The dollar's outer defenses have been breached
The puzzle of why the Trump administration is so concerned with a falling yen has historical parallels not to the 1930s or the 1980s, but to the 1960s, when US officials feared that a crisis elsewhere could spread to America. With US bond yields spiking, Treasury Secretary Scott Bessent is getting desperate.
The Trump administration is reportedly taking drastic measures to maintain the value of the Japanese yen, a move that has its roots in historical concerns about currency wars. Treasury Secretary Scott Bessent has announced plans to purchase between $5 billion and $10 billion worth of yen, citing the currency's current undervaluation.
Bessent's intervention echoes the 1960s when US officials feared a global crisis could spread to America. However, historical precedents show that currency interventions often fail to achieve long-term success and may even contribute to economic instability. The US has previously intervened in the market during times of crisis, such as after the Fukushima disaster in 2011 and the 1997–98 Asian financial crisis.
Yet, recent economic data suggests that the yen's value is already declining, making further interventions less effective. Despite Bessent's claims that the intervention is aimed at promoting friendship with Japan, the US trade imbalance with Japan indicates a more self-interested motive. The administration is also reportedly selling euros to demonstrate its commitment to preventing Japan or others from offloading US Treasuries.
Written by urgent.news from The Jakarta Post Academia's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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- The dollar's outer defenses have been breached thejakartapost.com
