Now that the US dollar interest rate hike has become a mystery to the world, what exactly do they want to do? Why are Americans so calm and not afraid?
Could it be that the dollar continues to have low interest rates, and people all over the world spend a good time with the dollar, isn't it? Today, let's introduce a statement that many people in the United States believe, how credible is it?
The US dollar interest rate hike is a harm to the world's economy and finance, and it is also the same for the US economy and finance itself, so many people don't understand why the Fed is so persistent and has to play this dangerous game every few years?
Although there is a lot of speculation around the world, no one knows the Fed's real cards.
The latest bad news is the shock wave of the surge in bad loans in U.S. commercial real estate credit triggered by the US dollar's interest rate hike, which is spreading from small and medium-sized regional banks to large Wall Street banks.
A few days ago, it was reported that the stock price of New York community banks fell by more than 50% due to serious losses in bad debts of commercial real estate, triggering a new round of runs on small and medium-sized banks, and the risk of bankruptcy of small and medium-sized banks in the United States rose rapidly.
The latest data shows that commercial real estate credit defaults on JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs and Morgan Stanley nearly tripled to $9.3 billion in 2023.
How high and serious is the risk?
According to data released by the Federal Deposit Insurance Corporation, the commercial real estate credit reserves of the six major Wall Street banks mentioned above are seriously insufficient, and there is a risk of a thunderstorm at any time.
In 2023, the amount of loan arrears related to other commercial real estate such as office buildings, shopping malls, and apartments in the United States reached $24.3 billion, up from $11.2 billion in 2022.
When Silicon Valley Bank and Signature Bank collapsed in the first half of last year, Goldman Sachs had already warned that the risk of commercial real estate credit was rising sharply.
Obviously, on the second anniversary of the current round of US interest rate hikes, the credit risk of commercial real estate has become another extremely high-risk bubble after junk bonds, sounding the alarm for Wall Street and even the entire US financial industry.
This is all because of the US dollar's interest rate hike. If the dollar does not raise interest rates, Silicon Valley Bank will not go bankrupt and commercial real estate credit risk will not arise.
Again, why is the Fed doing such a thankless job?
Among the various speculations about the US dollar interest rate hike, the US dollar tidal harvest world is the most widely circulated and credible statement, because the facts caused by the 6 US dollar interest rate hikes in history have been proven to be true, and it is not a story made up by anyone.
However, many Americans do not believe this claim, and they believe in another version: the US economic reset.
The underlying logic of this argument is that there is a very obvious but insurmountable drawback in the highly liberal and highly financialized economic system in the United States, that is, in the shadow of certain regulations, non-performing assets continue to breed and even bubbles.
As early as the beginning of the 20th century, American bankers had already discovered the phenomenon of bubbles in the overheated development of the economy.
When capital smells money, people will use their brains to play all kinds of new tricks, desperately earn wealth, and create new "outlets", and capital frantically pours into this gap, resulting in a large number of non-performing assets and quickly forming a high-risk bubble.
For example, the subprime mortgage in the 2008 financial crisis, the asset inflation bubble and MBS of Silicon Valley Bank in 2023, etc., are all non-performing assets in the financial system.
These high-risk bubbles are cancers in the U.S. economy and financial system, and over time they can cause all kinds of discomfort and even pain, and even cause severe scars to the U.S. economy in the 1930s, so they must be surgically removed.
The Fed is the knife that removes the cancer, and they use interest rate hikes to squeeze the bubble in the financial system and remove bad assets, and this process is the process of the US economic reset: recovering from economic overheating and returning to normal.
So how can you tell if the economy is overheating? Americans believe that when inflation is too high, there must be a risk of overheating and a high bubble, and when unemployment is soaring, there must be an economic overcooling.
So every time the Fed raises interest rates, it keeps saying that it wants to suppress inflation.
The highly liberal economic and financial system of the United States cannot avoid such a crisis, which is why every few years, the Federal Reserve has to raise interest rates aggressively to help the American economy reset.
Unfortunately, this selfish and reckless approach of the United States has also brought disaster to the world economy.
The biggest tragedy in this is that because the dollar is the world's currency, every time the dollar raises interest rates, the world has to suffer the pain of monetary tightening, and it has to experience a disaster in which the American capitalists harvest the world.
Do Americans know this mode of economic reset in the midst of a crisis? Does Wall Street know? A lot of people are obviously very clear, so they don't panic.
They may also know that as long as they survive the crisis, it will be a gluttonous feast to harvest the world, and only those who cannot persevere in the crisis will become pathetic fools and victims.
The plundering of the world's wealth is the greatest original sin of the United States today.