Biden has finally understood that this shocking crisis is a big conspiracy!

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Author: Rong ping source: official account: Rong Ping (ID: rongping898) has been authorized to reprint

The mid-term elections in the United States are getting closer, and the rumors of inflation have become smaller, because Biden understands that it is useless to rush now. After all, the inflation problem in the United States is not a simple economic problem, but a product of the spiral of international strategy and internal struggle!

First of all, we need to understand a question: who is the ballast stone to stabilize US inflation?

The so-called inflation is officially defined as the general rise in domestic prices and the substantial decrease in the purchasing power of money. There are roughly two factors that cause inflation. One is that the number of goods available on the market decreases. According to the economic principle that supply is less than demand, the price will rise, and the price of products will rise. The other is the oversupply of money. Money itself can also be regarded as a kind of commodity. Therefore, when the amount of money circulating in the market exceeds the demand corresponding to the value of the commodity, according to the economic principle of supply exceeding demand in the supply-demand relationship, the value of money as a commodity will decline.

As large-scale inflation cannot be alleviated, Bloomberg model predicts that the probability of the US economy falling in early 2024 is more than 70%

The above analysis is relatively macro. You can read it if you can understand it. It’s ok if you can’t understand it. Next, I will explain it in very easy to understand words!

To put it bluntly, inflation is a general rise in the prices of most commodities that are closely related to the daily life and work of the people

? Note that luxury goods such as jewelry or luxury cars and houses are not included in the inflation range, and 90% of ordinary residents may not use these things for a lifetime.

What is closely related to the daily life of the people?

In fact, our ancestors have made it very clear to us that it is nothing more than food, clothing, housing and transportation. In the narrow sense, food, clothing, housing and transportation refer to dressing, eating, housing and transportation. However, in the broad sense of clothing, food, housing and transportation, there are more detailed categories on the basis of the original four sub sectors.

Housing: in the traditional sense, the most are houses, beds, covers and other daily necessities, while in the modern sense, housing basically includes floor tiles, bath sets, kitchenware sets, TV sets, toilets, garbage cans and so on.

Travel: in the past, it was mainly carriage and boat, but now the traffic is full of diversity, including aircraft, cars, ferries, trains, buses, battery cars, etc. In addition to the production money, the most important cost is the energy cost to drive them. For example, cars need gasoline and diesel, airplanes need aviation fuel, trains need coal, and battery cars need charging. Electric energy belongs to secondary energy, which is generated from primary energy such as coal, water, natural gas, wind and light through industrial operation.

Dressing: Contemporary dressing is not only as simple as wearing clothes, but also includes related necessities, such as mobile phones in pockets, school bags on the back, and cosmetics in bags.

Eating: modern people eat at three levels. The first is the stage of food production, which involves chemical machinery, fuel oil and food manufacturing; Secondly, in the food preparation stage, there must be fire generated by natural gas and fresh water supplied by waterworks; Finally, the food itself, and the product categories are increasingly rich.

These things look miscellaneous and broken, which is not easy to clarify, but in the final analysis, they fall into two categories: one is middle and primary industrial products. In this lifetime, 80% of the commodities that ordinary people can use are intermediate and primary industrial products. You may as well look around yourself. Chairs, tables, mobile phones, computers, televisions and cabinets are all intermediate and primary industrial products at the terminal level of consumers. There are probably only two kinds of high-end industrial products that we come into contact with most in our daily life: chips and display panels in mobile phones.

What does this mean?

Among the ordinary consumers who play a decisive role in the overall economy, the pool of high-grade industrial products is relatively small, and its price changes have little impact on inflation.

The other is the production of industrial products and raw materials for daily life and travel of families, such as natural gas, coal, oil, iron ore and other bulk commodities.

From the most intuitive logic, on the one hand, the sharp rise of raw materials will promote the sharp rise of the production cost of industrial products. Iron ore is the upstream raw material of steel. If its price rises, the price of steel will also rise, and the downstream construction industry and home decoration industry will also rise. On the other hand, it will push up the price of secondary energy made from raw materials through industrial processing, such as electricity made from coal and natural gas.

The rise of secondary energy prices will also promote the sharp rise of commodity prices. We should know that energy consumption is an important part of commodity production costs. When many cities in China invest in industrial enterprises, preferential or even reduced electricity prices in stages are the key means to attract enterprises to settle down.

Therefore, the impact of the two ultimately fed back to the people’s livelihood is that the prices of most commodities required by ordinary consumers have risen, and the cost of living has soared. That’s how inflation comes. In other words, the inflation rate of a country depends on the price of primary and secondary industrial products and raw materials purchased! The lower the purchase price, the lower the inflation; on the contrary, the higher the purchase price, the higher the inflation.

What does the price of intermediate and primary industrial products and raw materials depend on?

Of course, it depends on the largest supplier!

China is the world’s largest supplier of medium and primary industrial products, and Russia is the world’s largest supplier of comprehensive raw materials. Over the past four decades, the inflation rate in the United States has been maintained at an average annual low of 3% for a long time, which is entirely based on the large-scale export of cheap medium and primary industrial products and raw materials from China and Russia.

Data are not deceptive.

The following figure shows the trend of US inflation rate over the years. Please note that after the 1980s, several key points of US inflation rate decline are related to China and Russia.

The first sharp drop occurred in 1981, from 13.55% to 3.21%. In addition to the ICT revolution and industrial transfer, the most important reason is China’s reform and opening up. An economy with a population of one billion and 200 million cheap labor has started to engage in low-end industry of “three supplies and one compensation”, which has lowered the inflation level of the whole west, including the United States.

The second sharp drop occurred in 1986, from 3.55% to 1.90%. In that year, the oil export volume of the Soviet Union suddenly soared from 600 million tons in 1985 to 2.343 billion tons, nearly quadrupling.

The third sharp decline occurred in 1992, from 5.4% to 3.03%. As we all know, after the collapse of the Soviet Union, the financial capital of the United States reaped the valuable state-owned property of the former Soviet Union member states at a low price, and a large amount of wealth poured into the United States in a short time, driving the strong rebound of the US dollar index. Correspondingly, the currency value continued to rise, and consumers’ purchasing power became stronger and stronger.

The fourth sharp drop occurred in 2002, from 3.38% to 1.59%. The year before that, China had made great efforts to join the WTO, and the tariff cost of commodity exports plummeted.

The fifth sharp decline occurred in 2009, from 3.84% to – 0.36%, which is closely related to the reason why China actively rescued the market, expanded industrial production capacity in a large area, fully entered the middle end manufacturing industry, and pulled down household appliances with high added value.

The sixth sharp decline occurred in 2015, from the highest of 3.16% to 0.12%, because the United States pulled Saudi Arabia to fight with Russia in the oil price war.

In other words, medium and primary industrial products from China and raw materials from Russia are the right hand to stabilize US inflation!

What is the situation now?

The Democratic Party kicked Russia out of the western economic system by concocting the war in Ukraine;

The Republican Party tried to kick china out by concocting an economic and trade war.

Although no real success has been achieved so far, it is undeniable that the threshold and cost for Chinese goods to enter the US market are indeed much higher than before.

The result of cutting off both hands of stabilizing inflation is that, when the US dollar is already over issued, the necessities of life circulating in the market are sharply reduced, forcing the transaction volume of currency to increase passively, further imbalance between the total amount of goods and the total amount of money, and serious loss of purchasing power. The system fed back to the people’s livelihood level is that the cost of living of ordinary consumers is getting higher and higher, and the living pressure is getting heavier and heavier.

Therefore, unless the United States takes the initiative to ease its relations with China and Russia and makes concessions on major issues, its domestic inflation cannot be solved. Is it possible?

The answer is obviously no!

However, all this may not be what the United States would like to see. At least the Republican Party is very fond of it.

First of all, the inflation pit was dug by the Republican Party: the Federal Reserve is a reservoir, the US dollar is water, and the indiscriminate release of water began with the trump administration. During this period, the water released from the reservoir gradually converged into a barrier lake in the US market. When the Democratic Party came to power, the dams around the barrier lake, which are necessities of life, finally could not withstand the impact of the floods, and collapsed completely, resulting in floods sweeping the US economy and overwhelming the purchasing power of most residents.

Angry people have reason to think that the Democratic Party should be responsible for this, so Biden’s support rate plunged at a visible speed, and the biggest beneficiary is certainly the Republican Party! In short, the higher inflation in the United States, the more favorable it is for the Republican Party to win the election.

Second, behind the Republican Party is industrial capital: the inflation rate, which has remained high for a long time, is conducive to industrial capital to a certain extent.

The downward trend of the currency value under high inflation can temporarily digest the high debt of the United States in the short term, so that the US government can take the battle lightly.

This is one of them!

Second, a long period of high inflation is bound to be accompanied by monetary policy tightening, because monetary tightening is the fastest way to deal with inflation so far. However, there is a great probability that the tightening of monetary policy will lead to an economic recession in the face of the global economic downturn.

In the context of economic recession, people usually do two things:

The first is to save money. The Great Depression era is an era when cash is king. Increasing savings, having money in hand and being prepared for unexpected needs are the greatest confidence to survive in the winter. This is true of enterprises and individuals. This is the basic law of economic operation and will not be changed by different countries. The second is to lower the threshold of employment. In the recession, the unemployment rate is increasing and the employment pressure is huge. Since the goal of life is to live, we will not be choosy about jobs.

The biggest role of these two points is to create a favorable environment for American Reindustrialization. The increase in the savings rate can provide a pool of funds for Reindustrialization, and the lowering of the job threshold can provide abundant labor for a large number of jobs required for Reindustrialization.

Third, high inflation in the United States will cause global demand to shrink, objectively contributing to China’s overcapacity, and at the same time hitting China’s economy, reshaping the international competitiveness of “made in the United States”.

However, a blessing in disguise does not mean that there will be a blessing, and it is not certain that there will be a greater disaster. The Republican Party’s attempt to rebuild the competitiveness of American industry by destroying the American economy may not achieve the expected results, but it will certainly intensify the contradictions between American society and parties.

Everyone knows that the trouble in the heart of the United States is not in China, let alone Russia, but in the White House, Washington and wall street!

But this heart disease is really too big. It has become cancer. If you don’t have surgery, you will die. In history, none of the countries that fought too much came to a good end; If you move, you may not be able to live. If you are not careful, you may accelerate the time to see God.

External metastasis is the only way to alleviate the spread of cancer.

Therefore, in the next step, we should focus on the Nazi and militarized tendencies of the United States, because Americans themselves know very well that there is not much time left for them.

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