TruthArchive.ai - Tweets Saved By @DalyAManagement

DalyAManagement
Posted - September 14, 2025 at 2:00 PM
Saved - September 15, 2025 at 9:13 AM
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George Soros's financial maneuvers have had catastrophic impacts on multiple nations, notably during the 1997 Asian Financial Crisis. He famously made $1 billion betting against the British pound in 1992 and later targeted Thailand, profiting from the collapse of the baht. His actions contributed to widespread economic turmoil across Asia, leading to severe currency devaluations and significant human suffering. While he claims to have merely identified imbalances, the crisis reshaped global finance, prompting countries to adopt new strategies to safeguard against similar attacks.

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George Soros didn't just destroy Britain. He also crashed Thailand, Indonesia, Malaysia, South Korea, and nearly brought down Japan. His 1997 bet against the Thai baht triggered the largest financial crisis in Asian history. Here's how ONE man devastated entire nations:🧵

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Let's recap: In 1992, Soros made $1 billion in a single day betting against the British pound. He borrowed £6.5 billion, sold it all for other currencies, and forced Britain out of the European Exchange Rate Mechanism. But it was just practice for what came next:

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In 1992 the UK was trapped in the European exchange rate mechanism. Think of it like financial handcuffs, they had to keep the British pound within a tight range against the German mark. No flexibility, no escape between these two currencies. But George Soros, this Hungarian immigrant who survived Nazi occupation and built one of the most successful hedge funds in history, is looking at the situation and thinking, this is unsustainable. And he was right. The UK had high inflation, weak growth, and they were paying crazy interest rates just to maintain this artificial system. It was like trying to hold a beach ball underwater. So what did Soros and the team do? They built a massive short position. We're talking billions of pounds.
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Speaker 0: Alright. So picture this. It's 1992 and The UK is trapped in what's called the European exchange rate mechanism. Think of it like financial handcuffs. They had to keep the British pound within a tight range against the German mark. No flexibility, no escape between these two currencies. But George Soros, this Hungarian immigrant who survived Nazi occupation and built one of the most successful hedge funds in history, is looking at the situation and thinking, this is unsustainable. And he was right. The UK had high inflation, weak growth, and they were paying crazy interest rates just to maintain this artificial system. It was like trying to hold a beach ball underwater. You can do it for a while, but eventually, your arms get tired and the thing comes rocketing up. So what did Soros and the team do? They built a massive short position. We're talking billions of pounds.

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5 years later in Thailand, he borrowed massive amounts of Thai baht and sold them for dollars. When Thailand's currency peg broke on July 2, 1997, the baht collapsed from 25 per dollar to 54 per dollar. A 50% currency destruction in 6 months. He doubled his money.

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Soros makes huge bets on whole countries and economies. Last year, when he saw cracks in the Asia boom, he began selling the currency in Thailand. Traders in Hong Kong followed suit, triggering a financial crisis that plunged much of Asia into a depression. In the last two years, you've been blamed for financial collapse of Thailand, Malaysia, Indonesia, Japan, and Russia. All of the all of the above. All of the above. The prime minister of of Malaysia Yes. Said that the region spent forty years trying to build up its economy, and along comes a moron like Soros, k, with a lot of money, and it's all over. He called you a criminal. The French finance minister talked about hanging speculators from lamppost. Soros says the Asian currencies would have collapsed even if he hadn't been in the market. They were over valued. He says people tend to follow his lead because he's been so successful. I have been blamed blamed for everything. I am basically there to to make money. I cannot and do not look at the social consequences of of what I do.
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Speaker 0: Soros makes huge bets on whole countries and economies. Last year, when he saw cracks in the Asia boom, he began selling the currency in Thailand. Traders in Hong Kong followed suit, triggering a financial crisis that plunged much of Asia into a depression. Speaker 1: In the last two years, you've been blamed for financial collapse of Thailand, Malaysia, Indonesia, Japan, and Russia. All of the all of the above. All of the above. Yeah. Are you that powerful? Speaker 2: No. I think there's a great misunderstanding. Speaker 1: The prime minister of of Malaysia Yes. Said that the region spent forty years trying to build up its economy, and along comes a moron like Soros, k, with a lot of money, and it's all over. He called you a criminal. It's easier for him to blame an outside force than to admit that they Speaker 2: were mismanaging their economy and their currency. Currency. The The French finance minister talked about hanging speculators from lamppost. Speaker 1: Good morning. Speaker 0: Soros says the Asian currencies would have collapsed even if he hadn't been in the market. They were over valued. He says people tend to follow his lead because he's been so successful. I think that I've Speaker 2: been blamed blamed for everything. I am basically there to to make money. I cannot and do not look at the social consequences of of what I do.

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His strategy? Step 1: Borrow baht from Thai banks Step 2: Convert baht to dollars immediately Step 3: Wait for the peg to break under pressure Step 4: Buy back baht at collapsed prices to repay loans The profit margin was built into the trade structure.

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Their figurehead is George Soros. The speculation process goes like this: an investor deposits a security of 1,000,000,000 US dollars with a bank somewhere in the world. Then he goes to a bank in Thailand and takes out a loan for 25,000,000,000 baht. This is the official equivalent of $1,000,000,000. He sells the baht on the open market. Immediately, other money traders follow suit because they now fear that the price of the baht will fall. When the exchange rate of the bot to the dollar has fallen, for example, by 30%, the investor then buys back the 25,000,000,000 baht with only 700,000,000 US dollars, thereby redeeming his loan. He has made a $300,000,000 profit and then hightails it out of the country.
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Speaker 0: Their figurehead is George Soros. The speculation process goes like this. An investor deposits a security of 1,000,000,000 US dollars with a bank somewhere in the world. Then he goes to a bank in Thailand and takes out a loan for 25,000,000,000 baht. This is the official equivalent of $1,000,000,000. He sells the baht on the open market. Immediately, other money traders follow suit because they now fear that the price of the baht will fall. When the exchange rate of the bot to the dollar has fallen, for example, by 30%, the investor then buys back the 25,000,000,000 baht with only 700,000,000 US dollars, thereby redeeming his loan. He has made a $300,000,000 profit and then hightails it out of the country.

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The targeting wasn't random. Thailand had been growing at 9.1% annually from 1990-1995, attracting billions in foreign "hot money." But Soros saw what others missed: unsustainable debt levels and artificially propped-up currency values. He positioned for systematic collapse.

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1993: the Thai government decided to create an international financial center in Bangkok with the intention of competing with Singapore and Hong Kong, easing regulations on capital market, introducing tax incentives, and promoting a financial industry. Bang was specializing in foreign exchange lending operations, borrowing capital nominated in currencies and channeling it into local projects, making Bangkok one of the gateways to Southeast Asia. The experience as a financial center was limited, and regulations were ineffective. The influx of capital flooding Southeast Asia led to investments in projects that would not be profitable, funded by loans with little hope of repayment. IMF estimates loans in an erratic situation reached levels of between 1524%. Lax financial rules and lack of supervision meant loans were refinanced without being classified as dubious, interest never actually received was counted, and many troubled companies were lent more money to pay off interest on previous loans.
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Speaker 0: 1993. In that year, taking advantage of the enormous influx of capital that was flooding Southeast Asia, the Thai government decided to create an entire international financial center in Bangkok with the intention of competing with Singapore and Hong Kong. To achieve this, the Thai government did what it is usually done in such cases. It eased regulations on the capital market, introduced tax incentives, and promoted the creation of a whole financial industry. And the truth is that things began to go in the right direction. Soon, Bang was specializing in foreign exchange lending operations. That is borrowing capital nominated in major international currencies such as the dollar and channeling it into all types of investment projects in local currency. In this way, Bangkok became one of the great gateways to the economies of Southeast Asia. What happened is that its experience as a financial center was very limited and the regulations, well, let's just say they were pretty ineffective. But do you remember what else was happening? The enormous influx of capital into this part of the world meant that large amounts of resources were invested in projects that would never be profitable. Resources that, don't forget, came from loans that there was little hope of paying back. And that is precisely what led to a growing deterioration in the credit portfolios of Thai financial institutions, or in other words, a whole lot more default. Take a look. According to estimates made after the crisis by the International Monetary Fund, loans in an erratic situation, that is, that began to have problems being repaid or paying interest reached levels of between 1524%. However, despite the fact that these were figures that could make any analyst's hair stand on end, none of this appeared in the bank's annual accounts. Lax financial rules and lack of experience and supervision meant that loans in irregular situations were refinanced without being classified as dubious. And not only that, interest that had never actually been received was also usually accounted for, and many companies in trouble were lent even more money to pay off interest they already owed on previous loans. That's just crazy.

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Thailand spent over $12 billion trying to defend their currency. They raised interest rates, restricted baht access to foreign speculators, and burned through foreign reserves. None of it worked. When the peg broke, the contagion spread instantly:

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the real risk is if the foreign currency were to appreciate dramatically relative to your own. but if you're a Thai bank in the early nineties, you're like, there's this huge demand of other people wanting to convert their currency into the Thai baht. In fact, so much so that in order to maintain this peg, the Thai Central Bank is is is is printing money and buying those and buying those dollars. It's trying to soak it up. So the Thai Central Bank is building this huge reserve of dollars. So for whatever reason, if those investors were ever to try to pull out, the Thai central bank could still attempt to keep the currency pegged. And so when you go to 1997, that's exactly what happened.
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Speaker 0: The real risk is if the foreign currency were to appreciate dramatically relative to your own. But if you're a Thai bank in the early nineties, you're like, there's this huge demand of other people wanting to convert their currency into the Thai baht. In fact, so much so that in order to maintain this peg, the Thai Central Bank is is is is printing money and buying those and buying those dollars. It's trying to soak it up. So the Thai Central Bank is building this huge reserve of dollars. So for whatever reason, if those investors were ever to try to pull out, the Thai central bank could still attempt to keep the currency pegged. So you'd say, oh, this is a pretty stable thing and I could just make this thing the spread, this 4% spread, easy money. But as we know, it's not always that easy. Risks that you're not aware of can very easily crop up. And so when you go to 1997, that's exactly what happened. All of a sudden, people realized that there's all this there's this boom going on in Thailand. There's all this lending going on in Thailand, but maybe that lending wasn't going on in the best possible places. And in particular, it was going on in real estate in a very speculative way, and we all know now that real estate is a good source of of speculative bubbles, and investors start to get scared, and they start wanting to pull out. They start wanting wanting to pull out. And we saw in the last videos, they might they just might naturally get scared, then you might have speculative attack. You might have currency speculators say, I'm gonna start borrowing in Thailand, and then I'm going to and I'm going to then convert that to dollars, and then invest in The US hoping that this devaluation will occur, knowing that if enough people jump on the bandwagon, that the Thai Central Bank would literally run out of reserves. And the reason why this is risky is once they do run out of reserves, what's going to happen to this person who had borrowed in dollars and then lent in Thailand? Well, over here you see that there was a massive devaluation, that overnight the value of the Thai baht relative to the dollar almost went in half. So all of a sudden you borrowed in this currency and that currency is becoming twice as is becoming worth twice as much as you thought it was relative to your own currency, relative to this inbound payments that you're getting right over there. And so if all of a sudden if your debts are doubled because the currency you borrowed in doubled relative to your own currency, you now own twice as much. And given that banks like to leverage a good bit, you're probably going to go probably going to go out of business.

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Within the first 6 months: Indonesian rupiah: DOWN 80% Thai baht: DOWN 50% Korean won: DOWN 50% Malaysian ringgit: DOWN 45% Over $100 billion in capital fled the region in year one. Entire economies collapsed overnight. The human cost was devastating:

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Thailand's economy shrank 10% in one year. Indonesia faced riots, hyperinflation, and political revolution. South Korea required a $58 billion IMF bailout. President Suharto fell after 30 years in power. Unemployment and poverty exploded across the region.

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In the nineteen nineties, South Korea experienced rapid economic growth. But behind the scenes, problems were piling up, excessive corporate expansion, rising debt, and weak financial regulations. Then came the global financial shift. As foreign investors pulled out of East Asian markets, South Korea found itself in deep trouble. By November 1997, the government had no choice but to seek a $58,000,000,000 bailout from the International Monetary Fund, IMF. In return, Korea had to undergo painful economic reforms, corporate restructuring, financial sector reforms, and fiscal tightening. The impact was severe. Many businesses collapsed, unemployment soared, and families struggled.
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Speaker 0: In the nineteen nineties, South Korea experienced rapid economic growth. But behind the scenes, problems were piling up, excessive corporate expansion, rising debt, and weak financial regulations. Then came the global financial shift. As foreign investors pulled out of East Asian markets, South Korea found itself in deep trouble. By November 1997, the government had no choice but to seek a $58,000,000,000 bailout from the International Monetary Fund, IMF. In return, Korea had to undergo painful economic reforms, corporate restructuring, financial sector reforms, and fiscal tightening. The impact was severe. Many businesses collapsed, unemployment soared, and families struggled.

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Malaysia's Prime Minister accused Soros of economic warfare. But Soros defended his position: "I didn't cause the crisis. I simply identified the imbalances." The problem? he data supports both sides:

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This wasn't just about Malaysia's economy, it was about its future. How could a small Southeast Asian nation stand up to the immense forces of global speculation? As Mahathir and Soros prepared to face each other, the stakes couldn't have been higher. Major concerns about the banking system and the collapse of some of the conglomerates. I think it is an embarrassment. Furthermore, I think it has hurt Malaysia that we have seen a direct correlation between some of these outrageous allegations and the fall in the currency in Malaysia as well as the stock market. The crisis was reaching its peak, and the emergency meeting in Hong Kong became the epicenter of global economic debate. The IMF, with its $17,000,000,000 USD bailout offer, seemed like a lifeline for Malaysia. But this lifeline came with chains attached.
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Speaker 0: This wasn't just about Malaysia's economy, it was about its future. How could a small Southeast Asian nation stand up to the immense forces of global speculation? As Mahathir and Soros prepared to face each other, the stakes couldn't have been higher. Higher. The stage was set and the world eagerly awaited the outcome of one of the most dramatic moments in modern economic history. Speaker 1: Major concerns about the banking system and the collapse of some of the conglomerates. I think it is an embarrassment. Furthermore, I think it has hurt Malaysia that we have seen a direct correlation between some of these outrageous allegations and the fall in the currency in Malaysia as well as the stock market. Speaker 0: I'm saying that currency trading is unnecessary, unproductive, and totally immoral. Society must be protected from unscrupulous profities. The crisis was reaching its peak, and the emergency meeting in Hong Kong became the epicenter of global economic debate. The IMF, with its $17,000,000,000 USD bailout offer, seemed like a lifeline for Malaysia. But this lifeline came with chains attached. The terms were brutal. Government would have to eliminate subsidies on essential goods, leaving the people to face skyrocketing prices for everyday necessities like eggs, cooking oil, gas, electricity, health care, education, and even basic staples like chicken and meat in the markets. For a nation already suffering, this was an unbearable prospect.

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Multiple hedge funds participated in the attacks. But fundamental weaknesses made the currencies vulnerable: - Massive short-term foreign debt - Overheated property markets - Weak financial oversight - Currency pegs that became unsustainable So, what is the truth?

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The crisis nearly reached Japan, forced Hong Kong to defend the HK dollar, and spread fear to Russia and Brazil. The entire global financial system shuddered. From one man's currency bet. This wasn't market efficiency. This was financial warfare. The bottom line?

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On the one hand, it increased the overcapacity of the export sector further reducing the profitability and even the viability of the investments made. And on the other hand, given the massive influx of capital, of cash that continue to arrive, the loss of export momentum meant that the current account balance, that is the difference between income and the payments to the rest of the world, would register considerably large deficit levels. The fact was that the accumulation of current account deficits was being financed by foreign debt. So to give you an idea, in 1996, the foreign debt of these countries exceeded 165% of their gross domestic product.
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Speaker 0: On the one hand, it increased the overcapacity of the export sector further reducing the profitability and even the viability of the investments made. And on the other hand, given the massive influx of capital, of cash that continue to arrive, the loss of export momentum meant that the current account balance, that is the difference between income and the payments to the rest of the world, would register considerably large deficit levels. The fact was that the accumulation of current account deficits was being financed by foreign debt. So to give you an idea, in 1996, the foreign debt of these countries exceeded 165% of their gross domestic product.

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Soros proved that in globalized markets, a single investor with enough capital and conviction can destroy entire nations. The 1997 Asian Financial Crisis remains one of the most devastating speculative attacks in history. $1 trillion in economic damage from one trade.

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It looks like a normal nice day. But Jim, a big investor, decides to start selling because he feels bearish. Maybe he came across a black cat on the way to work. Who knows? Bill and Sarah take notice. When they don't know what's going on, they don't stick around to find out who's the Paxi. So they start selling too. More investors notice and more selling follows. The result, prices keep falling, consumers lose wealth and confidence, businesses stop hiring, demand evaporates, and suddenly the whole economy is in shambles. Selling in fear of a weak economy impacted the environment and became a self fulfilling prophecy. This is why financial markets are prone to booms and busts that don't have to start with a crisis, but can cause one.
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Speaker 0: It looks like a normal nice day. But Jim, a big investor, decides to start selling because he feels bearish. Maybe he came across a black cat on the way to work. Who knows? Bill and Sarah take notice. When they don't know what's going on, they don't stick around to find out who's the Paxi. So they start selling too. More investors notice and more selling follows. The result, prices keep falling, consumers lose wealth and confidence, businesses stop hiring, demand evaporates, and suddenly the whole economy is in shambles. Selling in fear of a weak economy impacted the environment and became a self fulfilling prophecy. This is why financial markets are prone to booms and busts that don't have to start with a crisis, but can cause one.

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The legacy changed global finance forever: - Countries now hold trillions in reserves as insurance. - Currency regimes became more flexible. - Capital controls returned to prevent hot money flows. But the fundamental vulnerability remains...

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'One of the biggest financial crises in history.' 'A crisis that forced the Asian countries involved to carry out enormous restructuring and to receive bailouts of a $120,000,000,000.' 'Despite this, only South Korea managed to recover in a reasonably short amount of time.' 'We are talking about a crisis that had a lot of consequences throughout the financial world.' The speaker highlights the crisis's magnitude, the forced restructuring and massive bailouts for Asian economies, the uneven recovery with South Korea recovering relatively quickly, and the broad consequences for global finance. These observations illustrate how the crisis reshaped policy responses, capital flows, and risk assessment across international markets.
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Speaker 0: One of the biggest financial crises in history. A crisis that forced the Asian countries involved to carry out enormous restructuring and to receive bailouts of a $120,000,000,000. Despite this, only South Korea managed to recover in a reasonably short amount of time. We are talking about a crisis that had a lot of consequences throughout the financial world.

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This playbook is being used right now: - China's yuan faces similar pressure from US trade wars. - Turkey's lira collapsed using identical patterns in 2018. - Argentina defaulted again following the same script. The Soros formula never stopped working.

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So on Tuesday, the Turkish lira suffered its worst day since August 2018, falling 9% against the dollar with a new low of nearly 13 lira per dollar. If this sounds bad, then consider the fact that only a few years ago, it was about 3 lira per dollar, meaning that the lira has lost nearly 80% of its original value. As the lira has lost value, inflation has shot. If a tin of beans from The US is priced at $1, in 2016, it would have cost 3 lira. Today, the price of that same tin of beans would have inflated to nearly 13 lira. Turkey's annual inflation rate today then is about 20%, well above Turkey's historic average of between 510%. And for context, The UK is currently freaking out about the prospect of 4% inflation.
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Speaker 0: So on Tuesday, the Turkish lira suffered its worst day since August 2018, falling 9% against the dollar with a new low of nearly 13 lira per dollar. If this sounds bad, then consider the fact that only a few years ago, it was about 3 lira per dollar, meaning that the lira has lost nearly 80% of its original value. As the lira has lost value, inflation has shot This is exactly what you'd expect. If a tin of beans from The US is priced at $1, in 2016, it would have cost 3 lira. Today, the price of that same tin of beans would have inflated to nearly 13 lira. Turkey's annual inflation rate today then is about 20%, well above Turkey's historic average of between 510%. And for context, The UK is currently freaking out about the prospect of 4% inflation.

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Smart investors recognize that currency crises follow predictable patterns: Unsustainable debt levels, artificial currency pegs, and political denial create opportunities. But how do you read these patterns?

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Our FREE weekly newsletter teaches: - How to spot hidden portfolio fees - Macro trends Wall Street hides - Independent investing strategies Subscribe here for FREE: https://dalyam.beehiiv.com

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If you found this helpful consider: - RTing the tweet below - Following me @DalyAManagement Thanks for reading.

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George Soros didn't just destroy Britain. He also crashed Thailand, Indonesia, Malaysia, South Korea, and nearly brought down Japan. His 1997 bet against the Thai baht triggered the largest financial crisis in Asian history. Here's how ONE man devastated entire nations:🧵 https://t.co/D1nfpn1UHc

DalyAManagement
Posted - September 5, 2025 at 2:00 PM
Saved - September 6, 2025 at 1:12 AM
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China's economy has seen a staggering $3.7 trillion vanish, impacting 30,000 wealthy investors overnight. The collapse of the shadow banking system, which provided risky loans to property developers when traditional banks wouldn't, has led to significant defaults, starting with Evergrande in 2021. Zhongzhi Enterprise Group, a major player, filed for bankruptcy revealing a $36 billion shortfall. The government is unwilling to bail out these institutions, signaling a shift in wealth from shadow banks to more stable entities. The implications for global markets are profound.

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$3.7 TRILLION just vanished from China's economy. 30,000 wealthy investors wiped out overnight. The hidden banking system that powered China's rise for 20 years is collapsing. Here's what Wall Street isn't telling you about the coming crash:🧵

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Think of shadow banks as China's version of private lending. When regular banks wouldn't lend to risky property developers, these firms stepped in. They raise money from wealthy individuals and pitch: "We'll pay you 10% annually, guaranteed." For over a decade it worked:

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Shadow banks are simply lenders that are not banks. And in China, they take the form of trust or wealth management products. Many of them are sponsored by banks even though the banks themselves don't lend the money. The wealth management products take money from investors by promising them higher yields than they could get in a bank, then they lend the money out to businesses that are either too small or too risky for the big banks. One big risk is the loans go bad, and the question there is who takes the loss.
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Speaker 0: Shadow banks are simply lenders that are not banks. And in China, they take the form of trust or wealth management products. Many of them are sponsored by banks even though the banks themselves don't lend the money. The wealth management products take money from investors by promising them higher yields than they could get in a bank, then they lend the money out to businesses that are either too small or too risky for the big banks. One big risk is the loans go bad, and the question there is who takes the loss.

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China's property boom kept rolling. Developers borrowed billions to build more apartments. Shadow banks collected their fees and paid investors their promised returns. Everyone got rich. Until the music stopped:

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China's economic experiments in the nineteen eighties were largely successful. Its citizens began to make good money from the businesses they were setting up, and its cities began to grow as more people migrated from rural areas. But there wasn't enough housing to accommodate this influx, so the state began to make housing reforms. In 1988, it began to privatize and commercialize public housing, offering tenants the opportunity to buy their units at very low prices. In 1998, the government announced the end of public housing altogether. Whilst back in 1979, virtually no one owned their home in China, now 80 to 90% of households own their homes, with more than 20% of households owning more than one home. So where did it all go wrong?
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Speaker 0: China's economic experiments in the nineteen eighties were largely successful. Its citizens began to make good money from the businesses they were setting up, and its cities began to grow as more people migrated from rural areas. But there wasn't enough housing to accommodate this influx, so the state began to make housing reforms. In 1988, it began to privatize and commercialize public housing, offering tenants the opportunity to buy their units at very low prices. In 1998, the government announced the end of public housing altogether. Whilst back in 1979, virtually no one owned their home in China, now 80 to 90% of households own their homes, with more than 20% of households owning more than one home. So where did it all go wrong?

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The trouble started when China's property market imploded. Evergrande defaulted in 2021. Country Garden followed in 2023. Suddenly, the property developers couldn't repay their shadow bank loans. But shadow banks had already promised returns to millions of investors...

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China's property bubble has claimed its biggest casualty yet. Evergrande has been delisted from the Hong Kong Stock Exchange. It used to be the country's largest developer. Evergrande was buried under more than $300,000,000,000 of debt. It promised homes to millions of buyers but left behind empty towers and unfinished projects. It shattered confidence in China's property sector, and now the company is being liquidated. Evergrande's creditors face huge losses, and China's economy faces deeper troubles. The Hong Kong court had already ordered its liquidation last year. Evergrande was once China's largest developer. It is now the world's biggest property failure.
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Speaker 0: China's property bubble has claimed its biggest casualty yet. Evergrande has been delisted from the Hong Kong Stock Exchange. It used to be the country's largest developer. Evergrande was buried under more than $300,000,000,000 of debt. It promised homes to millions of buyers but left behind empty towers and unfinished projects. It shattered confidence in China's property sector, and now the company is being liquidated. Evergrande's creditors face huge losses, and China's economy faces deeper troubles. So what does the fall of Evergrande mean for the world's second largest economy? Here's a report. In Speaker 1: 2021, this video from the Chinese press had made the world sit up and take notice. These high rise buildings in Yunnan had been unfinished for seven years. The developer had run out of money. The apartments had to be demolished. Within forty five seconds, they were reduced to rubble. For years later, there's been another collapse, this time on the Hong Kong Stock Exchange. China's property giant Evergrande has been delisted. The decision came after the company failed to resume trading for eighteen months. The Hong Kong court had already ordered its liquidation last year. Evergrande was once China's largest developer. It is now the world's biggest property failure.

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Zhongzhi Enterprise Group was one of China's biggest shadow banks. When investors came asking for their money back, executives discovered a $36 billion hole in the company's accounts. They had $64 billion in promises to investors. Only $28 billion in actual assets.

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Wealth manager Zhangji Enterprise filed for bankruptcy. "$64,000,000,000 in liabilities is what the company has flagged already." Zhangji says the liquidity is dried up, but the the amount that could be recovered from these asset disposals is expected to be low. And this is a little bit of a surprise for investors because they thought going back a few months, there was a government inquiry into this. They thought, well, maybe we'd be able to avoid liquidation, and, there would just be a little livestream put out to the company. But, no, bankruptcy is the case, and it looks like the investors in the company, the equity holders, are gonna lose about 75% of their cash.
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Speaker 0: Wealth manager Zhangji Enterprise filed for bankruptcy. Now the shadow bank struggling to keep up with its debt after lending out billions of dollars to real estate firms. Speaker 1: $64,000,000,000 in liabilities is what the company has flagged already. Zhangji says the liquidity is dried up, but the the the amount that could be recovered from these asset disposals is expected to be low. Speaker 2: And this is a little bit of a surprise for investors because they thought going back a few months, there was a government inquiry into this. They thought, well, maybe we'd be able to avoid liquidation, and, there would just be a little livestream put out to the company. But, no, bankruptcy is the case, and it looks like the investors in the company, the equity holders, are gonna lose about 75% of their cash. Speaker 1: And so a lot of question marks really over the health and and the continuity of this sort of sector as well.

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Zhongzhi had been using new investor money to pay returns to existing investors. Classic Ponzi scheme mechanics. In January 2024, the company filed for bankruptcy. 30,000 wealthy investors faced total wipeout.

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Funds under the guise of so called subscription based trust product investments transitioned from wealth management companies to the group's company's headquarters then were directed to various investments under the group. Hence, a closed loop of self funding and self investment within those four groups was formed. For years, the outlook continues, whenever the Zhongzhou Group and its wealth management platforms faced liquidity challenges, the company could reassure the market quite swiftly due to the company's enormous scale and its ability to juggle funds internally among various subsidiary companies and products. Quote, investors usually brought their explanations, end quote. The once popular p to p industry in China has now completely ceased operations due to regulatory oversight with the crackdown beginning in 02/2018.
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Speaker 0: Funds under the guise of so called subscription based trust product investments transitioned from wealth management companies to the group's company's headquarters then were directed to various investments under the group. Hence, a closed loop of self funding and self investment within those four groups was formed. For years, the outlook continues, whenever the Zhongzhou Group and its wealth management platforms faced liquidity challenges, the company could reassure the market quite swiftly due to the company's enormous scale and its ability to juggle funds internally among various subsidiary companies and products. Quote, investors usually brought their explanations, end quote. The once popular p to p industry in China has now completely ceased operations due to regulatory oversight with the crackdown beginning in 02/2018.

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Most people assumed Zhongzhi was a one-off disaster. Wrong. April 2025: Zhongrong International Trust, managing $108 billion, was declared insolvent. April 2025: State-owned AVIC Trust sought emergency help after missing payments. The worst part?

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China's shadow banking sector manages $3.7 trillion. That's larger than the entire German economy. The funding mechanism that powered decades of Chinese growth is breaking down. But why is this a problem?

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There's even more bad news as China's economy exposes a deeper problem in shadow banking. The shadow banking sector is estimated to be worth at least $3,000,000,000,000, and that's in China alone. And it all started with real estate. The country is facing a financial meltdown. Every week, there is a new headline about its impairments.
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Speaker 0: Alright. So there's even more bad news because China's economy just exposed a deeper problem in something called shadow banking. This shadow banking sector Of shadow banking. Shadow banking. The shadow banking sector is estimated to be worth at least $3,000,000,000,000, and that's in China alone. And it all started with real estate. The country is facing a financial meltdown. Every week, there is a new headline about its impairments.

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China is 20% of world GDP. If Chinese companies can't access the funding they need to grow, global demand for everything from commodities to consumer goods will crater. The ripple effects are just beginning. And think about what this means for your portfolio...

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This isn't a recession. This isn't even a crisis in the traditional sense. What we're witnessing is the complete unraveling of the economic model that powered the world's second largest economy for four decades. And the West, we're completely unprepared for what comes next. For forty years, China's growth seemed unstoppable. Double digit GDP increases, gleaming cities rising from farmland, a manufacturing powerhouse that became the world's factory. Western corporations moved their supply chains there. Emerging markets tied their futures to Chinese demand. Everyone believed the twenty first century would belong to Beijing. But beneath the surface, something was fundamentally broken. The property sector that once drove 30% of China's economy has imploded. Evergrande, with its 300,000,000,000 in liabilities, was just the first domino. Country Garden followed, then China, South City. Now even state backed developers are failing.
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Speaker 0: This isn't a recession. This isn't even a crisis in the traditional sense. What we're witnessing is the complete unraveling of the economic model that powered the world's second largest economy for four decades. And the West, we're completely unprepared for what comes next. For forty years, China's growth seemed unstoppable. Double digit GDP increases, gleaming cities rising from farmland, a manufacturing powerhouse that became the world's factory. Western corporations moved their supply chains there. Emerging markets tied their futures to Chinese demand. Everyone believed the twenty first century would belong to Beijing. But beneath the surface, something was fundamentally broken. The property sector that once drove 30% of China's economy has imploded. Evergrande, with its 300,000,000,000 in liabilities, was just the first domino. Country Garden followed, then China, South City. Now even state backed developers are failing.

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China's shadow banking system was the hidden engine funding the country's growth miracle. Property developers, local governments, and private companies all relied on shadow bank funding. Now that engine is breaking down permanently.

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Speaker 0 questions systemic risk in the Chinese economy, referencing the 2008 financial crisis and the domino effect if a large bank fails. Speaker 1 says: 'the total amount of, the debt to the nonfinancial sector in China. It's about 370,000,000,000,000.' The shadow banking sector 'account for about 77% of it,' while 'The commercial bank themselves account for 65 percent' and are 'the backbone of the Chinese financial system.' Consequently, risk and losses may fall back to commercial banks as they are 'the lender to those shadow bank through those shadow bank to the to the developer child property developer and to the local government financing vehicle and also to some of those private enterprises with less than credit.' He adds that the 'market proport proport of the shuttle banking system to the formal banking system' signals risk; the Chinese government is 'unlikely to pay them out,' but will 'broker some of those SSLs and so on in restructuring.'
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Speaker 0: How much risk is there, systemic risk to the entire Chinese economy? I ask this because, obviously, the the ghost of the two thousand and eight financial crisis is still with us. And we all remember that if one bank fails Yeah. If it's a big enough bank, then there's gonna be a domino effect, and so many other financial institutions are gonna fail, and it's gonna put many ordinary people in trouble. What's the risk of that here? Speaker 1: I think that one of the massive size of the shuttle banking system I mean, now 25,000,000,000,000, you are talking about, the total amount of, the debt to the nonfinancial sector in China. It's about 370,000,000,000,000. So there is only the shadow banking sector only now account for about 77% of it. The commercial bank themselves account for 65 percent. So the commercial bank themselves is as as, obviously, we did the backbone of the Chinese financial system. So, some of those risk and some the losses later are eventually falling back to the to the commercial bank system because they are actually either their customer or themselves or the lender to those shadow bank through those shadow bank to the to the developer child property developer and to the local government financing vehicle and also to some of those private enterprises with less than credit. So so so from that sense, the market proport proport of the shuttle banking system to the formal banking system. So that is a risk that they probably can assault, and and the Chinese government is unlikely to pay them out, but they probably will broker some of those SSLs and so on in restructuring so on.

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Beijing's response reveals how serious this is. They're refusing to bail out shadow banks. Government officials are telling wealthy investors: "You knew the risks." Translation: The Communist Party is willing to let China's elite lose trillions to avoid moral hazard.

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Smart investors recognize this as a systematic wealth transfer. Money is moving from overleveraged shadow banks to cash-rich institutions that can acquire distressed assets. The question: Are you positioned for China's financial restructuring?

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Tired of high-fee advisors who underdeliver? Our FREE weekly newsletter teaches: - How to spot hidden portfolio fees - Macro trends Wall Street hides - Independent investing strategies Subscribe here for FREE: https://dalyam.beehiiv.com

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If you found this helpful consider: - RTing the tweet below - Following me @DalyAManagement Thanks for reading.

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$3.7 TRILLION just vanished from China's economy. 30,000 wealthy investors wiped out overnight. The hidden banking system that powered China's rise for 20 years is collapsing. Here's what Wall Street isn't telling you about the coming crash:🧵 https://t.co/CYT6uESR5d

DalyAManagement
Posted - August 22, 2025 at 2:17 PM
Saved - August 23, 2025 at 8:06 AM
reSee.it AI Summary
Since 2020, inflation has significantly eroded purchasing power, with $100 from that year now only buying $79 worth of goods. Prices remain 21% higher than pre-pandemic levels, affecting essential expenses like rent, food, and healthcare. While some wages increased nominally, real purchasing power has declined, leading to a permanent new baseline for living costs. Traditional financial planning models are outdated, and smart investors must adapt to protect against this systematic wealth transfer. The impact of inflation is profound, especially for middle-class families.

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Everyone talks about inflation. But nobody talks about THIS: Since 2020, you've lost 21% of your purchasing power. Your $100 from 2020 now buys exactly $79 worth of goods. Here's how bad inflation actually is (it's worse than you think):🧵

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Think about this: That $100 you had in 2020 now buys exactly $79 worth of goods. $1 in 2020 requires $1.21 today to purchase the same items. Over a fifth of your money's value, gone.

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You hear me talk about purchasing power because that's what really matters. You can have trillions of dollars like I do in this Zimbabwe note, and I can't even buy eggs with it. So this is the most current purchasing power data from the Federal Reserve. And what you see is since 2020, they wonder why consumer sentiment is so bad and consumer confidence is so bad. This is why. Because your dollars buy less and less and less. But what happens when we get to zero? Because the level of plummet has sped up since 2020. This is not a big surprise for anybody that's paying attention on our very rapid march towards zero. What happens when we hit zero, guys? Zimbabwe, Venezuela, Argentina, all those 4,800 currencies that do not exist anymore. That's what happens, and we are very, very close.
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Speaker 0: You hear me talk about purchasing power because that's what really matters. You can have trillions of dollars like I do in this Zimbabwe note, and I can't even buy eggs with it. So this is the most current purchasing power data from the Federal Reserve. And what you see is since 2020, they wonder why consumer sentiment is so bad and consumer confidence is so bad. This is why. Because your dollars buy less and less and less. But what happens when we get to zero? Because the level of plummet has sped up since 2020. This is not a big surprise for anybody that's paying attention on our very rapid march towards zero. What happens when we hit zero, guys? Why can't anybody ever answer that that for me? This is what happens. Zimbabwe, Venezuela, Argentina, all those 4,800 currencies that do not exist anymore. That's what happens, and we are very, very close.

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Most people believe inflation is "coming down". The reality? Current prices remain 21% higher than pre-pandemic levels. Your grocery bill, rent, and gas never went back down. They just stopped rising as fast. Here's what the data actually reveals:

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Inflation has steadily cooled over the past two years despite seeing a slight stall in October and November 2024. Prices for items like gasoline, used cars, and energy have declined accordingly. But food prices continue to outpace inflation, increasing by 28% since 2019. Eighty six percent of consumers reported feeling frustrated with rising grocery prices, and over a third said they have resorted to buying fewer items to save money. That's one of the real gauges people have of their cost of living because it's an important aspect of their cost of living, and it's something that we have a lot of exposure to. We go to the grocery store. We pick up the different products. We look at the prices.
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Speaker 0: Inflation has steadily cooled over the past two years despite seeing a slight stall in October and November 2024. Prices for items like gasoline, used cars, and energy have declined accordingly. But food prices continue to outpace inflation, increasing by 28% since 2019. Speaker 1: I just spent $33 on dinner tonight. I'm literally just making, like, lasagna soup. What are you talking about? Was $8.25, now $6.89? Like, this is some amazing deal. For four chicken breasts, 10 to $11. Speaker 0: Eighty six percent of consumers reported feeling frustrated with rising grocery prices, and over a third said they have resorted to buying fewer items to save money. Speaker 1: That's one of the real gauges people have of their cost of living because it's an important aspect of their cost of living, and it's something that we have a lot of exposure to. We go to the grocery store. We pick up the different products. We look at the prices.

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US inflation: 2.7% annually (still above the Fed's 2% target) OECD-wide inflation: 4.2% annually (more than double target rates) Global GDP growth: Projected at 2.3% through 2025 The wage growth illusion is even worse:

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The Federal Reserve just said that the expectation is higher inflation and higher unemployment in 2025. In support of our goals, today the Federal Open Market Committee decided to leave our policy interest rate unchanged. The risks of higher unemployment and higher inflation appear to have risen, and we believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments. So it's primarily being driven by the tariffs. If the large increases in tariffs that have been announced are sustained, they're likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment. The effects on inflation could be short lived, reflecting a one time shift in the price level. It is also possible that the inflationary effects could instead be more persistent.
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Speaker 0: The Federal Reserve just said that the expectation is higher inflation and higher unemployment in 2025. Speaker 1: In support of our goals, today the Federal Open Market Committee decided to leave our policy interest rate unchanged. The risks of higher unemployment and higher inflation appear to have risen, and we believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments. Speaker 0: Okay. Now, let's answer this very important question. So what's driving this expectation of higher inflation and higher unemployment? So it's primarily being driven by the tariffs. Speaker 1: If the large increases in tariffs that have been announced are sustained, they're likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment. The effects on inflation could be short lived, reflecting a one time shift in the price level. It is also possible that the inflationary effects could instead be more persistent. Avoiding that outcome will depend on the size of the tariff effect tariff effects, on how long it takes for them to pass through fully into prices, and ultimately on keeping longer term inflation expectations well anchored.

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While some workers saw nominal wage increases, real purchasing power declined for most households. Food prices alone are up 23.6% since the pandemic started. Your raise didn't keep up with your grocery bill. Let's do the math:

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There's so much more that goes into the cost of our food than just the actual food itself. There's a lot that goes into the producing it, moving it around, the transportation, the marketing, getting it on the shelves. It's not just the food. It's all of the inputs that go into it. Unexpected global events set the stage for a sudden rise in food costs. It was a global pandemic. There were disruptions all around the world in terms of production at the same time that you just have this unexpected, unprecedented wave of demand, that is a recipe for it to really break down and you to go into grocery store and see empty shelves or go into grocery store and see really higher prices.
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Speaker 0: There's so much more that goes into the cost of our food than just the actual food itself. There's a lot that goes into the producing it, moving it around, the transportation, the marketing, getting it on the shelves. It's not just the food. It's all of the inputs that go into it. Unexpected global events set the stage for a sudden rise in food costs. It was a global pandemic. There were disruptions all around the world in terms of production at the same time that you just have this unexpected, unprecedented wave of demand, that is a recipe for it to really break down and you to go into grocery store and see empty shelves or go into grocery store and see really higher prices.

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Look at what $1,000 in monthly expenses became: 2020: $1,000 monthly budget 2025: $1,210 needed for identical purchases That's an extra $2,520 per year just to maintain the same lifestyle. Over five years, inflation stole $6,300 from every $1,000 monthly budget.

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"For the past few years, Amanda Williams has happily been a stay at home mom of two, soon to be three kids." "Me and my husband had agreed when we started having kids that I would be a stay at home mom and take care of the kids in the house and that he would work and provide." "But with inflation hitting levels not seen in four decades, she says a single income just doesn't cut it anymore." "My grocery bill has gone up almost $300 extra a month than what we were already paying." "Economists say that Arkansas families are now estimated to be spending about $450 more a month due to inflation."
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Speaker 0: For the past few years, Amanda Williams has happily been a stay at home mom of two, soon to be three kids. Speaker 1: Me and my husband had agreed when we started having kids that I would be a stay at home mom and take care of the kids in the house and that he would work and provide. Speaker 0: But with inflation hitting levels not seen in four decades, she says a single income just doesn't cut it anymore. Speaker 1: My grocery bill has gone up almost $300 extra a month than what we were already paying. Speaker 0: And she's not alone. Economists say that Arkansas families are now estimated to be spending about $450 more a month due to inflation.

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The targeting is systematic across essential categories: Rent: Up 23% since the pandemic Food: Rising 3% annually in 2025 Energy: Still volatile and elevated Healthcare: Increasing 2.8% annually The basics of life got 21% more expensive while wages stagnated.

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From 2017–2019, rent growth hovered around 3–4% annually, with regional variation but not dramatic. Hot markets grew 5–7% a year, while cool markets were around 2% (or 1% in slower years). Real double-digit growth occurred mainly in energy-driven towns when energy-sector swings occurred. The 2020 pandemic flipped the market: proximity premiums evaporated, and rents in cities like New York, San Francisco, and Boston fell roughly 20–25%. This shock prompted a shift in the research agenda. In 2021 rents surged, with the index up about 18%. Since then, the market has cooled as interest rates rose and uncertainty grew. The current environment remains dynamic, with the Fed cutting 50 basis points, and no normal rent-growth period since 2020.
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Speaker 0: You know, when we were living our lives in 2017, 2018, 2019, we didn't think of those as particularly normal years that we would refer to as as normal for for some time afterwards. But from a rental market perspective, you know, rent rent growth hovered between three to 4% annually, kind of outpacing broader inflation by just a tad. And there was some really interesting regional variation, but it wasn't dramatic. You know, kind of hot markets grew five to 7% a year. Cool markets might grow, you know, 2% a year. Maybe 1% a year if rent growth was really sluggish. The only places with real double digit rent growth would be small kind of fracking or oil towns when something dramatic happened in the energy sector, they would have a big swing. Come 2020 when the pandemic hit, everything really changed overnight. And all of a sudden, we found that these real time shocks in demand could have dramatic swings on the housing market. 2020, we saw, you know, rents really nosedive in some of the the the cities where, you know, location was at the highest premium. Right? New York, you're there because you wanna be close to everything in New York. San Francisco, you wanna be there because you wanna be close to amazing jobs and the amazing atmosphere. All of sudden, when the shelter in place economy took hold, proximity wasn't a good thing anymore. That price premium essentially evaporated, and we saw rent declines in some of the the most, you know, high highly populated US cities on the order of 20 to 25% in places like New York and San Francisco and and and Boston. So, you know, I think that was the moment, Dave, when we had to kinda throw out the research agenda that we had planned for 2020 and see, okay. How do we really focus in on what's going on right now? But what's even more interesting is what happened next because as as many of your listeners, I think, are are deeply aware of, that kinda created this coiled spring in the housing market, so to speak, that just let out all this energy in starting in the 2020, but really going into 2021 when we saw this massive boom in rents. Our our rent index showed rents grew 18% in 2021. Again, unheard of from a pre pandemic understanding of of The US rental market. And then in the last couple years, we've really been tracking a a cooling market ever since interest rates started to rise, Economic uncertainty started to really take hold, and some of that feeling of invincibility that some parts of the economy felt in 2021 started to dissipate. So that's still the market we're in today. But, you know, as as we're talking, the Fed just announced a 50 a 50 basis point cut. So it's certainly still a dynamic market. We haven't seen a, quote, unquote, normal period of rent growth in the 2020 so far.

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Trade tensions and tariffs are making it worse. New import costs from trade policies act as "hidden taxes" on consumers. These policy-driven price increases compound the existing inflation damage. Working families pay twice: once through inflation, again through trade wars.

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Central banks can't fix what's already been destroyed. Even if inflation returns to 2% targets, prices don't deflate back to 2020 levels. The 21% increase in living costs becomes your permanent new baseline. Your purchasing power loss is locked in forever.

Video Transcript AI Summary
Experts question how far policies can really go to affect food prices. "There's no silver bullet in terms of bringing down food costs." "We've went through a brutal inflationary cycle for food." "There's really nothing government policymakers could really do about this." "This is not something unique to The United States." "This has been felt around the world." "The uncertainties introduced by the current political climate also make it challenging to predict the future of grocery prices." "There's no doubt that tariffs will massively make things more expensive, especially food." "So any food that we import gets a lot more expensive when you add a tax on that." "Same thing with mass deportations." "So I think there's absolutely no doubt that things will get more expensive under some of the policies that we're seeing the Trump administration propose."
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Speaker 0: But some experts question how far policies can really go to affect food prices. Speaker 1: There's no silver bullet in terms of bringing down food costs. Speaker 2: We've went through a brutal inflationary cycle for food. There's really nothing government policymakers could really do about this. This is not something unique to The United States. This has been felt around the world. And right now, we just have to wait and see how things will play out as we move forward. Speaker 0: The uncertainties introduced by the current political climate also make it challenging to predict the future of grocery prices. Speaker 1: There's no doubt that tariffs will massively make things more expensive, especially food. There's a lot of food that we all like to eat that we don't grow in The United States. So any food that we import gets a lot more expensive when you add a tax on that. Same thing with mass deportations. I mean, we have workers in this country who really prop up our food system, who make sure that the things that we want on our tables get grown, get packaged, get driven across the country. And when you start to really harm that workforce and send them away, that harms our entire economy. So I think there's absolutely no doubt that things will get more expensive under some of the policies that we're seeing the Trump administration propose.

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The psychological impact compounds the financial damage. Compared to 5-10 years ago, basic goods are 45-70% more expensive in some regions. Fixed-income households and retirees face the worst effects. Aggregate statistics hide massive inequality in inflation's impact.

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Here's what financial advisors won't tell you about inflation: Traditional investment advice assumes 2-3% annual inflation. We just experienced 21% cumulative inflation in five years. That's an average of 4.0% annually, double historical assumptions. The consequences?

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1. Retirement savings lost 21% of purchasing power regardless of market gains. 2. College savings fell short by thousands due to inflation in education costs. 3. Emergency funds lost over a fifth of their real-world buying power. This is very important:

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Smart investors recognize that inflation isn't just an economic statistic. It's a systematic wealth transfer from savers to asset owners. The 21% purchasing power destruction disproportionately hit middle-class families while asset prices inflated. The problem?

Video Transcript AI Summary
"Keep investing." "Try to figure out ways that you can keep sending your dollars to work for you so that you can constantly combat the eroding force of inflation." "A big part of get wealthy behaviors is trying to turn your wages, your time, your labor into actual assets." "And that's why I can't have you take a side trip to cut that off when that actually is going to be the long term solution to protect yourself from inflation." "And that's a hard thing to do when we've gone through inflationary period, but it doesn't mean you just stop."
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Speaker 0: Keep investing. Because not only will inflation eat away the value of your dollars today and the money you're spending today, but one of the best ways you're gonna fight that over the long term is by keeping your money working for you so that you can also fight inflation that's going to happen in the future. So don't just say, man, things are tight, things are hard. I'm just gonna cut off my investing altogether. Try to figure out ways that you can keep sending your dollars to work for you so that you can constantly combat the eroding force of inflation. Speaker 1: A big part of get wealthy behaviors is trying to turn your wages, your time, your labor into actual assets. And that's why I can't have you take a side trip to cut that off when that actually is going to be the long term solution to protect yourself from inflation. And that's a hard thing to do when we've gone through inflationary period, but it doesn't mean you just stop.

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Traditional financial planning models failed to account for this reality. Investment strategies, savings targets, and retirement calculations based on 2-3% inflation assumptions are now obsolete. The new baseline requires completely different approaches.

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This represents the end of the low-inflation era that defined financial planning for decades. Workers need investment strategies that actually protect against systematic currency debasement. Not the cookie-cutter portfolios that lost 21% of real value.

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The key is staying invested and being diversified across sectors because some parts of the market will do better than others when inflation hits. This is why a broad market index fund is a popular choice for so many investors. You get to own all the sectors of the market in a single fund. So here's the bottom line. Inflation eats away at your purchasing power over time. And equities, by owning pieces of real businesses that can raise prices and grow profits, offer one of the best long term defenses. They're not perfect in the short term. They can be extremely volatile. But if you have a long enough time horizon, they've historically helped investors beat inflation and build real wealth. Are there other options? Yes. Gold, real estate, and tips can all play a role in a diversified portfolio.
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Speaker 0: The key is staying invested and being diversified across sectors because some parts of the market will do better than others when inflation hits. This is why a broad market index fund is a popular choice for so many investors. You get to own all the sectors of the market in a single fund. So here's the bottom line. Inflation eats away at your purchasing power over time. And equities, by owning pieces of real businesses that can raise prices and grow profits, offer one of the best long term defenses. They're not perfect in the short term. They can be extremely volatile. But if you have a long enough time horizon, they've historically helped investors beat inflation and build real wealth. Are there other options? Yes. Gold, real estate, and tips can all play a role in a diversified portfolio.

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Tired of high-fee advisors who underdeliver? Our FREE weekly newsletter teaches: - How to spot hidden portfolio fees - Macro trends Wall Street hides - Independent investing strategies Subscribe here for FREE: https://dalyam.beehiiv.com

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If you found this helpful consider: - RTing the tweet below - Following me @DalyAManagement Thanks for reading.

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Everyone talks about inflation. But nobody talks about THIS: Since 2020, you've lost 21% of your purchasing power. Your $100 from 2020 now buys exactly $79 worth of goods. Here's how bad inflation actually is (it's worse than you think):🧵 https://t.co/xYqNiI0N9c

DalyAManagement
Posted - August 17, 2025 at 2:00 PM
Saved - August 18, 2025 at 12:54 AM
reSee.it AI Summary
The US dollar is facing unprecedented challenges, with global investors abandoning it for the first time in 80 years. A series of tariff increases has shaken confidence, leading to a significant drop in the dollar's value against the euro. Moody's downgrade of US credit and rising debt levels further complicate the situation, making borrowing more expensive. Global sentiment is shifting, with many viewing the US less favorably compared to China. As everyday costs rise and faith in the US economy wanes, the dollar's status as the world's reserve currency is at risk.

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The US dollar is dying. For the first time in 80 years, global investors are abandoning America's currency. Your savings, mortgage, and daily expenses are about to get crushed. Here's the terrifying timeline of how the world's reserve currency is collapsing: 🧵

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The numbers are brutal: • December 31, 2024: $1 = €0.966 • June 10, 2025: $1 = €0.8747 • One euro now costs $1.143 instead of $1.041 That's a 9.8% surge in euro value in just 6 months. Investors are fleeing dollar assets at unprecedented speed. But why?

Video Transcript AI Summary
The US dollar is showing signs of weakness. It has lost over 10% of its value in the last six months. This is the dollar's worst performance in more than fifty years. The last time this happened was in 1973. And to add insult to injury, other currencies are appreciating. Appreciating. The euro, for instance, has gained by over 12%. The Swiss franc is up by more than 13%. The Japanese yen, nearly 8%. Even gold is outperforming the U. S. Dollar. Gold has gained 25% this year. Plus, riskier currencies are doing better than the U. S. Dollar, like Ghana's CD, the Taiwanese dollar, and Mexico's peso. They have all registered double digit gains. So there is a clear shift. Investors are moving away from the U. Dollar. They haven't dumped the American currency yet, but they are certainly diversifying. They are trying to lower the risk.
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Speaker 0: The US dollar is showing signs of weakness. It has lost over 10% of its value in the last six months. This is the dollar's worst performance in more than fifty years. The last time this happened was in 1973. And to add insult to injury, other currencies are appreciating. Appreciating. The euro, for instance, has gained by over 12%. The Swiss franc is up by more than 13%. The Japanese yen, nearly 8%. Even gold is outperforming the U. S. Dollar. Gold has gained 25% this year. Plus, riskier currencies are doing better than the U. S. Dollar, like Ghana's CD, the Taiwanese dollar, and Mexico's peso. They have all registered double digit gains. So there is a clear shift. Investors are moving away from the U. Dollar. They haven't dumped the American currency yet, but they are certainly diversifying. They are trying to lower the risk.

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It started with tariff chaos that sent shockwaves through global markets. February 4th: 10% tariffs on Chinese goods March 3rd: Doubled to 20% April: Tariffs hit 145% on Chinese imports Even temporary pauses couldn't restore confidence. JP Morgan's chief economist warned:

Video Transcript AI Summary
Long threatened tariffs from President Donald Trump have plunged the country into trade wars abroad, with the on again, off again new levies escalating uncertainty. Tariffs don't cause inflation, they cause success. There could be some temporary short term disruption, and people will understand. On February 1, Trump began by signing an executive order to impose tariffs on imports from Mexico, Canada and China. It prompted swift outrage from all three countries with promises of retaliatory measures. But on February 3, he agreed to a thirty day pause on that plan for Mexico and Canada, as both countries took steps to appease his concerns over border security and drug trafficking. The next day, 10% tariffs on all Chinese imports went into effect. China retaliated, and on February 13, Trump announced a plan for reciprocal tariffs.
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Speaker 0: Long threatened tariffs from President Donald Trump have plunged the country into trade wars abroad, with the on again, off again new levies escalating uncertainty. Speaker 1: Tariffs don't cause inflation, they cause success. There could be some temporary short term disruption, and people will understand. Speaker 0: So how did we get here? On February 1, Trump began by signing an executive order to impose tariffs on imports from Mexico, Canada and China. It prompted swift outrage from all three countries with promises of retaliatory measures. But on February 3, he agreed to a thirty day pause on that plan for Mexico and Canada, as both countries took steps to appease his concerns over border security and drug trafficking. The next day, 10% tariffs on all Chinese imports went into effect. China retaliated, and on February 13, Trump announced a plan for reciprocal tariffs. Speaker 1: I have decided for purposes of fairness that I will charge a reciprocal tariff, meaning whatever countries charge The United States Of America, we will charge them. Speaker 0: On March 4, 25% tariffs on imports from Canada and Mexico went into effect, and tariffs on all Chinese imports were doubled to 20%. Fast forward to April 2, the day Trump announced global reciprocal tariffs. He declared a 10% baseline and higher rates for nations that run trade surpluses with The US starting April 9. Speaker 1: 04/02/2025 will forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed, and the day that we began to make America wealthy again. Speaker 0: Just hours after the high reciprocal rates went into effect, most of the higher rates were suspended for ninety days. But the recently imposed 10% levy on nearly all global imports was kept. However, China was singled out, and Trump said he would raise import taxes to 125%. Then on April 10, the White House clarified that including 20% fentanyl tariffs, the current levy on China is a whopping a 145%. Speaker 1: We would love to be able to

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"We see a materially higher risk of global recession due to US trade policy." The IMF calculated that universal 10% tariffs would reduce: • Global GDP by 0.5% • US GDP by 1% through 2026 Investors are betting against America. The damage goes deeper than trade wars:

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Do you personally expect a recession? I am gonna defer to my economists at this point, but I think probably that's a likely outcome. I always remind people markets aren't always right, but sometimes they are right. I think this time they are right because they're just pricing uncertainty at the macro level and uncertainty at the micro level at the actual company level. and then how it affects consumer sentiment, it's hard to tell. You know, consumers still have jobs. Wages are going up the low end, which I think is a good thing. But if companies start cutting back, yeah, the consumer sentiment changes and business sentiment changes. You know, I think you've already seen business sentiment change a little bit. Hopefully, you know, no one's wishing for that, but, you know, hopefully, if there is one, it'll be short.
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Speaker 0: Do you personally expect a recession? I am gonna defer to my economists at this point, but I think probably that's a likely outcome. I always remind people markets aren't always right, but sometimes they are right. I think this time they are right because they're just pricing uncertainty at the macro level and uncertainty at the micro level at the actual company level. And then how it affects consumer sentiment, it's hard to tell. You know, consumers still have jobs. Wages are going up the low end, which I think is a good thing. But if companies start cutting back, yeah, the consumer sentiment changes and business sentiment changes. You know, I think you've already seen business sentiment change a little bit. Hopefully, you know, no one's wishing for that, but, you know, hopefully, if there is one, it'll be short.

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Moody's downgraded US credit from AAA to AA1 in May 2025. Why? America holds $36.2 trillion in debt, over $106,000 per person. A new Senate bill would add another $2.4 trillion over the next decade. Here's what's really happening:

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Moody's, downgraded The US's credit rating from its highest triple a rating to double a one. Moody's cited the growing US debt currently at about $36,000,000,000,000 and the inability of politicians on both sides to manage it. This means The US does not have a perfect credit rating at any major agency for the first time since the invention of government credit ratings in the nineteen tens. S and P downgraded The US in 2011 to its second highest ranking after that year's debt ceiling fight. Fitch downgraded The US also to its second highest ranking in 2023 over similar concerns raised by S and P and specifically citing The US's, quote, erosion of governance. So why does this matter? A credit rating from these agencies signifies how likely a country is to meet its debt obligations and affect borrowing costs for projects.
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Speaker 0: The international credit agency, Moody's, downgraded The US's credit rating from its highest triple a rating to double a one. Moody's cited the growing US debt currently at about $36,000,000,000,000 and the inability of politicians on both sides to manage it. This means The US does not have a perfect credit rating at any of the three major credit agencies for the first time since the invention of government credit ratings in the nineteen tens. S and P downgraded The US in 2011 to its second highest ranking after that year's debt ceiling fight. Fitch downgraded The US also to its second highest ranking in 2023 over similar concerns raised by S and P and specifically citing The US's, quote, erosion of governance. So why does this matter? Well, a credit rating from one of these agencies signifies how likely a country is to meet its debt obligations based on the country's financial stability. Investors consider that rating when deciding to purchase a country's debt. If a country has a lower rating, it might have to pay more in interest to get a loan for investor finance projects like building new highways.

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Higher borrowing costs from the credit downgrade make paying off debt even harder. Douglas Bonapart warns: "Think higher rates on mortgages, credit cards, and personal loans." It's a debt death spiral.

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When we see downgrades like this, it typically makes the cost of borrowing more expensive for the consumer. You're already seeing it today, and the average thirty year fixed mortgage went up to past 7%. We haven't seen that since April. We also know that homebuilder sentiment, for example, is at the lowest level since 2023 according to the National Association of Homebuilders, their monthly index. We also know that it could have a hampering effect on the ability of the Federal Reserve to make a decision that would sit well with consumers who are looking to enter the, you know, housing market or trying to borrow a car. We heard from the Fed president of Atlanta who said possibly only one quarter point rate cut given what is happening not just with the downgrade, but also that volatility that we're seeing when it comes to tariffs.
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Speaker 0: When we see downgrades like this, it typically makes the cost of borrowing more expensive for the consumer. You're already seeing it today, and the average thirty year fixed mortgage went up to past 7%. We haven't seen that since April. We also know that homebuilder sentiment, for example, is at the lowest level since 2023 according to the National Association of Homebuilders, their monthly index. We also know that it could have a hampering effect on the ability of the Federal Reserve to make a decision that would sit well with consumers who are looking to enter the, you know, housing market or trying to borrow a car. We heard from the Fed president of Atlanta who said possibly only one quarter point rate cut given what is happening not just with the downgrade, but also that volatility that we're seeing when it comes to tariffs.

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The Federal Reserve is under unprecedented political attack. The President has publicly pressured Jerome Powell to resign while criticizing his character. Central bank independence is critical for investor confidence. Politicizing the Fed terrifies global markets.

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Trump has been challenging the Fed's autonomy since taking office, aiming to sack Jerome Powell and appoint a loyalist, but he cannot remove the chair because a Federal Reserve chief has a fixed four-year tenure. So Trump is doing the only thing that he can: he's attacking the Fed chief. We have a moron at the head of the Fed. He's a moron. Speaking of the executive chief, now you have a top choice. Do. I have I have two or three top choices. Such remarks have made investors jumpy and all of this is hurting the dollar's reputation, pushing investors towards other assets like gold, the euro, the franc, and the yen. And this does not bode well for America.
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Speaker 0: His relentless attacks on the US Federal Reserve and its chief, Jerome Powell. Trump has been challenging the Fed's autonomy ever since he took office. He wants to sack Jerome Powell and appoint a loyalist in his place, but Trump cannot do that. He cannot remove the chair of the Federal Reserve because a Federal Reserve chief has a fixed tenure of four years. The president cannot remove him. So Trump is doing the only thing that he can. He's attacking the Fed chief. We have a moron at the head of the Fed. He's a moron. Speaking of the executive chief, now you have a top choice. Do. I have I have two or three top choices. Such remarks have made investors jumpy and all of this is hurting the dollar's reputation, pushing investors towards other assets like gold, the euro, the franc, and the yen. And this does not bode well for America.

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Even recession predictions are accelerating: • January 2025: 23% of analysts predicted recession • March 2025: 36% predicted recession But here's the terrifying part: Usually during crises, investors flock TO the dollar. This time they're fleeing FROM it. But it gets worse:

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Goldman Sachs chief economist Jan Hatzowitz downgraded the economy forecast for 2025, a departure from a prior positive outlook. Goldman’s baseline forecast is two and a half percent growth, well above consensus, with inflation on a continued path toward the 2% target and Federal Reserve rate cuts in 2025 seen as a tailwind for business growth and investment. "The biggest risk to our outlook is just how much of a tariff increase the Trump administration will impose." "But in our risk case of a 10% across the board tariff, we'll actually get a reacceleration in inflation to 3% plus at least for a period of time." "Patzowitz in his press release said, we now see the average US tariff rate rising by 10 percentage points this year, twice our previous forecast and about five times the increase seen during the first Trump administration." What was only considered a less likely risk case in December now appears to be playing out.
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Speaker 0: From Trump were accompanied by the release of new economic data and experts weighing in with their forecasts. The Federal Reserve chairman Jerome Powell, JP Morgan, and Warren Buffett, just to name a few. So let's see what they had to say, starting with the investment bank Goldman Sachs. To start the week, chief economist Jan Hatzowitz released a research note in which Goldman provided a downgraded forecast for the economy in 2025. This comes just a few months after they provided a very positive outlook. Speaker 1: We see several strong tailwinds pointing to solid US growth in 02/2025. Our baseline forecast is two and a half percent growth well above consensus. Speaker 0: They viewed inflation to be on a continued path towards the 2% target over the following years and that Federal Reserve rate cuts in 2025 would be a tailwind for business growth and investment. But there was one risk that they noted could derail their Speaker 1: The biggest risk to our outlook is just how much of a tariff increase the Trump administration will impose. But in our risk case of a 10% across the board tariff, we'll actually get a reacceleration in inflation to 3% plus at least for a period of time. We all Speaker 0: What was only considered a less likely risk case in December now appears to be playing out. Patzowitz in his press release said, we now see the average US tariff rate rising by 10 percentage points this year, twice our previous forecast and about five times the increase seen during the first Trump administration.

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Global opinion has turned against America. Ipsos poll across 29 countries found: • 26 out of 29 countries view US as less positive influence • 49% say China will have positive effect on world • Only 46% say same about US First time China beats US in a decade.

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European investors are pulling capital home in massive "repatriation trades." Peter Canella from Union Bank: "European investors are selling US assets and moving capital back to the Eurozone." Meanwhile, Germany announced €1 trillion in stimulus spending.

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The practical impact is devastating: • US travel abroad becomes 10% more expensive • EU imports cost 18% more (€120B in pharmaceuticals alone) • Credit card rates and mortgages will spike • Oil costs 9% more for Americans Everyday life gets pricier:

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And even Americans have lost faith. March 2025 Gallup poll: • 56% believe US has world's #1 military • Only 26% believe US has world's #1 economy When citizens don't believe in their own economic power, global investors notice:

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When people stop believing in the economy, they usually stop spending, and that's exactly what's beginning to happen. In March, the conference board's expectations index fell to 65.2, well below the recession warning threshold of 80. Meanwhile, the University of Michigan's consumer sentiment index kicked off April with a reading of 50.8, just barely above the all time low of 50 that hit in June 2022. Translation, people are nervous about what's next, and that matters. Sentiment drives behavior. And in an economy that relies heavily on consumer spending, fear alone can slow everything down.
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Speaker 0: When people stop believing in the economy, they usually stop spending, and that's exactly what's beginning to happen. In March, the conference board's expectations index fell to 65.2, well below the recession warning threshold of 80. Meanwhile, the University of Michigan's consumer sentiment index kicked off April with a reading of 50.8, just barely above the all time low of 50 that hit in June 2022. Translation, people are nervous about what's next, and that matters. Sentiment drives behavior. And in an economy that relies heavily on consumer spending, fear alone can slow everything down.

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Greg Meyer warns: "If US institutions become structurally less reliable, global capital will move elsewhere." This could erode the dollar's reserve currency status, something that's happened only once before in modern history:

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The dollar replaced British sterling in 1944 after two world wars decimated the UK economy. Now America faces its own reckoning: Political instability, crushing debt, and vanishing global trust. The world's reserve currency is dying before our eyes.

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That's why when most people around the world think about what money actually is, they're probably thinking about the US dollar. Between 1720 to 1815, if you asked someone to name a currency, they would have probably said the French livre, because it was France that held the reserve status from 1720 to 1815. But then, if you asked someone to name a currency between 1815 to 1920, you would have probably heard the British pound. Now after World War II, everything changed with the creation of the Bretton Woods Agreement, because after that point, most people would have probably said the US dollar.
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Speaker 0: That's why when most people around the world think about what money actually is, they're probably thinking about the US dollar. But it wasn't always like that, though. Between 1720 to 1815, if you asked someone to name a currency, they would have probably said the French libre, because it was France that held the reserve status from 1720 to 1815. But then, if you asked someone to name a currency between 1815 to 1920, you would have probably heard the British pound. Now after World War II, everything changed with the creation of the Bretton Woods Agreement, because after that point, most people would have probably said the US dollar.

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Smart investors aren't waiting for the dollar's death spiral to accelerate. They're positioning for the systematic transfer of global capital away from America's crumbling financial dominance:

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Tired of high-fee advisors who underdeliver? Our FREE weekly newsletter teaches: - How to spot hidden portfolio fees - Macro trends Wall Street hides - Independent investing strategies Subscribe here for FREE: https://dalyam.beehiiv.com

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The US dollar is dying. For the first time in 80 years, global investors are abandoning America's currency. Your savings, mortgage, and daily expenses are about to get crushed. Here's the terrifying timeline of how the world's reserve currency is collapsing: 🧵 https://t.co/ZJTRnwP1KI

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Posted - August 5, 2025 at 2:00 PM
Saved - August 6, 2025 at 12:01 PM
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Japan is facing a severe economic crisis, burning through $100 billion in foreign reserves to prevent a debt collapse that could have global repercussions. With $1 trillion in reserves, mostly in US Treasuries, each intervention to defend the yen creates a feedback loop that threatens both economies. The Bank of Japan's strategy of intervention and rate hikes aims to stabilize the currency but only delays the inevitable. As speculative pressure mounts, the risk of a financial disaster looms, potentially making past crises look minor in comparison.

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Japan is secretly burning $100 billion to prevent an economic apocalypse. Four desperate interventions in 2024 alone. When their money runs out in 5 years, the collapse will make 2008 look like a warm-up. Here's the $1 trillion gamble that could crash the global economy:🧵

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Most people think currency intervention is about national pride. The reality? Japan is burning through its foreign reserves to prevent a debt crisis that could devastate its entire economy. The problem is, it could take the whole world down with it. Let’s break it down:

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Japan, with only 2% of the world's population, could disrupt the entire world. Recent growth data shows Japan's economy has taken a step back. The country's three biggest auto industry names announced disappointing numbers and warned of rough waters ahead. Rice prices in Japan remain stubbornly high, causing consumers to struggle to afford food. The government has had limited success fixing the problem. Japan could increase interest rates in other countries, crash stock portfolios globally, and potentially trigger the next global recession.
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Speaker 0: So what if I told you that Japan, a country with just 2% of the world's population, could disrupt the entire world? Speaker 1: Japan's government has released growth data for the first quarter of this year, and the numbers show the economy has taken a step back. Japan's three biggest names in the auto industry announced disappointing numbers for the last quarter of the business year and their warning of rough waters ahead. Rice prices in Japan remain stubbornly high. Consumers are struggling to put food on tables and retailers to put products on shelves at affordable prices. Speaker 0: The government has been trying to fix the problem with limited success. Now you probably don't spend a lot of time thinking about Japan's economy, and most people don't. It's on the other side of the world, and it's not on the headlines all the time like The US or China. But the reality is that Japan could increase interest rates in your country, crash stock portfolios all over the world, and potentially even trigger the next global recession.

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Japan holds $1 trillion in foreign reserves, mostly US Treasuries. When they defend the yen, they're forced to sell America's own debt back into the market. This creates a terrifying feedback loop that could destroy both economies. Here's how the desperation escalated:

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Japan, a major global creditor holding over a trillion dollars in US debt, has long fueled risky financial ventures via the yen carry trade. Despite the yen's strength, this is problematic. In 2024, the carry trade began unwinding, causing a yen spike, a Japanese stock flash crash, and broader market repercussions, including impacts on US stocks and Bitcoin. JPMorgan warned the unwinding was only halfway complete. In 2025, the unwinding continues with Japanese government bonds declining in value, rising long-term interest rates, and unsuccessful bond auctions. This slow unwinding of trillions in global leverage is causing investor concern, signaling the end of an era.
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Speaker 0: Because Japan is not just another country. It is one of the biggest creditors on earth. It holds over a trillion dollars in US government debt, and for decades, it's been the engine that powered some of the world's riskiest financial bets through something called the yen carry trade. And the yen is one of the most important currencies in the world, and it's also getting stronger. Now that sounds like a good thing, but it's actually not. And we found out why it's not last year in 2024. That's when we saw the carry trade unwind, which led to a quick spike in the yen, which led to a flash crash in Japanese stocks, and a ripple effect that hit everything from US stocks to Bitcoin and more. Now, at the time, the Bank of JPMorgan was warning that the carry trade unwind was only halfway done. And now in 2025, that unwinding is continuing. The Japanese government bonds are collapsing in value, long term interest rates are going up, and bond auctions are failing. And because of that, we're seeing this slow motion unwinding of trillions of dollars in global leverage, and investors are starting to feel a little scared. But the thing about this story is that it's not just the story about Japan. It's a story about the end of an era.

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April 29: $24 billion intervention when yen hit 160 per dollar May 1: Additional $24 billion as selling pressure resumed July 11: $37 billion as yen reached 38-year lows July 31: Rate hike to 0.25% alongside intervention Every intervention occurs when USD/JPY approaches 160.

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The Japanese yen recently crashed past 150 to the dollar, a level the Bank of Japan was expected to defend, raising concerns of a potential global financial crisis. Japan's "zombie economy," supported by high public spending and zero interest rates, allows investors to earn significantly more in the US or Europe. This is causing capital flight from Japan, weakening the yen. The weaker yen has increased import prices, especially for energy and food, impacting Japanese consumers whose incomes have remained stagnant for 25 years. The Bank of Japan can't raise interest rates to strengthen the yen due to Japan's massive public debt, which is 267% of its GDP. Raising rates to US levels would make debt service unsustainable. Rising inflation may force the government and Bank of Japan to inject more money, potentially creating a cycle of further currency devaluation and rate increases. Japan's debt level could trigger a global debt crisis, dwarfing the crisis of 2008.
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Speaker 0: A few days ago, the Japanese yen crashed past the psychologically important line of 150 yen to the dollar. This had been considered an unbreachable line by the Bank of Japan, their version of the Fed, but apparently they failed. This giving rise to warnings that Japan could spark the next global financial crisis. So what's happening in Japan? In short, their zombie economy fortified by extravagant levels of public spending at zero interest rates means that investors can currently make roughly four to six times more investing in The US or Europe than in Japan. This is sucking trillions out of Japan, which means selling metric tons of yen for foreign currencies. So there's too many yen, meaning cheap yen. So far this giant sucking sound has dropped the yen 20% against the euro, while it's lost almost a third against the US dollars since 2021. In fact, the yen is now the weakest since the bubble economy burst way back in the late eighties when Brian Adams was topping the charts. This is all a problem because it raises prices for Japan's imports. Most notably energy of which Japan imports nearly 100 and food where Japan imports roughly two thirds of what it eats. US dollar terms, all of those are now 50% more expensive than before the fall of the yen. Toss in industrial imports from ores and metals to machinery, which make everything more expensive for Japanese consumers. Now, household income has been flat for twenty five years. So a 50% hike in prices is pretty rough. The problem is the solution to a weekend is to raise interest rates to erode that four to six times gap. But the Bank of Japan cannot raise rates, partly because the Japanese economy is too weak, but mostly because Japan has built a turbocharged version of the debt trap that Washington is busy building for the rest of us. Public debt in Japan is currently 267% of GDP, which would translate into roughly 60,000,000,000,000 in US terms. To illustrate the problem at the current target of 1% yield, roughly one quarter of Japan's government budget goes to debt service. But if the Bank of Japan raise rates to US levels, so that would be about 5% on the long bond, debt service would become a 125% of government spending. Of course, the rest of government still needs money from defense to highways, so call it a clean doubling. Now Japan already takes a third of GDP in tax, and the top rate is 45%. So doubling tax revenue is impossible. You would be close to Soviet levels of government dominance. So what's next? Brought to you by Unchained. What's next is Japan's slow motion train wreck may be about to get a lot faster because inflation is finally rising. This pushing both the government and the Bank of Japan to pump out yet more money. This could become a cycle where they pump out fresh money to defend rates and defend the yen. But that fresh money itself raises rates and crashes the yen because of future expectations on inflation. This market driven rise in rates is already starting to happen here in The US and we're at half of Japan's debt level. Japan has built itself a Leviathan of debt, big enough that it could spark the global debt reckoning. On the bright side, it could warn Washington off the suicidal path it's currently taking. On the dark side, it will be brutal on the Japanese people and could spread sovereign debt contagion that makes 2008 look like a cakewalk. Yesterday's newsletter talked about this very thing. Check it out at peterst.anj.com. K. We'll be watching. See you next time.

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That's their "line in the sand" because 160+ makes energy imports economically devastating. Japan imports 84% of its energy needs. Currency collapse = Economic collapse The death spiral they're desperately trying to avoid:

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Despite hotter-than-expected inflation in Japan, the yen continues to weaken due to Governor Ueda's dovish comments. Inflation is generally in line with expectations, with some technical adjustments for energy subsidies. The Bank of Japan is torn amid domestic and external uncertainties. Externally, there are concerns about a potential Trump 2.0 administration and Scott Bessent replacing Yellen as Treasury Secretary, which could lead to yen volatility. Domestically, the new Ishiba administration faces challenges, similar to Trump's early struggles in 2016, limiting the BOJ's ability to hike rates. While yen weakness at $1.60 is a concern for Ishiba, the BOJ is standing pat. However, the BOJ is often behind the market, and if the dollar-yen trend continues to $1.60, the Minister of Finance might intervene, potentially forcing a rate hike in January.
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Speaker 0: What I'm trying to figure out is, you know, we have that inflation printout hotter, than expected, yet yen continued to weaken. Is this still, is this still trading on, cuts to await his dovish comments? Speaker 1: Good morning, Martin. I I think so. Right? I mean, like, the inflation in Japan is pretty much in line with what we think. There's a bit of technical adjustment in it just because of around the, you know, subsidies, on oil and gasoline and also energy prices. But, you know, all in all, inflation in Japan growth, they are all still pretty sanguine. But what, was on the mind of, you know, governor Ueda was he was basically Bank of Japan is technically torn, amid person amid, you know, our uncertainties and both domestic and externally. And and, you know, in terms of externally, we have Trump two point o coming up. We have a new, treasury secretary, you know, replacing, treasury, secretary Yellen. Right? Scott Bessent is coming in. We might have a a bit of volatility if he started to, you know, address on the weakness of the end and once, you know, BOJ to do something on it. And I think that's, you know, on the on on that front with is very concerned on that. And on on in terms of domestic wise, right, I I think that's a bit of risk in in Japan too. Right? We we we we we see the new administration of PM Ishiba came up. And if you think of PM Ishiba, right, he has been the, minority within the ruling party for a very long time. And if you recall in 2016 Trump one point o, the administration hit a bit of rough patch, you know, in the first part of the, his period, and and this is what is happening within the Ishiba administration now, and BOJ just doesn't have the poll cover to hike at this point just because of this all these uncertainties. That's what is driving, you know, his dovish tone and, you know, what what we are seeing in the yen market. Speaker 0: Got it. Speaker 2: Masa, on that point though, given the yen is weakening so much, surely that would though be a major concern for Ishiba and the government. Speaker 1: Sure. I mean, like, know, they have been always been voicing that concern. Right? I mean, like, yen weakness at this level, $1.60, right, is is is, gonna generate, you know, unwanted, unpopular unpopular, theme for for for for Ishiba. And I think that's why, you know, BOJ's standing pat and being dovish now. But then, again, you know, they are always behind the market. This is what happened in the market, you know, in March, in July, what we saw, with with them, coming in and has to be forced to hike. Right? So I think, you know, with with dollar yen trifting, you know, trending to $1.60 level, next thing, you know, we might see the minister of finance trying to, Joe bond the mark Joe Joe bond the market, and then they might have to, force to hike in in January.

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1. Weak yen increases import costs for energy and food. 2. Higher costs force Bank of Japan rate hikes. 3. Rate hikes threaten Japan's $9 trillion debt load. 4. Debt crisis triggers currency collapse. They're trapped in a monetary policy nightmare.

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The Bank of Japan's dual approach exposes their desperation: Intervention buys time by artificially strengthening the yen while simultaneous rate hikes signal commitment to currency defense. Both actions aim to break the speculation cycle betting against them.

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Global carry trade reached $4 trillion by 2024. Investors borrowed cheap yen to buy higher-yielding assets. This created systematic selling pressure on the yen. Each intervention must overcome larger speculative positions. Here's where it gets terrifying:

Video Transcript AI Summary
Japan, with 2% of the world's population, could disrupt the entire world. Despite government efforts, Japan's economy has faltered, with disappointing numbers from major auto companies and high rice prices. Japan is a major global creditor, holding over a trillion dollars in US Government debt. The yen carry trade, where investors borrow yen at low rates and invest in higher-yielding overseas assets, has powered risky financial bets for decades. However, the yen is getting stronger, which is problematic. In 2024, the unwinding of the carry trade caused a yen spike and a flash crash in Japanese stocks, impacting global markets. The unwinding continues in 2025, with Japanese government bonds collapsing and interest rates rising. This slow-motion unwinding of trillions in global leverage is making investors nervous. Japan's zero interest rates enabled the yen carry trade, a key financial strategy for 30 years.
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Speaker 0: So what if I told you that Japan, a country with just 2% of the world's population, could disrupt the entire world? Speaker 1: Japan's government has released growth data for the first quarter of this year, and the numbers show the economy has taken a step back. Japan's three biggest names in the auto industry announced disappointing numbers for the last quarter of the business year and their warning of rough waters ahead. Rice prices in Japan remain stubbornly high. Consumers are struggling to put food on tables and retailers to put products on shelves at affordable prices. Speaker 0: The government has been trying to fix the problem with limited success. Now you probably don't spend a lot of time thinking about Japan's economy, and most people don't. It's on the other side of the world, and it's not on the headlines all the time like The US or China. But the reality is that Japan could increase interest rates in your country, crash stock portfolios all over the world, and potentially even trigger the next global recession. Because Japan is not just another country. It is one of the biggest creditors on earth. It holds over a trillion dollars in US Government debt. And for decades, it's been the engine that powered some of the world's riskiest financial bets through something called the yen carry trade. And the yen is one of the most important currencies in the world, and it's also getting stronger. Now that sounds like a good thing, but it's actually not. And we found out why it's not last year in 2024. That's when we saw the carry trade unwind, which led to a quick spike in the yen, which led to a flash crash in Japanese stocks, and a ripple effect that hit everything from US stocks to Bitcoin and more. Now, at the time, the Bank of JPMorgan was warning that the carry trade unwind was only halfway done. And now in 2025, that unwinding is continuing. The Japanese government bonds are collapsing in value, long term interest rates are going up, and bond auctions are failing. And because of that, we're seeing this slow motion unwinding of trillions of dollars in global leverage, and investors are starting to feel a little scared. But the thing about this story is that it's not just the story about Japan. It's a story about the end of an era. The reason it had so much spare money to send overseas comes down to one thing. Interest rates were stuck at zero. This created one of the most important financial cheat codes of the last thirty years called the yen carry trade. Here's how it works. Investors, hedge funds, and big institutions borrow money in Japanese yen at ultra low interest rates, then they convert that yen into dollars, euros, or other higher yielding currencies, and then they invest that money into assets overseas. And that could be anything from US stocks, emerging markets, bonds, crypto, real estate, you name it.

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$100 billion moves USD/JPY by approximately 5-8%. Effect lasts 2-4 weeks before selling pressure resumes. Each intervention requires larger amounts for same impact. Eventually, even $1 trillion reserves become insufficient. The global consequences are already unfolding:

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The Japanese yen is falling against the dollar because US interest rates are over 5%, while Japanese interest rates are close to zero. This interest rate differential is the primary driver of the yen's decline. The US dollar is also getting stronger against many other currencies, though to a lesser extent, due to the higher US interest rates.
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Speaker 0: Why is the Japanese yen falling so hard against the dollar? The main reason is that The US interest rates are now over 5% and they have been a 5% plus for quite some time, whereas Japanese interest rates are close to zero and that's another reason why we're seeing the US dollar to a lesser extent get stronger against many other currencies around the world as well.

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Yen interventions create a domino effect across global markets. Every time Japan buys yen, they're selling dollars. This strengthens the dollar against every currency, crushing US exporters and emerging markets.

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On 04/29/2024, the Japanese yen significantly increased against the dollar. Reports indicate Japanese authorities intervened in the market, causing the yen's rise. This intervention is a relief for traders anticipating action to support the yen. The yen's recent decline to levels unseen in over thirty years had pressured Japanese borders and policymakers. The intervention has provided some respite.
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Speaker 0: In a surprising turn of events, the Japanese yen made a significant jump against the dollar on 04/29/2024. Reports suggest that Japanese authorities intervened in the market, triggering the yen's bounce. This move comes as a relief for traders who had been waiting for signs of action to support the yen. The yen's recent decline, which saw it reach levels not seen in over three decades, had put pressure on Japanese borders and policymakers. However, the intervention has provided some respite. Stay tuned for more updates on this intriguing currency market development at trending hot topics.

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The August 5th crash proves how dangerous this has become. Nikkei plummeted 12% in a single day as yen strength devastated export stocks. The carry trade unwind wiped $6 trillion from global markets. US stocks fell alongside Tokyo despite zero fundamental reason to crash.

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On August 5, Japan's Nikkei 225 stock index plunged 12.4%, the worst day since Black Monday in 1987, amid investor concerns about the U.S. economy. The market closed down 4,451 points at 31,458, the largest points drop in history, erasing all gains for the year. At one point, it sank 13.4%. The market is worried about a potential U.S. recession risk, with Japan being the most affected market in Asia. Mitsubishi, Mitsui, and Sumitomo all plunged close to 14%, with Mitsui losing almost 20% of its market cap. The broader Topix index fell 12.8%. The Nikkei 225 dropped 5.8% earlier in August, marking its worst two-day decline ever. U.S. stocks fell sharply after a weaker-than-expected jobs report for July. The Nasdaq entered correction territory, down over 10% from its record high. The S&P 500 and Dow were 5.7% and 3.9% below their all-time highs, respectively. Concerns about the U.S. economy and the Bank of Japan's rate hike are driving risk-averse sentiment.
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Speaker 0: Japan's benchmark Nikkei two twenty five stock plunged 12.4% on August 5 in the latest bout of sell offs that are shaking the world markets as investors fret over the state of US economy. The markets closed down almost 4,451 points at 31,458 which was also the largest in terms of points in the entire history. The 12.4% loss on Nikkei was the worst day for the index since the Black Monday of nineteen eighty seven. The index erased all its gains this year and taking on a loss position. At one point, the benchmark sank as much as 13.4%. The worst single day route was a plunge of 3,836 points or 14.9% on a day dubbed as Black Monday in October nineteen eighty seven. Speaker 1: I would say the market is still pretty much worried about the potential US recession risk. And in Asia, there is indeed a trend of the sector rotation. So there's a very clear path that Japan is definitely the market being affected the most. But there are also other tech savvy markets such as South Korea and Taiwan also suffer a bit of the loss after reaching the new high in the past few months. Speaker 0: The heavyweights such as Mitsubishi, Mitsui and Co, Sumitomo all plunged close to 14%, with Mitsui losing almost 20% of its market cap. Its broader Topics index fell 12.8%, as selling picked up in the afternoon. Earlier on August, the Nikkei two twenty five dropped 5.8%, making this its worst two day decline ever. On Friday, The US stocks fell sharply as a much weaker than anticipated jobs report for July ignited worries that the economy could be falling into a recession. The Nasdaq was the first of the three major benchmarks to enter correction territory, down more than 10% from its record high. S and P five hundred and Dow were 5.73.9% below their all time high respectively. Speaker 1: There are two main factors driving the capitals towards the more risk adverse sentiment. The first is the worries on The US economy, especially after the poor unemployment data that were released last week. And second, this coupled with the rate hike in the Bank of Japan, which of course is a bit worrisome to some of the investors and pushing them to unwind some of the trade. So when you see such a big drop in the Japanese market and The US market that has no question about affecting some of the other related market in the region as well.

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Professional traders have decoded Japan's playbook. They know intervention happens every time USD/JPY hits 160. Each intervention only lasts 2-4 weeks before pressure resumes. This creates massive arbitrage opportunities. But the endgame scenario should terrify everyone:

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The Japanese yen has tumbled past 160 per USD without intervention from the Bank of Japan, potentially opening the path to 165. A Japanese official stated there isn't a particular level being watched. If there's a retracement from the dollar-yen's multi-decade highs, buying interest could reappear around the 158 support, aligning with the 23.6% Fibonacci retracement level. Traders are watching US jobless claims data, Tokyo CPI, and US PCE releases.
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Speaker 0: So we've had the Japanese yen tumble beyond $1.60 per USD without immediate intervention from the Bank of Japan. So does this signal an open path to the next psychological levels, perhaps one six five? According to the recent comment of a Japanese official, there wasn't a particular level they were watching. But of course, this is something officials will have discussed privately and not just sharing this information with the public. Should there be a retracement from the multi decade highs from the dollar yen, buying interest could resurface around the 158 support, aligning with the 23.6% fib level retracement. On the fundamental side, traders will be eyeing tomorrow's US jobless claim data followed by Tokyo CPI and US PCE releases on Friday.

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When Japan's $1 trillion runs dry, they'll be forced to liquidate their entire $1.1 trillion Treasury position. This isn't just a yen collapse, it's a US debt crisis that triggers global financial system failure. The carry trade reversal will make 2008 look like a warm-up.

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Over the past 13 years, the Japanese yen has fallen roughly in half versus the US dollar, creating both positive and negative impacts for the Japanese economy, specifically inflation. Decades of deflation made it difficult for the government to reduce its budget deficit, which typically ran around 6% of GDP, causing Japan's debt ratio to spiral to over 200% of GDP. Positive inflation has allowed them to reduce deficits and debt ratios, but at the cost of higher consumer prices. Businesses importing goods also face rising input costs. A Japanese Chamber of Commerce survey indicated that business owners believe the ideal yen level is between 100 and 130 versus the dollar, while it currently trades at 146. A rally could push Japan back towards deflation, derailing the government's fiscal gains achieved with a weaker yen.
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Speaker 0: Over the past thirteen years, the Japanese yen has fallen roughly in half versus the US dollar, and a weaker Japanese yen has had both good aspects and bad aspects for the Japanese economy. Now, the good aspect is inflation and the bad aspect is also inflation. Inflation in some ways for Japan has been positive. For many decades, Japan was in and out of deflation, meaning that its money was gaining in value versus goods and services. That made it very difficult for the government to ever reduce its budget deficit, which was typically running at around 6% of GDP. And Japan's debt ratio spiraled to over 200% of GDP. So finally, with positive inflation, they have begun to reduce their deficits and their debt ratios. But there's a cost and the cost is higher consumer prices, which many Japanese consumers are complaining about. In addition to that, the input costs faced by businesses who import goods safer industrial processes are also rising. A recent survey by the Japanese Chamber of Commerce inquired what level should the yen be ideally? And the average Japanese business owner said it should see somewhere between 100 and 130 versus the US dollar. But currently it's trading all the way up at 146, which means that the Japanese yen would have to gain anywhere from 10% to as much as 30% versus the dollar to get back into that range. Now the challenge is if the Japanese yen were to rally that much versus the dollar, it could push Japan back towards deflation and to derail the government's gains in fiscal responsibility that they've achieved with a weaker yen.

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Each intervention has diminishing impact duration. Speculative pressure increases after each failed attempt. Market expects intervention exhaustion within 3-5 years. This represents the controlled demolition of post-war monetary policy.

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Japan's intervention strategy isn't solving the fundamental problem. It's buying time while the underlying crisis grows larger. Smart investors aren't betting on intervention success. They're positioning for the systematic failure:

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Japan is secretly burning $100 billion to prevent an economic apocalypse. Four desperate interventions in 2024 alone. When their money runs out in 5 years, the collapse will make 2008 look like a warm-up. Here's the $1 trillion gamble that could crash the global economy:🧵 https://t.co/2rHyAB35m0

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