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Remember the wave of interest rate hikes that swept the world last year? Now, the wind has changed. The Fed is about to press the "interest rate cut button", which is not only the first time since 2022, but also like a dangerous pawn falling on the global economic chessboard, stirring up the already turbulent situation.
Some people say that this is the old routine of United States "cutting leeks"; Others say that this is a sign of the decline of the dollar's hegemony. What is the truth? Don't worry, and listen to me slowly.
Why can the US dollar, this green piece of paper, become the "hard currency" of the global economy? To put it bluntly, isn't it because United States is tough enough and economically strong?
After World War II, United States relied on its strong industrial strength and military power to push the dollar to the throne of "world currency". Since then, the US dollar has been decoupled from gold, but it is bound to oil, and it has become a "sweet spot" for central banks to compete for reserves.
Holding the hegemony of the dollar, the United States is like holding a super money printing machine, which can manipulate monetary policy and harvest global wealth at will.
For example, when the United States economy is overheated and inflation is high, the Fed can raise interest rates to attract global dollars to return, thereby achieving the purpose of curbing inflation.
However, although this "star-absorbing law" can relieve United States itself, it will make other countries, especially emerging economies, face a series of problems such as capital outflows, currency depreciation, and debt crises.
Since 2020, the Federal Reserve has embarked on a four-year interest rate hike cycle in response to domestic inflationary pressures, and the global economy has fallen into a quagmire of sluggish growth.
Originally, raising interest rates is a monetary policy tool that every country has the right to use, but the problem is that the dollar is not an ordinary currency, it is a world currency, and any movement in it will have a huge impact on the global economy.
What is even more worrying is that United States does not seem to realize, or care, at all, how much harm its actions have caused to other countries.
They only care about their own well-being, but pass on the risks and crises to the whole world, and this kind of "harming others and benefiting themselves" approach will only end up shooting themselves in the foot.
Today, although inflation in United States country has eased, the size of the $35 trillion national debt is like a time bomb, threatening the security of the United States economy at all times.
In order to avoid the outbreak of the debt crisis, the Fed had to press the "interest rate cut button" in an attempt to ease its own debt pressure by "releasing water".
However, this thirst-quenching approach will only plunge the global economy into greater uncertainty.
First, interest rate cuts will lead to a depreciation of the US dollar, a flood of global liquidity, and more severe imported inflationary pressures in emerging economies.
Second, interest rate cuts could exacerbate global economic imbalances and trigger new financial risks.
In the face of the threat of the "release of water" of the US dollar, countries around the world are also actively looking for ways to deal with it.
On the one hand, some countries have chosen to increase their gold reserves and reduce their dependence on the US dollar. After all, gold, as a hard currency, still has certain advantages in combating inflation and financial risks.
On the other hand, emerging economies are also strengthening cooperation and exploring the establishment of a new international monetary system in order to get rid of their excessive dependence on the US dollar.
However, will United States really watch the dollar hegemony fall aside?
The answer is clearly no.
In order to maintain its hegemonic position, the United States is likely to take more aggressive measures, including creating geopolitical tensions and even provoking military conflicts.
After all, for United States, "war money" has always been a powerful tool to make up for the fiscal deficit and transfer the domestic crisis.
At present, hot spots such as the Taiwan Strait, the South China Sea, and the Korean Peninsula may become targets for United States' "ignition."
Therefore, at a time when the Fed is preparing to "release water", all countries in the world, especially China, must remain highly vigilant and be prepared to deal with various risks and challenges.
In the face of the global economic situation, China must see both challenges and opportunities.
There is no doubt that the Fed's interest rate cut will pose a series of challenges to the Chinese economy.
First, the "release" of the dollar will exacerbate imported inflationary pressures in China. Prices have been high for a long time, and now that the dollar is coming to "arch the fire" again, the cost of living for the common people may increase again.
Second, the increasing pressure on the appreciation of the renminbi will have a certain impact on China's foreign trade. Exporters are already having a hard time, but now that the renminbi is appreciating, their products are even less competitive in the international market.
Finally, United States may also increase its financial suppression and military deterrence against China. In order to maintain its hegemonic status, the United States can do anything, and we have to guard against it.
In the face of the "conspiracy" of US imperialism, we must not sit idly by, let alone mess with ourselves, but calmly deal with it, defuse risks, and turn crises into opportunities.
First, we need to continue to promote the internationalization of the renminbi and reduce our dependence on the US dollar. You can't put your eggs in one basket, everyone understands that. Only by establishing a diversified international monetary system can we fundamentally get rid of dependence on the US dollar.
Second, we need to strengthen economic cooperation with other countries and maintain the stability of the global industrial chain. Huddle together to keep warm, in order to withstand the cold winter.
Finally, and most importantly, we need to strengthen our national defense capabilities, safeguard national sovereignty and territorial integrity, and be prepared to deal with various risks and challenges. Friends come with good wine, jackals come with shotguns.
Of course, we must also note that the Fed's rate cuts are not all bad.
The decline of the dollar's hegemony provides China with an opportunity to reshape the international financial order.
As a responsible major country, China should seize the opportunity to actively participate in global economic governance and promote the building of a more just and equitable international financial system.
At the same time, we should also strengthen our own economic construction, continuously enhance our comprehensive national strength, and contribute China's strength to the stability and development of the world economy.
The Fed's interest rate cut is another signal of the decline of the dollar's hegemony, and the global economic landscape is facing unprecedented challenges and changes.
For China, this is both a challenge and an opportunity.
We must maintain our strategic focus, calmly respond to various risks and challenges, seize opportunities, take advantage of the momentum, promote the building of a community with a shared future for mankind, and make greater contributions to the stability and development of the world economy.