Recently, some fans asked me:

Why does a rate hike in Japan have such a big impact?

This has nothing to do with the China-US conflict,
nor is Japan suddenly becoming stronger.
But it is indeed a switch that can influence global capital flows.

Let me start with some background that many people don’t know.
Since 1999, Japan has maintained near-zero or even negative interest rates for about 25 years.
Here’s a clarification to avoid misunderstandings:
It doesn’t mean ordinary people can borrow money from banks without paying a single cent in interest.
The real “almost zero-cost” financing is done by large institutions and financial capital, through interbank and international markets.

So, what do they use this money for?
It’s simple:
Borrow yen, exchange it for dollars, then buy Bitcoin, gold, or US stocks.
As long as assets are rising,
and financing costs are extremely low,
this logic keeps amplifying.
And this isn’t just a few people playing.
This “borrow yen, speculate on global assets” money,
amounts to roughly 4 trillion USD.

So, how can you understand the yen?
As the faucet of the global financial market.

When Japan starts raising interest rates or clearly signals a rate hike,
the yen will appreciate.
And those who borrowed yen before will see their repayment costs immediately rise.
They won’t slowly think of countermeasures,
their first reaction is only one:
Sell assets first, exchange for yen, and pay off the debt.
So you’ll see a scene that many think is “sudden”:
Bitcoin drops, gold drops, US stocks also fall.

It’s not because these assets suddenly become worse overnight,
but because funds are being withdrawn simultaneously.

Why is the market so tense now?
Because Japan itself has reached a dilemma.
Long-term yen depreciation leads to rising import costs,
putting great pressure on ordinary people.
But Japan’s government debt is enormous, and interest burdens are growing heavier.

Not raising interest rates means slowly enduring.
Raising interest rates is very painful in the short term, and could even pull the global markets down together.
So what the market truly fears,
has never been whether the Japanese economy is good or not,
but where that 4 trillion USD arbitrage capital will go once it starts to withdraw.
A straightforward summary:
Whether Japan raises interest rates or not,
it’s not just about Japan itself,
but whether the global financial markets can continue to print money.

Once the liquidity is tightened,
the assets that rise the fastest and are most aggressively speculated on,
are often the first to face problems.

I might be wrong here, Sister Miao 😄 @takaichi_sanae

#大漠茶馆 #BTC #ETH #JPY #USD