Today, we will delve deeply into a hot issue once again. Today, we will discuss the ripple effects of the weakening dollar on the U.S. economy, with the knowledge of Park Jong-hoon. Welcome. Hello. Dr. Ahn, nice to meet you here at the headquarters. It's new for me too. Oh, it's really new. Here, I will give you the bell like this. Oh, that's right. It feels like a long time. As far as I know, after our Dr. Park appeared in the market, he received offers from numerous channels, and among them, I heard that our economic program was one of the channels he decided to appear on. Yes, that's correct. It's an honor. Thank you for inviting me. Let's talk about the weakening dollar today. I didn't expect it to hit 160 yen. What's the recent situation? I was on last week.

It was like a roller coaster itself, really surprising every day because of the real swaying appearance. The reason was actually that it started on April 24th. In fact, during this time, there was one unwritten rule for everyone investing in yen. The moment it exceeds 155, it must not go over 155 for a dollar. This is something that the Japanese government or the Bank of Japan cannot accept at all. Because of this fear, people now had to invest and make money. So, they had this appearance of trying not to exceed 155 at all. But on the 24th, it exceeded 155, and that wasn't the end. On the 29th, it touched 160 yen for a moment. But from here, the real roller coaster started because the Bank of Japan actively intervened. Of course, how much intervention they did can only be speculated in the market.

Bloomberg speculated that there were two interventions, spending a whopping 23 billion dollars, which is 31 trillion Korean won, in just two days. It's astonishing. They spent so much that it could completely change the exchange rate itself. They really poured a massive amount. The problem is that they dropped it to 152, completely controlling the exchange market. They seemed to have won against the forces betting on the weak currency. However, when I checked the exchange rate just now as I came in here, it's back over 24, and even the Bank of Japan spent so much money, but it keeps fluctuating up and down. It feels really unsettling. Firstly, it's a very basic question, but many people don't understand one thing. Usually, countries that rely on exports for their livelihood, when their currency depreciates, we were taught in textbooks that exports would do well. If that's the case, even at 155...

If the yen falls, and Japanese products become cheaper due to good exports, it seems like Japan's economy will revive and only good things will happen for Japan. So why is the government pushing against this? At first, when the exchange rate was rising, for example, in the past, if we had 10,000 won, it would be 1,300 yen. As the exchange rate rises, export competitiveness increases, and export volume increases. I had this kind of thought. But nowadays, the world has changed a lot. Now, export prices listed in dollars do not change much. As a result, while it is meaningful to bring in foreign currency by exchanging it, the era where export prices drop significantly and at the same time export volume increases, benefiting the country, like in the past, has somewhat ended. Additionally, another issue is that production bases have also moved out of our country quite a bit, but Japan is much worse off than us.

Because in the 1990s, when globalization was in full swing, we still had relatively high wages. However, Japan was already the country with the highest wages globally. Due to the large number of manufacturing companies that moved out of Japan for about 30 years, even if the exchange rate rises significantly, even if the value of the yen falls, the era when export companies could make a lot of money like that is over. The third reason is that in the past, we used to exchange dollars for yen, and the same goes for South Korea. Export companies used to convert the money they earned into Korean won. But now, they just keep the money in that country. And then they reinvest it. Especially in the case of the United States, these days, they are saying, Why invest in the U.S.? Invest elsewhere. So, South Korea and Japan are the same. In the past, the exchange rate was...

Once we go up, well, the export companies will still do well. This has completely disappeared, and now there is only one thing left. On the contrary, prices are soaring. As a result, in Japan right now, while prices are soaring, salaries cannot keep up. But we have seen a lot of news about Japan, right? Like, they raised it by 15% during the Chuseok holiday, and Japanese companies raised it by 5%. All these companies are large corporations. Oh, Japan is the same. Large corporations account for about 10% of employment, and about 90% are small and medium-sized enterprises. They couldn't raise wages, so Japan's middle class is actually becoming much poorer. Seeing foreigners coming in and spending money lavishly, support for the government keeps dropping, and the situation in Japan is quite serious right now. It's somewhat similar for us, but Japan is.

It's about twice as serious as us. So, if you see it like this, it makes sense. The weakening of the yen leads to export competitiveness, but if the economy fails to recover, it inevitably had to be caught. However, I'm curious about this. Usually, in the case of the United States, it is known that if a country actively intervenes in the exchange rate, it is condemned during the G7 meetings. Even though this has happened, this time it is estimated to be almost 30 trillion won, and a few years ago, it was known to be huge. Is this okay? No, the United States really dislikes it. Oh, Yellen, what did she do? There's a date for that. An interview with Reuters was published on April 25th. Yes, the interview is, I think Yellen was wrong. What did she say at that time? Well, Japan, you know, the yen.

Don't intervene in the market very rarely intervene, so they say to intervene very rarely with the word rare in English, and then Japan says, If you want to intervene in the foreign exchange market, you need to consult with us, which means to say, Get permission from us. That's what they said. That's right. However, because of this statement, after the 25th, the yen exchange rate went crazy, hitting 160 yen. The reason it hit 160 yen is because Yellen made a mistake. Oh, because the United States is in a desperate situation right now, and the United States is very reluctant to have Japan intervene in the yen market, and Yellen got scared, sending a signal to the market that the United States is afraid of Japan intervening in the yen market. That's why the exchange rate, which was playing around 155 all of a sudden, jumped from 160. It's because Yellen made a mistake. Because Yellen's true feelings were revealed, this is always similar to a card game. Yellen's hand and the Bank of Japan's hand practically on that day.

It all seemed to be from Reuters' interview. Such things also contributed to the exchange rate soaring again. Now, I understand the basic concepts or situations surrounding the overall situation. However, the unusual thing these days is that U.S. presidential candidates are expressing concerns about the exchange rate. Normally, presidential candidates approaching an election tend to speak about domestic politics and policies, so why are both candidates suddenly expressing concerns about yen and yuan? This is closely related to the U.S. presidential election. For example, the date is very interesting. It started on April 23rd. Yes, it began on the 23rd. The first meeting was between the Vice President of the Liberal Democratic Party in Asoda and former President Trump. Yes, at Trump Tower. But when they met, President Biden was very aggressive. What's this all about?

I was really angry correctly. Why did he do that? On that day, Trump posted on social media, A weak yen is a disaster for the United States. He didn't just say it's bad, he said it's a disaster. Before that, there was Plaza Accord, and the yen was around 160 yen to a dollar back then. But by saying he will break the Plaza Accord, it means he will cut it in half. Let's send it down to 80 yen to a dollar. In other words, he said the yen should be appreciated by about double. However, former President Trump attacked the yen first. There is a reason for this. For example, if the yen keeps depreciating, and the Bank of Japan intervenes, how should they intervene? They have to sell the dollars they hold. That's right. However, the Bank of Japan holds dollars in cash.

Do you have U.S. Treasury bonds? If the market intervenes with 23 billion dollars, Japanese banks must have cash too, maybe around 30 billion dollars. Let's say they had about 30 billion dollars, but if they intervene with 23 billion dollars, they need to replenish that cash. They can't just hold it all in bonds. So, the possibility of selling 23 billion dollars of U.S. Treasury bonds is very high. Right, they need to keep the cash the same. So, what problems could arise? Currently, President Biden, along with Treasury Secretary Yellen, seems to have a plan to inject a lot of money in the third quarter to boost the U.S. economic growth in the third and fourth quarters. Because if you look at the U.S. presidential elections, it's very interesting. For example, in November.

In the recent presidential election, if the stock prices rise over the three months, the probability of the president being re-elected is 83%. It's amazing. And if the growth rate drops and the economy falls into a recession, what is the possibility of losing? The possibility of losing is 100%. So, if the economic growth rate is increased and the stock prices rise in the last three months, then the re-election feasibility is very high. But the problem is, if Japan were to dump U.S. Treasury bonds, what would happen? The U.S. Treasury bond interest rates would rise, right? Everyone would try to get rid of U.S. Treasury bonds, which means the U.S. Treasury bonds would become cheaper, and in the process of becoming cheaper, it means the Treasury bond interest rates would rise. However, if this phenomenon occurs, what would happen? It would definitely have a negative impact on the stock market.

You have to influence it, right? That's right. So Yellen said, Hey, don't get involved at all. I rarely say this, so if I say it's rare, rarely get involved. But for those who want to get involved, they need permission from us. The turmoil started because of the interview with Reuters. If you look at it this way, in the U.S., Yellen, the Secretary of the Treasury, became a figure of self-interest, and when we speculated about the situation in Japan, we confirmed that Japan would have no choice but to throw a large amount of U.S. Treasury bonds. That's how the market was shaken. But recently, looking at the actions of the Biden administration, especially regarding fiscal spending, it seems like they have no intention of reducing this debt. The debt just keeps increasing. So, if the debt keeps increasing, isn't that like digging a hole somewhere and doing business?

So, they are planning to increase the national debt again. I wonder what kind of impact this will have on the market. From my perspective, this will definitely have a significant long-term impact. The speed at which the U.S. government's debt is increasing is the fastest in U.S. history. Just a year ago, the national debt of the U.S. was only $10 trillion. Of course, this amount is enormous, but consider this - since the founding of the U.S. in 1776, the national debt had only reached $10 trillion over 230 years. However, since 2008, with the global financial crisis, the national debt has been increasing rapidly. Finally, in January of this year, for the first time in U.S. history, the national debt has exceeded $34 trillion. So, while it took 23 years to increase from $10 trillion to $34 trillion, it will only take 16 years to increase the remaining $24 trillion.

It didn't happen, and this speed is too fast. Just until September, it was $33 trillion. Yes, but it took exactly 100 days to reach $34 trillion. So, in the history of the U.S. government, debt has only increased this much three times so far. The costs of World War II were enormous, right? The global financial crisis, well, that had to overcome a financial crisis. Finally, it's during the time of Corona. But at that time, everyone understood. It's not even an emergency situation now. In the current situation, the U.S. government's fiscal deficit has finally reached a record of 6.2% of GDP, or not. The prediction now is that in 24 years, it will be 6.7%, and in 25 years, 7.1%. No, this is not even close to what rating agencies like Fitch are saying. It will exceed 88%. Such private evaluation companies even say it will exceed 88%.

When we talk about this, what kind of problem arises is that the interest rate is very high. In the past, when the interest rate was low, the burden of interest wasn't a big issue. But now, the interest burden is already 1 trillion dollars per year. This amounts to 150 trillion Korean won. Our country's annual budget is 650 trillion, and we are already handling double that amount just in interest. If it continues to increase at this rate, by the 2030s or 2040s, it will truly skyrocket astronomically. There are many predictions like this, but in reality, we don't have to go that far. Situations to worry about could come by the end of next year. The interest rates are rising, and it seems that the U.S. government debt will continue to increase in the future as well. The money spent is not just spent; it will be used in U.S. Treasury bond issuances.

If we issue national bonds, the biggest buyer of these bonds was actually Japan. However, even the Japanese need to resell them instead of buying, which indicates a significant shock in the market. This is because we need to somehow keep interest rates low until the presidential election. If they decrease from the current levels, stock prices will rise, and then the re-election possibility of President Biden will increase. Currently, a tremendous amount of national bonds will be issued again in the second and third quarters. After that, they will spend the third quarter as planned for economic stimulus. Why is this? It is for the best. Nowadays, the Minister of Finance doesn't seem like the typical Minister of Finance I knew because this person is a truly excellent scholar, a real expert in the real economy, and her husband is also a famous person. Her husband is a Nobel laureate in economics. So, this couple is truly outstanding economists.

There was a part where Janet Yellen, the Secretary of the Treasury, recently did another interview. If you look at the interview article from May 1st, she talks about why there was such a fuss during the Trump administration. Yellen, the Treasury Secretary, said she was very scared at that time; democracy was under threat. For democracy to be healthy, economic growth must occur, and whoever hinders this economic growth is an enemy of democracy. She was saying that Powell is currently pursuing policies that hinder economic growth. What does this mean? The Treasury Secretary has crossed the line because the Fed is much more independent than the Bank of Korea. If this continues in a way, as with the Three Principles Law, Powell, who is an enemy of democracy, is a bit excessive. Probably, if you interpret it a bit broadly, she has been trying to lower interest rates recently before the presidential election.

They want to lower it, but the problem is that if the market interest rates go up, issuing a lot of national bonds like this doesn't mean that the base interest rate has been lowered, right? That problem arises. So, from the perspective of the finance minister, they are very anxious now, and as a result, various thoughts revealing their inner thoughts have been expressed here and there since the end of April to early May. But every time, I feel a bit sorry because when you express your inner thoughts like that, originally, in the eyes of others, speculators, hedge fund people, the moment they see the opponent's weakness, they completely seize the upper hand like in a poker game. Ellen is revealing her inner thoughts too much now, so if she's not careful, speculators in the U.S. international market, and other markets related to the yen, might, let's say, hedge funds. Hedge funds will really have the opportunity to make money.

It has increased. I look like this, but this is the United States. To be precise, if the concrete interest rate in the United States goes up, it will inevitably have a negative impact on the economy by pulling up the market interest rate. Despite knowing this obvious fact, there are certain structural reasons why we have no choice but to continue issuing debt like this. Why is that? In fact, I believe that we can sufficiently revive the economy in a healthy way without doing this as much as now. However, I am forced to do this excessively. In fact, as I mentioned earlier, there are really amazing laws in the U.S. presidential election, so if the stock market rises and the economic growth rate increases, it is almost certain for re-election. But the problem is that according to the opinion polls now, it is coming out as a tie. On average, Trump and Biden are almost neck and neck.

But the problem is if you become president based on approval ratings in the United States, President Biden doesn't need to be so impatient. The U.S. elects indirectly through the Electoral College, right? This is the crux of the problem. In the U.S., there are swing states where the voters are indecisive, not knowing where to vote. Among these swing states, about seven states can be seen. Excluding one of these seven states, almost all six states support Trump. Now, suddenly, in Michigan, Biden's approval rating has risen a bit. Originally, Michigan was a state that supported Trump more. What will happen here? In Michigan, Biden promised to support various renewable energy initiatives significantly. From Michigan's perspective, Biden needs to be elected so that they can continue to receive this funding. So, suddenly, this has spiked.

So what this is, various electricity fees and such, consumers can directly receive subsidies right away. So, if it's President Biden, the fees are reduced, but if it's Trump, it's uncertain, so Michigan flipped. So, from President Biden's perspective, Hey, if we give a little boost to the economy and add some subsidies, it would be beneficial, this kind of thought can arise. Looking at this precisely, it seems like they thought, We should spend money like this. Then, in the U.S., the voting system, if even one elector has more, they take all the electors in that state. So, it's worth spending money, right? It's effective. There are many things working against President Biden these days. I see. I understand. Why are U.S. presidential candidates like Japan's attitude like this?

I have now confirmed the most basic reasons why people make such earnest remarks. We will briefly listen to an advertisement, then examine how the constantly changing U.S. economy is affecting the current inflation and the U.S. benchmark interest rate. Dr. Park, after reviewing the content you mentioned in part 1, I had this thought. As the Biden administration continues to spend money without reducing it in the run-up to the election, won't inflation be controlled? In the past year, efforts have been made to control inflation, but when will inflation be under control? In the U.S. now, the Fed and the Treasury Department have been playing separately for about 6 months. The problem is that even if one side tightens monetary policy to control inflation, the Treasury Department keeps injecting money.

So, this could potentially stimulate inflation again. Here are two important points. The first one is, when I mentioned earlier, whether succeeding or failing in re-election in the U.S., the growth rate and stock prices are really important. It's a unique relationship. Of course, there has been no inflation in the past 40 years, so it could be possible. Anyway, since it's not related to inflation, from Yellen's perspective, inflation rising won't be a big issue for re-election. There's another thing. Usually, when they inject money into the economy through fiscal or Fed policies, there's a lag before inflation spikes in the real economy. Normally, it takes around 6 to 12 months. So, I feel a bit sorry for Yellen, but wasn't she aiming for that lag after the election for inflation to rise?

So, if it's 6 months, oh, this is a big problem, but since it was solved in the second half of last year, in fact, if it's 6 months, it can actually rise from this fall. In that case, something might be wrong, but if it's 12 months, until November 5th, inflation may not increase much. So, considering various situations of Ellen, the finance minister, inflation is not a big concern. Also, they aimed for the time difference. In fact, in this presidential election, immigration seems to be very important. Immigration, yes, this is actually a very important part in terms of inflation. In fact, after former President Trump took office, the most important change was that the number of immigrants decreased significantly. Now, of course, former President Trump mainly focused on illegal immigrants officially, but looking at the statistics, even the number of legal immigrants has decreased significantly. Consequently, after former President Trump...

After the president's inauguration, if we look at the data five years later, the number of legal immigrants entering the United States has decreased by about one-fourth, from around 1.3 million to about 300,000. Now, if legal immigration has decreased by that much, can you imagine how much illegal immigration has decreased? But the statistics on illegal immigration are not available. However, now, Larry Fink, the CEO of BlackRock, the world's largest asset management company, is turning back to Trump, not calling him Trump, but yes. Because now, due to continuous dislike for immigrants in politics, if we lack 2 million workers a year, I can guess what will happen. So, if legal immigrants have decreased by about 1 million, it seems that illegal immigrants have also decreased by about 1 million. So, it seems like we are short of about 2 million workers. Actually, many people think that labor costs have temporarily increased due to Corona, labor costs.

When you look at the graph, it goes up from 2017. In January 2017, it was the day when former President Trump was inaugurated for the first time. So, in 2023, what happened? President Biden actually had lax border security. For example, it's almost certain that a lot of illegal immigrants came in. However, we don't know exactly how many came in. But it was enough to somewhat curb the rise in wages. So, in 2023, since a lot came in, Trump attacked. So, from Biden's side, they have now strengthened border security again. Why? Because they are getting criticized a lot, which is very disadvantageous in the presidential election. But from President Biden's perspective, he was like, Show me the evidence, because there are no statistics on illegal immigrants. But Powell, the Fed...

The chairman here once mentioned that the reason the U.S. economy has recently shown prosperity is because many immigrants have come in. In 2023, even though President Biden said he didn't have immigrant statistics, Powell even acknowledged that one of the main reasons the U.S. economy has shown prosperity is due to immigrants stabilizing wages to some extent. This was an acknowledgment. In 2024, after former President Trump began a full-fledged attack, what has happened now is that because Samsung Electronics employees are building a factory in Texas, visas will be needed with the U.S. These visas are not easily issued, so the speed of building the factory has been delayed. Currently, the Immigration Office is making things difficult. In my opinion, there is a slightly strengthened aspect for the presidential election show, and they have also reinforced border security.

The problem is that this could put pressure on wages again, so it seems like wages for the 24th year might face some pressure again. Now, who becomes the president is so, so important. If former President Trump becomes president again, he will greatly tighten the borders. Despite saying he would block illegal immigrants, based on his track record of cutting legal immigrants into pieces, he will likely block legal immigrants greatly. Therefore, in my view, Trump, with his strong temperament towards immigrants, may stimulate inflation in that direction. On the other hand, President Biden is more likely to stimulate inflation through government spending. No, these two should not collaborate like this. Please, I hope they will do it in a good way. Such thoughts come to mind. Hey, after listening to what you said, now everyone must have interest rates in their minds.

I think you might be worried. As I listened to your explanation, from President Biden's perspective, the situation seems to be aiming for re-election by continuing to spend money. Naturally, the effect of price increases due to this spending is expected to occur after the election. Next, if President Trump is re-elected, it seems that there may be another factor that could induce price increases, as he may restrict immigrants, leading to an increase in labor costs. So, when should we expect a rate cut from the U.S. Federal Reserve? Currently, it seems like there is some cooperation between Janet Yellen, the Treasury Secretary, and Jerome Powell, the Chairman. So, it seems like they are making some efforts to try to lower interest rates within this year. Even though inflation hasn't been controlled yet, it might still be possible.

It's similar a couple of times, but the problem is not the interest rate cut, but if the prices spike again after lowering the interest rates, there might be a situation where the rates have to be raised again, right? So, I actually wish that President Biden and former President Trump could get along a bit and please focus on controlling prices. Currently, they seem to be competing with each other by implementing policies that stimulate prices. So, I am quite worried. In fact, the last book I wrote was at the end of 2022. What did I say back then? I said, Don't expect a low-interest era in the future; a moderate-interest era is coming. I wrote like this. And based on that, I made some appearances and received a lot of attention at that time. The interest rate rose to 20%, and in the past 40 years, the U.S. Treasury bond rate was at 15.5% in 1981. It dropped to 0.54% in July 2020, but this is.

How did the trend of interest rates rise up to this point? Back then, it increased by 3%, but this is a temporary phenomenon and it will go down again. That's why I faced a flood of malicious comments. But these days, the pilgrimage to the holy land is happening again. However, fundamentally, I made such an argument at the end of 2022, but nowadays, in the second half of 2023, I have a colleague now. Who is it? Oh, this person is truly remarkable. In fact, using the term colleague feels a bit awkward. Larry Summers, a professor at Harvard University, is actually someone who is proficient in practical economics as well. He has also served as a minister. Larry Summers said at the end of last year, Over the next 10 years, U.S. Treasury bonds will average 4.75%. So, what is it now? When I broadcasted this, it was 4.5%. Therefore, it is 0.25% higher than the current rate, which is the 10-year average.

You know, why is the interest rate inevitably higher than before? In fact, there is a relationship with this. In the past, the efficiency of the capital market was very high because in the era of globalization, there were no borders for money. In the past, we used to say, Hey, don't borrow money, it's risky. But these days, it's like, Oh, attract foreign capital, attract foreign investment. What does this mean? As the efficiency of the capital market becomes extremely high, in a world where money is cheap, we have experienced a time when money was spent unconditionally for 30 years. But what kind of world is it now? After the Ukraine war, Russian conglomerates must have been really shocked. Of course, they made a mistake in choosing the president, but still, Russian conglomerates didn't expect a war like this.

What did they do next? They confiscated all the assets of a Russian tycoon from their husband. They froze the accounts, froze the accounts. And instead of just seizing the money and releasing it later, they decided, Hey, we'll confiscate all this money and use it for the reconstruction projects in Ukraine. So, what kind of signal does this give? Even the Chinese or Indian tycoons who have a lot of money, when they think about where to invest, they might wonder. In the past, there were no boundaries for capital, and the United States always welcomed money. Because the U.S. played the role of a global police state, they could invest anywhere in the world without worry. But now, what kind of world is it? Today, for example, there is talk that Taiwan could go to war. So, if Chinese tycoons made a mistake and invested in the U.S., they could all be confiscated. This is the situation.

In the process, this is exactly what we call a political risk premium. So, interest rates will not go down as much as before, and we are entering an era of moderate interest rates. To be honest, it was at 4.5, but this person wrote 4.75 for 2022. Therefore, I felt a bit daring. However, the issue is that from what I see up to this point, based on the current interest rate, as someone who studies macroeconomics, I predict that the average for the next 10 years will be like this. I can talk about it, but I'm not an expert on what interest rates will be in 2024 or 2025. So, I'm thinking of bringing in other experts for this part. Yes, what I'm most concerned about is that it will turn out as Jamie Dimon, the chairman of JP Morgan, said. What do you think? Interest rates will inevitably rise again because prices will rise again.

I am a bit worried about this, and in the process, what was said last year was that in September last year, the interest rates in the United States could temporarily rise to 7%. However, the interest rates in the market, the U.S. 10-year Treasury bond rates, could potentially rise to 8.8%. While mentioning that it could also drop by 2%, leading to an economic recession and even bankruptcy, it could rise by another 2% at the moment of bankruptcy. So, from 2% to 8%, extreme interest rate phenomena could occur. This part is truly concerning. However, the problem is that people observing the market are divided to the extremes. In reality, there are those who see 8.8% and those who see 2.5%. In 2024 and 2025, why? Because, well, if the current administration manages finances well, I believe stability can be achieved. But now, we...

It's really hard to expect a significant decrease now. There are various factors as I mentioned earlier. However, in the era of low interest rates, whether it will decrease slightly or not, the truth is that we have to look to the U.S., to the Federal Reserve Chairman and the Treasury Secretary. It's quite unfortunate from our perspective because they basically determine international interest rates, and the power of the Federal Reserve is much stronger than that of the Bank of Korea. So, there is some concern, and we can only hope that they will do well. In the midst of the prolonged era of low interest rates, one of the reasons why many people around the world are hesitant about sharing funds globally was mentioned. But Chairman Daimon earlier said that inflation will not be controlled well in the future. Why does he forecast that inflation will not be controlled well like this? Jamie Daimon.

I seem to have some distrust of the U.S. political system. Of course, I don't specifically write such things because in the shareholder letter, you really wrote it so long that it takes hours to read. The prose was really well written, but it was written metaphorically. But now, when reading between the lines, it seems like you are leaning towards the idea that the era when the U.S. political system worked well has somewhat ended. Currently, the U.S. politics are completely divided ideologically. When I now do something like YouTube, if I criticize what Trump did wrong, Biden fans immediately attack me saying I'm a Trump supporter, and vice versa if I point out what Biden did wrong. It's not just our country, but America is now exactly like a double-humped camel. In the old days, there was one political ideology, roughly.

In the normal distribution, people were just gathered in the middle a lot. But now, in the political spectrum, there are two pairs of humped camels. As ideologies have completely split, both sides cannot go down the path of a rational and correct decision in the political system, leading to extreme arguments on both sides. This seems to be not only a phenomenon unique to Korea but also happening in the United States. As a result, trust in the system may have somewhat declined. Although it wasn't directly mentioned, I felt this way when reading between the lines for a long time. Alright, then, let's summarize the content Dr. Park Jong-hoon has mentioned so far regarding the situations in Japan and the United States. Now, from that perspective...

I would like to ask about the impact on our economy. If Japan's weak yen continues for a long period like now, what kind of impact will it have on our economy? First, let me summarize about Japan. From Japan's current perspective, it seems like they are losing. When they lose in the foreign market, it's really serious. I majored in international economics. Although I disappeared now, I used to study international economics. Since I majored in international economics, I have seniors and colleagues who are involved in foreign exchange dealing. All seniors say, Never get into foreign exchange dealing, you will lose your mind and almost disappear by the time you reach your 30s. They advised me not to become a foreign exchange dealer. There are many seniors who are really into it, but I didn't become one. Therefore, predicting exchange rates is really difficult, almost impossible. In fact, stocks are actually

Some people are still making predictions, but I have hardly seen anyone who accurately predicts the exchange rate. So, I find it challenging to confidently predict the exchange rate, especially the Korean won exchange rate. In Korea, the foreign exchange market is relatively small and heavily regulated. Therefore, the Bank of Korea has many areas that can be adjusted. For example, the Bank of Japan spent a whopping 31 trillion won, yet the foreign exchange market was still turbulent. In contrast, Korea has more flexibility in making adjustments. This is why Korea did not follow Japan in raising the exchange rate. However, despite this, we can still be affected by Japan. For instance, there are speculators engaging in speculative foreign exchange dealings, especially leveraging.

People who make really bold investments, you know, they were very curious about the yen-dollar exchange rate at the Bank of Japan. So, if the exchange rate goes over 155 yen to 1 dollar, they hesitated to invest easily because they are afraid that the Bank of Japan will definitely intervene once it goes over 155. They didn't do it because they don't know that point and they are afraid of making a big loss if they make a mistake. Because if you make a mistake, you will suffer a huge loss, like 10 times, 20 times leverage. But now, the exchange rate has shown a sign. What kind of sign did it show? It showed the 160 yen mark. So, for those who are in foreign exchange dealing, now it has become a very easy market. It's like playing poker. Professor Park Jong-ho is showing me the opposite side of poker and that's what I'm playing right now. Japan has set a line that must be kept at 160 yen.

Well, so how will things go from now on? If the interest rate gap between Japan and the United States remains as it is now, I think the yen will test 160 yen several times, go up, have a meal once at 160 yen, intervene again, come back down, and have a meal again. Hey, this is interesting. Those who handle this should not be revealed. But now, Minister Yellen is too impatient. In my opinion, Japan has no choice but to show its back. So, what is the only way to solve this problem? Yes, it's to reduce the interest rate gap between the United States and Japan. But what do you think now? In the market, Japan, you have finally escaped from negative interest rates and now have positive interest rates for the first time. I understand that. But the problem is that you cannot raise interest rates properly for two reasons. The first is domestic factors. You have the largest.

There was a problem that the debt of the Japanese government was too high, so now they are spending 1 in the national budget to repay the principal. Hey, try raising the interest rate a little. You will definitely use 1 1. That was the problem. You probably have seen it in the news. But a bigger problem has arisen than this. Last year, something happened. Real estate loans, they should not have touched real estate last year. The Bank of Japan made a huge mistake. That's what I think. So, the Japanese government or the Bank of Japan should have done better. Actually, what did Japan do in January last year? In January last year, on a monthly basis, the largest amount of quantitative easing in Japanese history was done. While others were tightening, money flowed into Japan from all over the world, buying real estate and stocks, pushing up stock prices and real estate, and now the Japanese economy is recovering.

It seemed like that, right? So, Tokyo has 23 districts, which are equivalent to districts in Seoul. There are talks about how housing prices have surged by 70% here. However, Japan is not a country with strict real estate regulations like South Korea. Therefore, you can borrow up to 105% of the house value in Japan. Of course, you need to have an income. You need to prove your income. If you only prove your income, you can borrow up to 105% for the house value. Why is it not 100% but 105%? Oh, you also need to pay taxes and miscellaneous expenses. Japan is a country where everything is possible. So, if you are a member, even if people have borrowed 100% now, what was the interest rate? The interest rate for real estate secured loans has been around 1%. Thank you for buying the house. Tax deductions are substantial. So, in reality, I bought a house at around 0.5%. So, for example, if the interest rate goes up by just 0.5 more from here,

Just a 0.5% increase in points doubles the interest rate, right? Because of this, we raised real estate prices significantly and invested heavily in stocks, which has now become burdensome. On top of that, as I mentioned earlier, it has become an international issue being caught between Biden and Trump. So, considering the pressure from the U.S., it seems quite difficult for Japan to easily intervene. These thoughts have led to a situation where Ana is constantly being tested. In this process, unfortunately, the Korean won has recently changed back to yen, which we once followed along with Japan's yen depreciation. This is because our relationship with China has been significantly severed these days. Nowadays, Korea is aligning quite closely with you, and the Bank of Korea is supporting this.

Korea is much more regulated, and Korea has much more influence than Japan. It's longer than me, but if it continues like this, in my opinion, the exchange rate in Korea will follow the yen's trend in Japan. It may become a variable that counteracts. So, if I remember correctly, Korea has been further liberalized in the foreign exchange market since July. Then, the Korean won may fluctuate significantly like the Japanese yen. What do you think? It's hard to understand why this must be done now, but anyway, since a promise has been made, it will be done. However, if that happens, what difference does it make? Japan's banks will have to spend much more money than us. When liberalized, following that, there will be consequences like when the rate was lowered to 10 won in the past.

For example, if it costs $100 million to lower it from 1,390 won to 1 won, when the external market is liberalized, the money that goes in increases to $300 million. But unfortunately, the exchange rate is continuously decreasing. Yes, it's over $400 million now, so people get shocked when the numbers change. But now we don't have much left. We are continuously losing $4 trillion. This time, even though we announced the exchange rate, it decreased again. So, when it keeps decreasing like now, is it really an easy choice for our country to go below $400 billion? Consequently, our ability to intervene in the external market has decreased. But now, the cost is a big concern, and then.

This time, we used foreign exchange stabilization bonds a bit uniquely. Originally, a country should issue national bonds for national debt, but we used foreign exchange stabilization bonds instead of issuing national bonds. As a result, we used about 20 trillion won of foreign exchange stabilization bonds instead of issuing national bonds. Therefore, currently, we may not have the capacity to intervene in the foreign exchange market in various aspects. If necessary, the foreign exchange market will be free at this moment, which is a bit concerning, but we have to make plans. I don't know the details for July yet, but I hope that the Bank of Korea and our government will carefully plan for it. Yes, understood. Another thing is that you mentioned the continuous increase in U.S. debt, how will this affect the South Korean economy?

Should I do it? Oh, this seems like the most serious problem. Because right now, why did the U.S. Treasury yield suddenly drop from 4.7 to 4.5? This is also because of Yellen. What did Yellen do? Well, issuing Treasury bonds is the job of the U.S. Treasury Department, right? But mistakenly, the U.S. Treasury Department is buying back. Yes, they repurchase the Treasury bonds. It doesn't make sense. Just like how Apple is currently burning its own shares. This is similar. Apple is a loss-making company. They are facing a huge loss. But they buy back their shares and burn them. So, will Apple's stock price fall or rise? Normally, it should rise. But if a loss-making company burns shares, people will think they are crazy, and the stock price will drop. But what the U.S. is doing now is.

What exactly is Buyi? It's the same as a company that burns its own shares with a huge astronomical deficit. So, the situation is like taking on debt to pay off debt, which is very similar to shuffling cards. In this way, they have temporarily lowered the national interest rate by issuing short-term national bonds instead of long-term ones like 10 or 30 years. But the problem is that this is just a temporary measure until the presidential election is over.

Before or after, you have to borrow money again, and you worry about the aftermath. I really hope that Ellen, the finance minister, has a plan. Please, I hope there is a plan. As I listen to Dr. Park Jong-hoon's words, I hope that the Ministry of Economy and Finance in Korea has a plan, and I hope Minister Allen has a plan. In this process, well, earlier you mentioned that anyone cannot predict the exchange rate, but I'm not looking for numbers. In the future, in such situations, will the exchange rate in Korea rise a lot or fall a lot? We have little time left, but to put it simply, in the long term, although short-term predictions are impossible, unfortunately, there is a high possibility that the exchange rate will rise in the long term. This is because Korean companies are now making profits overseas and converting them into Korean won.

If we invest back in the United States, export companies will no longer come to Korea to exchange currency, so in the long run, advanced Korean companies will face increasing pressure for the exchange rate to rise as they go to the United States. I understand. Thank you so much for today's short- to mid-term outlook. Please come out often. So far, it was Dr. Park Jeong-eun of Knowledge Hanbang. Thank you. Thank you.

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