Japan?
Michael Graves
Starting to see fear mongering about the current situation in Japan.
Japan selling off vast holdings of US treasuries to defend the Yen. Doom & gloom.
Is there an MMT informed update to their current reality?
Ryan Benincasa
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Jay Mills
Depends what “doom & gloom” refers to. If it’s about Japan, selling Treasuries to support the yen is an exchange-rate operation. It doesn’t by itself indicate a solvency problem or fiscal crisis.
If it’s about the U.S., Japan selling Treasuries doesn’t impair the U.S. government’s ability to spend. Those are separate issues.
James E Keenan
> Starting to see fear mongering about the current situation in Japan.
>
> Japan selling off vast holdings of US treasuries to defend the Yen. Doom
> & gloom.
>
> Is there an MMT informed update to their current reality?
>
on his blog for posts about that:
https://billmitchell.org/blog/?cat=31
Perhaps this is what you're looking for:
https://billmitchell.org/blog/?p=63252
Michael Graves
Jay Mills
This is mostly a story built on conventional financial intuition rather than an operational description of how a currency issuer works.
Japan is not “breaking” because its debt-to-GDP ratio is over 200%. That ratio tells you very little about the government’s ability to spend or service debt. Japan issues its own floating currency. The Japanese government, working with the Bank of Japan, can always make yen payments as they come due. There is no solvency risk in yen.
The claim that Japan must choose between “saving the bond market” and “saving the yen” is also overstated. The Bank of Japan sets the risk-free interest rate if it chooses to. It has demonstrated repeatedly over decades that it can purchase whatever quantity of government securities is necessary to achieve its target. Bond yields are ultimately a policy variable, not something imposed by markets on a currency issuer.
The “yen carry trade” is real, but its importance is often exaggerated. Investors borrow yen because it is profitable to do so. If those trades unwind, some assets may fall as leveraged positions are liquidated. That’s a portfolio adjustment, not evidence that Japan is financially constrained or that the global financial system depends on Japan “calling its money home.”
The idea that Japanese investors selling U.S. Treasuries forces U.S. interest rates higher is also incomplete. Treasury yields are primarily determined by Federal Reserve policy and expectations of future policy. Foreign investors can change the composition of asset ownership, but they do not determine whether the U.S. government can finance itself. Like Japan, the United States is a sovereign currency issuer.
As for the anonymous tweets and Article 589, there is no credible evidence that they represent Bank of Japan policy. Building a macroeconomic thesis around anonymous social media posts is not a sound analytical approach.
Japan’s actual issues are much more mundane:
- Higher import prices from a weaker yen.
- Demographic challenges.
- Whether higher wages become persistent.
- How aggressively the BOJ wants to normalize interest rates.
- Political choices about fiscal policy.
Those are real questions. They are not evidence that Japan is approaching a debt crisis.
The biggest mistake in the video is treating Japan like a household or an emerging market that can “run out of money.” Operationally, that is false. Japan can always make yen payments. The relevant questions are inflation, resource availability, exchange rates, and real economic capacity, not whether it can obtain the yen needed to pay its own obligations. That’s the distinction modern monetary analysis starts with.
On Jul 29, 2026, at 9:29 AM, Michael Graves <mgr...@mstvp.com> wrote:
James E Keenan
> This fellow is what inspires my question.
>
> YBhwK-VWsxY?si=LX735Eo9A_dF63Ud>
>
Just take a look at his home page on YT:
https://www.youtube.com/@AndreiJikh
"Magic of Finance"
Note the hyperbolic titles of all his videos, his past adventures in
bitcoin. Which describes him better: hustler or huckster?
I wouldn't pay much attention to his thoughts on Japan Central Bank policy.
Warren Mosler
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