Some observations and thoughts on the recent visit of Blinken to China and the devaluation of the yen:

The substantive negotiations during Blinken's visit to China were not optimistic, but the easing of tensions had a significant impact, with only moderate substantive results.

At this juncture, the significant devaluation of the yen not only depreciated against the US dollar but also had a substantial impact on the euro and the RMB. This is actually a strategic move. If we piece together various fragments, such as the recent approval of a $95 billion aid package (for Ukraine, Taiwan, and others), combined with the recent surge in US bond yields, it becomes clear that this is a grand play, a grand harvesting play. Why do I say this?

The substantial devaluation of the yen by Japan is a heavy blow in the United States' combination punch aimed at Asia. It is well known that currency devaluation is actually beneficial for exports. Over the past two years, multinational companies such as Toyota, Honda, and Uniqlo have reported very good performance, with the highest returns coming from exchange rate gains. For example, selling a Lexus LX600 for 12.5 million yen, which was worth $100,000 two years ago, is still worth $100,000 now. However, when converted back to yen, it is worth 16.25 million yen, an increase of 3.75 million yen, or nearly 30%. Similarly, as a major exporting country in Asia, China is relatively disadvantaged by the appreciation of the yen, making it difficult for the Chinese export industry. Furthermore, the devaluation of the yen also benefits Japan's tourism industry, which is easy to understand.

Japan has been used as a pawn by the big brother for quite some time, starting from the Plaza Accord and the devaluation of the yen. Japan has endured decades of pain and loss, which only the Japanese people can truly understand. Although the devaluation of the yen harms the Japanese people, the Governor of the Bank of Japan, Haruhiko Kuroda, remains calm and openly states that an appropriate devaluation of the yen is beneficial for Japan's development and maintains loose monetary policy. What's the story behind this?

This brings us to the currency swap agreement established in 2010, in which six central banks participated, with the Federal Reserve leading the way, along with five other countries: Canada, the United Kingdom, Japan, Europe, and Switzerland. During the pandemic in 2020, nine more central banks joined, including Australia, Brazil, South Korea, Mexico, Singapore, Sweden, Denmark, Norway, and New Zealand. The Federal Reserve has had three large-scale currency swaps in its history, but this time the currency swap is the longest, largest, and most frequent. In March 2020, the frequency of currency swaps between the Federal Reserve and the core five central banks was increased from once every seven days to once a day. Essentially, this has formed a dominant alliance with the US dollar as the center of liquidity, realizing the global evolution of US dollar hegemony. This has created a confrontation with the BRICS countries. By the way, the countries in the alliance of the US dollar currency swap agreement will likely be the biggest supporters of BTC in the future, so stay tuned.

In Asia, Japan is like a core enforcer. The rapid devaluation of the yen will seriously impact the asset pricing in Southeast Asian countries and hit their export markets. Due to the extremely low cost of borrowing in yen, speculators can borrow yen, exchange it for US dollars, enter the markets of Southeast Asian countries, drive up asset prices, and inflate asset bubbles. When stock and real estate prices soar, these speculators can profit and then exchange back to yen. This way, speculators can profit again from the appreciation of the US dollar against the yen. Ultimately, it is the people of Southeast Asia who silently bear the brunt. Therefore, Japan, as the enforcer, may not suffer in this devaluation of the yen and is highly likely to be one of the biggest winners.

However, the benefits to the Japanese people are limited. The biggest problem with the devaluation of the yen is inflation, which also inflicts the greatest damage on the people. If one understands this, they may understand the reason why Shinzo Abe was assassinated. He wanted to serve the people, but the big brother disagreed, and the result was his own demise.

In summary, the instability in Asia is slowly unfolding through a non-shooting financial war. This is compounded by the instability between Israel and Iran in the Middle East, as well as the containment between Russia and Ukraine. The resurgence of US bond yields, the rise of gold and BTC, these factors are not coincidental. Once Iran blocks the Strait of Hormuz, Russia and Ukraine reignite the flames of war, and the prices of oil and natural gas soar, leading to high inflation. The Federal Reserve will once again raise interest rates in the name of inflation, for example, if the yield on 10-year US Treasury bonds rises to 7%-8%, global capital will once again be sucked back into the US dollar. High interest rates will also trigger a crisis in the US banking industry. At a critical juncture, the Federal Reserve will lower interest rates, and in this give and take, the wool will be sheared even more thoroughly, with Asia being the most likely target. The Americans are also worried about this situation, which is why they have visited China for negotiations multiple times, but the results so far have been unsatisfactory. We need to be very vigilant about the possibility of the above-mentioned situation occurring this year, until the Federal Reserve lowers interest rates, it is crucial to keep some bullets in hand!

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