Preface
In the spring of 2024, the global economy is undergoing a seismic shift. In the currency market, the duel between the dollar and the yen has become a point of controversy. One theory is that the dollar's strong performance has shattered market expectations, and it has led the market into a new and unpredictable pattern like a beast breaking through the chains.
Another view is that the beast is arrogantly controlling the currency market, not realizing that it has slipped under its own feet into the abyss. As a result of its play, other currencies, especially the yen, have fallen into a dangerous abyss and become out of control.
"The Great Change in Money Markets: Behind the Strength of the Dollar and the Depreciation of the Yen"
Behind the seemingly mediocre figures, there is a thrilling past and future. The dollar-yen exchange rate has risen from 129 to 156 in just one time, which means that the yen has depreciated by 21% in one year and a staggering 52% in three years. This rapid rise vividly illustrates the fickleness and cruelty of the market economy. Like a sword of Damocles hanging over the yen, it threatens Japan's economic stability. Not only the yen, but other Asian currencies are also weak in their self-worth status, and there is a lot of mourning.
But this is only the surface, and a deeper look reveals that the truth behind this is even more complex and striking. The strength of the dollar is not only the strength of a currency, but also the embodiment of an economic principle. This is a silent confession about the dynamics of the international economy, the flow of capital, the transfer of wealth, and a clever use of the strategy of the international money market.
As the old proverb goes, "A pig on the tuyere can fly", and in this market storm, who can ride the wind and waves and raise their eyebrows? Or will it be mercilessly swallowed up by the wave? All this can only be decided by the market.
Behind the strong dollar, further revealing the secrets behind this will be a major theme - the debt crisis in the United States. This is a rebirth of the market, this is a contest of wealth, this is a new interpretation of economic principles.
"The U.S. Debt Crisis: The Economy's Path to the Wall"
The blind pursuit of prosperity often makes people ignore their own vulnerability. Like a material resource, debt is a resource that has its own life cycle. And if this resource is overloaded, the consequences are often staggering. In the economic sphere, in particular, the failure to consider the sustainability of debt can ultimately reveal in a devastating way the crisis at its origins.
In a world-leading country with ambitions, such as the United States, it may be difficult for ordinary people to understand who is responsible and who is burdened with trillions of dollars. It's like performing a grand magic show, the huge debt is wrapped in the gorgeous economic façade of the United States, and the halo is dazzling, but no one pays attention to the heaviness and helplessness behind it.
By eroding economic fundamentals, debt has silently widened, squeezing the already fragile resilience of the economy and becoming a ticking time bomb that could ignite the global economy at any moment. And the United States, like a magician standing on this ticking time bomb, is holding high the banner of the dollar while managing more than $35 trillion in national debt, while facing an impending debt crisis.
There is no doubt that the United States is the brain of the world, and the size of the domestic economy, which has been expanded through debt, leads the direction of global economic development. Like a giant soap bubble, large and easy to break. When the foam is noticeable when it floats in the air, when it is rubbed too tightly, it bursts silently, and all that remains is a bubble. And when this huge and gorgeous bubble bursts, the Ace cows that fly by the neck will also fall into the real bullfold, not the imaginary paradise.
Has the United States reached a point where it is impossible to cope with this huge debt crisis? The answer is no, in the face of the debt crisis, the United States has begun a new round of harvesting. It seems to be a humane hand, but in fact it hides a well-thought-out trap.
"Anatomy of U.S. Strategy: Behind the Debt Crisis"
To analyze the strategy of the United States, we must first go back to the Asian financial crisis of 1997. That year was like a bright lightning bolt, piercing the dark night of the Asian economy and letting the world see the cruelty of the market economy. Under the economic strategy of the United States, Southeast Asian countries such as Thailand, Indonesia, Malaysia, and even Hong Kong have also been included in its control, allowing the United States to make a wild profit of $2 trillion through the Asian financial crisis.
And this strategy works with a rapid rate hike and a sudden rate cut to convince the market that the Fed has started a rate cut cycle. Such a strategy is like a seemingly docile big bad wolf, first smiling and letting the lamb let his guard down, and finally swallowing it in one bite. The teeth of this big bad wolf, that is, its interest rate adjustment, can easily penetrate any economic line of defense. And the United States has done all this, because as early as 1994, it began to prepare.
This does not mean that the United States is the only winner. As participants, we can dissect their strategies, understand their motivations, and use them when appropriate. Whether it is the Asian financial crisis in 1997 or today's economic situation, the Fed's benchmark interest rate adjustment has led the market with its seemingly random rhythm and carefully planned steps, and has become an important means of US economic strategy.
In this seemingly complex and volatile battle, some people lose everything because of it, and some people accumulate results overnight. Whatever the outcome, however, we must recognize that this is not simply a zero-sum game of winners and losers. Because no matter what the outcome, we are moving towards the unknown, after all, the winner in the economic war, perhaps, the next moment, becomes the loser.
The situation is strikingly similar to that year between 2022 and 2023, when the Federal Reserve raised the benchmark interest rate on the US dollar from 0% to 5.5%, triggering a sharp depreciation of Asian currencies. The abundant harvest on the lavender plains of the United States today comes at the cost of pain and price all over the world. The world is still spinning, history is still moving forward, and we need to stay awake and see through the surface to see its essence. Where will we be? How will we respond?
"China's Response Strategy: An Important Tool for Maintaining Economic Stability"
In the face of the U.S. economic strategy, China's response is extremely complex and delicate. There is an argument that China's strategy is slow and steady, like a humble Tai Chi master, easily avoiding the opponent's onslaught and causing it to collapse in a traction way, but always holding on to its central stability.
The Chinese government has always adhered to a unique economic philosophy: "optimizing the economic structure, not stimulating economic growth". It's like that, in the face of a crazy game of guessing, China has chosen to be calm and not blindly follow. After all, a high-speed economy is like a transparent soap bubble, which is round and bright, but full of dangers.
The economic response is not limited to conservative strategies, and China is gradually restructuring its economy from an export-oriented one to a more domestic demand-driven one. However, the implementation of this strategy does not happen overnight. It's like a long marathon, and the participants need to be patient enough to wait for the best moment to make the most of it.
China actively participates in international economic interactions, manages its foreign exchange reserves like a child, and turns its capital potential into real influence. By promoting the internationalization of the renminbi, advancing the Belt and Road Initiative, and skillfully managing domestic monetary policy, China has found the optimal balance in its limited political and economic space.
epilogue
In the face of dollar hegemony, debt crisis, and global economic instability, China needs to design and implement unique economic strategies to ensure its own economic stability. How can China remain resilient in this changing world? How will it respond to the next economic storm? The answers to these questions remain unclear, but we can be sure that China will stick to its unique response.