Why is the United States dragging its feet on cutting interest rates? It’s not because of economic data or non-farm payrolls data. These are not the most important. You have to know that the United States is not only a military power, but also a financial power. It is not the industry that makes money, but the capital that counts!
The three things that the United States cares about most are whether the stock market can continue to rise, whether U.S. bonds return to quoted prices, and whether to acquire assets in other countries. For these three things, it can invent any data to support whether the Federal Reserve should raise or lower interest rates.
Now, it is time for the Federal Reserve to make a key decision. Although the U.S. debt is 34.7 trillion, most of it is old low-interest debt, so it is relatively safe for the time being. The stock market has also risen well. Even if there has been a correction in recent days, inflation is controlled at 3%. Anyway, everything seems to be fine.
However, its goal has not yet been achieved, which is to beat the opponent to economic collapse and then buy the bottom to reap the benefits, and the problem of US debt will also be solved. If it cannot be achieved, it can only cut interest rates to protect itself and exit the game.
The opponent that the United States is targeting is naturally the Eastern power, China. The game between the two sides is called "hypertension vs. hypoglycemia", that is, inflation vs. deflation. So how to defeat a hypoglycemia? That is to suck its blood while not letting it eat.
You see, the interest rate in the United States is now over 5%, more than 3 percentage points higher than ours. The huge interest rate gap has caused countless hot money to flow back to the United States, and has also caused a lot of Chinese capital to choose to go overseas for profit. Some real estate giants are unable to repay their dollar debts, which has exacerbated the collapse of real estate. Under the superposition of multiple factors, China's real estate and stock markets have continued to fall, and a tightening spiral has emerged.
On the other hand, the United States has increased export restrictions on China, trying to make China's production capacity unable to be digested and companies unable to make profits. However, the United States underestimated China's resilience. The real estate market is sluggish but not to the point of collapse, and the stock market is falling but not to the point of collapse. Although China is under great pressure, it still has the energy to complain a few times, and it is not like the financial crisis in the United States where it has to line up to get bread. Moreover, no matter how many export restrictions there are, it cannot change the fact that the United States is out of stock and China has goods. More restrictions will increase some transit countries in the middle, which will increase some costs.
Now the time left for the United States is running out. With the increase of high-interest bonds, the interest rate expenditure of US national debt has exceeded 1 trillion US dollars and is climbing towards 2 trillion US dollars. The US debt has overdrawn a lot of bubbles. If the inflow of hot money slows down, it will be hit by high interest rates. Powell also gave in a few days ago. Although he refused to disclose the specific time of interest rate cuts, he said that inflation has made great progress.
Therefore, it is highly likely that the United States will not live to see the day when China explodes.
After this round of game, the United States paid a lot more interest, prices rose instead of falling, and residents' expenditures increased. On the other hand, our income fell. The "hypertension vs. hypoglycemia" will most likely end in a lose-lose situation, and the historical wheel of global monetary easing will start to turn again. We must cheer up and prepare for a new cycle.