the amount of yen in circulation). Raising rates would make borrowing yen more expensive thus crushing it, but Japan will have a hard time raising rates because they have the highest debt to gdp ration in the world.
You mean to tell me the Bank of Japan not pursuing long-term solutions and relying on world class bellend Scott Bessent’s circular financing schemes is only a temporary solution? Color me fucking shocked. If the Bank of Japan won’t raise rates or sell US Treasuries, the Yen is going to get waxed without constant pledges of US Dollars. We have a deeply unserious moron running the US Treasury trying to save his buddies engaging in the Yen carry trade. These people are on absolute tar if they thought this lunch was going to damn near be free forever.
The Bank of Japan has no incentive. Imagine you have a mortgage on your house. You’ve got a payment, but you can’t afford it. Now imagine your parents step in every time you’re about to miss a payment because you missing a payment could embarrass dad and cause him to look financially insecure. What incentive do you have to come up with a solution? In fact the best solution for your financial health might be to not have a solution. Is it right? No but this is the world of leverage and finance.
I’m not even going to argue against the BoJ having no incentive. I can’t identify a sound reason outside of the Yen buying less and less foreign imports as time goes on. Obviously Japan has always been very industrious, but the people tend to make the nation. If the people of Japan are finding out their Yen buys less and less stuff and the Japanese industries don’t have the same amount of buying power to secure inputs, the Bank of Japan will eventually have to acquiesce to the interest of Japanese nationals. Right now appeasing the US is more profitable than appeasing domestic citizens. There is a critical mass though where that calculus changes.
The incentives are the same and that was my take as well but it's somewhat worse than in your original analogy though isn't it?
It's like if you are constantly refinancing your mortgage to borrow more so your dad has to pay more and more each time... and also you used his garage as collateral and if he misses a payment his mortgage rate will shoot up and he'll have less available to pay your mortgage.
I know I killed this analogy and anyway an analogy is supposed to make things simpler but hey isn't the miracle of modern economics grand.
Governments generally are heavily incentivized to do nothing in the face of serious problems, because it's much easier to assign blame to bad decisions than inaction.
They've discovered the one weird trick of taking the exact worst possible course of action and still blaming the libs or immigrants for the consequences that are clearly their fault. It works so well!
The hedge funds borrow in yen and buy essentially us assets with the yen.
Carry traders do not benefit from a rising yen and there have been a few flash crashes in the last couple of years when the yen has gone up chasing margin calls.
So I don't really know how this intervention is helping them
Bessent was a Soros protege (ironic right?), so people like Druckenmiller and Michael Geromino are friends of his and bending his ear a lot. Apparently the BOJ governor and him are “longtime friends” and did some school together. Rich fucks all know one another. They’re always talking about how to use your money to fulfill their needs.
I get that, but no one seems to know specifically who are the biggest players in the carry trade. I know it’s hedge funds and banks etc but I’d love to know actual dollar value at risk broken down by each player instead of blanket statements
I am not too convinced that the carry trades play such an important part. They will be hedged anyway and a devaluation of the jpy would actually benefit them. Do you have a different view that you can share?
I’m thinking it plays enough of a role if we’re needing to prop up the yen to maintain its stability. You may be right that the carry trade itself isn’t so important, but the downstream effects of that carry trade could create a cascading of unwinding of positions if the volatility hits harder than expected. I understand the devaluation helps, but I think part of the concern was an unexpected whiplash after a continued devaluation.
Selling US treasury bills will hurt themselves as well, since the total value will drop. No different from selling lots of shares at once can tank the entire value.
Raising rates is simply not an option as well based on how big the debt is, the interest rate would be insane.
They have to do something other than relying on Scott Bessent’s half-assed fiscal necromancy. If Japan continues to do nothing, and the currency is further devalued, who on earth is going to take Yen? Japan has to import literally everything needed for their quaternary industrial economy and are still falling short on output against Korea and China. This isn’t even taking into account their energy security problem lurking in the shadows.
Japan will literally either militarize heavily or forsake the Yen for the US Dollar if they don’t take more drastic action. I can’t see years of USD pledges helping here. The US Treasury is playing away games and throwing gasoline on another country’s fire.
Given that Japan has virtually no immigration, and it is facing an obvious, known demographic cliff for decades -- perhaps, long term, it doesn't make sense for the Yen to be a reserve currency. A weak institution shouldn't be the third most traded in forex markets.
Considering that the US will never let their airbases in Japan go because that leaves only South Korea left as a US military presence near China, the US is going to continue to take yen forever. They'll do whatever they can to prop up Japan because they're the strongest US ally in the region and a prime spot for conducting any kind of military operation in central China.
> Selling US treasury bills will hurt themselves as well, since the total value will drop.
it's worse than just the total values dropping. each time japan sells large amounts of us treasury bills when the price drops the interest rate (yield) increases.
that makes the difference between us treasury bonds and boj interest rates even larger and so incentives even more carry trade
Problem is that dramatic yield spikes screw up the basis trade in Treasuries. The Fed nearly had to step in last year for that exact reason. If the basis trade goes upside down, a whole lot of treasuries have to liquidate to cover the margin.
Basically raising yen rates will stop the carry trade. Japan can do some combo of also selling t bills and buying yen using the proceeds.
But still it’s complicated. The main issue is that Japan has like 250% debt to gdp and at 2% instead of near 0% that will basically bankrupt the government. I’m not quite sure what japan can do now
> If the Bank of Japan won’t raise rates or sell US Treasuries, the Yen is going to get waxed without constant pledges of US Dollars.
The problem is Japan cannot raise interest rates because its GDP growth is far too low. While 1% is relatively high for Japan, it is abnormal low for the rest of the world. It can't drop to 0% because then inflation will consume everyone's wages. The 1% interest rate is largely a political token. It's efficacy as a policy is arguable. Japan, like most complex economies, has lost the ability to manage a crisis through interest rate manipulation.
This is just the crisis orthodoxy of modern central banking and macroeconomics.
The causes for Japan's lack of growth is partly structural, it has outdated processes and procedures in almost every sector of its economy, a cultural issues, and a demographic crisis. All three of those problems are not economic problems. They are political and only political intervention can fix Japan's woes.
What is playing out in Japan is happening throughout the developed world. Every single complex economy, whether it be the US, Europe, or China, is now facing political and not economic problems. Our political systems are biased towards managerialism and not problem solving. The entire world relies on the assumptions of post-Keynesian economics without critical thought or imagination.
Inflation is becoming a reoccurring theme and in my view it is clear that inflation might be more than just a money supply/GDP ratio. I think we're at the end of the practical usefulness of post-Keynesian economic orthodoxy. This is either going to end in a type of corporate feudalism, or we get a miracle and the US or China decide to undergo a 1970's type transformation which will drag the rest of the world along with because most politicians are managers with zero imagination who just copy what the big boys do.
> I think we're at the end of the practical usefulness of post-Keynesian economic orthodoxy.
I think we have already de facto moved on from the post-Keynesian economic orthodoxy even though we are still going through the motions. The free market Republicans are somehow fine taking ownership stakes in all sorts of companies while the crazy Stalin Bernie Sanders wants to do the same thing so there is broad agreement.
That in itself is neither here nor there but what is truly remarkable that there is not a peep about it, it's just slowly happening and everything is meh apparently.
It seems the world is just slowly moving to a more Chinese model without making a fuss about it.
>It seems the world is just slowly moving to a more Chinese model without making a fuss about it.
What is the Chinese model? Does anyone actually know or do they just keep referencing it as if it is something that exists? What about China's model is so radically different to the generic capitalism?
People seem to think that China's communism is something concrete and different. It isn't. It is just the political dialect they speak in but underneath the language are the exact same structures that exist in Western states. China is a market based system. It is dominated by SOE's which are in reality exactly the same as the private corporations that exist in the West with the only difference being the political language used. China has a central banking system coupled with regional banks - again all coded in communist language but functionally just banks. China has interest problems. It has consumption problems. It uses speculative investing to create GDP bubbles. It engages in the blurring of public/private interests when it engages in market action, and circular funding just like Trump is now with AI.
The only difference with China is excessive profit is not a part of the status quo. There is a cultural difference. China doesn't need to engage in the single biggest capital investment movement in recorded history under the promise of endless profit to force capital-inefficient AI development.
There is a cultural difference but that is it. Structurally, the Chinese economy almost exactly the same as any Western economy and even shares practically all of the same issues - housing prices, consumption decline, and inflation woes.
China is not an example of an alternative but an uncomfortable sign that there is no alterative. Even the Communist have become capitalists. There is now no competing economic ideology to capitalism which means the future of humanity is going to be defined by capitalism. We are not past post-Keynesian economics. If anything, we're deeper than ever before.
> Does anyone actually know or do they just keep referencing it as if it is something that exists
A very fair point not sure there is an answer.
>there is no alternative.
This is it there is and there must be we just can't know what it will be yet. We can all recognise that we are at the threshold of a major crisis, the only thing anyone can agree on is that this can't go on for ever so I'd counter that there will soon be no alternative but to find an alternative. As that other post Keynesian luminary said when that crisis occurs, the actions that are taken depend on the ideas that are lying around at the time.
What are you talking about? Arrogant Bessent made millions and knows much about financial deals as he smugly repeats every-time a news reporter presses him with tough questions
it's ticking time bomb anyway. Japan is fucked and so is the US. There is no way to safe the Yen. If they raise interest rates, Japan will default on its debt. If they sell us treasuries, they will keep afloat for a couple of months maybe years but the trend will only accelerate and US treasuries will as welll.
But like, we print dollars for lots of things. Why can't we just keep printing to stabilize the yen? The world has limitless demand from yummy dollars.
Trying to fiscally manipulate your way out of all your economic problems isn’t gonna work when the fundamentals are crashing. Japan is simply falling behind South Korea, Taiwan, and China on all fronts and is facing an oil crisis that it’s trying to subsidize its way out of. Resulting in overconsumption in oil when there’s a global shortage
It's kinda crazy to think that Japan has fallen behind even on a per capita basis not only the Asian tigers, but is almost about to be overtaken by China's Tier 1s. In PPP, China's T1 cities have already overtaken Japan. Unthinkable even 15 years ago.
Ya, there's been a bunch of maps comparing modern Japan's economy being only equivalent to like 2-3 Chinese provinces compared to all of Asia in the 1980s. An obvious rebuttal is that those provinces still have twice the population of Japan, so they're only half as rich. But that still shows just how much Japan has fallen off compared to China. At this rate, probalby within the next 20 years, the average Japanese person will only be as wealthy as the average Chinese urbanite.
I understand your point about how much China and other Asian countries have closed the gap with Japan, but PPP used for international comparisons is calculated on a national level and doesn't account for differing price levels within countries. So for a country like China, while on a national level its GDP when adjusted for Purchasing Power Parity is just over double its nominal GDP, that gap would be much smaller for a T1 city like Beijing or Shanghai and much larger for rural areas and small cities in poorer provinces.
China’s highest per‑capita GDP isn’t found in huge metropolises like Beijing or Shanghai. Instead, it belongs to Chinese‑standard medium‑sized cities on the Taihu Plain: such as Suzhou, Wuxi and Changzhou. And against popular stereotypes, the countryside around these cities is still very well‑off.
Yeah I am aware of that. I just brought up Beijing and Shanghai because most people reading my comment would be more familiar with them, and not all rural areas are poor, but those in more inland, less developed provinces tend to be poorer.
While this is definitely true, I would also point out that the Tier 1's and new tier 1's (Suzhou, Shenzhen, etc.) are all within 10-15% of Japan even in USD.
Real time data on this is obviously well-nigh impossible, but if you take the Shanghainese GDP per capita of 228,403 CNY under today's CNY:JPY ratio, it would actually almost equal Japan's GDP per capita of 5.37 million yen. I mainly relied on PPP as a statement because it was a more clearcut example of passing. That's also with the recent US and BoJ interventions; had it been a week ago, the Shanghainese GDP per capita would actually be higher than Japan's GDP per capita after conversion.
But yeah, my overarching point mainly is it's shocking to see Japan make so little progress while it's equally shocking to see how far China has come. In USD, Japan has basically not made progress from the 90s.
Their plan is to squeeze the people with low wages and longer working hours and provide low to no yielding savings, issue and force even major corporations to take on even more debt, and of course print more. Either way living standards are going down and COL going up because you’re right they’re not competitive anymore and costs for things like welfare and making sure every meter of road in Japan looks new and clean is catching up fast
Probably going to keep happening if both countries keep on track with their current monetary and fiscal trajectories. Japan might end up borrowing against their treasuries to get USD to prop up their currency since the US really doesn’t want them selling off their bonds. Maybe that can tide them over until the fed cuts rates or investors are more willing to accept more US debt.
What is the data source for inflation should be higher aside from vibes? Beef is more than 50% as expensive as it was five years ago, but it’s less than 0.5% of CPI.
Fair, it’s .67%
https://www.bls.gov/cpi/tables/relative-importance/2025.htm. I misquoted it.
I mean, CPI tries to get the average mean of all consumption. Per a 2023 study, 12% of people account for 50% of all beef consumption.
https://www.mdpi.com/2072-6643/15/17/3795. To be fair we used to fall into that group but when Ora King is almost the same price as Prime ribeyes, fish becomes a much more palatable substitute. Copper is cheaper is most A5…
Maybe because interventions to artificially prop up your currency only work if people have faith in your government?! America is an unreliable partner and Japan has been treading water economically for 15 years.
It’s all foreigners’ fault. Once Takaichi runs them out the pure Yamato spirit will once again shine through and bring about an economic renaissance. Ganbare!
I was lucky enough to get mine out of the way before we passed the 135 yen per dollar mark, but I’d be lying if I said I didn’t feel the pain even then
Central bank market interventions almost never sustain long-term currency strength without structural rate adjustments.As long as the wide interest rate differential between the Federal Reserve and the Bank of Japan persists, carry trades will continue to put downward pressure on the Yen. Intervention buys time, but monetary policy divergence drives the market
They, the Fed cannot keep
Kicking this can. There are a lot of bills aside from just this Carry Trade matter that need to get unwound, and it’s expensive.
That came exactley as expected. We come from kicking the can down the road every few years to every few days.
Everything is hopelessly overleveraged. G7 currencies are devalued to the point that China doesn't even have to do anything to become the leading world power. The old people decided saving their portfolios for a decade or two was more important than saving the currency and the economy. This is what came of it now.
I dont know what the implications are but what I do know is that, if this is bad, it is definitely Obama's fault. If this is good, Trump one again save America. Also, unrelated, I waited 3 hours in a doctor's office today and they had Fox News on loud enough that you couldn't hear your own word
Often times when talking about debt Japan is mentioned as an example for possible debt ceiling one can take, but if country can't increase interest rate because debt is too high then that means they don't have an actual control of their interest rate or debt.
And if they have to rely on a foreign country can they actually fix this?
As the article indicates, it’s still far from the 164 when the intervention began but it is definitely going to be interesting if the US will intervene again and why. We have a weird motivational mix of buddyeconomics and self-preservation, the 10y T-notes are eying the 4.7% line and the fed needs to prevent a Boj fire sale.
Let’s see what comes. Exciting times for speculators that bet on continuing joint market actions.
Has anyone noticed the weird shape of the JGB curve?
Lol, people who think the situation in Japan is bad don't understand the situation at all. What this situation means is that the US is in deep trouble.
First, the cause of the yen's depreciation is the rapid rise in U.S. debt, which has led to higher interest rates to induce people to buy government bonds. As a result, the yen is depreciating due to the interest rate differential with the US.
Japan needs to buy yen to curb the turmoil caused by the rapid depreciation of the currency. In that case, what Japan would do is sell U.S. Treasury bonds. However, when U.S. Treasury bonds are sold, U.S. interest rates rise further. That’s why the U.S. is trying to intervene regarding the weak yen.
In short, the US currently finds itself in a nightmarish situation. Debt is ballooning, interest rates are rising, and it faces the need to pay out enormous amounts in interest.
If you look at this graph, you will understand what I mean.
People who argue that Japan should raise interest rates fail to grasp the situation entirely. The real issue for Japan is the rapid depreciation of the yen. This is problematic because rapid exchange rate fluctuations cause turmoil. But a weak yen in itself does not harm the economy. In fact, Japan's current account balance is at a record high.
What is actually needed in this situation is for the US to lower interest rates. In fact, the U.S. wants to lower interest rates, and if the U.S. economy recovers, the yen will appreciate again. But right now, the Trump administration is doing nothing but stupid things and heading in the opposite direction and China is also selling U.S. Treasury bonds. Japan has no obligation to mindlessly go along with rising interest rates, which is why it is looking to sell off U.S. Treasuries.
I wonder if anyone with advanced notice of this happened to place, otherwise, extremely risky bets?
I wonder if they also happened to have advanced notice that there would not be more support to immediately follow?
Just wondering. Which normally would be a pretty flippant comments, but at this point in history may be one of the largest forces guiding the momentary gains and losses in the world markets right now.
It's not like they're going to rapid-fire these interventions one day after another. Yen is slowly creeping back down, true, but they're going to wait a bit until it goes back to where it was, then they do it again. This will repeat until the world learns its lesson.
stuntondeezh0es | a day ago
You can’t fight bonds and win this way. The BoJ needs to raise rates significantly to bring back money into the country. Inflation is running wild and countries that rely heavily on imports are getting less and less for their money
JustTaxLandbro | a day ago
The issue is the new Japanese PM who basically promised more spending and less taxes which is what triggered the current bond crisis (on top of the Iran war, and the trade war).
Emotional_Goal9525 | 23 hours ago
Liz Truss at home.
PanzerKomadant | 13 hours ago
More like Temu Thatcher lmao. Just as bad as that witch.
iaNCURdehunedoara | 22 hours ago
Wasn't Thatcher her hero? Why did they expect anything else from stupid politicians? 💀
NextWeather7866 | 20 hours ago
Thatcherism/Reaganism is what got us into service based economies, more of the same is ultimately going to hit bonds, because lenders want their fucking money.
emp-sup-bry | 16 hours ago
All of this economic theory at this level is honestly out of my league, but, at a basic level, it’s difficult to believe that we managed, as a world (and the conservative governments in particular) to not increase productivity to unheard of gains yet somehow managed to make unsustainable levels of debt and banking fuckery.
People spending a lot on dumb shit, yeah (but also actually gets churned back into economy). How is it that life for many people was far more stable in the pre 80s and debt was managed and people could not spend a million dollars for college, all while working and producing an actual sliver of what we produce today? I get that we all have big screen TVs now but it just seems like bankers and tarot economists have gambled with our systems and we all lost (well, except that 1% that seem to have absorbed all the wealth). Life is somewhat better in developing nations, I guess, to some degree, but why do my kids have to face this type of shit while being able to do the work of 10 people from the 70s?
Low tax and banking fuckery, it seems. Is there a path out beyond higher tax on those that have absorbed all our gains over decades?
mistressbitcoin | 9 hours ago
What better way to convince people to work hard than to indebt them, or at the minimum, to make them believe that they will never have enough.
L4gsp1k3 | 19 hours ago
Ironically, lenders are also borrowers. While they want premium for their money, they also want lower short term interest rates.
This economy is weird and not text book, my bet is that future economic studie will have this era as the " everything all at once " economy.
FearlessPark4588 | 17 hours ago
Truss is genuinely a nut. Years later on some podcast she complained about how the bank of england wouldn't get out of the way so politicans could run the show. She literally learned nothing from her time in office.
exmachina64 | 22 hours ago
No, the bigger issue is that the entire Japanese housing market depends on adjustable-rate mortgages. If interest rates rise, their housing market will collapse.
Misfiring | a day ago
They can't afford the debt interest payment that results from the high interest rates.
vote-morepork | a day ago
The most recent Japanese CPI was 1.7%, that's hardly running wild.
The currency is devaluing, but not so much to drive inflation yet.
Prestigious_Load1699 | a day ago
If inflation is only 1.7%, then it would seem immensely challenging to raise interest rates and risk spiraling back into deflation.
I’m not an expert in this topic, but what exactly is the logic behind raising interest rates?
If it’s about stemming currency devaluation - why does that matter?
Appreciate any insight on this.
valletta_borrower | 23 hours ago
Low interest rates means you get a poor return on investments made in Yen and thus lower demand for Yen and thus lower value.
Prestigious_Load1699 | 23 hours ago
I follow.
But why does it actually matter if the Yen devalues to comport with market fundamentals?
Like - what’s the problem with a cheaper Yen?
stuntondeezh0es | 23 hours ago
Japan is the biggest holder of US treasuries. Because until August 2024, it costs $0 to borrow yen and use it to buy things like stocks or US treasuries for guaranteed returns. But now if the yen is weakened, Japan may need to sell the treasuries. Furthermore, a weakened yen may prompt investors to sell Japanese government bonds. No one would hold yen if it kept falling
Prestigious_Load1699 | 23 hours ago
To my semi-educated mind, this just seems like a necessary correction.
Unless I’m missing some catastrophic consequence of the Yen reaching its true market value.
I imagine people would hold the Yen, just not at an unsustainably-inflated value.
And, for my part, raising interest rates when inflation is currently 1.7% is simply bad monetary policy.
Glad to read any response.
Classic-View-3467 | 17 hours ago
The problem with the Yen devaluing reletive to the Dollar is that Japan is an energy net heavy importer, meaning that if the Yen keeps losing value to the Dollar then it becomes more and more expensive for Japan to buy energy.
Kazang | 16 hours ago
You have to bear in mind that the rates are already extremely low, their overnight rate (the one everyone uses as the benchmark when talking about central bank rates) is just 1%.
Also Japan's economy is based around near zero inflation, it works for them because the central bank rate is also so low, this enables massive government debt at what are ultimately negligible interest rates. Their private investment spending also seems to function just fine despite the negligible inflation, contrary to conventional wisdom in other countries.
The Yen acts as a extremely low interest source of credit for many countries, particularly the US, any increase of rates would impact the rates the US pays on it's debt, and because that debt is astronomical that is a big deal.
Like pretty much all modern financial systems it is a house of cards and any dramatic change at all (even if that change is not objectively bad) risks a catastrophic collapse of systems that relied on the status quo.
Euiop741852 | 19 hours ago
Sometimes, necessary corrections brings pain to the consumers, like since a lot of food is imported, a weak yen may result in food costs rising disproportionately compared to non-imported goods, and to struggling households that may lead to financial pain, which can be seen from the way they removed food tax to alleviate some of it
PanzerKomadant | 13 hours ago
Exports. That’s what. A weaker yen sounds good if you’re based on selling your stuff to larger markets.
But the problem is, Japan doesn’t do that as much as it used to since China and South Korea rose up in manufacturing.
Now that weak Yen means that Japanese have lower purchasing power within Japan itself while inflation slowly rises. But at the same time the Yen will keep getting weaker as tourism takes the front seat since it’s incredibly cheap, even now, to visit Japan.
CombinationSilent877 | 15 hours ago
The yen carry trade relies on low Japanese interest rates. It’s one of the big reasons for yen devaluation (as borrowing increases the amount of yen in circulation). Raising rates would make borrowing yen more expensive thus crushing it, but Japan will have a hard time raising rates because they have the highest debt to gdp ration in the world.
StorkReturns | 21 hours ago
CPI is generally a lagging indicator and PPI is running at 7.1% y/y.
mano1990 | 22 hours ago
Trump is just buying time, he and the Republican party can’t afford the unrevealing of the Japanese carry trade before the midterms
PedanticPaladin | 19 hours ago
Then they have to use the inflation fighting tool that governments are loathe to use: raising taxes.
FirstAtEridu | 20 hours ago
"Bring back money into the country" --> More inflation
"Raise interest" --> 250 % debt/GDP mostly held domestically --> Lots more money to ~~bagholders~~ Investors --> More Inflation
Japan is breaking the conventional monetary wisdom lol.
MammothUnique4147 | 16 hours ago
Raise rates ? Bro have you SEEN how much debt they have. There's no way they can do that.
Sure-Current-3267 | 12 hours ago
20 years of zirp and now it’s at 1%. I think we’ll see some baby steps.
wormtheology | a day ago
You mean to tell me the Bank of Japan not pursuing long-term solutions and relying on world class bellend Scott Bessent’s circular financing schemes is only a temporary solution? Color me fucking shocked. If the Bank of Japan won’t raise rates or sell US Treasuries, the Yen is going to get waxed without constant pledges of US Dollars. We have a deeply unserious moron running the US Treasury trying to save his buddies engaging in the Yen carry trade. These people are on absolute tar if they thought this lunch was going to damn near be free forever.
bhenghisfudge | a day ago
Nail on the head. Deeply unserious is an understatement in reference to Bessent.
grandblue-91 | a day ago
You missed the opportunity to use "bellend" instead of "head" :D
jessewalker2 | a day ago
The Bank of Japan has no incentive. Imagine you have a mortgage on your house. You’ve got a payment, but you can’t afford it. Now imagine your parents step in every time you’re about to miss a payment because you missing a payment could embarrass dad and cause him to look financially insecure. What incentive do you have to come up with a solution? In fact the best solution for your financial health might be to not have a solution. Is it right? No but this is the world of leverage and finance.
wormtheology | a day ago
I’m not even going to argue against the BoJ having no incentive. I can’t identify a sound reason outside of the Yen buying less and less foreign imports as time goes on. Obviously Japan has always been very industrious, but the people tend to make the nation. If the people of Japan are finding out their Yen buys less and less stuff and the Japanese industries don’t have the same amount of buying power to secure inputs, the Bank of Japan will eventually have to acquiesce to the interest of Japanese nationals. Right now appeasing the US is more profitable than appeasing domestic citizens. There is a critical mass though where that calculus changes.
mouthful_quest | a day ago
They’re bending over for the USA until mid term elections happen. Then we’ll see what happens after
Oraclerevelation | 15 hours ago
The incentives are the same and that was my take as well but it's somewhat worse than in your original analogy though isn't it?
It's like if you are constantly refinancing your mortgage to borrow more so your dad has to pay more and more each time... and also you used his garage as collateral and if he misses a payment his mortgage rate will shoot up and he'll have less available to pay your mortgage.
I know I killed this analogy and anyway an analogy is supposed to make things simpler but hey isn't the miracle of modern economics grand.
RedParaglider | a day ago
Lol sounds like something I say in board meetings. "Doing nothing is one of many bad decision options".
YakResident_3069 | a day ago
what ive also heard in bd meetings: doing something, even if bad, is oftentimes better than doing nothing.
gravescd | a day ago
Governments generally are heavily incentivized to do nothing in the face of serious problems, because it's much easier to assign blame to bad decisions than inaction.
teamonkey | 22 hours ago
https://en.wikipedia.org/wiki/Politician's_syllogism
afghamistam | 22 hours ago
They've discovered the one weird trick of taking the exact worst possible course of action and still blaming the libs or immigrants for the consequences that are clearly their fault. It works so well!
Valphai | 15 hours ago
Why is dad embarrassed? 🤔
TheCockyBus | a day ago
Who are the main actors conducting the carry trade that Bessent would be trying to save?
YakResident_3069 | a day ago
hedge fund friends
CanadianVolter | 2 hours ago
The hedge funds borrow in yen and buy essentially us assets with the yen.
Carry traders do not benefit from a rising yen and there have been a few flash crashes in the last couple of years when the yen has gone up chasing margin calls.
So I don't really know how this intervention is helping them
DigitalSheikh | 23 hours ago
Bessent was a Soros protege (ironic right?), so people like Druckenmiller and Michael Geromino are friends of his and bending his ear a lot. Apparently the BOJ governor and him are “longtime friends” and did some school together. Rich fucks all know one another. They’re always talking about how to use your money to fulfill their needs.
LillianWigglewater | a day ago
Banks
Sure-Current-3267 | 12 hours ago
It’s self preservation to prevent a USD fire sale. 30y tbonds are already over 5.2%
TheCockyBus | 12 hours ago
I get that, but no one seems to know specifically who are the biggest players in the carry trade. I know it’s hedge funds and banks etc but I’d love to know actual dollar value at risk broken down by each player instead of blanket statements
Sure-Current-3267 | 11 hours ago
I am not too convinced that the carry trades play such an important part. They will be hedged anyway and a devaluation of the jpy would actually benefit them. Do you have a different view that you can share?
TheCockyBus | 11 hours ago
I’m thinking it plays enough of a role if we’re needing to prop up the yen to maintain its stability. You may be right that the carry trade itself isn’t so important, but the downstream effects of that carry trade could create a cascading of unwinding of positions if the volatility hits harder than expected. I understand the devaluation helps, but I think part of the concern was an unexpected whiplash after a continued devaluation.
Misfiring | a day ago
Selling US treasury bills will hurt themselves as well, since the total value will drop. No different from selling lots of shares at once can tank the entire value.
Raising rates is simply not an option as well based on how big the debt is, the interest rate would be insane.
wormtheology | a day ago
They have to do something other than relying on Scott Bessent’s half-assed fiscal necromancy. If Japan continues to do nothing, and the currency is further devalued, who on earth is going to take Yen? Japan has to import literally everything needed for their quaternary industrial economy and are still falling short on output against Korea and China. This isn’t even taking into account their energy security problem lurking in the shadows.
Japan will literally either militarize heavily or forsake the Yen for the US Dollar if they don’t take more drastic action. I can’t see years of USD pledges helping here. The US Treasury is playing away games and throwing gasoline on another country’s fire.
FearlessPark4588 | 17 hours ago
Given that Japan has virtually no immigration, and it is facing an obvious, known demographic cliff for decades -- perhaps, long term, it doesn't make sense for the Yen to be a reserve currency. A weak institution shouldn't be the third most traded in forex markets.
TotallyObviousBot | 17 hours ago
Considering that the US will never let their airbases in Japan go because that leaves only South Korea left as a US military presence near China, the US is going to continue to take yen forever. They'll do whatever they can to prop up Japan because they're the strongest US ally in the region and a prime spot for conducting any kind of military operation in central China.
reflect25 | a day ago
> Selling US treasury bills will hurt themselves as well, since the total value will drop.
it's worse than just the total values dropping. each time japan sells large amounts of us treasury bills when the price drops the interest rate (yield) increases.
that makes the difference between us treasury bonds and boj interest rates even larger and so incentives even more carry trade
gravescd | a day ago
Problem is that dramatic yield spikes screw up the basis trade in Treasuries. The Fed nearly had to step in last year for that exact reason. If the basis trade goes upside down, a whole lot of treasuries have to liquidate to cover the margin.
YakResident_3069 | a day ago
can Japan do both? sell Tbills and raise Yen rates?
reflect25 | a day ago
Basically raising yen rates will stop the carry trade. Japan can do some combo of also selling t bills and buying yen using the proceeds.
But still it’s complicated. The main issue is that Japan has like 250% debt to gdp and at 2% instead of near 0% that will basically bankrupt the government. I’m not quite sure what japan can do now
YakResident_3069 | a day ago
Either way, a lot of pain that's been kicked down the road.
PerfectZeong | a day ago
There are no good options only least bad.
monstrofik | a day ago
nothing bad can happen, it can only good happen
Euiop741852 | 19 hours ago
They can sell off slowly to minimise that, and that will also achieve the effect of slowing the depreciation of the yen, minimising the economic pain
Thom0 | 17 hours ago
> If the Bank of Japan won’t raise rates or sell US Treasuries, the Yen is going to get waxed without constant pledges of US Dollars.
The problem is Japan cannot raise interest rates because its GDP growth is far too low. While 1% is relatively high for Japan, it is abnormal low for the rest of the world. It can't drop to 0% because then inflation will consume everyone's wages. The 1% interest rate is largely a political token. It's efficacy as a policy is arguable. Japan, like most complex economies, has lost the ability to manage a crisis through interest rate manipulation.
This is just the crisis orthodoxy of modern central banking and macroeconomics.
The causes for Japan's lack of growth is partly structural, it has outdated processes and procedures in almost every sector of its economy, a cultural issues, and a demographic crisis. All three of those problems are not economic problems. They are political and only political intervention can fix Japan's woes.
What is playing out in Japan is happening throughout the developed world. Every single complex economy, whether it be the US, Europe, or China, is now facing political and not economic problems. Our political systems are biased towards managerialism and not problem solving. The entire world relies on the assumptions of post-Keynesian economics without critical thought or imagination.
Inflation is becoming a reoccurring theme and in my view it is clear that inflation might be more than just a money supply/GDP ratio. I think we're at the end of the practical usefulness of post-Keynesian economic orthodoxy. This is either going to end in a type of corporate feudalism, or we get a miracle and the US or China decide to undergo a 1970's type transformation which will drag the rest of the world along with because most politicians are managers with zero imagination who just copy what the big boys do.
Oraclerevelation | 14 hours ago
> I think we're at the end of the practical usefulness of post-Keynesian economic orthodoxy.
I think we have already de facto moved on from the post-Keynesian economic orthodoxy even though we are still going through the motions. The free market Republicans are somehow fine taking ownership stakes in all sorts of companies while the crazy Stalin Bernie Sanders wants to do the same thing so there is broad agreement.
That in itself is neither here nor there but what is truly remarkable that there is not a peep about it, it's just slowly happening and everything is meh apparently.
It seems the world is just slowly moving to a more Chinese model without making a fuss about it.
Thom0 | 12 hours ago
>It seems the world is just slowly moving to a more Chinese model without making a fuss about it.
What is the Chinese model? Does anyone actually know or do they just keep referencing it as if it is something that exists? What about China's model is so radically different to the generic capitalism?
People seem to think that China's communism is something concrete and different. It isn't. It is just the political dialect they speak in but underneath the language are the exact same structures that exist in Western states. China is a market based system. It is dominated by SOE's which are in reality exactly the same as the private corporations that exist in the West with the only difference being the political language used. China has a central banking system coupled with regional banks - again all coded in communist language but functionally just banks. China has interest problems. It has consumption problems. It uses speculative investing to create GDP bubbles. It engages in the blurring of public/private interests when it engages in market action, and circular funding just like Trump is now with AI.
The only difference with China is excessive profit is not a part of the status quo. There is a cultural difference. China doesn't need to engage in the single biggest capital investment movement in recorded history under the promise of endless profit to force capital-inefficient AI development.
There is a cultural difference but that is it. Structurally, the Chinese economy almost exactly the same as any Western economy and even shares practically all of the same issues - housing prices, consumption decline, and inflation woes.
China is not an example of an alternative but an uncomfortable sign that there is no alterative. Even the Communist have become capitalists. There is now no competing economic ideology to capitalism which means the future of humanity is going to be defined by capitalism. We are not past post-Keynesian economics. If anything, we're deeper than ever before.
Oraclerevelation | 6 hours ago
> Does anyone actually know or do they just keep referencing it as if it is something that exists
A very fair point not sure there is an answer.
>there is no alternative.
This is it there is and there must be we just can't know what it will be yet. We can all recognise that we are at the threshold of a major crisis, the only thing anyone can agree on is that this can't go on for ever so I'd counter that there will soon be no alternative but to find an alternative. As that other post Keynesian luminary said when that crisis occurs, the actions that are taken depend on the ideas that are lying around at the time.
Rare_Positive_7997 | a day ago
The first domino…
charlesgrrr | a day ago
This is the gauge to watch. Will Bessent intervene again if needed as promised? I don’t think so.
DiscoJuan2000 | a day ago
What are you talking about? Arrogant Bessent made millions and knows much about financial deals as he smugly repeats every-time a news reporter presses him with tough questions
Fickle-Maintenance-1 | a day ago
Love the use of the word “bellend”
Gods_ShadowMTG | a day ago
it's ticking time bomb anyway. Japan is fucked and so is the US. There is no way to safe the Yen. If they raise interest rates, Japan will default on its debt. If they sell us treasuries, they will keep afloat for a couple of months maybe years but the trend will only accelerate and US treasuries will as welll.
FearlessPark4588 | 23 hours ago
But like, we print dollars for lots of things. Why can't we just keep printing to stabilize the yen? The world has limitless demand from yummy dollars.
OriginalHappyFunBall | 23 hours ago
Well said.
violentsushi | a day ago
Ok genius anonymous redditor man. What would you do? There is literally no way out of this for Japan.
Important-Emu-6691 | a day ago
Trying to fiscally manipulate your way out of all your economic problems isn’t gonna work when the fundamentals are crashing. Japan is simply falling behind South Korea, Taiwan, and China on all fronts and is facing an oil crisis that it’s trying to subsidize its way out of. Resulting in overconsumption in oil when there’s a global shortage
Remote_Volume_3609 | a day ago
It's kinda crazy to think that Japan has fallen behind even on a per capita basis not only the Asian tigers, but is almost about to be overtaken by China's Tier 1s. In PPP, China's T1 cities have already overtaken Japan. Unthinkable even 15 years ago.
5mao | a day ago
Ya, there's been a bunch of maps comparing modern Japan's economy being only equivalent to like 2-3 Chinese provinces compared to all of Asia in the 1980s. An obvious rebuttal is that those provinces still have twice the population of Japan, so they're only half as rich. But that still shows just how much Japan has fallen off compared to China. At this rate, probalby within the next 20 years, the average Japanese person will only be as wealthy as the average Chinese urbanite.
Highlander0208 | 23 hours ago
I understand your point about how much China and other Asian countries have closed the gap with Japan, but PPP used for international comparisons is calculated on a national level and doesn't account for differing price levels within countries. So for a country like China, while on a national level its GDP when adjusted for Purchasing Power Parity is just over double its nominal GDP, that gap would be much smaller for a T1 city like Beijing or Shanghai and much larger for rural areas and small cities in poorer provinces.
Level-Reputation5050 | 18 hours ago
China’s highest per‑capita GDP isn’t found in huge metropolises like Beijing or Shanghai. Instead, it belongs to Chinese‑standard medium‑sized cities on the Taihu Plain: such as Suzhou, Wuxi and Changzhou. And against popular stereotypes, the countryside around these cities is still very well‑off.
Highlander0208 | 18 hours ago
Yeah I am aware of that. I just brought up Beijing and Shanghai because most people reading my comment would be more familiar with them, and not all rural areas are poor, but those in more inland, less developed provinces tend to be poorer.
Remote_Volume_3609 | 9 hours ago
While this is definitely true, I would also point out that the Tier 1's and new tier 1's (Suzhou, Shenzhen, etc.) are all within 10-15% of Japan even in USD.
Real time data on this is obviously well-nigh impossible, but if you take the Shanghainese GDP per capita of 228,403 CNY under today's CNY:JPY ratio, it would actually almost equal Japan's GDP per capita of 5.37 million yen. I mainly relied on PPP as a statement because it was a more clearcut example of passing. That's also with the recent US and BoJ interventions; had it been a week ago, the Shanghainese GDP per capita would actually be higher than Japan's GDP per capita after conversion.
But yeah, my overarching point mainly is it's shocking to see Japan make so little progress while it's equally shocking to see how far China has come. In USD, Japan has basically not made progress from the 90s.
endeend8 | a day ago
Their plan is to squeeze the people with low wages and longer working hours and provide low to no yielding savings, issue and force even major corporations to take on even more debt, and of course print more. Either way living standards are going down and COL going up because you’re right they’re not competitive anymore and costs for things like welfare and making sure every meter of road in Japan looks new and clean is catching up fast
YakResident_3069 | a day ago
standards have been going down a lot. have you seen what avg people in tokyo make? its shocking. no wonder even more folks dont wanna have kids, etc.
Bread_Fish150 | 23 hours ago
For anyone curious the average in Tokyo is around $45,000 a year.
lordaddament | 22 hours ago
Damn that’s barely enough to live in the shittiest larger US cities
CopBaiter | a day ago
Also dont help that their goverment debt is so high. the intrest they gotta pay on their loans is huge
airbear13 | a day ago
Probably going to keep happening if both countries keep on track with their current monetary and fiscal trajectories. Japan might end up borrowing against their treasuries to get USD to prop up their currency since the US really doesn’t want them selling off their bonds. Maybe that can tide them over until the fed cuts rates or investors are more willing to accept more US debt.
endeend8 | a day ago
Fed cut rates? Inflation is realistically around 10-13%. Rates should be way higher
Special_Ad712 | a day ago
What is the data source for inflation should be higher aside from vibes? Beef is more than 50% as expensive as it was five years ago, but it’s less than 0.5% of CPI.
ViolenceIsBad | a day ago
Beef should be much more than .5% of the cpi, the CPI has been unrealistic and non-representative for years
ViolenceIsBad | a day ago
“Vibes” is a derogatory way of saying “yea your basket of goods looks bad but we don’t care, come look at this basket of goods that totally matter”
devliegende | 18 hours ago
Sounds like you can't afford your carnivore diet anymore. Time to acknowledge you're a beta and switch to veggies.
Special_Ad712 | a day ago
Fair, it’s .67% https://www.bls.gov/cpi/tables/relative-importance/2025.htm. I misquoted it.
I mean, CPI tries to get the average mean of all consumption. Per a 2023 study, 12% of people account for 50% of all beef consumption. https://www.mdpi.com/2072-6643/15/17/3795. To be fair we used to fall into that group but when Ora King is almost the same price as Prime ribeyes, fish becomes a much more palatable substitute. Copper is cheaper is most A5…
airbear13 | 22 hours ago
What? 😭
CombinationSilent877 | 15 hours ago
Fed has to because of deficit bomb. That’s why Warsh hasn’t done it yet.
artbystorms | a day ago
Maybe because interventions to artificially prop up your currency only work if people have faith in your government?! America is an unreliable partner and Japan has been treading water economically for 15 years.
Moral-Relativity | a day ago
It’s all foreigners’ fault. Once Takaichi runs them out the pure Yamato spirit will once again shine through and bring about an economic renaissance. Ganbare!
Decent-Photograph391 | a day ago
Someone needs to give Takaichi a DNA test for Yamato purity. 30% of modern day Japanese have partial Chinese ancestry.
YakResident_3069 | a day ago
or gulp, don't say it aloud, korean.
TotallyObviousBot | 17 hours ago
Manchukuo 2.0 incoming
kananishino | a day ago
Wait did you even read what your wrote?
Diamond1africa | a day ago
This is just utter bullshit 😆. Can you quantify your claims
Mammoth-Buddy8912 | a day ago
I moved to Japan years ago but now I might have to move back to the US, because it's so weak.
But the cost of living is so much higher. I feel like I'm between a rock and a hard place
PapaSnow | 22 hours ago
I mean, if cost of living is overall lower in Japan, even with a weaker yen, if you’re doing fine why not just stay
Mammoth-Buddy8912 | 21 hours ago
I have Student Loans in dollars
Substantial-Elk4531 | 20 hours ago
Sorry to read that, that is tough. Hope you can find a good path forward
PapaSnow | 20 hours ago
Ah yeah, that’ll do it
I was lucky enough to get mine out of the way before we passed the 135 yen per dollar mark, but I’d be lying if I said I didn’t feel the pain even then
Best of luck
devliegende | 18 hours ago
Finding out about currency risk.
It's when you earn money in one currency while having expenses in another
_le_slap | 16 hours ago
big ooff
VacanyeraYT | a day ago
Central bank market interventions almost never sustain long-term currency strength without structural rate adjustments.As long as the wide interest rate differential between the Federal Reserve and the Bank of Japan persists, carry trades will continue to put downward pressure on the Yen. Intervention buys time, but monetary policy divergence drives the market
061826heart | a day ago
Quick, Warsh! Turn the printers back on!
They, the Fed cannot keep
Kicking this can. There are a lot of bills aside from just this Carry Trade matter that need to get unwound, and it’s expensive.
Geigengiger | 17 hours ago
That came exactley as expected. We come from kicking the can down the road every few years to every few days.
Everything is hopelessly overleveraged. G7 currencies are devalued to the point that China doesn't even have to do anything to become the leading world power. The old people decided saving their portfolios for a decade or two was more important than saving the currency and the economy. This is what came of it now.
Consistent-Soil-1818 | a day ago
I dont know what the implications are but what I do know is that, if this is bad, it is definitely Obama's fault. If this is good, Trump one again save America. Also, unrelated, I waited 3 hours in a doctor's office today and they had Fox News on loud enough that you couldn't hear your own word
max38576 | 19 hours ago
I have a logical question.
In the past, the U.S. was always accusing other countries of manipulating their currencies and then punishing them under U.S. law.
This time, the U.S. is openly saying it wants to drive down the yen’s exchange rate—does that count as currency manipulation?
Enjutsu | 23 hours ago
Often times when talking about debt Japan is mentioned as an example for possible debt ceiling one can take, but if country can't increase interest rate because debt is too high then that means they don't have an actual control of their interest rate or debt.
And if they have to rely on a foreign country can they actually fix this?
Sure-Current-3267 | 13 hours ago
As the article indicates, it’s still far from the 164 when the intervention began but it is definitely going to be interesting if the US will intervene again and why. We have a weird motivational mix of buddyeconomics and self-preservation, the 10y T-notes are eying the 4.7% line and the fed needs to prevent a Boj fire sale.
Let’s see what comes. Exciting times for speculators that bet on continuing joint market actions.
Has anyone noticed the weird shape of the JGB curve?
testman22 | 6 hours ago
Lol, people who think the situation in Japan is bad don't understand the situation at all. What this situation means is that the US is in deep trouble.
First, the cause of the yen's depreciation is the rapid rise in U.S. debt, which has led to higher interest rates to induce people to buy government bonds. As a result, the yen is depreciating due to the interest rate differential with the US.
Japan needs to buy yen to curb the turmoil caused by the rapid depreciation of the currency. In that case, what Japan would do is sell U.S. Treasury bonds. However, when U.S. Treasury bonds are sold, U.S. interest rates rise further. That’s why the U.S. is trying to intervene regarding the weak yen.
In short, the US currently finds itself in a nightmarish situation. Debt is ballooning, interest rates are rising, and it faces the need to pay out enormous amounts in interest.
If you look at this graph, you will understand what I mean.
https://www.reddit.com/media?url=https%3A%2F%2Fpreview.redd.it%2Fdxc75fug1khh1.png%3Fwidth%3D1440%26format%3Dpng%26auto%3Dwebp%26s%3Dc14a5f3c2d60da06e58550e766a39b7c2e23e60a
https://www.reddit.com/media?url=https%3A%2F%2Fpreview.redd.it%2Fhz5cuxxg1khh1.png%3Fwidth%3D1440%26format%3Dpng%26auto%3Dwebp%26s%3Db93f93037c764ac8acdb3bd1f6c5c9ee1e709b5e
People who argue that Japan should raise interest rates fail to grasp the situation entirely. The real issue for Japan is the rapid depreciation of the yen. This is problematic because rapid exchange rate fluctuations cause turmoil. But a weak yen in itself does not harm the economy. In fact, Japan's current account balance is at a record high.
What is actually needed in this situation is for the US to lower interest rates. In fact, the U.S. wants to lower interest rates, and if the U.S. economy recovers, the yen will appreciate again. But right now, the Trump administration is doing nothing but stupid things and heading in the opposite direction and China is also selling U.S. Treasury bonds. Japan has no obligation to mindlessly go along with rising interest rates, which is why it is looking to sell off U.S. Treasuries.
LessonStudio | a day ago
I wonder if anyone with advanced notice of this happened to place, otherwise, extremely risky bets?
I wonder if they also happened to have advanced notice that there would not be more support to immediately follow?
Just wondering. Which normally would be a pretty flippant comments, but at this point in history may be one of the largest forces guiding the momentary gains and losses in the world markets right now.
LillianWigglewater | a day ago
It's not like they're going to rapid-fire these interventions one day after another. Yen is slowly creeping back down, true, but they're going to wait a bit until it goes back to where it was, then they do it again. This will repeat until the world learns its lesson.