Original | Liu Jiaolian
Overnight, BTC temporarily stabilized at 59k. Now the market is like a frightened bird, shaking at the slightest disturbance. Yesterday [“8.28 Teaching Chain Insider: The US may lose the financial war, will it surge or plummet first and then surge?”] initially looked forward to the consequences that the US will face after losing this round of financial war, mainly three: interest rate cuts, recession, and financial collapse. However, interest rate cuts do not necessarily lead to collapse, at least, interest rate cuts are not the cause of collapse, I am afraid that both are the result of recession.
So why, from the historical data chart, it seems that the Fed starts to cut interest rates first, followed by a recession, and then the US stock market begins to collapse? The reason is that the Fed can always "peek" at the real data of economic deterioration earlier than the market, and the public data shown to the market is modified and released with a delay, so that the Fed can always "get ahead" of the market.
However, to be honest, the Fed and the Bureau of Statistics are too arrogant and treat the people as idiots. It is obvious from the data that the more you cry "wolf", the worse the manipulation effect will be. The market has long seen through it. As long as the Fed cuts interest rates, or even if there is an expectation of a rate cut and surrender, I will run away and sell at high prices, so as not to stay where I am and wait to be buried.
Therefore, if this kind of market manipulation is done too much, it will become a kind of "self-fulfilling" situation - because everyone expects a collapse, so they all run away, which actually results in a collapse.
The scenario of the Fed's failure was actually written as early as last year when the article "Shooting the Bull from Across the Mountain: The Great Financial Collapse" was published on September 19, 2023. It's just that it relied on the whitewashing of the data by the U.S. Bureau of Labor Statistics and has not officially raised the white flag of surrender until today.
Judging from the CME rate cut probability table, it is 100% certain that the Fed will cut interest rates starting next month. Apart from the Chinese self-media and a few pro-American scholars who claim that the Fed will never cut interest rates (implying that it will never surrender and will never admit defeat in this round of financial war), I am afraid that even Americans themselves do not believe this nonsense.
In the article "Shooting the Bull from Across the Mountain" last September, when the two major forces in this round of financial war were fighting to the climax, Jiaolian clearly pointed out that since one side was unwilling to give up the interest rate hike and the other side was unwilling to give up the exchange rate, the result of the battle between the two gods would inevitably push up the prices of BTC and gold. On the day of writing, BTC closed at 27,000 US dollars and gold closed at 1931 US dollars. You can all see what kind of rise has started in the past year.
Now we have to start thinking and considering where the Federal Reserve and the US dollar will go after the defeat in this round of financial war.
We must first consider a traditional, classic closed loop of the US dollar tide, the method of harvesting and the direction of the US dollar flow. Simply put, it is a cycle of interest rate hikes and a cycle of interest rate cuts, completing two waves of harvesting.
First, there is the interest rate hike cycle, which draws dollar liquidity back to the United States from all over the world, explodes the leverage and exchange rates of other countries, cuts asset prices at their ankles through the Davis double kill, and simultaneously issues bonds to dilute everyone's wealth (the first wave of harvest). The harvested dollars are transferred to interest groups through deficit spending, pushing up US stocks, and further concentrating liquidity in the hands of US interest groups and their financial white gloves, namely Wall Street institutions.
After the layout is completed, the economic data is manipulated, the monetary policy is reversed, and the interest rate cut cycle is started. During the interest rate cut cycle, the US interest groups that obtained a large amount of US dollar liquidity in the previous step rushed out of the United States and rushed to the world through their white gloves. Faced with high-quality assets at a discount everywhere, they made large-scale acquisitions, and even "spent your life while you were sick" (the second wave of harvest) like the cheap merger of Ermao - anyone who has started a business and was forced to sign an unequal treaty ("selling oneself") when the company urgently needed financing and begged VCs for money to keep it alive should have a deep understanding of the ruthlessness of financial capital that only wants to add icing on the cake and never help in times of need.
The first wave of harvest is to rob you of your money. The second wave of harvest is to use your money to buy your life.
However, since the Chinese have stood up, the United States' tried-and-tested financial harvesting tactics have become less effective.
In fact, it messed up in 2008. It raised interest rates in the interest rate hike cycle, but it failed to bring down others, but it brought down its own real estate leverage, which led to the subprime mortgage crisis. However, it quickly spread the crisis to the whole world with its unparalleled financial transmission ability, which led to the global financial crisis. This tactic of killing one thousand enemies and hurting itself eight hundred also scared the whole world. Everyone rushed to rescue the market, bought US bonds crazily, and gave the US blood transfusion. Finally, everyone worked together to help it get through it.
In the end, it is the people of the world who bear all the responsibilities.
However, we also have to thank the global financial crisis, which directly ignited Satoshi Nakamoto's inspiration and gave birth to the epoch-making great invention of BTC.
By 2016, the Americans had recovered and found it a bit too uncomfortable to eat white steamed buns with pickles. They missed the luxurious days of eating bird's nest and shark's fin every day, so they started another round of interest rate hikes. This time, they attacked the global industrial chain simultaneously, engaging in a trade war (restricting China's exports to the United States, suppressing the demand side) and imposing embargoes and sanctions (restricting the export of high-end technology from the United States to China, suppressing the supply side), hoping to "block both ends" and achieve success in one fell swoop.
Man proposes, God disposes. In 2020, a global pandemic came, which directly interrupted the Fed's interest rate hike process, forcing it to quickly return interest rates to zero and start unlimited money printing. However, the Americans once again demonstrated their terrifyingly strong ability to withstand blows: in 2008, they blew up themselves, destroying the jobs and money of thousands of people, but they didn't feel any pain at all; in 2020, they blew themselves up, destroying millions of lives, but they didn't even frown. This kind of thing that might have triggered a domestic revolution in another country, the Americans seemed to have mastered the magical skill of the bone-melting palm, and they swallowed it alive, without even a burp, and still talked and laughed. This invincible strength really frightened the opponents.
It is easy to change a country, but difficult to change one's nature. In 2022, the Americans felt a little better about themselves and immediately began to raise interest rates at an ultra-high speed. On the one hand, it is to cope with high inflation, and on the other hand, it is probably to make up for the lost results of the three-year interest rate hike from 2016 to 2019 as soon as possible.
But because the speed is too fast, I can't keep up with the pace. The Fed has only been playing for more than half a year, and it has blown up its own small and medium-sized banks such as Silicon Valley Bank and Signature Bank. Friends who read the teaching chain article in 2023 should know all these things. But if you think about it more deeply, why are these small and medium-sized banks so stupid and stupid that they don't know that they may have maturity mismatch problems? Did they not receive some key information? Who created an information wall for them, causing an information gap between them and big banks and big capital?
Don't be afraid to think too much or too deeply about finance. You have to believe that Zhuang must think much more and much more deeply than you do.
By the second half of 2023, when the Fed can no longer raise interest rates, that is, around the time when the above-mentioned lecture chain wrote "Shooting the Bull Across the Mountain", the Fed's failure was already doomed. However, it feels that it can still hold on a little longer. Hold on a little longer, maybe the opponent will surrender first?
It has to be said that this was purely a strategic fluke and a manifestation of opportunism.
The first wave of interest rate hikes was somewhat hasty. With high inflation hanging over our heads, we really have no choice.
The main reason is that we did not indulge the Americans this time. They issued and sold bonds in an attempt to harvest the first wave. We also sold off our holdings of U.S. bonds. You sucked up the U.S. dollar liquidity, and I sucked it too. We got a lot of U.S. dollar liquidity and did two things: the first thing was to lend it to countries with U.S. dollar leverage, so that they could close their positions and not be blown up. In exchange, they had to do currency swaps with us and kick the U.S. dollar out of bilateral trade; the second thing was to defend the exchange rate while hoarding gold, which led the whole world to hoard gold, and also promoted the rise of other U.S. dollar hedging alternatives such as BTC, intercepting the returning U.S. dollar liquidity.
This makes the Americans very uncomfortable. If the first wave of harvest is not harvested, the basis for the second wave of harvest will no longer exist. If the harvest is not harvested, the Federal Reserve will not dare to cut interest rates. Because the current high interest rate keeps the dollar tight and the dollar appears to be relatively strong. If the interest rate is cut and there is no sufficient support from high-quality assets, then the massive amount of dollars that are sharply magnified by the money multiplier will face a huge risk of rapid depreciation!
If the dollar depreciates rapidly, it will deal a huge blow to its credit, which is something the United States cannot accept in any way.
It is precisely because of this consideration that the U.S. Bureau of Labor Statistics would rather embellish the data in the first half of the year and cooperate with the Federal Reserve to maintain high interest rates. It dares not cut interest rates, and at the same time fantasizes that the conditions and opportunities for a second wave of harvest will fall from the sky.
But China's two moves are too steady. Time is not on the side of the Fed. Its persistence is nothing but meaningless stubbornness and waste. The longer it stubbornly and wastes time, the slimmer its hope of victory becomes, and the greater the risk of collapse. Isn't it that the SAM index has reached the critical value of recession? (See the article "US stocks are forcing death" on August 3, 2024)
Moreover, both moves are overt schemes. The dollar was too ruthless to leave after having an affair with the US dollar. It left the small country heartbroken. No one asked the dollar to leave, it wanted to leave. We just came to the door and sent warmth after it left. You don't allow others to take care of the girlfriend you abandoned yourself? Is it too overbearing? Therefore, there is no solution to the overt scheme.
Now the cycle is about to reverse, and the US dollar can't stand the loneliness. After sleeping at home, it wants to sleep around the world. This is bullying. If you want to make the bully talk some reason, it's probably not possible without Dongfeng, aircraft carriers, and 055 destroyers, so we have to build more.
People are all made of flesh and blood. After experiencing the goodness of a warm man, who would want to use their own body to bear the desires of the village bully? So, as long as the new lover can beat the village bully and has enough force to keep him out, then as Jiaolian said in the article "The Dollar Seeks Kindness and Gets Kindness" on October 26, 2023, "This time the dollar has left ruthlessly, and it doesn't need to come back."
By understanding this situation clearly, we can roughly deduce how the post-war situation will develop after the Federal Reserve surrenders.
On one hand, the US dollar liquidity that is trapped in the US is eager to come out, and on the other hand, there are few beauties in the world who are kicked down in the interest rate hike cycle and are waiting for the dollar to rise. They are still standing well and nestling in the arms of others. If you want to rely on your own strong ships and powerful guns, the one next to the beauty seems to be no pushover either. After weighing it over, you really don't dare to use force.
What should I do?
We have to go out this way, and we can't go back to the old road, so we have to find a new exit to release the flood and relieve the pressure.
Therefore, this huge amount of US dollar liquidity has to flow into the crypto market that is open to it.
BlackRock is a veteran in the industry. It has been actively preparing for the new post-war situation this year, and has launched crypto ETF products for BTC and ETH, paving the way and building bridges to open up a channel from the domestic market to the crypto market, so that the overwhelming and surging US dollar liquidity can rush into the crypto world more quickly and conveniently.
At that time, Satoshi Nakamoto will use his loving and tolerant heart to comfort Powell's empty heart.
(Official account: Liu Jiaolian. Knowledge Planet: reply “Planet” to the official account)
(Disclaimer: The content of this article does not constitute any investment advice. Cryptocurrency is an extremely high-risk product and there is a risk of it returning to zero at any time. Please participate with caution and be responsible for your own actions.)
