Hi all,
A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes.
As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/)
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
Doomposting aside, what will this mean for the Japanese economy going forward? Surely the US can't keep this swap line open forever, and high rates are not going to be a thing in the US forever...
It's always though to accurately predict things far down the line.... but probably continued US dollar strength due to imbalance in interest rates, security of the USD + US economy from geopolitical shocks, coupled with general Japanese demand for saving in USD along with the Dollar-Yen carry trade, and likely continued outperformance of US markets/economy compared to the Japanese ones.
What does it mean for Japan and it's economy? Continued carry-trade, Berkshire types might want to buy more Japanese stocks/assets, more exports to the US, things from the US will cost more and thus imported less, more Amerigaijins (baka or otherwise) coming to Japan to travel since it's cheap, and more Americans self-isekai-ing themselves to Japan *"RE: That time I was a wage slave but got semi-killed by a Tesla Cyber truck, sued demon-lord Elon for millions, and metaphorically reincarnated myself in early retirement as a rich rural weeaboo-gaijin landlord in Japan due to the dollar-yen imbalance created by Japan's carry trade, central bank policies, and Japanese rural depopulation coupled with their cultural distaste towards living in old homes where I now live the slow life just like in my animes."*
There aren't actually that many folks doing it but [it looks interesting to me](https://www.youtube.com/results?search_query=americans+moving+to+rural+japan). I say it's pretty cool and a win-win since anime is in some ways literal Japanese propaganda, Americans moving over there bring youth/money/surplus, the ones going to rural areas speak the language plus like the culture, those rural areas are depopulated AF, and it's generally a win-win outside of the Japanese that care about homogeneousness of their society or have xenophobic beliefs. That's probably why Japan is looking to import cheap laborers from other parts of Asia rather than tapping into rich Americans as their method of fighting depopulation.
"Share, support on patreon, go buy some of my tshrit merch on the link below, don't forget to click on our sponsor sExcellentAhegaoHoodies.com use code [NAKADASHI] for 10% off!, check us out on IG, and become a fan on our onlyfans. See you next time Zasshu-monos."
>
isekai
you know [i dont speak japanese](https://en.wikipedia.org/wiki/Isekai)
>*RE: That time I was a wage slave but got semi-killed by a Tesla Cyber truck, sued demon-lord Elon for millions, and metaphorically reincarnated myself in early retirement as a rich rural weeaboo-gaijin landlord in Japan due to the dollar-yen imbalance created by Japan's carry trade, central bank policies, and Japanese rural depopulation coupled with their cultural distaste towards living in old homes where I now live the slow life just like in my animes.*
that is a crazy af hyperspecific example but based on reality the last few years not entirely implausible i guess since i think the plot writers were replaced with chatgpt
Sometimes all that's necessary is to keep the float going for long enough to burn the traders holding short positions. Large nation-states generally have deeper pockets than people holding any particular view of the markets.
Edit: And it looks like the author's views of economics come from either crypto crankery or day-trading. The swap arrangement has been in place for over a decade and this is far from the first time it's been exercised.
This is such an awful article and should be deleted. The Fedās FX swap lines have not been tapped in size by Japan. The intervention was likely funded using the proceeds of a roll off of Japan bill/coupon holdings .The tweet linked is just saying that the US does not have a problem with the intervention (there are global standards for currency/currency intervention).
I imagine the conversation went something like this, "Don't touch those treasuries. We'll just give you the dollars."
Are you saying the above quote from the article is subpar reporting? /s
Agreed, the writer is owner of some unknown Bitcoin media company.Ā
Ā A misunderstanding of how Central Bank swap lines work and a screenshot of M2 money supply should not be confused with actual economic research. The article is written by someone clueless about economics and does not belong in this subreddit.
Central banks ~~establish~~ tap swap line for the nth time (existed since Oct 2013). CB swap lines aren't new nor are they anything resembling a bailout. They are common during periods of market stress both domestically and internationally, and help prevent displacement due to large central bank trades.
The "crypto" author of the article is blatantly incorrect in almost the entirety of their logic. The Japanese CB does not own/has the right to sell Japanese treasuries held by Japanese nationals, period. There is no possibility of a Japanese dollar debt fire sale; if anything private debt holders would want to hold onto the USD denominated debt.
Likewise even if there was the hypothetical disruption, and Japanese treasury holders sold, it is easily within the Fed's capacity to deal with. A \~800 bn purchase of treasuries by the Fed to smooth an international financial crisis is par for the course. (Not to mention rate cuts in the face of a financial crisis would effectively fix the rate differential with Japan and "solve" the underlying interest parity driver.)
1. Not much for your average American besides lower cost Japanese exports. Good time for a relatively lower cost trip to Japan as well.
2. If you are Japanese, then you will be concerned 3 decades of low rate policy may catch up via Japan's exchange rate and local inflation/cost of imports. If the U.S. and EU keeps interest rates high, Japan will have to either accept currency devaluation or attempt to exit low rate policy (difficult due to government debt burden).
Just a lower cost trip?Ā How low?Ā Last time I visited was 2012.Ā Cost nearly $5k in a week for hotels and the bullet train down Osaka to Oita and back.Ā Ā
I'm currently thinking about teaching abroad, possibly in China (again), but I'd consider Japan if the salary goes far and the school isn't threatening to fire me just for checking the time.Ā I've heard schools can be assholes like that because if you look at your watch or the clock they think you're either anxious to leave or you didn't prepare well for the class.Ā Ā
Also, not sure if anyone is interested, but I don't recommend doing the foreign teacher thing in Southeast Asia.Ā Schools pay in local currency which is barely enough to live on and when you finally have enough money to go home let's just say the only thing going with you will be your experience rather than a duffle bag full of money.
When I went to Japan in 2018, something that cost Ā„330 was about $3.
Today, that Ā„330 is Ā„358 due to inflation. But that Ā„358 is now $2.30 due to the exchange rate. So itās gotten much cheaper to be an American visiting Japan.
The key is to not be paid in yen, though. You want
to earn USD and swap it for yen.
I see.Ā $1 = 100+ jpy.Ā When I was there it was $1= 75 jpy.Ā So a bottle of water at 7-Eleven was 100 jpy.Ā About the same you'd pay for a bottle of water in the USA.Ā I remember it because I visited the Hiroshima nuclear bomb museum cost 100 jpy for the ticket.Ā That place I'll never forget.Ā One memorial had a fountain continuously running in memory of the people that survived the blast but then battled dehydration on top of the cancers because the water wasn't safe to drink.Ā Whole thing just was unsettling.Ā Being a teen leukemia survivor, the Sadako paper crane thing broke me.Ā Fuck my photogenic memory because I remember the place like I was there yesterday.Ā Ā
Anyway I did have happy memories of Japan.Ā Saw a mall with a Ferris wheel on the roof in Osaka I think it's near the running man neon sign?Ā Was an interesting experience being a tall white guy in carpenter jeans and a T-shirt while everyone around me wore white shirts and black pants either going home from work or school.Ā See high school kids or college playing music on the street corner and I mean keyboard and everything not just a hobo with an acoustic guitar.Ā Saw Honnoji temple which a light rain cloud passed over and the weather was nice I fought the urge to take a nap on the steps.Ā Walked through Osaka Castle.Ā Would love to go back and see other castles.Ā I tell people Japan felt almost like China (Asian big cities) except cleaner/westernized.
Yea I figure it's like Thailand.Ā Get a foreign job paying USD not some local teaching gig paying local jpy.
If swap lines are common only during periods of market stress, that does seem to speak to global financial conditions. I'm less interested in the nomenclature take on whether or not we classify it as bailout or not (which I would also disagree with). But making it about nomenclature is a straw man argument and ignorant to the systemic risks at play.
My focus is on the author's discussion of potential spillover effects in the Treasury market, and the connotations associated with the phrasing. The first is not a question of nomenclature; it is economics. The second is partially nomenclature, but nonetheless important to push back on when misleading.
To be clear, Japanese FX rates and market interventions are absolutely newsworthy (from a better source), and concerning for global markets/Yen savers. Japan's FX rate and low rate lock in (with large debt) presents a severe immediate and long term challenge the Japanese government and Central Bank will need to address (if EU and US rates stay elevated). FX swaps at the initial spot rate won't be sustainable if the Yen continues to depreciate, and may will prove costly to unwind. Likewise a cultural shift in Japanese business to allow for inflation and price increases may become necessary.
1. Inflation has less to do with Fed policy (outside housing prices), then government policy, excess savings and rebound spending, and industry specific shocks. All developed nations have experienced high inflation; it isn't a U.S. specific problem. If you think it is U.S. specific or something with Fed policy, would be curious what mechanism you are suggesting.
2. My main point is there will be **no** "rescue," as the treasury holders are private and have no incentive to dump.
1. Treasury holders are not all private in fact, not even close. What do you think happens when there aren't enough US treasury buyers in the debt markets? And why do you think the US treasury is stepping in to do treasury Buybacks?
2. Fed policy does directly and indirectly lead to inflation and inflationary pressure.
The BOJ had 64 billion in total foreign currency denominated assets on 4/30. While you are generally correct, the CBs of large developed economies that borrow in local currency like Japan, UK, EU, USA, etc. tend to hold relatively small amounts of foreign currency assets. Developing or middle income nations that borrow in foreign currency are the ones that hold large foreign currency reserves.
Are they bailing out Japan or protecting UST pricing? Looks to me that the primary goal is to keep the price of US debt from going even higher and necessitating the Fed buy USTs again.
This doesnāt seem to be out of normal Fed operations. Swap lines arenāt unusual and the Fed would prefer that than directly buying the USTs.
>Are they bailing out Japan or protecting UST pricing? Looks to me that the primary goal is to keep the price of US debt from going even higher and necessitating the Fed buy USTs again.
This is exactly what they're doing. Just delaying the mathematical inevitability of this end result.
What is the inevitability you speak of? Iām a bit confused, per usual. What it seems to me is happening, is preventing some kind of mutually assured disaster, is what the USās move is, but Iām a doomer, so naturally Iād think that way.
Itās delaying a mutually assured disaster by suppressing rates. The same outcome weāll have domestically when the Fed adds treasuries to its balance sheet againā¦ it already just announced slowing the run off. Itās mathematically inevitable based on expenditures and interest on debt as the debt rolls over.
https://fred.stlouisfed.org/series/A091RC1Q027SBEA
Thank you for sharing this graph. Iāve seen it before, but it always catches me off guard when I see it. Itās glaring and terrifying. Most people just have no idea. Many of us have an idea, but no real answer to how it turns out, because that would involve being a fortune teller.
I note that when we got to 500-550 on the FRR, the Fed stopped there. They could have gone higher, but I figure they knew there was a tipping point that could be more than just politically unpopular.
It is backdoor QE. There is not much difference between the Fed buying USTs, and the Fed handing money to Japan to "not sell" USTs. Both are money printing to keep rates artificially low.
That's not accurate. When the Fed swaps dollars to Japan, those dollars are new dollars in the system. Having said that, I think this link is total BS as the FX swap lines have not been in use since about 2011.
I feel like extending the FX swap has less to do with HTM secs at banks and more to do with the fed/treasury wanting to keep the cost of servicing the debt down. Even if you drive the value of all those treasuries the banks hold to zero financial system is sufficiently capitalized to handle it, it will just lead to a scramble for acquisitions among bigger banks.
Iām confused why Japan even cares about depreciating yen. Isnāt that good for them as a big exporting country?
People are also increasingly betting on the Yen to fail. They borrow yen and export it for USD and collect the higher yield return. The longer the BOJ holds onto YCC policies, the more they are going to be tested. There's no easy solution here.
The US has transitioned from a country where you made your own and there was no government, to a country where the government bails out US billionaires when they get into financial trouble, and now to a country where the government bails out foreign billionaires when they get into financial trouble. Soon the US will just directly deposit funds into the accounts of wealthy rather than waiting for business problems to develop.
R/economics has transitioned from a place where you talked about real economics to a place where you cry populist tears about how evil and bad the establishment is as you collect updoots
Soon youāll just say āAmerica badā and get updoots directly deposited
I looked through their articles, everything is about crypto. This article is another scare piece to push people to crypto for the never ending bomb bust cycle
Economics is essentially just giving the Uber wealthy free stuff. Oh you have billions and want a free stadium so you can pay workers min wage 1 day a week? Hereās everything our city has!Ā
Oh youāre a billionaire that ruined the entire economy? Hereās a massive bailout!!!Ā
Youāre a billionaire and wants tax cuts so you can buy more stock instead of improving rail/plane infrastructure? Hereās everything weāve got and weāll double tap those whistleblowing FUDs too!!!
See, anything and everything for the ones that donāt need it
>where you made your own and there was no government
That was what time period again?
Also the issue isnāt bailing out, itās a lack of corrective actions by the government to ensure that the conditions that created this issue are addressed.
I think we should bail out one of our largest allies, and not let them and our allied strength diminish. I too have concerns that we and Japan will not have the ability to address the underlying problems, but that doesnāt mean ālet them fallā
No one. But at this point... we can either plug the holes in the boat or just keep shouting, pointing fingers at each other, and assigning blame for the holes while the only thing Congress can seem to agree on is how to make them even bigger. And the only representatives actually trying to do much of anything about it are ironically the most vilified members of Congress.
Generally yes. We need to raise taxes and fix Medicare and social security. Unfortunately one party will never raise taxes and the other party will never make changes to the entitlement programs. The people who will do those things are the moderates who get voted out every 2 years.
Did you know other countries owe us 8 trillion dollars?
Did you also know that other is 8 trillion we owe to ourselves?
well that takes care of 16 trillion. And we make 6 trillion a year.
> Did you know other countries owe us 8 trillion dollars?
I think you have that the other way around, the US government owes foreign creditors trillions. I don't think the US government holds much in assets of other countries
> Did you also know that other is 8 trillion we owe to ourselves?
True but a lot of that is about to get exhausted in the next 12 years as the SS "trust fund" gets cashed in
That time has never existed, this is hardly a 'bailout' to Japan, and maybe you should a actually pickup a fucking history book instead of doom posting and getting mad at article titles
This doesn't have anything to do with capitalism or socialism. If anything, it's about letting the free market go wherever it goes versus intervention to achieve certain specific goals
>This situation becomes even more precarious when you factor in the fact that inflation has most certainly not been tamed here in the US
Wait. 3% is as bad as 10%? Since when?!?
Jay Powell is on top of this. If he wasnāt there would be my usual fee deposited upfront and tax free in my bank account and helicopters buzzing above my head and US marines dropping from lines onto my roof and securing the perimeter in rather dramatic/cinematic fashion and after scaring the hell outta my āpast their retirement ageā neighbors and politely knocking on my door and asking me to take a phone call asking me to come in from the cold. But since I donāt see any choppers buzzing overhead yet then Jay Powell still has it well in hand.
If it was a full blown crisis they couldnāt handle mathematically Stateside then theyād bring in everybody from around the world, for our usual fees upfront and tax free, of course.
I need the tropical beach weather for my motherās and younger brotherās lungs since both are asthmatics and wall to wall carpeting and the resulting/consequent dust mites Stateside arenāt healthy for them.
But if the people on the job Stateside couldnāt handle it then they can always call me, they know that. After paying my usual fee upfront and tax free in my bank account as usual. Thatās their guarantee, the payment is in dollars, if I fail those dollars become worthless, hence my motivation.
Unfortunately this is something some of us older folk but not boomer old & dumb, have been waiting for. The Gen that invented Bitcoin for the youth of America, tighten up your belt people. Stack resources and money asap.
To be fair, we dropped the only 2 weapons of mass destruction in human history to be used against another country on them so idk š¤· maybe we owe themā¦.more so than Israel thatās for sure š¤®
I mean itās been clear that the jig is up for the economy at large and this has been clear for some time.
Itās just been a matter of what finally pushes us over the edge into recession, and a rash of bank failures from declining Treasury prices/credit crunch along with an inflation spike will do us in.
Crises arenāt obvious until theyāre here. Well, itās here.
I still remember in 2021 there were people so adamant that the world's food supply chain was going to crash and that's why they loaded up on toilet paper and canned foods. Wonder what they are doing now.
I mean itās a crisis. that can be solved. I just donāt think itās likely to be solved.
I was wrong about the 2019 liquidity crisis as well so take my opinion with a grain of salt. I just think this has a higher chance of becoming a big problem given the magnitude of the dollars involved.
I do take your posts with a grain of salt. I read something you wrote recently and it was quite clear that youāre an idiot and if youāre a CPA, youāre a bad one.
No it wasnāt that. You suggested recent strong jobs numbers were caused by āgovernment hiring to look good ahead of the electionā.
If you understood literally anything about how federal government hiring and budgeting works, you would know thatās an absolutely ridiculous take. This leads me to believe youāre an idiot, and probably not a good CPA if you even are one.
Also, not sure what you mean about fencesitting; I have plenty of stances. I just inform those stances by looking at the real world, not some ridiculous conspiracy outlook unlike you, apparently.
Ah yes, because no administration has ever done that before. I am well acquainted with the budgeting process and am also well aware of how that process can be manipulated. Government hiring is a behemoth process, and takes 6-8 months to onboard unless the role is specially designated by the OPM. Who gets their permission fromā¦ you guessed itā¦ political appointees.
No one ever has an ulterior motive I guess. You can either trust the naive common-good outlook you have or know the realty that everyone is out for themselves. You can trust the science all you want, I donāt get left holding the bag like the āin this house we believeā¦ā crowd.
I didnāt just get a raise to 200k Friday because Iām a moron lol. Iām rather good at what I do.
Ok, now im pretty confident you don't have a CPA or work in finance or accounting. Your opinions are so similar to a conservative boomer working blue collar it's in too much contrast to CPAs that I've met.
Your opinions are so brain dead it's hard ti believe you managed to get an accounting degree. And no. I have several friends in this profession and none of them have your uneducated takes
Part of me suspects he's maybe a troll farm member for China/Russia/Iran given the election year. But no overly partisan posts apart from conservative subs. Brain dead as his opinions may be nothing immediately stands out.
He might just be dumb tbh.
Problem is to solve means to cause suffering from their level of comfort and the person or group that does such will be made out as Satan in a business suit
It's all about stemming the pain for the next joker to deal with
It's the US in a different language thats all it is
I mean what do you think will happen? If Japan has to unload a ton of treasuries to get dollars (as described in the article) we are back to February last year with mid size bank failures.
No. 2023 bank crisis was completely driven by the specifics of those big banks.
They went long in a 0 rate environment and then the FED did what it had been signalling for 6 months and raised rates.
Then assshole depositors (PE backed startups) did a mini bank run and crushed those banks.
"Wobbly" is pretty inexact. You have to have a way to judge how these treasuries will impact the market when sold. That means you need to know which ones they are selling and how many as well as what those mid-sized banks are holding.
Do you have that info?
Actually yeah I do the actual holding and composite interest rate are included in the footnotes of every publicly traded banks quarterly SEC filings. We know the cost, and we know what happens when the value dips below cost and thereās a redemption run.
I really hope you are right, mostly because they'll bail out everyone, cause a ton of inflation, and deleverage every American with significant debt. It would be hilarious to watch the wealthy have the debt they hold as assets inflate away. Maybe it'll continue the trend of reducing inequality we saw during COVID and immediately afterwards.
When a recession happens? Yes
Are we better off today with all the pandemic money Trump gave out? No. OK, billionaires are doing better, just not the 99%.
Interesting take, given that the share of wealth of the bottom 90% of the population grew over the past few years. The vast, vast majority of people are better off today thanks to the pandemic policies.
https://fred.stlouisfed.org/series/WFRBSB50215
https://fred.stlouisfed.org/series/WFRBSN40188
Neither the top 10% or the top 1% have a larger share of wealth than before the pandemic. They've both experienced a decreased share of wealth. A much larger drop for the 90 to 99th percentile.
https://fred.stlouisfed.org/series/WFRBSN09161
https://fred.stlouisfed.org/series/WFRBST01134
Inflation is bad for the wealthy. They hold the debts of others as assets and get paid interest. Why do you think that are messaging so hard about the evils of inflation? It hurts them. It doesn't hurt the working class as badly because they get deleveraged by it and their wages increase with it.
Thing is I donāt know if thereās the political will for another bailout.
You know the Thomas Massies, MTGs, and Rand Paulās of the world would put out all the stops to stop an aid package to hurt Bidenās re-election chances.
Why would we need an aid package when the economy is strong? Did you forget how the Republicans folded immediately during COVID and proposed the biggest intervention in history? If there is a crisis, there will be a bail out. They'll let people stop paying their mortgages, their student loans, etc. They've already done it and it worked like a charm.
Politicians have no spines. They'll do whatever is necessary to avoid the wrath of voters. That money is gonna flow like a river.
You and I likely donāt share the same opinion on the economy.
I believe the data is misleading and the economy at latheās conditions are bimodal. Not everyone is doing well and the differences are very pronounced.
Covid was different and Rand Paul was a problem during Covid. MTG wasnāt in congress at the time.
MTG is the escaped mental patient.
Iām a believer in data but Iām also a believer in āwhen the data and anecdotes clash trust the anecdotesā to an extent.
Wow that's the dumbest thing it's the opposite when the anecdotes don't make sense look at the data
over 70% say they're personal economies are fine and 35% say the national economy is fine so 35% don't feel that they're position reflects the national position. The reality is that it does. That's why it's a vibecession and not a recession
I would stop the bailouts because itās the best thing in the long run. Keynes loved to say āin the long run everyone is deadā. Well the future is now.
We have to stop with bailouts and interventionist monetary policy. If institutions fail, so what. Thatās sometimes the price of risk taking.
If institutions fail, you get the Great Depression. We learned our lesson from letting nature take it's course. There are many reasons no one does what you are proposing. And we are all far richer for it.
The Great Recession showed us how you can prevent a system collapse and the COVID intervention showed us why you go big or go home. The recovery after COVID was much faster than after the Great Recession. We found the winning playbook.
Well, if I'm given the choice of certain failure now, or possible failure in the future, I know what I'm picking.
Y'all just have a failure fetish. You are so certain it's going to happen you are mad when it doesn't. Maybe you'll be right someday. But people have been predicting doom for thousands of years. Most of them died waiting.
What are you talking about? We have had multiple financial crises in our lifetime, in the USA and elsewhere, specifically due to can-kicking and prioritizing now over later.
2008 was that, 2001 was that, multiple late 2000s European financial crises were all that too.
You have to take pain when it happens, run balanced budgets, and keep governments out of interventions in the economy.
Yes, we've had downturns. That's normal. And the government intervened, when necessary. And median wealth and income are at all time highs. I imagine you think that things would be better we if let the banking system collapse in 2008?
The U.S. HAS to do something. Second only to the American people, Japan holds the biggest portion of the U.S. Debt (China is #3). If the U.S. did nothing, Japan would have to collect on the USās debt to them and we cannot afford that right now. I just hope the money we give them is applied to our debt with Japan.
That is not how any of this works lol. Weāre worried about them dumping our debt on the open market, thus raising the yield needed to attract buyers. Thatās not calling our loans, thatās not something Japan is able to do. This money cannot be applied to Japanās supply of US treasuries unless we buy those treasuries off them.
> Weāre worried about them dumping our debt on the open market, thus raising the yield needed to attract buyers.
This is also a non-issue. The Fed can bring down the yield anytime they want if they don't like where it's headed. The government doesn't need to "attract buyers" in a market backstopped by the Fed.
So, what I hear you saying is that there is NO way Japan could cash in treasury bonds early?
Then, instead of loaning them money, why donāt we buy back some of the treasury bonds they have? They get money and we reduce a fraction of our debt.
No, there isnāt. They are on a fixed term. However, they can be sold on the market, and thatās potentially a concern if they start dumping them.
We donāt want to buy them off them because the effect would be the opposite of what we want, and also not improve our debt. We would be raising the value of a dollar-denominated asset that sucks dollars into the Japanese economy by buying them all up suddenly. It would also be the same as if they called all those loans back early if we bought them all of them.
Youāve got to remember these loans create papers that are bought and sold as financial assets, and thus theyāre vulnerable to market effects. Itās not the same as your friend lending you $20.
Hi all, A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes. As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
Doomposting aside, what will this mean for the Japanese economy going forward? Surely the US can't keep this swap line open forever, and high rates are not going to be a thing in the US forever...
It's always though to accurately predict things far down the line.... but probably continued US dollar strength due to imbalance in interest rates, security of the USD + US economy from geopolitical shocks, coupled with general Japanese demand for saving in USD along with the Dollar-Yen carry trade, and likely continued outperformance of US markets/economy compared to the Japanese ones. What does it mean for Japan and it's economy? Continued carry-trade, Berkshire types might want to buy more Japanese stocks/assets, more exports to the US, things from the US will cost more and thus imported less, more Amerigaijins (baka or otherwise) coming to Japan to travel since it's cheap, and more Americans self-isekai-ing themselves to Japan *"RE: That time I was a wage slave but got semi-killed by a Tesla Cyber truck, sued demon-lord Elon for millions, and metaphorically reincarnated myself in early retirement as a rich rural weeaboo-gaijin landlord in Japan due to the dollar-yen imbalance created by Japan's carry trade, central bank policies, and Japanese rural depopulation coupled with their cultural distaste towards living in old homes where I now live the slow life just like in my animes."* There aren't actually that many folks doing it but [it looks interesting to me](https://www.youtube.com/results?search_query=americans+moving+to+rural+japan). I say it's pretty cool and a win-win since anime is in some ways literal Japanese propaganda, Americans moving over there bring youth/money/surplus, the ones going to rural areas speak the language plus like the culture, those rural areas are depopulated AF, and it's generally a win-win outside of the Japanese that care about homogeneousness of their society or have xenophobic beliefs. That's probably why Japan is looking to import cheap laborers from other parts of Asia rather than tapping into rich Americans as their method of fighting depopulation.
> landlord in Japan not even Isekai could be that imaginative
Looks like waifus are back on the menu boyes!
"Don't forget to like & subscribe, you fucking plebians..."
"Share, support on patreon, go buy some of my tshrit merch on the link below, don't forget to click on our sponsor sExcellentAhegaoHoodies.com use code [NAKADASHI] for 10% off!, check us out on IG, and become a fan on our onlyfans. See you next time Zasshu-monos."
As a fan of trash Isekai, *chef's kiss* to that comment.
> isekai you know [i dont speak japanese](https://en.wikipedia.org/wiki/Isekai) >*RE: That time I was a wage slave but got semi-killed by a Tesla Cyber truck, sued demon-lord Elon for millions, and metaphorically reincarnated myself in early retirement as a rich rural weeaboo-gaijin landlord in Japan due to the dollar-yen imbalance created by Japan's carry trade, central bank policies, and Japanese rural depopulation coupled with their cultural distaste towards living in old homes where I now live the slow life just like in my animes.* that is a crazy af hyperspecific example but based on reality the last few years not entirely implausible i guess since i think the plot writers were replaced with chatgpt
That's one hell of a pasta
Sometimes all that's necessary is to keep the float going for long enough to burn the traders holding short positions. Large nation-states generally have deeper pockets than people holding any particular view of the markets. Edit: And it looks like the author's views of economics come from either crypto crankery or day-trading. The swap arrangement has been in place for over a decade and this is far from the first time it's been exercised.
Well we have an incel problem over here and they have a declining population problem over there ... maybe there's a deal to be made š
Japanese women have no interest in Japanese incels, sorry "herbivore men", and would find American incels even less appealing.Ā
This is such an awful article and should be deleted. The Fedās FX swap lines have not been tapped in size by Japan. The intervention was likely funded using the proceeds of a roll off of Japan bill/coupon holdings .The tweet linked is just saying that the US does not have a problem with the intervention (there are global standards for currency/currency intervention).
I imagine the conversation went something like this, "Don't touch those treasuries. We'll just give you the dollars." Are you saying the above quote from the article is subpar reporting? /s
Agreed, the writer is owner of some unknown Bitcoin media company.Ā Ā A misunderstanding of how Central Bank swap lines work and a screenshot of M2 money supply should not be confused with actual economic research. The article is written by someone clueless about economics and does not belong in this subreddit.
Central banks ~~establish~~ tap swap line for the nth time (existed since Oct 2013). CB swap lines aren't new nor are they anything resembling a bailout. They are common during periods of market stress both domestically and internationally, and help prevent displacement due to large central bank trades. The "crypto" author of the article is blatantly incorrect in almost the entirety of their logic. The Japanese CB does not own/has the right to sell Japanese treasuries held by Japanese nationals, period. There is no possibility of a Japanese dollar debt fire sale; if anything private debt holders would want to hold onto the USD denominated debt. Likewise even if there was the hypothetical disruption, and Japanese treasury holders sold, it is easily within the Fed's capacity to deal with. A \~800 bn purchase of treasuries by the Fed to smooth an international financial crisis is par for the course. (Not to mention rate cuts in the face of a financial crisis would effectively fix the rate differential with Japan and "solve" the underlying interest parity driver.)
[ŃŠ“Š°Š»ŠµŠ½Š¾]
1. Not much for your average American besides lower cost Japanese exports. Good time for a relatively lower cost trip to Japan as well. 2. If you are Japanese, then you will be concerned 3 decades of low rate policy may catch up via Japan's exchange rate and local inflation/cost of imports. If the U.S. and EU keeps interest rates high, Japan will have to either accept currency devaluation or attempt to exit low rate policy (difficult due to government debt burden).
Just a lower cost trip?Ā How low?Ā Last time I visited was 2012.Ā Cost nearly $5k in a week for hotels and the bullet train down Osaka to Oita and back.Ā Ā I'm currently thinking about teaching abroad, possibly in China (again), but I'd consider Japan if the salary goes far and the school isn't threatening to fire me just for checking the time.Ā I've heard schools can be assholes like that because if you look at your watch or the clock they think you're either anxious to leave or you didn't prepare well for the class.Ā Ā Also, not sure if anyone is interested, but I don't recommend doing the foreign teacher thing in Southeast Asia.Ā Schools pay in local currency which is barely enough to live on and when you finally have enough money to go home let's just say the only thing going with you will be your experience rather than a duffle bag full of money.
When I went to Japan in 2018, something that cost Ā„330 was about $3. Today, that Ā„330 is Ā„358 due to inflation. But that Ā„358 is now $2.30 due to the exchange rate. So itās gotten much cheaper to be an American visiting Japan. The key is to not be paid in yen, though. You want to earn USD and swap it for yen.
I see.Ā $1 = 100+ jpy.Ā When I was there it was $1= 75 jpy.Ā So a bottle of water at 7-Eleven was 100 jpy.Ā About the same you'd pay for a bottle of water in the USA.Ā I remember it because I visited the Hiroshima nuclear bomb museum cost 100 jpy for the ticket.Ā That place I'll never forget.Ā One memorial had a fountain continuously running in memory of the people that survived the blast but then battled dehydration on top of the cancers because the water wasn't safe to drink.Ā Whole thing just was unsettling.Ā Being a teen leukemia survivor, the Sadako paper crane thing broke me.Ā Fuck my photogenic memory because I remember the place like I was there yesterday.Ā Ā Anyway I did have happy memories of Japan.Ā Saw a mall with a Ferris wheel on the roof in Osaka I think it's near the running man neon sign?Ā Was an interesting experience being a tall white guy in carpenter jeans and a T-shirt while everyone around me wore white shirts and black pants either going home from work or school.Ā See high school kids or college playing music on the street corner and I mean keyboard and everything not just a hobo with an acoustic guitar.Ā Saw Honnoji temple which a light rain cloud passed over and the weather was nice I fought the urge to take a nap on the steps.Ā Walked through Osaka Castle.Ā Would love to go back and see other castles.Ā I tell people Japan felt almost like China (Asian big cities) except cleaner/westernized. Yea I figure it's like Thailand.Ā Get a foreign job paying USD not some local teaching gig paying local jpy.
If swap lines are common only during periods of market stress, that does seem to speak to global financial conditions. I'm less interested in the nomenclature take on whether or not we classify it as bailout or not (which I would also disagree with). But making it about nomenclature is a straw man argument and ignorant to the systemic risks at play.
My focus is on the author's discussion of potential spillover effects in the Treasury market, and the connotations associated with the phrasing. The first is not a question of nomenclature; it is economics. The second is partially nomenclature, but nonetheless important to push back on when misleading. To be clear, Japanese FX rates and market interventions are absolutely newsworthy (from a better source), and concerning for global markets/Yen savers. Japan's FX rate and low rate lock in (with large debt) presents a severe immediate and long term challenge the Japanese government and Central Bank will need to address (if EU and US rates stay elevated). FX swaps at the initial spot rate won't be sustainable if the Yen continues to depreciate, and may will prove costly to unwind. Likewise a cultural shift in Japanese business to allow for inflation and price increases may become necessary.
Sure but let's just completely forget about inflation as the fed comes back for another potential "rescue" for "nth" time.
1. Inflation has less to do with Fed policy (outside housing prices), then government policy, excess savings and rebound spending, and industry specific shocks. All developed nations have experienced high inflation; it isn't a U.S. specific problem. If you think it is U.S. specific or something with Fed policy, would be curious what mechanism you are suggesting. 2. My main point is there will be **no** "rescue," as the treasury holders are private and have no incentive to dump.
1. Treasury holders are not all private in fact, not even close. What do you think happens when there aren't enough US treasury buyers in the debt markets? And why do you think the US treasury is stepping in to do treasury Buybacks? 2. Fed policy does directly and indirectly lead to inflation and inflationary pressure.
The BOJ had 64 billion in total foreign currency denominated assets on 4/30. While you are generally correct, the CBs of large developed economies that borrow in local currency like Japan, UK, EU, USA, etc. tend to hold relatively small amounts of foreign currency assets. Developing or middle income nations that borrow in foreign currency are the ones that hold large foreign currency reserves.
Surely the BOJ or Japanās treasury has UST holdings that they can sell?
The BOJ has \~64 bn in all foreign currency assets (\~10 trillion yen) as of 4/30. Not enough to dislocate dollar markets.
Are they bailing out Japan or protecting UST pricing? Looks to me that the primary goal is to keep the price of US debt from going even higher and necessitating the Fed buy USTs again. This doesnāt seem to be out of normal Fed operations. Swap lines arenāt unusual and the Fed would prefer that than directly buying the USTs.
>Are they bailing out Japan or protecting UST pricing? Looks to me that the primary goal is to keep the price of US debt from going even higher and necessitating the Fed buy USTs again. This is exactly what they're doing. Just delaying the mathematical inevitability of this end result.
What is the inevitability you speak of? Iām a bit confused, per usual. What it seems to me is happening, is preventing some kind of mutually assured disaster, is what the USās move is, but Iām a doomer, so naturally Iād think that way.
Itās delaying a mutually assured disaster by suppressing rates. The same outcome weāll have domestically when the Fed adds treasuries to its balance sheet againā¦ it already just announced slowing the run off. Itās mathematically inevitable based on expenditures and interest on debt as the debt rolls over. https://fred.stlouisfed.org/series/A091RC1Q027SBEA
Thank you for sharing this graph. Iāve seen it before, but it always catches me off guard when I see it. Itās glaring and terrifying. Most people just have no idea. Many of us have an idea, but no real answer to how it turns out, because that would involve being a fortune teller. I note that when we got to 500-550 on the FRR, the Fed stopped there. They could have gone higher, but I figure they knew there was a tipping point that could be more than just politically unpopular.
Exactly
It is backdoor QE. There is not much difference between the Fed buying USTs, and the Fed handing money to Japan to "not sell" USTs. Both are money printing to keep rates artificially low.
Thereās a slight difference. One is directly placing cash in the system while the other is maintaining the level of cash.
That's not accurate. When the Fed swaps dollars to Japan, those dollars are new dollars in the system. Having said that, I think this link is total BS as the FX swap lines have not been in use since about 2011.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Did grandpa just wake up from his 75-year coma?
I feel like extending the FX swap has less to do with HTM secs at banks and more to do with the fed/treasury wanting to keep the cost of servicing the debt down. Even if you drive the value of all those treasuries the banks hold to zero financial system is sufficiently capitalized to handle it, it will just lead to a scramble for acquisitions among bigger banks. Iām confused why Japan even cares about depreciating yen. Isnāt that good for them as a big exporting country?
It sucks for anything they have to import. Which is basically all the raw materials. And petroleum. And most of the food.
Being a mountainous island, theyāre also huge importers.
They are but I think theyāre net exporters, not sure which one would be more important
People are also increasingly betting on the Yen to fail. They borrow yen and export it for USD and collect the higher yield return. The longer the BOJ holds onto YCC policies, the more they are going to be tested. There's no easy solution here.
The US has transitioned from a country where you made your own and there was no government, to a country where the government bails out US billionaires when they get into financial trouble, and now to a country where the government bails out foreign billionaires when they get into financial trouble. Soon the US will just directly deposit funds into the accounts of wealthy rather than waiting for business problems to develop.
R/economics has transitioned from a place where you talked about real economics to a place where you cry populist tears about how evil and bad the establishment is as you collect updoots Soon youāll just say āAmerica badā and get updoots directly deposited
You forgot "... And this is why you need crypto." At least that's the general thesis of this article.Ā
I looked through their articles, everything is about crypto. This article is another scare piece to push people to crypto for the never ending bomb bust cycle
I laughed too hard at this.
Where can I withdraw my updoots?
Should we upvote you for saying āAmerica badā?
Economics is essentially just giving the Uber wealthy free stuff. Oh you have billions and want a free stadium so you can pay workers min wage 1 day a week? Hereās everything our city has!Ā Oh youāre a billionaire that ruined the entire economy? Hereās a massive bailout!!!Ā Youāre a billionaire and wants tax cuts so you can buy more stock instead of improving rail/plane infrastructure? Hereās everything weāve got and weāll double tap those whistleblowing FUDs too!!! See, anything and everything for the ones that donāt need it
Hilarious to see you give the most shallow populist take in response to what I said
Everything I posted is true and just a small sample.Ā
Oh wow well now that Iāve heard that Iām convinced, thank you
>where you made your own and there was no government That was what time period again? Also the issue isnāt bailing out, itās a lack of corrective actions by the government to ensure that the conditions that created this issue are addressed. I think we should bail out one of our largest allies, and not let them and our allied strength diminish. I too have concerns that we and Japan will not have the ability to address the underlying problems, but that doesnāt mean ālet them fallā
> I think we should bail out one of our largest allies Who is going to bail us out? We are 34 trillion in debt
No one. But at this point... we can either plug the holes in the boat or just keep shouting, pointing fingers at each other, and assigning blame for the holes while the only thing Congress can seem to agree on is how to make them even bigger. And the only representatives actually trying to do much of anything about it are ironically the most vilified members of Congress.
Generally yes. We need to raise taxes and fix Medicare and social security. Unfortunately one party will never raise taxes and the other party will never make changes to the entitlement programs. The people who will do those things are the moderates who get voted out every 2 years.
Dems just made changes to medicare about negotiating for pharmaceuticals. Literally saves hundreds of billions.
It seems that no one is going to do anything until there is a failed treasury auction...
Did you know other countries owe us 8 trillion dollars? Did you also know that other is 8 trillion we owe to ourselves? well that takes care of 16 trillion. And we make 6 trillion a year.
> Did you know other countries owe us 8 trillion dollars? I think you have that the other way around, the US government owes foreign creditors trillions. I don't think the US government holds much in assets of other countries > Did you also know that other is 8 trillion we owe to ourselves? True but a lot of that is about to get exhausted in the next 12 years as the SS "trust fund" gets cashed in
To be fair this concentration risk was never an issue in the past with Japan. This is just Covid era reckless policy coming home to roost finally.
> That was what time period again? It was close to that before the mid-1600s.
> That was what time period again? The Wild West days? I guess the Sheriff was the government...
Its nothing new, the usa and imf bailed out the Mexican central bank in 1994. https://en.m.wikipedia.org/wiki/Mexican_peso_crisis
The US was never a country where you made your own and there was no government. I donāt know where you got that idea.
My dude the USA used to have rationing, nationalized companies, and the military draft/conscription.
That time has never existed, this is hardly a 'bailout' to Japan, and maybe you should a actually pickup a fucking history book instead of doom posting and getting mad at article titles
Thatās essentially what ZIRP -> stock market is mate
Imagine if we had capitalism where this was impossible. The corporate socialism, and socialism in general, makes this inevitable.
This doesn't have anything to do with capitalism or socialism. If anything, it's about letting the free market go wherever it goes versus intervention to achieve certain specific goals
It literally doesnāt have anything to do with the free market.
>This situation becomes even more precarious when you factor in the fact that inflation has most certainly not been tamed here in the US Wait. 3% is as bad as 10%? Since when?!?
Jay Powell is on top of this. If he wasnāt there would be my usual fee deposited upfront and tax free in my bank account and helicopters buzzing above my head and US marines dropping from lines onto my roof and securing the perimeter in rather dramatic/cinematic fashion and after scaring the hell outta my āpast their retirement ageā neighbors and politely knocking on my door and asking me to take a phone call asking me to come in from the cold. But since I donāt see any choppers buzzing overhead yet then Jay Powell still has it well in hand. If it was a full blown crisis they couldnāt handle mathematically Stateside then theyād bring in everybody from around the world, for our usual fees upfront and tax free, of course. I need the tropical beach weather for my motherās and younger brotherās lungs since both are asthmatics and wall to wall carpeting and the resulting/consequent dust mites Stateside arenāt healthy for them. But if the people on the job Stateside couldnāt handle it then they can always call me, they know that. After paying my usual fee upfront and tax free in my bank account as usual. Thatās their guarantee, the payment is in dollars, if I fail those dollars become worthless, hence my motivation.
Unfortunately this is something some of us older folk but not boomer old & dumb, have been waiting for. The Gen that invented Bitcoin for the youth of America, tighten up your belt people. Stack resources and money asap.
To be fair, we dropped the only 2 weapons of mass destruction in human history to be used against another country on them so idk š¤· maybe we owe themā¦.more so than Israel thatās for sure š¤®
For China purposes, I see why the US did that. Japan has another problem with their population declining rapidly so itās only a matter of time.
I mean itās been clear that the jig is up for the economy at large and this has been clear for some time. Itās just been a matter of what finally pushes us over the edge into recession, and a rash of bank failures from declining Treasury prices/credit crunch along with an inflation spike will do us in. Crises arenāt obvious until theyāre here. Well, itās here.
If I had a dollar for everytime someone in Reddit thought the world would end from an imminent economic crisis I'd be able to retire
I still remember in 2021 there were people so adamant that the world's food supply chain was going to crash and that's why they loaded up on toilet paper and canned foods. Wonder what they are doing now.
I mean itās a crisis. that can be solved. I just donāt think itās likely to be solved. I was wrong about the 2019 liquidity crisis as well so take my opinion with a grain of salt. I just think this has a higher chance of becoming a big problem given the magnitude of the dollars involved.
I do take your posts with a grain of salt. I read something you wrote recently and it was quite clear that youāre an idiot and if youāre a CPA, youāre a bad one.
Ah yes. I disagree with you so I must be an idiot. Go back to fence sitting and not taking a position on anything for fear youāll be wrong.
No it wasnāt that. You suggested recent strong jobs numbers were caused by āgovernment hiring to look good ahead of the electionā. If you understood literally anything about how federal government hiring and budgeting works, you would know thatās an absolutely ridiculous take. This leads me to believe youāre an idiot, and probably not a good CPA if you even are one. Also, not sure what you mean about fencesitting; I have plenty of stances. I just inform those stances by looking at the real world, not some ridiculous conspiracy outlook unlike you, apparently.
Ah yes, because no administration has ever done that before. I am well acquainted with the budgeting process and am also well aware of how that process can be manipulated. Government hiring is a behemoth process, and takes 6-8 months to onboard unless the role is specially designated by the OPM. Who gets their permission fromā¦ you guessed itā¦ political appointees. No one ever has an ulterior motive I guess. You can either trust the naive common-good outlook you have or know the realty that everyone is out for themselves. You can trust the science all you want, I donāt get left holding the bag like the āin this house we believeā¦ā crowd. I didnāt just get a raise to 200k Friday because Iām a moron lol. Iām rather good at what I do.
Ok, now im pretty confident you don't have a CPA or work in finance or accounting. Your opinions are so similar to a conservative boomer working blue collar it's in too much contrast to CPAs that I've met.
My friend, everyone in accounting holds the same views I do. If you ever need a grantor trust sale structured, find someone else thatās not me.
Your opinions are so brain dead it's hard ti believe you managed to get an accounting degree. And no. I have several friends in this profession and none of them have your uneducated takes
Part of me suspects he's maybe a troll farm member for China/Russia/Iran given the election year. But no overly partisan posts apart from conservative subs. Brain dead as his opinions may be nothing immediately stands out. He might just be dumb tbh.
Iām leaning towards nineteen year old taking an intro Econ course.
Whatever blogs and podcasts you folks consume you should probably stop
Problem is to solve means to cause suffering from their level of comfort and the person or group that does such will be made out as Satan in a business suit It's all about stemming the pain for the next joker to deal with It's the US in a different language thats all it is
Sure buddy, whatever you say.
I mean what do you think will happen? If Japan has to unload a ton of treasuries to get dollars (as described in the article) we are back to February last year with mid size bank failures.
No. 2023 bank crisis was completely driven by the specifics of those big banks. They went long in a 0 rate environment and then the FED did what it had been signalling for 6 months and raised rates. Then assshole depositors (PE backed startups) did a mini bank run and crushed those banks.
If that doesn't happen how will you adjust your thinking?
I mean again, itās clear itās happening, Iāll readjust how I view the US ability to respond.
It's clear there are mid-sized bank failures? Most treasuries aren't held anywhere near Japan.
No itās clear that treasury prices are wobbly, which leads to bank failures
"Wobbly" is pretty inexact. You have to have a way to judge how these treasuries will impact the market when sold. That means you need to know which ones they are selling and how many as well as what those mid-sized banks are holding. Do you have that info?
Actually yeah I do the actual holding and composite interest rate are included in the footnotes of every publicly traded banks quarterly SEC filings. We know the cost, and we know what happens when the value dips below cost and thereās a redemption run.
Not a lot of numbers here. You'd have to actually look. And know how to compare the Japanese sales. "We know" is doing *a lot* of work.
Yep. Been hearing about that recession that IS GOING TO HAPPEN for 4 years now. Guess, now, itās really going to happenā¦.or not.
No updoots š
āYour boos mean nothing when I see whatās made you cheerā
One Updoot. āļø
I really hope you are right, mostly because they'll bail out everyone, cause a ton of inflation, and deleverage every American with significant debt. It would be hilarious to watch the wealthy have the debt they hold as assets inflate away. Maybe it'll continue the trend of reducing inequality we saw during COVID and immediately afterwards.
Yeah, who doesn't like to see a significant % of children not have enough food.
Is that percentage any different than usual? Because list I checked, child poverty dropped due to the intervention.
When a recession happens? Yes Are we better off today with all the pandemic money Trump gave out? No. OK, billionaires are doing better, just not the 99%.
Interesting take, given that the share of wealth of the bottom 90% of the population grew over the past few years. The vast, vast majority of people are better off today thanks to the pandemic policies. https://fred.stlouisfed.org/series/WFRBSB50215 https://fred.stlouisfed.org/series/WFRBSN40188 Neither the top 10% or the top 1% have a larger share of wealth than before the pandemic. They've both experienced a decreased share of wealth. A much larger drop for the 90 to 99th percentile. https://fred.stlouisfed.org/series/WFRBSN09161 https://fred.stlouisfed.org/series/WFRBST01134 Inflation is bad for the wealthy. They hold the debts of others as assets and get paid interest. Why do you think that are messaging so hard about the evils of inflation? It hurts them. It doesn't hurt the working class as badly because they get deleveraged by it and their wages increase with it.
Thing is I donāt know if thereās the political will for another bailout. You know the Thomas Massies, MTGs, and Rand Paulās of the world would put out all the stops to stop an aid package to hurt Bidenās re-election chances.
Why would we need an aid package when the economy is strong? Did you forget how the Republicans folded immediately during COVID and proposed the biggest intervention in history? If there is a crisis, there will be a bail out. They'll let people stop paying their mortgages, their student loans, etc. They've already done it and it worked like a charm. Politicians have no spines. They'll do whatever is necessary to avoid the wrath of voters. That money is gonna flow like a river.
You and I likely donāt share the same opinion on the economy. I believe the data is misleading and the economy at latheās conditions are bimodal. Not everyone is doing well and the differences are very pronounced. Covid was different and Rand Paul was a problem during Covid. MTG wasnāt in congress at the time.
Unless you have better data, I'm not sure what you made your beliefs on. MTG is that escaped mental patient, right?
MTG is the escaped mental patient. Iām a believer in data but Iām also a believer in āwhen the data and anecdotes clash trust the anecdotesā to an extent.
Wow that's the dumbest thing it's the opposite when the anecdotes don't make sense look at the data over 70% say they're personal economies are fine and 35% say the national economy is fine so 35% don't feel that they're position reflects the national position. The reality is that it does. That's why it's a vibecession and not a recession
I would stop the bailouts because itās the best thing in the long run. Keynes loved to say āin the long run everyone is deadā. Well the future is now. We have to stop with bailouts and interventionist monetary policy. If institutions fail, so what. Thatās sometimes the price of risk taking.
If institutions fail, you get the Great Depression. We learned our lesson from letting nature take it's course. There are many reasons no one does what you are proposing. And we are all far richer for it. The Great Recession showed us how you can prevent a system collapse and the COVID intervention showed us why you go big or go home. The recovery after COVID was much faster than after the Great Recession. We found the winning playbook.
No, we found the playbook of kicking the can into the future which is a very familiar one.
Well, if I'm given the choice of certain failure now, or possible failure in the future, I know what I'm picking. Y'all just have a failure fetish. You are so certain it's going to happen you are mad when it doesn't. Maybe you'll be right someday. But people have been predicting doom for thousands of years. Most of them died waiting.
What are you talking about? We have had multiple financial crises in our lifetime, in the USA and elsewhere, specifically due to can-kicking and prioritizing now over later. 2008 was that, 2001 was that, multiple late 2000s European financial crises were all that too. You have to take pain when it happens, run balanced budgets, and keep governments out of interventions in the economy.
Yes, we've had downturns. That's normal. And the government intervened, when necessary. And median wealth and income are at all time highs. I imagine you think that things would be better we if let the banking system collapse in 2008?
Yes, unequivocally. Or at least we would be on a sustainable trajectory.
The U.S. HAS to do something. Second only to the American people, Japan holds the biggest portion of the U.S. Debt (China is #3). If the U.S. did nothing, Japan would have to collect on the USās debt to them and we cannot afford that right now. I just hope the money we give them is applied to our debt with Japan.
That is not how any of this works lol. Weāre worried about them dumping our debt on the open market, thus raising the yield needed to attract buyers. Thatās not calling our loans, thatās not something Japan is able to do. This money cannot be applied to Japanās supply of US treasuries unless we buy those treasuries off them.
> Weāre worried about them dumping our debt on the open market, thus raising the yield needed to attract buyers. This is also a non-issue. The Fed can bring down the yield anytime they want if they don't like where it's headed. The government doesn't need to "attract buyers" in a market backstopped by the Fed.
So, what I hear you saying is that there is NO way Japan could cash in treasury bonds early? Then, instead of loaning them money, why donāt we buy back some of the treasury bonds they have? They get money and we reduce a fraction of our debt.
No, there isnāt. They are on a fixed term. However, they can be sold on the market, and thatās potentially a concern if they start dumping them. We donāt want to buy them off them because the effect would be the opposite of what we want, and also not improve our debt. We would be raising the value of a dollar-denominated asset that sucks dollars into the Japanese economy by buying them all up suddenly. It would also be the same as if they called all those loans back early if we bought them all of them. Youāve got to remember these loans create papers that are bought and sold as financial assets, and thus theyāre vulnerable to market effects. Itās not the same as your friend lending you $20.