{"id":67662,"date":"2024-04-27T14:52:19","date_gmt":"2024-04-27T19:52:19","guid":{"rendered":"https:\/\/olduvai.ca\/?p=67662"},"modified":"2024-04-27T14:52:19","modified_gmt":"2024-04-27T19:52:19","slug":"how-far-can-the-yen-fall-before-japan-goes-bankrupt","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=67662","title":{"rendered":"How Far Can The Yen Fall Before Japan Goes Bankrupt?"},"content":{"rendered":"
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How Far Can The Yen Fall Before Japan Goes Bankrupt?<\/a><\/h3>\n

We may be about to find out<\/strong><\/p>\n<\/div>\n

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Japan\u2019s ongoing march to national bankruptcy has been a recurring theme here. See:<\/p>\n

Japan Is In That Box<\/a>
\nJapan Takes Another Step Towards the Cliff<\/a>
\nHow a Country Goes Bankrupt, In 10 Steps<\/a><\/p>\n

Now the death spiral has entered a new phase, with the yen\/dollar exchange rate heading straight down:<\/p>\n

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\"\"<\/picture><\/div>\n<\/figure>\n<\/div>\n

To restate the \u201cJapan collapse\u201d thesis, soaring government debt will eventually cause the yen to crater and\/or interest rates to spike. The Bank of Japan will then face an impossible choice: Support the yen with even higher interest rates and watch government interest expense rise to national bankruptcy levels. Or push interest rates down to keep a lid on debt costs and cause the yen to collapse.<\/p>\n

As the above chart illustrates, the \u201ccause the yen to collapse\u201d part of the story seems to be happening. Interest rates, meanwhile, are now spiking in a mirror image of the yen\u2019s collapse.<\/p>\n

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\"\"<\/picture><\/div>\n<\/figure>\n<\/div>\n

Decision Time<\/strong><\/p>\n

So it\u2019s decision time for Japan\u2019s leaders. What will they choose? And \u2014 more importantly \u2014 what happens when the global financial system realizes that\u00a0it no longer matters?<\/em><\/p>\n

Japan is a big country, so its impending crisis creates risks for the global economy. But it\u2019s more important as a signal to the US, Europe, and China that we\u2019re heading in exactly the same direction.<\/p>\n

In other words, the Fed is in the same box as the Bank of Japan, and that box is shrinking with every new trillion dollars of debt.<\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

How Far Can The Yen Fall Before Japan Goes Bankrupt? We may be about to find out Japan\u2019s ongoing march to national bankruptcy has been a recurring theme here. See: Japan Is In That Box Japan Takes Another Step Towards the Cliff How a Country Goes Bankrupt, In 10 Steps Now the death spiral has […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1361,1099,9024,7544,30990],"class_list":["post-67662","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bankruptcy","tag-currency-devaluation","tag-japanese-yen","tag-john-rubino","tag-substack"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/67662","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=67662"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/67662\/revisions"}],"predecessor-version":[{"id":67663,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/67662\/revisions\/67663"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=67662"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=67662"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=67662"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}