Is Washington’s rescue of the yen an act of friendship, or a sign that the dollar system itself is beginning to crack? I am joined by economist Michael Hudson to unpack the US intervention to save a collapsing yen and why the official story of “solidarity” masks a far more desperate calculation. Michael explains how the yen’s weakness threatens the carry trade and capital inflows the dollar system depends on, why the US chose to sell euros rather than dollars to defend it, and how even long-time dollar bulls like Barry Eichengreen now admit the intervention exposes Washington’s growing reluctance to let foreign central banks touch their own reserves. We examine the mounting evidence of dollar fatigue, from the ECB now holding more gold than dollars, to the flood of new Treasury issuance the market must somehow absorb, to a Federal Reserve whose credibility is increasingly in question. Michael argues this is not simply a story about Trump’s erratic instincts, but about a financial order that is running out of options.

00:00 – Introduction 01:15 – The Carry Trade Explained 05:06 – Bessent’s Swap Deal: Averting a Treasury Sell-Off 09:46 – Who Really Funds the Dollar System 13:06 – Dwindling Inflows: Gold, AI, and Remilitarization 19:22 – The Dollar System as a Ponzi Scheme 26:56 – Balance of Payments, Revisited 32:08 – Bessent’s Swap Playbook for US Allies 39:33 – Can the AI Bubble Save the Dollar? 43:03 – The Fed’s Impossible Choice 50:07 – Japan’s Dilemma: Intervene or Raise Rates Support me on Patreon ►   / radhikadesai   TikTok ►   / raddesai   X ► https://x.com/RadDesai Substack ► https://substack.com/@radicaldesai Website ► https://www.RadhikaDesai.com Edited by gena.sm@genasmirnovs.com