Money replaces God and these are the consequences...

Editor's note: ...like in Japan and many other countries, that need - forced - to purchase and hold US dollars (US dollar hegemony) for several key reasons, driven by global economic realities (those realities are "paper instruments that dwarf the physical reality of anything") and Japan's own economic structure impressed on Japan by the US. Here are a few factors that reveal Japan's forced use of US dollars. The Japanese have perfected the concept of "consumerism being the perfection of slavery" and you see it everywhere in Japan. The religion of consumerism drives Japan's economy. Japan has now been warned with Japan having the highest debt-to-GDP ratio among advanced economies. According to recent data, as of December 2024, Japan's government debt accounted for 216.2% of its Nominal GDP. Other sources, looking at General Government Gross Debt, estimate it to be around 236.7% in 2024. It's shrink time for Japan. The sovereign debt crisis will start in Japan and then will "spread like a contagion":

The World's Largest Pension Fund Down $61B Last Quarter – Warning for Japan

World's Largest Pension Fund Now Loses $61bn As Dollar Falls

The US dollar is the dominant global reserve currency formally established as the world's primary reserve currency by the Bretton Woods Agreement in 1944. The US dollar would be pegged to gold at a fixed rate of $35 per ounce at the time of the Bretton Woods Agreement. What Nixon did on August 15, 1971, was to unilaterally suspend the convertibility of the US dollar to gold for foreign central banks. This means a vast majority of international transactions, including trade (especially for commodities like oil) and financial investments, are settled in US dollars. Japan is forced to purchase US dollars in order to purchase oil.

Japan is highly dependent on imports for energy, raw materials, and many manufactured goods. These imports are often priced in US dollars, so Japanese companies and the government need dollars to pay for them.

While Japanese exports earn yen, many foreign buyers convert their currency to US dollars first, or the contracts themselves are denominated in US dollars.

Japanese companies invest heavily overseas, and these investments often require US dollars. Similarly, foreign investment into Japan might involve converting dollars to yen, but the underlying global financial system often revolves around the dollar. The US dollar empire. The tariffs are designed to equalize the playing field under the Trump administration:

Trump sets 25% tariffs on Japan and South Korea, and new import taxes on 12 other nations

Central banks, including the Bank of Japan (BOJ), hold large foreign exchange reserves to maintain currency stability and instill confidence in their economy. That confidence has deteriorated to all time lows under the current head of the BoJ Kazuo Ueda. A significant portion of these reserves is typically held in US dollar-denominated assets (like US Treasury bonds) because of their liquidity and perceived safety. Japanese investors have been buying less US Treasury bonds. This is a significant shift in global finance, given Japan's historical role as the largest foreign holder of US debt. It's a trade off: If Japan wants to export to the US then buy US debt.

If the Japanese yen weakens too rapidly against the dollar (making imports more expensive and potentially fueling inflation), the BOJ might intervene in the foreign exchange market by selling some of its dollar reserves and buying yen to strengthen the yen's value. Conversely, if the yen strengthens too much, the BOJ might buy dollars and sell yen to weaken it.

For a long time, Japan has maintained very low, sometimes even negative, interest rates to stimulate its economy and combat deflation. In contrast, the US Federal Reserve has often had higher interest rates. This creates an incentive for investors to borrow in low-interest rate currencies like the yen and invest in higher-yielding assets denominated in US dollars. This "yen carry trade" involves selling yen to buy dollars, which puts downward pressure on the yen and increases the demand for dollars.

Higher interest rates in the US make US dollar-denominated assets (like US Treasury bonds) more attractive for Japanese investors seeking better returns than what they can get domestically.

In essence, Japan's reliance on the US dollar is a function of the dollar's global dominance in trade and finance, the need for currency stability, and the pursuit of investment returns in a world with varying interest rates.

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When will we stop central banks from creating money out of nothing with their death grip over productive human beings? As of today, Tuesday, July 15, 2025 the current Governor of the Bank of Japan (BOJ) is Kazuo Ueda. Ueda's doctoral advisor was Stanley Fischer who was an American and Israeli economist who served as the 20th vice chair of the Federal Reserve from 2014 to 2017. Fischer was spawned out of the LSE in London. All these central banks are tied together through the IMF and the BIS in Switzerland. Ueda was at the IMF on the board of governors since 2022. The 26th head of the Bank of Japan Yasushi Mieno was a director of the BIS was responsible for creating the way over extended "bubble economy" (under direction of the BIS) in Japan. See Princes of the Yen - The Hidden Power of Central Banks:

Related:

How Shadow Banks Rule the World 

One scenario is that a war between Japan and China could pull Japan out of its financial and economic doldrums:

China defends military aircraft approach as Japan complains