After the collapse of the Bretton Woods system, the United States directly overturned the table, using oil with extremely abundant reserves as a benchmark, while using guns and cannons to make the world believe in the credibility of the United States.

After the collapse of the Bretton Woods system , the United States directly overturned the table, using oil with extremely abundant reserves as a benchmark, while using guns and cannons to make the world believe in the credibility of the United States.

After that, the chapter of the hegemony of the US dollar harvesting the world has officially opened.

After two rounds of harvest, now the sickle is rising again, and the US dollar may be reaping the third round of the world.

does not talk about martial ethics! The collapse of the Bretton Woods system is the starting point of US dollar hegemony

In 1944, the United States established the "Bretton Woods System" and established the gold standard system of the US dollar, and the US dollar was later called the "US dollar".

However, after the failure of Vietnam War , the US gold reserves quickly fell, and the US dollar was difficult to exchange for the originally stipulated gold volume, resulting in the Bretton Woods system declared collapse after 1971.

So, why does say that the collapse of the Bretton Woods system is the starting point of US dollar hegemony?

Because before that, gold reserves were the basis for a country's central bank's issuance of currency. Paper money was not supported by national credit, but gold was used as the basis. In other words, at that time, the US dollar was just a " exchange coupon " for gold.

However, after the collapse of the Bretton Woods system, the US dollar chose to be linked to crude oil. Since crude oil does not have the scarcity of gold, the United States can rely on its national credit to over-issuance of nearly unlimited currencies (this is also the foundation for the United States to start cheating).

Therefore, the collapse of the Bretton Woods system is the starting point of the hegemony of the US dollar. If the Bretton Woods system does not collapse, then the United States can only issue currency according to its gold reserves. But with the collapse of the Bretton Woods system, the US dollar only supports one extremely high reserve of crude oil and the credit of the United States (unfortunately the United States does not).

For the global market, since the US dollar has extremely high liquidity in the international market (accounting for about 85% of global foreign exchange transactions), the United States can harvest the world through a series of monetary means such as interest rate hike -rate cuts, etc.

The first round of harvesting - super-issuance of currencies, leading to a rise in global asset prices

After the outbreak of the new crown epidemic in 2020, the United States launched an unlimited quantitative easing policy (QE). As of now, the stock of M2 in the United States has increased by US$6.22 trillion (about 44 trillion yuan) compared with the beginning of 2020.

"Flooding", global asset prices began to rise sharply -

First of all, from the price of commodity , in May 2022, the CRB commodity index peaked to 644.04 points, a low point (April 2020) rose 296.52 points, an increase of 85.31%.

Secondly, from the perspective of housing prices, according to OECD statistics, during the epidemic (9 quarters), the actual housing price index of OECD member countries rose by 18.8 points, an average quarterly increase of 2.01 points, while between 2015 and the end of 2019 (20 quarters), the housing price index only rose by 15.6 points, and the quarterly increase by only 0.78 points.

In other words, the average quarterly growth of housing prices has more than doubled, and in the past two years, the increase in housing prices has been more than in the past five years.

Finally, from the perspective of the financial market, based on the S&P index, at the end of 2021, S&P peaked to 4796.56 points, a low point increased by 114.38%. That is to say, the U.S. stock market nearly doubled last year.

So, why is this the biggest beneficiary of the sharp rise in asset prices in the United States last year?

In the past few decades of operation, the United States has reaped a large number of high-quality assets around the world by coercing (provoking many wars in Middle East ) to induce (using Marshall Plan to bundle Europe, etc.). . Against the backdrop of a sharp rise in asset prices, US capital naturally achieved extremely obvious expansion.

Take the Forbes rankings in 2021 as an example. In 2021, the assets of the top American rich people began to expand significantly, and the total assets mostly showed double-digit growth.

This is also the first round of harvesting of global high-quality assets.

The second round of harvesting - tightening the currency, strengthening the purchasing power of the US dollar, and gaining the advantage of foreign exchange settlement

After March 2022, the Federal Reserve started a "crazy" interest rate hike process, and so far, it has accumulated a total of 300BP interest rate hikes.

Under the crazy interest rate hike in the United States, the dollar index showed a sharp rise. Not long ago, the US dollar index broke through the 114-point mark, up 27.67% from its low point.

Why is it said that the sharp strengthening of the US dollar index is the second round of the United States' harvest of the world? The sharp appreciation of

USD will lead to the exchange of more assets (currency) when the United States exports goods, and the United States can import high-quality overseas resources with less currency.

Take 2021 as an example. The total amount of imports and exports of the United States is as high as US$5.95 trillion. The sharp changes in the US dollar index will lead to the United States obtaining approximately US$1.64 trillion in exchange income in foreign exchange settlement.

The third round of harvesting - the cycle repeats itself, the US bottom The global timing is approaching

As we all know, after the world enters the interest rate hike cycle, the asset bubble will be burst, and since monetary policy is mostly prognostic management, that is, there is a strong lag, so the tightening monetary policy of will cause the asset price to be oversold , making its price performance to a certain extent lower than its real actual value.

The United States, as the initiator of the global interest rate hike cycle, often has a strong influence on the interest rate hike cycle.

This means that The United States and the United States investors can find the most convenient time to buy global assets. Combined with the high liquidity of the US dollar, the convenience of buying assets in the United States is also significantly stronger than other countries.

Historically, the United States has "pulled" twice around the world through such a hike and interest rate cut:

Latin America Lost decade -In 1970, the Federal Reserve implemented a low interest rate policy to stimulate investment and employment, resulting in the depreciation of the US dollar and the high inflationary pressure (during the period of large stagflation). Some Latin American countries took the opportunity to borrow a large amount of low-interest US dollars and invested in oil development, resulting in the continuous expansion of their foreign debt scale.

In 1980, the Federal Reserve suddenly started a cycle of interest rate hikes (Volke era). The US dollar appreciated and oil prices fell. Latin American countries suddenly fell into the trap of the US dollar. In August 1982, Mexico was the first to break out of a debt crisis, and then a large number of Latin American countries encountered difficulties in repaying debts. In the 1980s, it was called the "lost decade" of Latin America.

Southeast Asian financial crisis -In 1990, the Southeast Asian region's economy flourished and developed. Under the manipulation of the Federal Reserve, a large amount of financing flowed into Southeast Asia, and many countries experienced economic overheating. Then between 1994 and 1995, the Federal Reserve raised interest rates seven times in a row over 13 months.

The strong US dollar brought back a large amount of capital to the United States, becoming a key factor in triggering the Southeast Asian financial crisis from 1997 to 1998. The Thai baht depreciated sharply in July 1997, and then the shock wave spread quickly, and Southeast Asian countries paid a heavy price to recover from the turmoil.

USD has a great impact on the international market

From the perspective of the USD itself: its various indicators account for more than 40% of the global total, among which the proportion of foreign exchange transactions and foreign exchange reserves is as high as 85% and 61%. The high proportion of USD in the financial market is the foundation of USD hegemony.

From the economic situation, the United States is still the world's largest economy. According to World Bank data, the proportion of GDP in the United States in 2020 accounts for 24.72% of the world (17.37% in China). 's strong economic strength is the basis of US dollar hegemony.

From the perspective of military strength: the United States has the highest military expenditure in the world, with military expenditure reaching US$800 billion in 2021, which is significantly higher than other countries. In addition, according to the People's Daily report, in 2014, the United States has 598 overseas military bases, covering six continents and four oceans, and radiating to 40 countries around the world. 's strong military strength is an important guarantee for the hegemony of the US dollar.

Ultra-high US bond bundles major economies around the world, further strengthening the status of the US dollar. As of now, the total U.S. bonds have risen to US$31.15 trillion, even exceeding the total U.S. GDP. Among them, China, Japan and Europe are important holders of US bonds, with a total holding of 3.55 trillion yuan as of the end of July.

So, overall, although the United States' use of the hegemony of the dollar to harvest the world is disgusting, it still has to be admitted that is still the world's most important settlement currency, and the basis of the hegemony of the dollar has not yet been shaken.

is imperative to reverse the dollar

The world is suffering for a long time! Anti-dollarization may become a consensus in the future international market:

From a historical perspective, the hegemony of currency is not unsubversible - as we all know, after the first industrial revolution of , Britain became the most powerful country in the world, known as the "Empire of the Sun" when Britain's control of the global economy was even better than that of the current United States. Through colonial rule, it controlled more than 20% of the world's population and more than 25% of the land, and its economic size accounted for more than 70% of the world's global reserves, and its gold reserves accounted for more than 80% of the world.

But after World War II , with the weakening of Britain's national strength and the rise of the United States, the US dollar replaced the pound and became the major settlement currency in the world.

From the current situation, major countries around the world are starting to reduce their holdings of USD . According to IMF statistics, as of 2022Q2, the global official USD reserves were USD 6652.3 billion, down 440.2 billion from its high (2021Q3). This is the largest reduction in holdings of the US dollar since statistics, reflecting that "de-dollarization" has gradually become a consensus in the international market.

The United States continues to harvest the world's dream, and maybe it's time to wake up.

Source: Wall Street News VIP Member Author Zhou Xueli

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The world is suffering for a long time!