At first, everyone thought that raising interest rates in the United States was a harvest for the whole world. Many economists predicted it several years ago, with the aim of attracting global capital back to the United States by raising interest rates. Many economists also understand this behavior as the United States harvesting leeks all over the world. For example, for China, the US interest rate hike can cause China's foreign exchange to flow out of the United States; For the EU, it can make the dollar appreciate, make the prices of European necessities-oil and natural gas priced in dollars rise, and play a role in beating the EU; At the same time, it will also cause capital outflows from many small countries, reduce the credibility of the local currency, and return the US dollar to its hegemonic position.
Raising interest rates makes it difficult for the United States to ride a tiger, but China is a tiger knight. However, it seems that every foot in America has stepped into a pit. In the first quarter, the GDP growth of the United States was only 1%. At that time, the inflation rate was close to 6%, and the interest on American debt had soared to 4.3%. If you want to offset the inflation rate by raising interest rates, you have to raise the interest rate to 6%, which is simply a fantasy. Why is America so unlucky?
In the first pit, China announced that the digital currency transaction was illegal, which led to the global digital currency market turmoil, and various digital currency plummeted, which led to the return of dollars locked in digital assets to the US market and aggravated inflation.
In the second pit, China did the opposite, and other countries followed suit to raise interest rates. Instead, China announced RRR cuts. Instead of collecting funds, it released funds, which further led to the return of dollars to the United States.
In the third pit, China and Japan continued to sell American debt, and the American people took over American debt themselves. On the one hand, we have to pay high interest, on the other hand, there is still uncontrollable inflation. All these pressures have come to the banking industry.
Raising interest rates leads to a decline in the profitability of the banking industry. Raising interest rates means that you don't need to invest, you just need to deposit your money in the bank to make a profit. Inflation has also damaged the investment interests of enterprises, further tightening investment and not lending. In this way, banks have to pay depositors' interest with large sums of money. On the other hand, the loan can't be issued, which leads to the imbalance of income and expenditure and faces losses. Therefore, a large number of banks have invested their money in American debt with high interest rates and become the takers of American debt.
However, public opinion in the United States was out of control, and once rumors about the loss of principal by banks began to spread, Americans began to run wildly. This has led to a series of problems for Bank of America. There used to be Silicon Valley Bank, and now it is the First Bank of China. The story is basically the same.
China is right not to raise interest rates. I wonder if there are any business friends like me. In the past, our small and micro enterprises had to go to the bank for loans, and it was not necessarily possible for grandpa to tell grandma. Recently, however, banks began to call our enterprises to actively promote the loan business, and the credit line was not low. Not raising interest rates is the correct way to reduce the profit pressure of banks in this period when no one dares to invest. American finance, this time, did not show the wisdom of China people.
Why are American banks so prone to bankruptcy? Raise interest rates crazily and bring down capitalists. Another American bank is at risk of bankruptcy. The Bank of the First Republic is on the verge of bankruptcy, dragging down countless bank capitalists. Just last month, 1 1 large American banks injected $30 billion into the First Republic Bank. If the First Republic Bank goes bankrupt, it is not clear whether there will be further chain reaction.
At first, people thought that the United States raised interest rates in order to profit from all over the world.
The interest rate hike in the United States was predicted by many economists several years ago, with the aim of attracting global capital back to the United States through this action. Many economists also interpret this behavior as that the United States benefits from all over the world. For example, regarding China, raising interest rates can cause China's foreign exchange to flow out to the United States; As far as the EU is concerned, it may lead to the appreciation of the US dollar, leading to the rise in the prices of European necessities such as oil and natural gas denominated in US dollars, thus putting pressure on the EU. At the same time, it will cause the capital outflow of many small countries, which will lead to the reduction of the credit rating of their own currencies and make the US dollar regain its dominant position.
Raising interest rates makes it difficult for the United States to get off the tiger, while China is a knight riding on the tiger instead. However, the US interest rate hike seems to stumble every step. In the first quarter, the GDP growth of the United States was only 1%, while the inflation rate was close to 6%, and the interest rate of American bonds soared to 4.3%. If they want to raise interest rates to fight inflation, they need to raise interest rates to 6%, which is impossible. Why is America so unlucky?
The first stumbling block is that when China declared cryptocurrency trading illegal, it caused turmoil in the global digital currency market. Various digital currency crashes have led to the return of dollars locked in digital assets to the US market, which has aggravated inflation.
The second stumbling block is that China, contrary to other countries, announced a reduction in the deposit reserve ratio. Instead of tightening funds, it released funds, which further led to the return of dollars to the United States.
The third stumbling block is that China and Japan continue to sell American bonds, which are then picked up by Americans themselves. On the one hand, the pressure of high interest payment, on the other hand, the unstoppable inflation, all of which comes down to the banking industry.
Raising interest rates leads to a decline in the profitability of the banking industry. Raising interest rates means that people don't need to invest, they can simply make profits by putting their money in the bank. However, inflation harms the investment interests of enterprises, which further tightens investment and leads to a decrease in loans. As a result, on the one hand, banks have to pay interest to depositors, but they are unable to issue loans, resulting in an imbalance between income and expenditure and facing losses. Therefore, many banks invest their funds in high-interest American bonds and become buyers of these bonds.
However, the American media is uncontrollable. Once the rumors of bank capital loss began to spread, Americans began to run on banks crazily. This has led to a series of problems of American banks, first Silicon Valley Bank and now First Total Bank, all following a similar pattern.
China is right not to raise interest rates. I wonder if anyone else is doing business like me. In the past, it was difficult for small and micro enterprises to get loans from banks, even after begging. But recently, banks have been calling us entrepreneurs to actively promote their loan business, and the credit line is not low. In this period when few people dare to invest, not raising interest rates is the correct way to reduce the profit pressure of banks. American-style finance, this time, did not show the wisdom of us in China.