According to Taiwanese media reports, Federal Reserve has raised interest rates many times this year, and the US dollar has continued to rise strongly. In response, Taiwan’s former “legislator” Lei Qian said that when the Federal Reserve raises interest rates, other countries and regions must keep up and confront, otherwise it will drag down the economy like the Asian financial crisis. “So we say that the United States is cutting the leeks of the world.”
picture source Taiwanese media
Lei Qian said in a political commentary program that she has seen all production costs increase now, including grain, wages, energy, raw materials, etc., which makes the real economy face great difficulties. A manufacturing power like Germany must find a safer market.
Finance, Lei Qian pointed out that many countries and regions raise interest rates after the Federal Reserve raises interest rates, and even raise interest rates in advance. Japan and Taiwan are two exceptions. Those places expect interest rate hikes, mainly to prepare to fight against the Fed's interest rate hikes and "cut the leeks" when the Federal Reserve raises interest rates, the capital it faces flees to the United States, which will happen even in mainland China.
Lei Qian also said that these countries and regions must defend their currency and the exchange rate risk of the US dollar , because when the currency depreciates repeatedly, the results of people's efforts will not be rewarded, and there is an increase in transportation costs in the middle. Countries compete for interest rate hikes to benchmark with the US dollar, but this will also cause problems such as increasing production costs, and at the same time it will reduce consumption and investment willingness, affecting export competitiveness.
Lei Qian mentioned that it is often said that there will be three carriages in economic growth, including investment, consumption, and exports. These three will actually have negative effects in an environment of interest rate hikes. The reason why countries do this is because they have to confront the Federal Reserve, otherwise they will drag down their own countries. This is the bloody and tearful history of the Asian financial crisis.
Lei Qian said bluntly that the real economy such as manufacturing and trade and finance are two worlds and two games, and the games above are only affordable for the United States, because the United States is at the top, and the Federal Reserve is the initiator of this series, and the countries that are mobilized must respond, "So we say that the United States is cutting the leeks of the world."
