Treasury Secretary Scott Bessent is reportedly pursuing a high-risk strategy involving Japan’s currency—and critics warn the attempt to protect a lucrative source of easy money for American markets could instead help trigger a worldwide financial crisis.
In a sharply critical editorial, The Guardian’s editorial board argued that Bessent’s apparent plan to purchase large quantities of Japanese yen may stabilize markets in the short term. But it warned that the intervention could produce dangerous consequences if investors suddenly unwind the massive bets funded by cheap Japanese money.
“This is less a rescue of the yen than an attempt by Scott Bessent, the U.S. Treasury secretary, to preserve a cash spigot that benefits the U.S.,” the editorial argued.
At the center of the controversy is a popular investment strategy known as the yen carry trade.
For years, Japan’s extremely low interest rates have allowed investors to borrow yen cheaply. They then sell those yen for dollars and invest the money in assets offering higher returns—including American technology shares.
As those investments rise in value, they generate profits, strengthen collateral and encourage even more borrowing. That cycle has effectively transformed Japan’s currency into what The Guardian called a “global funding utility.”
The arrangement can be highly profitable when currency values and interest rates remain relatively stable. But it can turn destructive when the yen strengthens or Japanese borrowing costs rise.
Investors who borrowed yen must eventually purchase the currency again to repay their debts. If the yen’s value climbs sharply, repayment becomes more expensive. Traders may then rush to sell stocks and other assets to cover their liabilities, potentially accelerating a market collapse.
That is where Bessent’s reported intervention becomes especially consequential.
Buying yen could strengthen the battered currency and provide Japan with breathing room. But critics argue that the underlying goal may be to keep the carry trade functioning—and preserve the stream of cheap capital flowing into American financial markets.
The danger is that geopolitical and economic pressures may already be making that system unsustainable.
President Donald Trump’s continuing war with Iran has pushed up energy costs and intensified inflationary pressure, according to the column. Those forces could eventually prompt the Bank of Japan to increase interest rates more aggressively.
Higher Japanese rates would narrow the gap between the cheap yen loans investors take out and the returns they obtain elsewhere. That would make the carry trade less profitable while simultaneously increasing the cost of servicing yen-denominated debts.
If enough traders attempt to escape at once, the consequences could spread rapidly across borders.
“A currency correction could quickly become a Wall Street rout,” The Guardian warned.
Such an unwind could force investors to dump American equities, including highly valued technology stocks that have benefited from the flow of inexpensive foreign capital. Falling share prices would weaken collateral, potentially prompting lenders to demand additional payments and forcing further asset sales.
What begins as a currency adjustment could therefore become a self-reinforcing financial spiral—one capable of affecting banks, retirement accounts, corporations and governments around the world.
The prediction is not a certainty. Currency interventions are a conventional tool of economic policy, and carefully coordinated action can sometimes calm volatile markets. Whether Bessent intends to make a major yen purchase, how large it might be and how international partners would respond would all influence the result.
But the editorial’s warning is that short-term market stability may come at the cost of increasing long-term vulnerability.
Bessent is no stranger to major currency trades. Before joining the Trump administration, he worked for billionaire investor George Soros and reportedly helped generate more than $1 billion by betting against the yen.
That experience may give him unusual insight into how currency markets move. It may also explain why critics view his latest strategy as an effort to manipulate the existing system rather than allow market pressure to produce a painful correction.
The Guardian invoked former British Prime Minister Margaret Thatcher’s famous assertion that governments “can’t buck the market.”
“Mr Bessent is saying you can—as long as you rewrite its rules,” the editorial concluded.
The larger issue is whether the administration is attempting to address a genuine imbalance or merely delay the moment when an overleveraged financial structure begins to buckle.
Keeping the yen weak and Japanese borrowing cheap could preserve the flow of money into American markets. It could support share prices, reassure investors and postpone a reckoning during a politically sensitive period.
But delayed corrections can become larger corrections.
If Japanese rates rise, the yen surges or inflation shocks the global economy, the same “cash spigot” Bessent is allegedly trying to protect could suddenly reverse direction. Instead of pouring money into Wall Street, it could drain liquidity from markets as investors scramble to repay mounting debts.
Bessent may believe his experience allows him to control that risk. His critics fear that no individual—not even a veteran currency trader sitting atop the U.S. Treasury—can dictate how millions of investors react when panic begins.
The strategy could preserve America’s easy-money machine.
Or it could become the move that finally breaks it.
