01
US inflation has reached a new high
This year is really a magical year.
has always followed the decline but not the rise of A shares . Last time, the Federal Reserve announced a interest rate hike of 575 basis points, which put global stock markets under pressure, but A-shares stubbornly emerged from the independent market.
The Shanghai Composite Index stands at 3,300 points. It can stand out in the depression of the global market, which fully demonstrates that Chinese assets are recognized by global investors.
On the other hand, and US stocks fell sharply, so much that they lost their "backbone". From the highest point of 36,000 to the current level of 30,000, the Dow Jones Industrial Average has fallen by almost 16%, and people are everywhere.
However, the exact opposite of the plummeting U.S. stock index is U.S. inflation. The U.S. stock and bond markets have suffered a "double kill" of stocks and bonds, and core assets have plummeted. However, the inflation rate has picked up the baton, soaring all the way and remaining high.
The U.S. inflation data for June came out yesterday. As we expected, the U.S. dollar raised interest rates three times this year (25 basis points in March, 50 basis points in May, and 75 basis points in June). Inflation, on the contrary, inflation in the United States has accelerated.
broke records again and again, soaring from 8.6% in May to 9.1%, being the largest inflation since 1981.
In the United States, the 9.1% rate in June was not only much higher than the 8.6% in May, but also much higher than the market expectation of 8.8%.
The CPI increased by 1.3% month-on-month, the highest since 2005, and increased by 9.1% year-on-year, the largest increase since the end of 1981.
is not the hottest, only hotter!
After the release of US inflation data, the global capital market was frightened.
The three major U.S. stock index futures dived , Nasdaq futures fell 1.56%, S&P 500 index futures fell more than 1%.
The U.S. dollar index rose 70 points to above the 108.5 level.
Other currencies collectively fell. The pound against the U.S. dollar and the euro against the U.S. dollar both fell by about 60 points, and the U.S. dollar rose by nearly 50 points against the Japanese yen.
The three major U.S. stock indexes collectively opened lower, with the Dow Jones Industrial Average falling 1.17%, the Nasdaq Composite Index falling 1.85%, and the S&P 500 Index falling 1.41%.
European stock markets also fell in response.
Germany's DAX index and France's CAC40 index once fell by more than 2%, the UK's FTSE 100 index fell by nearly 1.5%, and the Spanish and Italian stock markets both performed sluggishly.
Of course, the American people are suffering the most.
The first is currency depreciation. You must know that the inflation rate in the United States was as high as 5.4% in June last year. If you held US$1 million at the beginning of last year, 's current purchasing power has shrunk by 14.5%.
Followed by soaring prices, Goods prices have generally risen across the United States, with gasoline prices rising 11.2% from last month, far outpacing other categories, although gasoline prices have been falling in recent weeks. Prices for energy services, including electricity and natural gas, rose 3.5%, the biggest increase since 2006.
Food costs rose 10.4% year-on-year, the largest increase since 1981. Primary residential rents rose 0.8% from May, the largest monthly increase since 1986.
Real wages fell for the 15th consecutive month.
We often complain about "only raising prices but not wages". This time it is Americans' turn to enjoy it.
02
fed? Or is it Biden and that are to blame?
It is easy for everyone to simply attribute the current inflation in the United States to excessive currency issuance. The statement
is neither right nor wrong. To be precise, it is incomplete.
In history, there have been cases of inflation and even economic crisis due to excessive currency issuance.
Once upon a time, the French government printed money like crazy to pay off its national debt, which led to the famous " Mississippi Bubble ".
After the Mississippi bubble burst, the French economy also fell into depression. For more than a century, when talking about banks in France, people's faces inevitably showed doubts.
Because there is too much money, there are only so many things, prices will rise, and the money will no longer be valuable.
However, the inflation in the United States this time is not only due to the crazy release of water in the early stage. If it is just printing money, the increase in the money supply in the United States in the past two years will not be able to set off such a large-scale inflation.
Look at the essence through the phenomenon. Inflation is due to more money, but not more goods on the market.
If there is an increase of 10 yuan, and there are 10 more yuan of goods on the market, then inflation will not occur.
But there is another situation. What about products that cost 10 yuan more but also cost 10 yuan less? Then inflation will be even worse!
I remember that in September last year, "American KFC has no chicken" was a hot search on Weibo.
KFC in the United States said:
Due to insufficient supply of boneless chicken, it has decided to temporarily cancel the advertising of this product.
In addition, crab meat in the United States has increased nearly 6 times! The average price of eggs, milk, snacks and other household foods has increased significantly.
Even pearl milk tea cannot escape the fate of shortage.
The pearl raw materials in European and American milk tea are almost entirely imported from Asia. However, due to transportation delays, the supply of pearl milk tea in the United States has been tight in the past six months.
KFC has no chicken to fry, bubble milk tea has no pearls... These are just the tip of the iceberg of the US supply chain crisis.
According to common sense, the United States undoubtedly has the most powerful agricultural production capacity in the world. It is not a problem for agriculture to operate at full capacity to feed 10 billion people.
Advanced agricultural technology and the world's unique endowment of agricultural factors are the result of acquired efforts and God's reward.
As the pinnacle of human material life, theoretically there is no large-scale material shortage in the United States.
has a little knowledge, and the emergence of the "no chicken to fry" phenomenon can basically be concluded that is a problem with , the social operating mechanism.
The modern agriculture and food industry in the United States - is a powerful, complex, and fragile system.
When everything is normal, this system operates very efficiently. Even the killing of pigs is a mechanized operation. After being electrocuted, they are put on the assembly line conveyor belt, the heads and limbs are cut, and then they are turned into whole pieces of pork.
Throw away all the heads, feet, and internal organs, leaving only the meat. You can be as extravagant as you want, but the quantity is enough.
The factory decomposes the sea fish, cuts it twice on the left and right, and only takes out the two fattest pieces of meat, discarding most of the rest.
However, once a nationwide vicious public incident occurs, this seemingly indestructible system will become very fragile.
Such a powerful industry must require mature and complete supporting facilities. It requires large-scale farms, efficient processing plants, refrigerated warehouses, cold chain transportation , developed transportation, mature and reliable supply chains, and a modern and standardized catering industry ……etc.
As long as there is a problem in one of the middle links, it will be a crisis for the entire industry, because every element is indispensable!
The epidemic has come, and the four major meat processing companies in the United States have been infected one by one. Related industries have either closed down at home, or been directly "optimized".
Before the factory could not open, production came to a standstill. Now the situation of resumption of work is not good, and the production capacity cannot return to the previous situation.
After pigs and chickens were raised, a large number of them were slaughtered and abandoned due to transportation difficulties. Because they missed the slaughter period and grew too big to be put on the machine assembly line, farmers could only destroy them on the spot.
This is only a problem in the American food supply chain, and this is only a domestic situation in the United States.
You must know that the system played by the United States is called "global industrial chain" :
with East Asia and South Asia as the production base of cheap goods, North America as the technology research and development center, Europe, Japan and South Korea as the supplier of high-end goods, and the Middle East , Australia, Africa, and South America are raw material suppliers, and then the whole world is the product dumping market.
This gameplay is really advanced - takes the strengths of each country and uses global resources to become the hegemony of the United States .
However, the global industrial chain also has certain vulnerabilities. It may not necessarily be destroyed by military conflicts, but it will definitely be defeated by the epidemic. Play them all.
So you see now, no matter how the Federal Reserve raises interest rates, inflation has no intention of coming down. Not only is it getting higher month by month, it has also repeatedly exceeded market expectations.
Is the reason just monetary policy? The fundamental reason is that the supply chain has not been fully restored and the epidemic has not really ended.
03
The Great Recession in developed industrial countries
is now of the same nature as the "Three World Wars". A large number of people have died from the new crown epidemic, and it has triggered a global economic recession.
" world war " has already started quietly, but in a way that is less easy to detect.
In addition, the war between Russia and Ukraine triggered multiple sanctions against Russia by the United States and its allies. This not only impacted the global energy market and food market, but also promoted the rapid rise in global commodity prices. Leading to rapid rise in energy, grain, and food prices.
is equivalent to pouring another barrel of gasoline on the global economy surrounded by raging fire.
By sorting through the import and export data of the world's major economies in May, we can find that the United States, France, the United Kingdom, South Korea, India and other countries all have trade deficits. Even the emerging processing trade country Vietnam, which has attracted much attention, also experienced a trade deficit of 1.73 billion in May. US dollar trade deficit.
As a traditional industrial power and exporting country, Germany has suffered its first trade deficit in more than 30 years.
On July 4, data released by the German Federal Statistics Office showed that after adjusting for working days and seasons, Germany’s foreign trade deficit in May was 1 billion euros.
This is the first time Germany has had a trade deficit since 1991.
The situation in Japan, another traditional trading power, is even worse.
Japan’s Ministry of Finance released a flash report on trade statistics for May. The flash report showed that Japan’s trade data for that month continued to show a deficit, with the deficit reaching 2,384.7 billion yen. This figure is the second highest figure since records began in 1979. .
This is the 10th consecutive month of deficit for the Japanese economy.
Major manufacturing countries such as Germany, Japan, and South Korea have turned into deficits one after another, which is extremely rare in the economic history of recent decades.
Some time ago, Sri Lanka became the first country to go bankrupt in this tightening cycle, and also the first country in the world to suffer a "thunder" after the epidemic.
As the crisis deepens, Europe's Greece and Italy may also be walking a tightrope.
On the other hand, China’s foreign trade has staged a major reversal.
data from the General Administration of Customs shows:
my country’s total import and export value of goods trade in the first half of this year was 19.8 trillion yuan, a year-on-year increase of 9.4%. Among them, exports were 11.14 trillion yuan, an increase of 13.2%.
5. Foreign trade growth picked up significantly in June. In May, my country's foreign trade import and export increased by 9.5% year-on-year, 9.4 percentage points faster than in April, and the growth rate in June further increased to 14.3%.
China has become the “strongest rebel” in the new round of epidemic.
This also fully illustrates two issues:
First, the large-scale and complete range of manufacturing clusters are the trump card of China’s comprehensive national strength and are the core competitiveness in the true sense.
Second, the epidemic must be controlled. If foreign countries were like China and put it out at the beginning, how could there be so many troubles later?
However, this also provides an idea for the United States to solve inflation: To extricate itself from the economic crisis, it still needs to rely on China's huge industrial system and production capacity.
You must know that money printing in other major economies is no longer a matter of a day or two. Since the subprime mortgage crisis in 2008, the United States has launched four rounds of quantitative easing. The Fed's asset-liability ratio has climbed from US$800 billion to more than US$4 trillion before the epidemic, a five-fold increase. In just a few years, the currency has been issued five times more. The crazy behavior is really shocking.
Not only the United States, but also the central banks of major economies around the world, all without exception chose to release water to save the economy after the subprime mortgage crisis.
is engaged in science and research, and the development of "nuclear-powered" banknote printing machines is faster than the last.
For more than ten years, we have been working non-stop, staying up all night, opening the floodgates and releasing water.
However, what is surprising is that global inflation did not come as expected after countries started using nuclear-powered money printing machines.
What is the reason?
This is because after China's accession to the WTO, for nearly 20 years, it has provided goods to the world with "cheap" RMB and "cheap" Made in China.
China is releasing "deflation" to the world, almost using to offset the "inflation" released by various central banks.
Many people will think that the reason why inflation did not occur in the United States after quantitative easing was because the world shared liquidity. This is not the case! is largely made in China, which washes away the impact of inflation.
The essence of inflation is that goods do not increase, but money increases, causing prices to eventually rise. If enough goods are produced on the market, there will be no such thing as currency devaluation and price increases.
Now that the United States wants to get over the impact of inflation, will it be useful to just rely on the Federal Reserve to continue to raise interest rates and shrink its balance sheet?
They must make the global industrial chain work so that the CPI, which is soaring every month, can be reduced. In short:
It depends on whether the United States is willing to continue to let China expand its production capacity and industrial production capacity.
However, in today’s deteriorating international environment and the delicate relationship between China and the United States, it is highly likely that this will not be possible.
