The bill passed by the US Congress in May this year to raise the US debt ceiling, although it was unexpected and reasonable, also raised concerns about whether the US debt would collapse. Although there are people who have fantasies every time the debt ceiling is raised, it has ended in disappointment. Over time, people have become numb to this, and some even believe that the US dollar hegemony can support him to continue to borrow money to spend without capsizing. But this is probably not true.
If the United States can really borrow wantonly, then he can use money to smash China to death, why is it still so busy like today?In fact, under the false aura of unlimited US debt, there must be something restraining it. So, what is the relationship between dollar hegemony and US debt?As you may know, the reason why US debt is so arrogant is largely because the US holds the hegemony of the US dollar. So, how did the hegemony of the dollar come about?In fact, before the collapse of the Bretton Woods system in 1971, there was no such thing as dollar hegemony in the world.
Previously, the British pound was the hegemonic currency of the world, but the US dollar was not. Because in that era, countries implemented a gold standard system, that is, as much currency as there were. Money can't be over-issued, so there's no such thing as a dollar tide. Without the dollar tidal wave, the world's wealth cannot be harvested. If we can't harvest the world's wealth, we must "take it easy" to repay the debt, and not borrow as we do today. The so-called debt ceiling of the United States was also a product of the system at that time.
People at that time took the issue seriously, not as perfunctory as it is today. However, after the collapse of the Bretton Woods system, the issuance of money was decoupled from **, and the amount of money issued was also based on the conscience of the Federal Reserve. Soon, Fed Chairman Volcker found a shortcut to make money. He found that as long as he adjusted the rise and fall of currency interest rates, he first lent money to countries that needed dollars, and then invested their money in various high-quality assets, and then unexpectedly announced interest rate hikes to let the dollars flow back, so that he could make money.
Topic: The Principle of American Financial Magic and the Risks of Existence In the global financial system, the United States has made the world its pig farm through financial magic, and the premise of this operation is that the financial system of the host country must circulate freely. Although this kind of operation is seen through, no one can prevent it, because the rules are all set by the United States. In the past, the United States was able to play so heroically mainly because the vast majority of countries in the world did not have independent sovereignty at that time.
However, as the world's wealth is increasingly concentrated in China, the road to harvest in the United States has become more and more difficult, so since the defeat of the Sino-US financial war in 2016, domestic problems in the United States have been frequent. The reason why the United States is unable to grab money is because all kinds of contradictions that have been covered up by prosperity have begun to be exposed. Since the time of Trump in 2016, the size of the US debt was 19$98 trillion, and by the time he left office, the U.S. debt had soared to $27$8 trillion, equivalent to a 39% increase from the original size.
After Biden took office, the U.S. debt was pushed up to a world record of $32 trillion. This means that the risk index of US debt default has been climbing and has become higher and higher. Therefore, there is a risk in the financial magic of the United States, and it is not a clever operation, but because the rules are all made by the United States, any operation can be won. Extraction Topic: The U.S. Debt Problem and Its Causes Rewritten: Speaking of which, there may be some friends who are confused.
They may think that the U.S. debt that has reached the point it is today is simply the result of the extravagance of Trump and Biden. Perhaps, if you change to a thrifty **, the situation will improve!Actually, it's completely impossible. The debt problem of the United States is caused by various interest groups such as the military industry, medical care, education, and finance. Over the past three decades, the United States has destroyed the Soviet Union, believing that the world is stable, and allowing interest groups to swell wildly. They are like a cancer on the body, constantly absorbing nutrients from the body.
Interest groups will only grow larger and larger in the process, and will need more and more nutrients. If nutrition is reduced**, it means that a large number of interest groups will perish. They will definitely not sit still, and will definitely resurrect this body through various mechanisms. Americans can't stand this pain and can only relieve it by buying painkillers like U.S. bonds. The result is that the drug cannot be stopped, and the dose is getting bigger and bigger.
For example, during the Clinton era, the size of the U.S. debt was only 14 trillion dollars, after all, the Soviet Union had just collapsed, and the United States still maintained the Xi of thrift. However, when George W. Bush left office, that number soared to 61 trillion dollars, most of which was thrown into the military-industrial complex. George W. Bush. Obama took office in the midst of the 2008 financial crisis. In order to save the large financial groups that could not fall, Obama continued to print money and issue bonds, pushing up **, and since then the United States ** has entered an epic bubble period.
By the time he left office, the debt had increased even more than the top two ** combined, which shows the harmfulness of interest groups!As debt continues to ballooze, the United States must have the ability to cut leeks accordingly. But the question is, can the world's "leeks" keep up?Not to mention whether it can keep up, China's invulnerable stubble alone is enough to give the United States a headache. Some friends may ask, since China cannot be ceded, can the United States pay off its debts by ceding other countries?Again, the answer is no.
For example, in recent years, the Fed has begun its rate hike cycle, but we were surprised to find that no developing country has declared bankruptcy except Sri Lanka. Even if Pakistan and Argentina were in crisis at one time, as long as they came to China, they could get out of the crisis. The hegemony of the dollar is currently facing an embarrassing situation: if the problem of production centers is not fundamentally solved, its abundant foreign exchange reserves can cause problems for star-absorbing countries by aiding other developing countries.
Not only is China doing this, but bond-issuing countries such as Saudi Arabia are also digging into the corners of the United States. The only way for the United States to counteract the influence of the eastern powers is to raise interest rates and increase its efforts to attract stars. However, in this way, it is difficult to guarantee whether the developing countries will collapse first, or the United States will die first, because compared with US debt, ** is the lifeblood of the US dollar's hegemony. The collapse of the US stock market will mark the end of the hegemony of the US dollar. The world's debt is not only in the form of bonds, but money is the largest debt.
For every 100 yuan of currency issued by the state, if it cannot stimulate the corresponding increase in productivity by 100 yuan to support it, then the issuance of this 100 yuan of currency will dilute the existing value of the currency and lead to inflation. China and the United States have issued the most money in the past few decades, but productivity growth has lagged far behind monetary growth, contributing to the potential for hyperinflation. In order to prevent inflation, the US stock market and real estate absorb excess money into the financial system and not into the real production sector. As long as that money in the financial system keeps spinning forever, there will be no hyperinflation.
But if there is a big fall, the money will go to the real realm and ask for cash, and it will be all over. The market capitalization of the United States is as high as 59 trillion, and it has been living by printing money since 2008. According to statistics, more than 60% of them are water, and there is no physical asset support. This number is about 354 trillion, three points larger than the U.S. debt. The bigger the bubble in the US stocks, the less able it is to withstand volatility, and the market will have to cry out for help with a little interest rate, which severely limits the room for US dollars to raise interest rates.
During the Volcker era, the United States once raised the rate of interest rate to more than 20% at one time, but now the rate of interest rate hike has only increased to 5%, and the market has begun to appear**. This has greatly weakened the confidence of countries around the world in the United States. While the dollar tidal scheme is well-known and unethical, it also illustrates America's ability to repay its debts. Even if the United States is a robber, as long as it has the ability to pay off its debts, I can safely lend him money.
However, now that the U.S. is not as indebted as it used to be, it often suffers backlash, and what if I lend money to the U.S. and it can't repay it in the futureWhen this idea emerges from countries around the world, the cost of borrowing in the United States will rise even further. The United States is caught in a vicious circle that cannot be stopped. If the U.S. debt crashes, it's not necessarily a good thing for the world. The capitalist world has always had the problem of overproduction, and the capitalist system has a crisis of overproduction every once in a while due to the overdeveloped and unevenly distributed productive forces.
However, after the collapse of the Bretton Woods system, the debt system of the United States successfully absorbed these overproductions. The United States borrowed money to consume goods far beyond its means, thus keeping the world's production systems functioning to this day. This is the so-called "China-US" model, where Chinese products are sold to the United States, and the United States pays in dollars, and then China exchanges those dollars for U.S. bonds, and the U.S. continues to consume those dollars. Without these dollar debts, would the United States have such great spending power?The answer is no.
Similarly, if the United States does not consume it, will the products produced in China be able to digest it?Still negative. This principle applies to all countries in the world. If the overproduction hedge of U.S. debt collapses, will humanity be far from the Great Depression of overcapacity?Some people will say that it is possible to lend money to the people of the country to consume excess capacityLinking credit issues to debt, anyone borrowing must consider the creditworthiness of the other party.
But why do we think that our own guarantees of national credibility are more valuable than those Americans who have hegemony?This assumption dooms the United States to be the most likely country in the world to borrow. Other countries do not dare to imitate, otherwise they will face a grim situation like Greece. However, the magic of US bonds will not last long after all. The economic crisis is a long-lost disaster, and it is getting closer and closer. This article was originally created by "Literature and History", and has been opened on the whole network to protect rights