Charlie Garcia

Sat, Jun 7, 2025, 8:36 AM8 min read

Over the past 40 years, Japan has helped bankroll Americans’ lifestyle while its own economy sank into decades of stagnation. Now the tab’s due, and it might cost the U.S. a fortune.

The Japanese have been floating America’s boat since the mid-1980s. Not out of kindness. Not out of stupidity. But because of a deal so sweet that nobody wanted to talk about it.

• ‘He failed in his fiduciary duty’: My brother liquidated our mother’s 401(k) for her nursing home. He claimed the rest.

• ‘The situation is extreme’: I’m 65 and leaving my estate to only one grandchild. Can the others contest my will?

• My new husband gave me a contract and told me to ‘sign here’ — but I refused. It was the best decision of my life.

• ‘I’m not wildly wealthy, but I’ve done well’: I’m 79 and have $3 million in assets. Should I set up 529 plans for my grandkids?

• My daughter’s boyfriend, a guest in my home, offered to powerwash part of my house — then demanded money

Now the deal’s going bad. Japan’s drowning in debt, its politics are in chaos and it needs its money back. And when your biggest lender starts heading for the exits, it’s time to pay attention.

Japan holds $1.1 trillion in U.S. Treasury bonds. It’s got more U.S. paper than any other country. But unlike China — the second-largest Treasury holders — Japan has never complained about it. Japan just kept buying, kept lending, kept quiet.

But here’s the thing about quiet money — when it stops being quiet, you’ve got problems.

Look at Japan today: government debt at 235% of GDP — that’s like owing your annual salary times 2.3 to Visa. Prime Minister Shigeru Ishiba hanging on to power like a cat on a screen door, with 21% approval after a series of fundraising scandals and economic missteps. You know what happens when your biggest lender is both broke and paralyzed? America’s reliable ATM is about to display “INSUFFICIENT FUNDS.”

Picture this: 1945. World War II is over. America’s got the guns, Japan’s got the ruins. The U.S. cut a deal — military protection for economic cooperation. But the real magic trick came later.

For the next 40 years, Japan rebuilt itself, accumulating dollars and using them for its own development. Japan went from making tin toys to Toyotas JP:7203 TM, from cheap radios to world-class electronics. By 1985, they’d completed their first miracle.

Then came the second act. The Plaza Accord of 1985 — five finance ministers in a New York hotel room deciding to dismantle Japan’s export machine. Japan signed on too, thinking they could manage it.