Japan’s Declining Yen and U.S. Funding Pressures Trigger Worldwide Liquidity Crunch

Robert Kiyosaki Repeats Market Crash Concerns Amid Global Liquidity Squeeze

Robert Kiyosaki, well-known for his book Rich Dad Poor Dad, has once again voiced his concerns about a looming market downturn. His latest remarks come at a time when global financial markets are under pressure, driven by aggressive fiscal actions in Japan and tightening conditions in U.S. funding markets. These developments are converging to create what analysts describe as a "double squeeze" on worldwide liquidity.

Although Kiyosaki frequently highlights Bitcoin as a safeguard against inflation and the erosion of fiat currencies, the immediate threats to risk assets are rooted in significant changes within the Japanese and American economies.

Japan’s Fiscal Moves and the Yen’s Decline

Japan’s recent economic strategies, which include substantial government spending and rising bond yields, have intensified the yen’s weakness. This has led to the unwinding of popular carry trades—where investors borrow in low-interest currencies like the yen to invest in higher-yielding assets. For years, these trades have been a major source of global liquidity. However, as Japan’s efforts to control yields diminish and inflation rises, the yen’s value is dropping more rapidly. Investors are now forced to adjust their portfolios and reduce leveraged positions, draining liquidity from markets around the world. This shift is particularly challenging for smaller traders and highly leveraged funds.

U.S. Funding Market Strains

At the same time, the U.S. is experiencing funding market tensions reminiscent of the 2019 repo market turmoil. Hedge funds are heavily leveraged in Treasury securities, government spending has increased Treasury General Account balances, and the Treasury is issuing more short-term bills. These factors are restricting the availability of dollars, leading to stress in the repo markets where short-term borrowing and lending occur. The Federal Reserve has limited options to address these strains, as its primary focus remains on controlling inflation. Nevertheless, the risk of a self-perpetuating liquidity crunch is growing.

Impact on Risk Assets and Potential Policy Shifts

The combined effects of these pressures are already being felt across risk assets. Equities, currency markets, and cryptocurrencies are all struggling as investors prepare for tighter financial conditions. Even Bitcoin, which Kiyosaki regularly promotes, is facing challenges as market sentiment turns cautious. However, these same pressures could prompt the Federal Reserve to change course sooner than expected.

If policymakers respond—perhaps by lowering interest rates or injecting liquidity—risk assets could see a rebound, with positive effects potentially lasting into 2026.

Outlook: Navigating a Fragile Global Market

The current environment highlights the vulnerability of global markets amid diverging monetary policies. While Kiyosaki’s warnings may appear dramatic, the underlying issues in Japan and the U.S. reveal deep-seated risks. Investors now face a world where easy liquidity is no longer a given, and the Federal Reserve’s ability to stabilize markets is limited by its dual objectives. As the year unfolds, the direction of financial markets may hinge on whether central banks can adjust their strategies without sparking further instability.