Japan should announce a plan where it uses the interest income on...
Brad Setser@Brad_Setser
79 views
Jan 21, 2026
~1 min read
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Japan should announce a plan where it uses the interest income on the MoF's considerable holdings of US assets (in their reserve portfolio) to buyback the long end of the Japanese curve.
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MoF realizes a tiny fraction of the massive gain on its reserve portfolio (ought at 80-100 JPY to the USD) -- win for JP's taxpayer
and MoF buybacks a portion of its nominal debt stock at a massive discount (another win for JP's taxpayer)
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and MoF buybacks a portion of its nominal debt stock at a massive discount (another win for JP's taxpayer)
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Huge fan of Mr. Arnold's twitter feed by the way --
But no country with $2 trillion (MOF + GPIF) in sovereign foreign assets and a postal savings bank that holds more foreign than domestic assets is going bust ...
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But no country with $2 trillion (MOF + GPIF) in sovereign foreign assets and a postal savings bank that holds more foreign than domestic assets is going bust ...
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Sorry doomers. Gotta learn the BoP not just fiscal
(applies to the IMF too ... )
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(applies to the IMF too ... )
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Think my friend Robin gets the end game here wrong -- my bet is the Japanese turn Postbank back into a captive source of demand for JGBs and the GPIF reallocates back into JGBS (at a massive profit) and the MoF reduces its fx reserves v GDP. 100% different impact on the yen
x.com/robin_j_brooks…
x.com/robin_j_brooks…