Loading ...Japan … the Global Liquidity Firehose …. drying up?
https://realinvestmentadvice.com/liquidity-crisis-in-the-making-japans-role-in-financial-stability
“The BOJ’s policies to avoid a massive liquidity crisis not only severely impacted Japan’s markets and economy but have and continue to benefit asset prices around the world. Inflation is finally perking up in Japan. Accordingly, this massive source of liquidity for global markets may be on the verge of drying up, resulting in a liquidity crisis felt around the world.” ……
“In Part 2, we introduce the yen carry trade and inflation, the potential fly in the ointment. Stay tuned; the story gets more intriguing.” (forthcoming)
The Japan Yen is the third most traded currency in the world after the Dollar and the Euro.
The Yen is collapsing, but how can the Japan central bank protect the value of the Yen with higher interest rates when the Debt/GDP is 250% ? Answer: it can’t.
The Euro is in trouble for the same reason.
Meanwhile in America interest rates are trending higher. Call it a reaction to ever rising prices.
Therefore the Dollar will continue to appreciate against the Euro, the Yen (and other currencies) until something breaks. We have a currency crisis expanding like a gigantic bubble that hovers over the world economy.
IMHO there are dark days ahead. The economy will get much, much worse before it gets better.
I see no signs on my charts promising a yen upside reversal either.
And I see no way out as well.
Seems like at some point, something will remove the options BOJ thinks it currently has.
Ie, nominal rates will go up like it or not.
If they don’t, won’t REAL rates in Japan turn DOUBLE DIGIT negative?
The yen is down 25% in a year, 10% last month alone.