Former U.S. Treasury Secretary Summers said the Federal Reserve's 50 basis point rate cut last month may have been a mistake!

Summers believes that the 50 basis point rate cut was a mistake, but fortunately the impact was not too great.

He said the latest jobs data was unexpectedly good, making the Fed's previous interest rate cut seem a bit unnecessary.

The reason is that on October 4, the U.S. Department of Labor released a fairly "excellent" non-farm employment data. The number of non-farm employment in September increased by 254,000, far exceeding the market's expectation of about 150,000.

However, this is fabricated data, because the data shows that the number of US government employees has reached 22.216 million, an increase of 785,000 in one month. It should be noted that the total population of the United States is only 342 million, and the ratio of government employees to the total population has now reached 6.4%. In other words, if the Biden-Harris administration had not desperately increased government employees in order to make the employment data look good during the election, then in fact, the company would have reduced more than 600,000 employees, which is a very tragic data.

However, the US financial community pretended to be blind and was bullish on the US economy. Even the exchange rate of the US dollar against the RMB appreciated from 6.96 to 7.06. This is simply incredible.

So Biden's spending money to hire people achieves two goals with one stone. First, it covers up the wave of layoffs in American companies and creates a false prosperity, which makes it look like there is full employment, a stable economy, and a rising stock market, which makes it reasonable to launch a war of words for the upcoming election. And given the characteristics of American Muggles' brains, they will not think about why the relationship between employment and deficit is sustainable. Secondly, the newly added government employees will basically support the Democratic Party, especially in swing states and polls, which will play a key role in the general election.

Therefore, the Americans said that the interest rate cannot be cut by 50 basis points in the future, and the maximum cut can only be 25 basis points. This is the American version of bragging.

In fact, the Americans made these leaks after seeing the Chinese stock market surge and funds begin to flow into China. In essence, they were unwilling to accept the failure of the financial war. But it was too late for them.

Because the money-making effect of the Chinese stock market has emerged, in addition to some of China's overseas deposits and hot money quickly returning to China, foreign funds have also begun to flow into China. For example, during the National Day holiday, the mainland stock market was closed, but the Hong Kong stock market continued to rise sharply, and a lot of it was bought by foreign funds.

For example, Goldman Sachs mentioned that when there is "intense" buying in the Chinese stock market, the Indian market will become vulnerable!

Considering that the Indian Nifty index fell 4.5% last week, its worst weekly performance since June 2022. According to Nikhilesh Kasi, a Goldman Sachs India trader, the most frequently asked question by clients in the past two weeks is "Are we seeing funds flowing from India to China?" Kasi has clearly answered: "Yes", and explained that based on the capital flows they have seen, the trend is very obvious.

In other words, subsequent funds will show a trend of increase and decrease. Some stock market funds in developing countries, and even European, American and Japanese funds, based on the money-making effect, will have to buy stocks in the mainland China stock market or Hong Kong stock market that are highly correlated with the mainland China stock market as basic configuration.

Therefore, no matter how the Americans manipulate the market, they are already on the losing side. The funds attracted by the high interest rate and strong dollar in recent years have shaken their trust in the dollar. Otherwise, the surge in gold prices cannot be explained. This is called the situation is stronger than people. Now Americans can not only not afford to raise interest rates, but the situation of enterprises requires them to quickly cut interest rates, otherwise no industry can support such high interest rates. And the price increase of enterprises and the salary increase of employees to fight inflation will make it difficult for inflation in the United States to go down. Inflation is difficult for enterprises, and it is even more difficult for enterprises without interest rate cuts. So the Americans regretting the interest rate cut is just talk. They can't afford it anymore. The interest rate cut is necessary.