Golden October, when the hard-working people are happy to get a bumper harvest, the beautiful country on the other side of the ocean has also ushered in its "harvest season".
Why do you say that? Because in September, Federal completed the fifth hike of . The rate hike this time was 75 basis points, and 300 basis points have been raised this year, raising the target range of the federal funds rate from 2.25% to 2.5% to 3% to 3.25%, setting the highest record of interest rate intensiveness since 1981.
The United States will raise interest rates. What does it have to do with our hardworking and hardworking Chinese people?
Because at the moment of deepening economic globalization, the United States, the world's largest economy, has every move that affects the nerves of all countries. Moreover, since the Federal Reserve dominates the global monetary market, most countries will regard the Federal Reserve policy as an important consideration when formulating monetary policies.
The result is that after the United States continues to raise interest rates, it triggered a chain demonstration effect. Many countries such as Switzerland , the United Kingdom, Norway , Indonesia, South Africa, Nigeria and Philippines , followed the pace of the United States and were forced to adjust their policies and join the "rate hike competition".
It’s really a person sitting at home, and the pot comes from the sky.
Not only that, the rate hike also brought a series of impacts, especially the impact on exchange rate .
For example, if you deposit $1 million in the United States before the interest rate hike, and only interest rate 10,000 yuan a year, and after the interest rate hike, you can get 20,000 yuan a year, then capitals of countries around the world will exchange the US dollar, causing the US dollar to continue to appreciate, and currencies including the pound, euro, yen, Korean won and RMB will continue to depreciate.
US dollar is valuable, the country's currency has depreciated, and the debt burden of developing countries will inevitably increase, and may even induce a debt crisis and affect the stability of the regime. Not only that, the strong US dollar has caused the price of bulk commodities such as oil, natural gas, , etc., soaring, pushing up the import costs of various countries. In fact, the United States exports inflation to the outside world, and the lives of ordinary people have been affected.
For example, our neighbor Vietnam has been hit by the appreciation of the US dollar. At the end of September, Vietnamese Dong fell for nine consecutive days, and the exchange rate of Vietnamese Dong to the US dollar hit a record low of 23,700 in at least 1993. Vietnam was also listed by international institutions as one of Southeast Asia's countries that most need to consolidate their finances.
Regarding the series of reactions to the US interest rate hike and the appreciation of the US dollar, the World Bank issued the latest warning in September on the "global economy is heading for recession", believing that emerging markets and developing economies will suffer lasting damage from a series of financial crises, and many small and medium-sized economies face great economic pressure after the appreciation of the US dollar.
Oxford Economic Research Institute Gabriel Stern also pointed out that emerging markets are already at the critical point of crisis, and what they need the least is a strong dollar. If the dollar appreciates further, it will be the last straw that broke the camel's back.
is the result that everyone is familiar with, and the United States has started the harvest mode. According to statistics released by international organizations for the first half of this year, international capital has begun to flow into the United States on a large scale, and overseas investors have been buying U.S. securities assets.
is really "Risk in September, harvest in October". This profit is very good.
However, is the fact really as the United States wishes?
The road to hikes interest rates is not a stable profit without losing money. On the contrary, if you are not careful, you may even backfire yourself.
If we don’t learn the United States’ style of slandering China’s collapse every day, let’s see what Americans say. Recently, the Wall Street Journal published an analysis saying that the Federal Reserve's interest rate hike measures will eventually lead to a slowdown in economic growth and may drag down corporate profits. In addition, the market's valuation level has been limited, which means that the US stock market is facing double pressure.
article said that since the beginning of this year, major U.S. stock indexes have continued to fall sharply, with S&P 500 index, Dow Jones Industrial Average and Nasdaq Composite Index both hitting their worst performance in the first nine months since 2002 on September 30. Among them, Dow Jones Index has fallen 21% this year, S&P 500 Index has fallen 25%, and the Nasdaq Composite Index has fallen 32%.
The stock market is facing a collapse. Can capitalists still sit still?
Not only that, over time, the Federal Reserve's sharp interest rate hikes will likely lead to substantial layoffs of American companies and an increase in unemployment rates, and a full-scale economic recession will break out at the end of this year or early next year.
The deafening warning is still in my ears, and the slap in the face in reality comes.
Just in September, with the fifth rate hike, the United States ushered in three general strikes: On September 12, about 15,000 nurses in Minnesota took to the streets to march, demanding wages to increase wages. A few days later, American railway workers held a general strike to increase wages. On September 21, nursing staff from the United States civil medical institutions launched the largest strike in history, fighting for increased treatment.
Three consecutive strikes in the short term are the direct reason for the continued aggressive interest rate hikes in the Federal Reserve, causing prices for housing, medical care, etc. to rise, and people's purchasing power continues to decline, and they are unable to afford other consumption.
Maybe the US government thinks it’s okay, we can print tens of trillions of dollars more. If anyone is short of money, we can just send it to him. As for what to do after printing the money? Anyway, according to the current situation, it is unlikely that Biden and will be re-elected. Let’s keep it now. Whoever becomes president will be dealt with later will be the president.
Then again, why are you willing to take huge risks and also take the path of interest rate hikes to the end?
The United States' interest rate hike is so fierce that curbing high inflation is the main reason.
According to data released by the U.S. Department of Labor, in July this year, the U.S. Consumer Price Index (CPI) increased by 8.5% year-on-year, and 8.3% year-on-year in August, still maintaining a historical high.
According to unwritten regulations, the Federal Reserve believes that the acceptable annual inflation rate is around 1-3%. Although the United States has experienced more than 10% inflation due to policy mistakes in history, except for the 1970s and during wars such as World War II, inflation remained below 5% for most of the time, especially after 1985, the inflation rate in the United States basically remained around 2%.
Comparison of this will make you understand why the United States is so eager to suppress high inflation. After all, the current inflation rate is still a thousand miles away from the Fed's medium- and long-term target.
1 Let me say one more thing, why can rate hikes suppress inflation?
Because interest rate hikes can encourage residents to save more and spend less, and can also curb financing and loans, thereby inhibiting investment and consumption. When investment and consumption are suppressed, it is conducive to the decline in inflation.
suppression of high inflation is just one factor, and the more important factor is for votes.
The US midterm election is imminent, and the public's feelings about rising prices and the degree of recognition of the Biden administration's ability to govern will directly affect the election. Although the Federal Reserve is independent of the US government, it cannot completely ignore "political correctness". The Biden administration will inevitably put pressure on the Federal Reserve through various channels to prompt its attitude to resolutely curb inflation.
On one hand, there is high inflation, and on the other hand, there is an imminent election. No wonder The Federal Reserve raises interest rates so crazy.
It is said that it is said that the fuss is said, and the Fed continues to aggressively raise interest rates, which will not help solve the structural problems of the United States itself, but may instead put the global economy into recession. The United States is committed to promoting globalization, and the result is to harvest global assets and make the world pay for its inflation.
Image from the Internet
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