What I want to say is: yes or no, if the Bundesbank raises interest rates, it really has nothing to do with us, but the Fed may not be able to say so. Today, we will talk about what the Federal Reserve has done for us as a China citizen.
First of all, the Fed belongs to the United States and the world.
Remember my previous article "How do banks control the country? And control the world? I once wrote about the establishment of the Federal Reserve, but we might as well review it today. At the beginning of last century, in order to cope with the economic crisis that appeared every few years, with the support of then US President Wilson, the Federal Reserve Act was passed in 19 13, and the major banks in the United States jointly funded the establishment of the US Federal Reserve system. As the central bank of the United States, a private central bank was born. At that time, the Federal Reserve was indeed the central bank of the United States, only responsible for the issuance and management of the American currency, the US dollar. At that time, the United States was still a small follower behind the European powers, and it was indeed well-known, so the Federal Reserve was a pure national central bank.
But after the two world wars, the United States basically used the same routine. First, at the beginning of the war, it sat on the sidelines, selling arms on both sides and making a fortune in the war. Then, it saw which side would win, suddenly joined the war and harvested the fruits of the war. In this way, the developed countries in Europe are burdened with the heavy debts of the United States, and most of the world's gold reserves have flowed into the United States. Under such circumstances, with the strength of victory, the United States held the Bretton Woods Conference at the end of World War II. The Bretton Woods Conference required the currencies of all countries in the world to be linked to the US dollar and the US dollar to be linked to gold, thus tying all countries in the world to the thief ship of the US dollar.
At the beginning, because of the constraints of gold, the Fed did not dare to do whatever it wanted. However, with the continuous reduction of American gold reserves, in the 1970s, President Nixon announced that the US dollar was decoupled from gold, forming a phenomenon that currencies of various countries were linked to the US dollar, and the US dollar did not need to be linked to anything. If America needs to buy things, it doesn't need to bother to make money by itself. Start the Federal Reserve printing machine to print money. If the world doesn't obey, it doesn't matter if the United States has invincible military strength in the world. Just hit you. It can be said that the United States, with the help of the Federal Reserve, has made Europe a supplier of industrial products, Japan and the Four Little Dragons of Asia a supplier of electronic products, and China, India and other emerging market countries a supplier of light industrial products and daily necessities, so that it can buy the whole world with only US dollars. Coupled with the impact of economic globalization, the Fed's every move affects the economies of various countries. When the Federal Reserve sneezes, all countries in the world will catch a bad cold.
It can be said that the Federal Reserve is not only the Federal Reserve of the United States, but also the Federal Reserve of the world. Do you think it has something to do with China?
Second, what happened to China people when the Fed raised interest rates?
As mentioned earlier, due to the special status of the US world currency, whatever the Fed does has world influence, and the Fed's interest rate hike is no exception. What does the Fed mean by raising interest rates? It was the Federal Reserve that raised the federal benchmark interest rate to achieve the purpose of market operation. Raising interest rates by the Federal Reserve is naturally a good thing for the United States, but not necessarily for China?
Everything is definitely a double-edged sword. The Fed's interest rate hike will definitely have a good impact on China. We adhere to the principle of telling good news first. Let's sum up the good things first:
First, American bonds will appreciate. For a long time, due to the lack of sufficient safe and stable investment channels, China's abundant foreign exchange reserves are often used to buy US Treasury bonds. Although the amount of US Treasury bonds held by China has been changing, the amount of US Treasury bonds held above $1 trillion is basically a fixed value. Therefore, the Fed's interest rate hike is good for US Treasury bonds held by China and US dollar assets held by China people. Because the interest paid each year has increased, the appreciation of these American bonds or American assets will become an inevitable trend, and it is even more important to hold American assets.
Secondly, China will face the pressure of RMB depreciation. With the appreciation of US dollar assets, there will be depreciation pressure on the RMB. If the RMB depreciates, how can it be a good thing? This is because the depreciation of RMB means that products made in China become cheaper from the exchange rate point of view. People all over the world are price-sensitive animals. The same cheap products are even cheaper in China. Why don't I buy products made in China? Therefore, the products exported by China will be more competitive and our exports will be stronger, which is naturally not a bad thing for China.
The good news is over. Let's talk about the bad news. Disadvantages to China are mainly manifested in the following aspects:
First, the China stock market may be more environmentally friendly. Any friend who stocks stocks will know a familiar term: hot money. The Fed's interest rate hike again means that China's investment market, such as the stock market, is less attractive to these international hot money, so the hot money will flow back to the United States, because the profit of China market is obviously lower than that of investing in the American market. Once the hot money flows back, the already depressed China stock market will only develop in a greener direction, and the pressure of shorting is obviously greater than the pressure of going long.
Second, friends who borrow money to buy a house should be cautious. The Fed's repeated interest rate hikes mean that the possibility of the People's Bank of China raising interest rates is also increasing, which is not a good thing for friends who have already borrowed money to buy a house. Because, every year, everyone's repayment interest rate fluctuates according to the benchmark interest rate at the beginning of the year. Once the benchmark interest rate is raised, the amount of mortgage that everyone needs to pay back every month will also rise. As far as I know, many friends need to pay their mortgage every month, which accounts for more than half of their family income. If the family income does not increase, but needs to pay more money, it will undoubtedly reduce the quality of our daily life.
Third, aunts who like to buy gold will be depressed. As we all know, Federal Reserve Chairman Yellen is an aunt. This Aunt Yellen has always been unfriendly to Chinese aunts. Once the Fed raises interest rates, the dollar will strengthen as interest rates rise, and precious metals such as gold and silver denominated in dollars will become more expensive, which will reduce their attractiveness to investors, leading to a decline in prices. As an investment product, the price of gold can only keep falling. In this way, holding gold will become uneconomical, but gold is a relatively difficult asset to realize.
Fourthly, it is not conducive to the life of China people. For the common people in China, if they don't buy stocks, mortgages or gold, the biggest influences on our lives will be studying abroad, traveling and Haitao. Originally, it was quite cheap and cost-effective for us to go out, but once the Fed raises interest rates, it means that many parents of overseas students and Haitao gangsters will be depressed, because we have to spend more money on the same thing, which is not good news.
Online jokes say: The Federal Reserve is the world's Federal Reserve, and Aunt Yellen is the world's aunt. Although this sentence is overdone, as China people, we can't help but care about international events such as the Fed's interest rate hike.
Viewing Jiang Han, the official account of World WeChat from an economic perspective ID: jianghanwiew