Today, let’s deduce a series of chain reactions caused by out-of-control inflation in European and American countries.
The inflation economy of Europe and the United States
First of all, let’s look at a picture.
021-2022 The United States and EU inflation index changes
html In September, the EU inflation index reached 9.9%, and the EU was forced to raise interest rates by 275 basis points again, raising the main refinancing interest rate , marginal lending interest rates and deposit mechanism interest rates to 2%, 2.25% and 1.50% respectively.
European people attribute the reason for high inflation to the EU's sanctions on Russia after the Russian-Ukraine War. Therefore, more and more people from EU member states took to the streets to demand the lifting of sanctions on Russia.
Under tremendous pressure, recently Netherlands became the first country to take the lead - announcing the lifting of sanctions against Russia. Next Italy freezes all aid to Ukraine, and the European Union for sanctions against Russia has begun to face a situation of falling apart.
So, if the EU lifts sanctions against Russia, can it solve the problem of high inflation?
is a bit difficult.
Why?
Russia-Ukraine war is certainly an important driving force for high inflation in the EU, but it is by no means the only reason for induced high inflation in the EU. As can be seen from the above figure, before the outbreak of the Russian-Ukrainian war in February this year, the inflation index of the EU and the United States had been rising slowly. By February 2022, the EU inflation index had risen from 0.9 in 2021 to a high of 5.9.
In fact, the fundamental reason for high inflation in European and American countries is that after the outbreak of the epidemic, the European and American central banks released too much liquidity to the market. At the same time, due to the impact of the epidemic, the labor participation rate of declined - the decline in production supply and the increase in currency are the fundamental reasons for the steadily rising inflation index. The Russian-Ukrainian war is just a catalyst for accelerating inflation.
The most common method for the problem of inflation is to solve the problem by raising interest rates. The basic logic is this - inflation, in short, there is too much capital on the market. Through raising interest rates, the people can deposit money in the bank, reduce liquidity on the market, and restore balance between currency and commodities in the market. If the logic of
has a basic premise if it is to be established - Bank deposit interest rate should be greater than the inflation index. Otherwise, the people will depreciate the currency in vain by depositing money in the bank, which is very uneconomical and unattractive.
The current U.S. inflation index is 8.3%, and the EU is 9.9%. If inflation is to be reduced, the corresponding bank interest rate should be at least greater than the above figures. However, the current interest rate of the Federal Reserve is 3.75%, and the EU is 1.5%. Compared with the inflation index, the interest rate makes deposits lack basic attractiveness.
So why doesn’t the Federal Reserve and ECB directly raise interest rates to 8.3% or above 9.9%?
The reason is very simple. If such a fierce interest rate hike policy is adopted, corresponds to the enterprise side that the financing cost suddenly increases by more than 10%. Few companies can withstand such a large increase in financing costs, which will inevitably lead to a large number of enterprises closing down and closing —
The final result is that before the people's deposits have time to deposit into the bank, the sudden large-scale reduction of goods on the market has caused inflation to further worsen.
From the above analysis, it can be seen that using interest rate hikes to curb inflation also has side effects. It must consider the company's tolerance and increase it bit by bit to allow the company to have a process of adaptation. While reducing market liquidity, the supply side (enterprise) cannot be collapsed.
The current situation is, The interest rate of interest rate hikes in Europe and the United States is still far from the inflation index, but supply-side production companies are already showing signs that they can't stand it.
The US manufacturing purchasing managers index was 52.8 in August and fell to 50.1 in September. Although it was still barely stable in the expansion range, the shrinking trend was very obvious. If it was not done well in October, it would fall below 50 and enter the shrinking range.
is even worse than the United States. The manufacturing purchasing managers index fell to 48.4 in September, with the EU economic locomotive Germany falling to 47.8, all entering the shrinking range.
The EU inflation index has soared to 9.9%, and the EU deposit interest rate has just increased to 1.5%, and EU companies have entered the shrinking range, with the scale of production decreasing, and the supply of goods decreased -
In other words, the rate hike has not yet achieved any effect in shrinking liquidity, and there is a problem on the supply side. According to this trend, the EU inflation situation will deteriorate. How can this be achieved?
Therefore, controls inflation through interest rate hikes. It is not omnipotent . In history, there are many cases of failure to suppress inflation in interest rate hikes. When interest rate hikes fail to control, prices must be controlled by other powerful means.
Relatively speaking, the situation in the United States is better. After all, the United States has a good economic foundation and a strong foundation. If it really doesn't work, it can declare a state of emergency to control some economic fields.
, while the EU is much worse. Not only is the economic foundation much worse than that of the United States, but also requires an iron fist to govern hyperinflation. European white lefties are popular and they especially like to advocate hypocritical values such as democracy and freedom. These values are huge obstacles to the future iron fist to govern inflation.
Currently inflation is considered a starting point for Europe, the inflation index is still in single digits, If Europe cannot climb out of the quagmire of inflation in 2023, then the inflation in Europe may deteriorate spiral in the next year -
Inflation is increasing, people protest, the government compromises, expands debts and issues subsidies to the people, market liquidity increases, inflation continues to increase, the government collapses, another government changes its way, urges the European Central Bank to implement more severe monetary tightening, a large number of enterprises go bankrupt, supply decreases, inflation continues to increase...
What is the most feared of inflation?
What people fear most is that they form a unified collective expectation of price increases in the future.
Once the public forms a collective expectation of future price increases, the entire society will set off a crazy buying wave, and everyone waves money to sweep away the things they can buy on the market - regardless of whether they need it or not!
Nowadays young people may find the above description incredible, but our generation has really experienced this kind of scene - this is the rush to buy after China's price breakthrough in 1988.
At that time, people in major cities almost bought things when they saw them, grabbing both value-preserving goods and basic consumer goods. Some even bought 200 kilograms of salt and 500 boxes of matches at once, and some even bought more than a dozen pairs of embroidered shoes at home. As for valuable big items, the rush to buy has reached a crazy point -
TVs can hold the image, buy the electric fan when you can transfer, and buy the refrigerator when you have air conditioning. Everyone's demand for goods has reached an extreme fanatical and very irrational level.
If the EU cannot control inflation in 2023, causing inflation to undergo a spiral vicious cycle, EU people will eventually form a collective expectation of price increases, then this trend of buying will also be staged in Europe.
The birth of extreme right The power
If there is an uncontrollable superposition in Europe, causing a rush to buy in the entire social unrest, Then the final result is likely to give rise to extreme right-wing politicians coming to power.
tells you a piece of history.
In 2929, the United States broke out in a serious economic crisis. Soon the economic crisis spread from the United States to Europe. It was completely destroyed. Germany, which had just crawled out of the mud pit of the defeated country, suffered a heavy blow under the impact of this economic crisis.
In 1930, German industrial production fell by 40.6%, and production and trade shrank sharply. By 1931, the German national economy ate up its fixed capital. The industrial crisis caused a monetary credit crisis, and a hyperinflation swept Germany.
The economic crisis combined with hyperinflation caused a large number of companies to go bankrupt, and unemployment and bankruptcy surged. In 1929, the number of unemployed people in Germany was only 2 million, and increased to more than 6 million in 1932, reaching more than 8 million at the most. The unemployment rate soared from 7% in 1928 to 30.8% in 1932.
These unemployed people are desperate and become homeless people, forming a huge class of homeless people. These vagrants "are like broken boats, drifting everywhere." Most of them flowed into the vortex of the Nazi movement and became the main social foundation of German fascism.
Thousands of working people in Germany and petty bourgeoisie , have no way to live in the crisis, fall into the abyss of pain and despair, and have experienced unprecedented blows, and the social psychology has undergone significant changes:
generally feels that they are abandoned by society, and are dissatisfied, disappointed, fear, anxiety, and pessimism about everything around them, and are shrouded in a "desperate" and "homeless" mood. People have begun to advocate irrational emotions, desires, and wills, and the whole society has a dual crisis of spiritual and material.
Hitler and the Nazi organizations took advantage of this social psychology at that time to carry out demagogue propaganda, promising to open up a way out for national socialism from the difficulties of crisis. We promised to revive the German economy after taking office, eliminate the economic crisis and unemployment, and ensure that everyone has jobs and bread.
The serious consequences of the economic crisis not only caused great regression and destruction of productivity, but also exacerbated the political crisis in Germany. The government of frequently changed governments, and the heads of government were constantly rotating like a lantern. In just three years, the Weimar Republic government replaced cabinet four times. The cabinet had thought of countless ways, and various plans took turns to trial and error -
1 or issued huge loans and subsidies to large enterprises, to keep the enterprises from going bankrupt, reduce workers' wages, and reduce relief funds in large quantities to reduce the liquidity in the market; or raise interest rates and taxes, stop cutting workers' wages and restore subsidies to the people, etc. But it is useless. The economy continues to deteriorate, inflation continues to rise, and government currency becomes waste paper.
This story happened in Germany during the economic crisis. A man used a flatbed truck to push a truck full of money to buy food on the street, but he encountered a robbery. Do you think the robber was robbing money? no! After the robber succeeded, he threw the money from the flatbed car directly on the street and dragged the flatbed car away.
In the economic crisis, the Nazi Party's forces have achieved unprecedented development. At the end of 1929, its party members reached 178,000, and by the end of 1930, it rose to 380,000. In the election on September 14, 1930, it actually won 107 seats, and the Nazi Party became the second largest party.
In the election on July 31, 932, the Nazi Party won a great victory and won 230 seats in Congress. The Nazi Party has become the first largest party in Congress.
1933 Hitler served as the German Chancellor, and Pandora's box was opened.
From the cases of the Nazis coming to power, it can be seen that when the economic crisis and inflation cause serious livelihood problems for a large number of people, the social psychology is easy to become anxious and pessimistic.
In this state, the people are easily accepting extreme right-wing ideas and begin to desire and rely on power and political strongmen - This is the social basis for the birth of the Nazi dictatorship.
Secondly, in the case of economic deterioration, the Western national electoral system often leads to further deterioration of the situation. When the people are seriously dissatisfied with the current government, the Western national electoral system will give birth to an unsociable majority. The usual result is the rise of the extreme right forces. After the extreme right forces take power, they will completely deny the past political system and transform the country into a dictatorial regime.
or above is the lesson of Weimar Republic being replaced by the Nazi regime.
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The worst deduction
In the next year, if Europe falls into a spiral hyperinflation cycle, then severe social turmoil and political turmoil will be inevitable. However, European countries have been prosperous and comfortable for too long, so the entire Europe cannot get rid of the spiral hyperinflation cycle based on the existing political framework and public opinion.
people are the most realistic. The beating of life will cause drastic changes in the state of thought. When the European people are completely disappointed with the current government, then the mainstream European ideology white left will quickly change to white right - extreme, conservative, radical nationalism.
Then the European state regime that now boasts democracy and freedom will quickly transform into a powerful and dictatorial government. In the end, Nazi thought rekindled and right-wing dictatorial political strongmen came to power.
Don’t think that the above deduction is alarmist, there are such cases in real life.
014 After the Crimean crisis, the eastern part of Ukraine was in war for a long time, and then the national economy plummeted, and people's livelihoods were seriously problematic.
In this context, Nazi thought developed rapidly in Ukraine. The far-right organizations not only swept the society, but also began to infiltrate the government and the army. They not only gradually grasped multiple key departments of the Ukrainian government, but even controlled the grassroots command power of a considerable number of Ukrainian troops.
The direct fuse of the outbreak of the Russian-Ukrainian war - it was the war induced by the Ukrainian Nazi organization for a long time against the Russian tribes in eastern Ukrainians.
To be honest, if I were a Russian, I would find it unbearable to see the organized large-scale rape and massacre of Russians in eastern Ukraine, especially women and children. This is also the fundamental reason why Putin won more than 70% of the support rate in China after the outbreak of the Russian-Ukrainian war.
Back to the previous topic, if the whole of Europe changes color on a large scale, is infiltrated by extreme right-wing organizations, and becomes a powerful government under extreme right-wing political strongmen, then the consequences will be terrible.
After Hitler came to power, the first thing he wanted to do was to divert social conflicts and find a punching bag for the German people. This punching bag must have several characteristics.
First, has a social psychological foundation . This nation has a bad impression of the German people;
Second, This nation is relatively wealthy . Pillaging the nation can get rich material returns;
Third, This nation is relatively weak , plundering the nation will not trigger fierce resistance.
Finally, Hitler chose the Jewish nation, which perfectly satisfies the above three major characteristics.
If European extreme right-wing forces come to power, they will also face the problem of continuing to divert social contradictions. So, which ethnic group will these extreme right-wing governments choose as the punching bag?
Compared with the above three characteristics, Chinese is the best choice.
First, because Western media has long deceived and misleading propaganda, more than 70% of ethnic groups, including Europe and the United States, are very unfriendly to Chinese people;
Second, according to data revealed by Jin Canrong , the Chinese government currently has up to $8 trillion in assets overseas, while Chinese enterprises and private enterprises also hold up to $8 trillion in assets. Even Chinese immigrants overseas are relatively wealthy;
Third, Chinese immigrants overseas have the lowest political status in Western countries and basically have no say.
The only difference between Chinese immigrants overseas today and the Jewish nation before World War II is that China is now strong and is no longer the object of slaughter.
However, China does not recognize dual nationality . That is to say, If Western world set off a strong anti-China trend, the Chinese government may be able to protect its own country and its people's property, but it feels a bit out of reach for Chinese people who have immigrated.
Therefore, Chinese immigrants overseas may have to abandon their unchanging fantasies of peace in the future and unite to form some mutual aid organizations. On the one hand, they strive for political influence, and on the other hand, if the worst situation in Europe and the United States in the future, they must also strengthen home protection measures.
Of course, Western countries will set off an anti-China trend, which will definitely greatly deteriorate relations with China. However, the Western extreme right-wing regime will still make a big question mark on how much political considerations it will make with China's relations (including economic and trade relations).
After Europe changes color, the United States will also become right-wing, because there are problems in Europe. The United States has, but the United States has a strong foundation and can withstand the tossing.
However, the 2024 US presidential election is likely to be Republican victory. From this perspective, if the economic situation worsens, Trump is very likely to win, and Trump after being elected is not the Trump in the past, because his basic plate has become more right-wing, more conservative and more fanatical. This change in the basic plate will push Trump into a more dangerous figure.
U.S. Far-right wing forces have always had the desire to hard decouple from China, but in the past, due to various constraints, they could only promote soft decouple from China in some technology fields.
However, if Europe changes color and the United States far-right forces dominate, then the United States and the European Union will promote the hard decoupling of the entire Western world from China will become a high probability event.
The United States will first forcibly detonate the mine of Taiwan. When mainland China has to initiate cross-strait reunification, the United States will jointly impose the most severe sanctions on China with Europe - well, it is actually another way to decouple.
Then, by setting off a wave of anti-China in the Western world, it mobilized the entire Western people to a total public opinion mobilization, so as to hedge against the pain caused by hard decoupling of from China.
Dinghai Shenzhen
Peace and development were the themes in the past. This theme has lasted for decades and makes everyone feel that a peaceful and stable external environment is natural. However, the major changes we are facing that have not seen in a century, the global political and economic order dominated by the United States is collapsed and a new order has not yet been established.
So for a long time to come, the theme of peace and development will evolve into security and development - security comes first and development comes later.
Only by practicing internal strength and building a solid safety dam can we face the test of the stormy waves in the future.
or above is a deduction of the continued deterioration of inflation in European and American countries. However, I still hope that European and American countries can be more successful in the future and not make the economy messy. I hope that the world can return to the theme of peace and development.
00 years ago, the collapse of the old global order triggered two World Wars. Today, a hundred years later, the biggest change in the world is the rise of China. China is the largest stabilizer to maintain global stability and peace, and is the stabilizing needle that has the ability to protect the regional Hengqi in the era of the global chaos.
From the Belt and Road Initiative, regional economic cooperation to a community with a shared future for mankind, these ideas that nurture Eastern wisdom can hedge a considerable part of the world's hostility. We plan the worst and have the best expectations. We hope that the above deduction will not happen in the future.
