“What happens then? Well, according to Edwards, the crashing yen has been propping up US Treasuries, as yen carry traders flee local assets and find (relatively) safety in US paper. This means that any direct intervention to prop up the yen by the BOJ will lead to another snap higher in US yields as the Japanese carry trade buyer drops out of the picture.

But the move higher in US yields would be child’s play compared to the total collapse that would follow in Japan as the entire MMT paradigm is exposed for one epic fraud. To wit, when answering the question what happens to JGB yields when the BOJ pulls an RBA and no longer defends the 0.25% barrier, Edwards writes that while “the BoJ will persist in maintaining the 0.25% cap and all that implies” once “it abandons this ceiling or resets it higher” look no further than Australia for what happens next, which he shows shows below.

The conclusion: “When Australia ended YCC yields snapped higher – much higher!” A similar interest rate move in Japan, still the world’s second largest economy, and one can kiss all remaining central bank credibility goodbye forever… and with it, also say goodbye to the fiat regime, which perhaps may just be the endgame here.” Which, when that occurs, GOLD explodes higher. Not necessarily on the day this happens or even the first week after. It all depends how fast everything falls apart. Given how long these failed policies have been in effect and the extremes they have been driven to, “the equal and opposite reaction” should be earth shattering, to say the least!

https://www.zerohedge.com/markets/biggest-story-no-one-talking-about-why-albert-edwards-expects-something-market-about-snap