You might think the biggest risk in the market right now is the Fed raising interest rates. Wrong. The real ticking time bomb is in Japan.

Let me tell you a story. For the past thirty years, Japan’s economy has been like a patient with a strange disease—deflation. Milk at the supermarket costs 10 today, 9 tomorrow, and 8 the day after. Would you buy it today? Of course not, you’d just wait. Everyone in the country thinks this way, so no one spends money, factories shut down, employees lose their jobs, and there’s even less money to spend. A vicious cycle.

The Bank of Japan panicked and started flooding the market with money. Interest rates? Slashed right to 0%. Still not enough? Then negative interest rates—putting money in the bank doesn’t earn you interest, you actually have to pay fees. Basically, they're forcing you to spend.

But this move accidentally opened Pandora’s box. Smart money from all over the world (hedge funds, Wall Street whales, even Buffett) discovered an easy money hack: borrow yen in Japan at almost zero cost, exchange it for dollars, and buy US Treasuries (5% annualized), speculate on US stocks, or go all-in on crypto. This is called the “yen carry trade.”

For decades, Japan has been like a 24-hour free ATM, attracting money from all over the world. These funds have flowed into US stocks and crypto, pushing up countless asset prices.

But now, the rules of the game are changing. Japan is starting to “wake up”...

(To be continued. Next, I’ll talk about the chain reactions this awakening could bring.)