Article source: Xiao Lei sees the city (WeChat public number)
Original title: "Xiao Lei: The dollar ignited the global currency war, gold soared, bitcoin crazy, libra stunned"
Let's first take a look at how Trump won the Fed.
On June 11 this year, US President Trump issued a message on social media, saying that "the depreciation of the US dollar by other currencies such as the euro has put the United States in a very disadvantageous position. The Fed’s interest rate is still too high, coupled with the absurdity. Quantifying the austerity, they really don't know."
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On June 20th, the Fed held a meeting on interest rates to revise the forward-looking guidelines, claiming that the committee will pay close attention to and take action when appropriate, taking into account the uncertainties in the economic outlook. In fact, it is to guide the interest rate cut.
On June 24th, Trump once again put pressure on the Fed and said on social media, "Now, when we need to cut interest rates and easing policies, they insist on the same as stubborn children to make up for other countries to us. Oppose. It’s messed up!”
On July 4th, Trump wrote on social media: "China and Europe are playing games that manipulate the exchange rate, injecting a lot of money into their systems to compete with the US. We should also do this, don't sit like a fool. Watching other countries play with the exchange rate there – they have been doing this for many years!"
On July 10, Federal Reserve Chairman Powell published a semi-annual monetary policy testimony to the House Financial Services Committee, in which he mentioned that the Fed will “take appropriate action” to protect the US economy from the increasing risk of global economic growth. This is considered to be a positive statement that the Fed will cut interest rates on July 31.
From the perspective of market influence, from June to now, the global market is undergoing a reversal change due to the Fed’s policy expectations. The gold price has soared 15% since June; the US stock market Dow Jones index fell 6.7% from May, directly It became a 7% increase in June; the major central banks in the world to collectively cut interest rates in order to hedge the expected impact of the Fed policy, including Australia, Russia, India, Brazil, South Korea, South Africa, New Zealand and other countries.
The three major central banks in the UK, Europe and Japan are also taking different levels of action. The Bank of England buys corporate bonds of more than 10 billion pounds per month. The European Central Bank is about to revise its forward-looking guidelines to prepare for interest rate cuts. Japan’s next move is also increasing. Stimulating, the possibility of a rate cut in September is also very large.
It can be said that this time the emergence of a new global cycle is entirely due to the concentrated shift of the US national strategy.
Previously, we viewed the US market in fact, which was very complicated, because there were differences between the president and the Congress, the president and the Fed, and there were independent checks and balances. It is often difficult to reach an agreement.
But the United States has now changed all the ideas, because the American elite, the main interest group of the United States, has discovered a problem. When the United States still has huge political internal friction, that is, when the departments are operating independently, Other countries are using all their resources to compete with the United States. Therefore, for the present United States, there seems to be a change in that the whole people must participate in the external game dominated by the White House, the Ministry of Commerce, the Ministry of Justice, the Congress, the Federal Reserve, etc. Unite, "the United States has priority and is consistent with the outside world."
Of course, the Fed’s interest rate cut and the implementation of the Uranus exchange rate operation are also part of the “US priority and consistent external”.
According to the US economic growth and employment levels, as well as inflation expectations, the Fed has no need to cut interest rates. However, for political reasons, the Fed will allow the market to accept a new round of interest rate cuts in all aspects, and at the same time trigger a larger global market turmoil.
This is part of US trade protectionism and a derivative of US priority policy, so the Fed’s interest rate cut is entirely a political act, not an economic and monetary policy act.
Compared with Germany, the United Kingdom, Japan, etc., less than 2%, or even less than 1% of economic growth, the United States has a growth rate of more than 3%. The current unemployment rate in the United States is only 3.5%, which is the best in half a century. The unemployment rate is even better than 3.5%, dating back to the 1950s and the three years in which the United States participated in World War II.
In particular, in the three years in which the United States participated in World War II, the unemployment rate fell to 2% due to the full opening of the industrial production system. This may also be the main reason why the United States wants to provoke all kinds of contradictions around the world and hope to break out of war all the time.
The US consumer confidence index for the US is now 98, far above the best level in history before the 2008 financial crisis; US housing starts data and existing home sales data exceeded the 2008 financial crisis as early as 2014. During the period of real estate boom, it is currently at the best level in history.
In the era when the US should continue to raise interest rates and reduce the Fed’s balance sheet, the United States has opened the door to interest rate cuts. This is a historic event. This event is comparable to the 2008 financial crisis era. The Fed cut interest rates to near zero and launched QE. The impact of (quantitative easing).
I don’t really want to say this, but when the United States began to use money as a weapon without any scruples, the Fed stood for a hundred years, and the reputable institutions began to bow to the White House and bring the world to the world. The changes will be irreversible and iconic.
Smart people will not continue to criticize the global currency war triggered by the Fed, because it makes no sense, but starts to think about another issue. Who can create the next generation of world currencies that are not affected by sovereignty?
From 2008 to 2011, the currency depreciation strategy launched by investors in response to the financial crisis, a large number of assets such as gold, led to gold prices soared more than three times. Anonymous Supreme, who is extremely dissatisfied with global sovereign debt and currency depreciation, wrote a bitcoin paper in 2008. Bitcoin was born in 2009 and has spread throughout the world in 2011.
In the past June, we not only saw the Fed’s compromise with the White House, but also saw the United States’ agreement on the issue of interest rate cuts. In fact, we also saw the soaring price of gold. At the same time, we saw a white paper that caught the attention of the global market. The release, Internet giant Facebook released a white paper on the world currency ideal libra on June 18. This is no accident.
Behind every unusual market trend, or the birth of new things, is the accumulation and explosion of history . When we exclaimed that gold prices have soared again, bitcoin continues to be crazy, and libra has attracted global attention, we should reflect on it, not the miraculous solution that the people are not trying to present, but whether they are in the competitive depreciation of sovereign currency. Also helpless, no resistance.