The Rebirth of the Financial Hegemon

Washington, D.C.

Referred to as Washington.

It is the political center of the United States of America.

It is also the location of most U.S. federal government agencies and embassies of various countries in the United States.

The headquarters of international organizations such as the World Bank, the International Monetary Fund, and the Organization of American States are also located here.

Any news coming out of Washington may directly or indirectly affect any country in the world.

including politics and economics.

The Federal Reserve System (Federal Reserve) is the central bank of the United States.

Also located in Washington.

As the central bank, the Federal Reserve's job is to regulate the U.S. economy.

Like other central banks, the Fed mainly uses interest rate decisions to regulate the economy.

Any news conveyed by the Federal Reserve will affect the pattern of the world economy.

Therefore, every move of the Federal Reserve will be watched by all governments and consortium institutions around the world.

September 12th.

The Federal Reserve's interest rate meeting was held on time.

"Data released by the Ministry of Labor show that non-farm employment increased by 130,000 people in August, a 17-month high... Based on the statistical results, I support this interest rate increase."

"Core inflation continued to rise in August, with prices rising 0.7% after rising 0.8% for five consecutive months...Based on the inflation statistics, I support raising interest rates."

“According to Labor Department employment data, labor costs have been rising – growth in average hourly earnings reached a new cycle high in August….”

"..."

Alan Greenspan.

American Jew, the 13th Chairman of the Federal Reserve Board of the United States.

He is known as the global "economic czar" and "dollar president".

Wherever he went, he was treated like a head of state on the red carpet.

Of course, this time the Fed's interest rate meeting was chaired by Greenspan.

Most economic data show that the employment rate and inflation rate have been at a high level in recent months and are likely to continue to rise.

Twelve chairmen of the Federal Reserve Bank believe that the current U.S. economy is still suitable for decision-making to raise interest rates.

But before the official vote, Alan Greenspan gave a speech.

"Labor productivity is growing faster than the government's superficial statistics, which will reduce the unemployment rate without triggering inflation. I think the current economic growth is an illusion of irrational exuberance..."

After all his voting colleagues had their say, Greenspan delivered a five-minute speech based on his own views.

Ultimately, he said.

"I believe that the current economic environment requires interest rates to be lowered to maintain current economic growth."

On the eve of the 1996 U.S. election, Fortune magazine put out a sentence on its cover that told the world: "Idiot! It doesn't matter who is president, as long as Alan Greenspan is the chairman of the Federal Reserve."

This shows how significant Greenspan’s achievements and status are in the economic field.

After his speech, all the members discussed with each other and then asked Greenspan questions.

After the questions were answered by Greenspan, voting began.

More than 80% of the votes supported Greenspan's resolution to lower interest rates.

…

New York, Wall Street.

"Labor productivity is growing faster than the government's superficial statistics, which will reduce the unemployment rate without triggering inflation. I think the current economic growth is an illusion of irrational exuberance..."

Greenspan's speech was broadcast on television.

There is a saying in the American financial community: If Greenspan coughs, it will rain all over the world.

In the first two months since Greenspan took office as chairman of the Federal Reserve, "dark clouds were rolling in and strong winds were blowing" on Wall Street.

That "Black Monday" is still frightening to this day.

Within 3 hours of opening, the Dow Jones Index plummeted 508.32 points, setting an unprecedented record.

More than 500 billion U.S. dollars were wiped out, which was 1/8 of the U.S.'s annual gross national product that year!

Therefore, Greenspan’s words and deeds are particularly eye-catching.

Wall Street investors spend a lot of effort studying every speech he makes, trying to capture even a little bit of clues from his word choice, but the results are always in vain.

So when the final voting results for the interest rate cut were announced, people at Wall Street investment banks once again started to curse.

Of course, she was scolding Greenspan’s mother.

Starting in 1994, the U.S. monetary policy changed from its previous easing policy and continued a two-year interest rate hike cycle to restrain inflation.

But this time, the Federal Reserve suddenly announced that it would cut its benchmark interest rate by 25 basis points.

"Dry…."

"Look at you smiling like Alan Greenspan..."

"Ha ha….."

"The Tsar is mad, damn it..."

"Greenspan, I'll beat your lungs out..."

In a Wall Street investment bank, a group of traders were excitedly cursing Greenspan.

The scolding was very exciting, and the mother was very excited.

But scolding doesn’t necessarily mean it’s hate or resentment.

After the Federal Reserve's interest rate decision was announced, the Dow Jones Industrial Index and the Nasdaq Index rose by nearly 3% that day.

The surge has allowed countless securities investors to receive huge returns.

When countless traders celebrated the day's stock market surge, Zhao Jiangchuan also had a smile on his face.

He knew that the real decisive battle was about to begin.

After the Federal Reserve's interest rate decision was announced, the U.S. dollar first declined and then rose, rising nearly 1% that day.

Logically speaking, when the Fed lowers interest rates, it means releasing monetary liquidity.

It's the same as opening a gate to release water.

When the income from deposits and loans declines, capital will be driven into the market by banks for investment due to the decline in income.

The logic behind the rise of the U.S. stock market is based on this.

According to this logic, as the liquidity of US dollars in the market increases, the amount of US dollars in the market will also increase.

According to the basic factors of supply and demand, if the circulation scale of the US dollar expands, the US dollar index should weaken.

But the result is completely opposite.

Half a month later, after the Federal Reserve announced that it would cut interest rates by 25 basis points and there was a possibility of further reductions, the US dollar rose strongly for two weeks.

A stronger U.S. dollar means U.S. dollar assets have entered an appreciation cycle.

Under this influence, global safe-haven capital began to flow into the United States, further promoting the strength of the US dollar.

This has put pressure on Asian and European markets.

September 28th.

The Bank of Japan suddenly announced.

Increase bank deposit and loan interest rates by 0.5 basis points.

But what is surprising is that after Japan ended the era of zero interest rates, the yen did not strengthen as a result. Instead, it started to head downwards and entered the downward space.

The strength of the US dollar has begun to draw blood around the world, and the weakening of the Japanese yen has once again put pressure on Asian currencies.

In order to avoid capital outflows, Southeast Asian countries have raised interest rates in an attempt to prevent capital from leaving.

Thailand took the lead.

The bank deposit and lending interest rates will be raised from the current 4% to 6%.

Immediately afterwards, central banks in Southeast Asia took action one after another, also choosing to increase bank deposit-to-loan ratios to retain liquid capital that wanted to leave.

After receiving the news from the central banks of various countries, Zhao Jiangchuan showed a cruel smile on his face.

Central banks around the world don’t understand what’s going on.

But how could Zhao Jiangchuan not know that?

The U.S. dollar strengthened when interest rates were cut, and the Japanese yen weakened when interest rates increased. The monetary policies of the two major economic systems were later known as double ghosts.

It’s easy to imagine what such a terrifying term means.