I’m not in agreement with the dire tone of this post. Things are fucked, but I don’t think it’s for the reasons outlined above.

First off, Japan has like 1.3T of our debt, while we own over 20T of our own debt. There’s enough cash in overnight reverse repo to buy up all the debt Japan wants to sell if it’s treasuries. If they did sell all their treasuries, it would be because they ran out of usd currency and need to maintain some kind of peg to the usd, and would be a huge indication things are completely hosed there.

Japan’s currency is in trouble because we’re raising interest rates and they aren’t. It’s making our yields go up so our bonds are more attractive investments vs theirs. Therefore people will borrow yen, trade em for dollars, and use the dollars to buy treasuries. This puts downward pressure on the yen relative to the dollar. Even better, when you get dollars back from maturing bonds, you can pay back your yen debt at a favorable exchange rate, assuming the yen keeps weakening vs usd.

The market will try to price Japanese bonds at a higher yield, but if the BoJ steps in to crush yields, it becomes easy to borrow cheap yen, reinforcing inflation in Japan, and further weakening currency vs the usd.