All along, the US dollar has been one of the important means for the United States to make money. However, the failure of the United States to harvest the world this time has led to the loss of too much by the United States. Not only has the hegemonic status been shaken, but it may also involve the entire future economy of the United States.
The Federal Reserve never dreamed that in recent times, some countries with very good relations with the United States have started to cut interest rates one after another, especially Europe and Japan, which are selling a large amount of US debt.
However, the global interest rate cut is not good news for the United States. So, how will the Federal Reserve deal with it next? What kind of strategy is the United States plotting?
Many countries have cut interest rates.
The United States never thought that the countries with the best relations with it would choose to leave first. Many European countries and Japan have chosen to sell a large amount of US debt in a short time, which also shows that the hegemonic position of the United States has begun to shake.
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According to relevant reports in the United States, the latest budget of the US Congress was announced. From the announcement, the fiscal deficit of the United States in 2024 reached 1.9 billion US dollars, which was 27% higher than before.
From this point, it can be seen that the current US economy has a serious loss. Moreover, the United States is also continuously borrowing money from other countries. Of course, the reason for borrowing money is to make up for the current loss of the treasury. However, the United States this year is completely "unable to play". No matter there are new foreign debts, even the interest cannot continue to be repaid.
Under such circumstances, the United States can only choose to cut interest rates to ensure the normal operation of the country. After all, after the US dollar cuts interest rates, it can be relatively easier in terms of foreign debt and does not need to repay too much interest.
However, the US dollar's interest rate cut is not a good choice for the United States and the Federal Reserve, and it will also lose a lot, such as the hegemonic status of the United States, and at the same time, it will also lose the control of the global central bank. Before this, Yellen once stated that interest rate cuts must not be chosen unless there is no other choice.
As the most developed country in the world, the United States usually uses the US dollar as the common trade currency for countries around the world, and even the currencies of many countries change according to the changes of the US dollar. As long as there is any change in the US dollar, those small countries following the United States will cause economic risks. Therefore, only by raising interest rates can the Federal Reserve control the status of the US dollar.However, the Federal Reserve has been continuously raising interest rates, which is clearly not so friendly to the economies of many countries. The main purpose of the U.S. interest rate hike is to attract more investors to invest in the United States. Now, many European countries are cutting interest rates, which is undoubtedly going against the United States.
The actions of these countries obviously have a huge impact on the future U.S. economy and even shake the position of world hegemony.
The double-edged sword of interest rate cuts: The Federal Reserve is in crisis
In response to this operation of the Federal Reserve and the unconventional moves of some European countries, it does indicate that there are huge problems in the current U.S. economy. Of course, this may be the last choice for the United States and Europe, or it may also be a conspiracy that the Federal Reserve is planning.
At present, the relationship between China and the United States has been very tense. The continuous financial battle has had a great impact on both countries. It depends on who can persist to the end, and who will be the final influence. For the United States, such a strategy cannot be maintained for a long time. It is important to know that the current United States is beset with internal and external troubles, how can it compete with China?
The devaluation of the yen and the interest rate cuts of European countries and Canada may alleviate the debt problems of the United States. In this way, the United States can persist for a longer time in the battle with China.
Although interest rate cuts have certain benefits, there are also great risks. So far, the Federal Reserve has not had a clear answer. Nowadays, technology is developing rapidly, and securities and stocks are increasing. If an unfortunate wrong decision is made in this process, it may be a fatal blow to the United States.
Let's not talk about the future for now. Many business circles in the United States are facing huge financial pressures, and there is a custom-made bomb around, which can explode at any time. For the Federal Reserve, if it chooses to cut interest rates, the future securities and stocks will be even more crazy. If it does not cut interest rates, the U.S. economy may face collapse again in the following period. Both choices have a huge impact on the U.S. economy.
Saudi Arabia refuses to renew the agreement
In addition, Saudi Arabia also expressed strong dissatisfaction with the United States and decided not to sign the "Petrodollar Agreement" with the United States some time ago.This also indicates that the US dollar and oil are no longer tied together. Since 1974, the dollar has been internationally recognized as the sole currency for oil transactions, but now Saudi Arabia no longer signs agreements with the United States. Such a choice will inevitably deal a huge blow to the dollar.
So why is Saudi Arabia unwilling to renew the agreement with the United States?
In fact, Saudi Arabia has seen the international situation clearly. China has become the largest exporter in the world, and the dollar is just a currency for oil settlement. For Saudi Arabia, the United States has no value at all. In addition, the tense relationship between China and the United States also explains Saudi Arabia's decision, indicating that the United States is gradually losing its hegemony.
Moreover, Saudi Arabia's refusal to renew the contract will also affect the United States' influence in the Middle East in the future, completely dissolving the United States' power in the Middle East, and the global economy will usher in a new pattern.
Of course, this is indeed a good phenomenon for China. In the future, if more countries in the world use the yuan for settlement, it will be most beneficial for China's development.
The yuan achieves a "turnaround"
From Saudi Arabia's actions, China's opportunity has come. In addition, Russia has recently announced that it will stop all dollar transactions, whether in international currency or financial transactions, and no longer use the dollar as the currency for transactions.
The relationship between the United States and Russia has come to an end. Russia's decision to stop using the dollar also indicates a complete break with Western countries.
Before this, the dollar and the euro occupied a very important position in the Russian market, but now they have been directly swept out by Russia, which is indeed a huge shock to the West.
At present, the relationship between China and Russia is very good. After Russia stops using the dollar for transactions, it is very likely that the yuan will become Russia's future international transaction currency, which will also enhance the international status of the yuan.In conclusion, from the current international situation, we must remain vigilant about the Federal Reserve's interest rate cuts, as no one knows what operations the Federal Reserve will undertake next.
It has to be said that if the United States chooses to lower interest rates, it is indeed a once-in-a-lifetime opportunity for the Chinese yuan. As countries around the world become less dependent on the US dollar, the Chinese yuan has a strong possibility of becoming the next international currency.