Last week on 31 July, I asked Dr. Hudson about what was happening in Japan based on this Hertitage Foundation article: "Hello Dr. Hudson. Just saw this bit of news about Japan unloading Treasuries. Any comment?" The article was published on 26 July, thus the unwinding of Japan's carry trade was already in motion. He sent this in reply:
"I think this is the unwinding of Japan's carry trade. They borrowed at home at low interest and bought US securities yielding more, enjoying the arbitrage. Now it looks like US rates will fall and Japan's rates are rising, so this carry trade is no longer profitable. So the Treasuries are sold off and the money is brought back to Japan."Here's what he wrote at his Patreon page along with replies to many queries:
Stock prices down 5% (and 10-year US Treasuries way up as a “flight to safety.”) The media are blaming all this on the Federal Reserve’s high interest rates and spread of depression in the US and other countries.There is an utter blackout on the military reasons – the fear of war spreading in the Near East, and the crisis that the US/NATO war in Ukraine is creating for Europe (as Hungary’s prime minister Orban has been explaining.
We can see through BigLie Media's crap since they're Big Money controlled which wants to go back to the gravy days of ZIRP, but that's not going to happen.
I cited this in "The Dollar System: Up in Smoke":
[T]hings are coming to a head, because the Federal Reserve can neither lower interest rates because of inflation, and if it doesn’t lower them, then the financial crisis will come, and nor can it raise them further in order to finish the job, because that will simply mean the financial crisis will occur sooner.The global financial system is extremely unstable and also dysfunctional and is headed in a direction predicted often over the last few years. It's very possible the Deep State wants this crisis to fall into Trump's lap, but that means trying to contain it until January, and I don't see that happening. August is when the 2Q reports are made public and banks have probably not performed very well.
Posted by: karlof1 | Aug 5 2024 22:01 utc
