Transcription
If the interest rate is lowered, the bond market will truly collapse. Why? Because inflation will become extremely strong. Strong inflation is disliked by creditors. Creditors disliking it will cause yields to rise. When yields rise very high, bond prices fall, and people will sell off bonds. And finally, if the yield on government bonds rises very, very high, it will ultimately become the cost of borrowing again. And what's important is, do you know what? It's possible that even if interest rates are lowered to the absolute minimum, it might not be as effective as before. You might ask, will it be effective? Yes, but perhaps not as effectively as in the past. This is because debt is now very high. Lowering interest rates is intended to reduce borrowing costs so that people will borrow money to expand the economy. The problem is, there is already a lot of debt, and people already have a lot of debt. [Music] They don't have the capacity to borrow more. And you might ask, what about banks? Will banks be willing to lend easily, even if interest rates are at their absolute minimum? Perhaps not. Look at Thailand. Currently, Thailand's policy interest rate is 1%. Is it easy to borrow? No, it's not easy. So, you might ask, can yields go even higher? Why? The answer is yes. It seems like they can, because as I said, people are selling off massively. Small and large investors are selling off, which is one thing. But what about large investors like China? [Music] China and Japan are the largest creditors to the United States. China once held a maximum of 1.33 trillion US dollars in US government bonds. But China has been selling continuously for 17 years straight, so now China holds only 650 billion US dollars in US government bonds. Yeah.