Trust Economics, a financial research and consulting firm, is issuing a major warning about an impending global financial crash, as the unprecedented surge in Japanese bonds signals the end of the monetary system as we knew it.
The collapse of the Tokyo markets acts as the “canary in the coal mine,” heralding a “Black Monday” that threatens to drag down Wall Street, the dollar, and the savings of millions of citizens.
Years teach us things. In all areas of our lives, we gradually acquire perspectives and perceptions that are gained through experience, not theory, and more so with the passage of time, not speculation. The same is true for lives dedicated to investing in markets and economic cycles.
For example, during the dot.com bubble, a bubble built on the arguably transformative technology of the Internet, everyone from Wall Street pundits to Hollywood movies made it clear that names like Cisco, Yahoo, and AOL were kings who would never be dethroned.
It was truly exciting. At least until the NASDAQ lost 78% of its value and two of those “kings” walked away from the market like defeated warriors, while Cisco, which survived the carnage, would never be the same again.
Those days and years are now teaching us another lesson — a lesson whose pattern few wish to see, for the simple reason that many either don’t pay attention or never did.
And as for these patterns or lessons, what few see today is that Japanese government bonds (JGBs), the yen and the Nikkei have just given us a roadmap for what lies ahead for the Fed, the dollar and America’s S&P.
We’re all going to be Japanese after all
What’s happening in Japan this year goes far beyond the otherwise important discussions about the Japanese Carry Trade.
Since bond pundits constantly remind us of boring things like government bond yields, we often find them too boring (or too scary) to face head-on.
Like the sun, topics like death and bond markets are often difficult to examine directly. The fact, for example, that the yield on 30-year Japanese JGBs just topped 4.18% for the first time in its history may seem inconsequential to many who are otherwise endlessly searching the internet for the latest war news, AI memes, or the latest Washington scandal.
But this historic yield surge from Tokyo is much more than just another bond market signal — it’s a harbinger of what’s to come in your own backyard (and your own wallet).
The Canary in the Coal Mine
Like the US, today’s Japan, the world’s third-largest economy, is a paper tiger built on massive debt (more than 200% of its total economy) and a bond and, by extension, stock market that is entirely dependent on—and highly correlated with—a central bank fatally addicted to issuing (and devaluing) trillions of its currency in order to maintain the illusion of economic survival.
If this profile closely resembles that of America and Europe, it is because Japan is simply the canary in the West’s coal mine.
Where it goes, we will follow. In fact, Japan’s sins are in many ways ours—especially America’s.
Blame the experts
Shortly after the Nikkei “death” in 1989, the then-ambitious Ben Bernanke gave Tokyo a manual on how to print money to avoid a crash.
Bernanke would use a similar manual when the US markets crashed years later in 2008. As we are now discovering, his expertise was anything but real expertise.
But during this period of mass MMT delusion and massive currency devaluation, Wall Street had been betting for years (and decades) that Japan’s debt levels would eventually collapse under the weight of inevitably rising bond yields (and, therefore, rising debt-servicing costs).
For decades, Wall Street’s unconventional investors had been betting big on a sharp rise in yields that would once again crush the Nikkei and JGBs and make a huge headline.
But that headline never came. And the previous bet against Japan became known on Wall Street as the “widow maker,” an extremely risky and persistently unsuccessful bet.
Buying time, postponing the pain
Instead, the BoJ bought itself decades and a market recovery by printing unimaginable amounts of yen to keep demand for JGBs (Japanese government bonds) up and prop up the Nikkei.
This kept Japanese yields at zero to negative, buying time while crushing those who had bet against Tokyo.
And that brings us back to that seemingly dull record yield of 4.18% for the 30-year JGB. This rate confirms that the dam has now been broken for good on the failed Japanese “project.” Or, to use the analogy above, the canary in the coal mine has just died.
For those paying attention, these rising yields caused the Nikkei 225 alone to lose $200 billion in a single day, and this sell-off was led by the so-called “Immortal” tech kings — you know, the ones that were supposed to never go under, like AOL, Yahoo, or Cisco.
The disease is global and it’s killing currencies
But what happens in Tokyo doesn’t stay in Tokyo. Yields across the “developed” world are rising to decade-highs because bond markets are now more honest than central bankers from Tokyo to Washington.
As the Bloomberg Global Sovereign Bond Index yields exceed 3.72%, yields from Australia and the UK to Germany and the US are soaring to unsustainable levels.
The bond market is essentially demanding a higher risk premium (return) for sovereign debt, which is no longer considered trustworthy.
Given this global debt fiasco, is it any surprise that the global money supply in printed currencies, which reached $150 trillion in June, has increased by a staggering 50% since 2020?
This very obvious monetary devaluation, now taking place before everyone’s eyes, not only explains why currencies like the dollar have lost 87% of their real purchasing power since their decoupling from gold in 1971, but it also explains why the world’s central banks are accumulating gold at an unprecedented rate in 2026.
Physical gold is no longer a capital allocation issue or a “discussion” about the dollar; it is now the openly visible and obvious direction of global collateral and the de facto international reserve asset, above collapsing currencies and out-of-favor government bonds. This is not a fairy tale but a fact.
Stocks vs. Gold
But just as importantly, what the recent sell-off in Japanese tech stocks reminds us of the dot-com era of yesteryear and what it portends for the AI era and the market of tomorrow.
In contrast to the aforementioned bloodshed during the dot-com bubble, today’s U.S. stock market is essentially being kept alive by an equally disruptive tech narrative, with an even greater profile of overinvestment—$400 billion this year alone from the top tech companies—that is always moving from overbought to oversold.
As the U.S. national debt exceeds $40 trillion and interest rates rise to levels that cost the U.S., that is, you, the American taxpayer, more than $3 billion a day in interest payments alone, the convergence of a credit crunch is poised to hit a dying private equity market, an already dead private credit market, and an overvalued and overhyped AI industry.
This suggests that what we have just seen in Japan—both in its markets and its currency—is an unmistakable warning of what is to come for the US NASDAQ and the dollar.
Be prepared
Trying to accurately predict the timing of this convergence is a fool’s game. Preparing for it, however, is not.
Even if central banks like the Fed or BoJ “save” the markets with trillions created at the click of a mouse, the destruction of the value of the currencies required to support these “resilient” markets will steal your wealth before your eyes, notes Trust Economics.
The Nikkei, for example, has posted an impressive 145% rise over the past five years. However, when measured in gold terms, the result has been a net loss of -31%.
During the same period, the NASDAQ 100 posted an impressive nominal return of 95%. But when measured in gold, the net result was a loss of -23%.
And while some of you have been hearing from your advisors for the past 12 years that USTs (U.S. Treasury bonds) are the key to a secure retirement, the “risk-free returns” of U.S. Treasury bonds, when measured against gold, have caused you to lose 90%.
Do you see the theft? Do you see the true measure of wealth? Given the interplay between rising interest rates, collapsing bonds, undervalued currencies, and excessive risk in the technology sector, investing in physical gold with physical possession, rather than gold “on paper,” is the only asset that separates the informed from the uninformed and those whose wealth is protected from those whose wealth is destroyed.
