Could Interest Rates Blow Up?
Japan is the number 0ne holder of U.S. Treasuries. To keep Japan from selling its holdings, the United States is engaging in efforts to prop up the value of the yen, the Japanese currency. Eight-time best-selling author Jim Rickards, whose books mostly deal with finances, explains why this is a dangerous policy.
“Japan is the number one holder of US Treasuries. They have been selling Treasuries to get dollars to buy yen to prop up the yen,” Rickards says. “”What happens when you sell Treasuries? US interest rates go up. Do you think the Trump Administration or Secretary of the Treasury want US interest rates to go up? . . ..
Rickards goes on,”Treasury Secretary Bessent called Japan and said hold on to your Treasuries. We will give you all the dollars you need with a swap line with the Federal Reserve. So, what we are doing is the US is using dollars from the Fed to prop up the yen. So, the Japanese do not have to raise interest rates. So, the carry trade does not unwind. So, the markets don’t collapse. . .. It is extremely dangerous . . .. You are trying to defend an exchange rate that probably can’t be defended, and it is just a matter of time before it breaks.”
Here’, Rickards speaks with Greg Hunter on USAWatchdog.com.
