Anger about the 2008 bailout makes sense. Yen carry unwind deserves attention. However, the trading call to action fails on market structure.
Key counterpoints:
- Global FX turnover runs near $9.6T per day (BIS, April 2025). A retail wave of calls will not move USD/JPY in a durable way at that scale.
- /6J options settle on /6J futures. When you buy calls, you mostly push dealer delta hedging into futures, then dealers unwind as exposure changes. No sustained spot yen demand comes from that flow.
- FXY calls track an ETF wrapper, not spot.
- “Widowmaker trade” most often refers to repeated losses from shorting Japanese government bonds, not a long-yen crowd squeeze.
It cost the taxpayers nothing (in fact it made us money), it destroyed 4 of the 5 largest investment banks in the US, and it sent over 200 bankers, brokers, and auditors to jail.
The people angry about the 2008 bailout usually have little interest in the facts. I’ve had countless conversations where I’ve tried to tell people that the bailouts were a net positive or that people were, in fact, sent to jail. Outside of people familiar with finance, most people refuse to believe it.
A lot of people I’ve talked to about it weren’t even adults when the bailout happened. They weren’t watching the news and didn’t care at the time. They only know it through pop culture and from fiery speeches from politicians and influencers.
The idea of a bailout has become synonymous with the government handing hard-earned tax dollars over to banks, no strings attached. The facts don’t really matter.
2008 was caused, in part, by the governments deciding many "banks" were "too big to fail".
The fix was for the government to pick some winners, coercively lend them money and force them to buy the failing banks.
Now we have fewer, bigger banks. People who were conservative with money, saved instead of over-leveraging, did not get to buy assets cheaply, because the government propped up asset prices with unlimited, cheap money.
And TARP did eventually produce weak positive returns. So I'm glad they didn't lose money, but I'm not happy I was prevented from buying fire sale assets. I'm also not happy residential housing prices are 2x what they were in 2010 (and still well over 1.5x the peak of the bubble).
None of the highest up were sent to jail. CEOs perfectly fine taking responsibility for the profits, but what happened to taking responsibility for the fraud they enabled?
Literally dozens of CEOs went to jail, which is again why I think this may be the biggest ball-drop of the media this century (and there have been some pretty huge ones competing with it)
> None of the highest up were sent to jail. CEOs perfectly fine taking responsibility for the profits, but what happened to taking responsibility for the fraud they enabled?
> > Literally dozens of CEOs went to jail, which is again why I think this may be the biggest ball-drop of the media this century
The GP's remark is centered around the *sentiment* that none of the C-suite / execs in the Big Banks (Merrill, Goldman, BoA, Citi) were jailed for their involvement / excessive speculation in the 2008 crisis.
The keywords there being "Big Banks": If it's a national household name, OR if their positions are coveted by finance employees, it's a Big Bank. Otherwise, it's not a Big Bank.
> > > Your Google skills may need some work because this is the first result for "bank CEO jailed by TARP":
1) This is a goalpost shift from "bank CEOs jailed for causing / excessively speculating up to the 2008 crisis".
2) TARP was established as a result of the crisis (i.e. AFTER it happened), and therefore cannot be used to mark execs that were jailed for their involvement / excessive speculation in the 2008 crisis.
3) "TARP defraudment" is a different matter, and not "Causing the 2008 crisis" or "excessive speculation"
The case cited only tangentially involves TARP, when the bulk of the case was about the President of FirstCity Bank & his associates defrauding the bank with loans that *they themselves had involvement in*.
If you want to argue the wrong 200 bankers went to jail I think that would be a great discussion to have, but that's absolutely not where the public narrative is right now, which is that these convictions simply never happened
Now if you want to argue that the wrong 250 bankers went to jail, I'm open to discussing that, but the simple fact is you thought the number was zero until five minutes ago and rather than being happy you were wrong, you're annoyed. It's the most puzzling part of this, to me.
Though it sounds like they're mainly talking about bankers jailed for fraud related to the TARP loans themselves, as opposed to the mortgage fraud that precipitated the crisis.
There were examples of both. In most of the cases where they were jailed for fraud related to the TARP loans it was lying on the required audit about what their positions prior to the crash were.
There was an entire damn database put out by TARP of the hundreds of people they jailed before DOGE killed it. All you people who claim you care about this intently never even bothered to read it. Which is why I don't actually think people cared; they just want an excuse to be mad.
Where is this database? Say names. Literally even one. Who are the dozens of CEOs? Why would you make something like this up and spread misinformation? It's been 18 years, even if someone had big stake in the game I can't understand why they would lie about this so steadfastly. Look it up.
I think most people think that TARP cost the government money (rather than the opposite) and that "only one banker went to jail" is still true (it hasn't been true since 2013). Which is honestly a pretty shocking indictment of the news media.
Nobody that mattered went to jail. A few lackeys might have been thrown to the wolves, though it seems only 1 spent significant time in jail. Meanwhile the board members, C-suite of Lehmann, Bear Stearns, WaMu, etc didn't spend a second in jail. What's really shocking is you burying the lede.
Can you name any of them? As far as I know none of the CEOs of the major banks spent any time in jail. They tried to get the CEO of Wamu but he successfully countersued (LOL) to get the Feds to drop the charges?
edit: it's unfortunate that you can't bring up any actual evidence to support your assertion
The TARP inspector general used to have a database of everybody they jailed but unfortunately it got DOGEd. It wasn't anybody famous but kind of the whole point of doing illegal things is that you try not to be high-profile when you do them.
Because people are just straight-up misinformed about this and get angry when I point this out rather than being happy to find out they were wrong. Here's an article from 2016 which was before the big wave of convictions happened in 2017-2019; it was 35 already at that point:
> It cost the taxpayers nothing (in fact it made us money)
I was surprised to learn that the "bailout" was in fact a loan that was repaid with interest for a "net profit of $121 billion" [1] rather than just giving the banks money. After learning this, I polled many people around me and few had understood the terms of the transaction. So I think there may be significant public misunderstanding there.
Even if people do understand it was a loan, there's an argument to be made that the money could have been spent in better ways (e.g. early education improvement, preventative healthcare etc. that also give long term returns in preventing crime and reducing healthcare costs). If you believe not giving the loans would have caused the total collapse of the economy and worsened of all of those things (crime, healthcare, education etc.), then it seems a worthwhile investment. But not everyone may share that perspective.
> What part of that are people mad about, and why?
Another element of the controversy was the payment of $218 million of bonuses to the executives of AIG which was being bailed out and effectively run by the federal government [2]. Apparently the government allowed the bonuses because Geithner said there was no legal basis for voiding the bonus contracts.[3]
Some people think controversy over government mortgage relief spawned the Tea Party movement based on this speech by Rick Santelli [4] about his dissatisfaction with the government's bailing out the "losers" who couldn't afford their mortgages.
Some people also feel there could have been more regulation of the financial sector or breakup of big banks [5] or more stipulations attached to the loans.
Just some suggestions based on my understanding of the history.
It seems only the very simplified narrative actually sticks, especially when it is convenient for anti-establishment types to do so (and realistically, approximately no-one really _likes_ Wall Street). But I think it's important to consider that while probably the government didn't go as far as it could, it did for the most part help prevent the crisis from getting worse for those who were not responsible while for the most part not doing much for the people working in finance, especially those that they could nail for outright fraud.
> It cost the taxpayers nothing (in fact it made us money)
Pull the other one, it has bells on it. If the government is involved in a financial transaction it is because nobody in the private sphere with money wants to be involved. That means either the return wasn't commensurate to the risk or there was dodgy accounting going on that nobody would actually thought represented a reasonable real return. If there was actually a prospect of making a reasonable return, money would have been found. Even the creditors might have been willing to make deals.
I bet the average taxpayer would much rather have the money given to them in their capacity as an individual and would have profited off it more than the hypothetical return the US government may claim it made.
> What part of that are people mad about, and why?
The gross unfairness of it all. I mean, it is bad enough that the failures in charge of the banking system got bailed out despite being incompetent at their jobs, but the average person had to guarantee them their high status role in society? It is a sick joke.
It is a terrible idea to be printing money to prop up asset owners. If that is the basic plan anyway, it shouldn't be mandatory to have incompetents mediating the handout process.
And it isn't like bankruptcy is that terrible. All the physical assets still exist. There is still food. Maybe set up a special welfare system for people who lost their life savings if something has to be done, but for heavens sake, taking (and I repeat myself) known, verified incompetents and guaranteeing them ongoing control of the financial system is wildly stupid. It is on par with a scheme like mandating people all buy in to cryptocurrencies.
We don't know what the other options look like. A broader collapse of the economy, runs on banks? If the government stayed out then the outcome could have been worse for the average taxpayer.
I do agree it looks bad if bankers can take huge risks and benefit (personally) from the upside without a downside risk. But it's not necessarily the bailout that's the problem here and the taxpayers do have the theoretical power to vote for people who can change this.
> We don't know what the other options look like. A broader collapse of the economy, runs on banks? If the government stayed out then the outcome could have been worse for the average taxpayer.
What courses of action does that argument not justify? "We had a predictable emergency and decided to panic and hand out money. Don't expect us to really think about alternatives." is not the course of action that really speaks to me for getting good results for taxpayers, or anyone except the people directly getting the money.
We have a playbook for getting a statistically good outcome when people run out of money. It is called bankruptcy. I can see how a banker could confuse that with a bailout because they both start with a "b" and there are a lot of letters - but the stark truth is they are different words.
But the issues here were systemic and there was worry of contagion. I guess a question would be whether the people who made the decision had conflicts of interest that impacted those decisions.
So this argument doesn't justify any course of action but is does justify a course of actions with poor optics that seems reasonable given the risks.
Corporate bonds were simply not being bought, at any price. Same with commercial paper. Nobody knew what firms were going to still exist in a week so nobody was willing to lend any money at all.
> Nobody knew what firms were going to still exist in a week so nobody was willing to lend any money at all.
Perhaps I'm misunderstanding, but isn't this another way of saying it was too risky for people to invest? That seems to be the same concept as the quote you cited from the parent comment: "either the return wasn't commensurate to the risk".
I guess you could say that but the underlying problem was that the risk was entirely opaque so it couldn't actually be quantified and hedged against. The TARP loan ("shakedown" might be a better term honestly) gave financial firms time to sort out what their actual positions and exposure were; there wasn't time to let the market sort that out over months and at the cost of every major company (even non-financials) failing because of lack of access to credit.
Yeah it seems there's a bit of asymmetry between a normal lender and the federal government here where as a normal lender you might not be able to lend enough to guarantee the debtor survives. Also what the gov decides to do may significantly influence the lender's behavior. If the lender thinks there's a chance the gov will bail them out, they would probably prefer that and not give a loan.
Whereas the federal government can write a check for $633.6 billion and be much more certain the debtors will survive and pay it back.
So the government has negotiated from a position where the average taxpayer could be buying $10 worth of assets for $1 and have a go at managing it properly and creating some wealth, to a position where the taxpayer pays $1, the government buys the $10 in assets and gives it to some wealthy idiot, and there is a nominal return which at that time I imagine went into killing people in Iraq because Muslims, amirite? All those bombs cost a bomb.
And then we see 20 good years of economic prosperity where the US predictably got even wealthier than it previously was and there is great political stability and well-loved presidents like Mr Trump who represent the satisfaction US citizens feel for the economic highs they have reached!
What a fantastic deal for the average taxpayer. Let the confetti fall. Well done government, saved the day there.
Where it went was bailing out the automakers. It was a big story at the time and I'm starting to worry people just don't form long-term memories anymore.
More generally, be very suspicious when someone offers you investing advice dressed up as a call for solidarity and revolution. It’s intellectually dishonest and emotionally manipulative.
That $9.6T is mostly back and forth non-directional HFT.
Otherwise it would not take a day to swap $500 mil for commercial reasons (think buying a couple Boeing plane with Euros) to avoid too much market impact as documented in multiple interviews with currency dealers stating it takes them 1 day to "work" a $500 mil order.
Retail can move FX, if it piles into one pair. But unlike the Boeing order they will also need to exit the trade at some point, which makes them vulnerable.
What a lot of people seem to not understand about the stock market, is that at it's basis it's just a supply/demand ratio. When it goes down it means someone is selling a lot, someone is cashing in, at least converting it into cash.
For me it was obvious something was afoot with earnings and performance not matching the prices, I finally understand why now thanks to this article.
The fact that there are rules for institutional investors and retail investors and us in retail have so little visibility and time to keep up, just shows more and more the game is a david vs a goliath, and we are all slingless david.
It's more than just supply and demand. It's the price discovery. So I guess you can say supply and demand curves. The curves change with the market psychology and with future expectations.
Most institutional investors are not going to outperform your diversified portfolio. It's not like professionally managed funds are killing it while individual investors are losing. There are some specific examples of funds/people who do well but on average most do ... average.
Fully agree market psychology has a big influence in prices, TESLA is a great example of this.
My main point is that most people, including the media, whenever there is a big crash in prices, like silver going down double digits, they act like the money evaporated and everyone that invested lost money.
My point is that it's not the case, it dropped because there was a huge volume of people selling, making it cheaper. The people selling converted it all for liquidity, they just 'got' a lot of money in cash to spend, and they needed it or will use it for one reason to another.
Retail investors don't have the time (unless you work in finance) to read all the news and information to be aware of situations that will trigger liquidity crunches like these past few months, while institutional investors will.
My point here is you could have performed all of the value investing in the world and you are still eating losses, standard diversification theory is to put in gold when the markets are unstable, as it appreciates in time of high volatility, we are in times of extreme volatility and gold crashed, it makes no sense unless you have visibility in the institutional investing trends.
People lost money on paper. The loss turns real when they try to sell their assets.
Prices can drop on very low volumes. All that prices tell us is what someone agreed to buy and sell at a given point in time. Some (most?) sellers are likely selling because they are planning to buy when the price is lower (i.e. they are betting the market will go down) not because they need to use it.
Generally gold is not considered an investment or a hedge against marker instability and most diversified portfolios would not have gold in them.
Yes- if I own the S&P 500 and the S&P 500 goes down then the current value of my investment has gone down.
Disagree on many points, stocks are used as collateral for debt financing, their prices can definitely trigger cascade effects and losses even if not actually sold.
Overreaching arguments that sellers are like selling because they plan to buy when it's lower, no proof and a limited view, in fact in my also overreached argument I would say the opposite, most people just want to put money on an ETF and hold it until retirement, without having to touch it, they sell because something is forcing their hand and they need the liquidity to pay for something else.
Gold is definitely a hedge for inflation and market instability which is why it's had such a big run up these past few months, and they are definitely used in most diversified portfolios, yale fund as an example, (I don't know where you got this notion from)
Speaking as a quant that has followed this story closely for months (and was educated about the yen carry trade in my degree), this narrative is somewhat wrong and also very obviously LLM slop.
It is true that the yen carry trade is currently being unwound and that it has significant implications for nearly all holders of treasuries. But claiming that ALL of the recent volatility is due to this one event is ludicrous. There are some blatant falsities, like saying that gold and silver are historically uncorrelated??? And it’s clear that the author has a bias against the financial establishment (“monopoly money”), coloring the output.
That said, there are legitimately interesting bits here I didn’t know about, like the Japanese institutional liquidation of US treasuries. I would not repeat this information to others without fact checking it, but if accurately described it’s an important space to watch. It’s not surprising that the LLM would get some things right, of course.
One big problem with this article is the clear prompt given to connect x current event to the yen carry trade, like Warsh’s nomination and the Greenland nonsense. This creates a lot of noise. It’s basically the LLM looking for a pattern between these things instead of identifying a structural flow. It might not even be wrong, but it’s horribly biased towards finding a fake pattern, so I would never trust it.
For the tech heads in HN that are excited to see a Justine Tunney post: don’t go crazy. If you’re really interested in learning about the unwinding of the yen carry trade, there’s plenty of information from actual experts to read about, not this slop.
Also, while I’m not an expert on Japan, I’ve been following Gearoid Reidy’s commentary on Takaichi and the new Japanese economy and I think the fears expressed are significantly overblown. But this is also characteristic of many other market participants so I wouldn’t categorize this as something obviously wrong, just a disagreement.
I’m not finding a single article with a good summary, but you can find coverage on Bloomberg of all the twists and turns. FX markets are complicated, so you’ll need to do some research on how they operate as well. It’s not too hard to plug the keywords and concepts from these articles into AI and get a reasonably good background, though.
Tbf, they are not far from a Truss-squared moment. And doesn’t help that CCP is gaining momentum with US leaving a vacuum while Sino-Japanese relation is going down the toilet.
Takaichi is much more popular than Truss was, and Japan is in a much better situation right now than post-Brexit post-COVID UK. And absolutely nobody is seeking a better relationship with the US right now other than satisfying short-term needs. Japan is not in a good spot long term (population slowdown, debt, slow economy) but there’s no reason to panic right now.
I spoke with a silver expert a week ago before the crash and he said half the flow is speculative, structural flow will remain. Looks like he was right.
Aww, then you missed the best part! Who wouldn't be head over heels for the opportunity to follow this financial advice and lose all of their "monopoly money" (funsie term for real cash!)?
Call To Action
This won't just be the big one. This could be the last one. If you've been preparing your whole life, knowing that something's coming, then this could be the thing you've been preparing for. One final opportunity to get the guys who did this. [...] The worst that can happen is you lose your monopoly money, but that's been happening anyway.
Purposefully devaluing the dollar to make US goods more globally marketable and hide the Japanese debt crisis is an interesting but risky strategy.
Currently, I'm glad to see a correction without panic, but it's too early to make a call on the effect on the overall global economy. Xi's already suggested making the Yuan a global reserve currency, and seeing as much debt they're holding, I'm a little worried they're able to make it happen if this is the US financial strategy.
The channel appears to be five years of "It is happening!" and "It started!" thumbnails. I just can't take it seriously, so I decided to look into the company/leadership.
It appears they've been associated with a lot of hype/fear copy-paste companies that offer highly inflated monthly access to their trades and research. Note that they were named "Game of Trades" before rebranding.
> It appears they've been associated with a lot of hype/fear copy-paste companies that offer highly inflated monthly access to their trades and research. Note that they were named "Game of Trades" before rebranding.
I really wish that people would wake up to the danger posed by meme stock BS “leaking” into the general markets.
Just as voters are responsible for changes in society, uninformed investors can impact society too, especially when they’re amplifying their purchasing power via leverage.
For instance, I’ve been buying real estate forever, and I’ve enjoyed the Reventure app.
But I’ve REALLY noticed that his YT videos are exclusively doom and gloom.
This ceaseless negativity moves markets, just as the irrational exuberance for real estate in 2005 moved markets.
But the exuberance for real estate was driven by people who were buying real estate.
The endless doom and gloom of YT finance videos is for a much different reason:
It drives page views.
That’s not a good thing. Because it’s really easy to get swept up in the negativity. And that negativity has a downstream effect, where it’s often used to convince people to invest in things that the YouTuber is promoting.
Basically, I don’t know if we need an “SEC for YouTube,” but we might.
Yes, I know we already have an SEC for YouTube (it’s the SEC), but nearly none of the people doling out financial advice on YT are trained professionals. It’s the fundamental defect of internet advice; who to trust?
Misinformation and mass hysteria suck, I agree. But if the amplification of the sky-is-falling-flavor-of-the-week braindead youtuber take can materially imperil financial markets, the stability of that system was always doomed.
An “SEC for YouTube” can’t prevent shit if the lever of influence is already that long. It might be able to keep a lot of meme investor idiots from losing their shirts, but that has to be weighed against the historically evident risks of having what amounts to a ministry of truth/state propaganda regulator.
I remember sky-is-falling-flavor-of-the-week newsletters from the 1970s; they probably go back further than that, but I don't remember firsthand. The difference is that YouTube lets millions of people find this without either having to subscribe to the newsletter, or the newsletter having to figure out who they are and send them a free copy.
In other words, what's different is that the gain is higher. The system was not always doomed, because the gain wasn't this high. Now that it is this high, the system may now be doomed.
The channel appears to be five years of "It is happening!" and "It started!" thumbnails. I just can't take it seriously, so I decided to look into the company/leadership.
Reminds me of ZeroHedge. They've been shouting that the depresssion-level market crash is near now since 2009. Every single day. For 17 years.
i don't think that's a fair representation of the average of the ZH articles.
many bird's eye view articles are depicting how the game is rigged and corrupt to the core and that it is heading towards a wall (and you should buy x, typically gold)... yes.
but then they also have more day-to-day articles discussing market moves and predictions in all directions.
ZH is a wider range of stuff than that. and in all that noise, most of the important alternative, often initially censored news appeared there first.
so, yeah, don't take it all in literally... but then it's a site edited by Tyler Durden FFS... :)
I can only personally speak for myself and I'm not giving financial advice here. I use the Bolgehead strategy of the 3 fund portfolio is still the tried and true I follow, and I have yet to not benefit from doing so, even in economic downturns[0]
I'm immediately concerned with the note about silver dropping so much. Yes, that happened, and was a historic drop. But it followed a historic run up to its prior price, so the drop is still net positive for even a 1 month period.
I'm not saying the article's thesis is incorrect, but its providing some data without context. I'm always leery of data presented without context.
I take “not financial advice” articles like this at best as entertainment. How can anyone seriously talk about metals for example without mentioning that gold was $1900 and silver $20 a few years ago. Today they sit at $5000 and $80. It’s completely absurd to write about the “drop” as a proof of anything
this article discusses the events in the recent couple of months, explicitly. the moves prior to that is not really relevant for its thesis -- regardless of how true it actually is.
DO NOT make financial decisions based on the advice of a youtube channel.
DO NOT make financial decisions based of of the advice of an an article written by a know associate of Curtis Yarvin.
You saw the video yesterday because this is a marketing exercise.
They hold a stake in the outcome, you are the greater fool.
Christ.
Find a professional fiduciary that doesn't have a youtube channel and never speculate more than you can afford to lose.
> Curtis Guy Yarvin (born 1973), also known by the pen name Mencius Moldbug, is an American far-right political blogger and software developer. He is known, along with accelerationist philosopher Nick Land, for founding the anti-egalitarian and anti-democratic philosophical movement known as the Dark Enlightenment or neo-reactionary movement (NRx).
The bar has been significantly lowered in the last year since the US has decided to commit bigly to unpredictability. Another 3 years of these kinds of manipulations and the Yuan could very well look like the lesser evil to a lot of countries.
I don't understand why gold-backing is required. I'm a novice.
My understanding is that a reserve currency requires fluid markets and a stable, reliable, metrics-based currency policy. It's why the Fed is so stubborn about its relatively simple policy goals: 2% inflation and low unemployment.
China appears to be attempting to reproduce what the USD was before it was free floating.
USD is currently backed by debt and nominally military might. If the US defaults then all of the US bonds held by foreign banks become worthless. That is an enormous risk which is why countries have been divesting from US bonds. If USD was still gold, as it was before 1913, if you hold your money it cannot be made worthless by a third party. After 1913 USD became gold backed bills with partial reserve. It is why USD became the global reserve currency. But, reserve requirements were reduced and more paper was produced. In 1971 Nixon removed the convertibility of paper bills to gold metal effectively stealing the gold of any nation that asked the US to hold it.
One of my favorite bits of currency trivia is that a $20 double gold eagle coin used in circulation prior to 1933 had a gold content of 0.9675 troy ounces. Twenty dollars in your hand was literally nearly an ounce of gold.
This simplistic explanation seems to elide the very point it makes ... a gold backed currency becoming a non-gold backed currency was done via a political decision making process, just as any decision to default on US national debt would be.
You seem to suggest that people should worry about a default claiming if we had still had a gold backed currency the risk would go away ... "if you hold your money it cannot be made worthless by a third party" ... but it can be made worthless by a government any time that government chooses.
The government (having defaulted on gold-backed debt) could simply refuse to convert the paper of the debt to gold (sure, that would be bad, but hey, they've already chosen to default, so not much worse ...)
All reasons that a paper currency backed by gold has never lasted long. Going to paper currency is the first step to start cheating by fudging numbers. The only money that has ever lasted is actual coins/bars of metal, precious or otherwise.
> The only money that has ever lasted is actual coins/bars of metal, precious or otherwise.
1. most physical paper has a relatively short life, so one would not expect it to last as long as metal tokens
2. paper was only available in much of the world several thousand years after the first currencies began, so it's not suprising that we have little record of paper money from very old civilizations.
3. the idea that there was no cheating by fudging numbers before paper currency is completely ahistorical. The nature and ease of the fudging may have changed, but the fudging itself existed long, long before paper currencies became common.
The entire reason coinage was even a thing was exactly this! Turns out it's pretty hard to know if a coin is actually the amount of gold it represents, if the shopkeepers scales are accurate etc etc. etc
The entire concept of marking coins with trustworthy seals was exactly to basically invent fiat currency as risk mitigation: coins bearing the seal would be honored, and from that it was a short hop to "what if I just presented an IOU with the seal of the local gold merchant?"
> Xi's already suggested making the Yuan a global reserve currency, and seeing as much debt they're holding, I'm a little worried they're able to make it happen if this is the US financial strategy.
I wonder why you’re worried. Regime’s change all the time. From a third party perspective, China is no better or worse than the US. Also, given how literally every country under the sun despises US now, this might just happen.
The way China manages it's currency is very different to how the US manages theirs.
China maintains strict controls on capital flows in/out. A reserve currency requires free convertibility. Holders need to move large sums instantly without permission. China has repeatedly tightened these controls during stress periods (2015-16 devaluation fears, for example).
Limited access to Chinese bond markets and equities for foreign institutions. Reserve currency status requires deep, liquid markets where central banks can park hundreds of billions. US Treasury market is $26T and extremely liquid. Chinese government bond market is smaller and less accessible.
Reserve currency issuer must run persistent current account deficits to supply the world with currency. China's economic model is built on export surpluses. They'd need to fundamentally restructure their economy.
This is PRC's fundamental disagreement. US reserve currency morphed into high liquid, high speculative instrument to fund unsustainable debt, hollowed out domestic industry (triffin)... but this is not by design. It's the result of emergency adaptations moving off gold, then people post rationalize the trinity musts (open capital, floating rates, independent central bank) is what makes reserve when it's unintended structural outcome from failed gold peg.
Now we see hints of end stage USD reserve behavior, debt snow balls and reserve controller will pull the our dollar, your problem card. This US doing current conniptions trying to either reduce USD strength or inflate away debt... costly instability. People forget, liquidity / storage only matters to sovereign buyers who needs reserve for utility... everyone else (now plurality) are private buyers who buy for returns. If we enter end of dollar cycle and USD reserve cost them money, then they go elsewhere
Elsewhere is what PRC wants to offer, HIGHLY CONTROLLED, BUT STABLE reserve pegged to PRC industrial chains, i.e. real economy instead of speculative financialization. This what recent yuan reserve talk is from (note it was old Xi speech republished in Qiushi), so the propose model isn't even in response to current USD conniptions but prediction on end life of US behavior when USD reserve goes from exorbitant privilege to just exorbitant.
It's precisely because logical outcome of current reserve "musts", i.e. triffin charity/global good that makes it ultimately a stupid arrangement where the system breaks when US/owner can't afford to maintain or develops bad habits (deficit spending). Hence, what PRC plans to offer in parallel: stable regulated reserves for "real economy" financial utility. Stable Yuan "bank" reserve can coexist with volatile USD "casino" reserve. Now of course this all heterodox theory, but we are seeing theory of USD reserve limits peaking it's head, and PRC not retarded enough to pickup triffin baton. IMO PRC fine with US dealing with triffin headache and IMO betting US will fuck global creditors when shit hits fan, i.e. they waiting for USD reserve to implode due to inherent contradictions, to show world precisely why yuan reserve not modelled to repeat same mistake.
1. No one sane trusts EU after RU sanctions either.
2. Euro share of SWIFT shrunk from ~40% to ~20% post URK war. Part of this technical (t2 reforms), i.e. actual reduction not as dramatic, but Euro as toxic as USD with even less leverage.
Meanwhile PRC went from single digit % cross border settlements 10 years ago to 50%+, plenty of the world trust PRC with their money, not just money but PRC alternative to SWIFT financial plumbing, CIPS. Meanwhile PRC also recycling it's surplus USD to lending... i.e. they're financing more than imf/worldbank/paris club right now. Another indicator that countries "trusts" PRC to manage monetary system, or rather they balancing from losing trust of west.
TBH trust is western mindless muh reserve orthodoxy nonesense. Ultimately PRC has much stronger reserve posture for the same reason US did... for 80+ years countries needed USD for US techstack and then petrodollar, aka modernity was locked behind USD, all the other muh reserve "needs" is downstream of that. Need > trust.
Ironically where trust actually comes in is whether PRC TRUSTS others. Qiushi suggests PRC stable reserve functions something like panda bond lending, where PRC lends liquidity to trusted VIP (real economy) players. Everyone else can keep gambling with USD reserve with high likelihood of debasement. It looks like PRC doesn't want be THE reserve, they want to be VIP reserve while THE (USD) reserve burns.
Settlement and reserve currencies are two very different things. The USD isn't great as a reserve currency but it is still better than all the other options.
Settlement is leading indicator / proxy of trust. The point is countries trust in PRC running financial pipes is increasing, because vs US/EU, PRC simply look more responsible.
USD treasury isn't great now AND trending towards bag holding catastrophic "our dollar your problem" depending on debasement velocity. Hence central banks ditching dollar for gold etc... it's still currently better than other options in the sense that no other options really exist except metals with no counter party risk. More this happens the more exorbitant and less privilege USD becomes, the worse it serves as reserve, the more opening for alternatives. This where PRC eventually comes in, i.e. recent reserve talk is for eventuality not hand off. In the meantime they are banking on USD being not great, and getting worse. Which increases rates -> increase debt finance / servicing cost. The system is getting worse for everyone, including US. Don't underestimate watching US debt servicing growing from 1T to 2T in a few years when US realizes exorbitant reserve currency without privilege is not worth maintaining. Waiting for US to recognize USD reserve isn't great for US is part of the transition.
Utter rubbish from an extremely biased source. Every time they say something like "didn't you notice X" or "your portfolio must look like Y" the answer is nope, you're completely wrong. Every time they talk about some major "crash" you can just go look at it and see that it recovered within 48 hours and looked identical to dozens of other events through recent history. The outright calls for violence + intentionally destroying our own economy to "stick it to the man" at the end surely make me believe this is some rational analysis.
Basically, when currency is scarce, its value goes UP.
When currency is plentiful, its value goes DOWN.
The first scenario lowers inflation, the second raises it.
After Japans bubble economy popped in the early 90s, they had asset values FALL.
So the BoJ began stimulating the economy - trying to push UP inflation - by adding currency to the markets.
The Carry Trade illustrates one of the dangers:
Japan was trying to stimulate their own economy, to counteract the deflation caused by their bubble popping.
But money doesn’t know borders, and though the money was intended to stimulate JAPANS economy, there was nothing stopping ANYONE from purchasing that currency. It’s not like you have to live in Japan to buy Yen.
So the money (yen) was created in Japan, but ended up all over the world.
This has consequences:
* Japan ended up with mountains of US dollars. This is one of the reasons that Japan has more US Treasuries than China. This mountain of dollars lowers YOUR cost of living. Because USD is being acquired for The Carry Trade. This creates artificial demand for USD.
* Because the yen is created in Japan but is then used for international commerce, it dramatically reduces the inflation that “printing money” would normally create. This is why Japan has more debt per capita than any country by far, by a factor of over 2X
I am just an I.T. dude who invests in real estate. So what I just posted may be completely wrong.
The carry trade has existed for about four decades; that’s my summary of how it affects us, from the perspective of a small time real estate guy.
One cost is to the savings of Japanese people who don't get a competitive rate of return on their savings. They save a lot and generally don't invest abroad.
It is a shame that jart got control of @OccupyWallSt and occupywallst.com and never gave it up. It seems like her politics and views are very out of line with many of the people who were originally involved in that movement. Repurposing occupywallst.com for something like this compared to it's origin is a big disappointing contrast. https://web.archive.org/web/20111021162924/http://www.occupy...
I was the one who registered it. Occupy as a movement has always been inclusive of people with different points of view. My job running the website and twitter has always been to give the people a voice. I think that's important, don't you? The only guy with more credibility than me in Occupy is Micah White but he's been growing vegetables in Oregon ever since he visited Davos a few years back. So I'm the best you've got.
> My job running the website and twitter has always been to give the people a voice. I think that's important, don't you?
Do you truly believe in your heart of hearts that people posting neo-MOASS wish fulfillment suffer from a lack of a voice, and no place for them to be heard? Take this seriously. More important than "a voice" is consistency and clarity of communication. The people involved in occupy wall street in 2011 weren't occupying it because they wanted to eventually join it, and I don't think that their form of economic justice would be for Wall Street to lose money in a gigantic market crash that again would result in taxpayer-funded bailouts that spurred the first protests. For transparency's sake, what are your market positions today?
> The only guy with more credibility than me in Occupy is Micah White but he's been growing vegetables in Oregon ever since he visited Davos a few years back. So I'm the best you've got.
As an outsider to all this, it's funny how these movements always crumble as soon as there is any mainstream recognition.
You have X complaint against an institution. Let's say the institution accepts and reforms somewhat. It's pretty rare that the complainant will pat themselves on the back and say job well done. It's ultimately a game of diminishing returns.
If you have a hammer, it's not just that everything is a nail - you must find enough nails to justify continuing to use the hammer.
> As an outsider to all this, it's funny how these movements always crumble as soon as there is any mainstream recognition.
It crumbled when the physical encampments were forcibly removed by the police. I mean, even at the tiny encampment of UC Davis-- essentially a few camping tents-- the students got pepper sprayed and hauled off. Remember that meme? Many of those same students also faced serious jail time for a protest outside Washington Mutual Bank. It's probably difficult to sustain a movement under those conditions, no?
In any case, the message that resonated across the U.S. encampments is essentially what turned into Bernie Sanders two runs for president. That, the group behind AOC's House run, and many other important grassroots movements are the legacy of OWS. Whatever the deal is with jart's website is orthogonal to all this-- I've literally never heard about her association with OWS outside of HN.
Justine, do you think that readers here don't have eyes? The page linked is a call to financial action that, if the advice is followed, will result in yet another unsophisticated ETF pump and dump at best and a call to financial suicide at worst.
You are personally underwriting propaganda for something you are very likely invested in, targeting the most credulous. For it to appear on a site called 'Occupy Wall Street' is deliciously ironic.
Here's my disclosure: I am completely divested for both the US and Japanese market, except for transient USD cash holdings. I don't have a horse in this race. Will you follow suit?
I know very little of what happened in NYC years ago, but I would tell anyone reading the site now that it is run by actively malevolent speculators.
I do, however, know a few of your associates. Stop hanging out with grungy, unwashed sex pests, they aren't as smart as they pretend to be, and you should know that by now. It's unbecoming and frankly sad. You have the means to start life anew elsewhere, and you should take that opportunity now.
> Stop hanging out with grungy, unwashed sex pests
And that's where you lost credibility with me. I haven't the knowledge of these topics to express an intelligent opinion and I was considering your arguments, but then you went and lowered the bar. There's no need to level rude insults.
I'm a Leftist, fwiw. While I don't know enough to speak intelligently on this, I do resent the people at the top who plunder society for their own gains so I'm spiritually supportive of anyone who's against them.
It's also why I addressed her directly by name. I would really like her to leave the cult she's in, but I refuse to mince words about the nature of that group. She knows who the r*pists in that community are. I lost a friend to those people and I hold a grudge.
None of this is a secret and I could give a shit if me bringing it up isn't 'credible' to you.
Other than the short 'don't take financial advice from internet strangers' PSA, this isn't about you.
Why don't you look inside yourself and try to figure out why you don't find it 'credible' that there might unchecked sexual violence in a insular community of wealthy, mostly male, SV crypto fascists (who are on record warmly discussing feudalism and the return of chattel slavery to the US).
81% of women in the US have been sexually harassed, myself included. Only 2% of reports are false. Your default assumptions are fucked. If you are thinking 'well.. none of the women I know have been...' You are wrong, they just don't feel safe enough around you to talk about it, and for good reason.
People who invite themselves into conversations solely to tone police and cast doubt on allegations of sexual violence are the furthest thing from an ally. Spiritually support me by learning how to not be that person around the women in your life.
You in particular are my main criticism of Occupy as a movement. They lacked any sort of structure, shunned it in fact, that would have ripped control of these resources away from you once it became clear that you disagreed politically with the vast majority of the people involved. That you were allowed to keep control of those resources is emblematic of how Occupy could let all that energy dissipate into nothing.
Co-opting potentially effective political movements is how the people in control stay in control. Once you start noticing it, you see it time and time again.
What resources? OccupyWallSt.org only accepted enough donations to keep the 1-800 number and website online. I was smart enough to understand back then that an unemployed 26 year old activist living in a park wasn't qualified to manage the capital that was being offered to us. So what did I do? I gave you about twenty different links for various projects on the donation page to choose from.
Thank you for another example of why Occupy was doomed to fail, I had not considered that you had control over the donation flow. Instead of working together as a group and finding somebody more responsible than yourself to manage the incoming capital, you diverted it away from the movement and dispersed it to the winds. Was that decision made collectively by the group? Or did you take it upon yourself to do so? Control over the domains and twitter account, along with the incoming flow of donations are the resources that you had and Occupy let you squander.
Every group that showed up in the park and was working on a project, they could come to me and ask that their donation link be posted on the OccupyWallSt.org donate page. I'm a tech person. I registered a domain. I play it neutral. I included everything from basket weaving to aspiring governments. One of these groups called itself NYCGA or the NYC General Assembly. They were the political organization that claimed dominion over Occupy Wall Street and the public elected to give them the lion's share of donations. The guy who ended up with most of their money, if memory serves me right, is a tattoo artist named Pete Dutro. So these days I'm a lot more opinionated. The Pete Dutros of the financial community took out trillions of dollars of loans from Japan and the economy is crashing right now because of them. We should be focusing on reallocating that capital.
What a fall from grace, trying to fashion buying calls on FXY as a revolution! Put this on your own personal website and redirect that page, let the domain maintain some dignity.
This was posted on OccupyWallSt.com. The OccupyWallSt.org website is still exactly as it was in its full 2011 looking glory. I've been dragging my heels on renewing the SSL certificate however everything's still there. It's even been cataloged and archived by the Library of Congress for posterity. So the dignity of the movement has been secured and is continuing to be respected. Your voices are now a permanent artifact in America's historical record.
Can you say where that (in its original form) appears? Closest I can find are "I will make much of your voices" and "Your voices: for your voices I have fought", but neither of these relate to any type of permanence.
Because I'm speaking for the millions of people who lost homes, who lost jobs, and lost hope in a society where the only answers they're being given are distractions. Folks deserve to hear a more plausible explanation of why Wall Street has crashed the economy yet again than Trump going to war in Greenland. I'm also speaking for the millions of tech workers whose RSUs are going to be worth a whole lot less because of the yen traders being liquidated, even though those workers have done nothing wrong and have been marvelous at their jobs. Worst of all, the media will pin the blame on them for the crash. The rest of the working class has already been whipped to the brink of death, so tech is the new whipping boy for everything that goes wrong these days.
Yep, occupy may have had the moral high ground but they squandered it because they were the modern day hippy idealists with no boots-on-the-ground (or feet touching grass) know-how to actually effect change in a protracted way.
> It fueled extremism and populism, both on the left and on the right.
I think you're confusing the Occupy Movement with the housing crisis itself.
Any anti-establishment/libertarian right-wingers would have already gotten energized years before by the Tea Party movement. Even Ron Paul's million dollar "money bomb" in donations happened a few months before Occupy. And what's the path from Occupy to right-wing extremism? Even on Fox News Occupy was a short-term blip.
The "one percent" slogan made its way directly into Bernie's campaign, so that tracks with what I assume you're calling left-wing populism. But what do you mean by "extremism" here? If it's violent extremism I don't see the connection. And if it's left-wing anarchist movements, have those grown in any significant way since the 2010s?
I understand my comment might give one the impression that I am confusing the chicken (the financial crisis) and the egg (the Occupy movement).
Since Occupy could not have existed without the Crisis, certainly some blame goes to the Crisis.
That said, Occupy shaped perception of the Crisis. Occupy trained the public to view the Crisis in terms of bad people, instead of systemic problems like incentives.
The Occupy movement, with its permanent smoke-pit adolescents like Tim Pool, Matt Taibbi, Max Keiser, and so on, has influenced public discourse ever since.
I cannot prove that Occupy, rather than the Financial Crisis alone, made possible our current dysfunctional politics (with its focus on scapegoating, conspiracy theories, magical thinking), but I notice echos of its 'memes' (in the original sense of the word), and its attitudes - not to mention I notice some of the actual participants.
Anyone attempting to build a movement might find it interesting how Pumping Station One in Chicago is governed. It's a maker space but run by people who care (at least from my experience when I was a member back in 2015/2016). The process for electing leadership and holding members accountable was very democratic and fair, from my experience. They open-source as much as they can about how they organize:
> This #ows movement empowers real people to create real change from the bottom up. We want to see a general assembly in every backyard, on every street corner because we don't need Wall Street and we don't need politicians to build a better society.
Maybe at some point those people will understand that high-school approach doesn't work in the real world.
Look at the amount of change they brought, look at the amount of change that a single person like Donald Trump has brought (for better or worse, this is not an endorsement).
If by "the movement," you mean Occupy Wall St., one of the things about it as an organization is that it didn't have a mechanism to exclude people really, if I understand correctly. So there was a pretty broad slice of political philosophies united around the common idea "The system that rewards risk-takers for taking risks with other people's money while consolidating the consequences on those who did not consent to the risks is fundamentally flawed."
Oh God. Anyone aligning themselves with Yarvin in anyway is highly highly questionable. He wants to completely destroy US democracy, and is at least partially responsible for the mess the US is currently mired in.
I know what you're referring to, but this one is well-documented. When Tunney and I were last in overlapping circles, she self-described as techno-fascist. It's pretty well-documented (though I apologize for assuming it was common knowledge; since I was there and knew of her to only one or two degrees of separation, it's easy for me to forget she's not necessarily a well-known name).
... also, my intent was not to cast aspersions. When last I heard the name, I had a particular political leaning associated to the name and I was wondering if it had changed.
The author is implying that BoJ can/might/will cause appreciation of the Yen, which will force folks who are short(borrowing Yen) to buy USD assets to go underwater, forcing liquidation to pay back the Yen, and appreciating the Yen more. It's possible but there is no guarantee it would be a disruptive feedback loop or this year or etc.
If you believe them, then you can hedge buy either shorting TLT(betting treasury yields will rise), or going long Yen (e.g. FXY shares/calls).
I bought some FXY calls but just enough to hedge the Yen prices of my upcoming Tokyo trip in case they're right.
It‘s really hard to read this article, it smells of LLM generated slop once you get past the first couple of paragraphs - lots of negative parallelisms and lots of words without adding value to the sentence:
> To validate the thesis that the Yen unwind is the primary driver of volatility, we must examine the sequence of events. The crash did not happen in a vacuum; it followed a precise timeline …
> It wasn't just about rates anymore; it was about the stability of the U.S.-led global order
> The unwinding of a carry trade is not a monolithic event; it is a cascade that ripples outward
It‘s like almost in every paragraph. I don’t understand why this gets to be on the frontpage to be honest. It just reads horrible even if some of the points may be true (or hallucinated, who knows)
Only through the first two paragraphs but a little turned off by the "everybody else is wrong, we are right and it's this one specific thing" attitude when it the topic is understanding something as complex and opaque as the global economy
Yeah that part is a bit red string but the analysis further down is more reasonable. I have no idea whether it is an opportunity or someone grabbed the domain and going for a pump-and-dump, either seems plausible.
It reads exactly like a WallStreetBets "effort post" where someone has some pet theory that somehow explains the market in a way that nobody else understands, but is almost always either completely wrong, or a vast oversimplification
The Yen Carry Trade isn't some big secret... it's caused enough turmoil that it hit the front pages of the WSJ a few times in last few years (Aug 2024 was a big one iirc)
Finance bros will make their way in here soon to give a better peanut gallery, but I think "is there something here" comes down to do you believe the final bit of the articles opening act:
> When correlations between historically uncorrelated assets (e.g. Gold, Bitcoin, Microsoft, and Silver) approach 1.0 during a sell-off, it serves as a distinct indicator that traders are not selling what they want to sell, but rather what they must sell in order to meet margin calls in a funding currency that is rapidly appreciating against their liabilities.
Personally I think Microsoft's stock is crashing less about any of this (though it is a hell of a theory IMO) and more to do with the fact that:
* They are investing in AI, both financially and by corporate communication, over and above everything else and pissing off damn near everyone in the process
* The XBox brand is tanking
* Windows is an utter disaster, according to Microsoft themselves, and Valve is so dispirited with it as the future for gaming that they've invested millions into a linux-based framework to run Windows games
I’m a little impressed at how a company whose business model is to sell a product they developed in the 1990s over and over again while making inconsequential and non-breaking changes from year to year somehow still manage to screw that up. In my own opinion, they have always been a diabolical company. I’m glad to see them fail.
> I’m a little impressed at how a company whose business model is to sell a product they developed in the 1990s over and over again while making inconsequential and non-breaking changes from year to year somehow still manage to screw that up.
This wasn't nearly as bad as what's going on with Microsoft and Windows.
In retrospect, Coke made mistakes, but at the time their logic was kinda sound. Market was changing, people were changing, product tested really well, etc.
And they owned up to the mistake and reverted in under 90 days. Honestly, they probably came out stronger and re-affirmed the attachment that people have with the brand.
In addition, they haven't made that mistake again and have been much smarter protecting their core while chasing trends. Free-style is a brilliant bit of tech, marketing, and logistics combined.
Love the last line, what Valve has done on Windows emulation is herculean, I don't know (it would be great to know) other businesses creating/investing in incredible and risky third-party compatible technologies to run their real business on top of it.
I worked in what other calls "Adversarial Interoperability" [1] but the scale of Valve is on another level.
On the hand at one point the emulation layer becomes the target. Hopefully game developers will realise this and start using native Linux technologies before they are tied to a single companies abstraction layer. Again.
When it was created DirectX was a really useful thing for game makers. It made it easier to write hardware accelerated applications that were also consumer friendly. Contemporary Windows is full of anti-patterns. MSFT just can't seem to resist sticking things into it that make it less pleasant to use in support of MSFT's ecosystem. It's no wonder Valve invests into trying to be independent of that.
This is such a weird use of the domain, and kind of sad. I know the original movement was very diverse and had different ideas, but I'm not sure dispensing what ultimately amounts to financial advice from within the system really fits.
Also their software projects are quite amazing. It has to be someone living just on the edge of sanity. Schizo rollercoaster life of being at the same time smartest person in the room while completely missing forrest for the trees.
How can someone be starting occupy wall street and few years later fully embrace the moldbugs CEO corporate monarchy. Brilliant and dumb and scary. It's truly wild.
Sounds good, too bad I only have $5k available. Even if I spend all on FXY it won't gain that much from the current $58.6 in the forseeable future. Rich get richer I guess so nothing changes just the location.
>By anchoring borrowing costs at or near zero, the BOJ enabled Wall Street to borrow Yen cheaply and invest it with leverage into higher yielding instruments globally, such as U.S. treasuries, equities, and cryptography
They got the word wrong, but I don't believe cryptocurrency would count either: The interest rates at BoJ _are_ low, but to borrow anywhere near that low they have to have high quality collateral like treasuries.
A lot of the financial jargon makes the article hard to follow. I know I'm not the target audience, but I wish at times there were some plain English summaries of terms.
The Japanese central bank arrived in zero effective interest rates in the 90s, and has been practicing negative effective rates (I.E. smaller than inflation) for a while.
That had the effect that their banks took huge amounts of government loans and used it to buy foreign assets. As returns are higher in countries with higher interest rates, and lots of assets are practically safe, like government bonds, that is close to free money for them, and a very cheap loan to the receiving country.
But last year their central bank made the interest rate positive. And investors are acting on the expected way, selling the foreign assets and paying off their government. The article is claiming that this is the cause of the recent turbulence in the investment markets.
Thanks, that was generally how I interpreted the article.
The issue was the terms. There was a lot of logic inversion that someone who's much more familiar with the terms could probably follow, especially when trying to understand how an investment in Microsoft was loosing value when the investment was from a loan in yen.
Likewise, the end of the article uses a lot of abbreviations, especially when referring to Australian currency, which I just don't understand at all.
Can anyone recommend a good source to ramp up one's understanding of macroeconomics/monetary policy to a point where they can make sense of this? Starting from more or less a layman's understanding. Could be a book or course, but doesn't have to be university quality, a good blog or youtube channel could do.
Creating money out of thin air generally creates inflation, because theirs is more currency chasing the same amount of assets.
But the Devil is in the details, because there are hundreds of currencies, one currency can be exchanged for another, and interest rates vary all over the world.
Then once that starts to make sense, you open up a box called “derivatives,” and now the complexity just went off the charts.
I only need to understand it in the context of loans on assets, so I can do the math in my head or in excel. Occasionally I’ll vibe code this stuff in Python.
Because I’m not diving into the deep end of complexity, the books I absolutely LOVE are the cautionary tales of when it all blows up.
In that respect, I think “when genius fails” is an all timer.
Nearly everyone knows about the Great Recession, and the depression and the dot com bubble.
But the collapse of Long Term Capital Management was the canary in the coal mine.
LTCM blew up for all of the most predictable reasons, and as the name implies, nearly everyone involved in LTCM were at the top of their game.
Another book that is more folksy is “a man for all markets“, a book about the dude who revolutionized stock options, largely due to a fascination with Blackjack!
Anyone doing any attempt at market analysis should lay out the trades they've made and the time frames they're talking about. So we can come back later and point a finger at them and laugh.
It seems like their conclusion is "hold lots of yen"? We'll see I guess.
This is a good analysis of the yen carry trade but i'd argue the causality is backwards. Record high margin debt in the U.S. is the root cause as it's a powder keg. The yen is just the fuse being lit. When system-wide leverage is this extreme, any funding sock (whether it's the BOJ rate hikes, hawish fed, or geopolitical event) can initiate the liquidation cascade. The yen carry trade is one source of that leverage but the fragility was baked in. If Japan didn't do anything something else would have cause the liquidation cascade, only a matter of time.
The real story isn't Tokyo, it's that Wall Street built a house of cards and ran out of steady hands.
I have a public ThetaEdge card that monitors margin debt and calculates the correlation with the S&P here:
$566B in margin debt. Is that actually a financial black swan amount of money? If 50% of that got "corrected" into Money Heaven on Friday, would it be more than a bad day at the stock market?
You're right that $566B alone isn't a black swan. That FINRA figure only captures retail and small institutional margin at broker-dealers. It excludes prime brokerage (hedge funds), securities-based lending, and repo markets. Conservative estimates put total leveraged exposure at $10-15 trillion. The $566B is maybe 5% of the iceberg.
I see visible margin debt as both a canary and a proxy. It's a canary because retail cracks first (less sophisticated risk management, stricter regulatory margin). It's a proxy because when visible leverage contracts, it usually means hidden leverage is contracting too. They're exposed to the same assets. When FINRA margin debt starts falling, it's not just a warning, it's confirmation that system-wide deleveraging is already underway.
Whenever a government offers loans at an interest rate which is below the risk premium, that difference essentially represents the government giving the borrower free money paid for by all citizens through loss of buying power.
So when Japan offered 0% interest loans to traders who used it to buy USD bonds, it represents the Japan government offloading the cost of the risk premium to its citizens and giving the difference to the traders for free... But then the traders give that free money to the US government where it helps to inflate the USD currency supply to make American asset-holders richer.
The traders aren't actually profiting from the carry trade because the 4% return on US bonds doesn't cover the real inflation (loss of buying power) of the US dollar; their net worth in terms of buying power is actually the same or dropping. US asset holders are the ones actually reaping the benefit.
Japan is interesting because it has the highest debt-to-GDP ratio of any developed country and most other countries in the world are increasing their debt-to-GDP ratio; in effect, they're all moving towards a Japanese reality due to the fiat system's lack of hard monetary constraints.
If you look at Japan, the aspects of its economy and society which stand out the most are:
- Rigid economic structure and processes.
- Economy dominated by huge corporations, without much room for startups.
- Highly concentrated urban population.
- Population decline. Many young people are not dating and not getting married, can't afford much on their salaries working in the city.
> In short, occupywallst.org is a living archive and occasional update point for a landmark left-wing protest movement that put economic inequality and corporate power at the center of national conversation starting in 2011.
Dunno about the website or corp, but the occupy wall st movement was/is true. Happened right after 2008 stock market crash and people camped out on Wall Street in protest of bailing out the banks.
I would make the correction that the protest movement was not left wing. I think he’s trying to take credit for his favorite team. TARP was opposed by 80% of Americans. It passed legislation anyway. I think there’s a good lesson to be learned in how performative and inconsequential the electoral process is.
Just, like, it was the first populist political movement following the ‘08 crash, and while Obama was supposed to be the liberal technocratic answer to the failure of neoliberalism, he was not able to create policies that restored the social and economic post-war order in the US. After Bernie Sanders lost the 2016 nomination, the populist left, which still retained a hope of a new kind of society, no longer had a political representative, and Trump managed to clinch the nomination by campaigning in states that had been neglected by the Clinton campaign. Biden was another, more radical but still fundamentally liberal technocratic attempt to save the status quo of America politics, but the largest economic gains were for the educated professional class, and many people in the country felt left behind and ignored—-again, now with the backing of popular support, Trump won the 2024 election with a promise to completely reshape the country. And he has at least in part succeeded.
Hmm…there has to be more to it though right? The timeline tracks but it looks like there are events missing in between. How do we go from OWS to things like “Drain the Swamp” within a span of roughly five years?
How do you get from occupy to the tea party is the link this hypothesis is missing.
Tea party was the clear predecessor to the maga movement, with its nucleation point being simple racist backlash against obama and trump being personally & directly involved in stoking that racism. In retrospect it obviously laid the groundwork for trump's movement, and I can't see any direct link from occupy to tea party other than perhaps some individuals like tunney.
I think the Tea Party is only tenuously connected to Trump. A lot of his policies involve a lot of government spending and federal overreach, and his policies are often opposed by the Freedom caucus. Historically, anyway, right wing populism tends to follow the collapse of the radical left and becomes a dark mirror of those very same movements, attempting to absorb their energies (Steve Bannon’s Leninism, Trump’s workerism). The tea party was, conversely, the last cry of reaganism and the dream of mixing traditional life with libertarian economics, which was flawed from the start as it was that very same deregulation which led to our contemporary technologically inflected society where all social norms are broken for the sake of profit. So the tea party was not the legitimate bearer of world history.
Well duh. That's obviously what everyone should try to do, but it's nice to engage in a bit of flight of fancy. I like imaging a rogue group of retail investors buying up the yen, short squeezing carry traders and sticking it to the billionaires. Real life is much more boring, and involves habitual, long term good choices.
I'll bite. Isn't as obvious to me as it is to you, I'm just a programmer, I don't know how the economy works. This is literally the first time in my life I heard anything about governments borrowing Yen like this and that this would become an issue.
I'm aware of an "AI bubble" and the over-concentration on the "Magnificent 7".
What else is obvious to people and why is the timeframe (next 4 years) so obvious?
Well, investment markets all over the world are not reflecting the real economy right now. You can see that on how stock prices don't reflect how wealthy you feel and maybe more clearly in how house prices are completely unrelated to the amounts people can pay.
That's the obvious part. The consequences of that are anyone's guess, as is the timeframe. But it's not a sustainable situation, so something is bound to happen to change it eventually.
It’s not as obvious as they claim. If it was, if the future was somehow predictable, there would be software that did it; there isn’t.
People have been claiming the end is near since forever; economists have been saying for months now that stocks should already be falling, but they are going up. And also, it feels good to be part of the in-group that just knows more than everyone else. Just ask a prepper: they will be equally convinced.
So in summary, even if we’re headed for another crisis, unless you’re only a few years from pension, you’ll just sit this one out calmly, just like all crises before. Unless the global economy breaks down for good (in which case you’ve got other things to worry about), your ETF will recover. Don’t let the fear mongers get into your head.
The entire stock market basically functions as a funnel of wealth from the middle class to the rich right now. When OpenAI and Anthropic IPO, they'll be megacap stocks and 401ks and pension funds the world over will invest in them. Then insiders will cash out, and the AI bubble will collapse. USD will have transferred from the retirement accounts of middle-class people to the rich. This is how all stock market crashes work. This one is especially interesting because the middle class is already so squeezed - how many more times can they pull this trick off? Seems like it can't go on many more times.
>Following the Martin Luther King Jr. holiday, U.S. markets opened on January 20 to a bloodbath. The S&P 500 fell 2.1%, the Nasdaq composite dropped 2.4%,
Should someone that calls 2.4 percent movement bloodbath be taken seriously?
This reads like LLM slop. The "carry trade blowing up" has been written about hundreds of time before, so it's not surprising it's so prevalent in LLM training data.
The assertion that metals tanked because of Warsh being picked, is particularly telling. Warsh is not a hawk, despite some media narratives. The Fed is stuck behind not raising rates while the debt is coming down on banking while POTUS is crazier than ever and lowering rates to raise inflation/debase the currency and debt. It's not going to take long to see where this path leads.
It is most certainly LLM generated. Nobody but an AI prompted with “connect the unwind of the yen carry trade with Trump’s threats to acquire Greenland” would have ever written something like that.
My guess is that she did a lot of research on the topic with AI then created this article partially with AI generated text.
I definitely got a strong feel of LLM output reading it. Not sure if the points themselves have any merit, but I don't think that I'll go and run to buy jpy.
Key counterpoints:
- Global FX turnover runs near $9.6T per day (BIS, April 2025). A retail wave of calls will not move USD/JPY in a durable way at that scale.
- /6J options settle on /6J futures. When you buy calls, you mostly push dealer delta hedging into futures, then dealers unwind as exposure changes. No sustained spot yen demand comes from that flow.
- FXY calls track an ETF wrapper, not spot.
- “Widowmaker trade” most often refers to repeated losses from shorting Japanese government bonds, not a long-yen crowd squeeze.
Does it?
It cost the taxpayers nothing (in fact it made us money), it destroyed 4 of the 5 largest investment banks in the US, and it sent over 200 bankers, brokers, and auditors to jail.
What part of that are people mad about, and why?
A lot of people I’ve talked to about it weren’t even adults when the bailout happened. They weren’t watching the news and didn’t care at the time. They only know it through pop culture and from fiery speeches from politicians and influencers.
The idea of a bailout has become synonymous with the government handing hard-earned tax dollars over to banks, no strings attached. The facts don’t really matter.
The fix was for the government to pick some winners, coercively lend them money and force them to buy the failing banks.
Now we have fewer, bigger banks. People who were conservative with money, saved instead of over-leveraging, did not get to buy assets cheaply, because the government propped up asset prices with unlimited, cheap money.
And TARP did eventually produce weak positive returns. So I'm glad they didn't lose money, but I'm not happy I was prevented from buying fire sale assets. I'm also not happy residential housing prices are 2x what they were in 2010 (and still well over 1.5x the peak of the bubble).
> > Literally dozens of CEOs went to jail, which is again why I think this may be the biggest ball-drop of the media this century
The GP's remark is centered around the *sentiment* that none of the C-suite / execs in the Big Banks (Merrill, Goldman, BoA, Citi) were jailed for their involvement / excessive speculation in the 2008 crisis.
The keywords there being "Big Banks": If it's a national household name, OR if their positions are coveted by finance employees, it's a Big Bank. Otherwise, it's not a Big Bank.
> > > Your Google skills may need some work because this is the first result for "bank CEO jailed by TARP":
1) This is a goalpost shift from "bank CEOs jailed for causing / excessively speculating up to the 2008 crisis".
2) TARP was established as a result of the crisis (i.e. AFTER it happened), and therefore cannot be used to mark execs that were jailed for their involvement / excessive speculation in the 2008 crisis.
3) "TARP defraudment" is a different matter, and not "Causing the 2008 crisis" or "excessive speculation"
> > > https://archives.fbi.gov/archives/atlanta/press-releases/201...
The case cited only tangentially involves TARP, when the bulk of the case was about the President of FirstCity Bank & his associates defrauding the bank with loans that *they themselves had involvement in*.
https://www.housingwire.com/articles/38536-failed-bank-ceo-g... https://www.justice.gov/usao-md/pr/former-president-and-ceo-...
https://oig.federalreserve.gov/releases/news-bekkedam-senten...
https://www.washingtonpost.com/news/business/wp/2015/09/02/b...
Though it sounds like they're mainly talking about bankers jailed for fraud related to the TARP loans themselves, as opposed to the mortgage fraud that precipitated the crisis.
https://archives.fbi.gov/archives/atlanta/press-releases/201...
https://www.justice.gov/usao-md/pr/former-president-and-ceo-...
https://oig.federalreserve.gov/releases/news-bekkedam-senten...
https://www.washingtonpost.com/news/business/wp/2015/09/02/b...
edit: it's unfortunate that you can't bring up any actual evidence to support your assertion
https://oig.federalreserve.gov/releases/news-bekkedam-senten...
https://www.washingtonpost.com/news/business/wp/2015/09/02/b...
JFC you guys need to work on your web literacy
https://hartfordbusiness.com/article/fed-myth-busters-35-ban...
And, again, I'll remind you that until five minutes ago you thought the number was zero, and yet you're not happy to learn you're wrong. Puzzling.
I was surprised to learn that the "bailout" was in fact a loan that was repaid with interest for a "net profit of $121 billion" [1] rather than just giving the banks money. After learning this, I polled many people around me and few had understood the terms of the transaction. So I think there may be significant public misunderstanding there.
Even if people do understand it was a loan, there's an argument to be made that the money could have been spent in better ways (e.g. early education improvement, preventative healthcare etc. that also give long term returns in preventing crime and reducing healthcare costs). If you believe not giving the loans would have caused the total collapse of the economy and worsened of all of those things (crime, healthcare, education etc.), then it seems a worthwhile investment. But not everyone may share that perspective.
> What part of that are people mad about, and why?
Another element of the controversy was the payment of $218 million of bonuses to the executives of AIG which was being bailed out and effectively run by the federal government [2]. Apparently the government allowed the bonuses because Geithner said there was no legal basis for voiding the bonus contracts.[3]
Some people think controversy over government mortgage relief spawned the Tea Party movement based on this speech by Rick Santelli [4] about his dissatisfaction with the government's bailing out the "losers" who couldn't afford their mortgages.
Some people also feel there could have been more regulation of the financial sector or breakup of big banks [5] or more stipulations attached to the loans.
Just some suggestions based on my understanding of the history.
[1] https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program#...
[2] https://en.wikipedia.org/wiki/AIG_bonus_payments_controversy
[3] https://youtu.be/uYJLyGoWbzY?si=geM87strQlH7EURN&t=1079
[4] https://youtu.be/5v1EtiEuSEY?si=055bAuiZiIq-YHXy&t=3023
[5] https://en.wikipedia.org/wiki/Brown%E2%80%93Kaufman_amendmen...
Pull the other one, it has bells on it. If the government is involved in a financial transaction it is because nobody in the private sphere with money wants to be involved. That means either the return wasn't commensurate to the risk or there was dodgy accounting going on that nobody would actually thought represented a reasonable real return. If there was actually a prospect of making a reasonable return, money would have been found. Even the creditors might have been willing to make deals.
I bet the average taxpayer would much rather have the money given to them in their capacity as an individual and would have profited off it more than the hypothetical return the US government may claim it made.
> What part of that are people mad about, and why?
The gross unfairness of it all. I mean, it is bad enough that the failures in charge of the banking system got bailed out despite being incompetent at their jobs, but the average person had to guarantee them their high status role in society? It is a sick joke.
It is a terrible idea to be printing money to prop up asset owners. If that is the basic plan anyway, it shouldn't be mandatory to have incompetents mediating the handout process.
And it isn't like bankruptcy is that terrible. All the physical assets still exist. There is still food. Maybe set up a special welfare system for people who lost their life savings if something has to be done, but for heavens sake, taking (and I repeat myself) known, verified incompetents and guaranteeing them ongoing control of the financial system is wildly stupid. It is on par with a scheme like mandating people all buy in to cryptocurrencies.
I do agree it looks bad if bankers can take huge risks and benefit (personally) from the upside without a downside risk. But it's not necessarily the bailout that's the problem here and the taxpayers do have the theoretical power to vote for people who can change this.
What courses of action does that argument not justify? "We had a predictable emergency and decided to panic and hand out money. Don't expect us to really think about alternatives." is not the course of action that really speaks to me for getting good results for taxpayers, or anyone except the people directly getting the money.
We have a playbook for getting a statistically good outcome when people run out of money. It is called bankruptcy. I can see how a banker could confuse that with a bailout because they both start with a "b" and there are a lot of letters - but the stark truth is they are different words.
So this argument doesn't justify any course of action but is does justify a course of actions with poor optics that seems reasonable given the risks.
It's because the markets were frozen up; I was actually alive then and you can't really gaslight me about this
Perhaps I'm misunderstanding, but isn't this another way of saying it was too risky for people to invest? That seems to be the same concept as the quote you cited from the parent comment: "either the return wasn't commensurate to the risk".
Whereas the federal government can write a check for $633.6 billion and be much more certain the debtors will survive and pay it back.
And then we see 20 good years of economic prosperity where the US predictably got even wealthier than it previously was and there is great political stability and well-loved presidents like Mr Trump who represent the satisfaction US citizens feel for the economic highs they have reached!
What a fantastic deal for the average taxpayer. Let the confetti fall. Well done government, saved the day there.
Otherwise it would not take a day to swap $500 mil for commercial reasons (think buying a couple Boeing plane with Euros) to avoid too much market impact as documented in multiple interviews with currency dealers stating it takes them 1 day to "work" a $500 mil order.
Retail can move FX, if it piles into one pair. But unlike the Boeing order they will also need to exit the trade at some point, which makes them vulnerable.
For me it was obvious something was afoot with earnings and performance not matching the prices, I finally understand why now thanks to this article.
The fact that there are rules for institutional investors and retail investors and us in retail have so little visibility and time to keep up, just shows more and more the game is a david vs a goliath, and we are all slingless david.
Most institutional investors are not going to outperform your diversified portfolio. It's not like professionally managed funds are killing it while individual investors are losing. There are some specific examples of funds/people who do well but on average most do ... average.
My main point is that most people, including the media, whenever there is a big crash in prices, like silver going down double digits, they act like the money evaporated and everyone that invested lost money.
My point is that it's not the case, it dropped because there was a huge volume of people selling, making it cheaper. The people selling converted it all for liquidity, they just 'got' a lot of money in cash to spend, and they needed it or will use it for one reason to another.
Retail investors don't have the time (unless you work in finance) to read all the news and information to be aware of situations that will trigger liquidity crunches like these past few months, while institutional investors will.
My point here is you could have performed all of the value investing in the world and you are still eating losses, standard diversification theory is to put in gold when the markets are unstable, as it appreciates in time of high volatility, we are in times of extreme volatility and gold crashed, it makes no sense unless you have visibility in the institutional investing trends.
Prices can drop on very low volumes. All that prices tell us is what someone agreed to buy and sell at a given point in time. Some (most?) sellers are likely selling because they are planning to buy when the price is lower (i.e. they are betting the market will go down) not because they need to use it.
Generally gold is not considered an investment or a hedge against marker instability and most diversified portfolios would not have gold in them.
Yes- if I own the S&P 500 and the S&P 500 goes down then the current value of my investment has gone down.
Overreaching arguments that sellers are like selling because they plan to buy when it's lower, no proof and a limited view, in fact in my also overreached argument I would say the opposite, most people just want to put money on an ETF and hold it until retirement, without having to touch it, they sell because something is forcing their hand and they need the liquidity to pay for something else.
Gold is definitely a hedge for inflation and market instability which is why it's had such a big run up these past few months, and they are definitely used in most diversified portfolios, yale fund as an example, (I don't know where you got this notion from)
It is true that the yen carry trade is currently being unwound and that it has significant implications for nearly all holders of treasuries. But claiming that ALL of the recent volatility is due to this one event is ludicrous. There are some blatant falsities, like saying that gold and silver are historically uncorrelated??? And it’s clear that the author has a bias against the financial establishment (“monopoly money”), coloring the output.
That said, there are legitimately interesting bits here I didn’t know about, like the Japanese institutional liquidation of US treasuries. I would not repeat this information to others without fact checking it, but if accurately described it’s an important space to watch. It’s not surprising that the LLM would get some things right, of course.
One big problem with this article is the clear prompt given to connect x current event to the yen carry trade, like Warsh’s nomination and the Greenland nonsense. This creates a lot of noise. It’s basically the LLM looking for a pattern between these things instead of identifying a structural flow. It might not even be wrong, but it’s horribly biased towards finding a fake pattern, so I would never trust it.
For the tech heads in HN that are excited to see a Justine Tunney post: don’t go crazy. If you’re really interested in learning about the unwinding of the yen carry trade, there’s plenty of information from actual experts to read about, not this slop.
That should have been more than obvious from the domain name and the logo at the top already.
Ok I’ll bite. Where ?
You can start here: https://www.bloomberg.com/news/articles/2024-12-02/yen-carry...
There were news articles about this "happening" but this event never realized.
40% pullback but still up 150% over the past year..
https://www.youtube.com/watch?v=7ws8Grsc4jU
Purposefully devaluing the dollar to make US goods more globally marketable and hide the Japanese debt crisis is an interesting but risky strategy.
Currently, I'm glad to see a correction without panic, but it's too early to make a call on the effect on the overall global economy. Xi's already suggested making the Yuan a global reserve currency, and seeing as much debt they're holding, I'm a little worried they're able to make it happen if this is the US financial strategy.
It appears they've been associated with a lot of hype/fear copy-paste companies that offer highly inflated monthly access to their trades and research. Note that they were named "Game of Trades" before rebranding.
I really wish that people would wake up to the danger posed by meme stock BS “leaking” into the general markets.
Just as voters are responsible for changes in society, uninformed investors can impact society too, especially when they’re amplifying their purchasing power via leverage.
For instance, I’ve been buying real estate forever, and I’ve enjoyed the Reventure app.
But I’ve REALLY noticed that his YT videos are exclusively doom and gloom.
This ceaseless negativity moves markets, just as the irrational exuberance for real estate in 2005 moved markets.
But the exuberance for real estate was driven by people who were buying real estate.
The endless doom and gloom of YT finance videos is for a much different reason:
It drives page views.
That’s not a good thing. Because it’s really easy to get swept up in the negativity. And that negativity has a downstream effect, where it’s often used to convince people to invest in things that the YouTuber is promoting.
Basically, I don’t know if we need an “SEC for YouTube,” but we might.
Yes, I know we already have an SEC for YouTube (it’s the SEC), but nearly none of the people doling out financial advice on YT are trained professionals. It’s the fundamental defect of internet advice; who to trust?
Why do you suppose that is? Why is there an insatiable desire for negative news about real estate?
An “SEC for YouTube” can’t prevent shit if the lever of influence is already that long. It might be able to keep a lot of meme investor idiots from losing their shirts, but that has to be weighed against the historically evident risks of having what amounts to a ministry of truth/state propaganda regulator.
In other words, what's different is that the gain is higher. The system was not always doomed, because the gain wasn't this high. Now that it is this high, the system may now be doomed.
many bird's eye view articles are depicting how the game is rigged and corrupt to the core and that it is heading towards a wall (and you should buy x, typically gold)... yes.
but then they also have more day-to-day articles discussing market moves and predictions in all directions.
ZH is a wider range of stuff than that. and in all that noise, most of the important alternative, often initially censored news appeared there first.
so, yeah, don't take it all in literally... but then it's a site edited by Tyler Durden FFS... :)
[0]: https://www.bogleheads.org
I'm not saying the article's thesis is incorrect, but its providing some data without context. I'm always leery of data presented without context.
Christ.
Find a professional fiduciary that doesn't have a youtube channel and never speculate more than you can afford to lose.
> Curtis Guy Yarvin (born 1973), also known by the pen name Mencius Moldbug, is an American far-right political blogger and software developer. He is known, along with accelerationist philosopher Nick Land, for founding the anti-egalitarian and anti-democratic philosophical movement known as the Dark Enlightenment or neo-reactionary movement (NRx).
The author (jart, Justine Tunney) has openly supported these ideas: https://thebaffler.com/latest/mouthbreathing-machiavellis
What is this crazy idea that every single country must act all the time in the same simplified way?
https://bmg-group.com/russia-confirms-brics-will-create-gold...
My understanding is that a reserve currency requires fluid markets and a stable, reliable, metrics-based currency policy. It's why the Fed is so stubborn about its relatively simple policy goals: 2% inflation and low unemployment.
China appears to be attempting to reproduce what the USD was before it was free floating.
USD is currently backed by debt and nominally military might. If the US defaults then all of the US bonds held by foreign banks become worthless. That is an enormous risk which is why countries have been divesting from US bonds. If USD was still gold, as it was before 1913, if you hold your money it cannot be made worthless by a third party. After 1913 USD became gold backed bills with partial reserve. It is why USD became the global reserve currency. But, reserve requirements were reduced and more paper was produced. In 1971 Nixon removed the convertibility of paper bills to gold metal effectively stealing the gold of any nation that asked the US to hold it.
One of my favorite bits of currency trivia is that a $20 double gold eagle coin used in circulation prior to 1933 had a gold content of 0.9675 troy ounces. Twenty dollars in your hand was literally nearly an ounce of gold.
You seem to suggest that people should worry about a default claiming if we had still had a gold backed currency the risk would go away ... "if you hold your money it cannot be made worthless by a third party" ... but it can be made worthless by a government any time that government chooses.
The government (having defaulted on gold-backed debt) could simply refuse to convert the paper of the debt to gold (sure, that would be bad, but hey, they've already chosen to default, so not much worse ...)
1. most physical paper has a relatively short life, so one would not expect it to last as long as metal tokens
2. paper was only available in much of the world several thousand years after the first currencies began, so it's not suprising that we have little record of paper money from very old civilizations.
3. the idea that there was no cheating by fudging numbers before paper currency is completely ahistorical. The nature and ease of the fudging may have changed, but the fudging itself existed long, long before paper currencies became common.
The entire concept of marking coins with trustworthy seals was exactly to basically invent fiat currency as risk mitigation: coins bearing the seal would be honored, and from that it was a short hop to "what if I just presented an IOU with the seal of the local gold merchant?"
I wonder why you’re worried. Regime’s change all the time. From a third party perspective, China is no better or worse than the US. Also, given how literally every country under the sun despises US now, this might just happen.
China maintains strict controls on capital flows in/out. A reserve currency requires free convertibility. Holders need to move large sums instantly without permission. China has repeatedly tightened these controls during stress periods (2015-16 devaluation fears, for example).
Limited access to Chinese bond markets and equities for foreign institutions. Reserve currency status requires deep, liquid markets where central banks can park hundreds of billions. US Treasury market is $26T and extremely liquid. Chinese government bond market is smaller and less accessible.
Reserve currency issuer must run persistent current account deficits to supply the world with currency. China's economic model is built on export surpluses. They'd need to fundamentally restructure their economy.
This is PRC's fundamental disagreement. US reserve currency morphed into high liquid, high speculative instrument to fund unsustainable debt, hollowed out domestic industry (triffin)... but this is not by design. It's the result of emergency adaptations moving off gold, then people post rationalize the trinity musts (open capital, floating rates, independent central bank) is what makes reserve when it's unintended structural outcome from failed gold peg.
Now we see hints of end stage USD reserve behavior, debt snow balls and reserve controller will pull the our dollar, your problem card. This US doing current conniptions trying to either reduce USD strength or inflate away debt... costly instability. People forget, liquidity / storage only matters to sovereign buyers who needs reserve for utility... everyone else (now plurality) are private buyers who buy for returns. If we enter end of dollar cycle and USD reserve cost them money, then they go elsewhere
Elsewhere is what PRC wants to offer, HIGHLY CONTROLLED, BUT STABLE reserve pegged to PRC industrial chains, i.e. real economy instead of speculative financialization. This what recent yuan reserve talk is from (note it was old Xi speech republished in Qiushi), so the propose model isn't even in response to current USD conniptions but prediction on end life of US behavior when USD reserve goes from exorbitant privilege to just exorbitant.
It's precisely because logical outcome of current reserve "musts", i.e. triffin charity/global good that makes it ultimately a stupid arrangement where the system breaks when US/owner can't afford to maintain or develops bad habits (deficit spending). Hence, what PRC plans to offer in parallel: stable regulated reserves for "real economy" financial utility. Stable Yuan "bank" reserve can coexist with volatile USD "casino" reserve. Now of course this all heterodox theory, but we are seeing theory of USD reserve limits peaking it's head, and PRC not retarded enough to pickup triffin baton. IMO PRC fine with US dealing with triffin headache and IMO betting US will fuck global creditors when shit hits fan, i.e. they waiting for USD reserve to implode due to inherent contradictions, to show world precisely why yuan reserve not modelled to repeat same mistake.
2. Euro share of SWIFT shrunk from ~40% to ~20% post URK war. Part of this technical (t2 reforms), i.e. actual reduction not as dramatic, but Euro as toxic as USD with even less leverage.
Meanwhile PRC went from single digit % cross border settlements 10 years ago to 50%+, plenty of the world trust PRC with their money, not just money but PRC alternative to SWIFT financial plumbing, CIPS. Meanwhile PRC also recycling it's surplus USD to lending... i.e. they're financing more than imf/worldbank/paris club right now. Another indicator that countries "trusts" PRC to manage monetary system, or rather they balancing from losing trust of west.
TBH trust is western mindless muh reserve orthodoxy nonesense. Ultimately PRC has much stronger reserve posture for the same reason US did... for 80+ years countries needed USD for US techstack and then petrodollar, aka modernity was locked behind USD, all the other muh reserve "needs" is downstream of that. Need > trust.
Ironically where trust actually comes in is whether PRC TRUSTS others. Qiushi suggests PRC stable reserve functions something like panda bond lending, where PRC lends liquidity to trusted VIP (real economy) players. Everyone else can keep gambling with USD reserve with high likelihood of debasement. It looks like PRC doesn't want be THE reserve, they want to be VIP reserve while THE (USD) reserve burns.
USD treasury isn't great now AND trending towards bag holding catastrophic "our dollar your problem" depending on debasement velocity. Hence central banks ditching dollar for gold etc... it's still currently better than other options in the sense that no other options really exist except metals with no counter party risk. More this happens the more exorbitant and less privilege USD becomes, the worse it serves as reserve, the more opening for alternatives. This where PRC eventually comes in, i.e. recent reserve talk is for eventuality not hand off. In the meantime they are banking on USD being not great, and getting worse. Which increases rates -> increase debt finance / servicing cost. The system is getting worse for everyone, including US. Don't underestimate watching US debt servicing growing from 1T to 2T in a few years when US realizes exorbitant reserve currency without privilege is not worth maintaining. Waiting for US to recognize USD reserve isn't great for US is part of the transition.
Basically, when currency is scarce, its value goes UP.
When currency is plentiful, its value goes DOWN.
The first scenario lowers inflation, the second raises it.
After Japans bubble economy popped in the early 90s, they had asset values FALL.
So the BoJ began stimulating the economy - trying to push UP inflation - by adding currency to the markets.
The Carry Trade illustrates one of the dangers:
Japan was trying to stimulate their own economy, to counteract the deflation caused by their bubble popping.
But money doesn’t know borders, and though the money was intended to stimulate JAPANS economy, there was nothing stopping ANYONE from purchasing that currency. It’s not like you have to live in Japan to buy Yen.
So the money (yen) was created in Japan, but ended up all over the world.
This has consequences:
* Japan ended up with mountains of US dollars. This is one of the reasons that Japan has more US Treasuries than China. This mountain of dollars lowers YOUR cost of living. Because USD is being acquired for The Carry Trade. This creates artificial demand for USD.
* Because the yen is created in Japan but is then used for international commerce, it dramatically reduces the inflation that “printing money” would normally create. This is why Japan has more debt per capita than any country by far, by a factor of over 2X
I am just an I.T. dude who invests in real estate. So what I just posted may be completely wrong.
The carry trade has existed for about four decades; that’s my summary of how it affects us, from the perspective of a small time real estate guy.
Free money is never free.
Do you truly believe in your heart of hearts that people posting neo-MOASS wish fulfillment suffer from a lack of a voice, and no place for them to be heard? Take this seriously. More important than "a voice" is consistency and clarity of communication. The people involved in occupy wall street in 2011 weren't occupying it because they wanted to eventually join it, and I don't think that their form of economic justice would be for Wall Street to lose money in a gigantic market crash that again would result in taxpayer-funded bailouts that spurred the first protests. For transparency's sake, what are your market positions today?
They're the true Occupy Wall Street and all I'm doing is recognizing their achievement.
As an outsider to all this, it's funny how these movements always crumble as soon as there is any mainstream recognition.
You have X complaint against an institution. Let's say the institution accepts and reforms somewhat. It's pretty rare that the complainant will pat themselves on the back and say job well done. It's ultimately a game of diminishing returns.
If you have a hammer, it's not just that everything is a nail - you must find enough nails to justify continuing to use the hammer.
It crumbled when the physical encampments were forcibly removed by the police. I mean, even at the tiny encampment of UC Davis-- essentially a few camping tents-- the students got pepper sprayed and hauled off. Remember that meme? Many of those same students also faced serious jail time for a protest outside Washington Mutual Bank. It's probably difficult to sustain a movement under those conditions, no?
In any case, the message that resonated across the U.S. encampments is essentially what turned into Bernie Sanders two runs for president. That, the group behind AOC's House run, and many other important grassroots movements are the legacy of OWS. Whatever the deal is with jart's website is orthogonal to all this-- I've literally never heard about her association with OWS outside of HN.
Edit: clarification
Secondly a domain and a political movement are 2 different things. Either one can exist without the other.
The domain is not even a .org which would be befit a movement ownership
Source: trust me bro
Justine, do you think that readers here don't have eyes? The page linked is a call to financial action that, if the advice is followed, will result in yet another unsophisticated ETF pump and dump at best and a call to financial suicide at worst.
You are personally underwriting propaganda for something you are very likely invested in, targeting the most credulous. For it to appear on a site called 'Occupy Wall Street' is deliciously ironic.
Here's my disclosure: I am completely divested for both the US and Japanese market, except for transient USD cash holdings. I don't have a horse in this race. Will you follow suit?
I know very little of what happened in NYC years ago, but I would tell anyone reading the site now that it is run by actively malevolent speculators.
I do, however, know a few of your associates. Stop hanging out with grungy, unwashed sex pests, they aren't as smart as they pretend to be, and you should know that by now. It's unbecoming and frankly sad. You have the means to start life anew elsewhere, and you should take that opportunity now.
And that's where you lost credibility with me. I haven't the knowledge of these topics to express an intelligent opinion and I was considering your arguments, but then you went and lowered the bar. There's no need to level rude insults.
I'm a Leftist, fwiw. While I don't know enough to speak intelligently on this, I do resent the people at the top who plunder society for their own gains so I'm spiritually supportive of anyone who's against them.
It's also why I addressed her directly by name. I would really like her to leave the cult she's in, but I refuse to mince words about the nature of that group. She knows who the r*pists in that community are. I lost a friend to those people and I hold a grudge.
None of this is a secret and I could give a shit if me bringing it up isn't 'credible' to you. Other than the short 'don't take financial advice from internet strangers' PSA, this isn't about you.
Why don't you look inside yourself and try to figure out why you don't find it 'credible' that there might unchecked sexual violence in a insular community of wealthy, mostly male, SV crypto fascists (who are on record warmly discussing feudalism and the return of chattel slavery to the US).
81% of women in the US have been sexually harassed, myself included. Only 2% of reports are false. Your default assumptions are fucked. If you are thinking 'well.. none of the women I know have been...' You are wrong, they just don't feel safe enough around you to talk about it, and for good reason.
People who invite themselves into conversations solely to tone police and cast doubt on allegations of sexual violence are the furthest thing from an ally. Spiritually support me by learning how to not be that person around the women in your life.
I like how the wording here (Your voices) is giving off that sarcastic and patronizing "you're welcome" tone.
Like a religious person saying "I'll pray for you" to someone non-religious, where the undertone is an obvious middle finger.
It's pretty fun.
Why keep posting on the dotcom when it obviously causes confusion rather than a personal domain name?
I am curious, what would you consider success?
I do not think it failed, far from it. I can give my reasons, you first
one (started here) was successful but one failed hard
I’d just be curious to trade stories to see if we can learn from each other
My handle@iCloud if you want to reach out
I think you're confusing the Occupy Movement with the housing crisis itself.
Any anti-establishment/libertarian right-wingers would have already gotten energized years before by the Tea Party movement. Even Ron Paul's million dollar "money bomb" in donations happened a few months before Occupy. And what's the path from Occupy to right-wing extremism? Even on Fox News Occupy was a short-term blip.
The "one percent" slogan made its way directly into Bernie's campaign, so that tracks with what I assume you're calling left-wing populism. But what do you mean by "extremism" here? If it's violent extremism I don't see the connection. And if it's left-wing anarchist movements, have those grown in any significant way since the 2010s?
Since Occupy could not have existed without the Crisis, certainly some blame goes to the Crisis.
That said, Occupy shaped perception of the Crisis. Occupy trained the public to view the Crisis in terms of bad people, instead of systemic problems like incentives.
The Occupy movement, with its permanent smoke-pit adolescents like Tim Pool, Matt Taibbi, Max Keiser, and so on, has influenced public discourse ever since.
I cannot prove that Occupy, rather than the Financial Crisis alone, made possible our current dysfunctional politics (with its focus on scapegoating, conspiracy theories, magical thinking), but I notice echos of its 'memes' (in the original sense of the word), and its attitudes - not to mention I notice some of the actual participants.
https://wiki.pumpingstationone.org/wiki/Do-ocracy
https://wiki.pumpingstationone.org/wiki/Member_Manual
https://wiki.pumpingstationone.org/wiki/Administration
> This #ows movement empowers real people to create real change from the bottom up. We want to see a general assembly in every backyard, on every street corner because we don't need Wall Street and we don't need politicians to build a better society.
Maybe at some point those people will understand that high-school approach doesn't work in the real world.
Look at the amount of change they brought, look at the amount of change that a single person like Donald Trump has brought (for better or worse, this is not an endorsement).
"Questioned on Twitter about her beliefs, she replied: "Read Mencius Moldbug.""
(Original source of that information, as cited by above paper, is https://thebaffler.com/latest/mouthbreathing-machiavellis ; I don't have a Twitter archive at my fingertips so I cannot pull up the primary source.)
I feel International coverage, and even academic studies on the movement, missed this completely at the time.
https://www.salon.com/2017/08/19/who-gets-fired-for-being-a-...
Zhang, Zhexi. 2019. "The Aesthetics of Decentralization." p.68
https://www.nationalreview.com/2017/08/libertarians-sometime...
... also, my intent was not to cast aspersions. When last I heard the name, I had a particular political leaning associated to the name and I was wondering if it had changed.
If you believe them, then you can hedge buy either shorting TLT(betting treasury yields will rise), or going long Yen (e.g. FXY shares/calls).
I bought some FXY calls but just enough to hedge the Yen prices of my upcoming Tokyo trip in case they're right.
> To validate the thesis that the Yen unwind is the primary driver of volatility, we must examine the sequence of events. The crash did not happen in a vacuum; it followed a precise timeline …
> It wasn't just about rates anymore; it was about the stability of the U.S.-led global order
> The unwinding of a carry trade is not a monolithic event; it is a cascade that ripples outward
It‘s like almost in every paragraph. I don’t understand why this gets to be on the frontpage to be honest. It just reads horrible even if some of the points may be true (or hallucinated, who knows)
https://robinjbrooks.substack.com/p/debt-crisis-in-japan
Financial doom porn sells well, but it's almost always wrong.
Finance bros will make their way in here soon to give a better peanut gallery, but I think "is there something here" comes down to do you believe the final bit of the articles opening act:
> When correlations between historically uncorrelated assets (e.g. Gold, Bitcoin, Microsoft, and Silver) approach 1.0 during a sell-off, it serves as a distinct indicator that traders are not selling what they want to sell, but rather what they must sell in order to meet margin calls in a funding currency that is rapidly appreciating against their liabilities.
* They are investing in AI, both financially and by corporate communication, over and above everything else and pissing off damn near everyone in the process
* The XBox brand is tanking
* Windows is an utter disaster, according to Microsoft themselves, and Valve is so dispirited with it as the future for gaming that they've invested millions into a linux-based framework to run Windows games
Two words:
*New Coke.*
In retrospect, Coke made mistakes, but at the time their logic was kinda sound. Market was changing, people were changing, product tested really well, etc.
And they owned up to the mistake and reverted in under 90 days. Honestly, they probably came out stronger and re-affirmed the attachment that people have with the brand.
In addition, they haven't made that mistake again and have been much smarter protecting their core while chasing trends. Free-style is a brilliant bit of tech, marketing, and logistics combined.
I worked in what other calls "Adversarial Interoperability" [1] but the scale of Valve is on another level.
[1] https://www.nektra.com/main/2020/01/12/reflecting-on-16-year...
How can someone be starting occupy wall street and few years later fully embrace the moldbugs CEO corporate monarchy. Brilliant and dumb and scary. It's truly wild.
Think you mean crypto currency here?
That had the effect that their banks took huge amounts of government loans and used it to buy foreign assets. As returns are higher in countries with higher interest rates, and lots of assets are practically safe, like government bonds, that is close to free money for them, and a very cheap loan to the receiving country.
But last year their central bank made the interest rate positive. And investors are acting on the expected way, selling the foreign assets and paying off their government. The article is claiming that this is the cause of the recent turbulence in the investment markets.
The issue was the terms. There was a lot of logic inversion that someone who's much more familiar with the terms could probably follow, especially when trying to understand how an investment in Microsoft was loosing value when the investment was from a loan in yen.
Likewise, the end of the article uses a lot of abbreviations, especially when referring to Australian currency, which I just don't understand at all.
> used by a generation of investors
How short is a generation for investors? Aren't we near 20 year highs as far as US bond rates?
I guess the point is that this is more about the Yen than about US bonds?
God job
Because the fundamentals are basic:
Creating money out of thin air generally creates inflation, because theirs is more currency chasing the same amount of assets.
But the Devil is in the details, because there are hundreds of currencies, one currency can be exchanged for another, and interest rates vary all over the world.
Then once that starts to make sense, you open up a box called “derivatives,” and now the complexity just went off the charts.
I only need to understand it in the context of loans on assets, so I can do the math in my head or in excel. Occasionally I’ll vibe code this stuff in Python.
Because I’m not diving into the deep end of complexity, the books I absolutely LOVE are the cautionary tales of when it all blows up.
In that respect, I think “when genius fails” is an all timer.
Nearly everyone knows about the Great Recession, and the depression and the dot com bubble.
But the collapse of Long Term Capital Management was the canary in the coal mine.
LTCM blew up for all of the most predictable reasons, and as the name implies, nearly everyone involved in LTCM were at the top of their game.
Another book that is more folksy is “a man for all markets“, a book about the dude who revolutionized stock options, largely due to a fascination with Blackjack!
(The LTCM guys were big time gamblers too.)
https://www.google.com/search?q=a+man+for+all+markets+by+ed+...
"support my thesis and ignore alternative explanations and contrary evidence on whether there's even a there, there" AI-research slop.
It seems like their conclusion is "hold lots of yen"? We'll see I guess.
The real story isn't Tokyo, it's that Wall Street built a house of cards and ran out of steady hands.
I have a public ThetaEdge card that monitors margin debt and calculates the correlation with the S&P here:
https://thetaedge.ai/public/thetix-card/42d9c6de-218d-4627-a...
$566B in margin debt. Is that actually a financial black swan amount of money? If 50% of that got "corrected" into Money Heaven on Friday, would it be more than a bad day at the stock market?
I see visible margin debt as both a canary and a proxy. It's a canary because retail cracks first (less sophisticated risk management, stricter regulatory margin). It's a proxy because when visible leverage contracts, it usually means hidden leverage is contracting too. They're exposed to the same assets. When FINRA margin debt starts falling, it's not just a warning, it's confirmation that system-wide deleveraging is already underway.
That's my 2c. Does that make sense?
Whatever shenanigans are appear in the public record, multiply by 10x to approximate of the real story.
> Does that make sense?
Yep. 1929 called. Just to gloat. They don't want their market back.
So when Japan offered 0% interest loans to traders who used it to buy USD bonds, it represents the Japan government offloading the cost of the risk premium to its citizens and giving the difference to the traders for free... But then the traders give that free money to the US government where it helps to inflate the USD currency supply to make American asset-holders richer.
The traders aren't actually profiting from the carry trade because the 4% return on US bonds doesn't cover the real inflation (loss of buying power) of the US dollar; their net worth in terms of buying power is actually the same or dropping. US asset holders are the ones actually reaping the benefit.
If you look at Japan, the aspects of its economy and society which stand out the most are:
- Rigid economic structure and processes.
- Economy dominated by huge corporations, without much room for startups.
- Highly concentrated urban population.
- Population decline. Many young people are not dating and not getting married, can't afford much on their salaries working in the city.
Is this true?
Absolutely.
And guys like Tim Poole got famous off Occupy, then parlayed that fame into building an audience for themselves.
The libertarians at OWS never went away, they just found new causes.
I was at the HUMONGOUS rally that Obama held in Portland in 2008.
The epicenter of OWS was based a few blocks away, years later, and reflected the optimism of 2008 hardening into frustration over Wall Street excess.
Tea party was the clear predecessor to the maga movement, with its nucleation point being simple racist backlash against obama and trump being personally & directly involved in stoking that racism. In retrospect it obviously laid the groundwork for trump's movement, and I can't see any direct link from occupy to tea party other than perhaps some individuals like tunney.
Trump told people "you're OK".
It is what people need to hear
* Pay your debts
* Own useful assets
* Live in a peaceful stable country
I'm aware of an "AI bubble" and the over-concentration on the "Magnificent 7".
What else is obvious to people and why is the timeframe (next 4 years) so obvious?
That's the obvious part. The consequences of that are anyone's guess, as is the timeframe. But it's not a sustainable situation, so something is bound to happen to change it eventually.
People have been claiming the end is near since forever; economists have been saying for months now that stocks should already be falling, but they are going up. And also, it feels good to be part of the in-group that just knows more than everyone else. Just ask a prepper: they will be equally convinced.
So in summary, even if we’re headed for another crisis, unless you’re only a few years from pension, you’ll just sit this one out calmly, just like all crises before. Unless the global economy breaks down for good (in which case you’ve got other things to worry about), your ETF will recover. Don’t let the fear mongers get into your head.
Should someone that calls 2.4 percent movement bloodbath be taken seriously?
Imagine how deceptive llm slop contents are to the general population.
My guess is that she did a lot of research on the topic with AI then created this article partially with AI generated text.