Japan's bond market is breaking and could drag down US stocks and bonds — bad news for anyone with a 401(k), mortgage, or savings.

• Japan ran cheap-money policies for decades and now long-term Japanese bond yields are spiking to levels not seen since the 1990s.
• Japan is one of the biggest foreign holders of US government bonds, so if Japanese banks and pension funds start selling to cover losses at home, US bond and stock markets get hit.
• Every time bond yields spike like this, something breaks — from the 1987 crash to 2008 — and the 40-year trend of falling interest rates looks over.
• Americans look rich on paper from housing and stocks, but most cannot actually use that wealth, while credit card debt, car payments, and grocery bills are crushing regular households.
• Consumer-facing stocks are collapsing to 2008 crisis levels, masked by a handful of big tech names propping up the S&P 500.

Outlook: Money is expected to keep flowing out of paper assets and into real things like energy, copper, silver, uranium, and defense as the old cheap-money system breaks down.