September 21, Fed Chairman Powell announced that the Fed hike rate hikes for the third consecutive time hike hike 75 basis points. After this news came out, the market was panicked. The US stock market responded directly and fell across the board. The Fed's fierce interest rate hike did surprise the market. No one expected a 75 basis point rate hike. According to previous market forecasts, the Fed raised interest rates up to 20 to 30 basis points. Unexpectedly, Powell put a dose of strong medicine, which really scared the market.
First of all, the Fed's interest rate hike affects the global economy, and this behavior has gains and losses for the United States.
first. From the perspective of the US profit, the purpose of each interest rate hike or reduction of is the same. The Fed's one plus one subtraction behavior always revolves around the national interests of the United States. This means that, as the de facto central bank in the United States, its every move is still to serve the capital interests of the United States. This rate hike that made the outside world amazes is actually due to the national interests of the United States. This is also the main line of the Federal Reserve's interest rate hike and the reduction of interest rates. This is the national interests of the United States. From this main line and principle, we can see that as the chairman of the Federal Reserve, Powell announced the third rate hike of the Federal Reserve, which directly increased to 75 basis points, mainly to solve two major problems.
1. The United States is currently facing the highest inflation in more than 40 years. Although the United States Treasury Secretary Yellen , US Secretary of Commerce Raymondo and US White House Trade Representative Dai Qi have made considerable efforts to solve the inflation problem, the United States has always adhered to the principle of harming neighbors and has great hostility towards China. This has led to the global supply chain being in a very unstable state, which has led to numerous obstacles to global goods entering the United States. A typical example is that the United States imposed retaliatory tariffs on China directly caused the cost of commodity production and consumer prices to rise, and the price eventually transferred to the Americans themselves.
The United States itself abandons the principle of free trade and sets up many tariff barriers on goods from other countries, especially China. This is also the main factor in U.S. inflation in recent years. If the United States can let go of its arms, trade with China steadily, and allow China to provide the United States with a large number of affordable and affordable goods, how could the U.S. inflation reach its current high level? Unfortunately, decision makers in the United States are completely blinded by the principle of "hate of China". While increasing tariffs and punishments on China, the United States can only strengthen its dollar trend if it wants to solve its inflation problem. Therefore, the main purpose of the Fed's third continuous interest rate hike by 75 basis points is to solve the domestic inflation problem through the strengthening of the US dollar.
Second, as chairman of the Federal Reserve, Powell also hopes to solve the deep economic problems of the United States. The inflation problem is just a manifestation of the US economic problem. The structural problems that are truly hidden in the United States are the hollowing out of American manufacturing and the financialization and securitization of economic life. As long as the United States is deeply involved in the global market and relies on the global supply chain and production chain, as long as the Federal Reserve's currency, the US dollar, can still become the main currency for trade in various countries and regions around the world without any obstacles, the Federal Reserve will have a strong leverage .
The Federal Reserve can harvest the wealth of other economies around the world through interest rate hikes and interest rate cuts, which can break down the east and fill the west walls, and inject vitality into the US economy. This has also become the natural choice of the Federal Reserve. Therefore, the Fed's interest rate hike has risen directly to 75 basis points. At the same time, the Fed's interest rate hike in 2022 has reached 300 basis points. This has not been seen in previous history, which can only show that the US economy has indeed reached the point of internal and external troubles. Under the blow of the Sino-US trade war and the COVID-19 pandemic, although deep-seated problems in the US economy will not be worse, they have seriously affected the strong competitiveness of the US economy. In this case, the United States, which is good at financial operations, will naturally wave the scythe of hike interest rates and restore the US economy by digging warehouses and replenishing the road.
Third, the Federal Reserve directly announced a 75 basis point rate hike this time and its political purpose are to prepare for the midterm elections between Biden and the Democratic Party. American politics has been developed to this day, and the outside world has also seen it very clearly. Although it is said that democracy and freedom are spoken of, the United States also believes that everyone can realize the American dream through struggle. No one can deny that the United States is a golden and yuan society and a capital empire. As long as you have money, you can enjoy the treatment of superiors wherever you go. As long as you have money, you can become an elite in the upper class no matter what your skin color is. As the chairman of the Federal Reserve, Powell and the shareholders of the Federal Reserve have basically maintained a high degree of consistency with President Biden. In order to cope with the challenges of anti-establishment political forces such as Trump , it is necessary to unite and improve the purchasing power of the US dollar through appropriate interest rate hikes. This is also the reason why the Federal Reserve suddenly raises interest rates. Politics and economy are very common in the revolving door of the United States, and everyone regards it as a reasonable phenomenon.
Secondly, the Fed's crazy interest rate hike will also have an impact on the global economic order.
First, the Fed's interest rate hike will definitely make it worse for the global economy, which is currently suffering from the new crown epidemic, and will inevitably exacerbate the economic problems of some countries. When Americans waved the sickle of the god of death to harvest the "leek", they can't help but recall the financial crisis in 1997 and the global financial crisis in 2008. Americans have really made a move to realize their own interests. Under the American Grim Reaper's sickle, friends, allies, and ordinary partners, as long as they are profitable and have enough money, the United States will never be ruthless.
is definitely not good news for the "fat sheep" Europe, which is currently in trouble and Japan, which has been tortured by the economic downturn. In terms of political allegiance, this is also the moment when Europe and Japan express their loyalty to the United States to the Savior. It must also be pointed out that Europe and Japan still have wealth after all. For other developing countries, , the Fed's interest rate hike is undoubtedly a catastrophe. After all, the US dollar is currently the main currency for global trade payments and is also the main currency for central banks in various countries to store foreign exchange. In this case, the Fed's interest rate hike will inevitably absorb the return of the US dollar, and will also tighten the monetary policy of . In this case, with the outflow of capital and the increase in debt burden, some countries with smaller economies may really become victims of the Fed's interest rate hike.
Second, there are advantages and disadvantages, and there are gains and losses. This time, the Federal Reserve directly launched a radical approach to hike a rate of 75 basis points. Although it can bring benefits to the US economy in the short term and can also have immediate results, it should still be pointed out that the current Fed's interest rate hike, which is a naked way to harvest the wealth of other countries, is destined to shoot itself in the foot. The 21st 2020s were not 2008, nor was it 1997. The overall rise of emerging market countries, and China, as the world's second largest economy, played a mainstay in the global economy. During the Russian-Ukrainian conflict, Russia started the "de-dollarization" process and switched to settlement with its local currency has actually given early warnings on the Fed's interest rate hike. When the United States can no longer unify the world, the Federal Reserve's interest rate hike will eventually end up harming others and not being beneficial to oneself. The international credibility of the US dollar has been loosened again. After the Federal Reserve's interest rate hike, "de-dollarization" will definitely turn into a torrent.
