The Jay Martin Show 2025 In Review: China Takes Control of America
Dec 27, 2025
Economist Steve Hanke, renowned for his expertise in monetary policy and currency reform, dissects the pivotal financial headlines of 2025. He explains Japan's surprising rate hikes and why they could impact U.S. markets through the yen carry trade. The discussion shifts to political shifts, including Trump's interventionist policies, and the realities of tariffs and trade deficits. Hanke also challenges de-dollarization fears, analyzes who’s buying U.S. Treasuries, and warns about inflation risks tied to money supply changes and government industrial policies.
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Japan's Tight Money And The Carry-Trade Risk
- Japan has been too tight monetarily for decades, which suppressed growth and productivity despite high savings.
- A BoJ rate rise risks reversing the leveraged yen carry trade and could puncture U.S. asset bubbles.
Demographics Aren't The Whole Story
- Demographics alone don't explain Japan's stagnant productivity because Europe and China have similar aging trends.
- Hanke attributes Japan's malaise primarily to flawed monetary policy, not just aging.
Interventionism Is The New Consensus
- Trump's second term continued and amplified the U.S. shift toward interventionist industrial policy already present under Biden.
- The bigger change is transparency and aggressiveness, not an entirely new economic philosophy.