Tom Bilyeu

Now, there are likely three things that Besson is worried about right now.

First, Japan is the single largest foreign holder of U.S.

debt, owning roughly $1.1 trillion in treasuries.

For years, JGB yields were near zero, so Japanese pension funds and insurers, they had to buy U.S.

treasuries to get any return to make good on their promises to the people that hold their products.

But if JGB yields rise towards the 3% and 4% that we see them moving towards now, while the yen is strengthening, those Japanese investors no longer need the hassle of US assets.

So they would just repatriate their cash by selling US treasuries and buying the Japanese government bonds.

The massive selling of US bonds

would drive US interest rates up, making mortgages and car loans and things like that more expensive for Americans.

Okay, the second thing that Besson is most likely worried about, something we've talked about here before, the yen carry trade.

That unwinding would be a problem.

So this is the borrow cheap, invest high strategy that we've talked about.

So the trade goes like this, borrow yen at say 0.5% interest, sell it for dollars and buy US tech stocks or treasuries yielding 4.5%.

It's magic money.

It is an infinite money glitch, of course, until it's not.

Now, the crisis, if the yen suddenly gains value or the Japanese government bond yields rise, the cost of that cheap borrowed yen skyrockets.

Investors are then forced to fire sale the things that they've bought with that borrowed money.

So they'd have to dump their US assets effectively all at once to pay back their yen before they're wiped out by the rising interest costs.

This, by the way, is the same reason that you know that America, the Fed, is going to lower rates because you see that cliff of debt coming.

You're like, you have to do something.