Japan's Finance Ministry is set to elevate the assumed interest rate on bonds in its annual budget proposal for the first time in 17 years, signaling a seismic shift in fiscal policy. In fiscal 2024, the implications reverberate globally, posing challenges for the ECB that can't counteract on this threat of capital moving out of the bloc as the Eurozone slides deeper into recession and public debt is rising. Therefore we see the ECB's rhetoric of 'maybe' raising rates again now all over the place.
125 sats \ 3 replies \ @Catcher 28 Nov 2023
Ok, so I read it 3 times and then asked GPT to ELI5, maybe someone will find it useful like I did.
Imagine Japan is like a big piggy bank, and inside it, there are special papers called bonds. The people who take care of the piggy bank, called the Finance Ministry, are thinking about making these special papers more valuable by saying they are worth more interest. It's like saying, "If you give us your money, we'll give you a little extra back later."
But, this hasn't happened for a very long time, like 17 years! This makes other places in the world worried, especially a group of countries that use a special money called the Euro. They're afraid that if Japan makes their piggy bank more attractive, people might take their money out of the Euro piggy bank and put it in the Japanese one.
This could make the Euro piggy bank not happy and maybe even a little sick. So, the people who take care of the Euro piggy bank, called the European Central Bank (ECB), are talking a lot about the possibility of making their piggy bank more attractive too, just to keep people from moving their money away.
It's like a big game of making piggy banks look good so that everyone keeps their money inside, and if one piggy bank changes its rules, the others get a bit nervous and might change theirs too!
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10 sats \ 2 replies \ @TomK OP 28 Nov 2023
Sounds good and correct, thanks. And now think of what happens to the Eurozone's members that could loose control over their budgets in case of capital flight which leads to yield spikes. Their social systems (biggest Ponzis ever) would collapse OR: The ECB continues buying literally anything on the bond market and hyperinflates the Euro. They are trapped!!
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0 sats \ 1 reply \ @Catcher 28 Nov 2023
Good there is a thing called bitcoin:)
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0 sats \ 0 replies \ @TomK OP 28 Nov 2023
Tell me more
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