Regarding Japan's interest rate hike, many in the market are worried that this could trigger a chain reaction of global arbitrage risks. But the reality is far more complex than imagined.

Ask yourself, can Japan really raise interest rates to the level of the US? The answer is almost impossible. Why? Just look at this set of data: Japan's debt-to-GDP ratio is as high as 260%. What does this mean—if the Japanese people do not eat, drink, live, or consume, and use the entire year's GDP to pay off debt, it would take a full two and a half years to clear it. The debt interest payments as a proportion of GDP are even higher than those of the US.

The specific numbers are even more astonishing: Japan's total debt reaches 1,129 trillion yen (1.129×10¹⁵). On average per Japanese citizen, this is equivalent to owing 9.16 million 8,000 yen, which is about 480,000 RMB. What does this concept mean? It indicates that the Bank of Japan has no room to raise interest rates at all; even raising to 2% would be the limit.

Major global currencies face the same dilemma. The US dollar, Japanese yen, Chinese yuan... Central banks around the world are essentially being forced by debt to move in the same direction: a cycle of rate cuts. This is not a choice for any single central bank but the fate of the entire system.

Because of this, global central banks, major financial institutions, and institutional investors are frantically stockpiling traditional inflation-hedging assets such as gold, silver, platinum, and copper. This not only reflects deep concerns about the current financial system but also suggests that precious metal prices may usher in a new upward cycle. Under the debt storm, asset re-pricing has become inevitable.