The United States released a "financial nuclear bomb" against Japan in April, and the harvesting effect can be described as very significant, causing the yen exchange rate to plummet, and it had to urgently release 8.5 trillion yuan to save the market. And worse news came from the United States, to which Musk said that if the United States does not take practical measures, the dollar may become waste paper.
The United States launched a financial war and began to harvest against Japan
The United States, from the Trump to the Biden administration, has been facing fiscal and inflation problems, and the ceiling of the US debt has broken through to $33 trillion, which means that a quarter of the US fiscal spending has to pay interest. The United States has just released economic data for the first quarter of 2024, which is much lower than the same period last year, and the fiscal situation of the United States in the past two years is not optimistic.
Blinken visited China
We can only rely on continuous interest rate hikes to attract the return of the dollar, but this way is tantamount to "drinking water to quench thirst", if we fall into the vortex of high inflation for a long time, a recession in the US economy is inevitable.
Therefore, the United States also has a method, which is to rely on the dollar to harvest other countries to relieve its own economic pressure, which has been tried and tested repeatedly for the United States.
Previously, senior US officials visited China en masse, hoping that China would make economic concessions, and hyping up the issue of China's "overcapacity", in order to make China "cut off its own arm" so that the Americans could "harvest" the world's wealth. The answer is simple: the United States is no longer qualified to make demands on China from a position of strength.
Reducing holdings of U.S. debt is a necessary measure
According to data released by the U.S. Treasury Department, China has sold 30 billion to 40 billion U.S. bonds in the first two months of this year, and U.S. bond holdings have fallen below $775 billion, a significant decrease compared with the previous holdings of more than one trillion U.S. bonds. At the same time, China has also increased its gold reserves.
As for China, the United States can only look for other targets to alleviate its own economic problems, and the most suitable target is Japan.
Japan simply did not have much resistance in front of the United States
After all, although Japan is a theoretical ally of the United States, it is actually the "little brother" of the United States, and it also closely follows the United States in its domestic and foreign policies, and has no ability to be independent. As a result, the yen exchange rate fell to a maximum of 160 under the blow of the cooperation of US policy and capital, and the effect of a "financial nuclear bomb" was launched.
The yen exchange rate can only barely hold around 154 for now, and it may continue to fall in the future
The Bank of Japan threw 8.5 trillion yen to bail out the market, and all of them were lost
The Bank of Japan shot twice, throwing a total of about 8.5 trillion yen of US dollar foreign exchange reserves, the first wave smashed 5 trillion, barely pulling the yen exchange rate back to 154, but then continued to fall, and smashed another 3.5 trillion, pulling the yen exchange rate back to 153, not even unsatisfactory, compared with the previous exchange rate value of about 130-140 far worse.
The U.S. harvest took away 8.5 trillion yen from Japan at once, which is almost equivalent to $55 billion, which is quite a large amount of money, and it is all the hard-earned money of the Japanese people.
Don't look at the scale of Japan's foreign exchange reserves on the books of 1.2 trillion US dollars, the magnitude of 55 billion US dollars does not seem to be large, accounting for only 4.5% of its total foreign exchange, but the problem is that more than 90% of the 1.2 trillion US dollars of foreign exchange reserves have bought US bonds, and the scale of US dollar cash and foreign exchange is only more than 100 billion US dollars.
This time, $55 billion was used at once, and there was only $50 billion to $70 billion left in the dollar cash that could be used.
Therefore, Japan's 8 trillion rescue is lost, but it is not enough to save the market, even if all the remaining cash and foreign exchange are smashed into it in the future, it is a bottomless pit, and it will be further harvested by the United States.
Of course, some netizens said that after all, there are still so many U.S. bonds, and Japan can sell U.S. bonds to save the market, but Yellen has clearly warned Japan not to sell U.S. bonds casually to intervene in the foreign exchange market, and the hawkish posture is obvious.
As long as Japan does not sell US bonds, then the Bank of Japan will not care about the US dollar cash and foreign exchange bailout, on the one hand, it is convenient for the United States to harvest, and on the other hand, the United States knows the total amount of US dollar cash and foreign exchange of the Bank of Japan.
It can be said that after Japan was harvested by the United States for $55 billion, the crisis of the yen's exchange rate decline has not been overcome, but it has only stabilized temporarily, and the crux of the problem is that Japan's current economic situation is also sluggish.
In the past, Japan was known as a manufacturing power in developed countries, and it could export a large number of products with its technological and production capacity advantages, earning a large trade surplus, that is, earning a large amount of foreign exchange. Then Japan's financial policy is that the central bank's "nuclear money printing machine" is activated, constantly printing money to buy Japanese government bonds and other assets, and then using foreign exchange to buy back the yen to maintain the stability of the domestic exchange rate.
But now, with the industrial upgrading of China and other countries, the market competitiveness greatly exceeds that of Japan, and because of the impact of the epidemic and the war, the price of raw materials that Japan needs to import has skyrocketed, resulting in a deficit in Japan's foreign trade.
In this case, there is no way for Japan to buy back the yen through foreign exchange and maintain the stability of the domestic exchange rate, so the fall of the yen is inevitable, and the end of the harvest of the United States is a matter of the last step.
After all, unlimited money printing by the United States is not a magic weapon, and once the "reservoir" is filled, it is only a matter of time before it blows itself up
The situation of the US dollar is similar, printing currency to the whole world and letting the world take over, but the rest of the world is not a bottomless pit, and the unlimited printing of money by the United States is not a magic weapon, in the past, China and other countries relied on products to exchange foreign exchange reserves, so that the US dollar that the United States continues to print has enough purchasing power.
But things have changed now, with the US running a long-term trade deficit between China and the United States, and other countries looking to adopt other currencies, such as the renminbi, to protect against dollar risks.
Therefore, the United States is now printing money without restrictions, and the over-issued dollars cannot find enough "pick-up objects", which has led to a high inflation rate in the United States, unlike in the past, as long as the over-issued dollars are always available, which is bad news for the United States, Musk also said that if measures are not taken, the dollar is waste paper and worthless.
Some of the sources in the article: 1. What is the reason for the sharp depreciation of many currencies against the US dollar? Beijing Daily