We have witnessed history again, and the more dangerous is still ahead!

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This article is reproduced by Niu Danqin (id:bullpiano) with authorization. Author: Niu Danqin

There is no doubt that we have witnessed history again.

In recent days, if you care about the foreign exchange market, a magical scene has appeared. The two major currencies in the world are actually equivalent. One euro is one dollar, and one dollar is one euro.

The last time I witnessed a miracle was 20 years ago.

20 years later, the boy turned into an uncle, the girl turned into an aunt, and the euro fell back to grandma’s house.

You know, in the past 20 years, the euro has been higher than the dollar. In 2008, 1 euro was even equivalent to 1.6 dollars; But now, the tide has receded. Since this year, the euro has fallen by nearly 20%. Now, one euro is one dollar again.

After 20 years of hard work, I went back to 2002 at one stroke.

Many people may say that this is a matter of Europe and the United States. What is it to me?

Indeed, for the vast majority of Chinese people, this is none of our business. Moreover, the devaluation of the euro makes it cheaper for us to travel to Europe. Of course, you can just travel to Paris in your mind. In the current situation, you’d better not go either

But more importantly, the reversal of the situation in the euro and the dollar is a violent turbulence in the entire international financial system. This is a world that is fighting fiercely.

Why did the euro plummet?

Very simply, everyone is not optimistic about the euro. Since it is not good-looking, let alone many vultures in the capital market, we need to short the euro in a large amount.

Then why not?

The reasons may be complicated, and I’m not an expert, but my common sense tells me that the most fundamental reasons are no more than two.


First, the conflict between Russia and Ukraine.

Ukraine is undoubtedly the biggest loser in the most tragic battlefield of the European continent after the war, but Europe is the biggest enemy to the letter.

Assistance to Ukraine requires a lot of money;

Receiving Ukrainian refugees requires a lot of money;

Biting the teeth to sanction Russia will cost a lot of money

The result of not buying Russian oil and gas is the soaring energy prices in Europe. Despite the high inflation in the United States, Americans are glad that Europe is even higher. Fortunately, they do not live in Europe.

What kind of high law?

Data show that inflation in the euro zone reached 8.6% in June this year, up 0.5% from May, the highest level since statistics were available in 1997. Among them, 8.2% in Germany, 8.5% in Italy and 10% in Spain are at a high level. In addition, the inflation rate of the three Baltic countries is as high as about 20%.

Recently, Russia and Germany have been fighting fiercely again. Anyway, on the grounds of routine maintenance, Russia cut off the gas supply of “Beixi No. 1” pipeline, and the Germans were terrified. The Vice Chancellor of Germany has already called on everyone to take a shower faster and use less gas

If the cut-off continues, the result will be more tragic, and the European economy will fall into recession, and 1 euro may be less than 1 dollar.


This is the first reason. The second reason is that the Federal Reserve raises interest rates.

The European Central Bank also raised interest rates, but it did not dare to be as violent as the Federal Reserve. One is 75 basis points, the most violent interest rate increase since 1984.

The Federal Reserve raised interest rates and the dollar returned.

Don’t forget that the US dollar is the world’s main reserve currency. For the United States, the biggest dividend of the dollar is that it can “cut leeks” to the world in this way.

During the financial crisis, through quantitative easing measures such as interest rate cuts, the printing machine was started, and the flow of dollars overseas was essentially forced to borrow money, which was the first round of “cutting leeks”; Since then, the Federal Reserve will raise interest rates. The huge siphon effect will allow the dollar to flow back. Other countries have lost blood and even the financial crisis. This is the second round of “cutting leeks”.

It is no wonder that the US Treasury Secretary Connery in the Nixon era once said, “the US dollar is our currency, but it is your trouble.”

Complacency, without disguise!

For many countries, the Federal Reserve cut interest rates, bitter; The Federal Reserve raises interest rates, bitter!

Europe is no exception, so the dollar has become a safe haven and the euro has had to fall.

But the United States is desperately trying to save itself, regardless of the flood.

Seeing that former Russian President Dmitry Medvedev ridiculed the parity between the euro and the dollar, it was actually the result of the United States and Britain cheating Europe. The European Union foolishly shot itself in the head and is now reaping painful rewards.

Many people may be the first to react that this is a shocking conspiracy, a fierce currency war. The United States engaged in the Ukrainian war to bring down Russia, the European Union and the euro.

I wouldn’t think so. International politics is complex, finance has its internal logic, and there is competition between the US dollar and the euro. We can’t rule out pulling and stepping on each other. However, the most fundamental reason for the weakness of the euro is that Europe itself is not good at it. The sanctions imposed on Russia have made it full of money, and the dollar finally pushed it on the floor and rubbed it.

What does it say?

It shows that if you are not confident, no matter how hard you talk, your currency will be weak.

It shows that punishing others is sometimes punishing yourself, killing 800 enemies and losing 1000 yourself. The key is not to step down.

It shows that if the country is incompetent, the people will suffer, and their pockets will naturally be devalued, but worse still lies ahead.

It shows the strength of the US dollar, our currency and your trouble. It really deserves its reputation.

This is the dilemma facing the euro. The euro, the second largest currency in the world, is like this. What about other currencies?

For example, sterling, sterling has always been more valuable than the US dollar, but the British Prime Minister stepped down, Scotland premeditated independence, and Northern Ireland did not want to see the color of London. You see, if this toss continues, it may be one pound for one dollar in the near future.

Even if it is dollars, will it always be king?

In the short term, it is still that we should not have unrealistic illusions; But in the long run, there has never been an eternal king in this world. It is not impossible to lose everything by carelessness.


Don’t forget that in 2008, the U.S. economy almost collapsed. One euro is worth $1.6, and the dollar is only allocated to the euro to carry shoes. Now the geomancy turns around, and the dollar is back.

When it comes to China, the dollar is equivalent to the euro. I always think that we should see the fierce national competition. Of course, if the euro is weak, our exports to Europe are worrying; With a strong dollar, exports will be better, but the pressure on the RMB will also increase.

There are always advantages and disadvantages. There is no guarantee of winning.

But from another perspective, last year, China’s GDP was $17.8 trillion and the EU $17 trillion. China’s GDP exceeded that of the entire EU for the first time in history. But according to the trend of this year, China’s GDP should exceed $18 trillion, and the EU may only be about $16 trillion

I don’t want to say anything. I just want to say that in the competition between big countries, if you don’t advance, you will fall back. The exchange rate is very important, and it is definitely not just a data. Now one euro is equal to one dollar. If it continues to sink, it may be only 0.9 dollars, or even 0.6 dollars.

In this world, everything is possible. We have witnessed one history after another, and we are also facing unexpected dangers.

History continues, but I don’t know how Mrs Merkel will feel when she sees all this.

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