Unlike the past, where economics dictated a strong yen despite loose policy, markets are now driven by politics. The Japanese government is allowing the yen to devalue to manage its debt, even as interest rates rise. This weakens the yen, strengthens the dollar, and could fuel a US equity boom via carry trades.

The Ministry of Economy, Trade and Industry (METI) categorizes sectors to apply targeted policies. 'Green' areas have lost supply chain autonomy and require diversification. 'Blue' areas possess technological superiority and need control (e.g., export controls). 'Red' areas face disruptive innovation and demand proactive strategic investment.

Promises of foreign investment to build factories in the US are not funded by new money. Foreign entities sell their large holdings of US Treasury bonds to raise the cash for the real investment, creating upward pressure on interest rates.

The U.S. industrial strategy isn't pure "reshoring" but "friend-shoring." The goal is to build a global supply chain that excludes China, not to bring all production home. This creates massive investment opportunities in allied countries like Mexico, Vietnam, Korea, and Japan, which are beneficiaries of this geopolitical realignment.

Buffett's investment in Japanese trading houses was more than a value play; it was a masterclass in financial engineering. He financed the purchases by issuing yen-denominated debt at a near-zero interest rate. This created a carry trade where the substantial dividend income became almost pure, risk-mitigated profit.

Buffett financed his massive investment in Japanese trading houses by borrowing in Yen at near-zero interest rates. This created a 'positive carry' where the high dividend yields (6-9%) paid for the costless debt, generating hundreds of millions in free cash flow annually. The yen-denominated debt also perfectly hedged the currency risk of the yen-denominated assets.

The Trans-Pacific Partnership (TPP) successfully incentivized countries like Peru to raise labor standards. The carrot wasn't better access to the U.S. market, which they already had, but new access to Japan's historically closed market, which the U.S. helped negotiate.

Japan's biotech ecosystem is evolving with a new, successful model for creating cross-border companies. US venture firms are partnering with Japanese academia, combining American management expertise and capital with Japan's strong science and cost-effective R&D to build globally competitive biotechs from their inception.

A common question is "who will buy all the debt?" The answer is that money borrowed and spent by a company on a project becomes income and then savings for others. These new savings are then used to buy the debt, completing a self-funding circular flow.