On the evening of March 23, Beijing time, the Fed launched its final move, announced a new round of quantitative easing, and vowed to purchase an unlimited amount of US Treasury and MBS bonds in order to provide the market with the necessary liquidity.
What does it mean? In plain words, as long as there is any company or institution in the market whose bonds or debts cannot be repaid and the market is tight in liquidity (the company means "lack of money"), the Fed will directly enter the market to buy bonds of this company or institution. The Fed will take the trouble for all crises. As long as the market needs money, the Fed will print.
The intensity of this measure has exceeded that of the 2008 financial crisis, and it can be said that it is the ultimate move of the Federal Reserve. The Fed's move is not only harvesting all the countries that hold the dollar, but it is also passing on the crisis to the world.
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Once such measures are released, governments around the world will inevitably follow suit and enter the big water release model.
How does the market react to such a big movement? The US stocks rebounded quickly, but eventually closed down.
I think this is like a patient who is already ill. The doctor prescribes all the medicines and uses all the methods, but the patient only returns a little, and then faints again.
Until now , the Fed has only one other weapon left: negative interest rates. If the market plunges or panics again in the future, the introduction of negative interest rates may not be impossible, but if the US dollar has negative interest rates, the world ’s financial system will be completely chaotic.
I analyzed in the previous article that the financial crisis may not yet reach the real darkest moment. The outbreak of the new crown in the United States is in its infancy, and the United States has just taken measures to reach the federal government and the state governments.
In the future, when the new crown epidemic begins to rag in the United States on a large scale, people's emotions will change from paralysis to alertness, to panic, to pessimism, to despair, and the situation in the financial market will be nuclear explosive.
And when that time will come, we cannot judge accurately, the only indicator of judgment is the development data of the epidemic.
Judging from our country's experience, if we counted the closure of Wuhan on January 23 as the starting point of an outbreak, the epidemic has now been under stable control for almost two months.
The reason why our country is able to control the epidemic is to use powerful means of closing cities around the country. Even so, it takes two months. The most hopeless and anxious time for the epidemic to develop in this process was February.
Therefore, if we use this experience to judge the development of the epidemic in the United States, it is estimated that the most desperate and anxious moment will be from April to May. However, because the United States cannot take large-scale and strict closure measures like ours, The peak may be even more delayed.
By that time, we will see that no matter what the Fed does, it will not soothe investors' despair, nor will it save the financial market's defeat.
That kind of panic and despair will not only spread throughout the United States, but also quickly spread to other countries around the world. No country can stay aside, including our country's A shares.
At that time, all assets will plummet to the point we may not imagine now, and that will also be a strategic entry opportunity.
Over time, the effects of the Fed and the global government's release of water will only gradually begin to show when the despair of investors is gradually calmed down and the financial markets begin to stabilize.
Next we will see another situation: hyperinflation occurs, and various types of assets start to soar irrationally.
At this point, the US dollar and the fiat currencies of various countries have completely reduced to waste paper printed at random.
Satoshi Nakamoto left a paragraph in the genesis block of Bitcoin: On January 3, 2009, the Minister of Finance was on the verge of implementing the second round of emergency bank assistance.
This sentence is ironic that during the 2008 financial crisis, the British government released a large amount of water, and 12 years later, history repeats itself.
Digital currency will be led by Bitcoin to experience the coming global dark moment, and then leap forward to stunning the world.