Before reading this article, I sincerely invite you to click "Follow", which is not only convenient for you to discuss and share, but also brings you a different sense of participation, and it is more convenient to come back at any time to read more exciting content, thank you for your support.
As an international economic power, the United States is familiar with how to short the market, and for a long time, the Fed's policy has turned other countries as leeks to its own profits.
However, since the Fed's huge losses some time ago, the United States' interest rate cut short plan has completely failed, in order to stabilize the people's mind, United States Federal Reserve Chairman Powell urgently said that the situation is still under control.
But in fact, during the period of United States economic downturn, China, far across the ocean, sounded the clarion call for our counterattack after being repeatedly sanctioned.
The backdrop of the Fed's huge losses
The Fed's huge losses are closely related to the easing of policy in the previous two years, and in response to the recession, the Fed embarked on a massive asset purchase program, and the negative effects of the plan will follow in 2024.
However, as the economy recovers and inflationary pressures intensify, the Fed began to raise interest rates in 2022, and the current federal funds rate has risen to a range of 5.25%-5.50%, causing the depreciation of its early purchases of low-yielding assets, thus putting the Fed's financial position in jeopardy.
Specifically, the 2024 financial report shows that the Fed's total income is $40 billion, but the interest expense is as high as $300 billion, a huge interest rate differential that makes it a loss of more than $200 billion, the largest financial loss in United States history.
Such losses have sparked widespread concern in the market, with investors speculating about whether the Fed will make more aggressive policy adjustments to deal with the current predicament.
China's countermeasures
Since the Federal Reserve began to cut interest rates, the People's Bank of China (PBOC) has quickly adopted a series of major policy measures, including an overall RRR cut, an interest rate cut on existing housing loans, and an injection of 800 billion yuan into the stock market.
These initiatives are not only aimed at responding to changes in the international economic environment, but also hope to play an important role in the domestic economic recovery.
This strategy aims to reduce the cost of funds for financial institutions and release liquidity, thereby stimulating economic growth.
At the same time, the interest rate cut will directly reduce the cost of loans for enterprises and residents, which will help increase investment willingness and consumer confidence.
In the context of the general economic struggling global economy, the RRR and interest rate cuts can inject strong impetus into the economy and help enterprises cope with market challenges, especially small and medium-sized enterprises, which often face greater financing difficulties.
Another key measure is the interest rate reduction of existing housing loans, which directly affects the majority of home buyers, can effectively reduce their loan repayment pressure, increase household disposable income, with the reduction of mortgage interest rates, consumer demand for housing is expected to rebound, and then promote the real estate market sometimes a second spring.
In addition to cutting the reserve requirement ratio and interest rates, the central bank also decided to inject a total of 800 billion yuan in batches to support the stock market, which aims to enhance market confidence, stabilize the capital market, and avoid market fluctuations caused by changes in the external economic environment.
Unlike the decline of the United States stock market, Chinese investors have finally ushered in the dawn of victory after several years of stock market winter, which can be described as the most direct counterattack after the United States cut interest rates.
In terms of trade, China has actively cooperated with other countries to seek new markets and investment opportunities, and in the first seven months of this year, the bilateral trade volume of goods between China and ASEAN increased by 10.5% year-on-year to 3.92 trillion yuan.
During the downturn in the United States economic market, China has shown a positive influence in the world as an economic superpower.
Powell Emergency Mode
Powell made an urgent speech in the face of China's aggressive countermeasures, as well as the Fed's current huge losses and market unease.
He stressed that despite the major challenges, the Fed remains committed to achieving price stability and maximizing employment, Powell pointed out that maintaining transparency and flexibility in strategy is the key to dealing with the current economic environment, but in the face of Powell's urgent speech, many netizens dubbed this "Powell emergency mode".
Powell's comments provide the market with stable expectations, but it is still necessary to pay attention to the balance between inflation and economic growth in the future, and if inflation remains high, the Fed may be forced to tighten policy further, which will put pressure on the economic recovery.
However, the global economy is no longer the Fed's "cash cow", and since China began to fight back, United States' tried and tested short-selling plan can only end in failure this year.
At the same time, China's economic recovery prospects remain promising, with the economy expected to grow steadily in the coming years through flexible monetary policy and fiscal stimulus.
What do you think about the Fed's huge loss of 200 billion, Powell's urgent shouting? Welcome to discuss in the comment area!
Information sources:
Guangming.com: Another interest rate hike was announced! What is the impact of the Fed's multiple interest rate hikes? Expert interpretation
https://www.toutiao.com/article/7260364940534497792/?channel=&source=search_tab
Financial circles: the Fed's losses exceeded $200 billion; Goldman Sachs upgraded China equities to overweight
https://www.toutiao.com/article/7423182132752826889/?channel=&source=search_tab
Finance: Only for the stock market! The central bank has "two blockbuster positives", and big finance has obviously benefited
https://www.toutiao.com/article/7418368065076789801/?channel=&source=search_tab