https://t.co/9Xkp05A1Lj The situation has changed abruptly… An unprecedented situation in Japanese government bonds not seen since 1996! What should individual investors do now? [A detailed analysis by a former Goldman Sachs banker] O-chan [Former Wall Street Banker] #AISummary Caution Against Rising Global Long-Term Interest Rates and Currency Depreciation 🔳 Long-term interest rates are rising simultaneously across advanced economies Long-term government bond yields are rising concurrently in Japan, the U.S., the U.K., and European countries. The speaker argues that fundamental shifts are underway in the global financial system. 🔳 Interest rates surged sharply prior to past market crashes Before the 1987 Black Monday crash and the Japanese stock market decline beginning in late 1989, interest rates rose significantly. The speaker cites the current rise in bond yields as a warning sign. 🔳 Government bond markets form the foundation of the entire financial system Government bonds are essentially IOUs issued by governments. As investors grow more concerned about fiscal sustainability, they demand higher yields, increasing the government’s interest payment burden—and triggering a vicious cycle of further borrowing and rising rates. 🔳 Concern over expanding government debt across advanced economies G7 government debt has ballooned from roughly 40% of GDP in 1975 to approximately 130% today. The speaker highlights this as a key difference from past crises: major countries that once acted as rescuers are now themselves facing fiscal challenges. 🔳 A 100-year cycle analysis of the monetary system since 1971 Since the 1971 Nixon Shock ended the dollar’s convertibility to gold, government debt has expanded rapidly—a trend similar to that seen since 1914. The speaker points to a long-term cycle in which excessive debt accumulation eventually leads to a fundamental restructuring of the monetary system. 🔽 Inflation resurgence is driving bond selling After four decades of low inflation, conditions shifted around 2021. Bond investors, wary of declining real yields due to inflation, have begun selling government bonds and demanding higher yields—contributing to the current rise in interest rates. 🔽 Governments face a choice: austerity or interest rate suppression While reducing debt through spending cuts or tax hikes would impose heavy economic costs, governments are more likely to rely on central bank bond purchases to suppress rates, effectively diluting currency value to ease debt burdens. 🔽 Japan may be the first domino to fall Japan’s government debt exceeds 200% of GDP, and the Bank of Japan holds roughly half of all outstanding bonds—yet long-term yields continue to rise. As a result, foreign investors are viewing Japan as a potential starting point for global debt issues to surface. 🔽 Rising Japanese rates could spill over into U.S. markets As domestic Japanese rates rise, institutional investors lose incentive to hold U.S. Treasuries due to increased currency risk. This could trigger capital outflows from Japan, exerting upward pressure on U.S. long-term yields. 🔽 Households face pressure from higher mortgage rates and declining yen purchasing power Rising long-term rates increase fixed-rate mortgage and corporate borrowing costs. Conversely, if the Bank of Japan continues buying bonds to suppress rates, increased yen supply could erode purchasing power—meaning households bear the burden either way. 🔽 Holding only cash is the greatest risk In periods of expanding money supply, nominal prices of tangible assets—such as equities and real estate—tend to rise. Panic-selling into cash exposes investors directly to currency depreciation risks. 🔽 Equities are not inherently safe—watch for volatility During transitions in the monetary system, economic downturns and sharp stock market declines may recur. Holding stocks does not guarantee safety; instead, investors should secure emergency funds, avoid concentrating solely in cash, and predefine allocation limits for systematic investments and individual stocks. 🔽 Key market indicators to watch Watch whether Japan’s 30-year bond yield stabilizes in the 4% range, whether the Bank of Japan increases bond purchases, or whether the U.S. 30-year Treasury yield remains above 5%—these will signal shifts in the financial environment. 🔽 Final conclusion The speaker does not view current bond market movements as an inevitable sign of financial system collapse, but rather as a signal that the rules governing finance and currency are changing. Investors should avoid emotional trading and instead maintain disciplined diversification and sound cash management.