Our country's economy, which has maintained steady growth over the decades, has led many people to take this for granted. But globally, such a situation is not common.
Economic growth in Western countries, which has been sluggish for decades, has often been hit by economic crises. Japan's economy has been in a state of stagnation since 30 years ago. There are also some countries that are even more bleak, either just accumulating a little and being swept away by the financial crisis, or they are at peace with the situation and do not seek progress.
In developed countries and most developing countries, it is very rare and difficult for the economy to continue to grow strongly for decades. Many countries are unable to stabilize their economies, let alone grow them. Therefore, we should not take our economic growth for granted, but cherish and be grateful for it.
Now the United States is in the midst of an unprecedented austerity that could bring a Great Depression to the world instead of sustained prosperity and growth.
Many things in human society have cyclical laws, and the economic crisis of capitalism is no exception, but the size of the crisis and the length of the time are different. About 100 years ago, the United States triggered a Great Depression that affected the whole world, which is known in history as the Great Depression of the century in 1929.
Now it seems that the world seems to have returned to that era.
The Great Depression was preceded by three phases, the first of which was lax regulation, the second was massive easing after problems, and the third was the collapse of U.S. stocks due to interest rate hikes. At present, the United States has all the conditions in place, and it is only waiting for the final blow to detonate the collapse of the US stock market and trigger the great crisis of the century.
The U.S. has recently revealed that by the time of the May rate hike, it will not only add 50 basis points at once, but also start reducing its balance sheet, and eventually reach $95 billion per month thereafter. In fact, the same is true for shrinking the balance sheet, that is, the Federal Reserve sells all kinds of bonds, mainly U.S. Treasury bonds, and replaces them for cash, so that its balance sheet shrinks and the liquidity of the market is reduced.
This operation is not complicated, but the timing of this operation is worrying, because this matter, like a white man suddenly giving birth to a black child, is rare in history, and you can tell that there must be a problem in it at a glance. Not only is there a problem with the operation, but also with the timing.
So far, this round of interest rate hike cycle in the United States has just begun, and it has only raised interest rates once in March, and it is 25 basis points, which is equivalent to disinfection first. The planned interest rate hike in May is the second rate hike, which directly requires an increase of 50 basis points and a balance sheet reduction.
This is equivalent to not taking anesthetics and directly bleeding. Can liquidity in the U.S. market withstand such a large draw?If there is not enough money in the market, U.S. stocks will be shorted, and it is strange that U.S. stocks will not collapse after several times. Of course, there is also a possibility that the speed of the return of dollars around the world exceeds the speed of the Federal Reserve, and that is the result that the United States wants.
But from the point of view of the United States, if it has just begun to raise interest rates and collapse itself, it will be equivalent to the complete failure of this global harvest plan. So from this point of view, the world may not be at peace this year, because the United States will have to launch an unprecedented operation to drive the dollar back to match the Fed's unprecedented tightening policy.
The U.S. interest rate hike in March came less than a month before the Russia-Ukraine conflict broke out. In the end, the designated payer of the Russian turntable is innocent Europe. Is this part of the U.S. plan?If so, then in May, the United States will have to double the intensity of austerity and shrink its balance sheet, how much will it have to do to match such a big austerity?
And that's not all, the U.S. plan is three months, to add 50 basis points three times in a row, which is equivalent to a 1.5 basis point rate hike in three months5%。Can the U.S. economy withstand such a drastic rate hike?You know, if four interest rate hikes bring down the U.S. stock market, it will be a devastating blow to the United States.
Now the United States is desperate, which is tantamount to betting on the fortunes of the country, and it is necessary to ensure that the US stock market has sufficient liquidity support while raising interest rates. In the past, the Fed raised interest rates from a moderate start, and never worked hard as soon as it came up.
Now the biggest mystery, I don't know what happened, the United States must be so urgent to raise interest rates + shrink the balance sheet, so the operation is very risky, what makes the United States so anxious, willing to take such a big risk?We don't know yet, but the whole world is trembling when the United States does this. After all, Russia and Ukraine are the immediate examples, and this is also a nuclear power like Russia, which may not last so long if it were replaced by an ordinary country.