i’m sure you’ve all been hearing about the recent moves in the stock market. almost every stock in the US is overvalued almost all the time and stock prices basically never reflect material reality.

the basics of what happened are this:

1. Japan had really now interest rates. So you could borrow money in Yen at like 0.5%
2. To fight inflation, the US raised interest rates very high very fast. So the US would pay you maybe 5% if you bought treasury bills
3. Investment banks would borrow Yen at 0.5%, convert it to US Dollars, then buy treasury bills which paid 5%. When the treasury bills matured, they would then convert the money back to Yen and pay off the interest and be left with 4.5% returns.
4. Japan recently raised interest rates and this made the exchange rate between Yen and US Dollars change. Now the last step of converting back from US Dollars to Yen might not give you enough money to pay back the loan.
5. Investment banks start selling other assets to try and get cash to pay their loans. Tons of stocks are put up for sale so their prices get lower and lower.