Currency or Bond Market, Never Both

And here we are in 2013. Now, this is in Japan with the yen. Surprise, surprise. And this was in an era that was kind of kicked off called Abenomics. And basically, they wanted to bring the yen down. They needed to devalue the yen. And so what Scott Pessent did is he said, hey, we'll short it. We'll short it down. But we'll do it with you. So we're not attacking it. With the Bank of England, they were attacking the peg. They broke the peg. But here, they wanted to do it with them. We're going to go ahead and short that with you. And bring that down. Now, if you look at this, remember I said we'd come back to this chart. So you can see right here, right here, about 2013-ish, right here is when, hey, we need to get this down. And they did. So Scott Pessant shorted this move with Japan and made a billion dollars. How does Scott Pessant know to make this move? Well, he knows that again, like I said, the rule when a country is faced with a fork. Should we either save the currency or do we save the bond market? We can't do both. So which ones do we do? He knows that it's always going to be the currency that's sacrificed. And so which side of the fork is going to be sacrificed? And then he trades it with them. If you can't beat them, join them. He understands the dilemma that they're in. He understands the choice that they're going to make, and he positions himself to trade with that. So they could either— Japan was forced in this era to either save the currency But the problem is they had debt. The bond market— the government owed debt, 236% debt to GDP. Crazy high, 236%. That's— so if they raised the interest rate, they had to pay real interest on that amount, which they couldn't afford. So do we do that or do we save the bond market? And then the currency just keeps flowing out. Remember, they have to print it up. The currency supply expands and it buys less and less goods.