If someone says that the exchange rate is a purely economic issue, I think people who hold this view belong to the category of economic observers. The exchange rate is never just an economic issue, sometimes it is also a political or even political issue. There are two types of wars, wars with smoke and wars without smoke.
In the jungle of exchange rates, the world has been lame on one foot for a long time.
Regardless of whether it is a country with a free exchange rate or a country with a controlled exchange rate, the essence of is to a certain extent: the currency of the U.S. dollar linked exchange rate , which is a deformed bet on .
Regardless of whether , the gold standard, , served as an international currency in history, or the pound, which was once the global currency, tells us a simple fact: , the structure of a single currency dominating the world, is a temporary state, and its end will always be in the future. There was a bloody storm around the world.
and The Federal Reserve has continued to release quantitative easing of the U.S. dollar for more than 20 years since Greenspan. Under the current high inflation situation in the United States, especially this inflation is very similar to the U.S. inflation in the 1970s. That inflation led to the dollar-based Settlement Center The collapse of the Bretton Woods monetary system, and this inflation, will it disintegrate the status of the US dollar as the world's major reserve currency ?
Conclusions can never be determined by just one or two days of observation, but there are several conclusions that can be made now:
As the U.S. dollar has already raised interest rates in and the U.S. dollar will raise interest rates even more significantly within the foreseeable time, The U.S. dollar will soon kill several developing countries (capital outflows), U.S. debt will kill a number of Asian real estates (US dollar debt is difficult to refinance), US stocks will kill Americans' consumption and import capabilities (wealth effect) .
Why do you say this, because the US dollar must harvest the world to survive its own crisis , which is determined by the current economic and industrial structure of the United States:
1) Since World War II , the United States has aided post-war Europe The Marshall Plan realized the first relocation of industries. Later, due to the Korean and Vietnam War , the United States realized the second relocation of industries by supporting Japanese industry and economic revival, and then through Japan, South Korea, Taiwan, and mainland China. Due to the industrial "flying geese" transfer model, the domestic real industry in the United States has been relatively hollowed out. As the secondary industry of the real industry, the manufacturing industry accounts for about 15% of the domestic GDP output value in the United States. However, the output value of the tertiary industry, represented by financial and other service industries, accounts for as high as 80%.
In other words: It is difficult for the United States to solve the huge fiscal deficit and foreign debt of the US dollar through its own economic growth in a short period of time.
) The economy of printing dollars at the same time The marginal benefit is already greater than the marginal cost: that is to say, the Federal Reserve, which prints money, will also lose money
According to the first quarter financial report of 2022 released by the Federal Reserve, while the total asset size has risen to nearly 9 trillion US dollars, , its U.S. debt holdings and mortgage-backed securities suffered book losses of more than US$330 billion, equivalent to approximately 2.2 trillion yuan.
In other words, the Fed's asset returns are not enough to cover the Fed's liability costs. The assets of the Federal Reserve are mainly U.S. debt and various mortgage bonds, while the liabilities of the Federal Reserve are the printing and circulation of U.S. dollars and U.S. dollar interest around the world.
When the interest income from U.S. dollar bonds cannot offset the interest income from U.S. dollar deposits, it means that U.S. debt, a world-recognized safe asset, will also lose its halo. It also shows that the amount of U.S. debt is too large.
3) With the economic recession caused by the Federal Reserve's further interest rate hikes, the US dollar, as the world's leading currency, must once again harvest the world. There is only one "Huashan Road" to encourage external US dollars to flow back to the United States (holding US dollar bonds), Only by increasing the U.S. dollar assets held by the Federal Reserve can we provide an asset base for the next round of U.S. dollar easing after inflation is resolved, because printing U.S. dollars requires asset support. without asset support, printing US dollars will only lead to a faster and accelerated loss of international credit for the US dollar. This is also what the United States does not want to see.
And what about this wave of interest rate hikes? Who will be the largest entity harvested by the US dollar? Let's look around the major countries in Europe and Asia:
(1) Before, the media said how bright Vietnam's economy is, how India's economy will surpass it, and after this wave of interest rate hikes, take a look at Vietnam's capital market now. And the Indian capital market:
Compared with the economic size of Vietnam and India, the capital market, which has been rising for many years, is already on the way to decline. At the same time, India has experienced a "three kills" of stocks and bonds. I think the US dollar has been harvested in Asia. Obviously, South Korea and Japan will follow.
Let’s take a look: the Canadian dollar, the Australian dollar, and the British pound, these loyal little brothers of the United States, are all appreciating relative to the U.S. dollar. Even harvesting depends on skin color. Who said the exchange rate is a purely economic issue?
(2) Once the limelight almost crushed the euro, which almost crushed the US dollar. Now, the euro, which has been trapped in the quagmire of the Russia-Ukraine situation and has experienced high inflation, is gradually becoming weaker. Today, 1 euro can be exchanged for 1.04 US dollars, and it is still far away from breaking 1. How far?
Although the euro has been deceived by the US dollar several times before, European countries are still too rich. After all, they still have more than 3 trillion US dollars in reserves. Is the euro the target of being harvested?
(3) Having said so much, let’s look at the RMB trend chart:
The horizontal line in the chart has maintained an exchange rate of 6.83 for two years. That was in 2008. During the financial crisis in 2008, China’s GDP was less than 30% of that of the United States. The United States is one family. You have to listen to what the United States says.
Because our economy foreign trade accounted for 63% of GDP, saving the United States is actually saving demand. As long as they buy it, although our country will only make a small profit, it can solve the problem of employment. so. They cheated our four major industries. Bought tons of junk bonds. But in the end, I had to buy U.S. bonds. Come help them revive their economy.
saw the arrogance of Hillary and back then. The Chinese can only knock out their teeth and swallow it in their stomachs. The arm is broken and hidden in the sleeve.
In this round of Fed interest rate hikes , Japan, as a developed economy, took the lead in starting the downward trend of the yen:
Different from our usual common sense, when the U.S. dollar is raising interest rates, other countries are trying to prevent A sharp outflow of U.S. dollars is generally responded to by raising interest rates, but the Bank of Japan insists on monetary easing and not raising interest rates. As a result, when the U.S. dollar fell, the Japanese yen, a safe-haven asset, fell even more.
This is like the dollar saying: I'm going to rob, but the yen just lying flat: Come on. This is following the American sickle.
Now the RMB is at the historic mark near 6.8. This time we are guests from the United States? Or do you want to be your own master?
