Fiat Currency Collapse: What Happened with the Yen Intervention

Recently, there was a joint U.S.-Japan currency operation to push up the yen's value. The yen had slid to its weakest point in 40 years, reaching around 164 per dollar.

The majority of the heavy lifting was done by Japan, which spent roughly ¥8.45 trillion ($53 to $59 billion) in one session, with a total of $75 billion for the week.

The U.S.'s share was small, estimated at $5 to $10 billion, and it's worth noting that the Treasury bought yen with euros, not dollars, so it never had to touch the Treasury market.

This narrative is often linked to a broader story of fiat currency collapse, with some suggesting that this is a sign of things to come for other countries like Japan.

However, this framing is misleading. The yen intervention is firmly a response to a weak currency, not an implicit default or a sovereign default.

Japan's public debt nears 250% of GDP, but it owes that debt mostly to its own citizens and runs a current-account surplus.

This means that Japan can quietly devalue and inflate its obligations away instead of formally defaulting on its debt.

The FIMA facility is also being used as a tool to provide liquidity to prevent a fire sale in the U.S. bond market, but this is not a new or secret bailout measure.

This is just an extension of the Fed's 60-year-old playbook, aimed at maintaining financial stability and preventing a global panic from spreading.