US Economy's Deadly Adventure

Today, the U.S. dollar interest rate hike has become a global enigma. What exactly do they intend to do? Why are Americans so calm and unafraid? Wouldn't it be better if the U.S. dollar maintained a low interest rate, and people around the world enjoyed spending it? Let's introduce a belief held by many Americans today and see how credible it is.

The U.S. dollar interest rate hike is a form of damage to the global economy and finance, and it is the same for the U.S. economy and finance itself. Therefore, many people don't understand why the Federal Reserve is so persistent, playing this dangerous game every few years.

Although there are many speculations all over the world, no one knows the real bottom card of the Federal Reserve.

The latest bad news is that the shockwave caused by the U.S. dollar interest rate hike, which has led to a surge in non-performing loans in U.S. commercial real estate credit, is spreading from small and medium-sized regional banks to large Wall Street banks.

A few days ago, media reports indicated that New York Community Bank's stock price plummeted by more than 50% due to severe losses from non-performing commercial real estate loans, triggering a new round of bank runs among small and medium-sized banks, with the risk of bankruptcy for U.S. small and medium-sized banks rising rapidly.

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The latest data shows that in 2023, the scale of overdue commercial real estate credit of JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley increased by about three times, reaching $9.3 billion.

How high and severe is the risk involved here?

Data released by the Federal Deposit Insurance Corporation (FDIC) shows that the commercial real estate credit provisions of the aforementioned six large Wall Street banks are severely insufficient, with the risk of a potential explosion at any time.

In 2023, the amount of overdue loans related to U.S. office buildings, shopping centers, apartments, and other commercial real estate reached $24.3 billion, far higher than the $11.2 billion in 2022.In the first half of last year, when Silicon Valley Bank and Signature Bank went bankrupt, Goldman Sachs had already warned that the risk of commercial real estate credit was rising sharply.

It is clear that as the US dollar interest rate hike approaches its second anniversary, the risk of commercial real estate credit has become another extremely high-risk bubble after junk bonds, sounding the alarm for Wall Street and even the entire US financial industry.

This is all due to the US dollar interest rate hike. If the US dollar did not raise interest rates, Silicon Valley Bank would not have gone bankrupt, and the risk of commercial real estate credit would not have emerged.

It's still that question, why does the Federal Reserve do such a thankless task?

Among the various speculations about the US dollar interest rate hike, the dollar tide harvests the world is the most widely spread and credible statement, because the historical facts of 6 times of US dollar interest rate hikes have proven that this is real and not a story made up by anyone.

However, many Americans do not believe this statement, they believe in another statement: the reset of the US economy.

The underlying logic of this statement is that in the highly liberal and highly financialized economic system of the United States, there is a very obvious but insurmountable disadvantage, which is the continuous breeding of non-performing assets and even the creation of bubbles in the shadows of some regulations.

As early as the beginning of the 20th century, American bankers had already discovered the bubble phenomenon in the overheated development of the economy.

When capital smells the taste of money, people will use their brains to play all kinds of new tricks, desperately earn wealth, create new "wind mouths", and capital crazily pours into this gap, causing a large amount of non-performing assets and quickly forming high-risk bubbles.

For example, the subprime loans in the 2008 financial crisis, the asset bubble inflation of Silicon Valley Bank in 2023, and MBS, etc., all belong to non-performing assets in the financial system.These high-risk bubbles are the cancerous tumors within the American economy and financial system. Over time, they can cause various discomforts and even pain, and may even inflict severe wounds on the U.S. economy similar to those of the 1930s. Therefore, it is imperative to surgically remove them.

The Federal Reserve is the scalpel that removes these tumors. They use interest rate hikes to squeeze the bubbles out of the financial system and excise non-performing assets. This process is the reset of the American economy: easing from overheating and returning to normalcy.

So, how do we determine if the economy is overheating? Americans believe that when inflation is too high, it definitely indicates an overheated economy and a high risk of bubbles. When unemployment soars, it definitely indicates an economy that is too cold.

Thus, every time the Federal Reserve raises interest rates, they claim to be suppressing inflation.

The highly liberal American economic and financial system simply cannot avoid the occurrence of such crises. This is why every few years, the Federal Reserve has to implement a harsh interest rate hike to help reset the American economy.

Unfortunately, America's self-centered and reckless approach has also brought disaster to the global economy.

The greatest tragedy lies in the fact that since the dollar is the world's currency, every time the dollar's interest rates are raised, the world has to endure the pain of monetary tightening and go through a disaster where American capitalists harvest the world.

Are Americans aware of this economic reset pattern amidst the crisis? Does Wall Street know? Many people are clearly aware, so they are not panicked.

They probably also know that as long as they survive the crisis, it will be a feast of harvesting the world. Only those who cannot hold on during the crisis become the pitiful fools and victims.