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For the past decade, the term “carry trade” has been bandied about as if it’s a single, ubiquitous process.  In fact, it’s as far from homogenous as possible, in that such trades can be referred to in terms of both interest rate and currency arbitrage.  Generally speaking, it refers to the act of borrowing at a low cost, and using the proceeds to invest in a higher yielding security.  However, its definition can refer to both simple interest rate transactions and complex currency trades – the most popular of which has been the (now dying) “yen carry trade.”

Yen Carry Trade May Be Dead in the Water

Since 2008, global banks have been “bailed out” by liberal (read: FRAUDULENT) accounting changes…

Wall Street celebrates accounting rule changes designed to hide losses

…and PRINTED MONEY…

Adjusted Monetary Base Graph

…lent indefinitely

FED ZIRP graph

…at ZERO interest rates…

US Federal Funds Rate 2008-2013

…to invest in longer-term, higher yielding bonds; in turn, “monetized” by MORE PRINTED MONEY…

CBOE Interest Rate 6-24-13

…yielding MASSIVE, essentially RISK-FREE gains for banks

IShares Barclays 6-24-13

…while all the public received was a dying economy…

Labor Force Participation Rate

surging inflation…

DELUSIONS OF A FED CHAIRMAN

…and massive debt (note 1971 on the chart, when the gold standard was abandoned)…

10 Year Treasury Note

…the “spread” on this carry trade narrowed; as eventually, what cannot go down MUST go up; and now that the Fed has “bluffed” investors into FEAR mode – by simply hinting its artificial market support may be “tapered” (not stopped, but tapered); the Treasury bond “carry trade” is not only DEAD, but causing MASSIVE losses…

$TNX 6-25-13 1028

…most notably, within the portfolio of the WORLD’S LARGEST BOND OWNER…

Ben Bernanke Capital May P&L: ($115) Billion

As for the “Yen Carry Trade”; its governmentmanipulated, “risk-free” gains are also DEAD – albeit, for different reasons.  In that care, investors (read: banks) borrowed yen for essentially ZERO percent – care of “Abenomics”-style monetizing; using the proceeds to invest in higher yielding currencies like the dollar (i.e., U.S. Treasury bonds).  However, now that Japanese and U.S. Treasury rates are rising – AND the Yen itself plunging, the “Yen Carry Trade” is simply another government fostered DEATH TRAP…

FXY Currency Shares 6-25-13 1042

…that may dramatically worsen in the coming years…

THE REAL YEN BOMB – STARTS NOW!

As you can see, the CRIMINAL banks have been treated to FREE PROFITS for years; you know, their “reward” for destroying hundreds of millions of lives – and setting the stage to destroy billions more in the coming years.  However, now that the interest rate “beach ball” is being forced to the surface, that very same source of profit could well prove their demise; and with them, the ENTIRE GLOBAL FINANCIAL SYSTEM.  But remember, their goal is take you down with them – as “THEY WANT YOU DEAD!” – and thus, you MUST…