Due to the high inflation data in the United States, the Fed's interest rate cut speculation has not yet arrived, so far, the dollar has not only not depreciated, but has appreciated wildly. The Bloomberg Dollar Index has risen more than 4% this year, suggesting that the greenback is rising against both major developed and emerging market dollar indices.
The US dollar's interest rate hike is frantically harvesting global leeks, bringing a price to the global economic development, and Japan, as the largest creditor of the United States, naturally suffers from it. Recently, the yen has depreciated rapidly, and the safe-haven currency attribute no longer exists, and Japan originally wanted to eat with the United States, but I didn't expect to end up becoming a member of the menu. Countries such as India, Nigeria and Poland have all heard voices of government intervention in the foreign exchange market. The unrestrained harvesting behavior of the United States has forced more and more countries to start using their foreign exchange reserves, and the most typical way to deal with it is to sell US bonds to mitigate risks, and China is no exception.
According to a report by the U.S. Treasury Department, China reduced its holdings of U.S. bonds by another $22.7 billion in February this year, bringing its holdings to $775 billion, close to a 14-year low. China sold off U.S. bonds for the rest of the nine months of last year, with the exception of March, November and December, suggesting that China does not have strong confidence in the future economic development of the United States.
Selling U.S. bonds to other countries is critical to the U.S. economy. All along, the United States has been "spending ahead of time", using funds provided by other countries to maintain American financial hegemony. At the same time, the problem is that the huge interest generated by the US debt, which is as high as more than 30 trillion yuan, has even exceeded the US defense budget, and the uncontrolled growth of the debt has laid a bigger and bigger bane for the dollar.
Now there is a very outrageous phenomenon in the US financial market, that is, under the continuous interest rate hikes, the US deposit interest rate is even higher than the loan interest rate, which means that you can still make money by borrowing money from the bank and then depositing it in the bank. This phenomenon of "white wolf with empty gloves" is clearly unreasonable. On the other hand, the debt lent by the United States has returned to the United States through interest rate hikes, which can be regarded as another form of "empty glove white wolf".
In the past, when the United States maintained a strong economy, countries could only dare to be angry at the behavior of the United States, but now that they see the increasingly high debt and inflation data of the United States, countries are beginning to realize that the debt of the United States has exceeded GDP, and what should the United States do if it suddenly does not pay back. As a matter of fact, the United States itself is also worried about this problem, and how to repay its debts has become a headache for the US government. The most mentioned is the "trillion dollar coin", but even with the endorsement of the Federal Reserve, other countries do not dare to accept it. Paying off the debt with crude oil is a good way to do it, but most of the oil in the United States is private, and the capitalists will not harm their own interests for the sake of the US government.
As a result, US Republican Congressman Vance put forward a "brilliant idea," that is, to find a reason to rely on China's account. He claimed that the Kuomintang government had borrowed $1 trillion in long-term sovereign debt from the United States in 1949 as a guarantee for future tax revenues, and that it had not been repaid until now, and that "other countries can easily follow suit." He proposed that China repay the trillion dollars first, and then the United States will pay back the money owed by the United States.
According to the US congressman's calculation of turning over old accounts, China owes the United States more than $200 billion. If China really accepts this condition, it will be difficult for Western countries to use the unequal treaties of the Qing government to demand money and land from China. In fact, this councillor is just talking about it, after all, this is not the first time they have mentioned this matter. However, this still has to arouse China's vigilance, Western countries are considering freezing Russia's overseas assets, and China's assets are safe, and may not be safe in the future.