Name: I Analyzed How George Soros Made his Billions, It’s Worse Than You Expect
Uploaded: 2025-07-20T19:25:14.000Z
Duration: 15 min 4 s
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George Soros is known for breaking the bank of England and making billions of dollars.

But not many people know that he also broke the bank of Japan and made billions of dollars while keeping the Japanese economy poor.

George Soros is one of the brightest minds in the financial world.

And he found a real-life money glitch that allowed him to make billions of dollars while keeping Japan very poor.

It's like literally in GTA where you write down a cheat code and billions of dollars will flood your bank account.

So here in this video, let's figure out how exactly did George Soros made billions of dollars out of thin air while the economy of Japan suffered as a result of that.

If you are ready, give this video a thumbs up and let's dive right into it.

The Japanese economy was one of the fastest-growing economies of the 20th century.

The country that suffered the most as a result of World War II quickly recovered and started booming.

It literally went from the poorest country in the world to the country that challenged the United States as the world's largest economy.

At some point, the US was afraid that if Japan will overtake the United States, the US dollar might lose its status as the global reserve currency.

At its peak, the imperial palace in Japan used to worth a lot more than the entire state of California.

I want you to think about that for a moment.

The wealthiest state in the United States does not worth as much as a small piece of land in central of Japan.

Prices were inflated to the point, and all of that was made because people borrowed a lot of money and bought assets thinking that the prices of these assets will continue growing forever.

However, in 1990s, the entire economy collapsed, and since then, the stagnation of the Japanese economy began.

In fact, the economy until today hasn't even recovered.

When prices grow so fast, what do central banks do?

They instantly get into the economy and start hiking interest rates to stop the supply of  Because if people have less money to borrow, they will stop borrowing money, which means that they will stop buying a lot of these assets, which means that the demand for the assets will fall down, which means that prices will not rise that much, and the bubble will stop.

By the time the bank of Japan has increased the interest rates, it was too late already.

The bubble has ballooned to the point where nobody could stop it, and in 1990s, it completely collapsed.

The entire economy went into a deflationary environment.

Prices started falling down dramatically fast.

And when prices fall, people stop spending money, because people imagine that prices will continue falling down.

Why would I buy a house today if I know that the price of the house will worth a lot less next year?

Why would I buy it next year when I see that the prices last year has fallen and they will continue falling down?

If you want to buy this house, and you know that the price of this house is falling down, will you buy it today or you will wait until the price will reach the bottom line?

If you wait until next year and the prices are still falling down, you are probably going to continue waiting until the price falls to the rock bottom and then you are going to buy it, because that's when you get the best deal.

While at first glance falling prices seems like a great idea, in reality, it shrinks the economy and prevents the economy from falling down.

So the central bank intervenes and lowers down interest rates to make borrowing money much cheaper, so that people borrow money, start buying assets, start spending, and prices start growing again and the economy recovers.

That's why the central bank of Japan has lowered down interest rates to 0.5% by 1995.

And that's when George Soros realized one of the best opportunities in history.

George Soros quickly realized that the interest rates on the other side of the ocean are much higher than the interest rates in Japan. 0.5 interest rates or super low interest rates were one of the few unique things in the world and nobody saw anything like that.

So you could basically borrow money from one country where the interest rates are low and you could be investing in another country where interest rates are high and you will make a difference.

One of the main reasons why businesses borrow money is when they have a proven business model.

So if apple has a proven business model and they know that by borrowing money and investing in this project, they can make a 10% rate of return by producing iPhones for example.

They will borrow a billion dollars, let's say, at a 3% interest rate.

They don't care about the 3% interest rate because they are making 10% out of their business.

But in this case, you don't have to invent anything.

It's simply one country is loaning money at a lower interest rate and the other country is ready to borrow that money at a higher interest rate.

Which means that you can simply pocket the difference.

Borrow money at 0.5% in Japan, lend it to the US government at 5% interest rate or lend it to the British government at 5% interest rate.

You take the money back, you pay Japan the lower interest rate and you pocket the difference.

Let's say that George Soros borrows 100 million yen at 0.5% interest rate.

He takes that money and instantly converts it to the US dollar.

If you want to loan money to the US government, you will have to loan it in the US dollars.

Let's consider in this case that the conversion rate is 1 dollar equals to 111 yen.

And that will be roughly around 900 thousand dollars.

I am rounding out the numbers to make it easier to understand.

And then you will take the 900 thousand dollars and you look at the treasurer bills of the United States and the United Kingdom.

Interest rates in the US are around 5.5 to 6%.

Interest rates in the United Kingdom are roughly around 5.5%.

Governments usually offer an interest rate that is equal to the interest rate of the Federal Reserve or above that in order to compete with commercial banks.

If you can get a much higher interest rate by loaning your money to JP Morgan, for example, at 5%, why would you loan your money at 1% interest rate to the US government?

And that's why the government often borrows money at the exact same rate that the Federal Reserve sets.

Which means that you could be borrowing money at 0.5% in Japan and loaning it and buying treasurer bills in the United States and the United Kingdom at 5.5%. 5% or 900 thousand dollars is 45 thousand dollars.

You are going to pay back Japan 0.5% or 4500 dollars and you will end up with a profit of a little 40 thousand dollars.

While this doesn't seem like a lot of money, this is just a small example of what you could do with 900 thousand dollars.

Take the exact same strategy, apply it to billions of dollars and suddenly you will find yourself making hundreds of millions of dollars.

The problem with this strategy, while it seems very simple, it presents a very huge risk.

If you make one mistake, you could be losing billions of dollars.

And that's because exchange rates change so fast that if you are not very careful, you could be losing your entire fortune.

Suppose you borrow 100 million yen, and the exchange rate is 1 dollar equals to 111 yen when 100 million yen would equal 900 thousand dollars.

If the yen is going to appreciate, that means that yen is going to become stronger compared to the dollar, that means that the demand for yen is going to increase while the demand for the dollar is going to decrease.

If the yen will appreciate where 1 dollar will equal to 50 yen, now it means that the 100 million yen that you have borrowed will equal to 2 million dollars.

Because you are paying back the bank of Japan not in US dollars but you are paying the bank of Japan in the local currency.

Every central bank has the right to print money, but they only have the right to print their own local currency.

The federal reserve in the United States has the right to print the US dollars.

The bank of Japan in Japan has the right to print the Japanese yen, and they will only accept the Japanese yen.

So if you are paying back the bank of Japan, then you have to pay them back in the Japanese yen.

So if you miscalculate and the Japanese yen suddenly appreciates, you will find yourself losing billions of dollars.

When you lower down interest rates to 0.5%, that means that borrowing money is cheap now.

Now everybody rushing to the banks and borrowing a lot of yen.

That increases the supply of yen in the market.

When the supply rises while the demand is the same, that creates or devalues the currency.

The Japanese yen began to depreciate against the dollar and other currencies which allowed this strategy to happen.

And the only reason this strategy worked is because George Soros was convinced that Japan is not going to get out of the deflationary environment any time soon.

But George Soros was not ready to take the risk.

And he purposely did everything possible to continue the yen to depreciate and the only way he could do that is by pressuring the yen.

And the best way to pressure any security is to short it massively.

Shorting any currency means simply borrowing that currency.

If I want to short the Tesla stock, then I am borrowing the Tesla stock from the broker but I have to give it back some time in the future.

I might give it back tomorrow or next year or a few months from now.

I cannot pay back with a different security, I have to return back the exact same Tesla stock.

Which means that if the price of Tesla stock is going to rise tomorrow, I have to buy back that stock at a much higher price which means that I will make a loss.

So in this case, when you are borrowing a lot of yens, you are again flooding the market with a lot of yens which means that the supply of yen in the market is rising which is devaluing the yen.

But at the same time, I am taking my yen and I am instantly selling it in the open market.

Let's imagine for a moment that the exchange rate is 1 dollar equals to 100 yen.

I took my 100 yens and I sold it in the open market for 1 dollar.

I no longer have the yens but I have my single dollar.

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I Analyzed How George Soros Made his Billions, It’s Worse Than You Expect

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