Japanese government bond yields keep rising, investors will stop treating Japan as a source of basically free fiat currency, and the whole carry-trade party will come to an end.
Soon the US will be the only major central bank still cutting interest rates, effectively turning America into the new Japan – the world’s primary supplier of cheap fiat currency. With QT officially ending on December 1st, the Fed is now in full liquidity-reflood mode. And since the AI boom isn’t actually a bubble (it’s the new foundational infrastructure), the system will require endless amounts of this fresh fiat to keep growing – meaning the US now has to play global bailout provider for the entire AI buildout.
The US will quietly start backing its endless fiat issuance with Bitcoin, gold, and other real assets, turning itself into a giant, sovereign version of what El Salvador is doing today. Once the rest of the world sees that the only way to escape terminal fiat debasement is to accumulate hard, verifiable collateral behind their own currencies, nations will have no choice but to follow America’s lead or get left behind in the biggest monetary reset in history.