The recent financial storm, how severe will the consequences be for the United States and Japan?

Even if the U.S. dollar interest rates are cut immediately, will it still be effective?

After the chaos, Americans have started to reflect.

However, even the most accurate analysts on Wall Street hold an extremely pessimistic view.

Is the dollar and the U.S. stock market already doomed?

If we want to understand the American perspective on this financial storm, we must first understand the underlying logic of this situation.

Why is it said that the dollar and the U.S. stock market are doomed?

This is because experts believe that the controllers of U.S. finance have clearly given up on the U.S. stock market and the dollar, turning to protect U.S. Treasury bonds.

This is easy to understand.

If the U.S. stock market, the dollar, and U.S. Treasury bonds can only save one, what would the Americans choose?

When weighing the lesser of three evils, U.S. Treasury bonds are the immediate crisis that must be solved immediately, while the dollar is a chronic disease in the long term, and the U.S. stock market is simple.

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Big money like Buffett can withdraw first, and the ones that are cut are all retail investors.

This choice may be the result of the market operating on its own, or it may be the result of Americans actively operating.

A few days ago, we said that this is very much like a game operated by some people, creating panic in the U.S. stock market, and the U.S. dollar index also fell, driving funds to enter U.S. Treasury bonds for risk aversion, and the U.S. Treasury bond crisis is naturally temporarily alleviated.

However, the current U.S. Treasury bond crisis is not as simple as it seems.

Many people believe that the main problem with U.S. Treasury bonds is that the scale of 35 trillion is too frightening, which is a huge problem.

In fact, it is not the case.

The real crisis is the significant decline in the liquidity of U.S. Treasury bonds.

What is the liquidity of U.S. Treasury bonds?

In layman's terms, it means that fewer people are buying U.S. Treasury bonds, and not only can the new U.S. Treasury bonds issued by the U.S. Treasury not be sold, but even the U.S. Treasury bonds held by investors cannot be sold.

At the end of July, the U.S. Treasury rejected the bids of investors, which means that an auction of U.S. Treasury bonds was aborted.

This is very similar to our real estate market now, and the liquidity has dropped to a dangerous low.

Not only are fewer people buying new houses, but second-hand houses are also not easy to sell, which can easily lead the entire market into a vicious cycle.

Some people believe that the dollar is the most important, maintaining a strong dollar is the national strategy of the United States, and it is also an important tool for Jewish financial groups to plunder wealth.

But in fact, it is not necessary to always stick to a strong dollar.

Why?

Because manipulating the dollar to fluctuate dramatically is their secret to harvesting the world, which is the dollar tide that everyone often mentions.

Therefore, the foundation of the U.S. stock market is the dollar, and the foundation of the dollar is U.S. Treasury bonds.

The core of these three is actually U.S. Treasury bonds.

Understanding these, let's look at how Americans see it.

Let's focus on a few views.

Hartnett, known as the most accurate analyst on Wall Street, appears worried in his latest report.

He believes that due to "long-term high real interest rates that are slowly and profoundly damaging the U.S. consumer and labor market," global interest rate cuts are no longer a question of "whether" or "when," but a question of "whether interest rate cuts are effective."

Recently, the credit card debt of American families has suddenly decreased, and the debt interest rate of small and medium-sized enterprises has reached the highest point, indicating that the liquidity of both families and enterprises has problems at the same time.

Therefore, interest rate cuts have become unprecedentedly urgent, but small interest rate cuts may be completely useless.

Hartnett believes that a significant interest rate cut is needed to alleviate the current market crisis.

Citibank believes that the current decline in the dollar-yen exchange rate is just the beginning of yen carry trade, and there may be a larger decline in the future.

At that time, the U.S. stock market may fall by 20%, the Federal Reserve will cut interest rates by 75 basis points in September, and the Bank of Japan needs to cut interest rates instead of raising interest rates.

So, after looking at the views of Americans, when we look back at the three major crises of the U.S. stock market, the dollar, and U.S. Treasury bonds mentioned earlier, we can understand the difficulties of American policymakers.

If the dollar significantly cuts interest rates, for example, it cuts interest rates by 75 basis points in September, and cuts even more in November, or even as many people say, it cuts interest rates three times this year for a total of 250 basis points, then what will happen?

The dollar capital will flee on a large scale and go to the world to find better investment targets, and the dollar and the U.S. stock market will fall at the same time.

U.S. Treasury bonds are temporarily saved, on the one hand, the burden of interest payments is reduced, and on the other hand, the dollar and the U.S. stock market fall, and a large amount of funds will look for a safe haven, and relatively stable U.S. Treasury bonds have become an important choice.

So, what is in front of the Federal Reserve now is not a dilemma, but a trilemma.

Based on the established strategy, the Bank of Japan is expected to continue to raise interest rates, which will make the difficulties of the United States even worse.

So a while ago, after the yen raised interest rates, the United States was eager to ask the Japanese to make a statement to stabilize market sentiment.

From the current level of crisis and the style of the Federal Reserve, even if interest rates are cut in September, they are likely to choose a more cautious approach, rather than a radical bailout.

The fierce struggle of the U.S. election also needs a relatively stable financial market.

Bubbles cannot burst before the election, otherwise, neither party knows what kind of catastrophic events will happen.