"Fed Loses $1.4T in Financial Battle Twist"

On September 26th, U.S. Treasury Secretary Janet Yellen made remarks about "China and the U.S. becoming closer despite conflicts" during an interview. Against the backdrop of increasingly strict tariffs imposed on China, her comments sparked heated discussions among netizens.

She believes that the closer relationship is due to the effectiveness of the negotiation mechanisms between the two sides, which allows them to work together to maintain global financial stability. Why did Yellen choose this moment to show goodwill towards us?

Although she has been emphasizing the benefits of China-U.S. cooperation, their actions are contrary to their words. This verbal display of friendliness reminds us of the Biden administration's strong opposition to the "weaponization" of tariffs before taking office, yet they continued Trump's tariff strategy after assuming power.

The simple reason behind this "carrot and stick" approach is that they lost in the first half of the financial game and had no choice but to initiate a rate-cutting cycle.

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In fact, the U.S. was indeed the dominant offensive party in the past, whether in trade wars, technology wars, or financial wars. At that time, we could only passively defend because the U.S. was truly ruthless towards us.

Why did the Biden administration start to hype the theory of "overcapacity" as soon as they took office? It's because they wanted to use this point as a starting point to detonate our economy.

In their own history, they have had a similar experience to ours; they were once a powerhouse in global manufacturing, but they stumbled in manufacturing.

During World War I, they exported goods to Europe on a large scale and made a fortune. However, the demand from European countries decreased significantly after the war, leading to overcapacity and deflation, which led to the Great Depression in 1929.

Comparing this history, the U.S. believes that we are like them at that time because in 2021, we gradually resumed production and provided a large amount of goods to countries around the world, setting a new record for export volume that year.

While we were increasing production, the Biden administration began to devise bad ideas. They joined forces with allies and decided to use tariffs to curb our development. As long as they keep the market doors tightly closed, it would lead to our overcapacity.Following closely with the Federal Reserve's interest rate hike cycle, liquidity in our market was drained, consumers stopped spending, businesses had to downsize, and layoffs soon followed. Pessimism spread throughout society, ultimately leading to the outcome of a great depression.

This is why we feel that these past two years have been particularly challenging, especially for our stock market. In 2021, the major A-share index was still above 3600 points, but by 2022, it plummeted, being mocked by netizens as "the unsupportable 3000 points."

At this time, our policies had already called for the development of domestic demand. After all, we have such a vast consumer market that it could be supported by internal circulation alone. However, they began to make a series of blunders.

First, they joined in imposing economic sanctions on Russia in the context of the Russia-Ukraine conflict, causing a large amount of foreign capital to withdraw from the Russian market. This provided us with a good opportunity, and we began to explore this market with our geographical advantage.

This also gave us a new idea—the world is not only composed of Western countries. Many countries, although they are emerging economies, still have strong purchasing power. Therefore, we began to vigorously develop markets in the Global South.

Our foreign business was thriving, but the United States could not bear it anymore. A country that has already become "hollow" in industry could not withstand the continuous issuance of currency and aggressive rounds of interest rate hikes, even with the "hegemon" halo.

Because they have been in a state of interest rate hikes, liquidity in their market has dried up, leading to the bankruptcy of many local businesses, and their banking industry has also seen a wave of bankruptcies.

During these two years of the interest rate hike cycle, the Federal Reserve not only had to provide liquidity support to banks and underwrite their junk assets but also had to deal with the shrinking U.S. debt assets in their hands. Eventually, they could not hold on any longer and chose to start the interest rate cut cycle.

Although they started the interest rate cut cycle, they did not end the balance sheet reduction. As of October this year, they have accumulated the sale of 1.4 trillion U.S. debt, and the total loss has already exceeded the 200 billion U.S. dollars mark.

Here it can be seen that the mastermind behind the short-selling of their own bond market is their Federal Reserve, and this "Ponzi scheme" model is becoming increasingly unsustainable. This is because people have found that there seem to be markets with lower risks and higher returns to invest in.After all, the United States should not lower interest rates just once this year; inflation is likely to turn into stagflation. For American asset investors who are seeing their bubbles grow larger and larger, their worries are unstoppable. Everyone fears that the bubble will burst in their hands, losing all their capital.

So, at this time, our various favorable economic policies are being rolled out in succession, beginning to attract global capital into our market. It's finally our turn for revenge.

As the "big engine" of the global economy, once our economy starts to recover, the economies of countries with close trade ties to us will also be stimulated. These countries will become one "sponge" after another, absorbing all the hot money that the United States wants to "pass from the left hand to the right hand."

Capital flight is more severe for the United States than for other countries because, as a country with the financial industry as its pillar, losing the pursuit of investors, the entire currency will fall into a frenzy of devaluation, and it's just a matter of time.

If it really comes to that time, the triple kill of U.S. debt, U.S. stocks, and the U.S. dollar index will lead the heavily indebted United States to follow in Argentina's footsteps and eventually fall into a period of economic recession.

This is also why when our stock market enters a big bull market, major American institutions no longer talk about "hard landings" but instead start saying that the U.S. economy is resilient and will definitely have a "soft landing."

Even the non-farm data released this month in September is also "eye-catching," with new employment data exceeding market expectations by 69%, just to show investors that an economic recession is impossible, encouraging investors to increase their investment in American assets.

So now is the time when they are desperately defending against us, fearing that we will absorb all the hot money in their pool and avoid repeating the mistakes of several past economic crises.

So they are sending friendly signals to us on one hand, hoping that in case of an economic crisis, we can help them through the difficulties, while on the other hand, they want to play various tricks, trying to drag us down before they fail, so that they can regain their dominant position by harvesting us.

Now the game is still going on, and this time we are the attackers. As long as we can drive the economy out of the trough as soon as possible, we can win this big war. Let's wait and see!