Japanese Yen Teeters on the Edge as Bank of Japan Runs Out of Ammo

[00:00:00]Are we to believe that boiling water soaks into a grit faster in your kitchen than on any place on the face of the earth?

[00:00:10]>> I don't know.

[00:00:11]>> Well, perhaps the laws of PHYSICS CEASE TO EXIST on your stove. Are you sure about that 5 minutes?

[00:00:17]>> Are you sure about that 5 minutes?

[00:00:19]>> I don't know. I think you made your point.

[00:00:21]>> Are you sure about that 5 minutes?

[00:00:27]>> I may have been mistaken.

[00:00:39]Hey guys, Rafie here from the Endgame Investor and today we're going to talk about the collapsing yen. It's broken through 161. It's at its final support before it breaks down to I think the next support level is 177 to the dollar.

[00:00:57]And because Japan is a fulcrum of the entire Keynesian debtbased system, because Japan is the biggest foreign buyer of US treasuries on the planet, it used to be China, but they started selling a few years ago. That means when the yen falls, the entire Keynesian system falls with it. And you might want to say, well, the Bank of Japan has plenty of firepower with which to defend the yen. But unfortunately, that's not exactly true because the Bank of Japan has been spending a record amount of dollars defending the yen. last month before it broke through 161 and now it's broken through and has to spend even more. It's running out of firepower. How much more it has, we don't know. But it's going to be a repeat of the 2015 episode when the Swiss National Bank abandoned its peg with the euro and the Swiss Frank catapulted by a huge amount and off-footed a lot of forex traders and bankrupted a lot of people and made a lot of other people pretty rich. Same thing is going to happen this time with the yen but much more extreme. And yes, the everything bubble has reached Japan.

[00:02:00]Its stock market is going vertical. But if you look at it priced in gold, it's an illusion. Just like all bubbles are an illusion. Investor interest in gold stocks and mining stocks and streamers continues to fall towards record lows.

[00:02:15]Nobody's paying attention to the sector.

[00:02:17]Doesn't matter how good it's doing.

[00:02:19]There's just no interest, which means eventually there will be. And the funds and the stocks are going to be a lot higher than they are now when everybody finally realizes they exist.

[00:02:31]>> But existing is basically all I do.

[00:02:33]>> And we're going to talk about new Fed chair Kevin Walsh. Is his name Kevin?

[00:02:37]Kevin Worsh or W War Wars? I don't even remember what his name is. But anyway, he's starting a panel or some kind of investigatory committee to try to figure out what to do about the balance sheet.

[00:02:49]and he thinks he wants to shrink it and stop getting the Fed involved in all this monetary stuff. I guess he believes that the laws of economics do not exist on his Federal Reserve Board.

[00:02:59]>> Well, perhaps the laws of physics cease to exist on your stove.

[00:03:04]>> And finally, we're going to look at primary credit from the Fed, which is the Fed's primary bailout tool for banks that are immediate trouble of cessation of business activities because they're bankrupt. This thing spiked up to a record high in 2023 during the regional bank crisis of that year and it trickled up until it spiked in 2008 leading up to the 2008 financial crisis. And we're seeing a trickle up in the bailout right now up to about $8 billion. And this is about the level that it was at before it broke out in 2008. We'll see if it keeps trickling trickling up and resulting in some kind of financial crisis, which eventually is going to happen anyway. It just depends what we're looking at to trigger it. But anyway, if you want to support this channel, there are three things you can do. First of all, you can sign up for an account at Monetary Metals. That's Keith Weiner's company, where you earn gold and silver ounces on your gold and silver deposits. You earn interest on your deposits, just like a bank actually should be. I wouldn't have thought it, but that's actually the best way to support the channel. So, check it out at my link in the description below and start earning interest on your gold and silver in gold and silver ounces.

[00:04:12]You can also get physical gold and silver with Miles Franklin. Use the link in the description below and mention the Endgame investor. Or you can take some of your gold and silver and put it in a dirty man safe. Use the code endgame 10 at checkout for 10% off. And in the meantime, let's start the slides. We're checking out the yen here. This is a long-term chart going back to 1980 or even late 1970s. You can see this is now the third time that the yen has broken 161 since 1990. You can see that circle here at 1990 at about 1601 161 and over here in 2024 when the Bank of Japan intervened to bring the yen down to the 140s which means higher against the dollar and now we're back at 161.42 exactly I don't know but that was yesterday's number and we're all awaiting a Bank of Japan intervention just like we saw in 2024. The question is can it will it come this year? And uh the answer I think is no not like it has in 2024. Why is that? Because if you look at this black line over here, it's hard to see this color over here, but this is the monthly change in the Japan foreign exchange reserves. This is what the Bank of Japan uses to defend the yen. Whenever they defend the yen, they sell foreign exchange, usually dollars or dollar derivatives for dollars, to buy yen off the market and increase the value of the yen versus the dollar. But you can see they've already burned through about 71 billion uh yen this month. And that is an all-time record for a month. Nothing else comes close.

[00:05:45]This is where the black line is. Black lines matter, by the way. Oh boy, I'm going to get in trouble for that one.

[00:05:51]And this is before the yen broke down below 161 or above 161 depending on how you look at it. So, how much more does the Bank of Japan have? They're already burning through record amounts of foreign exchange reserves. Uh, we'll see. Maybe they can rescue it again. I don't know. I don't know exactly what goes on with the Bank of Japan. They don't really call me. Um, but judging by this chart, it don't look good for them.

[00:06:14]The everything bubble has reached Japan.

[00:06:16]Yes, this is the Japanese stock market, the Nikkeay, and it's been going vertical since 2024, 2025 looks like.

[00:06:24]Yeah, pretty much. So, the everything bubble has reached Japan, and it looks like the Japanese stock market is doing fantabulously well. But if you price it in gold, it changes the story entirely.

[00:06:36]Uh this is the Japanese stock market in ounces of gold, how many ounces of gold you can acquire with one unit of Nikkay.

[00:06:44]And yes, there's been a slight rally here from 10 to 17. That's a pretty good rally. Like, you know, 10 ounces to 17 ounces. That's uh that's pretty impressive until you look at the history. And we've been in the range of 10 to 17 since about uh 2015. So, the stock market, the Japanese stock market hasn't really gone anywhere since 2015.

[00:07:05]It's stayed in this anemic range. It really collapsed from 1990 at about 90 ounces of gold to 2012 when it hit below five ounces of gold. That's like a 90 95% decline in real money terms in real money value. And uh then we've had a tiny little little rally here. It's really not significant at all. And this Japanese bubble is an illusion as all bubbles really are. And so, would you be better off in gold or the Japanese stock market since 1990? Uh, gold by far.

[00:07:41]And let's look at these two charts. This is GDX and GDXJ. Actually, GDXJ on the top and GDX on the bottom. This is not the share price. This is the total number of shares outstanding in each fund. So you can see here that uh this is from 2016 to 2026 to now. And this is a daily chart actually. I think it's monthly uh to be more precise. And the amount of shares outstanding continues to fall in GDXJ. We're down to about 70 something million shares, a little bit below that. And no matter how high the shares go, we are very close to a record high. uh we were in Janu in late January uh March and early March at a record high in GDX here. We're not so far off it though we've had a little bit of a decline. Same thing with GDX, but the bullish activity in the mining stocks is not attracting anyone really and people still are getting out of the fund and there's no institutional or investor interest in gold mining stocks and hasn't been despite the enormous gains since 2024. And yeah, that sounds frustrating. But at the same time, when this interest does concretize, when it does start to exist and start to come out of the woodwork, you can imagine what these funds are going to do. They are going to go much, much higher when the realization is finally made that the dollar is going down the tubes of monetary hell. And the next to last thing we're going to look at before we talk about Kevin Worsh is the primary credit bailouts. This is primary credit, meaning I think they call the discount window or it's the Fed's emergency liquidity line for banks that are on the verge of dying. You can see here that we have been trickling back up since the beginning of the year when we took a dive after New Year's into 2026, up from about $3.5 billion to now 7.57 billion. And that itself is not that much money. But uh when the numbers tend to get into this area, you sometimes see spikes. And we're going to see that in the other um timelines here. You can see this is leading up. This is the same thing. Primary credit leading up to the 2023 banking crisis in March 2023. So this chart goes up to one week before the March 2023 banking crisis. You can see that we had hit this level which is about $7.5 billion. We went a little bit above it, traded a little bit below, not traded but uh the Fed started lending a little bit below it and then all of a sudden there was an explosion. Uh but you can see here that this is the area that we are in now and it's the area that tends to preede huge bank problems and bank bailouts and them needing this emergency liquidity line from the Fed.

[00:10:27]Doesn't happen every time, but every time it does spike, these levels are hit first. Lead up to the 2008 crisis. This is the same metric leading up to the 2008 crisis. You can see here the last date on this chart is August 2008 about uh 2 3 weeks before the um what's it called? That insurance company >> AIG we know money >> um or was it some other one? I don't remember exactly but you can see we we were in the same ballpark 7 8 9 billion we reached up to about 18 billion we're not there yet but we are in the ballpark where the financial stress started to materialize over here uh starting in about April 2008 and from there we all know what happened a few months later so this is showing how an artificial crisis that's not exactly a banking crisis we had zero zero dollars basically it was a little bit but you can't see it on the chart here basically zero until the 2020 lockdowns which forced a whole bunch of banks to borrow about $50 billion from the Fed overnight u so meaning the normal condition is that this is zero so meaning this condition over here when banks are borrowing 7 billion and this condition over here in 2023 it's still abnormal it's not extreme yet but it's more abnormal than say this when they're borrowing zero and everything is doing fine at least on the surface So now let's talk about Kevin Wars. He's the new Fed chair. He's the new money printer chief. And he seems to think that the laws of economics cease to exist on his Federal Reserve Board. How do I know this? Because this is an article from Bloomberg syndicated by Yahoo and it says Wars forms task force to review Fed 6.7 trillion balance sheet. He wants a task force to review whether the Fed needs to be involved in the monetary markets to the tune of $6.7 trillion. He wants that task force to recommend ways of shrinking the balance sheet. So here it says Federal Reserve Chairman Kevin War said he is appointing a task force to examine central bank's 6.7 trillion dollar balance sheet. A first step in addressing a policy issue he has long criticized money he's criticizing money printing. Well, he is the chief money printer of the planet right now. So, uh, he's criticizing his own position and there's not much he can do to change economic law because a fiat system needs constantly exponentially increasing debt in order to survive and it cannot escape that exponential curve.

[00:12:55]But anyway, we're going to the next paragraph here. War said one of the independent task forces he is forming will review the benefits and risks of the current ample reserves regime and the composition of the balance sheet.

[00:13:06]His announcement came at a press conference after the Federal Open Market Committee held rates steady at a range of 3.5% to 3.75% on Wednesday. The focus, and this is the funny part, on the balance sheet sharpens questions over how aggressively a Worshled Fed will act. Worsh has called for dramatically pairing back the central bank's financial footprint which ballooned under successive rounds of asset purchases and made the global financial crisis and the global and the coid9 pan. So he thinks the Fed is too involved in the money markets and he can somehow skip over the economic law that without inflation a monetary fiat system, a fiat monetary system implodes as Austrian business cycle theory proves deductively. There is nothing the new Fed chair war can do to get off the in exponential curve of money printing. If he tries, there will be global bank failures and he will have to reinflate to infinity. And if he doesn't try, well then we'll just keep going on that exponential curve to the endgame as we were before. Kevin, I guarantee you there's nothing you can do to change the laws of economics.

[00:14:22]Have a good time and let us know when you give up. This is Rafie of the Endgame Investor. Check out my Patreon at patreon.com/endgameinvestor for lessons on biblical economics and government libertarian lessons based on the Bible. Check it out there for as little as $3 a month and support this channel. I'll see you guys next week.

[00:14:46]Well, perhaps the laws of physics cease to exist on your stove.

[00:14:51]Were these magic grits? I mean, DID YOU BUY THEM FROM THE SAME GUY WHO SOLD JACK HIS BEANTO BEANS?

[00:14:59]>> OBJECTION, your honor.