Ep. 528 The Yen Bailout and Failure of Keynesian Policies

So, yeah, the big news, folks, we're recording this mid-August.

Is the ramifications of a massive intervention in the Japanese currency markets.

So I think it was I think the last two days in July and then it spilled over into August, I believe the Japanese authorities came in and they spent.

So we don't know the official numbers as of right now because it's not been released, but.

The guys at Goldman Sachs are telling us, oh, we monitored this and we can indirectly estimate, blah, blah, blah.

But it looks like they spent, it was measured in yen, you know, as they're doing it, but like reportedly about $85 billion worth of propping up the yen against the dollar, right? So in other words, the Japanese authorities are sitting on a boatload, like a trillion dollars worth of dollar foreign currency reserves, right? And so what's the point of having that? Well, amongst other things, if your own currency starts slipping against the dollar, you can sell your dollars to buy your currency.

And that makes your currency strengthen against the dollar.

Right.

So they did that about eighty five billion dollars over the course of those first two days.

To give a frame of reference, that was the biggest two day intervention since 2011 when they had the.

tsunami in the Fukushima or

Fukushima? I think so.

Yeah.

Fukushima power plant stuff going on.

So anyway, this is a big deal.

And then also it's significant that, yes, the US authorities also coordinate with them And I've seen people I think this is how to parse the different statements.

Some news reports say the last time U.S. authorities worked in tandem with the Japanese to intervene in the yen U.S. dollar exchange rate was back in, I think, 1998.

But then other ones say not since 2011.

And I think the distinction is in 2011, it was like a G7 initiative to help the Japanese with their currency and everything amidst their natural disaster.

Where's the 98 deal? It was just the U.S.

and Japan.

I think that's how to make sense of all these claims.

But in any event, it's been a while since you've seen something of this scope.

So let me, if I may, Adam, just to give some context here, share my screen.

This is Japanese yen to the U.S. dollar exchange rate.

So, yeah, the big news, folks, we're recording this mid-August.

Is the ramifications of a massive intervention in the Japanese currency markets.

So I think it was I think the last two days in July and then it spilled over into August, I believe the Japanese authorities came in and they spent.

So we don't know the official numbers as of right now because it's not been released, but.

The guys at Goldman Sachs are telling us, oh, we monitored this and we can indirectly estimate, blah, blah, blah.

But it looks like they spent, it was measured in yen, you know, as they're doing it, but like reportedly about $85 billion worth of propping up the yen against the dollar, right? So in other words, the Japanese authorities are sitting on a boatload, like a trillion dollars worth of dollar foreign currency reserves, right? And so what's the point of having that? Well, amongst other things, if your own currency starts slipping against the dollar, you can sell your dollars to buy your currency.

And that makes your currency strengthen against the dollar.

Right.

So they did that about eighty five billion dollars over the course of those first two days.

To give a frame of reference, that was the biggest two day intervention since 2011 when they had the.

tsunami in the Fukushima or

Fukushima? I think so.

Yeah.

Fukushima power plant stuff going on.

So anyway, this is a big deal.

And then also it's significant that, yes, the US authorities also coordinate with them And I've seen people I think this is how to parse the different statements.

Some news reports say the last time U.S. authorities worked in tandem with the Japanese to intervene in the yen U.S. dollar exchange rate was back in, I think, 1998.

But then other ones say not since 2011.

And I think the distinction is in 2011, it was like a G7 initiative to help the Japanese with their currency and everything amidst their natural disaster.

Where's the 98 deal? It was just the U.S.

and Japan.

I think that's how to make sense of all these claims.

But in any event, it's been a while since you've seen something of this scope.

So let me, if I may, Adam, just to give some context here, share my screen.

This is Japanese yen to the U.S. dollar exchange rate.