Woomph

The author argues that a sudden yen weakening and a collapse in Japanese government bond (JGB) prices, which occurred together in January 2026, will prompt the Federal Reserve to intervene and expand its balance sheet. The essay describes the mechanics the author expects: the New York Fed would create dollar reserves, sell dollars for yen in the FX market, and buy JGBs for its SOMA, lowering Japanese yields. The author links this to Treasury Secretary Scott Bessent's use of the Exchange Stabilization Fund and expects the policy to strengthen the yen, euro and yuan while boosting Bitcoin. The author presents this as a theory that current Fed balance sheet data does not yet confirm.