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How the US "saved" Japan. And who was really being saved?
I recently wrote that money is first and foremost security. Last week, the same mechanism was demonstrated at the level of the world's two largest economies.
On July 24, the yen fell to 164 per dollar, a 40-year low. And on July 31, the US for the first time since 1998 conducted a currency intervention to support the yen. And they did it stylishly: Treasury Secretary Bessent "accidentally" let journalists photograph a notepad with the entry "buy $5–10 billion worth of yen." In two days, the dollar dropped from 164 to 155.
Why would Americans save someone else's currency? Let's figure it out:
Japan holds about $1.1 trillion in US Treasuries and is the largest foreign creditor of the US. To buy back yen, Tokyo needs dollars. The only quick source is selling those same Treasuries. But TD Economics calculated: a sustained sell-off by the Japanese would push 10-year yields up by 20–50 bps. The 30-year is already at 5.23%, the highest since 2007. Every point above that means more expensive mortgages, more expensive corporate credit, and more expensive servicing of the US's own debt.
The creditor's problem automatically becomes the debtor's problem. That's why Washington built a workaround on two fronts:
Japan was given the FIMA repo mechanism: it pledges Treasuries to the Fed and receives dollars against them instead of selling on the market. The bonds stay on the balance sheet, the market doesn't see a sell-off.
The US itself bought yen not with dollars, but with euros from its reserves. The yen was strengthened, the dollar was untouched.
Formally, America was saving an ally. In reality — its own debt market and the cost of servicing $37 trillion in debt.
And this isn't a one-off: Bessent is already demanding an expansion of FIMA, and Japan's Ministry of Finance has stated it will keep using the mechanism. US creditors, taught by past crises, are now being rescued before they even start selling.

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1️⃣3️⃣ Telegram turns 13.

Happy Bar Mitzvah to the greatest app on the planet. Imagine where Telegram will be 13 years from now. By then, you’ll look back and wonder how you ever lived without it.

🎁 Here’s to the next 13 years, Telegram!