If the Bank of Japan raises interest rates, the global financial market will experience a level nine earthquake, with an impact far greater than that of a U.S. interest rate hike. Why do I say this? Because the yen has a specific term called a funding currency, which simply means borrowing yen allows you to do anything. For example, borrowing yen to acquire large enterprises, speculating in stocks, or even investing in funds, like Buffett. You might think Buffett is a stock god, buying U.S. stocks with his income, relying on his premium income to make those purchases, but that's not true. No, no, no. Buffett buys U.S. stocks by borrowing yen. Now, if the Bank of Japan borrows 100 billion yen, he first borrows 100 billion yen from the Bank of Japan to buy into Wall Street, to buy Nvidia stocks. So we must ask, why yen? Why not renminbi, pounds, dollars, or francs? Because the yen has no interest.
If you want to borrow money 💰, which is more advantageous, borrowing high-interest currency or borrowing yen? Definitely borrowing yen is more advantageous, with no interest. Moreover, 🇯🇵 Japan has not had interest for a year; since the burst of the Japanese bubble economy in 1990, Japan has had zero interest rates for a full 35 years, continuously for 35 years without any interest at all. Is there such a good thing in the world? Apart from zero interest rates, it has an unbeatable advantage, which is the low exchange rate. For example, if I hold 100 yen, with zero interest on yen, I have held 100 yen from 1990 to 2025 for 35 years. But if I hold 100 dollars, with interest on dollars, wealth will exponentially grow from 1990. So let me ask you, if there is a person who borrows yen to exchange for dollars, isn't it a way to make a profit effortlessly? And you should know that in finance, this can become very large; it looks like a 30% difference. If I have 1 billion dollars, if it is 10 billion, some consortiums can earn 2 billion, 3 billion, or 5 billion just by buying dollars and selling yen in a year. But what happens when this matter gets bigger? Gradually, the yen cannot even hold this line because everyone is selling yen and buying dollars. It can't even reach normal levels; if it goes lower, saving 100 yen results in 80 yen. Why does it become 80? Because the exchange rate was previously 1:100, now it is 1:150. In addition to interest, the dollar also gains from the exchange rate. Now I tell you, 🇯🇵 The Bank of Japan is going to raise interest rates, 💁🏼 Trump is going to lower interest rates, everything returns to the starting point. From here to here, you drop from here to here; isn’t that a big deal? Over time, funds will flow out of the U.S. and back to Japan, causing low interest rates and low exchange rates to become high interest rates and high exchange rates. It’s a double kill; isn’t it terrifying to kill it back? For a full 35 years, the global financial market and speculative market, all those who borrowed yen to invest are hanging on the tree, especially the Five Eyes Alliance: 🇨🇦 Canada, 🇦🇺 Australia, 🇬🇧 UK, 🇳🇿 New Zealand, including 🇨🇭 Switzerland. These few countries with Anglo-Saxon culture will suffer the most.
So can 🇯🇵 Japan's interest rate increase succeed this time? Whether 🇯🇵 Japan's interest rate increase can succeed depends on whether they have the determination. If they really have the heart to raise it from 0% to 1% through four increases, then it is estimated that it will collapse here, and it is estimated that the U.S. stock market will fall to 5000 or 10000 points. But the problem is, the mysterious person personally thinks the Bank of Japan is very timid and only raised a little bit. Then the Ministry of Finance said it couldn’t raise anymore; this is the end, emphasizing the impact. If the Bank of Japan is timid and raises it once but doesn’t raise it again, then the matter will hold because the Bank of Japan does not have the guts to stir up a global financial storm. If you want to short the yen and continue investing, it all depends on having a lot of guts.
