As the saying goes, economic foundation determines the superstructure , and even the United States, as the world overlord, cannot escape the shackles of this law. Since the U.S. inflation reached 7% last December, its highest in nearly 40 years, U.S. inflation has remained high and has climbed to a dangerous level. But even so, U.S. policymakers still stated that they would continue to raise interest rates until they could curb the surge in inflation . As this continues, the Federal Reserve , which has implemented interest rate hikes many times, may become the first choice "scapegoat" for the poor economic governance and supervision of the government.
According to the latest news from Deutsche Welle (DW), with Federal Reserve Director Christopher Waller publicly stated last Thursday (October 6) that he should not expect that the September non-farm employment or inflation data released later this month will change any Federal Reserve official’s idea of a major interest rate hike in November, the Federal Reserve’s “rate rate hike law” has increasingly aroused doubts from the American people and Western media, and regarded this as “drinking poison to quench thirst in a panic way.” Especially as the COVID-19 pandemic has severely reduced the domestic production capacity of the United States and the Biden administration has spent a lot of money on Ukraine's aid, it seems that it is difficult for the United States to get rid of the fate of facing a new round of economic recession.
1. The Federal Reserve "walks a tightrope" to save the US economy, which may lead to a "Volker impact".
As the saying goes, there are repeated and no recurrences, but Americans obviously do not understand this truth. They still violate the "ancestral teachings" of Western economics and raised the benchmark interest rate five times in succession this year. In response, Associated Press (AP) also said righteously in a recent report: "The purpose of the Federal Reserve to do this is to slow down economic growth to a certain level in order to reduce the annual price increase to the target of 2%.
. Fed Director Waller also pointed out in his speech at the University of Kentucky : "The latest forecast of the Federal Reserve for monetary policy is also It is the so-called dot map that the internal debate at the November meeting will revolve around another rate hike of 75 basis points or slowing to 50 basis points. Until the next meeting from November 1 to 2, there will not be too many new data that will cause major adjustments to our views on inflation, employment and other economic fields, which are less than enough to significantly change our view of the current economy. "But compared to their blind optimism, more industry insiders generally believe that this is a repeat of the mistakes in 1979. At that time, Federal Reserve Chairman Paul Volcker (Paul Volcker ) calmed inflation through a series of historic interest rate hikes, but it caused a two-year economic recession, during which the U.S. unemployment rate reached 10%. Since then, the United States has a professional economic name for the extreme interest rate adjustment policy, "The Volcker Shock".
In order to deal with possible emergencies in the future and prepare for the future, the US financial market has adjusted in advance the interest rate hike that may be announced in November. Among them, Bill Zox, portfolio manager of Brandy Global Investment Management, also told Bloomberg News: "I don't think the Fed has yet to stop or turn, because they have to maintain growth and suppress inflation, although doing so is tantamount to walking a tightrope."
As the saying goes, if you knew this, why did you have to be like that? As early as July 28 this year, the Economic Analysis Bureau of the U.S. Department of Commerce released the U.S. GDP data for the second quarter of this year: negative growth of 0.9%. After the US economy experienced a "unexpected" recession in the first quarter of this year, negative GDP growth in the second quarter made the United States in meditation, which means that in an economic sense, the powerful American has entered a "technical recession."In this regard, U.S. Secretary of Finance Janet Yellen (Janet Yellen) and Federal Reserve Chairman Jerome Powell (Jerome Powell ) are still insisting that this is just a "temporary inflation" and intend to whitewash the Biden administration's "rule inaction" in the US economy on the grounds that "technical recession" cannot be equated with "substantial recession".
At the same time, White House is also working hard to downplay GDP figures, and the new US White House spokesman Karine Jean-Pierre also defended Biden in a recent speech: "The current job market is performing strongly, and the unemployment rate has fallen to the level before the outbreak of the epidemic in February 2020. It is not the president that causes inflation, but many external factors, such as the rising global energy prices, supply chain problems caused by China's epidemic prevention, etc. " Obviously, "blaming" China has always been a common trick used by the US government to shirk responsibility. But many times, the historical responsibilities of decision makers are often unavoidable, and this will not be changed just by their few "lies".
2. The US government is obviously "convicted" and they are the culprits who ruin their own economy.
As the saying goes, it is said that you are guilty and cannot survive. The reason why the United States is now trapped in a new round of economic crisis is ultimately due to a series of wrong decisions made by the government in the economic field. This mainly includes the following two points: First, the United States has long held the top of the "pyramid" of the economic supply chain, deliberately shaped other countries in the world as their own "workers", so as to use cheap overseas labor while making more considerable profits. But this has also accelerated the loss of domestic production capacity in the United States to a certain extent, causing the US manufacturing industry to continue to decline. This problem is particularly evident after the COVID-19 pandemic blocked the US industrial supply chain.
Second, in order to avoid economic recession and transfer inflation risks, the United States once again used the "monetary dilution policy" in an attempt to make other countries in the world "pay the bill" for themselves by printing money frantically. But from the current perspective, this common trick of the United States has aroused the vigilance of foreign investors. Some US dollar holders have even begun to sell their holdings of US Treasury bonds and other related assets. More and more countries refuse to accept US Treasury bonds and other assets denominated in US dollars to avoid the risk of being "cut off" by the United States. This eventually led to large-scale unemployment of the working class in the United States, and American consumers were forced to tighten their belts to "pay debts" for the government. According to the latest data released by the U.S. Treasury Department, the federal government's debt scale has now exceeded $31 trillion, quickly approaching the statutory debt ceiling of $31.4 trillion stipulated by the U.S. Congress. As of October 3, the balance of outstanding federal government debt in the United States was approximately $31.1 trillion, of which the public held about $24.3 trillion in debt and the intergovernmental debt was approximately $6.8 trillion, significantly exceeding the GDP of the United States for the whole year of last year.
It is not difficult to borrow and repay, but the United States, an economic powerhouse that was previously rich and wealthy, has now become a "deadbeat" of the international community and a "black household" in the economic field, because the Biden administration has "borrowed international loans until 2050" in one go. With the current economic strength of the United States, it may be difficult to repay this amazing debt. Although the Biden administration has been boasting about efforts to cut deficits, the latest debt data is enough to deeply worry countries around the world. Because at this moment, the US economy, which is both troubled by high inflation and high interest rates, has long been overwhelmed. The Federal Reserve's "interest rate hike law" further prompted the US government's original interest expenditure to increase by $1 trillion in ten years. Even if the debt rate is only one percentage point higher than the Congressional Budget Office's valuation in the next few years, its 2029 debt interest expenditure may exceed U.S. defense spending. Before that, the US Treasury Department will face " technical default " due to the exhaustion of all US$31.4 trillion in loan authorizations, and officially become a "world black household" with high debt.
In this regard, the Peter Peterson Foundation of the United States also made an image metaphor for the debts faced by the country, saying: "If the huge debt owed by the United States is shared to the American people, it is equivalent to the debt of US$236,000 per household and US$93,000 per American. If each American family repays US$1,000 per month, it will take 19 years to pay off all debts." Facts have proved that while the US economic indicators plummeted, President Biden also "dived" with the polls that fell into a trough. As the midterm election on November 8 is approaching, promoting the "China threat theory" to win votes seems to have become the only means Biden and Democrats can think of.
The Federal Reserve's continuous interest rate hikes have caused doubts and may become the "scapegoat" of the US economic recession. But when the Federal Reserve was criticized for its "monetary dilution" and interest rate hike policies, some officials also began to learn from Biden, viewing China as a political tool to divert the attention of people at home and abroad, saying that the Federal Reserve does not have an appropriate mechanism to combat China's "bad" behavior of collecting internal information of the US economy and monetary policy. The U.S. Senate Homeland Security Committee, Republicans, also wrote a report specifically for this, which provides a detailed case study of five people, four of whom are still Fed employees, noting that the Fed's Washington-based council and 12 quasi-independent regional banks have employed thousands of economists from other countries, including China. Although this cooperation method has improved the Federal Reserve's ability to understand the economy and formulate policies, it has also enabled "China to gain influence on the Federal Reserve."
In response, Chinese Foreign Ministry spokesman Zhao Lijian responded at the first time at a regular press conference, saying: "This so-called report is a political lie maliciously fabricated by a few Republican lawmakers, and has no factual basis. Some politicians on the US side may have "China phobia" and "persecution paranoia", and it seems that they are not ill. We have noticed that the Federal Reserve has written to relevant lawmakers on this and expressed doubts and dissatisfaction with the content of the report, which fully demonstrates this report The quality of the so-called report. "At the same time, the current Federal Reserve Chairman Powell also refuted the statement that the Federal Reserve will be "influenced by China", saying: "The Federal Reserve's surveillance and technology are powerful. We know that some external actors are aiming to exploit our vulnerabilities, but our procedures, surveillance and technology are powerful and updated regularly. We respectfully reject any suggestions that are contrary to this." At this point, no matter how the Biden administration and the Federal Reserve use China to shirk responsibility, they will not offset their responsibilities in the trouble of the US economy. Biden's own dismal support rate is probably the best proof.
