What are the irreconcilable structural contradictions in this rate cut?
For example: As a global currency, abusing interest rate tools will backfire. Deliberately push up interest rates and stock markets, and absorb more money, and then spit out more blood.
1. Before the rate cut, the currency value has dropped by 5%, and the interest income for one year has disappeared. After the rate cut, the interest rate will drop for at least two years. The hot money in the global market is watching.
2. The unsettled US dollars held by Chinese companies overseas alone are close to 600 billion US dollars. These funds that should have been settled back to the country are driven by short-term arbitrage. If the interest rate is cut, concentrated unilateral selling will promote stocks, foreign exchange, and bonds, a triple kill.
- The Japanese also have a lot of hot US dollar money, and there are a lot of US dollar assets at the bottom of the huge pension.
The total of several positions is a one-sided sell order of one trillion US dollars (deposits + stocks + bonds, etc.)
The market thinks that the interest rate cut will increase liquidity, but it may actually accelerate the reduction
