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US Treasury undertakes historic intervention in yen market

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Re: US Treasury undertakes historic intervention in yen market

#111

Post by Schiendelman »

adabyron wrote: post #62
Schiendelman wrote: post #52

Earlier quoted context omitted.

Hold on there. The reason you mostly see sky is falling posts is that those get more engagement , both positive and negative. "Everything is fine" doesn't cause a reaction in a reader. This is inherent to social media. It's bad for us, too, because it eventually tricks our brain into thinking the sky is always falling, no matter how we try to talk ourselves out of it.

Curious what others think. In my small real offline world, it seems this has caused people to get worked up about the sky falling a few times and then quit paying any attention to the sky or boy crying wolf at all. Which means when events actually happen that will have a large negative impact on their life or their descendants, they just don't care. Which then results in another metaphor - boiling a frog.

The not caring is honestly a good idea for most people. Very few people have any action they can take that will make measurable change on those negative impacts.

Re: US Treasury undertakes historic intervention in yen market

#112

Post by Yokolos »

danmaz74 wrote: post #38
sph wrote: post #14

Earlier quoted context omitted.

Here’s the likely rationale from one of the FT comments: “It looks like the Japanese economy is on the BoJ [Bank of Japan] ventilators. I mean, the BoJ is the largest single holder of Japanese equities, government bonds (JGBs) and currency (JPY). It’s likely that the BoJ is printing more yen to finance Japan Inc, which in turn is probably the driving force behind inflation. […] BoJ is the largest foreign bank holding…

> hope their bet on JPY vs EUR pays off in the long-term Which bet?

Yes, which bet? I agree. There's no bet here. The comment correctly outlines why the US is doing this and how it benefits. And instead of concluding that "this is why they're doing it", they're making some weird hint that they're shorting the Euro and that somehow this doesn't pay off if the trade isn't favourable or something else? They benefit by BoJ not selling US treasuries. It doesn't matter how EUR is valued against JPY. It's not a bet between these two currencies. Europe would also benefit by their currency getting weaker, since it's filled with export-heavy countries like Germany.

Re: US Treasury undertakes historic intervention in yen market

#113

Post by epolanski »

jordanb wrote: post #108
epolanski wrote: post #104

Earlier quoted context omitted.

> the Fed could buy it up and pay interest to itself. With what money..?

You're asking where the Fed gets money?

I'm just making you realize that what you're describing is inflationary.

Re: US Treasury undertakes historic intervention in yen market

#114

Post by don_esteban »

jordanb wrote: post #91
mitthrowaway2 wrote: post #84

Earlier quoted context omitted.

> Japan would then have a whole bunch of non-interest-bearing US dollars They would not be holding the dollars long enough for the interest to matter. Those would instantly be traded for JPY, weakening the dollar and strengthening the yen, because the goal is to influence the exchange rate.

But this is what the US Treasury is doing on Japan's behalf without requiring Japan to give up any bonds. If Japan wants a stronger Yen against the dollar why not make them spend their reserves to support it?

Because Japan would sell its treasures to buy dollar with which to buy Yen, pushing the yield on US treasures even higher, speeding up the debt spiral.

Similar as the credit-swap lines for the Gulf countries: They have enough treasures to sell to cover their cash flow problems (from the blocked Hormuz), but (see above).

Re: US Treasury undertakes historic intervention in yen market

#115

Post by ProllyInfamous »

dr_coffee wrote: post #40
CamelCaseName wrote: post #35

Wait, no way! Someone posted a zoomed up photo of a US official (can't recall who) of a notepad a few days ago saying "To do: Buy Yen 5Y - 10Y" or something similar

It was US Treasury Secretary Scott Bessent https://www.reuters.com/world/asia-pacific/bessents-to-do-li...

[flagged]

Re: US Treasury undertakes historic intervention in yen market

#116

Post by aorloff »

dzonga wrote: post #6

Japan is the sort of canary in the coal mine. so yeah if the yen pops - then the u.s will too given all the 'a.i' shenanigans & the market manipulation with oil. but I guess the US Treasurer is willing to manipulate the market till they can't.

at some point, the SPR runs dry

Re: US Treasury undertakes historic intervention in yen market

#117

Post by marcosdumay »

hn_throwaway_99 wrote: post #101
koito17 wrote: post #71

Earlier quoted context omitted.

The devaluation didn't really get out of control until 2022 IME. In 2021 you were still able to divide by 100 and not be far off in conversion. Typically traded between 105 ~ 115. Nowadays the Yen is so weak that I unconditionally convert my whole paycheck to USD after paying rent. Even if risk-free interest rates between Japan and United States converge, there's just not much reason to hold Yen if you want to avoid…

As someone who hasn't followed this closely, when/why did things switch? Japan had the opposite deflation problem for years (decades?) and IIRC tried battling that with "money printer go brrrr" for a long time. How did inflation become their primary problem?

My understanding is that Japan experienced the same kind of phenomenon that is unwinding in the US right now.

As long as your markets and tax policy are vicious enough that lots of normal people can barely make ends meet, you can print as much money as you want and it won't show up on the CPI. Instead, if you funnel that money to rich people, it will show entirely as growth in the price of investment instruments.

At the same time, you will have great economical indicators, and even large taxes that can be spent on anything that doesn't end up on the population's bank accounts (like on infrastructure).

But that money keeps piling up on investment, making them more and more distant from normal cost of life expenses. As soon as any of it reaches normal people, the CPI explodes.

Re: US Treasury undertakes historic intervention in yen market

#118

Post by Yokolos »

Eddy_Viscosity2 wrote: post #98
bsaul wrote: post #83

Earlier quoted context omitted.

"was considering a mass sell off to raise cash to defend the Yen." How would that have worked ? Selling US bonds in exchange for yens, to diminish the amount of yen in the economy, and pump up its price ?

Currency interventions never work. They buy a bit of time maybe, but without any fixes to the underlying causes that made the intervention necessary, its a temporary solution.

This is literally what central banks do. Central banks influence the economy with monetary policy, including things like this. That's all they're allowed to do, since they're intentionally not a political institution and have no legislative or executive authority. If you want the root cause to be handled, that's up to the legislative body. That's not the central bank's job.

Re: US Treasury undertakes historic intervention in yen market

#119

Post by jfengel »

jordanb wrote: post #108
epolanski wrote: post #104

Earlier quoted context omitted.

> the Fed could buy it up and pay interest to itself. With what money..?

You're asking where the Fed gets money?

They have the option of simply putting it on their books, but that is the very last option.

They would rather borrow it. Sometimes they borrow it from themselves at artificially low rates, which is still better than simply not treating it as a debt at all.

Their preferred option is to auction off bonds. Though just at the moment rates on those bonds are extremely high, because reasons.

Re: US Treasury undertakes historic intervention in yen market

#120

Post by btown »

SpicyLemonZest wrote: post #99
btown wrote: post #93

Earlier quoted context omitted.

> deserves what they get American voters exist in an environment of propaganda addiction, with every piece of their personal technology reinforcing and profiting from said addiction, that has never existed before. I have great empathy and understanding for those who are bombarded by voices that are actively manipulating them for engagement, and I believe this empathy is key to understanding if, and how, a landscape o…

Understanding, absolutely. None of us are immune from propaganda, and most of us have at one time or another been swayed by selective arguments and echo chambers to behave poorly. I don’t like that you have empathy for people who are right this second steering the government in a project of performative cruelty against me. I think you should withhold your empathy until they’ve been stopped and appropriately punished…

To be very clear: there's a difference between the people shaping/benefiting from/profiting from this system, and those being shaped by it. And, without sharing too much personal info, I am very much one of those being attacked by such a project of performative cruelty, and far too many people I know and love have suffered - and the architects of these projects must not escape accountability.

But I have to believe that a sizable number of people exist out there: the ones who have not carpetbagged on the ragebait economy, but who have been the ones taken down an algorithmic video-feed rabbit hole primed because of the news channel playing at their workplace or words of hatred shared by a community leader... that this person has been taught to fear rather than understand, that that person still has the innate capacity to understand, and that a future can be built on that capacity.

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