On October 15th, Federal Reserve Governor Waller indicated that the upcoming rate cuts would not be as significant as those in September, but he supports gradual rate cuts in the future. Does this imply that the Federal Reserve has compromised and will choose to continue lowering interest rates?

As the sole international currency, the United States frequently uses the dollar's interest rate hikes and cuts to disrupt the rhythm of the international financial market. The world has long suffered from the dollar's dominance. On October 10th, "RT" reported that BRICS countries are developing a new international payment system. From excluding Russia from the only international clearing system to an increasing number of countries starting to use their own currencies for transactions, and to 45 states in the United States declaring monetary independence, from 71% of the global reserve currency share in 2000 to the current 58%, the United States is gradually walking into the grave it has dug for itself. The "Father of Black Swan" warns: the status of the dollar is gradually being lost.

The tragedy of the U.S. economy

Since October 4th, the United States has successively released four sets of data. In just a month, the U.S. economy can shift from a situation where a recession necessitates interest rate cuts to a situation where everything is looking up and there is no need for rate cuts. Everyone is aware of the水分 involved, but what is the real state of the U.S. economy?

When the U.S. lowers interest rates, global capital flows into the Chinese stock market. Naturally, this is not what Wall Street capitalists, who have been bearing high debt interest expenses for more than two years, would like to see. Therefore, four sets of impressive data have followed one after another after the National Day, and market sentiments have shifted from whether it should be 25 or 50 basis points to whether there is a need for further rate cuts.

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Regarding the Federal Reserve, they may also be indecisive about whether the U.S. economy should opt for a soft landing or a hard landing.

Based on past experience, what the United States has always wanted to achieve is a smooth landing. However, many times this has led to global economic turmoil, and even the outbreak of financial crises.

So, what about this time?

According to a recent report released by U.S. banks, perhaps the U.S. economy will not land.What would happen if there is no landing?

First, let's look at why there won't be a landing.

According to a report from JPMorgan Chase, one of the current issues in the United States is that consumer spending in the U.S. remains strong. It is well known that the three main drivers of economic growth are consumption, investment, and imports and exports.

Consumption is a strong force for a country's economic growth. When external demand is insufficient, internal demand becomes particularly crucial. This also means that American consumers are not at all worried about the U.S. economic environment, and at the same time, the U.S. economy will not go into recession.

However, while consumption increases, the U.S. CPI for September exceeded expectations, and the risk of inflation in the U.S. has not gone away.

At the same time, the report from JPMorgan Chase also points out that the credit environment in the U.S. is gradually easing.

Some news agencies, after in-depth analysis, have come to the conclusion that consumers are still spending vigorously, restrictions on loans have been appropriately relaxed, and the predicted inflation will ease, and interest rates can also be lowered, all of which add a lot to the continuous prosperity of the U.S. economy.

This has labeled the U.S. economy as not landing.

What is meant by not landing?

It means that after experiencing a period of prosperity, it cannot come down. U.S. consumption remains strong, but inflation in the U.S. has not been effectively alleviated, and the interest rate reduction range in the U.S. has also been compressed to a very small range.In fact, this is also related to the prosperous financial industry and hollowed-out manufacturing industry in the United States, with a large amount of bubbles accumulating. The U.S. economy operates against the backdrop of excessive dollar issuance and soaring prices.

The U.S. economy appears to be very prosperous, but the high debt has already overwhelmed the United States. According to data from the U.S. Congressional Budget Office, the fiscal revenue of the United States in 2024 will be nearly 5 trillion U.S. dollars, while expenditures will reach 6.7 trillion U.S. dollars, leading to a severe imbalance between income and expenditure. Among the expenditures, interest payments on debt directly exceed U.S. defense spending.

If the United States continues to maintain high interest rates, the interest payments on U.S. debt will only increase the fiscal deficit of the United States.

In the long run, the United States can only declare bankruptcy. Once bankrupt, the status of the U.S. dollar will be precarious. Therefore, for the United States, the only option is to actively burst this bubble.

The United States does not want to experience a recession, but it has to actively induce a recession. Isn't the current U.S. economy a great tragedy?

The U.S. dollar is heading towards the grave that the United States has dug for itself.

The United States uses a set of tight operations of quantitative easing and interest rate hikes to openly harvest wealth globally, such as Argentina, Spain, and even Japan. After interest rate hikes, the speed of currency devaluation and imported inflation have a significant impact on a country.

Therefore, for many countries, the United States' combination of interest rate cuts and hikes is a disaster.

In 2022, with the outbreak of the Russia-Ukraine conflict, the United States ruthlessly kicked Russia out of the only international clearing system. For oil-exporting countries, this undoubtedly greatly affected Russia's exports. Secondly, by instigating the European Union to freeze Russian assets in Europe, the direct result is that the Russian exchange no longer uses the U.S. dollar.

As the creator of the black swan, Taleb bluntly stated that this is one of the biggest financial mistakes since the 21st century.Moreover, what's worse is that the high interest rates of the US dollar have made everyone overlook the fact that its actual value is continuously sliding. The United States' current trade deficit and fiscal deficit are expanding wildly, making the entire situation look simply astonishing.

The high deposit interest rates of the US dollar have also attracted some funds that were originally intended for investment in other countries.

Under these circumstances, investors with large amounts of US dollar cash or deposits will face potential risks.

If the Federal Reserve begins to lower interest rates and the US dollar exchange rate rises instead of falling, US dollar investors will be in a dilemma: The Federal Reserve may adopt a linear interest rate reduction strategy, but the changes in the US dollar exchange rate could be non-linear, causing them significant losses.

For a long time, the United States has abused the big card in their hands—the "dollar hegemony"—and those intimidating unilateral sanctions, all of which have caused deep concern in the international community.

Just last month, former US President Trump, in one of his stirring speeches, even claimed that if you don't use the US dollar, then doing business with the United States would face tariffs as high as one hundred percent!

In response to the possible scenario where the United States might use the US dollar as a political tool or weapon, many countries have already started to take action, attempting to find alternative methods, hoping to use other non-US dollar currencies for settlement in international trade to reduce the risks of being influenced and led by the United States.

It can be seen that the process of de-dollarization will continue, and what we should consider more is that as China promotes the internationalization of the renminbi, it will inevitably face many obstacles from the United States in the future. The birth, glory, and fall of the euro were inseparable from the United States' involvement. Now, the renminbi has taken up the banner of de-dollarization, and the game between China and the United States will continue.