The Federal Reserve has indeed cut interest rates, 25 basis points, with a reasonable and reasonable standard. Following this, Canada also announced a rate cut. Many central banks will follow up in the future. Is it really coming to let go of money?
Our central bank will announce the new LPR quotation on the 20th of each month, but this time it will be postponed to Monday, so 922 must be paid attention to.
The US interest rate cut will stimulate funds to find assets with higher yields and security, and will trigger a global wealth flow. What impact will it have on our stocks, bonds, and foreign exchanges?
It is very large because the US dollar is an international currency, and its operating mechanism is: the United States prints money, and sends the US dollar out by purchasing products from other countries. The United States raises interest rates, and all the money goes to the United States. Other countries have less money and the economy is declining, and assets are becoming less valuable. Then the United States cuts interest rates, and the US dollar goes to the world to buy high-quality assets at a low price, and then waits for a high price to sell. After that, the US dollar raises interest rates, and the money goes back to the United States.
This is the logic of the US dollar tide harvesting the whole world, and it keeps circulating.
Every dollar rate cut will affect the world’s huge distribution of wealth. The United States has cut three major interest rates this century:
1. From January 2001 to June 2003, in order to deal with the bursting of the Internet bubble and the 911 incident, it dropped by 550 basis points 13 times;
2. From September 2007 to December 2008, in order to deal with the subprime mortgage crisis and the global financial crisis, 500 basis points were reduced 10 times;
3. From August 2019 to March 2020, the rate cut was first preventive and interest rate cuts, which was reduced by 225 basis points five times due to the acceleration of the new crown epidemic.
It can be seen that every major interest rate cut in the United States is to deal with a super crisis, and it is also very effective in the future. After the first interest rate cut, the United States has doubled its price in four years, and the index doubled directly. After the second major interest rate cut, the US stock market entered a bull stage, with the index rising 3 times, and after the third interest rate cut, the index rose 60%.
