Japan Just Sent a Warning to The Global Economy

Japan's bond market is now facing a crisis that's been brewing for decades. They have too much debt and the interest rate on their debt is rising very quickly. And yes, this directly impacts you here in the United States because Japan is the largest foreign owner of United States dollars in the world. In plain English, this change in economic policy in Japan can impact the value of your savings, the stock market, and even Bitcoin, which is why you want to get ahead of this shift because unfortunately, most people are not going to pay attention and they're not going to realize it until after the fact and it's too late. So in this video, I want to do three things. Number one, I want to talk about what's happening in Japan right now so you understand the background. Number two, I want to talk about how this is going to impact you directly. And then number three, I want to show you how this can create an investment opportunity as well. And a reminder, with all the changes that we're seeing in the economy, from the Trump economic policy to tariffs to AI, and now the things in Japan, I am hosting a live and free investor workshop on January 13th, 2026. I decided because of everything that happened in 2025 and the amount of things that are about to change in 2026, I wanted to host this workshop to show you, number one, how the economy is changing, but number two, how this is going to create new and unique investment opportunities. That way you can hopefully get better returns. It's a free workshop and it's live. I'm doing it twice on January 13th, once in the morning at 1030 AM Eastern time, and then again in the evening at 8 PM Eastern time. There's going to be so much value there. So if you're an investor, I invite you to join for free, but I have one request. Please, if you're interested in joining, register soon because there are a limited number of people that can join me live. And every time I've done an investor workshop in the past, we have pretty much hit capacity or hit capacity. So if you're interested in joining, it's free to register and it's live and I have the link for you down in the description below. Here's what's going on. The Japanese economy, which is measured through a number called GDP, is about four trillion dollars large. At the same time, the Japanese government has racked up around nine and a half trillion dollars worth of national debt, which means from a debt to GDP ratio, Japan has around 235 percent debt to asset. You can think of GDP kind of like a collateral if you're going to buy a house. This is the collateral. This is the amount of debt you have. So they have a lot more debt than assets. You can compare this to the United States, where we have around 30 trillion dollars worth of economy GDP. We have about 38 trillion dollars worth of national debt. So our debt to GDP ratio is at around one hundred and twenty five percent, which is high, but a lot less than this. Now, this is where things get very interesting, because this in Japan directly impacts you here in the United States. But to understand that, you have to understand the three reasons how Japan got here to this high level of debt versus GDP. Number one are negative interest rates, because over the almost decade, the Japanese government and their central bank have been running on negative interest rates. Now, this can be a weird concept to get your head around, because you think when I go to buy a house, I pay a five, six, seven percent mortgage rate. What does a negative one percent rate mean? And what that means is now the Japanese government can borrow one thousand dollars. But instead of paying the thousand dollars back plus interest, the Japanese government might pay back nine hundred and ninety dollars. So you borrow money and you pay back less than what you borrowed. That's how negative interest rates work. And now you're probably wondering who in the world would lend money to the Japanese government at a negative interest rate. Which brings me to number two. When you lend money at a negative interest rate, the goal is not to make a profit. The goal is to lose less money than you would somewhere else. And right now in Japan, the leading investor, meaning lender to the Japanese government, has been the Bank of Japan. They have been the forefront lender to the Japanese government to continue stimulating the economy. Now, you can compare this to the United States because in Japan, the Bank of Japan owns 58 percent of the Japanese government debt versus in the United States, the Federal Reserve Bank owns about 20 percent of our government debt. But the only reason why the Bank of Japan would lend money at a negative interest rate is because of deflation. Remember what I said just a minute ago that when you lend money at a negative interest rate, meaning I lend you a thousand dollars, you pay me back nine hundred and ninety. The only reason why that's possible is because the prices of things around you are falling. So the idea of lending money at a negative interest rate is I'll lend you money because I'm going to lose less money by doing that than I would by putting it anywhere else because prices are falling due to deflation because Japan has been facing a deflation crisis for decades. Now, deflation is actually good if you're a consumer and you have cash because that means your cash has more buying power. But it's not good from an economic standpoint because that means the economy can't grow as fast because asset prices can't rise as fast. So over the last number of decades, the Japanese government has racked up a large amount of debt relative to their GDP. And the reason why they've been doing that and how they've been able to do that is because, number one, is they've had these negative interest rates to incentivize the government to borrow a whole lot of money because the Japanese government is borrowing more money relative to the GDP than the United States government to stimulate the economy. And they can do that because a leading lender for Japan is the Bank of Japan who is willing to lend money at a negative interest rate. And they can do that because of deflation. But this system just stopped because now Japan is not facing deflation. They are now facing inflation after decades of doing this. And because now they're facing inflation, now they're having to raise interest rates. So now they've gone from negative interest rates to the highest interest rates that they have seen in decades. And now investors in the United States are starting to get concerned because these changes that are happening in Japan are going Here's how it's going to impact you and why. Number one has to do with something called the yen carry trade. Because of this negative interest rate policy, borrowing money in Japan was the cheapest place in the world to borrow money. And who do you think likes to borrow a lot of money? Investors, hedge funds, banks. So you have these big investment firms in the United States that are now borrowing money in the Japanese economy, in the yen, and then using that money to then buy assets in the United States, to buy stocks, to buy real estate, to buy other types of assets here in the United States, because you can borrow the money at essentially nothing. And if you can grow it at more than nothing in the United States economy, well, now you essentially got to borrow that money for free and grow free money. To put it in perspective, in 2024, it's estimated that these institutions borrowed around one and a half to two trillion dollars in this yen carry trade because you could borrow this money essentially free. So this was money that was going into the United States stock market and into the United States economy. And now the interest rates are starting to go up in Japan. Well, now it's going to be more expensive to do that. So you might be seeing less of that happening. Read what Behrens had to say. The Bank of Japan is done financing the rest of the world's risk taking. Now, to put it plainly, the reason why this can impact the is because the stock market and every asset class moves on supply and demand. When you have more buyers and sellers, the price of a stock goes up. When you have more sellers than buyers, the price of a stock goes down. And so we had a lot of institutions being buyers because they could borrow money so cheap from Japan and then inject it into the United States stock market. And if interest rates are rising in Japan, that can mean less buyers into the markets. It's the same concept with Bitcoin, except just more speculative, because anytime there's more money in the economy or lower interest rates, Bitcoin is generally benefited. Like between 2020 to 2021, when interest rates were being cut, we saw Bitcoin prices skyrocket. In 2022, when interest rates went up and money was tightening, we saw Bitcoin prices fall by around 60%. The second thing that happens is it creates higher interest rates globally from a competition standpoint. Interest rates around the world are set by a competition for money. And so now if Japan is starting to raise interest rates and they have positive interest rates, this could mean that other countries around the world now have the ability to raise their interest rates higher because the baseline, the cheapest interest rates, are now going up. Obviously, there's a lot of other factors that can impact interest rates here in the United States and the UK and Canada and everything like that. But if the baseline is going up, other countries might say, hmm, this gives us the ability to keep higher interest rates for longer because Japan is raising. And number three has to do with So the United States government also spends a lot of money that we don't have. We've been talking about the national debt problem here in the United States for a long time. Obviously, it's worse in Japan. But remember, the largest foreign lender to the United States is Japan, and Japanese investors are a big part of that. So if now Japanese investors are looking at investment opportunities and they're saying, hmm, now the Japanese government is going to give me a real rate of return because before it was a negative rate of return. If I can get a real rate of return in Japan, maybe I don't need to lend my money to the United States. I can just lend my money inside of Japan. And the reason why that matters to the United States is because, again, supply and demand. If the United States government keeps spending money that they don't have, which, yes, they're going to continue doing in 2026, they're going to need to borrow that money. And if people are not lending money to the United States government, the government then has to raise interest rates as a way to incentivize people to lend money to the government. Now, I'm not talking about the Federal Reserve Bank rate. I'm talking about the Treasury rate. I'm talking about the interest rate that the United States government has to pay when they borrow money. And the reason why that matters to you is because if the government has to pay a higher interest rate to borrow money, that raises mortgage rates. And it also means that the government has to pay more money in interest on its loans, which means more of their tax dollars are being used to pay back their debt. Now, we don't know if that's going to happen just yet, but this is what investors on Wall Street are paying attention to because if we see less Japanese buyers of United States debts, the United States is going to have to sell those debts to other people or incentivize people with higher interest rates to buy those debts. If the government, not the Fed, if the government has to raise their Treasury yields, that means you get a higher rate of return by lending your money to the government, but it also then pushes up mortgage rates, and it also means that more tax dollars are being used to pay back the government debt. Now, the question here is how does this create an investment opportunity? And one of the things that I normally talk about is, number one, why it's so important for you to be an investor and how you can invest in the American economy. But I want to do something a little bit different today because we're also starting to see shifts in the Japanese economy. Previously, Japan has been known as a stakeholder-first economy, where the entire Japanese ecosystem was designed to take care of the stakeholders of a company, not shareholders, stakeholders, so all different pieces of a company, not just the investors. The United States is a shareholder-first economy. The CEO of a company has a fiduciary duty, meaning a legal obligation to increase the share price of a company. So when you invest in stocks in the United States, you know that a company's duty is to increase its stock's value. Japan is not like that, or at least it wasn't. But in 2025, that changed. Because of all the changes happening in Japan, because of now the inflation problems, because of the debt problems, the Japanese economy is changing drastically where they're moving rapidly towards a shareholder-first economy. They're changing their entire economic policy to be more like the United States, to be driven by shareholder value. What does that mean? In reality, they're working to increase their stock values. That's what they want to see happen. Now again, risky to invest in the United States. Investing is risky by itself. On the side of the United States, it's even more risky. You're never guaranteed to make money when you invest. In fact, you will lose money at some point, so make sure you always do your own due diligence. Never blindly trust a random guy on YouTube. Okay, got that? But just understand that these changes are happening, and now the Japanese government is saying we need to change our entire economic system. We need to be shareholder-first to drive up the Japanese stock market, which could create investment opportunity. Now how do you play that? There are funds here in the United States, ETFs, that give you exposure to baskets of stocks. And there are specific ETFs that will give you exposure to the Japanese economy. I'm going to give you some examples. Again, I'm not telling you what to invest in. I just want you to start thinking like an investor, so let me wipe off the whiteboard and go over a few examples. And yes, these are ETFs that you can invest in here in the United States on pretty much whatever brokerage that you have. Example number one is DJF. This is an ETF created by Wisdom Tree, which is giving you exposure to Japan's small-cap dividend funds, meaning this is investing in smaller companies in Japan that are paying out dividends that are hoping to benefit from the Japanese economy growth. Option number two is EWJV. This is another ETF that gives you exposure to Japan. This one is created by iShares, and this is investing in value stocks, meaning these are mid-cap and large-cap companies, larger companies that are believed to be undervalued and can hopefully grow from the Japanese economic growth as well. And then we have JPXN. This is another ETF that's giving you exposure to the Nikkei 400. Now, the Nikkei 400, these are 400 of the most attractive companies in Japan, not the largest 400 companies, but 400 of what is believed to be more of the attractive companies in Japan. So if you want more broad exposure, this can give you exposure to that. Again, investing is risky. Investing outside of the United States, more risky. But we know that the Japanese economy is changing. How do we know? They went from an economy of negative interest rates fueled by the Bank of Japan because of deflation that is now changing to positive interest rates because of inflation. And not just that, they now have to push for a shareholder-first economy. Why? Because they went from stakeholder-first to now shareholder-first to help grow the economy, to grow the stock market, and to hopefully help that debt-to-GDP ratio. There's a chance that it doesn't work. There's a chance that it will. Now, if this is something that you are interested in, there are ways in the United States to invest into the Japanese economy. We went over three different ETFs that can give you exposure to that. But my goal for you is not to tell you what to invest in because, well, personal finance is personal, investing is risky, but to understand how moves can create opportunities, and then it's up to you to value the risks and see what's right for you. Again, the economy is shifting fast. This is why in 2026, I'm hosting my Live Investor Workshop. It's free. There's going to be so much value there. You will not want to miss it if you are an investor and want to know where to invest in 2026. I have the link for you to register for free down in the description. And if you got value out of this video, the best thank you is a referral. So if you could, please share this video with a friend, family member, colleague, or fellow investor so we can continue to spread this type of financial education. Thank you. The majority of Americans are living paycheck to paycheck with little to no investments and drowning in debt. And things are not going to magically get easier next year. But in the middle of all this chaos is opportunity. And opportunity is ability for you to grow your wealth even faster, assuming you don't fall into these 10 money traps that I'm going to show you in this video. So please watch this video until the end.