BOJ 2nd Raise Warning

Roundtable Discussion

BOJ raises rates for 2nd time leading to Nikkei 225 implosion and a global market sell-off

So, what happened this week?

Japan’s stock market dropped 20% in 3 days. The US and Europe, almost 10% over the same period. These are some of the largest market drops ever in such a short time span.

For those of you following the New Breed of Business, you will recall our several discussions about the importance of Watch Japan and the Bank of Japan’s monetary actions:

• Watch Japan original discussion (1/4/23)
• Watch Bank of Japan (12/12/23)
• Japanese Suzu Earthquake (1/10/24)
• 1st raise BOJ (3/27/24)
• Yen Intervention (5/1/24)

If you have time to refresh on those discussions, it helps put into context this week’s market plunge and what is coming – likely over the next several months into 2025.

Much of the conversation has to do with “First Japan, then the US/Europe”.

Basically Japan was set up as a little America post WWII, less the foundations of faith. Their economy is more “Western” than “Eastern” in how their markets and banking are setup. The Yen is closely tied to the Dollar markets.

In a sense, Japan is just doing what we helped teach them to do, but on steroids. Hense, more debt. More money printing. Etc. They pioneered those things. To deal with their financial crash in the late 80s, which led to depression / deflation.

Japan was by some measures was the #1 economy in the 1980s. Now they are the fourth largest economy. They have greatly shrunk.

Japan is essentially like a beta test of Modern Monetary Theory. How far can they (the BOJ and Japanese government) stretch the bounds of monetary policy, quantitative easing, and debt borrowings with a major fiat currency (Yen).

Here is that chart:

	FIRST – JAPAN		FOLLOW – USA / EURO
STOCK MARKET CRASH	1989		2008
0% SHORT RATES	1995		2009
0% 10Y TREASURY	2016		2019
DEFLATION	1998		2009
DEBT TO 100% GDP	1999		2013
DEBT TO 200% GDP	2010
CENTRAL BANK QE – GOV DEBT	2001		2009
CENTRAL BANK QE – ETFS	2010		2020
CENTRAL BANK QE – 50% OWN GOV DEBT	2022

We have previously discussed one of the key global market dynamics: “Why? Because it portends a setup like we had in 2007, whereby the BOJ raises rates prematurely again. Because the Yen carry trade is still “on” in the hedge fund macro world.” (1st Raise BOJ discussion – March 2024)

What is the Carry Trade?
Carry Trade Example:
– Borrow in Yen at 0% interest
– Buy Mexican bonds at 11%

The sharp reversing of the carry trade by hedge funds likely begins a cascading of events which can lead to bursting all sorts of asset bubbles.

Why was/is the 2nd BOJ raise “bad for the economy / markets”, both back in 2007 and again in 2024? “It was premature for their economy, which was still greatly depressed and had just turned positive for the first time in a long-time.” (Watch Japan discussion – January 2023). Same reason today. BOJ made the move because they were trying to strengthen the yen and punish speculators. This is like cutting off your nose to spite your face.

Here is the case study from which the “Watch Japan” word has been based on:

These words are now in the process of being fulfilled.

• Article on Global Sell-off
• Article about why other assets outside Japan are unwinding
• Article on BOJ raises rates

A Sign

The market drop post the 2nd BOJ move was a sign in 2007 (down 10%), and sense again it is a sign in 2024 (down 20%). It was a sign in February / March 2007 leading to a full blown financial crisis in 2008. Will this recent move and market drop lead to the next financial crisis? Will it be even bigger this time?

We continue to WARN about why the US dollar led global financial markets are being judged – for pride, fear, greed, love of and trust in money, the depersonalization of finance, exploitation of the poor, etc. among many other reasons, just as ancient Egypt and Pharoah were judged for similar issues (read: Ezekiel 29-32). It is a BLIND-SPOT in the US church because of the more recent focus on prosperity, individualism and a no-suffering theology, post WWII.

The Significance of 40000

Both the Dow 30 and the Nikkei 225 interestingly reached new highs this year, both surpassing 40000 points. When this happened I was reminded of the number 40 in the bible. Jesus was tested in the wilderness for 40 days. The Israelites were tested in the wilderness for 40 years. So the number 40 is a biblically significant number with the meaning “testing”. I believe too, the world is about to go through a great period (1000 biblically) of financial and economic TESTING.

Come out of Babylon

Now, more than ever is time to seek shelter through repentance. We are commanded in Revelation 18:4 to “Come out of Babylon”. Practically, coming out of Babylon is coming out of partnership/ownership of any investments, companies and markets that have drunk the “cup of her abominations”. This includes the stock market.

If I sell my investments, what do I do with the money?

The Storehouse Vision is an economic framework that embodies this repentance (in deeds not just words) and we encourage all to pursue what scripture teaches us about trusting in Jesus, not money. There is no “easy” answer, but it requires the messy reality of relationships. Investing personally. Investing locally. Investing cooperatively. Investing actively. It requires listening to Jesus at times “Do not expect anything in return” instead of always demanding an earthly return (or have recourse to claw-back, or sitting back and collecting interest).

To focus on loving one another rather than only or first looking after self. To “not store up treasure on the earth where moth and rust will destroy – where thieves break in and steal”, but instead to “store up treasure in heaven” (Matt 6:19-24). This means relationships in the local and broader community are key. The wealth is in people, not gold, silver, money or stuff. It is fostered in the community. “Investment” takes on a whole new meaning when you look at “not the money that I need in the future”, but the opportunity to invest in the discipleship of people, and the calling God created them to develop into. This includes investment in local businesses owned by people you know. This also means “community banking” that is not part of the Federal Reserve / FDIC fractional banking structure.

Let us Come out of Babylon. Stop trusting in a “money black box” for profit and income. Take down the golden calf.

You have to think “outside the box”.

You have to become an “active investor” where you get involved with people’s lives. Yes, its messy.

You have to learn how to trust God for miracles of provision, even in the desert.

Practical Application

Short-term

• Sell paper based market investments (stocks, bonds, ETFs, mutual funds, annuities, futures, options, whole life policies, mutual funds, closed-end funds, hedge funds, private equity funds, etc.)
• Pay off all debts, especially mortgage debt
• Withdraw money from the banking system: cash-on-hand
• Buy convenient physical stores of value, such gold, silver, oil, grain, water

Long-term

• Help friends and family pay off their credit cards, student loans, debts and mortgages where you become the bank instead. Lend biblically. It creates an income stream back to you. Forgive debt periodically. Don’t charge interest. Those who borrowed can also provide a dividend to you as they are blessed to do so.
• Buy land
• Invest in local businesses
• Invest in agriculture and farms
• Invest in food-supply production, packaging, transportation and economy
• Invest in local energy sources, clean water, other essential needs, tools and equipment.
• Seed a local Storehouse (community co-op – bank like private pool of funds) to do all of the above with your friends and fellow believers

Read/listen/watch more on Come out of Babylon and the Storehouse Vision

Confirmation

And they went out and preached everywhere, the Lord working with them and confirming the word through the accompanying signs.

Matthew 16:20

The day after this discussion (8/8/24) and presentation of the warning, the second largest earthquake of the year hit Japan. 7.1 on the scale in Kyushu, Japan. Seven tsumani warnings were also issued. Let the reader understand.

Here too, was a warning of a mega earthquake (8-9 on scale) to come to Japan at any time.

https://www.nbcnews.com/science/environment/japan-megaquake-advisory-meaning-reason-rcna165976

Good Book