Rebirth 79: I opened a bank in the United States

Carter's expression is very exciting now. To use a future meme, it would be "I sat up in shock when I was dying, and the clown turned out to be me"...

When he was in New York, Carter had a great time harvesting wool from Vickers Company. As a result, in the blink of an eye, Vickers Company, which had suffered heavy losses due to his wool harvesting behavior, had to cut off the meat and sell the blood at a super low price.

The product is used to withdraw funds, but indirectly it is a trap for itself.

"It's okay, it's okay. I may know the reason why Vickers Company did this. Let's talk about it later. You can continue to talk about it. Are there any other situations?"

"Okay, there is one more thing that you may need to pay attention to, but don't worry too much. The chairman of the Federal Reserve has recently changed. The person taking over now is Paul Volcker. I heard that he was directly appointed by Carter. He was originally the chairman of the New York Federal Reserve.

The president of the bank, I worked for Chase Manhattan before. I heard that this guy likes to do extreme things.

On the other hand, if he takes over the Federal Reserve now, he may shrink the money supply, but next year is an election year. I think it won’t be too exaggerated. After all, he also has to consider the chair under his butt. I suggest that in the past six months, we should shrink the money supply.

What do you think about the size of the loan to cope with this stressful period?"

"Well, I agree. But I have a different view than you. I don't think he will increase the money supply under pressure from the White House."

Carter nodded and agreed with Goodman's proposal. Although tightening loans will reduce the bank's profits, considering the increasingly higher bad debt rate in the future, Carter feels that this loss can still be tolerated. It is better than

It's good that the money you borrowed goes down the drain.

It's just a pity that according to the restrictions on savings banks in the United States these days, savers' deposits cannot be invested. Otherwise, if you put these deposits in the Magellan Fund, you can get a high enough return every year...it will not be lower than lending!

"I told you before that when I come back from my trip, I will tell you my plan. Now is the time. Needless to say, you should know how exaggerated the inflation in these years is, right?"

"Of course, but I don't think Volcker can withstand the pressure from the White House. Maybe he was a radical when he was the governor, but from the moment he became the chairman of the Federal Reserve, he was a politician. For politicians, they themselves

The position under the buttocks is the most important!"

How exaggerated was inflation in the United States in the 1970s? In terms of the consumer price index, it was still 38.8 in the 1970s. By the 1980s, it had become 84.2. The consumer price index usually indicates the impact of prices on consumers, that is, the average person.

Degree. The larger this number is, the more it indicates that basic commodity prices have a great impact on people's lives, that is, people can no longer bear the rising prices.

This may not be intuitive enough, so let’s give another example. Many people feel that the price increase in the future is exaggerated, but even in 2021, when the price increase was very serious, the increase year-on-year was only 0.9%. By analogy, it is relatively normal.

The index growth rate is 10% in ten years, which is about the same. However, in the United States, it has increased by more than 200% in ten years, which is more than 20 times the future price increase.

During the era of Volcker's predecessor, Burns, that is, from 1970 to 1978, the average annual price increase exceeded 6.5%. Under Volcker's predecessor, William Miller, the increase once exceeded 10%.

. It’s just such an increase. If the economy keeps up with the development and the wage level rises, it may not be a big deal, but the U.S. economy is not in a period of great development now!

Then this is very scary! What this data shows in real life is that something that sold for 10 yuan in the first year became 11 yuan in the second year, and 12.1 yuan in the third year...

With such basic information, combined with future insights, Carter became more and more convinced that Volcker would be able to withstand the pressure. The reason is also very simple:

"Yes, what you said makes sense. But it's been ten years, hasn't it? Someone has to do some things. If he doesn't do it, there will be a new Paulk or Rolke who will do it."

Carter reached out and knocked on the table and said slowly:

"It won't work if we don't do it, Goodman. Such a high increase for ten years is exaggerated. It's like a tumor on the human body. It will hurt if you cut it out, but if you don't cut it, sooner or later it will die.

Your life. If the Federal Reserve continues to cater to the votes of politicians and spend a lot of money on the money supply, then we should pack our bags as soon as possible and prepare to leave this hopeless country."

"While the U.S. dollar is still worth some money, go and set up a business elsewhere. In the end, the money in our hands will become worthless pieces of paper like toilet paper."

"Why him? Everyone knows the truth, but so what? After so many years, Burns has not done it, Miller has not done it, why do you think Volcker can do it? That Carter in Washington only

Concern about his votes next year, as for the future you talk about, that is the future. As long as his term does not explode, who cares if there is a flood behind him?!"

Goodman understands all that Carter said. But perhaps it is because Americans have a natural distrust of government officials, or they are too familiar with the national conditions of the United States. He simply does not want to believe that Volcker can take such measures for the future of this country.

Bet on your own future.

Contribute to the country, the country needs you and so on... Come on, are you just trying to fool those fools on the street to become soldiers? How can people like them, who are dealing with capital, trust this dignified man like Volker?

Will the president of a top bank be so enthusiastic that he goes to war for the United States?

"Then let's wait and see. At least, our current goals are the same, right? I also intend to reduce the size of the loan. We will do the next loan approval."

Carter smiled and did not refute Goodman's words. If he didn't know the future, Carter wouldn't believe that Volker was really so reckless...

An election year always has a different meaning for the United States. In an election year, everyone from the president to the people can feel different things. For example, people will feel that their welfare has improved, and that the city’s

Some people's mugshots were hung in the center, and the square seemed to be a lot more lively.

For officials, an election year is a critical moment when they strive to maintain their own factions. Otherwise, will they still be able to secure their positions under a different president? Volcker, the Fed chairman appointed by President Carter, will naturally be criticized.

Summed up as Carter or the Democratic Party, if he does not cater to Carter, relax monetary policy, and let the people get some temporary benefits, isn't that giving votes to Republican competitors?

When the Republican candidate comes to power, will he, the "Democratic" Fed chairman, still be able to hold on to his position? Publicly and privately, at this time, not to mention Goodman not trusting him, perhaps no one in the entire United States believes in him.

Even the interest rates on long-term Treasury bonds have now increased by two percentage points. Obviously, from the perspective of the issuer, Volcker, who was appointed chairman of the Federal Reserve at such a delicate time before the election, was used by Carter to gain traction.

It's just a scapegoat introduced based on votes.

When the election year is over and inflation continues to rise due to the excessive issuance of currency, this currency can be introduced to "apologise"... No matter what he says, everyone believes that the currency that should be issued will still be issued.

Inflation should still rise!

If the interest rates on long-term government bonds do not rise, no one will buy them. No one is a fool!