This is one of the funniest pieces of elite macroeconomic theater ever staged. Japan spends 15 years pinning interest rates to the basement, monetizing government debt, crushing domestic savers, exporting capital, and turning the yen into the global carry trade’s complimentary drink coupon. Then the yen collapses. Washington looks at the smoking crater and declares the currency “substantially undervalued,” as though a rogue gang of hedge funds broke into Tokyo at night and secretly installed Abenomics. Now America may help Japan buy yen, while offering Japan a larger FIMA repo facility so Tokyo can raise dollars against its Treasury holdings without dumping those Treasuries into the market. Read the plumbing carefully. Japan needs dollars to defend the yen. Japan owns a mountain of U.S. government debt. Selling that debt could push American yields higher. Higher American yields would increase U.S. financing costs, tighten global liquidity, strengthen the dollar, and place even more pressure on the yen. So the Federal Reserve provides a facility allowing Japan to borrow dollars against the Treasuries, then sell those dollars to buy yen, thereby protecting the price of the Treasuries that collateralize the dollar loan used to defend the currency damaged by the rate differential created by those same Treasury yields. This is an absolute circus.