In a staggering revelation, the Japanese government itself has embarked on a massive $20 trillion carry trade, a risky financial maneuver that could spell disaster if it goes awry.
The situation is dire: the Japanese government, through a complex web of institutions including the Bank of Japan (BOJ) and state-owned banks, borrows yen at rock-bottom interest rates and invests in higher-yielding assets denominated in other currencies. It’s a high-stakes gamble that has the government trapped in a precarious position.
Poster Comment:
If you borrow at the lower exchange rate and have to pay back at the higher one, you will lose trillions. Bad for and and Europe.