2020-11-22

Know panic now? China’s large-scale dumping of US debt, the Fed:must act

By yqqlm yqqlm

The new crown epidemic has had a huge impact on countries. Over time, more and more problems have been exposed in some countries, including the United States. The current problems in the United States are not entirely caused by the epidemic. The biggest impact of the epidemic is the economic impact, and the United States is no exception.

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Since the outbreak of the epidemic, the US economy has continued to decline. After four meltdowns in the U.S. stock market, Trump adopted the method of issuing more U.S. dollars to solve his temporary emergency. But what comes with it is the depreciation of the dollar. Out of economic considerations, some countries have dumped a large amount of US Treasury bonds, and this is also true of China.

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United States Facing a debt crisis

The United States suffered heavy losses in the epidemic. To be able to survive until now, I have to say that the United States is strong. In any other country in the world, if something like the United States happens, it will have to request foreign aid. But strangely, the United States does not. I don’t know whether it is self-confidence or conceit.

The lifeblood of the world economy is in the hands of the United States. Even if the United States wants it, other countries will not let the United States fall. Although since the collapse of the Bretton Woods system, the status of the dollar has become less important. However, the status of the US dollar is still higher than the currencies of other countries. So this is why the United States is still optimistic about the economy.

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However, although the United States remains optimistic about the economy, But the debt crisis in the United States is real.

The federal deficit has soared

Recently, The total debt of the United States is still rising, and the United States may become the world’s largest debtor country. A series of problems brought by the US dollar need to be solved urgently. The depreciation of the U.S. dollar has devalued U.S. Treasury bonds. Based on this situation, countries that feared greater losses promptly sold US Treasuries, including Japan, which has close ties with the United States.

Faced with this situation, China, as the largest creditor of the United States, had to sell US Treasury bonds, worth more than 40 billion U.S. dollars, not including the failure to sell To go. Faced with China’s massive dumping of US debt, the Fed can’t sit still. In response, the Fed said it must act.

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sell off U.S. Treasury bonds

The number of people infected with the U.S. epidemic has exceeded 10 million. The U.S. has spent a lot of money to control the epidemic, resulting in a deficit in the national treasury. After countries have sold U.S. Treasury bonds , The US fiscal data has been horrible. However, the United States had to control the epidemic. After more than half a year, they finally realized that the epidemic is not a joke.

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Too many people in the United States have lost their lives due to the epidemic, making the US labor force Decrease, because of the epidemic, too many people lost their jobs, and the unemployment rate in the United States increased. The epidemic has intensified conflicts, and the government and ordinary people are incompatible. The United States is now full of muddy waters. Economic issues are not the first issue to be resolved, but political security. To solve this problem, let’s start with the epidemic first.