Before reading this article, I sincerely invite you to click "Follow", which is not only convenient for you to discuss and share, but also brings you a different sense of participation, and it is more convenient to come back at any time to read more exciting content, thank you for your support.
The total amount of U.S. debt has soared to an unprecedented $35 trillion mark, and everyone is speculating about when the time bomb of U.S. debt will detonate. However, just when the tension was set, the Fed resolutely dropped a bombshell, announcing that it would rather die than cut interest rates in August.
They need to United States out more than $1.1 trillion a year just to pay interest, United States they are struggling to extricate themselves from a deep deficit policy.
But the strange thing is that even in the face of many difficulties, the United States still seems to have chosen a seemingly difficult but firm path, that is, it would rather die than cut interest rates, and there is a conspiracy behind this? Or is it a last resort?
China released a striking economic data in June, and we are experiencing an unprecedentedly high trade deficit. In the face of this situation, ensuring stable export growth has become a top priority, and in view of the downturn in the real estate market, it is necessary to support the economy with export trade.
Dear readers, it is not easy for the author to write an article, and his income is meager, so he has to add a short 5-second advertisement to the article, and you can read the full text for free by watching. I know this may be a little intrusive, but your understanding and support is my biggest motivation! I'll try to bring more quality content!
Entering July, China's PMI fell slightly to 49.4, a slight decline from June, which also reminds us that the real economy is now facing huge challenges. In order to stabilize this key area, China has anticipated and implemented interest rate cuts in advance, creating a low-interest rate environment, and in doing so, it is actually trying to reduce the burden on companies.
As for the United States, their strategy is also very clever, but no one understands the intention behind it. At this critical moment, they chose to continue to maintain a high interest rate policy, but this move invisibly exacerbated the market risk of the dollar.
Recently, the dollar index has started to decline, which proves that the future trend of the dollar is not so clear. As we all know, two years have passed since the United States implemented the interest rate hike policy, and the phenomenon of dollar repatriation has stabilized worldwide.
This means that even if the current interest rate differential between China and the United States widens, it is unlikely to trigger more US dollars to withdraw from the Chinese market. Therefore, even if the United States maintains high interest rates, it is difficult to cause a severe shock to the Chinese economy, so no one knows the real intention behind the United States's move.
In fact, most people are now more curious about why the United States is reluctant to cut interest rates, in fact, the purpose behind it is very simple, the day they cut interest rates is their end time.
If the United States decides to lower interest rates on the dollar, it will be like loosening the ties on those dollars that depend on interest income, giving them more opportunities to move freely. As a result, the amount of dollars circulating around the globe increases, like suddenly there is a lot of money in the market.
As a result, the value of the U.S. dollar will fall relative to other currencies, i.e., the U.S. dollar exchange rate will weaken. If the dollar exchange rate falls, it will have an impact on many things.
For example, United States stock market may be hit because investors may sell stocks because they are worried about the future economic outlook, causing the stock market to fall, which is often referred to as a US stock crash.
Moreover, the depreciation of the dollar will also make domestic prices rise faster in the United States because imported goods become more expensive, which is inflation.
If inflation is severe and prices skyrocket, the cost of living for United States people will increase significantly, which may cause social dissatisfaction and unrest, and may even lead to serious internal problems in United States country, that is, there may be civil unrest within the United States.
In fact, the reason why the United States looks richer than us in many ways and has a higher GDP is largely because the exchange rate is at work. What would happen if the exchange ratio between the US dollar and the yuan changed to 1 US dollar and only 5 yuan?
For United States friends, the purchasing power of their wallets has shrunk, just like they have to spend more dollars to buy the same thing, which feels like prices are quietly rising, everyone can buy fewer things, and the quality of life is naturally reduced.
In turn, our renminbi has become stronger, and theoretically, our economic aggregate, that is, GDP, will look more attractive internationally, because the same amount of goods can be exchanged for more dollars in value.
But the reality is far more complicated than that, and in recent years, the United States has printed a lot of new money in response to economic challenges, and everyone has seen this. If they start cutting interest rates, it will not just be as simple as bringing the exchange rate of the dollar and other currencies back to what it used to be.
It's more like opening a floodgate for the dollar to become less expensive, and its exchange rate will swoop down like a slide, maybe even lower than it used to be. As a result, the international status and purchasing power of the US dollar will be greatly affected.
Eventually, all this will lead to a definite consequence, which is an unprecedented large-scale depreciation of the dollar. At that point, the situation may be completely reversed, and instead of United States easily buying assets around the world at low prices, global forces will instead target United States and look for opportunities to invest at low prices.
Recently, the yen has been doing quite strongly, and they are also selling United States Treasuries to use this strategy to increase their value, and they have also announced a major decision to raise interest rates.
This series of actions has made many people think that Japan seems to be in opposition to United States, but in reality, the situation is far more complicated than it seems. The yen exchange rate climbed all the way from 162 to 148, easily crossing the key point of 150, and as an important part of the dollar index, the appreciation of the yen naturally weakened the relative value of the dollar, indirectly promoting the appreciation of the yuan.
In order to maintain the smooth operation of the economy, we need to pay special attention to maintaining the stability of the RMB exchange rate and avoid large fluctuations.
This is because a sharp appreciation or depreciation will put pressure on exports, and at the same time, it will also affect the confidence of international partners who hold the RMB, and may also hinder the internationalization process of the RMB, and may even affect the enthusiasm of foreign capital to invest in the Chinese market.
Understanding this, we can see more clearly why the United States insists on not cutting interest rates despite its own economic difficulties.
Seeing this, I believe everyone should also understand what is the reason behind the policy of not cutting interest rates in United States, they still want to curb China's development, try to curb our exports through a series of means, and put pressure on our economy.
In recent months, our export prices have been declining, which means that we have to sacrifice some of our price advantage in order to maintain the growth of export volumes. At such a critical moment, it is all the more necessary for the people of the whole country to work together, at least not to cause chaos in the country, and to jointly deal with the challenges.
What do you think about United States not cutting interest rates? Welcome to discuss in the comment area!