In 2024, the world's capital, not to mention the cryptocurrency market, is waiting with bated breath for the US to cut interest rates!
Everyone unanimously believes that the global economy will only improve if the United States starts to cut interest rates.
But it is already July, why hasn’t the US cut interest rates yet? The Fed keeps saying it wants to see inflation, economic data, and employment, but the truth behind this is far more complicated than you think.
Today I would like to share with you two most core answers. The first one is that the United States has not yet achieved its goal. Why has the United States been able to command the world in the past few years?
Isn't capital the tide of the US dollar? Everyone must have heard the logic that the United States harvests the world by raising interest rates, but it is true that this is the method that has been tried and tested in the past few decades. Forty years ago, the United States harvested Japan and West Germany, and 30 years ago, the United States harvested Southeast Asian airlines. Me and the days, in the 2008 global financial crisis, the United States harvested leeks all over the world again. So think about who its target is this time, everyone knows, right?
In order to achieve this goal, the United States worked at full speed and raised interest rates 11 times in two years. As a result, they did not catch any big fish. The systemic financial crisis they expected did not happen. Why couldn't they harvest it? Let's discuss a question. If you want to control the core lifeline of a country, do you have to get its core assets into your own hands first? For example, if you want to harvest South Korea, do you have to take over the shares of Samsung and LG? If you want to harvest Japan, do you have to take over those big financial groups first?
This is indeed the case. What about our core assets, such as electricity, oil, and banks? Have you noticed that they are all state-owned and controlled by the state? You can't just give them up if you want to. This includes restrictions on the stock market. Foreign investors can only buy 23% of Chinese stocks, and then they can't buy any more.
And not only that, we are also preventing them from harvesting other countries. When they want to use interest rate hikes to blow up the economies of various countries, we stand up and tell everyone that it’s okay if you are short of US dollars, I will lend you some, but you will need to pay it back in RMB.
Doing so not only prevents the United States from reaping the benefits, but also expands the influence of the RMB in disguise, which is equivalent to cutting off the source of the US dollar's hegemony. If you don't believe it, look at the current situation. Several major oil-producing countries in the world, including Russia, Saudi Arabia, Iran, and Venezuela, have all announced in recent years that oil trade will be settled directly in RMB.
This has led to a magical situation now, that is, this round of interest rate hikes in the United States not only failed to catch big fish, but even caused a huge crisis for the dollar hegemony.
So the second answer is that the United States dare not cut interest rates. Once the Federal Reserve starts a cycle of interest rate cuts, the first thing it will face is the depreciation of the US dollar, and investors around the world will collectively sell off US debt. Think about it, the United States has issued a total of 14 trillion US debts in recent years, which is almost as much as three Japans. If it fails to harvest, who will take over its old debts? Who will it sell new debts to?
Therefore, the first meeting of the Federal Reserve has already entered garbage time. They can only postpone the time of interest rate cuts as long as possible. However, the United States has been slow to cut interest rates. At the current interest rate, their own companies can no longer bear it. Banks are bankrupt and small and medium-sized enterprises are struggling. According to Musk, the interest paid by the United States on U.S. debts each year has exceeded military spending and has become the largest government expenditure item.
I think we are indeed witnessing history again. We are getting closer and closer to the crossroads of making a choice. In this financial tsunami, who will be the big fish and who will have the last laugh? Let us wait and see.
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