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In recent years, the US dollar interest rate hike has become the focus of global economic attention. Many people are curious about why the dollar has not cut interest rates for a long time, and some people even assert that the dollar has reached its limit and cannot come down. This is because the underlying logic and real secret of the dollar's interest rate hike is not well known. This article will reveal the logic behind the US dollar's interest rate hike and the hidden truth.
1.Success criteria for a US dollar rate hike
Past experience has taught us that the success of the US dollar rate hike depends on two aspects: inflation and unemployment in the United States, as well as international capital flows and international** activity. In the United States, high inflation means that the economy is overheating and interest rates should be raised to prevent the economy from spiraling out of control; A rise in unemployment indicates that the economy is in recession and that interest rate cuts are needed to stimulate recovery. Internationally, the US dollar interest rate hike will lead to a global monetary tightening, a decline in international activity, losses in the manufacturing industry of producing countries, depreciation of currencies in other countries, and commodities
2.The essence of the US dollar's interest rate hike
The essence of the US dollar interest rate hike is to create a tidal effect by manipulating interest rates, transferring inflation and financial risks to the world, and at the same time reaping the fruits of the world economy. The U.S. has made the U.S. economy and financial system healthier and entered a new round of development cycle through cyclical regulation and control of interest rate hikes and interest rate cuts. At the same time, the US dollar interest rate hike can also attract global capital to the United States, so as to achieve a large harvest.
3.The failure of this round of US dollar rate hikes
However, this round of dollar rate hikes has clearly failed. Domestically, inflation is far from the target despite the fact that the dollar rate hike is close to the limit, and if the pace of rate hikes slows slightly, inflation will rise again. In addition, major US banks have frequently sounded the alarm, and Wall Street has also come under tremendous pressure. Internationally, even economies such as Argentina and Turkey have persevered, and Southeast Asia, which has been the most volatile in the past, has not suffered much of a shock. Although the world has been affected by the US dollar interest rate hike, and export-oriented economies, including ours, have been greatly affected, one thing is fortunate that the world has miraculously borne the impact of the US dollar rate hike.
4.America's worries and concerns
Americans today are on pins and needles, fearing catastrophic consequences if the timing is not right. Therefore, they do not dare to raise interest rates again, let alone cut them easily. Even if interest rates are cut, they will be done with extreme caution, carefully releasing bubbles, easing the crisis, and striving for a soft landing. According to Goldman Sachs**, even if the Fed decides to cut interest rates, it will not cut rates anytime soon, and the rate cuts will not be too large.
1.Global monetary tightening and negative impacts
The US dollar interest rate hike has led to a global monetary tightening, a decline in international activity, damage to the manufacturing industry in producing countries, currency depreciation in other countries, and a large flow of commodity investment hot money and industrial capital to the United States, resulting in a disorder in global capital flows, especially investment hot money and industrial capital being pumped away, which has a great impact on export-oriented economies.
2.It affects the survival and development of export-oriented economies
For an export-oriented economy like ours, the impact of rising US dollar rates cannot be ignored. The outflow of investment hot money and industrial capital has led to a sharp decline in exports, bringing serious losses to export-oriented industries. In addition, the large-scale flight of American capital will also lead to problems such as the outbreak of our financial crisis, and the economy will face huge risks.
1.The slow and cautious rate cut of the US dollar
Due to uncertainty about the direction of the US economy and the complexity of global financial markets, the process of cutting interest rates in the US dollar will be slow and cautious. The rate cut will be a small and small downward movement to test the market's reaction. There may even be back-and-forth fluctuations between rate cuts and rate hikes. This cautious strategy of cutting interest rates is to avoid a financial crisis and recession.
2.The inevitable evolution of the U.S. economic model
The double-edged sword of the US dollar's interest rate hikes and interest rate cuts has exposed the US economy to huge risks and challenges. Past experience tells us that capital is full of adventure and bloodthirstiness, and every time it passes, it accumulates a large number of bubbles and crises. Failure to puncture the bubble and alleviate the crisis in time can have catastrophic consequences. This is also an inevitable consequence of the capital-driven economic model of the United States.
3.2024** and uncertainties
2024** will be accompanied by political battles, adding a lot of risks and uncertainties. This has made the US more cautious in considering cutting interest rates to avoid the risk of triggering a financial crisis and recession.
Both U.S. dollar rate hikes and rate cuts have their specific purposes and effects, and have a significant impact on both the U.S. and global economies. However, the current round of US interest rate hikes has clearly failed, and has not achieved the desired effect either domestically or internationally. The reason why the US has delayed cutting interest rates is that they fear that a rate cut will have catastrophic consequences, and that the current world conditions are not conducive to a smooth rate cut. Therefore, the US dollar will only cut interest rates in the second half of the year at the earliest, and the rate cuts will be very careful to avoid the risk of triggering a financial crisis and recession.
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