America, finally can’t hold on?!

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Original: Zhanhao source official account: Zhanhao wechat id:zhanhao668

The American economy is really in big trouble!

Let’s look at some data first. According to the data released by the U.S. Department of labor, the U.S. may non seasonally adjusted CPI rose 8.6% year-on-year, is expected to rise 8.2%, and the previous value rose 8.3%; After the quarterly adjustment, CPI increased by 1% month on month, expected to increase by 0.7%, and the previous value increased by 0.3%. The CPI of June will also be announced soon, and the probability will continue to rise.

Let us not forget that on June 16, the Federal Reserve frantically raised interest rates by 75 basis points, which is very rare and the largest single rate increase since 1994. In early May, the Federal Reserve just announced a 50 basis point increase in interest rates, which was the largest single rate increase in 20 years, which means that the Federal Reserve raised interest rates by 125 basis points in more than a month. At the current pace, the Federal Reserve may raise interest rates again in July, and the rate increase is basically still 50 basis points or 75 basis points. At present, the benchmark interest rate of the Federal Reserve is 1.5% – 1.75%. At the current pace, the interest rate will be increased to 3.5% by the end of the year.

Why did the Federal Reserve raise interest rates so aggressively? The reason is very simple, that is, serious inflationary pressure. If the Federal Reserve does not raise interest rates significantly, the hyperinflation in the United States will intensify, and the dollar may fall into a systematic risk, which may lead to a serious depreciation of the dollar.

In fact, the U.S. government is deeply worried now, because it is difficult to maintain positive growth pressure. The latest economic forecast was updated according to the forecast model of gdpnow of the Atlanta fed on July 1 local time. It is expected that the US GDP in the second quarter may shrink by 2.1%, further revised down from the previous forecast of -1%. The GDP growth rate of the United States in the first quarter was -1.6%. If it continues to shrink in the second quarter, it means that the U.S. economy may fall into a technical recession.

For the United States, the current situation is the worst situation of economic development: high inflation and low growth. For the United States, this situation is obviously unsustainable. However, the lesser of the two evils, the United States finally chose to control CPI between economic growth and CPI control. As a result, there is a risk of a hard landing for the US economy.

Therefore, the current situation in the United States is very bad, with high inflation and negative growth. However, in the face of such a situation, the United States still has no intention of reflection, and continues to create confrontation between major countries and regions, stimulating regional conflicts.

In fact, this is also the American routine. The U.S. economic growth is really poor, and there is no growth point. In this case, the Federal Reserve wants to raise interest rates. The Federal Reserve had to raise interest rates when the CPI in the United States was seriously high, but at the same time, the U.S. economy showed negative growth. Raising interest rates means that the economy is likely to have a hard landing and the U.S. capital market may burst foam. In this case, to stimulate the return of dollars from other countries to the United States by raising interest rates, we must create regional conflicts. For example, when the war between Russia and Ukraine breaks out, European funds will flow from the EU to the United States on a large scale. One of the most important reasons why the United States has always wanted to create conflicts around China is to stimulate the flow of funds in China into the United States.

However, in terms of economic means, China is old-fashioned. In the middle and late April before the “violent” interest rate hike by the Federal Reserve, the RMB has depreciated rapidly against the US dollar in advance, and the depreciation range is just about 5%. Such a round of depreciation, if the US dollar tries to return for the sake of interest rate spread, it will raise the threshold at once. It’s OK to leave 5% of the cost first. As a result, the impulse of funds to return to the United States was curbed. In June, the direct net inflow of A-share northbound funds exceeded 70billion, and China’s utilization of foreign capital also reached a new high. American policy has failed again here in China.

The Federal Reserve raised interest rates sharply, which led to the collapse of some economies with weak affordability. For example, the economy of Sri Lanka has collapsed, and riots have also occurred in Uzbekistan, all of which are related to the U.S. interest rate hike. Some economies have to raise interest rates in order to fight against the Fed’s interest rate hike. In the past, the Chinese market also needed an interest rate gap between the RMB interest rate and the US dollar interest rate to remain attractive to funds. However, it is different now. Under the background of the Federal Reserve’s sharp interest rate hike, there is no action at all on the RMB interest rate, and it seems that there is no intention of any action, which means that the benchmark interest rate of the Federal Reserve will exceed the RMB benchmark interest rate of the people’s Bank of China at the end of the year. In the future, if the interest rate of the RMB market is lower than that of the US dollar market, and if the Chinese market can remain competitive, it shows that China is surpassing the United States in terms of economic strength, and its economy is much better than that of the United States.

Moreover, against the backdrop of the Federal Reserve’s sharp interest rate hike, the inflationary pressure on the US dollar has not eased rapidly, which has begun to force the United States to bite its tongue to cancel the tariffs on Chinese goods exported to the United States imposed by the trump administration before China.

According to the source quoted by the Wall Street Journal, after weeks of weighing and discussion, it is expected that US President Biden will soon decide to cancel the tariffs imposed on some goods from China, which will be announced as soon as this week. The Washington Post said on July 4 that Biden is expected to soon cancel some tariffs imposed by former president trump on Chinese imports.

Why is the Biden administration ready to abolish tariffs after taking office for a year and a half? The fundamental reason is inflation. The continuous high inflation makes the United States more need cheap Chinese goods to stabilize prices, but the best way to take the initiative to reduce prices is to reduce tariffs on Chinese goods exported to the United States. When the Biden administration came to power, it wanted to use this matter to make China buy more American products. As a result, China simply ignored the intention of the United States. This is one of the fundamental reasons why China and the United States have talked for a year and a half without any results.


Baideng: I’m making up my mind about it

Of course, there is another fundamental reason why the tariff did not fall is that Dai Qi, the U.S. trade representative, is a Chinese. Chinese entering the American elite circle can only be more anti China in order to obtain “political correctness” and ensure their political trust. We can see this clearly from Gary Locke, the U.S. ambassador to China in the past. So is Dai Qi. She must “stick to” to ensure her “innocence”, Therefore, tariffs on Chinese goods exported to the United States have not been reduced on a large scale, which indirectly pushed up prices in the United States.

Now, the United States cannot withstand the serious inflationary pressure, so the Biden government is ready to reduce tariffs. Biden also made it clear before that the White House has been considering the matter in the past few weeks and may announce its decision this week. The elimination of tariffs on goods may include consumer goods such as clothing and school supplies, and will promote a broader framework to allow importers to apply for tariff exemptions. Media reports said that before, there were serious differences within the U.S. government over the cancellation of tariffs on Chinese goods exported to the United States.

In fact, the severe inflation in the United States fully shows the weakness of the U.S. economy. There are three fundamental reasons for serious inflation in the United States:

First, the trump administration released liquidity on a large scale in the last year and Biden’s first year in office, which is almost $6 trillion. Under the condition that the world simply cannot accept so many dollars, it is impossible for the United States not to inflate. Why did the United States release such large-scale liquidity? The fundamental reason is that the epidemic has led to the risk of the U.S. economy falling into recession. In order to stimulate the economy, Trump and Biden have used the trick of “printing money”.

Second, the United States provoked the war between Russia and Ukraine. The United States provoked the war between Russia and Ukraine with geopolitical and economic factors, but it also produced another evil result, that is, the sharp rise in international oil prices. The most important factor in American inflation this time is the sharp rise in oil prices. Why is the U.S. economy less tolerant of international oil prices? This shows that energy consumption accounts for too much of economic growth in the United States, and the dilution ability of U.S. production to the cost of oil prices has been greatly weakened, indicating that the ability of the United States to create wealth has been greatly reduced. Conversely, compared with 2007 to 2008, China’s economy has a lower tolerance to international oil prices. This year, China’s economy has a much higher tolerance to international oil prices than the United States. You can look at China’s CPI, which has a very small increase.

Third, the tariffs imposed by the United States on Chinese goods exported to the United States. China’s exports to the United States are mainly daily necessities, which have increased the cost of so many commodities out of thin air, and the inflationary pressure in the United States is bound to intensify. Now, after more than four years of competition with China in the trade war, the United States has to swallow the bitter fruit under economic pressure. This shows that the anti risk ability of China’s economy is objectively better than that of the United States. Whether the United States is willing or not, it will have to swallow the bitter fruit.


Baideng: Little coconut, let’s surrender!

After all, the current state of the United States shows that the U.S. economy is really a little unsustainable and has to do something unrelated to itself. In today’s world, big countries are actually “fighting for blood”. It depends on who can carry it better. If he can’t carry it, he will fall down. This is the general situation of today’s world. The United States has no choice but to be unwilling!

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