Japan Surrenders To Inflation – This Pivot Could Trigger A Global Bond Crisis

So the bank of Japan has finally Surrendered to inflation and pivoted now For the first time in 15 years Japan They raised their Benchmark rate to 0.5 And somehow the whole world is shocked Now if you have been following this Channel you know Japan had no choice but To raise rates had done hawkish sooner Or later right this is why I'm calling It the dumbest people in history because It is a self-inflicted wound and because The whole world somehow couldn't see This coming higher rates from Japan Might actually trigger a sovereign debt Crisis and take down Global bonds so if We recall Japan has been aggressively Easing right keeping their interest Rates low and near zero percent and Because of this inflation in Japan Hitting a 40-year high of 3.6 in October Everyone's freaking out Japan has Freaked out but here's the insane part To fight this inflation Japan is going To spend more money to solve the problem You really can't make this stuff up just A month ago they approved 200 billion Dollars in stimulus spending to ease the Pain of inflation right and the majority Of it is going to be filled by more debt And this is why investors will fleeing Japanese bonds and moving into Treasuries and this is why the Yen was Crashing all year long until they Decided to do the pivot and it's because

Of this money printing misadventure that Japan has doomed their economy and could Very well take down Global bonds if Their interest rates go high enough and Let's be serious about this guys a pivot Should never have happened right it was Never needed in the first place modern Monetary Theory ergonomics corroduce Policy whatever you want to call it it Has failed the market forces has pinned The bank of Japan to a corner and force Them to Pivot but Japan's economy is Much weaker right now they have printed Up trillions of Yen that that burden has Grown to almost one quadrillion Yen That's seven trillion dollars worth and A lot of this debt is helped by the bank Of a pen and if we take a look at Japan's treasury Holdings they have been Selling off their treasuries dropping by More than 200 billion dollars since February they are selling off their Dollar reserves in order to prop up the Yen but it has not been working it's Only when power hinted at a smaller rate Highs in December and Japan's actual Beaver back to tightening that the Japanese Yen started to recover right But it is still down over 13 because too Much confidence has been lost too much Money has been printed and this is going To Boomerang back to hurt the Japanese Economy now we'll talk about this many Times about how money printing always

Backfires and how the bank of Japan will Have to eventually reverse costs and Jack rates back up right essentially Japan has lost the battle of the Yen They have lost a battle to inflation They have realized that they don't have Enough dollar reserves and they can't Outlast the Federal Reserve when it Comes to higher interest rates now I Don't believe Japan were dead reverse Courses that printing money all over Again but it's definitely possible Right Anything is possible but that will crush The Yen and Destroy any credibility left The bank of Japan has now investors they Are beginning to realize that Japan is Running out of options holders of the Jgbs are starting to sell off their Bonds because prices are going to Collapse as Japan starts to raise Interest rates and that's why we see This insane spike in a 10-year Japanese Bond to almost 50 basis points and this Is going to out Japan's economy at This point Japan's stock market has Reached legendary status right for being Flat for decades their stock market that Nikkei has not moved and if you compare It to the S P 500 we can see a big Disparity in performance over the last 30 years the s p is up by over 2400 While the Nikki has barely scratched 10 Gains they have suffered three lost Decades guys and this brings us back to

The reality that Japan has a demographic Issue and a fertility crisis the buffet In Japan will hit a new record low this Year and no amount of money printing is Going to solve it in fact it will just Cause the yen to crash even further Cause inflation to spike and make it Harder to form families right now Japan They're thinking of giving an additional 80 000 Yen a child to boost the birth Rate but that's only around 600 as good As nothing now not every issue can be Solved through monetary policy we know This by now that's not how the real World works the boj is practicing Fantasy economics but Japan's pivot Could very well trigger a bomb crisis Like what happened in the UK a few Months back remember what happened when The yields on the UK Guild started to Soar we saw Pension funds collapse Because they were leveraged on bonds so They face huge margin calls and this Resulted in a bank of England coming in And bailing out their economy by buying All these UK bonds back to drop down the Yields right now their reports that Japan's life insurance are well Capitalized and probably won't face the Same pension crisis as the British but Still a terrorists we need to watch out For because if they use on the jgb is They rise to two percent or even three Percent this could very well collapse

Both the bond market and the stock Market and that's why I believe Japan Has duck itself into a deeper hole today They have fewer dollar reserves now and Their debt is humongous and with Rising Rates their economy is going to slow to A crawl their Industries are probably Going to get hollowed out like Europe And lose ground against China and America so I won't be surprised if they Have another lost decade or two but this Situation is about to get worse Japan's Pivot and rate Heights could trigger the Next Global Bond crisis now let's rewind Back time to a few months ago where the Boj was still easing and the Yen was Still crashing right investors were Running away from Japanese bonds they Were massive sellers dumping over six Trillion dollars worth in September Alone that's just one month and Global Funds and Japanese investors they were Taking money out of the jsg GBS and There were net buyers of U.S treasuries Because the yields were better and the Dollar was strengthening but now the Reverse is going to happen if Japan Keeps hiking rates we're going to see Global born use Spike we're already Seeing it in the US 10 year where yields Have almost jumped from under 3.5 Percent to almost 3.7 percent and that's A huge move in just a few days so let's Understand what really happens when

Japanese born use rice yes it will be Bearish for Japan's economy but it could Trigger a big liquidity rush out of Western bonds back in the Japanese debt Now we're talking about money living U.S Treasuries and Euro bonds and flooding Back into the jgbs and Dubai's Japanese Bonds you need Yen so the higher the BLK Raises rates the stronger the Japanese Yen will become and this is the big Threat that the markets are not pricing In just yet Japanese Savers and Investors are bringing home their money Away from the west and adding pressure To U.S treasuries so even if Powell Stops hiking slows it down what Japan is Doing could very well Spike use higher And Trigger lower bond prices in the U.S The Yen carry trade is closing and if it Ends we could see another debt crisis Now will this alone collapse the U.S Bond market I seriously don't know but This is another dollarization event from Japan amongst many others in the world Right we already have the market Predicting a 70 chance of a recession in 2023 and according to economies the U.S Economy is facing big headwinds from Surging interest rates High inflation The end of physical stimulus and weak Export markets abroad and if Japan Continues to hike rates we're going to See the U.S economy take a beating and a Stock market also suffer right because

Now it's truly Global demand destruction Every single country today except for Maybe China is hiking rates to crush Inflation the Cavalry is not coming and The markets the SMP still has more room To fall and this date can't bounce isn't Over but yet courtesy of Japan so there Are a lot of signals blaring that the Recession is coming and Japan's pivot Could be that final straw that breaks The camel's back but more importantly This is a lesson guys that printing Money and manipulating interest rates Just makes things worse it destroys the Value of currencies and doesn't solve Any of the structural problems I believe Japan is going to keep hiking up because Inflation is becoming a real problem and The yen is still in crisis mode right if They decide to do another pivot and Start quantitative easing all over again This will just crush the Japanese Yen Now Japan's public debt to GDP is Already at a crazy 262 percent and this Can't go on forever yes a lot of it is Owed to the bank of Japan but this just Shows us that the Japanese economy is Being propped up by funny money it's not True genuine growth and this is why as We continue towards 2023 my focus is Still on cash and gold but the last Thing in the world I would ever touch Much are Japanese stocks they might have Doomed their own economy for the next 10

Years with their flip flopping around so Let me know what you think in the Comments below will Japan continue Hiking rates to save the Yen or will They flip like a pancake again and start Printing money all over again let me Know in the comments below stay safe be Sure to smash the like button and Subscribe as we navigate through these Crazy times