Inflation in the United States is developing in an all-round way, and it affects the world through its dollar hegemony. The May CPI of the United States announced on June 10 hit the highest in 2008, while the core CPI hit a new high since 1992. CPI rose 5% year-on-year in May, exceeding market expectations by 4.7%, and core CPI increased by 3.8% year-on-year, exceeding market expectations by 3.5%. So far, the inflation data of the United States for two consecutive months in April and May have burst into the table. Rapid inflation has been an undisputed matter. Of course, the Fed and the U.S. Treasury Department’s interpretation on behalf of the U.S. government still insists on the view that it is universal. Expansion is short-term, a short-term counterattack against market prices that were depressed by the epidemic last year. Unlike the global shock when the April data (4.2% and 3%) came out, the May data has been predicted by the market, so the major investment markets and the US dollar index did not experience much turbulence. What people care about now is whether inflation is short-term or long-term? Many people actually prefer that inflation will not be short-term at least, even if it is not the kind of inflation that lasted for more than 10 years in the 1980s. So when will the Fed raise interest rates and shrink its balance sheet? This will affect the trend of the global financial market, so it is obvious that the global investment market is now in a kind of "low pressure", waiting for the landing of the boots, and the currency market is no exception.
After the great easing of liquidity during the epidemic, inflation will follow with the recovery of consumption and investment. The main means to suppress inflation is to tighten liquidity, that is, to raise interest rates and shrink the balance sheet. This is the mainstream strategy in past history, and it is also an American strategy that people are almost sure of today. What everyone suspects is not that the United States does not have short-term liquidity tightening capital. This strategy is like climbing a mountain. It’s very tiring to go up the mountain. After climbing the mountain, it’s often more tiring to go down the mountain. Therefore, there is a saying that "uphill is easier to go downhill". However, the recent series of subtle actions by the US government make people feel something is wrong. So a new conjecture in economics has emerged, that is, if the United States goes up the mountain and stays on the top of the mountain, what will happen? If it is this unprecedented new US national policy, how will it affect the world?
The United States directly ignores inflation, and uses the global hegemony of the US dollar to make the world share the cost. It adopts the new national policy of "income and price increases", that is, "increasing income against rising prices", and constantly over-issuing US dollars in legal tender to workers. Raise wages, sprinkle money on helicopters with no workers at the bottom, allow enterprises to develop long-term access to low interest rate or even negative interest rate funds to stimulate investment, and use inflationary price increases to force national consumption to stimulate economic recovery. If such evil tricks are used, natural commodity prices “will not come down if they go up”, and international commodity prices “will not come down if they go up”, and they will all stay on the top of the mountain and not go down.
If the United States implements this new national policy, all countries in the world will naturally have bad luck. Although this will quickly stimulate global de-dollarization, at the moment when the U.S. dollar is still the global reserve currency and possesses hegemony, countries around the world are like being hooked. The fish caught, the strong fish can finally break free from the hook, at the price of tearing the corners of the mouth, bleeding, and even a piece of meat; while the weak fish will probably be swallowed alive, with no flesh and blood. The reason is simple. Inflation is developing so fast and spreading to the world. Other countries will naturally also inflate. However, the fiat currency of other countries is not a global currency, and the cost is not as good as the United States.
Under normal circumstances, the United States certainly would not choose this new national policy. However, in the current global situation, economists are increasingly worried about the United States. Is it "normal" now in the United States? The United States now regards China as the "enemy of the century," and it urgently wants to end China's momentum of surpassing the United States. If the United States implements the formal austerity strategy recommended by economics, it means that the United States will have at least several years of economic recession. Liquidity is squeezed, the real economy will recover slowly, the financial investment market will not be active, and consumption and investment will be suppressed. . Is the United States willing to adopt such a conventional national policy in this "world of great controversy"?
The core concept of the "New National Policy" is to treat the world as a beggar. The proliferation of liquidity in the US dollar under the new crown epidemic has attracted the tiger of vicious inflation. The traditional and conventional strategy is for the United States to arm itself and fight the tiger, and its allies support the United States in fighting until it defeats inflation. What about the "new national policy"? The U.S. runs first, the U.S. is powerful, and the U.S. dollar hegemony is like adding wings to the U.S. In the process of running, the tiger will naturally swallow those weak and slow countries first, allowing the U.S. to adjust its physical fitness and state leisurely. , Wait until the United States is strong and armed enough, and then go back and kill the inflationary tiger that has been weakened by fighting with other countries. As for the sacrifices of other countries, "The dollar is the currency of the United States, but it is your problem." As long as the United States is strong enough, what is hatred? In this process, the United States will of course pay obvious costs such as global de-dollarization and dollar involution, and this is obviously a gambling on national luck. The gambling is that the speed of the United States can surpass the backlash of negative effects. But if you can't live anymore today, who cares about the situation 10 years from now?
Therefore, it is worthwhile to carefully observe the relevant policy trends of the United States in the second half of the year for this possible "new US national policy."
If the United States adopts this "new national policy" and starts a century-old American national game gambling, it will naturally have a huge impact on the global investment market and currency circles. This means that the flood of liquidity in the United States will continue for a longer period of time. A part of the liquidity will be used to increase the nominal income of Americans to counter rising prices and increase consumption; the second part of liquidity will flow into physical enterprises. City companies dominate to increase investment; the third part of liquidity will flow into financial institutions to acquire global assets. Of these three types of liquidity, of course, more or less of the capital will flow into the currency circle, triggering the market. Therefore, this "new national policy" is directly beneficial to the currency circle, not a bad thing. However, the global economy is turbulent as a result, and to what extent will inflation become chaotic and disorderly, it is difficult to say whether the intricate effects caused by it are positive or negative.
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