Before the Federal Reserve's interest rate cut last night, the market predicted a 39% chance of a 25 basis point cut and a 61% chance of a 50 basis point cut.

Since it was a quiet period, current Federal Reserve officials could not express their opinions, while former officials had various opinions. Former Cleveland Fed Chairman Mester supported a 25 basis point cut, and former St. Louis Fed Chairman Bullard also supported a 25 basis point cut. However, former New York Fed Chairman Dudley said that a 50 basis point cut was necessary.

At the press conference, Powell said:

▶ The U.S. economy is generally strong and has made significant progress towards our goals.

▶ This decision reflects our increasing confidence that, as long as we properly calibrate our policy stance, the strong momentum of the labor market can continue against the backdrop of moderate economic growth and inflation continuing to decline to 2%.

▶ We know that reducing policy restrictions too quickly may hinder the progress of cooling inflation. At the same time, reducing restrictions too slowly may excessively weaken economic activity and employment.

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Powell listed a series of data such as GDP, employment, CPI, etc., at the press conference to prove that the U.S. economy is generally strong, but this is not important, and these data are not believed by the outside world.

The most important thing is a paradox: why is the economy growing strongly, but the committee members almost unanimously decided to cut interest rates by 50 basis points?

Either the statistical data of the U.S. Department of Labor are problematic and fake, or the policy decisions of the Federal Reserve are wrong.

I analyzed in 2021 that the inflation data of the United States are fake, and in 2023, I also used data to prove that the employment data are also fake, and there are links below.Data fabrication, the U.S. Department of Labor must be aware, and the Federal Reserve must also be aware, but they cannot speak out since it's part of the dollar tide; the show must go on, and if it can't, then data must be falsified.

However, the U.S. has been holding on for so long, and not many major countries in the world have exploded, but Japan and the UK, these two staunch allies of the U.S., can no longer hold on. Therefore, the benefits of the Federal Reserve continuing to hold on are not many, but the dangers are increasing.

Before this interest rate cut, most banks in the U.S. supported a 25 basis point cut, but a few banks such as JPMorgan Chase and Wells Fargo supported a 50 basis point cut.

They support a 50 basis point cut and will also promote a 50 basis point cut in various public opinion fields and behind the scenes. So why are JPMorgan Chase and Wells Fargo actively promoting a significant interest rate cut?

Now, U.S. financial institutions have been divided into two camps, one representing the U.S. domestic industry and the other representing the Jewish financial blood-sucking system. How to distinguish between the two? Look at their asset structure.

Among U.S. financial institutions, JPMorgan Chase and Wells Fargo can be said to mainly not be investment banks but loan businesses.

In 2023, JPMorgan Chase's total assets were $3.88 trillion, of which loans were $1.32 trillion, accounting for 34%, and Wells Fargo's proportion was even as high as 49%. Their main business income does not come from investment banking profits but from loans issued.

In the past two years, the Federal Reserve has raised interest rates significantly, guiding the dollar to flow back to the U.S., and then using various concepts such as the metaverse and AI to blow bubbles, leading to a significant increase in U.S. stocks. This poses little risk to institutions like Goldman Sachs, which mainly rely on investment banking business, but it means a significant risk for Wells Fargo and JPMorgan Chase.

We can use the Industrial and Commercial Bank of China to help everyone understand this risk. The following figure shows the non-performing loan ratio of the Industrial and Commercial Bank of China. The highest point was actually 1.52% in 2021, and by the first half of this year, the non-performing loan ratio had actually decreased to 1.35%. How has the economic environment been in these two years, to what extent have housing prices fallen, and how much has the number of foreclosed houses increased? Everyone has heard about it. So why has the non-performing loan ratio decreased?

The key is that banking institutions have extended some overdue loans. Many people can't afford to pay their mortgages and want to stop supplying them. The bank supplements and signs a deferred repayment agreement, and this is not included in the statistics of non-performing loans.Is the situation in the United States similar to that in China?

How much of JPMorgan Chase's $1.32 trillion in loans and Wells Fargo's over $930 billion in loans will turn into non-performing loans?

The real data is known only to them.

Therefore, financial institutions like JPMorgan Chase and Wells Fargo, which support the U.S. real economy, are very eager for the Federal Reserve to significantly lower interest rates, while institutions like Goldman Sachs fear a collapse of the dollar, which would lead to significant losses for them, and hope for a gradual reduction in interest rates by the Federal Reserve.

From the Federal Reserve's decision this time, it is evident that the Federal Reserve has indeed felt the economic risks are imminent, which is why there is overwhelming support for a 50 basis point cut.

From this outcome, it can be seen that the United States has already lost the financial war.

As the Federal Reserve lowers interest rates, the interest rate differential between China and the U.S. begins to narrow, and the pressure of capital outflow will gradually ease. A lot of capital starts to flow into the country, and a large amount of foreign currency deposits are successively exchanged, which will promote the appreciation of the renminbi.

Now is a very good time node.

In the past two years, the sharp decline in asset prices has led many people to choose to deposit money in banks or buy government bonds. Once the world starts to flood the market with money, the price of government bonds will fall, and a lot of people's money will be harvested by government bonds.

According to normal logic, after flooding the market with money, the price of government bonds should rise, and buying government bonds should be very cost-effective. However, the current situation is different from the past.The current value lowland in the whole society lies in the stock market. Once there is a global inflation, it will lead to a significant increase in commodity prices. The performance of many companies will rise due to the increase in inflation, which in turn will drive up stock prices.

However, government bonds are different. The interest rate of 2.1% on government bonds will not keep up with the rise in the Consumer Price Index (CPI), let alone the rise in the stock market. If someone buys a 10-year government bond, they will find that they may be eroded by inflation by one or two percentage points each year in the future. Over ten years, this could amount to more than ten percentage points.

The result is that those who buy government bonds are being "commonly enriched."

After this financial confrontation between China and the United States, the wealth gap in China will be significantly narrowed. The middle class with houses will see their assets shrink due to falling housing prices. Those who have a large amount of savings and buy government bonds have obtained a brief positive return in the early stage, but they will be harvested by inflation later on.

The overall goal of common prosperity will be achieved. As long as the wealth gap in China is narrowed, the market will show great prosperity, rather than the future economy getting worse as many people say. This is somewhat similar to 1978.

The United States, on the other hand, is the exact opposite. This high interest rate has forced many American industries into bankruptcy, making the supply chain even more incomplete. Even if inflation alleviates the debt problem later, the collapse of American industry means that the American economy has lost its ability to generate blood and will not last long.

Many people say that the United States relies on consumption to drive the economy. Let's think carefully about whether this makes sense. If everyone consumes, the economy will be very good?

How could that be possible? There must be both consumption and production. An economy that only consumes and does not produce will only collapse, with no other outcome. No one can go far by spending money without making money, unless they are living off someone else.

When the United States needs to import most industrial products except for agricultural products, isn't it similar to our Republic of China period?

If it can't hold on, it will surrender. Now that the Federal Reserve has surrendered, we can also take the opportunity to release some water, which will be beneficial for the current situation.