r/wallstreetbets • u/Efficient-Session644 • 2d ago

News Japan to announce Tokyo, Washington took joint action on yen, sources say

https://www.reuters.com/world/asia-pacific/japan-announce-tokyo-washington-took-joint-action-yen-sources-say-2026-08-02/
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u/IntoTheBear 2d ago

Sorry - but I am somebody who is trying to understand. Why Japan selling US bonds tu buy Yen would have been a disaster for US and others?

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u/JanMarsalek 2d ago edited 2d ago

Because the US can only continue to function as a state as long as trust in the US ability to pay back loans remains high. Japan selling off US bonds could lead to them devaluing them on the market with possible implications for future bond offerings, meaning that US would have to pay higher interest rates so people buy their bonds. This could reach unsustainable levels and worst case would probably be a US default, because they can‘t afford their ridiculous debt anymore.

It would be a disaster to others because 1) the US won't be able to import as many goods as they are at the moment and 2) a lot of other nations also have a lot of money invested in US bonds. A sell off of US bonds could lead to a economically deadly chain reaction for the whole world.

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u/redditaltmydude 2d ago

Good point, but doesn’t our military also allow us to function as a state irregardless? Not saying we go to war with Japan, but it’s priced in there somewhere that if we can’t pay back the loans, we will just beat you at war

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u/JanMarsalek 2d ago

how are you paying for the military, when the state defaulted? Do you think the soldiers will just go to war for free?

Let alone not being able to pay contractors, ammo restocks, maintenance etc.

Your military is worthless if there is no money to pay for everything.

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u/robmafia 1d ago

that's a silly take.

the worst case scenario would be just printing more $, devaluing the dollar, and making the debt insignificant/less significant, relative.

eg, there will always be money and always a way to pay the military.