{"id":26958,"date":"2019-07-30T05:10:21","date_gmt":"2019-07-30T12:10:21","guid":{"rendered":"https:\/\/goldco.com\/?p=26958"},"modified":"2022-12-29T12:57:47","modified_gmt":"2022-12-29T20:57:47","slug":"japan-owns-massive-amount-us-debt-means","status":"publish","type":"post","link":"https:\/\/goldco.com\/japan-owns-massive-amount-us-debt-means\/","title":{"rendered":"Japan Owns a Massive Amount of US Debt: What This Means for You"},"content":{"rendered":"<p>The current stock market bull market has been fueled by the massive amounts of money pumped into world economies by central banks around the world. All that money had to go somewhere, and it has finally ended up in stock markets. To a large extent the continuing bull run is the result of stock buybacks on the part of US corporations. Those corporations have taken advantage of low interest rates to issue massive amounts of debt, then used the receipts from those debt sales to buy back their stocks. But who is buying all that debt?<\/p>\n<p>One company, Japan Post Bank, <a href=\"https:\/\/www.zerohedge.com\/news\/2019-07-12\/theres-no-escape-one-japanese-bank-owns-over-half-trillion-us-corporate-bonds\" target=\"_blank\" rel=\"noopener noreferrer\">owns nearly $600 billion of foreign corporate bonds<\/a>. That company, majority-owned by the Japanese government, has therefore been bankrolling numerous US corporations and allowing them to issue debt and buy back stocks. The bank itself has often been called the <a href=\"https:\/\/www.nytimes.com\/2005\/07\/05\/business\/worldbusiness\/japan-postal-reform-creates-worlds-largest-bank.html\" target=\"_blank\" rel=\"noopener noreferrer\">world\u2019s largest savings bank<\/a>.<\/p>\n<p>The Japanese have a reputation for having a <a href=\"https:\/\/www.ceicdata.com\/en\/indicator\/japan\/gross-savings-rate\" target=\"_blank\" rel=\"noopener noreferrer\">high savings rate<\/a>, and many risk-averse Japanese citizens choose to deposit their money at Japan Post Bank. Thus American companies are benefiting from the high savings rate of Japanese citizens. But what happens when Japanese citizens have no more to save? Or what happens when Japanese retirees decide to withdraw their savings and the bank is forced to sell that debt in order to satisfy those withdrawals?<\/p>\n<p>This example highlights the convoluted nature of international finance and the fact that, even though the Federal Reserve plays a huge role in the performance of stock markets in the US, other central banks play a similarly important role. No matter what the Federal Reserve does this week, what the Bank of Japan continues to do or not do could play a similarly important role too.<\/p>\n<p>For investors looking to find out which may markets will move in the future, they need to pay attention to the behavior of all central banks, not just the Fed. While the Bank of Japan may want to engage in further easing, it is facing increasing difficulty finding high quality assets to keep on its balance sheet. Central banks can\u2019t continue buying stocks and bonds ad infinitum, as that would completely destroy markets. So there will come a time at which point central banks throw in the towel. They\u2019ll realize that they can\u2019t keep buying up debt that they\u2019ll never be able to get off their balance sheets. And that\u2019s when the music will end.<\/p>\n<p>That day won\u2019t be very far off, and in the end it\u2019ll likely be political considerations rather than economic ones that result in that happening. Positioning yourself now by <a href=\"https:\/\/goldco.com\/gold-ira\/\" target=\"_blank\" rel=\"noopener noreferrer\">investing in gold<\/a> ahead of the coming market crash will be the best way to ensure that when the day of reckoning finally occurs, your retirement savings will remain safe and secure.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The current stock market bull market has been fueled by the massive amounts of money pumped into world economies by central banks around the world. All that money had to go somewhere, and it has finally ended up in stock markets. To a large extent the continuing bull run is the result of stock buybacks [&hellip;]<\/p>\n","protected":false},"author":13,"featured_media":32475,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[213],"tags":[],"class_list":["post-26958","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-retirement"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.8 (Yoast SEO v26.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Japan Owns a Massive Amount of US Debt: What This Means for You &#8211; Goldco<\/title>\n<meta name=\"description\" content=\"Japan is one of the largest holders of US Treasury debt. 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