Author: Liu Jiaolian
Overnight, BTC continued to fall to the 57k level. With no volume to fall and no support, it may take some time to hold on.
This September is probably garbage time until the Fed's interest rate meeting. Why is the Fed so caught up in raising or lowering interest rates? In the final analysis, this is a dilemma for it.
As we all know, the Fed's public target for regulating monetary policy is the level of price inflation in the United States. But as it recently admitted, it actually has a dual goal, or a dual mission: one is inflation, and the other is employment. Inflation should be low, but not too low, and should be kept at a moderate level, that is, about 2%. Employment should not be too hot (lack of people), and unemployment should not be too high (lack of jobs), and should be kept at a moderate level of unemployment.
The starting point of these two goals, publicly stated as controlling prices and achieving full employment, sounds like they are set from the perspective of workers. Sorry, it is actually the opposite. These two goals are set entirely on the side of the capitalists. High inflation will push up wages and increase the cost of hiring capital. Only by maintaining moderate unemployment can applicants fully compete, allowing the job market to find the lowest price of labor.
This layer will not be expanded further. The teaching chain will simply break it down and tell you that the Federal Reserve has an open agenda and another hidden agenda, the so-called hidden agenda. Yin and Yang are two inseparable sides of the same coin. This is not a conspiracy theory, or even an open conspiracy theory. There is no so-called "scheme" here. This is a "mechanism". This economic system is designed like this. Just like the car you drive, when you step on the accelerator, the four wheels can carry the sedan and run away. To a person who traveled from ancient times, this seems so magical. Is this a conspiracy or an open conspiracy? In fact, it is neither. It's just that this ancient person didn't understand how cars work.
What is the use of understanding this for an individual? At least it can inspire and encourage you to try not to work if you can, and work hard to be a boss (own capital). Because when you are a boss, the Federal Reserve is helping you.
However, what we want to talk about is not the subtext of the Fed’s dual mission that it claims on the surface, but the deeper hidden agenda.
The dual mandate is obviously a self-contradictory pair, or a pair of mutually hedging goals: to suppress inflation, the economy must be suppressed, which will hit employment, which is inconsistent with full employment; to boost employment, the economy must be overheated, which will push up inflation, which is inconsistent with controlling inflation. But this cannot be called the Fed's dilemma.
The real problem with the Fed's manipulation of monetary policy is that the dual mandate is just an excuse or a means. Its real mission, or the dilemma it faces now, is something we have long been familiar with: to protect the exchange rate or to protect assets?
To protect the exchange rate is to prevent the US dollar from depreciating on a large scale, especially relative to other major international currencies. To protect assets is to prevent the US stock market from collapsing and causing financial collapse and economic crisis.
Last year, when the teaching chain talked about the serious problems faced by the central bank in the face of the Fed's sharp interest rate hike, the collapse of China's real estate, and the rapid depreciation of the RMB against the US dollar, they were also these two problems: to protect the exchange rate (RMB exchange rate) or to protect assets (such as real estate)? The teaching chain said at the time: if you protect the exchange rate, you can protect everything; if you lose the exchange rate, you will lose everything. In fact, this is the simple truth in the military that "if you save the land and lose the people, you will lose both the people and the land; if you save the people and lose the land, you will save both the people and the land." Therefore, the correct approach is to put aside real estate (and A-shares?) and try to protect the RMB.
The difficulty is that if you make the right choice, you will be criticized. You need to have a little courage to "go forward even if there are thousands of people against you". After all, if the housing prices fall, those who own houses will feel the pain. If the stock market falls, those who have positions will feel the pain. If the exchange rate falls, most people will not feel the pain, because those who have RMB will only spend money in China, and those who have US dollar assets will feel secretly happy.
The reason why the Federal Reserve is now under the fire of high interest rates is that if it wants to protect the US dollar, maintain high interest rates, or even continue to raise interest rates, it will cause the US economy to go into recession, the US stock market to collapse, and a financial crisis to occur; and if it wants to protect the US stock market, it must cut interest rates significantly as soon as possible, which will inevitably lead to a re-flooding of US dollars around the world, and the US dollar will depreciate significantly in both nominal exchange rate and actual purchasing power.
From the perspective of the Americans, the lesser of two evils should be chosen. Defending the hegemony of the US dollar at all costs is the strategic choice that truly conforms to the interests of the United States. After all, American programmers earn $100,000 a year, while Chinese programmers earn 100,000 RMB a year. Isn't it the 7:1 exchange rate that supports the former's leisurely life in a big villa? Former Google CEO Schmidt recently gave a speech at Stanford University and complained that American programmers take high salaries but don't work hard, just seeking a balance between work and life. What is the cause of this systematic inequality? What if the US dollar exchange rate falls to 1:1? Americans who earn US dollars to buy daily necessities all over the world will immediately "downgrade" their living standards to the same as those of the Chinese, and will no longer be "superior people".
But from the perspective of the Chinese, why should the Chinese support Americans as the superior people from generation to generation? Some Chinese people have worked hard to join the United States and directly become the superior people; but more Chinese people have to endure humiliation and bear heavy burdens in order to one day overthrow the US dollar and make the Chinese and Americans truly equal.
However, from the perspective of the Fed, from Chairman Powell to the so-called hawkish directors, none of them has the willpower to match that of their predecessor, Volcker. They are about to make a major strategic mistake of "saving land and losing people, and losing both land and people".
Originally, the Federal Reserve created the dollar tide in order to withdraw dollars from around the world, thereby controlling the amount of dollars to match the global commodity production and circulation, thereby ensuring the strength of the dollar and the exchange rate.
The interest rate hike is only one part of the entire dollar tide. The Fed uses high interest rates to temporarily return global dollars, blow up other people's leverage, and shrink global liquidity. At the same time, it uses targeted tools to inject countercyclical liquidity into the United States to support its own country from being blown up by high interest rates. This objectively creates a situation of ice and fire with domestic liquidity flooding and international liquidity drying up. At the same time, the US Treasury will take the opportunity to issue bonds to absorb this flood of liquidity.
However, if there is only this link, it will be like drinking poison to quench thirst. The money that flows back will still run away in the future. Whether it is because of the high interest rate or the surge in the US stock market, when they run away, they will only take more away. The money raised by the new bond issuance will also have to be repaid with principal and interest in the future. In other words, the amount of liquidity taken in during the interest rate hike cycle will be spit out in the next short-term debt cycle. By then, the US dollar will still depreciate to a greater extent.
Therefore, there must be a next step, which is to use the cycle reversal to guide American capital to buy other people's high-quality assets at low prices after the interest rate hike cycle has exploded. After making ten or a hundred times the profit in the easing cycle, they will flee from the top and bring back ten or a hundred times the profit in US dollars. This is the real way to recover the excess US dollars and return them to the hands of American capital.
Financial capital wants to make quick money. If it is not by borrowing money and not paying it back, then isn’t it by buying low and selling high? Such a simple truth is understood by even a novice stockholder, but many people insist on pretending to be confused. When you say that American capital wants to buy low and sell high, they say you are a conspiracy theorist.
But why is the Federal Reserve in such a dilemma this time?
Because the Chinese don't buy into its tricks, it blocks their way to wealth. It raises interest rates to withdraw dollars, and China lends dollars to others to close their positions, and then replaces them with RMB.
In the past, when the dollar left, countries were dumbfounded. When exchanging goods between two parties, there is a double contingency problem in economics: you want something, but you don’t have something I want to exchange with me.
Now China can basically sell and buy everything, and has become a hub. If you want to get rid of the US dollar and re-network, you don't have to connect two to each other, just plug them into the super hub of China. This has become a star topology.
Now that the US dollar has gone, everyone waves goodbye to you.
Do you think the United States is angry?
What’s even more terrible is that if these guys don’t collapse, American capital will not be able to pick up the bloody chips.
Friends who have traded in the secondary market know that only leveraged margin calls will result in bloody chips.
American investment guru Howard once said that the best way to buy is to buy from someone who is desperate to sell.
Who would sell desperately? Isn't it the person whose leverage has blown up? He is not only selling desperately, he is forced to sell at the worst price.
Why are American investors still reluctant to take advantage of the 3,000-point A-share market? It’s because they are all spot traders, and there is also a national team quietly ambushing below 3,000 points. Everyone is looking forward to it, waiting for American capital to "buy the dips" and pull up the market, so as to reap the profits from the market. How dare they come?
They are not brave enough to push up BTC at present, probably for the same reason. After more than half a year of market manipulation, only the diamond hands of spot traders who refuse to sell at a loss are left. If they come in now, they may not be able to sell at a loss to others, but they may be the first to be sold at a loss.
As long as they fail to complete the harvest in a short-term debt cycle, they have failed strategically.
Dear friends, your goal is to avoid being harvested by them, and you can even harvest them instead.
You can definitely win, as long as you have enough strategic patience. Because time is not on their side.
If the Fed does not cut interest rates, it will only accelerate the penetration of RMB. If the Fed cuts interest rates, it will make a strategic mistake. The flooded US dollar will definitely suffer a significant depreciation without the necessary conditions of harvesting and recovering, thus damaging the foundation of the US dollar's credit.
Sun Tzu's Art of War says that victorious troops win first and then go to battle, while defeated troops go to battle first and then seek to win.
If the Fed cuts interest rates in September, it will be taking a military risk, a typical case of fighting first and then winning, and will bring serious consequences of strategic failure to the US dollar.
However, it is obvious that the willpower of Federal Reserve Chairman Powell and other board members can no longer support the current high interest rates.
When the Federal Reserve cuts interest rates and eases monetary policy, the surging liquidity will push the currently hesitant US dollar capital to rush forward regardless of the consequences.
Reading the words of the investment guru above in reverse, the best way to sell is to sell to those who are determined to buy at all costs, and reap your profits from them.
