Original Liping sitting and watching the clouds rise, Lao Sun recommended reading
At least, since the Fed's successive violent rate hikes, there has been constant talk of the possibility of a recession in the United States. Including many famous scholars and investment institutions, almost all of them are convinced of this.
Not only that, some experts even believe that the United States also needs such a big recession. For example, former Credit Suisse analyst Zoltan Polzsar, whom I once quoted, said:
We need to form a big "L" recession to curb inflation, and we need to promote a negative wealth effect to suppress consumer demand so that the consumption side can match the new reality on the supply side. And if monetary easing leads to an increase in demand, constrained supply will immediately re-push inflation higher.
But so far, at least, the expected recession doesn't seem to have happened. Not only did the recession not occur, but it gave a strong feeling both in terms of growth rate and in terms of investment, consumption, employment, and wage growth.
On a Tesla earnings call, Musk said: "Sometimes there is a feeling that the world economy is going to collapse, but by the next day, everything seems to be fine again, and frankly, I don't know what is happening now." One banker said: "Those who say they know what the future will be ahead of them are deluding themselves, right? We really didn't know, and with a big rise in interest rates, I thought a recession should have come, but it wasn't. ”
Now, people are asking, why didn't the expected recession happen? This is indeed a bit strange. If nothing else, when the benchmark interest rate is above 5% and the commercial loan interest rate is around 9%, why can the economy perform so strongly?
In this regard, many explanations have been proposed. For example, in the case of high inflation, the growth rate of people's income offsets the impact of inflation, so that people's real income still increases after deducting inflation; For example, pent-up demand during the pandemic has been released reboundly after the epidemic has ended. More importantly, it emphasizes the role of government money during the epidemic.
But in my opinion, these explanations are relatively superficial.
My opinion is that the concept of the Great Disassembly can better explain this phenomenon. The concept of dismantling not only better explains this phenomenon, but also allows us to better understand what are the main factors that determine the trend of the economy today, and what the future direction may be.
I have emphasized that in the context of the Great Dismantling, the problems facing the United States and China are different.
The U.S. faces a supply problem, while China faces a demand problem. The problem of the former is that many things need to be produced by themselves, and the problem of the latter is that many things have to be re-found on the market. Then it can be understood that in the context of the Great Dismantling, the United States is facing inflation, while China is facing deflation.
To rebuild the industrial chain after the Great Dismantling, the West needs to form new production capacity and form new supply capacity, which requires huge investment. And what happens in reality is exactly such a scenario. Some say that a supercycle of U.S. manufacturing investment is beginning. Heavy industry, in particular, is making large-scale new investments to produce batteries, solar cells, semiconductors, etc.
It is worth noting that foreign money is also entering the United States in large quantities. One researcher put it this way: "When you talk to companies in South Korea, Japan and Europe, they talk about just wanting to build a business in the U.S. "Data shows that by April 2023, annual spending on new factories in the U.S. manufacturing sector reached $189 billion, three times the 2010s average.
This is somewhat similar to the process of rebuilding the economy.