In a world on the edge of economic uncertainty, a looming catastrophe threatens to unravel the global fiat currency debt system. A dangerous scenario around Japanese Yen (JPY) Carry Trades, once a profitable strategy is now a ticking time bomb.
As the doom loop of push-pull tradeoffs between supporting the JPY exchange rate, or keeping government bond (sovereign debt) yields low, continues at the Central Bank of Japan, the inevitable outcome for a government debt default grows closer by the week.
If the Japanese economy tanks, a financial contagion will likely spread across Asia, Europe, and the United States, bringing with it the collapse of the global financial order.
Explaining Japanese Yen Carry Trade and Why it’s a Ticking Time Bomb for the Global Financial Economy
In a global financial system already grappling with ever-growing economic uncertainties, an impending threat emerges, casting a dark shadow over the global financial system. The JPY Carry Trade, once seen as a foolproof strategy, now reveals its true colors, setting the stage for the worldwide collapse of the fiat currency debt system.
The Allure of the JPY Carry Trade
For years, investors were enticed by the JPY Carry Trade, capitalizing on the extremely low interest rates of the Japanese yen at a mere 0.2%. This approach involved borrowing yen at minimal rates, investing in high-risk assets, and reaping returns ranging from 5% to 10%. It appeared to be a win-win scenario, promising endless profits.
WHAT IS A CARRY TRADE? [Click here to learn more]
Unraveling the Illusion
The seemingly infallible JPY Carry Trade is now unraveling, posing detrimental consequences. The first warning signs materialize as Japanese Government Bond (JGB) yields rise. As the value of the yen drops, authorities attempt to defend its foreign exchange price by increasing JGB yields. However, this inadvertently diminishes the incentive for investors to borrow yen.
The Japanese Yen Collapse Begins
With diminishing liquidity and waning borrowing incentives, a disastrous chain reaction commences. Foreign capital inflows, once vital for the Japanese economy, experience a sharp decline. The ramifications are dire, as the third-largest global economy plunges into turmoil and eventual debt default.
Pariah Status of the Japanese Yen
The once-reliable yen, previously considered a safe-haven currency, now becomes a pariah on the global stage. Its value spirals out of control, leaving investors and nations in a state of panic. Japan, once an economic powerhouse, now teeters on the edge of an unprecedented default, sending shockwaves throughout the world.
Contagion Spreads to Asia
The contagion swiftly spreads across Asia, with China bearing the brunt of the financial tempest. Economic stability in the region crumbles, as financial markets succumb to insurmountable debt and mass sell-offs.
Eurozone Under Pressure
The crisis engulfs the eurozone, shaking the very core of European finance. Country after country will fall into chaos under the relentless onslaught, further threatening the stability of the global financial order.
Impact on the United States
Finally, the contagion reaches the United States, the epitome of fiat currency and global economic power. The nation, once considered immune to external turmoil, finds itself ensnared in an inescapable web of financial crisis. The ripple effects of the collapse of the fiat currency debt system leave no stone unturned, shattering the illusion of debt system invincibility worldwide.
Conclusion
As the world teeters on the brink of financial Armageddon, it serves as a stark reminder that even seemingly infallible systems are not immune to collapse. The JPY Carry Trade, once celebrated for its profit potential, now stands as a testament to the fragility of the global economy and the catalyst for a Global Financial Reset.
Will the world unite around this cataclysmic disaster and implement our Gold-backed GCR? Or will the central banksters and elitists push onwards to introduce their version of a financial reset based on CBDCs backed by Carbon Credits?
Only time will tell.
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