Japanese Government Bond Market House of Cards Could Topple Anytime. Contagion Would Follow.

Japanese Government Bond Market House of Cards Could Topple Anytime. Contagion Would Follow.

As you can see, if we go further back, uh, Japanese government bond yields the 10 year has been as far as eight. Uh, if that were to happen very quickly in the next 6 months to a year, uh, that would trigger a massive global government bond crisis. Wednesday, November 26, 2025. Mano 64, home of alternative economics and contran views. Well, I I’ve covered Japan for many years. Uh we uh have a uh Japanese yen carry trade playlist, and today I want to talk about Japan because it’s not just about the carry trade anymore. It it’s about the Japanese uh government bond market. I think it’s uh flashing uh very uh bright red warning signs not not just for Japan but uh for the whole uh western global sovereign debt situation. Yes, Japan could be the first domino to topple and uh there would be a contagion uh effect. Uh you can bet on that. Yes. So, uh things are getting very interesting uh in in Japan and uh yes, I guess it would be a a good uh excuse if things were to unravel in the West and in the US and the UK, they could blame the Japanese, but we’re going to see why. In my opinion, that would also be a a a big cover up. Before we uh look a little deeper into uh the Japanese situation, uh just want to wish uh my uh viewers in the US and and you guys are the majority of my uh viewers when I look at the uh statistics almost up to 50% of you are in the US. Uh yeah, I want to wish you a a very uh well a very happy and uh a great Thanksgiving uh weekend. I think it’s a a great holiday actually yet. We don’t have it here in the UK or I think in Canada they have it. It’s in October. But uh I I remember when I uh was at university uh in Florida at Rollins College in Winter Park in the early 80s. Um I grew up uh and was born in Brazil. So we don’t celebrate Thanksgiving. So I I wasn’t going home. I was staying on campus. But a very good friend of mine invited me to go up to uh New York State uh to uh spend uh Thanksgiving with his family and it was great. And um yeah and I think uh giving thanks and having gratitude is something we should uh uh do uh every day actually. Uh I I do it every day. I I thank God for all the blessings uh he has uh bestowed upon me and my family. We shouldn’t take anything for granted. Uh that that’s the way I see it. So yeah, again happy Thanksgiving and thank you again um for your following and uh yeah, your support. So, back to Japan now. Um, and I’m going to look at the bond market and then we’re going to look at a a special kind of money from Japan at the end. I think you’re going to like this. But, uh, as I’ve said, I’ve been uh warning about the Japanese carry trade for uh at least 5 years, I think. And what is the Japanese carry trade? Well, it was really uh put on steroids, so to speak, back in 2013 when Prime Minister Abbe uh took over and abonomics uh became u the narrative. It became the policy and abnomics basically is what the new uh prime minister is also pushing. Ta T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T Ti I think her name is first woman prime minister and that basically is uh loads of stimulus, fiscal stimulus, uh loads of central banking, uh QE, low rates, a weak yen, and that’s helped the carry trade. And what’s the carry trade? Well, investors uh from around the world borrow in yen because it’s cheap and the currency is weakening. So, uh the uh your loans become worth less and then you take those yens and uh you convert them into your dollars, pounds of course or euros and you invest it in higher yielding assets. Uh the problem is that um this worked all right when uh the uh cost of living in Japan wasn’t going through the roof when their inflation so to speak or CPI was near zero uh and the bond market the long-term bond market behaved uh 10-year yields were even negative uh until I mean until 2022 or thereabouts. Uh yeah uh there wasn’t a a government uh let’s say maturity uh going as far out as 40 years that was above 1%. And that was pretty uh stabilizing for the Japanese financial system because a lot of financial institutions in Japan they hold these bonds as assets. So they were steady. Uh they kept pumping uh stimulus fisc fiscal and monetary into the economy. Foreigners kept selling the yen. Uh yen kept was pretty much under control. Not too weak. It went from 80 well it went from 80 to like 120 um under since the beginning of a uh abonomics in 2013. So that means that uh the dollar strengthened from 80 to 130 that means the yen weakened but now uh the yen is getting a little bit out of control i.e. the dollar is rising fairly sharply but the worst thing that’s happening now and this is kind of an effect of the carry trade. not the carry trade itself is the fact that uh Japanese government born geos especially in the longer end and I’ve got a 10-year yield here chart of the JGB Japanese government born you can see that it’s uh rising very sharply and very quickly and I think uh very few people expected this to happen so quickly they thought it would be more under control. So, I think uh the Bank of Japan is losing control of the bond market even though they own almost half of all the long-term uh government bonds in Japan. Uh they’re losing control and you can see that we are approaching uh key level here, I think, which would be around 2% which uh basically is the high of this century. But as you can see if we go further back uh Japanese government bond yields the 10 year has been as far as eight. Uh if that were to happen very quickly in the next 6 months to a year uh that would trigger a massive global government bond crisis. And why is that? Well, Japanese investors, financial institutions, they would be rushing to get rid of their JGBs because their uh portfolios would be going through the floor and uh yeah, they would be rushing as well to sell treasuries, guilts, European government bonds just to pat up their balance sheets and that would trigger uh yeah an avalanche of selling in the west as well because all the western global all the western government bonds are linked together uh financial institutions in uh New York, London, Paris, Frankfurt um Tokyo, uh Sydney, uh they all uh own these different government bonds and it would be a mess. Uh the question now is could this accelerate? Could this happen uh very soon instead of in a year or two? It’s possible. And the other indicator that points to me uh that uh things are not great in Japan is the price of uh gold and Japanese yen. And I’ve been covering this for many years. And you can see here that u it’s gone from uh around 60,000 yen just a well during the uh great financial crisis and now we’re at 650,000 it’s going up 10 times and that in of itself is uh the destruction of the yen. I think the yen is going to be the first or could be touch and go with the British pound. Uh could be one of the first currencies uh that will uh sink to the bottom and just basically disappear. Yeah. Um and uh you can see here there’s uh also shorter term that uh we’re almost most uh near the the all-time highs which is around 650 well 660,000. We’re at 650 right now. Uh so keep an eye on XAJPY. You can go on tradingview.com and and punch that in uh under the charts. Uh it’s easy to keep track of. That folks is a signal of a failing currency. It’s not uh really dollar yen. It’s more uh the price of gold and yen. And that applies to all the other currencies as well. And that’s why the bankers are always trying to control the gold and silver price. Yes, I mentioned silver there as well. So, um, with that, let’s look at the, uh, kind of money, uh, that you probably never heard of, and it’s from Japan. I mentioned it earlier. It’s, uh, called Japanese bar money. So, I I’ve got one here. It’s a silver, uh, coin or bar money, Japanese. And uh yeah, there’s a website here, rectanglecoins.com. I’ll put a link below in the description. You can have a further look, but it says about Japanese bar money. In 1599, Japan issued a rectangular gold piece now known known as the Gaku Ichibu. Uh this regional issue from Edo blossomed into a 250year series and branched into more denominations eventually spilling over into silver pieces in the mid700s. Uh these rectangular pieces are sometimes referred to as bar money for their unusual bar-like shape. They were minted through 1869 when Japan’s old currency system was replaced by the yen. While an incredibly interesting series, they’re also phenomenally difficult to research for English speakers, this website hopes to help fill the gap and eventually become a a book. So, um, yeah, I think I I bought this on uh eBay if I’m not mistaken. But it just goes to show that gold and silver have been really money everywhere, not not just in the west, even in Japan. And I would venture to say that the yen was a jump towards western style central banking because it was around the time that uh western influence u 1869 um started growing in Japan. And here we are uh well 160 years almost a after the the yen was replaced. this kind of money and I think the yen is on its last legs. So, um yeah, history always goes in cycles and nothing lasts forever. But I I I think gold and silver though are timeless. Anyway, uh let’s quickly uh look at the markets here this morning. Yes. Uh just before we do, yeah, today we we’ve got the finally uh Rachel Reeves, the chancellor of the ex-checker or the minister of finance or the secretary of the treasury equivalent here in the UK. She will present her budget this afternoon. It’s early afternoon, I think. I’m not sure what time. Um and it usually goes for an hour. She she presents it to parliament to the the House of Commons. Usually takes yeah an hour as I said uh the tradition in the past was that uh the chancellor could choose a drink to have while he or she presented the budget. And I remember Kenneth Clark uh a chancellor back in the 90s. He used to have a glass of whiskey. But uh I think things have changed now and uh everyone is so politically correct. They probably will drink water or or something like that or Rachel Reeves that is um and uh well we have to brace ourselves for more taxation without representation, right? because their manifesto uh in the general election was not to increase a lot of taxes and they’re doing exactly that. But uh I still believe that education and uh informing the public about what money really is is the solution to our political problems. Uh I I interviewed uh Dr. Thornton from the Mises Institute and he said something interesting. Yeah, money is private property. You just have to look at things uh in a basic and fundamental way. If you go back into antiquity uh into uh before there were uh even tribes or uh villages or cities, you realize that people uh started subsistent uh living, right? They hunted and gathered and uh if you hunted something for your family to eat and someone came and stole that, that was wrong. Eventually things evolved and and uh farming evolved. Uh the cities grew or villages and then cities and people realized that there were some products and and goods that everyone wanted that made uh indirect exchange much easier and that was money. But it doesn’t change the fact that um these goods uh or money are your property. Uh that that’s the whole basis of uh not just western um civilization but civilization itself that you respect private property and respect the individual. uh what we have now has gone so far beyond that because people have been brainwashed into thinking that there’s something magical about money that only that the government can create it out of thin air. uh and it can’t especially the MMT people or even the Keynesians uh so that’s the whole problem and it’s so simple uh that it’s uh a bit frustrating uh but uh yeah I recommend what has government done to our money by Murray Rothbart I’m going to put a link to it below in the description and uh yes uh it’s a free PDF but if you can think about buying one from the Mises Institute and helping the Mises Institute because uh I’m grateful and thankful to the Mises Institute because I learned about it over 20 years ago and it’s one of the reasons why I’m here talking to you and trying to uh help you. I have a lot to thank for for the Mises Institute. So, back to the market then. It’s uh 10 to 8 a.m. Uh we’ve got uh spot gold at 4,157 4157. It’s up about 26 bucks or 2/3 of a percent. The high’s been 4169. So, we’re knocking on the door of that triangle I I showed you in the last few days. Uh silver uh silver’s up uh 56 cents just above 52. Uh the high’s been 5219, low 5128. And yeah, the US Treasury market is uh kind of under control right now. I I saw the uh retail sales data were uh a lot weaker than expected yesterday. So I think the Fed will definitely cut rates on the 10th of December. Uh right now the 10-year yield is just above 4% at 402. So with that, I’m going to wish you all well, my viewers in the US a great uh Thanksgiving uh weekend and to the rest of you as well, a great day. Take care. Bye.

#debt #interestrates #market #finance #gold #silver

What Has Government Done to Our Money by Murray Rothbard: https://mises.org/library/book/what-has-government-done-our-money

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