Japan’s funding crisis

The intervention by the US to support the yen was at the request of Japan, which with oil supplies from the US running out faces an acute economic, debt, and currency crisis.

There is little doubt that all members of the G7 group of countries face debt traps as their funding costs are about to go higher in the next few months, a problem brought forward by the closure of Hormuz to oil and oil derivative supplies to the rest of the world.

There has been some debate as to which G7 will trigger the crisis first that brings them all down. We got our answer last week — Japan. Japan threatens to be the domino which falls first, knocking over the other G7s in a global crisis engulfing financial markets upon which our fiat currency system is based.

The purpose of Bessent’s intervention was to save Japan

Around August 1, 2026, the US coordinated with Japan to support the yen. Treasury

Secretary Scott Bessent was photographed at a Camp David cabinet meeting with a notepad reading “To Do Buy Japanese Yen $5-10 bil,” and both governments confirmed the action on August 3-4. Bessent described it on social media as “Friday’s coordinated foreign exchange actions countered disorderly yen movements.”

Rather than the more conventional approach of selling dollars directly, the Treasury reportedly sold euros held in the Exchange Stabilization Fund to finance the yen purchases.

Those appear to be the facts of the case. But other than causing a bear squeeze leading to a sharp 4.7% recovery in the yen/dollar rate, they have led to confusion as to what was to be achieved by this intervention. It should be noted that movements in