American and Japanese Sovereign Debt Is Imploding—Is The Great Taking Close?
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Right now, a quiet storm is raging in the world of sovereign debt. Quiet, because hardly anyone is paying serious attention. At best, the mainstream discourse treats it like a side note—no more urgent than the daily moves in Nvidia or Tesla. But this isn’t equities we’re talking about. This is sovereign debt—the foundational layer of the global financial system. It is the financial plumbing that everything else relies on.
The best way to understand the gravity of this is to simply take a look at Exter’s pyramid. Government bonds sit just above base money—considered the ultimate “safe” asset. In essence, they’re the scaffolding that props up the entire structure of global finance. The whole Ponzi scheme is based upon its integrity remaining intact.
As ridiculous as it might seem to us, sovereign bonds, despite being debt, are held as an asset. And the debt of nations like the US and Japan, is considered pristine collateral. The safe harbor when risk assets come under stress. But what happens when the protection itself starts to melt down? Well, we might be about to find out.
To make sense of what this quiet storm looks like, we need to look at what’s happening right now in the long end of sovereign debt markets. Japan’s 30-year government bond yield just hit the highest level ever recorded. This surge in yields—representing a violent collapse in price—is abrupt, unanticipated, and historic. And what is most shocking is that this is happening as the economy slows—the opposite of what we should be seeing.
But it’s not only in Japan where we’re seeing a debt meltdown. In the US, the 30-year yield is now just a few basis points away from levels not seen since before the financial crisis—nearly two decades ago.
Right now, most analysts are fixated on tariffs, earnings, and stock market resilience. Meanwhile, bond markets—the markets that actually determine the cost of money—are gushing wounds in the global debt Ponzi. And when you consider that Japan and the United States are the two largest sovereign debt markets in the world, what we’re witnessing isn’t just a normal market reaction. It’s a wrecking ball with a trajectory that threatens to tear apart the entire system.
It also has a direct link to the Great Taking, which I will discuss below.
The Scale: A Monumental Market Shift
The significance of these developments is amplified by the sheer size and importance of the bond markets involved:
US Treasury Market: At over $28 trillion in marketable debt, it is the largest, most liquid sovereign bond market on earth. US Treasuries serve as the benchmark risk-free rate, collateral in the global repo system, and pricing foundation for virtually every asset class.
Japanese Government Bond (JGB) Market: Worth approximately ¥1,150 trillion (around $7.5 trillion USD), Japan’s bond market has long been a stable, low-yield anchor. It’s deeply intertwined with the nation’s heavily indebted government and its deflation-sensitive monetary policy.
Japan and America’s debt markets are not just passive instruments; they underpin the global financial architecture. Changes in their valuation or liquidity are transmitted instantly through derivatives markets, funding mechanisms, and currency channels. When the price of bonds collapse in either market, big dominoes can start to fall. Right now, we are seeing both markets fail simultaneously.