Yen carry trade unwind intensifying

quote:

---

What if it bounces?

---

The JPY/USD exchange rate is just a small part of the equation that was the part that triggered carry trade unwind fears back in 2024 but now with Japan raising rates and making the money printer go BRRR the risk is far greater this go round.

When the contagion event starts it will go JPY -> EUR -> USD

We are just the least sick horse in the glue factory.

quote:

---

Jut so we're clear, this is for the entire world.

---

All fiat currencies collapse over time. JPY blowing up is enough to take down the whole world with all the derivatives which are off in the quadrillions of dollars. Remember every financial asset is also someone else's liability and it's only worth if the liability holder can make good on it.

The only thing that saved USD after Nixon took us off the gold standard was in 1974 when Kissinger negotiated the petrodollar standard where the world would trade for oil in USD in exchange for protection from the US military. That, the warfare model it supported, and technology growth are the only reasons it has lasted this long. Once the Biden administration started freezing assets of the Russian oligarchs it sent the signals to the world that you can no longer consider the USD a safe haven asset so de-dollarization is underway. Japan is the largest holder of US bonds it is all interconnected which is why when the system finally does go up in smoke you will want assets outside the babylonian debt slavery model.

quote:

---

Lowering rates increases money supply, not raising rates

---

Right but the Japanese government is printing Yen to cover their 250% debt to GDP ratio at the increased payback rates

quote:

---

Lowering rates increases money supply, not raising rates

---

My take away wasn’t that their money supply impacts the US. It’s that since Bank of Japan has been allowed to borrow yen at zero and negative interest rates for decades they’ve been allowed to use that money to hoard US treasuries and generate risk free money.

Now that they have to pay interest like everyone else, there’s no money to be made, and the US loses its best customer.

Assuming this is true, what is the play? Bitcoin or gold? A financial meltdown would obviously devalue the dollar and crash the market.

quote:

---

Now that they have to pay interest like everyone else, there’s no money to be made, and the US loses its best customer.

---

That's a problem for us. Over the last 14 years, Japan was the largest foreign buyer of US debt for 11 of those years, responsible for anywhere from ~1/5-1/4 of total US debt purchased by foreign entities each year. Over that same period, they've purchased an average of ~6.2% of total US debt each year (although that's dropped a LOT since COVID).

Currently, Japan holds about $1T of US Debt and that's the lowest amount they've held since 2011. The more they (and/or other countries) pull back from buying as much US debt, the higher the yield tails have to be during auctions in order to attract enough buyers.

The Fed has been slowly divesting those assets since 2023. If they start buying again it's going to be a bad sign as it will likely mean they are only buying to help keep an auction from failing (because a failed auction would send investors fleeing, thus creating an even greater rush away from US debt).

quote:

---

Yeah credibility is diminished because its a vid from a gold company

---

LMFAO

Loading Twitter/X Embed...
If tweet fails to load, click here.

Silver up 5.6% today