Why do we always think that the Fed should cut interest rates, and that something bad will happen if it raises interest rates again, while the Fed thinks that the current high interest rates are a good sign and should be maintained? #美联储何时降息？
This is a question of counterparty perspective. USD is a global currency. The Federal Reserve and the U.S. government behind it are counterparties to all individuals and countries in the world. The process of the Fed raising interest rates and the so-called beautiful non-farm data, the essence of non-farm data should actually be viewed in reverse. When we look at counterparty data, we should not use our own perspective, but the perspective of the Federal Reserve and the U.S. government.
The essence of non-farm payrolls is the corresponding data that requires employment. In essence, for the general public, the higher the data, the more tiring life will be. Don't forget that the Federal Reserve and the US government are the counterparties of all individuals and countries in the world. A USD interest rate hike will lead to the harvesting of assets, including but not limited to assets in its own country and overseas countries.
The good non-farm data reflects the effect of the Fed harvesting assets through interest rate hikes, so the Fed believes that there is no need to cut interest rates at present. The Fed and the US government have made a lot of money through interest rate hikes, and stock prices have also risen. Why cut interest rates? And the more you insist on high interest rates, the better the non-farm data will be. The actual curve is also like this. The non-farm data has been rising, which shows that the effect of harvesting market assets is clear. Because the Fed and the US government are the counterparties of all individuals and non-US governments in the world, the Fed will not cut interest rates.
So why did Europe and Canada choose to cut interest rates? It's very simple. The sickle has already slashed at the allies. If you don't understand this, you have to refer to Turkey's Erdogan economics. The United States has raised interest rates without a bottom line, and Erdogan has lowered interest rates. Turkey cannot lose control of assets. Many domestic analysts believe that the US dollar interest rate hike will lead to a lot of bankruptcies and bank closures. The problem is that if these entities go bankrupt, you Chinese can't get them, so bankruptcy doesn't matter. The key is to make others go bankrupt. If you go bankrupt in your own country, the meat will rot in the pot. Why is Chinese capital prohibited from investing in the United States? Is it a problem of lack of money? Not at all. It is a national security issue. After domestic companies go bankrupt, they will still be controlled by American capital.
Erdogan cut interest rates. Turkey's inflation is so severe. If Erdogan raises interest rates according to textbook theory, domestic companies in Turkey will go bankrupt. Turkey is also a country with a relatively free economy. Once interest rates are raised, domestic companies will go bankrupt, and they will no longer be controlled by the Turks. Therefore, Turkey chooses to keep cutting interest rates. If he foolishly follows the IMF experts and announces interest rate hikes to fight inflation, Hagia Sophia may belong to Goldman Sachs.
Everyone wants to eat meat, but the key is whose meat to eat and whether to forbid others to eat their own meat. In the same way, Europe and Canada found that the sickle of the United States began to harvest themselves, and they also announced interest rate cuts. The essence is that the alliance relationship is gradually breaking down at the economic level. Sweden and Switzerland are also included, including other small countries that are not particularly loyal but just want to follow the United States to get some scraps.
This was also the economic policy chosen by India when Modi first came to power. However, because India's market economic means were very weak, India chose to confiscate directly. Modi announced a currency reform, and all money circulating in the market was invalidated and had to be deposited in banks within a time limit. As a result, a large amount of black market currency became waste paper.
For the counterparty, the liability side of the Indian central bank's balance sheet is gone. The reason why Modi's trusted Reliance Group was able to rise rapidly later was because Modi's currency reform caused a large amount of wealth to be ownerless at the central bank, and this large amount of wealth went to the Reliance Group. In essence, Modi stole the country and instructed the Reliance Group to hold it on his behalf.
So Modi won a narrow victory in the recent Indian election with great effort, and as a result, the share price of Reliance Group plummeted immediately, because Modi's various policies in the future would no longer be decided by him alone. The financial liquidity support behind the Reliance Group had a balancing vote of opposition, so the share price plummeted on the day the election ended.
In addition, why did Japan start to raise interest rates? Japan is really in cahoots with the United States. ODA loans in yen are very popular in Southeast Asia. The assets harvested by the yen interest rate hike are then transferred to the United States. Of course, Japan will help enhance the effect of the United States in Southeast Asia. Why must Japan take the lead? Isn't there enough pressure in Japan? Because China's actions in Southeast Asia are extremely large, the USD interest rate hike has not had a very good effect on Southeast Asia. So let's consider the yen interest rate hike as the same logic as the USD, and count it as a compensatory measure for the USD interest rate hike in Asia. Of course, the cost to Japan is also very high. To put it bluntly, it has to bear the inflation.