Name: “Most People Have No Idea What is About To Happen To Japan”
Uploaded: 2025-08-01T17:54:56.000Z
Duration: 21 min 20 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

The superlative

The greatest threat to the US economy is not China.

Gerund

In fact, China is one of the countries that wants the United States to continue growing and prosper because it is making a lot of money out of the United States.

Past simple

It made more money out of the US than any other country.

And if it wasn't for the United States, China wouldn't be as rich as it is today.

It might have taken China another century to be as rich as they are right now.

The country that is the biggest threat to the United States is one of the closest allies of the United States.

You know they say that keep your enemies close but your friends closer.

Japan is the greatest threat to the United States.

And that's not because they have anything against the United States but because they are in such a huge economic crisis that they can drag down not just the US economy but the entire global economy and can cause a financial crisis the likes that we have not seen.

And here in this video, I am going to show you how bad this situation is.

I will show you the numbers, I will show you the details, I will show you the statistics and you will understand why this is the greatest danger to the global economy.

So if you are ready, give this video a thumbs up and let's get right into Japan was one of the successful economies of the 20th century.

And there was a point in time where Japan overtook the United States and the average Japanese was much wealthier than the average American.

Because Japan had plenty of people with its population that is much smaller than the United States, it almost became the world's largest economy.

They were trying to figure out a solution to beat Japan because how is it that the United States will lose the position of the world's largest economy.

And that persisted for a couple of years until the Japanese economy collapsed.

And ever since the Japanese economy could not recover, it has been like over 30 years.

And since then, there were attempts to recover the Japanese economy.

But as you can see that it has been collapsing since then.

Imagine the size of the Japan's economy today is much smaller than it was back in the 1990s.

But the most important question is that how is it such a country that is suffering so much is the biggest holder of the United States treasury bills.

Nobody, not a single country in the world invests in the United States as much as Japan invests.

And right now they are having over a trillion or I would say to be more precise, over 1.1 trillion dollars in treasury bills of the United States.

And if they sell all of those treasury bills once in the open market, it will cause a financial disaster in the United States because it has the power to crush the entire bond market.

And the bond market is the bedrock of the global economy or the bedrock of the dollar being the global currency reserve.

So if that massive sell-off is going to happen by Japan, it is going to drive the entire US economy into a crisis that we have not seen probably since the great depression of 1929.

But the most important question is that why would they do that?

Why would Japan crush the US economy by selling so many treasury bills?

That's not because they want to crush the US economy.

That's because if they don't do that, there is a huge chance that the Japanese economy could get significantly worse.

To understand what's happening, we first have to answer the most important question.

How did Japan ended up with so many US treasury bills?

How did Japan ended up buying over 1.1 trillion dollars in treasury bills?

And it's really interesting because every single year, people in the United States are paying so much taxes and tens of billions of dollars of those taxes directly go into the budget of Japan because they are having so much debt of the United States.

When the Japanese economy crashed back in 1980s and 90s because it turned into one of the largest bubbles in history, what do you think governments do during that period?

When you have an economy that has crushed and prices going down, the economy is down, and you have to figure out something, you must do something in order to stimulate the growth.

So let's go back, for example, aftermath of 2008 financial crisis when the entire US economy collapsed.

They immediately lowered down the interest rates to absolute to make it easier to borrow money so that people borrow money, buy houses, corporations borrow money, start new projects, and everybody starts borrowing money.

And when they start spending money, the economic cycle starts cycling again and the economy starts growing.

And that's how it always works in the United States and all across the globe.

So the Bank of Japan immediately lowers down the rates, not just to 0%, but to negative percentage.

As if the government of Japan getting into their Japan and saying, listen guys, here we are going to give you as much money as you want just for you to borrow money from us.

Logically, it makes no sense because if I am borrowing money from anybody, then I have to pay interest for borrowing that money.

But the situation got so bad in Japan that the Bank of Japan had to literally pay people in Japan to borrow money.

So essentially, people are profiting from borrowing money.

Now, if that would happen to anybody, you should immediately go to the Bank of Japan and borrow as much money as possible because eventually, you are borrowing that money for free.

You can take that money, invest it in the stock market, and you will make plenty of money.

Even if you make like 1% return on that investment, you are still making a profit because you are not paying anything to the Bank of Japan.

And in this case, the Bank of Japan is paying you.

Now, this sounds great in theory, this sounds fantastic, but it has its consequences.

The government of Japan suddenly got hooked on this cheap money and they started borrowing money.

And as you can see that, the debt to GDP ratio in 1990s was around 50%.

The data that you see over here is for 2020.

If you look at the data for 2025, then it's clearly around 250%.

That is double the amount of the GDP ratio in the United States.

In the US, it's around a little over 100%.

And we are already freaking out about the debt to GDP ratio in the United States.

And here in Japan, they are having a debt to GDP ratio of over 250%.

The reason that it did not cause any kind of a catastrophe is because all of this period of time that Japan has been borrowing money, they have done it literally at almost 0% in interest.

But what you have to understand about governments borrowing money is that you can't create money out of thin air.

There is a market mechanism of how you can do that.

So any government, including the government of Japan, creates a piece of paper that is called a government bond and then sells that bond to anybody who wants to buy that bond.

That bond usually have some kind of an interest, and that allows the government to raise money.

That's how the United States raises money.

That's how the bank, the government of Japan raises money or the UK or any other government.

The question is that who is going to buy all of these government bonds in Japan when interest rates are so insanely low.

If interest rates are 0% or negative 0.1%, then the government of Japan cannot possibly offer you a 5% interest rate or a 4% interest rate because the bank of Japan will gladly lend money to the government of Japan at 0% interest rate or 0.5% interest rate.

And that's why the vast majority of all the government bonds in Japan are being held by government institutions like the bank of Japan, which holds 50% of all of that debt.

Then the largest banks in the country, insurance companies, which are also in one way or another tied to the government, and most importantly, pension funds.

Now, the question is that how would these corporations survive when they are getting simply 0.5% or lower than that on their investments?

We understand the bank of Japan, they don't have to be profitable, but the largest banks in the country, they must be profitable.

The insurance companies, they must make a decent return to make it possible.

When you are not making any kind of returns on your investment, what are you going to do?

And this is the genius solution that Japan came up with essentially allowed Japan to make trillions of dollars over the last 30 to 40 years without building or creating anything.

There is a huge difference in interest rates between the United States and Japan, and that has been the case historically.

For example, right now, interest rates are about 4.3% or 4.5% while interest rates in Japan are less than 0.5%.

Essentially, a pension fund from Japan can borrow money from Japan from the bank of Japan and take that money and invest it in the United States.

Because we are having an open market, because this is a capitalistic market, the rates on the bond usually reflect the rates that are being set by the Fed.

So if the Fed, for example, lowers down interest rates to almost 0% and 1%, then the rates on the government bonds will go down as well.

But if the rates of the bonds are forced to go higher, then the Fed has no other option but to increase the rates as well to match the rates that we have on the bonds, because everything works based on demand and supply.

Why would anybody buy the government bonds in the United States at those rates?

If the Federal Reserve will start artificially buying those rates at a much lower interest rate, that will create in confidence in the market, which is why they don't do that.

But here in this case, we have the bank of Japan that has a much lower interest rate, so the pension fund started basically borrowing money in Japan and investing it in the United States over all of these years, which allowed Japan to accumulate trillions of dollars in treasurer bills from the United States.

And pension funds from now onwards don't have to make a return from their Japanese assets, because the returns that they are already making from the United States are covering everything.

So the pension fund essentially is making a profit, even though that they are not making much profit or any profit whatsoever from Japan directly itself.

Basically, Japan massively started investing in the United States and making lots of money.

Maybe that's another reason to consider investing as well.

So if you are actually very serious about investing, just like Japan was during the days and made trillions of dollars out of the United States, maybe this is the time for you to consider joining our academy, because this is one of the things that we teach in our academy.

The better you understand the financial markets, the better you understand how the system works, the better investment decisions you are going to make.

Every time something like that happens, the Japanese yuan weakens, because you are borrowing money from Japan, and you are using that money and you are buying US dollars.

So the Japanese yuan is weakening, but the US dollar is strengthening, which means that it cannot work over the long period of time.

At some point, this system is going to break up, since the currency will continue to devalue.

But it worked in the case of Japan, because Japan is an export-driven economy.

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“Most People Have No Idea What is About To Happen To Japan”

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