Last Friday, Reuters news agency published a photograph of a hastily scribbled reminder on the notepad of US Treasury Secretary Scott Bessent of a ‘To Do’ list that was simply followed by: ‘Buy Japanese Yen (JPY) $5 – 10 bill.’
This carelessly revealed note, scribbled during a meeting attended by journalists at Camp David, confirmed the fact that the US was staging a dramatic intervention to try to prop up the Japanese currency from complete collapse.
On Sunday, Donald Trump told reporters: ‘They have a weakening yen, and they wanted a little bit of help. And we’re always there for Japan’ adding that along with this sign of friendship the US was helping the world economy.
This remarkable exhibition of altruism by the Trump administration, to join Japan in propping up its collapsed currency, has left commentators speculating on the real reasons behind it.
After all, Trump is not noted for his desire to ‘help out’ friends.
On the contrary, he has resorted to imposing tariffs on his ‘allies’ in the UK, Europe and Canada in recent days under the pretext that these countries are not doing enough to stop forced labour or police labour abuses.
That Trump and the US ruling class are concerned about the wellbeing of workers across the world is beyond belief. It is simply a ruse to get around the US Supreme Court’s ruling that previous tariffs were illegal and must be ended.
So, Trump and Bessent intervening to prop up the Japanese currency by buying up billions of yen has nothing to do with helping out a friend or preventing a complete financial meltdown that would threaten the world economy but everything to do with attempting to prevent the US dollar from collapse.
Japan holds the biggest amount US dollars and is the largest foreign holder of US government debt in the world.
For years, Japan has been gripped by a massive economic crisis with its manufacturing base in terminal decline.
Japan is almost totally reliant on imports of oil and gas for its energy supplies, and the economic crisis has been greatly exacerbated by the illegal US-Israeli war on Iran which has sent energy prices soaring.
At the same time, the Japanese economy is being strangled by a massive national debt that stands at over 235% of the country’s GDP – the highest among developed countries.
In an effort to quell the rising anger of Japanese workers and youth against the intolerable increases in the cost of living, the right-wing Japanese Prime Minister Sanae Takaichi has resorted to cutting sales tax on food items, placing yet more strain on a Japanese economy sinking into recession, leading to economic commentators describing it as Japan’s ‘Liz Truss moment’.
In order to alleviate this economic catastrophe, Japan has been selling off its supply of dollars used to finance the American government.
Tokyo is estimated to have sold almost $59 billion US dollars to prop up the yen and putting the status of the dollar as the world’s most secure currency under the spotlight.
But the US plan has also drawn attention to the vulnerability of US capitalism, with the news that to buy yen the US sold euros.
Robin Brooks, senior fellow at the Brookings Institution, said this ‘raises more questions than answers because it invariably will have the markets wondering why the US didn’t just fund yen-buying out of dollars.’
The simple answer is that US capitalism, having burnt through hundreds of billions of dollars waging an unwinnable war against Iran, is in no position to buy up the yen and rescue the mighty US dollar.
America’s inability to inflict defeat on Iran has exposed the weakness of US imperialism as a mighty military force, and this latest attempt to shore up the dominance of the US dollar exposes the economic fragility of the world’s leading capitalist economy.
As capitalism dives over the cliff into economic collapse, the only way forward for the working class and people of the world is to put an end to capitalism by dumping it in the dustbin of history with the victory of the world socialist revolution.
