Even the concept of safe assets has become a battleground. The era ahead will never return to a low-interest rate era. Let's delve deep into today's hot issue. Today, we have invited Dr. Park Jong-eun from the Knowledge Economy Research Institute to discuss. Please welcome him. Hello, Dr. Park. These days, the U.S. bond market is moving like a coin. Bonds are typically stable safe assets, but what exactly is happening these days? The U.S. is no longer a safe asset as before. With interest rates exceeding about 3%, for example, when the 10-year U.S. Treasury bond yield exceeds 3%, many bond experts in Korea say things like Sell U.S. Treasuries. Even then, I believe that U.S. Treasuries are much riskier than stocks.

I have mentioned this before, but the reason is that currently in the United States, various disaster relief funds were released around 2020 and 2021 due to disasters. However, all of that was done in short-term, like for 3 months or 6 months. The reason for this is that when an economic crisis occurs, issuing a lot of long-term bonds puts pressure on the market, causing market interest rates to rise. So, when such a crisis occurs, like in 2008 and 2020, they always start with short-term bonds first. Yes, after the crisis is somewhat resolved, they gradually transition to long-term bonds. But the problem is that this transition happened very smoothly in 2011. Why did they smoothly transition the funds used during the 2008 economic crisis to long-term bonds in 2011? It was because there was no inflation at that time.

But in this situation where inflation exists, remnants still remain. With embers still burning, if a long-term bond conversion occurs, there could be market turmoil in the process. Therefore, if one cannot accurately predict the future, doubts may arise about whether U.S. long-term bonds are still safe assets. Even now, in a state where the embers are not completely extinguished, it is uncertain how the market will react to the conversion of long-term bonds. In this atmosphere, what I am most curious about is how the overall interest rate trend of government bonds will be. In the future, predicting government bond interest rates will be extremely challenging. In fact, I have been arguing since last year that the era ahead will never return to an ultra-low interest rate era. The lowest point for the 10-year U.S. Treasury bond yield was actually.

There was a moment, I was really surprised. It happened in July 2020. Going back to such an interest rate is of course impossible. At that time, looking back and forth, the interest rate was generally okay, around 1.5%. But going back to such a low interest rate is very difficult for various reasons in the current period. Because, look, money ultimately involves supply and demand. If there is high demand or high supply, it will change accordingly. We always see, for example, when the price of cabbage drops drastically, it's because there is an oversupply of cabbage. Isn't it when cabbage fields are left uncultivated? Why has the value of money been continuously decreasing? Interest rates directly affect the value of money. The reason is that there was really a lot of money supply.

If it was possible, but who has been supplying the money? So far, the Fed has been printing money and supplying money, which has been lowering the price of money. But at this point, if the Fed prints money again, then inflation will naturally rise again this time, right? So, in the current situation, because money supply is not abundant as before, it's difficult for me to predict easily until the high-interest rate era. However, in this ultra-low interest rate era, I see the current situation as transitioning to a moderate interest rate era. I have been making this argument since the end of 2022 in my book. However, the problem is that in the second half of 2023, I, who is usually very... Oh, this person really predicts well, Professor Larry Summers from Harvard, said for the next 10 years, a 10-year term in the United States.

The average government bond interest rate is going to the era of 4.75% interest rates, so when you said that, I feel like my previous predictions are somewhat gaining strength. Another thing I'm curious about is, just like you mentioned earlier about government bonds, there is demand and supply for money, and there is demand and supply for government bonds as well. It seems like there is a continued atmosphere globally where more government bonds will be issued. Many OECD countries are entering the super-aged society now, and it seems difficult to secure revenue, with ongoing expenditures promised to the citizens. It appears that government bond issuance will continue, and even in the United States, there seems to be confidence now, continuously issuing bonds to raise funds, feeling somewhat confident about funding. In this situation, what kind of impact will it have on the bond market?

I am a bit worried that the timing to convert these bonds into long-term bonds is actually a bit late. It should have been done since last year. I keep suspecting that it might be because of the U.S. presidential election. The conversion of long-term bonds that should have been done since last year keeps getting delayed. In the U.S., there is a committee for borrowing bonds like this, an advisory committee. They should have done it quickly, but they started a bit late from this year. So, this year, a lot of these long-term bonds will be issued. Because during the global financial crisis in 2008, I issued short-term bonds just like this. From 2011, I started converting them into long-term bonds. I issued about 1.5 trillion dollars of these long-term bonds with maturities of around 30 years. Back then, people said I was crazy for issuing so many. If we issue a lot like this year,

If we follow the recommendation as it is and issue bonds, we would have to issue $1.9 trillion. In U.S. history, issuing bonds in such a large amount all at once is unprecedented. So, not only is the problem issuing a large amount of these bonds, but another issue is the duration of maturity. Adjusting this duration all at once is also unprecedented this time, as warned by the IMF. If we have to do it, issuing $1.9 trillion will undoubtedly shock the market, as the long-term supply suddenly increases. Right now, it's not just about increasing debt; the fact that long-term bonds are increasing can also be a significant issue. So, with a large issuance of long-term bonds that seems unavoidable, I understand the situation. However, most of these long-term bonds will have to be absorbed by someone. As our professor mentioned recently in the international community, the United States must also assist in absorbing these long-term bonds.

The perspective on national bonds is not the same as before. Will this bond issuance proceed smoothly in the future? They are already issuing bonds in May. Normally, when issuing bonds like this, they all go through bidding. However, the problem is that it was very weak. Because of that, it caused a big shock in the market at the end of May. In the future, this phenomenon is inevitable. The biggest buyer of U.S. bonds was the U.S. Federal Reserve. However, the Fed is now in a situation where they are reducing their bond purchases. Furthermore, U.S. financial companies, who could be the second largest buyers, do not have as much financial capacity as before. In various aspects, we can only expect foreign countries to buy U.S. bonds. As we all know, China is constantly selling U.S. bonds.

But how much did they sell? Compared to January last year, recent data is available until March. They have sold nearly $100 million worth of bonds. So, China used to hold $8,600 billion of U.S. bonds, but now they only have about $7,600 billion left. Therefore, it's inevitable to worry about who will buy U.S. bonds now. So far, there has been a force supporting the U.S. bond market. Who could it be? Where is it? It's none other than many central banks in Western countries and Western investors who have been buying U.S. bonds in large quantities. China has only sold about $100 million worth of U.S. bonds in a year and three months at most. Of course, this amount is substantial, but they have only sold $100 million. Of course, this is also.

But this is not the problem. The problem is that at a faster pace, financial companies in Western Europe, especially central banks in Europe, were buying U.S. Treasury bonds on a massive scale. For example, China used to be the second-largest holder of U.S. Treasury bonds, but this ranking will soon change. The country next in line to China, taking the second spot, is the United Kingdom. Until now, the UK had been holding over $660 billion of U.S. Treasury bonds as of January, but according to the most recent data in March, they have bought as much as $730 billion, increasing their holdings by a whopping $70 billion. However, the country that has been buying the most U.S. Treasury bonds recently is Canada. Canada, which had only around $250 billion, has increased its holdings by a staggering $360 billion in just 15 months.

As the dollar increased, they bought nearly $110 billion. For example, by combining the United Kingdom, Luxembourg, Ireland, and Canada, they bought a whopping $320 billion of U.S. Treasury bonds. China's market intervention has been only $100 billion so far. Of course, this is also a large amount, but because Western financial institutions and central banks have bought $300 billion in bulk, the U.S. international market has been relatively stable. This is how you can see it. What you mentioned is very interesting. Western countries like the United Kingdom, Canada, Luxembourg, etc., buying U.S. Treasury bonds in bulk is their own way of judging that investing in U.S. Treasury bonds will be highly attractive in the future. Or, it could be seen as a somewhat political reason for investing in U.S. Treasury bonds due to international political circumstances.

Let's assume that for now. Since I am an economic expert, let's interpret it economically. So, originally, these countries, when you look at the current account balance, are not doing well. Yes, in the case of countries like the UK and Canada, the accumulated current account deficits are very large. In fact, Canada has a deficit of over 100 billion dollars, which is as much as buying US government bonds. They don't have enough leeway. The deficits have been accumulating for a long time. And the UK, you know, in the past, there were many talks about the economy collapsing, failing. In the past, there were many stories like the downfall of the British Empire. But recently, they borrowed 70 billion dollars. This is because they really don't have the financial leeway, so it's really strange. Even so, let's try to interpret it economically. These countries have weaker economic strength than the United States, so they try to secure enough US dollars when they have some leeway.

They are going to lower interest rates in advance, so at this point, their currency value will drop. In preparation for this, isn't it possible to have some doubts about whether they have equipped themselves with ammunition? Economically, if you interpret it purely, it could be seen that way, but it's not just that. The scale is too large, well over 300 million dollars. Does this make sense? You might think that way. Therefore, inevitably, we can only make a political interpretation. In fact, European countries and Canada are most wary of the current president, former President Trump. When this person was re-elected as president, the first thing he said he would do is to impose various tariffs on Europe now. And the allies, right now, may even take Russia's side. Really, what is happening now, of course, former President Trump.

The president denied being absolutely not, but European countries have this suspicion. So politically, isn't Biden still better? But if the national debt interest rate spikes here, Biden's chances of reelection are almost nonexistent, so maybe they worked so hard for this reason. Two interpretations are possible. Because if these countries have a large trade surplus, it's natural, but it's somewhat suspicious that a country with no leeway bought this much. Right, I see. So, one of the main reasons we check the trend of U.S. Treasury bond yields and the scale or status of U.S. Treasury bond issuance is that the change in this trend can have a significant impact on our bond market and interest rate trend.

When we consider various situations you have just mentioned, what other impacts will there be on the bond market in South Korea? South Korea has not raised or lowered its benchmark interest rate recently, right? It has been frozen for a long time. However, the interest rates of South Korean government bonds continue to fluctuate, right? It fluctuates directly in line with the U.S. government bond rates. Just on May 29th, the U.S. government bond rates suddenly surged. The reason is that until then, the U.S. had been conducting auctions for 2-year and 5-year government bonds, but the market response was so cold that they thought, Oh, this is a big problem. As a result, the U.S. government bond rates jumped to 4.6% on April 29th. However, the issue is that at that time, the interest rates of South Korean government bonds with a 10-year maturity...

Suddenly, the interest rate has increased by about 3.6 percent. The reason for this is that now, our country's central bank is more influenced by the U.S. government bond interest rates. In fact, the management and control of the bond market in the U.S. should be done well, although it should be left to the market originally. However, now, issuing bonds in astronomical amounts should be managed well to control interest rates. Otherwise, our country's bond interest rates will fluctuate in the same way. Therefore, we hope that the U.S. will handle this well. If after the election, President Biden does not turn to a tightening policy and continues to issue bonds at a considerable level in the global bond market, this would be a bit.

When you talk about it, the Bank of Korea in our country now seems to have less influence on our domestic market interest rates, and it seems that factors influenced by international bond markets will have a much greater impact on market interest rates. That's right. Governor Lee Ju-yeol of the Bank of Korea mentioned this. It seems like we are independent from the South Korean government, but in reality, we are not independent from the Fed. Regardless of what we do in Korea, the biggest reason for fluctuations following the U.S. is that in various bond markets here, foreigners occupy about 20% of the market. However, the problem is that in terms of trading volume, the proportion of foreigners is much higher, especially in futures.

Foreigners in the market really shake things up. Since they have such a big influence on the gift market, it affects the spot market even more. The 20% we have is actually close to 50% in terms of market influence. We need to actively use this. For example, if we keep seeing deficits or if there is a recent tax revenue shortfall, when our country issues a lot of national debt, the financial market changes significantly from before. We always need to consider this. In Korea now, both progressives and conservatives have their own ideas. For instance, conservatives suggest cutting taxes, while progressives suggest spending more. This is always a common phenomenon, but these days, even though conservatives suggest spending more, they are also joining hands with progressives who suggest spending more, and they are also joining hands with conservatives who suggest cutting taxes.

But the problem is why now specifically? In the past, when, for example, long-term interest rates were stable, spending more money like this didn't have a big impact on the market. But the problem is that even the United States, when issuing bonds like this, the market reaction is cold, causing bond yields to spike up and then go back down repeatedly. In such a situation, since we are a small open economy, we are heavily influenced by overseas factors, especially by the United States. Therefore, shouldn't we be more careful in using fiscal policies? Because economic policies are always correct. It was correct at that time, 30 years ago, 10 years ago, and even now. It's not about always being correct, but the policy that fits the situation is the correct answer.

But I often see that once a single argument is started, it is pushed through to the end. I think now there is a need to flexibly carry out policies. In the United States and in countries slightly larger or more stable than us, if they continue to maintain their bond markets entirely, would there be some demand globally when our country issues national bonds? I'm curious about that. So far, it's been quite okay because even though we have raised interest rates a bit, fortunately, the good thing is that we don't think our country will raise interest rates much more. Therefore, when investing in national bonds, the most important thing is, yes, there are two very important aspects. One is that if you have invested in this country and the exchange rate is very unstable, or if

If a country were to raise its bond yields or implement such policies, it would make it very difficult for investment in that country. However, relatively speaking, because South Korea appears to be a bit more stable, there are no issues as of now. But the problem arises when we cannot continuously resolve fiscal deficits, tax revenue shortfalls, and so on until the end of the year. If these signals continue until the end of the year, the perception of South Korea as an advanced country may change. If we fail to address these issues by the end of the year, it could change. This change is similar to when water boils. Before the water boils, it doesn't bubble. However, the problem is that when the water boils, it boils all at once. This transition is like when inflation rises, everyone experiences deflation, and then suddenly.

As thoughts on government bonds change in an instant, just like inflation, it's not a time to be at ease when the situation seems good. Around the U.S. presidential election, approximately in November this year, it's really difficult for us to imagine in advance what will happen to U.S. government bonds. This is because it is related to political issues, and from that perspective, we need to be cautious at times like this. I didn't expect to analyze the situation regarding government bonds with such excitement. Even Treasury Secretary Janet Yellen seems to lack confidence in the government bond market, as evidenced by the announcement of repurchasing medium and long-term government bonds for the first time in 20 years. What are the details of this policy announcement, and will it actually be accepted in the market?

I am also curious about this. It is a situation that is hard to understand in the United States right now, where the issuance of government bonds in the second quarter is increasing more than in the first quarter. Moreover, the issuance of long-term bonds should increase even more. I mentioned this earlier, right? However, if the trend continues like this, there will be no buyers for U.S. government bonds. Janet Yellen is doing really well because, as I mentioned earlier, Western countries, European countries, and Canada, have practically bought as much U.S. government bonds as they can afford, even if it's not an exaggeration to say they've bought until April. Yellen, the Secretary of the Treasury, must have been well aware that by May, it will be all over.

Government bonds need to be continuously issued, and in such a situation, what problems arise when long-term bonds spike? Well, the issue of changing interest rates is not a problem for the U.S. Treasury at that time of issuance. The interest rate at the time of issuance is crucial. When issuing 10-year and 30-year bonds, for example, if the bond rate is around 5% or 3%, you have to repay it over 10 years or even 30 years. So, it is important for the interest rate to be low at the time of issuance to prevent significant losses to the American people, especially future generations. By doing so, starting from May to July, European countries may no longer be able to buy U.S. bonds as diligently as before. So, what is the trick that Janet Yellen has come up with? It's about buybacks, right? How to do it now.

Long-term government bonds need to be issued a lot. It was said that it must be done, so it has to be done. They buy long-term government bonds themselves. But the U.S. Treasury is out of money, so they have to buy with other people's money. So, how do they do buybacks? They issue short-term bonds, like 3-month or 6-month bonds, to raise funds, and use that money to buy back long-term bonds, such as 10-year or 30-year bonds, in the market. This policy has been implemented in the U.S. before. When was it? It was back in 2001. At that time, the U.S. had been in deficit for a long time and finally returned to surplus. So, with that surplus money, they bought back bonds internationally. For example, a company like Apple, if they...

If you make a profit and buy back your own stocks for burning, people in the market would think you did well. However, the problem is, let's assume Apple is a huge loss-making company. Hey, Apple stockholders, this doesn't mean it's in the red. It's just an assumption. But if a company with huge losses, for example, has no money but borrows from others, borrows money from banks, buys back stocks for burning, then people in the market might think, Is this a financial wizard? So, the buybacks in the U.S. in 2000 were done in a financially profitable state. In my opinion, healthy buybacks are what the Treasury Secretary did. What is a buyback? It's basically a turnaround. To prevent long-term bond interest rates from soaring, they buy long-term bonds instead. Now, it's really about short-term.

By taking on short-term debt to pay off long-term debt, what exactly are they doing now? Looking at it this way, in the short term, it will undoubtedly have an effect because this will be done from May 29th to July 23rd. During this period, it will surely have some effect of lowering long-term bond interest rates even slightly. The problem is that because so many bonds are continuously being issued, what will they do after this ends? These kinds of issues will continue to arise. If we summarize the changes in the U.S. Treasury bond market that you have mentioned so far, it seems like this: it appears that the number of people willing to buy U.S. Treasury bonds is decreasing, which is leading to desperate efforts to somehow succeed in issuing bonds and stabilize the bond market to prevent an increase in bond interest rates.

I mean, to put it differently, the more it is said, the more likely it is that the interest rates on government bonds in the bond market will rise or remain high. In that case, many businesses or individuals in our country may not know what the Bank of Korea's base rate will be, but it's not advisable to expect that the various market interest rates that we actually apply will decrease in the short term. Can we summarize it like this? I think it is really difficult for a time like the past when many people hoped for U.S. Treasury yields to drop below 2.5. Also, I believe that it is really challenging for such a time to come. And it is crucial for the short term to be unstable at the moment. If, for example, the government bond interest rates continue to remain at the same level, it would be less shocking for the market. It's like riding a roller coaster continuously at the moment, the government bond...

Interest rates go up and down, right? Why does this happen? Currently, there are factors causing U.S. Treasury bonds to be issued massively by the U.S. Department of the Treasury. This has an immediate impact on the market. The first buyback was on May 29th, and it continued on June 4th, June 10th, almost once a week. In total, there were seven buybacks. When the first buyback was conducted, the interest rate, which was 4.6%, dropped to 4.18%. So, it was indeed effective. The second buyback also had a clear effect. However, the third buyback on June 10th had a slightly diminished effect. So, when buybacks start, each time, it's like...

They provide coupons of 2 billion dollars each for long-term bonds. However, in the case of these coupon bonds, the problem is that the amount is fixed each time when continuing the medium and long-term bonds. When the first 20 billion dollars was invested, there was clearly an effect on the market. The same for the second time until June 4th, but just yesterday, on June 10th, there wasn't much effect. How does this work? Yellen is really putting a stop to the bond market with all her might, to the point where it's not an exaggeration. Because, for example, the bond market is like a dam that is about to overflow due to flooding. Yellen alone is now really putting her all into it, like a buyback until the end of July, which is July 23rd. Exactly, until then, looking forward to the future of the bond market.

I will continue to show a really restless appearance of going up and down, probably because now in the financial market, oh, this, the bond interest rates are safe assets, but they are shaking. So where should I invest in safe assets? This kind of thinking itself will surely influence the market in the future. So, in a way, the fact that bond interest rates are not falling, and the market interest rates are not falling, I think the more important part is that the volatility has increased. In a way, in order to understand the future flow of U.S. bonds, we may need to consider changes in economic policies after the U.S. presidential election. How significant do you think the changes in economic policies will be after the U.S. presidential election? I really think that there will be a lot of changes after the presidential election in November. First of all, now, with Yellen, the Treasury Secretary, really putting in all efforts, currently

I think Yellen, the Secretary of the Treasury, will definitely come up with another measure after July 23rd to prevent the dam from collapsing. But there is one problem. How is Yellen, the Secretary of the Treasury, being evaluated on Wall Street? If it seems like she will lose in the election, they say she will spend every last dollar and leave. Wall Street people joke around a bit like this because if the administration changes, there is practically no need to leave any money behind. Yellen, the Secretary of the Treasury, has shown a more political side than any other Secretary of the Treasury so far. That's why they say this, emphasizing that who becomes the president is even more important, in other words, Yellen, the Secretary of the Treasury, until the very end.

Due to the efforts to prevent the dam from collapsing and the appearance of spending until the last dollar, the U.S. economy will look very different after November. However, we still don't know who the president will be, right? Depending on who the president is, there will be significant volatility afterwards. This is not going to be easy now, because when former President Trump took office, you might remember, the value of the dollar fluctuated, gold prices went up and down. It took about three months for the market to react and adapt because no one knew what kind of economic policy he would implement. This phenomenon will likely continue for about three months from November. That's how I see it.

Listening to what Dr. Park said, it seems that even after the U.S. presidential election, there will continue to be factors increasing the volatility of the bond market for a while. If that's the case, there is clearly a preference for safe assets globally. Demand for safe assets is also for representative safe assets like bonds. If the volatility of bonds, which are considered typical safe assets, increases to a level close to semi-safe assets, how will the demand for safe assets change in the future? Now, when you mention semi-safe assets, you mean half, right? It's not anti, right? Yes, that's correct. I also have about half of safe assets, so it's not completely safe assets. In fact, personally, let me say a little bit about this. I also hold U.S. bonds. I have them in a very short-term focus. This is considered a safe asset. So, I manage it with a very short-term focus. Now, what is the current situation for many people?

You might be wondering what exactly a safe asset is right now. However, as the world is currently engaged in a hegemonic war, even the concept of a safe asset has become a subject of hegemonic war. Oh, right. As I mentioned earlier, Western countries, such as European countries, still view the United States Congress as a safe asset. The citizens there also see it that way. But the interesting thing is that China, along with pro-China countries, considers gold as a safe asset. So, whenever there is an opportunity, China and pro-China oriented countries show a tendency to sell U.S. Treasury bonds and buy gold. Moreover, even in countries that are not pro-China, basically in countries that are somewhat at odds with or not very friendly with the United States, central banks tend to keep increasing their gold reserves. However, this doesn't end with central banks, it goes further.

An interesting phenomenon has affected individuals. So, in the case of China, buying gold is considered patriotic. Therefore, a gold-buying movement occurred. It is the opposite of our anti-gold movement. We had gold, which we released in 1998 when the IMF crisis hit, but China is telling its people not to buy gold right now, not to buy things like dollars. This movement has taken place among the citizens. Another aspect is, where are the specific entities that buy gold? For example, in countries like Turkey, the citizens buy gold whenever they have the opportunity. Why do they buy dollars? They are cautious about things like this. If you keep reporting to the authorities, saying, I have dollars, it becomes suspicious. You can't see how much gold you bought. So, in Turkey, if there is an opportunity, the citizens make efforts to buy gold. As a result, President Erdogan himself is involved in gold imports.

For example, there are systems that make it difficult to do things like this. Right now, in a situation where they are really fighting over whether this is a safe asset or that is a safe asset, even virtual assets are being included in safe assets. So, in a situation where even the criteria for safe assets are shaking more than ever, it seems that now is the time. So, in that case, in which direction should Korea align itself? Where is the Bank of Korea aligning its policy? In the case of Korea, I feel a bit confused about where we should go. Because it seems that the Governor of the Bank of Korea is probably very worried. Whenever I see him at a press conference, I can sense his concerns, and his expression looks really stiff these days. I think the reason is that.

I think this is about constantly being aware of the current situation in the United States. Oh, the U.S. is keeping interest rates so high, what should we do? It feels like this, and then, but we are not as strong a country as the U.S., but Europe has already lowered interest rates. So, since we are not the U.S., we should also lower interest rates, right? From a global perspective, there must be a lot of concerns about this. Another perspective is about the Korean economy. The Korean economy is not as robust as before, and the growth momentum has declined, so there seems to be a lot of thoughts on quickly lowering interest rates. However, things don't go as planned, as the growth rate in the first quarter was surprisingly high. So, when the Bank of Korea announced this, reporters raised some objections, right? Well, in our country...

You said the economy would not be good, but why is it so good now? You even mentioned that predictions can be wrong, saying that even international organizations get it wrong. You showed such a sensitive reaction that it seems like the Bank of Korea is more pleased than ever with concerns about domestic economic growth rates currently fluctuating, and internationally, whether Korea will follow the United States or Europe. I would like to ask once again if I may interpret what you just said. The Governor of the Bank of Korea mentioned that even if the inflation rate drops to a slightly higher level of 2.3% instead of 2%, it could lead to a change in the interest rate policy. This means that in a situation where inflation is not expected to be quickly controlled, they would like to somehow lower the interest rate even a little sooner.

Can I accept that it's a projection of the mind? Yes, I see it that way because right now, it seems like you're a bit impatient. Yes, you seem a bit surprised and you might think it would be nice if it continued. However, in the long run, it's clear that the driving force for growth is somewhat weakened. That's why I really want to proactively lower the interest rate. If we wait for 2%, later if there is a possible economic downturn, the Bank of Korea won't be free from all the responsibility. That's why whenever there's a chance, it seems like you want to lower the interest rate. But there's one issue. For example, if the U.S. also lowers interest rates now, all the problems will disappear. If the U.S. suddenly lowers interest rates in September, various forecasts are being made, right? But the problem is, we started lowering interest rates proactively, but unexpectedly, if the U.S.

If interest rates are lowered late, when we started to lower it with a consumer price inflation rate of about 2.3%, the exchange rate goes up. Isn't the exchange rate surprising right now? It's around 170 won to 180 won. But, if we lower the interest rates and the U.S. doesn't, it's possible for it to go to the 1000 won to 500 won range. I once said on a broadcast that when it was around 1120 won, that's when you should buy dollars. I received a lot of malicious comments back then. People were asking why I was talking about an exchange rate that was unimaginable at the time. The reason I said that is because there will be a problem with this exchange rate due to expected inflation. Why does South Korea have many industries vulnerable to inflation? The U.S. has many industries that are strong against inflation, such as energy and food.

But South Korea, all the companies are competing on price. Think about how many monopolistic companies there are in South Korea that don't compete on price, or companies that have brand royalties. In the U.S., there are plenty, so in terms of influence, which country do you think is stronger? Of course, the U.S. is much stronger. When inflation comes, we can't help but be affected by the exchange rate. If we also lower interest rates, then problems with the exchange rate may arise again, and prices may rise again. So, it might be difficult for the governor to easily give us a break for a year. It's not that he can't sleep well, but I think we can't sleep well either. I was going to ask to lower the interest rates continuously in this high-interest situation, but listening to what Dr. Park said, it seems like the exchange rate will fluctuate again. So, what should we do now?

In the current situation where various volatilities are increasing internationally, how should our listeners prepare? First of all, how should they invest? Well, at this point, it is really difficult to give advice. For those who have been watching my show, I have been continuously emphasizing a principle. What does it mean to have all assets in Korean won? It means that we are investing all our assets in a currency that accounts for only 0.5% of the currencies used worldwide. So, investing solely in Korean won is like putting all your assets into a really unique asset, which is only 0.5% globally recognized. Therefore, when the exchange rate falls below the 3-year average, I recommend converting 50% of your total financial assets into dollars. That's around the 1120 won range.

I mentioned this before, the average for three years was 1,120 won. But why 50%? Because we also have other assets, such as various insurances or real estate. When we think about people who have real estate, they should consider converting 50% to financial assets. It probably won't be just 10% in dollar assets for us. That's why I suggested 50%, converting 50% of financial assets. But when should you make the switch? It's really difficult to adjust the exchange rate. The average for three years. But when I write a book or appear on a broadcast, the average has always been 1,120 won, so I used to say, Just convert below 1,120 won. But now the exchange rate is much higher than the three-year average. Nowadays, it's quite easy to calculate this. You can download Excel files from various places and do it. Please calculate it once now and there will be a chance to go down.

If you have it, don't change it all at once, but steadily invest about 3% to 2% in one financial asset. That's the first thing. And then, what about dollar assets? You don't convert dollars into cash. You can deposit them in a U.S. bank that operates with a short-term focus like I do, or buy U.S. stocks, among various other methods. Another option is gold. When I had $1,400 worth of gold, I appeared on KBS and talked about gold for an hour. At that time, Choi Kyung-hwan and Hong Geun-shik were hosting the economic show. I mentioned buying gold for 50 minutes, and people criticized me for fueling speculation. But why is buying gold speculation? I thought this way. I had $1,400 at that time. Currently, the price of gold is temporarily too high, and the buyers of gold are mainly from China and Russia, so it's not stable.

It's a bit difficult to buy gold right now, but if the price of gold happens to go down, the recommended ratio that Carl Icahn or Ray Dalio suggest is to have about 7.5 to 10% of your total financial assets in gold. It's not my recommendation, but they have always advised around that range. Safe assets are probably not only recommended by our experts but are also being agreed upon by many people these days. It seems like many people agree with what the experts are saying, as the proportion of financial investment in overseas stocks is increasing, and there is a concentration of money in that area. Probably many people would agree with that. So, in other words, we may need to wait a little longer for the domestic stock market to flourish. Yes, we may need to wait a bit more for that. It seems like I need to make one difficult statement, but the fact is, it's quite challenging for the stock market in Korea to have a clear upward trend. But then, why is it like that only in Korea?

It seems like people are angry, but it's the same in other countries. In Japan's case, it only recently reached the level of stock prices in 1989. Similarly, in Europe, it's just now approaching the stock price levels of 2006. It's only about 15% higher than back then. In the long run, there is only the United States as a superior country. That's why, for the past three years, I have been continuously advocating that more than 50% of assets should be in dollars. Even though I was a public broadcaster, why did I make such claims? It's because when people hold dollar assets and the value of the dollar rises, if a crisis like the IMF crisis in Korea happens again, these people become patriots. They not only realize profits but also help make Korea's foreign exchange market robust. That's why I could say this three years ago as a public broadcaster.

I confidently stated, but now, well, when it comes to exchanging currencies, for example, when investing aggressively in U.S. stocks, I said that three years ago, I was criticized by malicious comments. Now, I think I am a bit too aggressive, so it's not good. This is my view to some extent. Yes, I understand. Actually, these days, it's so confusing and chaotic, with market volatility so high, and the flow of money not the same as before. The only person who can analyze this complexity is indeed our Dr. Park Jong-eun. I think so. I have learned a lot today as well. So far, Dr. Park Jong-eun has been here. Thank you. Thank you.

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