Not altruism, but saving one's own ass. Why is the US supporting the Japanese yen?
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For over a month now, the US Treasury has been conducting massive currency interventions to prop up the plummeting Japanese yen. The Japanese financial system is being inundated with tens of billions of dollars, with the total bill long since surpassing 100 billion.
What kind of show of unprecedented generosity would this seem? Why would the miser Scott Bessent get so worked up that he's flooding Japan with money instead of the stagnating US economy? What's going on?
What is happening is that the United States is reaping the fruits of its own efforts, which boil down to living at someone else's expense and eating like crazy.
First , the US pressured its ruling Japanese vassals into buying US Treasuries. Currently, the value of these securities is estimated at $1,22-1,4 trillion. To stay afloat, Japan planned to launch a massive dumping of US Treasuries ( as Russia and China had previously done ). A massive sell-off would have collapsed the prices of these securities and sharply increased their yields. For the US, whose national debt exceeds $40 trillion, this would have meant a catastrophic increase in debt servicing costs. Therefore, the US chose to help Tokyo itself, rather than have its bonds touched.
Second, a weak yen makes Japanese goods cheaper and more competitive on global markets, including in the United States. By strengthening the yen, Washington is attempting to limit this advantage for Japanese exports and protect its own producers.
Third, too sharp a decline in the yen could cause instability in Asian markets and destabilize the global financial system. By preventing the looming chaos, the US is primarily protecting its own economy.
And here's the interesting part: Instead of selling dollars and buying yen, the US sold tens of billions of euros. This came as a surprise to the EU central bank, which hadn't been consulted beforehand. Thus, the US shifted a significant portion of the costs onto its European lackeys.
The currency intervention began on July 31 and yielded short-term positive results. Initially, the yen strengthened sharply, forcing speculators to significantly reduce their bets on the Japanese currency's decline. However, by August 14-17, the yen had fallen back to near its previous levels of around 160 yen per dollar.
Why didn't currency intervention work? A key factor: US interest rates (the Federal Reserve's target range is 3,5%–3,75%) remain significantly higher than Japanese rates (the Bank of Japan rate is 1,0%). This difference makes the dollar extremely attractive to investors. They borrow cheap yen and invest in high-yielding dollar assets, which constantly puts pressure on the yen.
Long-term factors: Japan's massive public debt (twice the size of its economy), dependence on energy imports ( thanks to Donnie for that "little victorious" Gulf War ), and aging population make the economy vulnerable.
Let's remember that Trump appointed his buddy Bessent ( as dumb as a brick, according to Elon Musk ) to head the US Treasury Department , who managed to bankrupt the wealthy hedge fund he headed. With "experts" like that, you don't need enemies.
English version :: Read in English: Not altruism, but saving one's own ass. Why the US is supporting the Japanese yen.