What's Happening in Japan Just Got Even Worse
A Reuters photographer recently captured a handwritten note sitting in front of Treasury Secretary Scott Bessent that read:
“Buy Japanese Yen — $5 to $10 billion.”
So why is America suddenly helping Japan defend its currency?
And what does the United States get out of it?
In this video, I break down Japan's growing currency problem and why what happens to the yen could eventually affect U.S. interest rates, mortgage rates, government debt, and the broader economy.
We'll cover:
• Why the Japanese yen has lost so much of its value
• How Japan's enormous government debt makes raising interest rates extremely difficult
• Why Japan has been spending billions of dollars trying to defend its currency
• How Japan's massive holdings of U.S. Treasuries connect its financial problems directly to America
• Why the U.S. doesn't want Japan dumping Treasury bonds to raise dollars
• How a little-known Federal Reserve program could give Japan another way to defend the yen
• Why Japanese investors are beginning to bring money back home
• And the financial, trade, and geopolitical reasons America has such a big interest in keeping Japan stable
This isn't really a story about the Japanese yen.
It's a story about how interconnected the global financial system has become.
Japan is one of America's closest allies.
But it's also one of America's biggest lenders.
If you want to understand why America is suddenly helping defend the Japanese yen, and why Japan's financial problems are becoming America's problems too, this will give you the full picture.