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The JPY shorts are still holding the line; once the September rate hike hits, the whole world will have to tremble along Short positions surged to a nine-year high not long ago Every short position, in essence, is a potential forced buyer The death spiral is already turning: As the yen falls to around 160—its weakest level in 40 years—the Bank of Japan is likely to hike rates in September to defend it Carry trades are forced to unwind To buy back yen, you have to sell what you’re holding The first thing sold will be U.S. Treasuries Japan is the largest foreign holder of U.S. Treasuries The yield on 30-year Treasuries is already 5.26%, the highest since 2007 With forced selling, yields can surge even higher The U.S. government’s interest on debt alone is already $1.25 trillion a year If it goes higher than that, they truly can’t carry it At that point, the Federal Reserve will have to choose between two options: support the bond market or protect against inflation Most likely, it will support the bond market Trump’s side will also pressure the Fed to do the same The result is continued money printing Middle-class real income gets wiped out Floating-rate debt and small businesses are the first to fail A consumption cliff With lower tax revenue, the deficit gets bigger The global economic crisis kicks off directly Don’t forget: Japan is almost 100% reliant on imported oil, and it still has to pay for it in dollars That’s a structural sell pressure on the yen—not something a couple of interventions can fix Two weeks ago, the U.S. and Japan jointly intervened, and the yen popped up But now it has already given back half The market simply doesn’t believe This round is different from beforeIran is still on fire; with China facing pressure from the tech race, oil prices are heading higher, and consumer confidence is already worse than at the peak of the Great Depression The situation is getting worse every day—we don’t know when it will end $BTC $ETH $OKB