The current international situation is not very peaceful, the global economy has fallen into a downturn under the epidemic, inflation has raged in many countries, and now the increasing tension in Ukraine has been transmitted from the financial market to the already fragile real economy.
Recently, inflation, which has plagued global financial markets, has been complicit in geopolitical risks, causing further turbulence in world financial markets. The price of crude oil futures in the United States once hit a new high in seven and a half years, crude oil prices directly affect the operating costs of the economy, enterprises are worried about their own costs, more worried about the economic recovery slowed down, so the entire financial market risk aversion is getting stronger and stronger. In the face of the Ukraine crisis, almost none of the world's major stock markets were spared, and they fell. The U.S. Dow Jones Industrial Index fell for two consecutive trading days, investment funds have flowed to U.S. Treasuries that are regarded as safe assets for safe haven, not only the U.S. market and the European market, on February 14, the Japanese stock market Nikkei index in asia fell below 27,000 points, especially those stocks that are closely linked to the international market and rely on export markets have fallen sharply. Stock markets in South Korea and Taiwan, the mainland, also fell sharply.
The decline in the stock market has allowed investment funds to flow into US Treasuries and gold, and the price of gold futures in the New York market has risen to the highest level in more than three months.
Since last year, the United States and other Western countries have experienced inflation once in decades, and the damage of the epidemic to the global supply chain is considered to be a direct factor, but americans deliberately avoid the united states in order to cope with the epidemic and divert domestic contradictions. The us dollar, the world currency, enjoys the highest level of credibility in the world, and is widely regarded as a hard currency by all countries in the world, and these green pieces of paper issued by the United States can be purchased around the world. In order to get the domestic economy out of the crisis, stimulate domestic consumption, and calm the increasingly intensifying social contradictions in the country, the high trick that the US government has come up with is to print money, and several rounds of money from the whole people seem to be very envious, but in fact, this condition of the Americans is really not available in other countries. The money printed by Americans can be consumed not only at home, but also around the world, unimpeded.
The epidemic has caused a great impact on the DOMESTIC ECONOMY OF the United States, production logistics have been hit, at this time the US government throws money, certainly not for the purpose of these extra money in the United States, it is hoping to use its dollar hegemonic advantages to harvest materials around the world and pass on domestic contradictions. In fact, the money spilled out has indeed alleviated the sharp social contradictions in the United States to a certain extent, at least the person who receives the money must spend the money first before risking to buy it on the street. But even so, the United States still has a severe inflation that has not been seen in four decades.
Two reasons, the first is that the money is printed too much, so much money pours into the international market, its digestion capacity in the international market is also limited, the speed of commodity production can not catch up with the speed of dollar issuance, and it is strange that prices do not rise. Secondly, the global economy has been hit by the new crown epidemic, the entire global industrial chain itself is not smooth enough, the production capacity has not reached the normal state, let alone accelerated, so the price rise and material shortage will become very serious. So in the more than two years since the outbreak of the epidemic, we have seen global commodities and the prices of various commodities around the world rise.
In the recent period, the global epidemic has been controlled to a certain extent, the global industrial chain has gradually returned to normal and is on the right track, and the world economy must move in the direction of comprehensive recovery. But at this juncture, the situation in Ukraine suddenly became tense. I believe that many people have suddenly heard directly from the news that Ukraine is going to war and Russia is going to invade Russia. In fact, not only us ordinary people, but also the international market, when we heard the US government order the staff of the US embassy in Ukraine to evacuate, Biden announced that Russia will invade Ukraine on February 16, it was a frightened expression. International investors are nervously watching the changes in the situation in Ukraine, reacting in panic in the market, which directly leads to market turmoil.
New York crude oil futures briefly exceeded $94.9 a barrel on Feb. 14, up from $94.66 the previous weekend on Feb. 11, and recently contract prices have reached a new high since seven years and five months since September 2014. Many in the investment community believe that if Russia does "invade" Ukraine, Russian crude oil, which accounts for 10% of the world's production, may stop exporting due to sanctions, which will cause the price of crude oil to break through the $100 mark. Analysts believe that if the price of commodities centered on crude oil prices rises, it will inevitably cause a chain reaction such as accelerated inflation, and the very fragile global economy will be in a state of instability for a long time. Against this backdrop, inflation, which has been consistently high in the United States, is naturally even worse, and the consumer price index in the United States rose by 7.5% year-on-year in January, which is already growing faster than in December 2021 and at the highest level since 1982. Now the further rise of commodities will inevitably be transmitted to manufacturing companies, and the CPI in the United States may only climb at a faster rate. For a long time, the United States has been responsible for printing money, harvesting the world, and keeping domestic inflation low.
If the new crown epidemic is a natural disaster, then the Ukraine crisis is a man-made disaster, the global economy after more than two years of suffering, is about to come out of the quagmire, towards recovery, before the results of the dollar release also let the Americans taste the taste of harvesting others all day, the Federal Reserve also began to gradually move towards the currency contraction, severe inflation has also shown signs of weakening. However, the outbreak of the Crisis in Ukraine will make the situation in Europe face a more serious new crisis, the oil and gas market will bear the brunt of the impact, and the cloud of war no one dares to say that it is completely empty. If the flame of inflation is rekindled and spreads around the world, it will undoubtedly be a blow to the global economy that is just emerging from recovery, and central banks will probably have to accelerate the pace of monetary tightening and let the fragile world economy suffer the consequences of overcorrection.
Inflation has already made the world economy uncomfortable enough, and if it is truly resolved, it has not found a practical solution until now, and now inflation and geopolitical risks are intertwined. Today, thirty years after the end of the Cold War, it is said that the global economy has truly come out of the division and moved towards integration, and while sharing the benefits of integration, we must also face up to the reality that today's world is only economic globalization, and geopolitical tearing has not changed in essence, and this tear may even cause more serious harm and consequences with the help of economic globalization.