In the past few decades, many countries around the world have created miracles of economic growth for a period of time, but they eventually failed and fell into the middle-income trap of , and were unable to extricate themselves, including Brazil in Latin America, Argentina , thailand in Southeast Asia, t Philippines , t Malaysia , and Russia and Turkey in Europe.
According to the normal economic growth path, it is natural for per capita income to exceed US$10,000, but why are there a large number of countries that just can’t get through? In my opinion, in addition to the fragility of these countries in their own development, another important factor is that Wall Street harvests their huge wealth through US dollar tidal weapons, making them unable to recover. In this harvesting process, the US dollar is often accompanied by an unusually strong momentum.
Today, the dollar index broke 110, a sharp increase of 23% from May last year. The mainstream non-US currencies continue to plummet - the euro rarely falls below 0.99 against the US dollar, with a maximum drop of up to 20%; the pound falls below 1.15 against the US dollar, with a maximum drop of up to 20%; the US dollar rises above 144 against the Japanese yen, infinitely close to 145, which the market believes may trigger a financial crisis, and the latter depreciates sharply by 29%.
US dollar is strong, overwhelming the euro and yen, and the harvesting trend is obvious. Historically, the US dollar index broke through 110, only three times, and each time, the emerging economy, , suffered unlucky and fell into the so-called middle-income trap.
01
164 peak
1 On February 28, 2019, the US dollar index climbed to 164, setting a record high, doubling the rise from 82, a low of 1978. has risen so much, which is closely related to the Federal Reserve 's extremely radical monetary policy at that time. The global inflation in the 1970s, Burnsch, then chairman of the Federal Reserve, could not adopt strong monetary policies to suppress inflation. When he stepped down in 1978, U.S. inflation was still as high as 7.62%. After leaving office, William Miller came to power, and after only 18 months of work, he stepped down in a hurry. The inflation in the year he stepped down was 11.22%. Immediately afterwards, Volker took office in August 1979, and started a significant rate hike in mode, raising interest rates from an interest rate of about 8% to 19.1% in June 1981. During this period, geopolitical and energy crisis broke out. From the end of 1978 to early March 1979, Iran stopped exporting oil, resulting in a global oil supply and demand gap of 5 million barrels per day. In September 1980, the Iraqi Air Force bombed Iran, the Iraq War broke out, both countries stopped exporting oil, and the oil crisis broke out again. Oil prices soared from $14 in 1979 to around $40.
USD has strong interest rate hikes, coupled with geopolitical war, the global USD continues to return to the United States. In this process, foreign capital from Brazil, Argentina and other countries, with high economic development momentum, ran away, and eventually collapsed, creating a Latin American economic crisis and falling into the so-called trap. Before that, these countries relied on a large amount of debt to foreign capital to develop their economy, soaring rapidly from US$21.2 billion in 1970 to US$328.7 billion in 1980, a cumulative increase of 15.5 times.
USD appreciation has been in the process until 1985. On September 22 of that year, the finance ministers and central bank governors of the major industrial powers, including the United States, Japan, Britain, France and Germany, signed the famous " Square Agreement " after meeting in New York, which caused the yen to appreciate significantly and the US dollar to depreciate significantly.
After that, a large amount of US dollars flowed into Japan, causing the domestic currency to become lighter, commodities to become heavier, and the real estate and stock markets to soar. When the time was almost the same, that is, in 1988, the US dollar raised a sharp interest rate hike and burst the bubble, a large amount of capital flowed out of Japan, and financial assets continued to plummet. A massive amount of wealth was swept away, and Japan lost 30 years.
USD appreciates strongly, creating a tragedy in Latin America. During the decline and depreciation process, the square agreement was signed to start the road to harvest Japan.
02
121 peak
Starting from 1995, after several years of consolidation at the bottom, the US dollar index once again embarked on its rise, climbing to 121 in July 2001, setting the second highest record in history.
In fact, starting from January 1994, the Federal Reserve raised aggressive interest rates seven times in a row, and the federal benchmark interest rate quickly increased from 3% to 6%.Among them, on November 15, 1994, a one-time interest rate hike was 75 basis points, becoming the largest rate hike since the 1980s. In the following three years (1995-1998), the Federal Reserve adopted the operation of "rate cuts - rate hikes - rate cuts", but the increase in interest rate cuts was relatively small, and the overall monetary policy was in a relatively strong state. Later, in June 1999, a significant rate hike cycle of was launched.
In addition, the strong surge of USD is the strong performance of economic fundamentals.
The United States triggered the Internet information revolution in 1995, and its economy has embarked on a vigorous growth craze in a few years. From 1995 to 1997, the IT industry only accounted for 8% of the United States' GDP , but its contribution rate to economic growth was as high as 35%. During the period of a sharp appreciation of USD 1, the currencies of Southeast Asian countries that adopt a fixed exchange rate system forced passive appreciation, greatly weakening export competitiveness. In 1996, exports in these countries fell significantly, and current accounts deteriorated rapidly.
In February 11997, Suo LS mortgaged half of his worth, raised $15 billion from the Bank of Thailand, equivalent to 380 billion Thai baht, reserved foreign exchange ammunition, and waited for the benchmark attack. In April, So, he believed that the ammunition he held and the sales that caused the market to follow the trend was greater than the Bank of Thailand's US$30 billion foreign exchange reserves , so he joined hands with Wall Street's peers to intensively sell the Thai baht in a short period of time, and cooperated with tools such as futures to significantly short the Thai baht exchange rate.
The Central Bank of Thailand fought against Score LS, but was eventually defeated. On July 2, it abandoned the fixed exchange rate system and implemented a floating exchange rate system. The Thai baht exchange rate plummeted on the same day, depreciating as high as 18%. Since then, the exchange rate continued to decline. By January 1998, the Thai baht depreciated against the US dollar to 1:55, with a depreciation of as high as 40%, and by the end of the year it reached 60%. The Wall Street tycoon led by
So took away hundreds of billions of dollars in Thailand's huge wealth, including the 30 billion US dollars of foreign exchange that the Bank of Thailand has accumulated for decades, and was also robbed. But the nightmare is not over yet. During the same period, the real estate and stock market bubbles burst (SET fell from 1756 points to 200 points in August 1998, a drop of 89%), which hit Thailand's economy hard. Almost by the same routine, Wall Street robbed the wealth of Southeast Asian countries such as Malaysia, Indonesian , Singapore .
SoS is nothing more than a general trend of the US dollar tide, seizing the right time and taking advantage of the trend, hitting Thailand hard and spreading to the entire Southeast Asia. The joint short selling of Soft is just the fuse, but it is not the initiator. The strong appreciation of the US dollar is. After the Southeast Asian economy and financial crisis, overseas funds have flowed back to the United States, which has instead stimulated the US dollar to strengthen its momentum.
In addition to the disaster in Southeast Asia, the strong US dollar also triggered Russia's debt crisis, and the financial crisis gradually escalated into an economic and political crisis.
At the end of 1997, Russia's total foreign liabilities were US$128 billion (short-term debt accounts for 70%), but its total assets were only US$27.7 billion, and its foreign exchange reserves were only US$13 billion. The US dollar appreciates too quickly, consumes Russia's foreign exchange reserves too quickly, and is unable to pay foreign debts, resulting in default.
In August 11998, Russian Central Bank announced the postponement of repayment of foreign debts and suspension of government bond trading. A series of crises broke out, hitting Russia hard and causing it to fall into a trap.
learns from history, and the so-called middle-income trap is actually a conspiracy. Why can’t get over it? The main reason is that you have grown fat and it’s time to be slaughtered. A long time ago, the great plunder of wealth had to be dependent on war, while the past few decades had relied on financial plunder. The wave of the US dollar tide had looted the huge amount of wealth accumulated by these so-called emerging economies, and economic and financial sovereignty were also given up and could not turn over.
, but there are exceptions, and Japan is one of them, crossing the trap and entering the ranks of developed countries. But he still cannot escape the fate of being harvested by Wall Street, and a series of sovereignty have been taken away by the powerful.
03
ending
This wave of appreciation of the US dollar from May last year to the present is not because of how strong the US economy is, but is very similar to the wave from 1978 to 1985, mainly caused by extremely radical monetary policy.
From the beginning of the year to now, the Federal Reserve's interest rate hike has been exceeding expectations, with interest rate hikes of 25BP, 50BP, 75BP and 75BP respectively in March, May, June and July.In just four interest rate meetings, a sharp increase of 225 basis points was set to the most radical and craziest rate hike in 40 years. And the expected probability of raising interest rates again in September this year is more than 70%.
The Federal Reserve's monetary policy has such a "sharp turn" and is obviously an attack on other currencies around the world. Since the beginning of this year, the average daily foreign exchange reserves of US$2 billion in emerging economies have been consumed, but they still cannot stop the depreciation of their own currencies and the strong appreciation of the US dollar.
Once the foreign exchange reserves of these countries are squeezed out, the exchange rate continues to depreciate, and the finance and the economy fall into huge turmoil and chaos, it may be inevitable. This creates huge space for Wall Street global wool shearing.
Sri Lanka has declared bankruptcy at the national level, but this size cannot satisfy the appetite of capital at all. Now, Wall Street Capital is targeting heavy-weight economies like Europe and Japan, and they are now in huge dilemma.
html won 110 USD 1, hitting another 20-year high, and has already sounded the sirens of the financial storm . Now, the one-sided performance of non-US currencies, especially Japan and Europe, is a bit of an ominous sign.
