Good news came in the early hours of yesterday, the Federal Reserve cut interest rates, which also means that on the front battlefield of the financial war between China and the United States, we have won. The most difficult period has passed.

In the past five years, the world has been extremely turbulent. People who cannot see the trend of history will think that the decline of various countries' economies, the rise of prices, multiple wars, bank bankruptcies, and national bankruptcies are all independent events. However, almost all major news in the past five years have a very clear main line behind them.

If I draw a timeline, I will divide this timeline into three stages:

The first stage

The first stage is the period before 2020, which I call the "pre-crisis period."

If you still remember, in August 2019, there was a very influential event, which was the inversion of U.S. Treasury bond yields at that time.

From 1978 to 2006, the United States experienced a total of six inversions of Treasury bond yields, and five of them led to economic recessions. To understand whether there is a problem with the U.S. economy, I looked up a lot of data and materials.

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I saw the bond king Gundlach continuously issue warnings, saying that the U.S. economy has been in a state of growth stagnation since 2017. Although the GDP data on paper is still growing, this is driven by the increase in the national debt of the United States.

This is like a restaurant selling 1 million hamburgers last year and 1.1 million hamburgers this year, and then announcing performance, saying that GDP has increased by 10% and the economy is booming. However, in reality, the additional 100,000 hamburgers sold were consumed by the owner borrowing money to invite people, so this kind of growth is false growth driven by debt.At that time, the United States was in the midst of this illusory growth, with an underlying crisis about to erupt, likely around the year 2020. This is also the reason why I warned everyone to be cautious of a crisis in the U.S. stock market and the dollar during my major predictions for 2020.

I could see it, and of course, the elite class in the U.S. could see it too. How should they respond? There are two approaches: pragmatic and idealistic.

The pragmatic approach is what "The Donald" wanted to do. He wanted to bring manufacturing back to the U.S., making it the engine for U.S. GDP growth, thereby replacing debt-driven economic growth. This is a move to guide the U.S. economy from the virtual to the real, a pragmatic approach that can fundamentally resolve the crisis in the United States.

He also withdrew from a bunch of international organizations, ended the war in Afghanistan, and even threatened to dissolve NATO, among other things.

To put it bluntly, these organizations and wars are all money-burners, increasing the scale of debt and making the U.S. debt crisis come sooner. Therefore, withdrawing can delay the arrival of the crisis, providing the U.S. with a valuable window of time.

At the same time, he vigorously reached out to and courted Russia, wanting to bring them on board to deal with China together, because the most powerful country in global manufacturing is China. In order to bring manufacturing back to the U.S., he vigorously suppressed China.

You see, although everyone mocks him as "The Donald," laughing at his madness, his actions are very methodical, with logic behind them. These are all beneficial ideas for the U.S., which is the pragmatic approach.

From the past up until 2019, I would like to call this period the "pre-crisis era." During this time, the causes of the economic crisis had already been sown, and the crisis could erupt at any time.

There are countless prophets who have seen the signs of the crisis, and some are trying to arouse people's attention.Someone is trying to turn the tide and save the crumbling edifice. However, no matter how knowledgeable the "wise king" may be, it is difficult to turn the tide.

Because there is not much time left, and before the pragmatic approach can take effect, the crisis has already emerged.

Phase Two

From the years 2020 to 2021, we enter the second phase, which I would like to call the "crisis period."

At the beginning of the year, COVID-19 emerged, and countless people later attributed the cause of the crisis to COVID-19. So, I really want to ask everyone a question: Do you think the economic problems in the United States appeared because of COVID-19?

If you answer yes, then you are the type of person that the media loves the most, who is easily brainwashed.

What I want to tell everyone is that the entire timeline is coherent and interconnected. It is because of the causes sown in the first phase that led to the consequences in the second phase. It's just that with the pretext of COVID-19, the speed came more quickly and directly.

In March 2020, the U.S. stock market collapsed as expected.

Then Warren Buffett repeatedly came out and spoke, saying that he had never seen the U.S. stock market circuit breakers in his lifetime, and then quickly changed his words, saying, he had never seen two circuit breakers, he had never seen three circuit breakers, he had never seen four circuit breakers...The seeds of crisis had long been sown; it was just a matter of when they would erupt, and the pandemic served as an excellent outlet for pent-up frustrations.

The window of opportunity for pragmatic approaches was too short, and thus we witnessed the wheels of history beginning to follow a predictable pattern.

In the final year of "The Wise King" and the subsequent years of "The Sleepy King," they both opted for a speculative strategy—playing financial tricks.

The goal of financial trickery is clear, as I discussed in an old video from 2019. The amount of money and the quantity of goods in society should correspond one-to-one, with one unit of currency corresponding to one unit of goods. If the quantity of goods in society does not increase, but the money supply is doubled through printing, it is evident that one unit of goods will have to correspond to several units of currency, causing prices to skyrocket.

The United States has borrowed so much debt and printed so much new money, but the real wealth of society, which is productivity, cannot increase rapidly. The United States does not want to decline and does not want to become like Argentina; it must find a way to solve the problem.

The Wise King's pragmatic approach was to bring manufacturing back home, develop productivity through labor, and thereby increase the quantity of goods, which could then support the debt and currency. However, the window of time was insufficient to resolve the issue.

The speculative strategy, on the other hand, is to use financial trickery to transfer other countries' assets and productivity to one's own, effectively increasing the quantity of goods at home and thus supporting the debt and currency.

So, how should this goal be achieved?

Many years ago, there was a well-known mobile phone manufacturer called Jin. It was rumored that Jin collapsed because the boss was lured into a trap by a loan shark who took him to Macau, where he was initially treated to fine dining and small profits. Later, he was induced into a deep debt, and ultimately, through debt transfer, the mobile phone manufacturer, worth billions, was swallowed up by someone else.

These are rumors from the underworld, and I dare not verify their authenticity, but the method used by the loan sharks to set up traps is essentially the most basic principle of trickery. No matter how sophisticated the United States' financial trickery may be, at its core, it is nothing more than this.Let's review the first step, which was a drastic and rapid reduction in interest rates. In March 2020, the interest rates were directly lowered to near zero.

At the same time, a massive amount of money was printed. We witnessed the largest monetary issuance in American history.

The amount of base money issued by the Federal Reserve, which was only 4.2 trillion before March 2020, surged to 7.2 trillion in just that one month, and later reached a scale of 9 trillion.

In just a few months, the amount of money issued exceeded that of the more than 200 years since the founding of the United States. When the base money doubles, the amount of money circulating in society will increase even more massively.

You can see how the U.S. money supply M1 has changed. It was 4.2 trillion U.S. dollars in March 2020, and by May it became 16 trillion U.S. dollars, and soon reached 20 trillion.

From 4.2 trillion to 20 trillion, how many times has it increased?

Massive money printing, combined with interest rates almost pressed to zero, has caused the dollar to continue to flood globally. Low-interest dollar debt has been surging around the world for N years, and after 2020, it has accelerated and stepped on the last accelerator.

Looking back at the domestic situation in previous years, entrepreneurship was very hot. You might raise tens of millions or even hundreds of millions of investment by chatting in a coffee shop for an hour. Major platforms competed to spend money, which also brought high salaries to the programmer industry.

Behind this, it is actually the hot money that flows in through PE and VC.

For example, through the method of domestic enterprises issuing dollar bonds to foreign entities, we can see from the statistical data that the explosive growth of domestic enterprise dollar financing in 2017 shrank under the influence of the trade war, but this time, it began to flourish massively with the interest rate reduction.By the end of 2021, the balance of U.S. dollar bonds issued by various enterprises had approached $1.3 trillion, which is equivalent to nearly 10 trillion yuan.

Not to mention the scale of U.S. dollar capital inflow through various means such as money houses, private equity (PE), venture capital (VC), northbound capital, and international investment, which is likely to be an astronomical figure.

Countless domestic real estate companies and various private enterprise giants borrowed a huge amount of U.S. dollar debt during this period. For example, the well-known Hengda belt brother and the Zhang family from Su Lion Head, etc.

The interest rate was particularly low. Does this feel like being taken to Macau by a loan shark, being treated with good food and drink, and being lent a large amount of credit card with a smile for arbitrary consumption?

The third stage

As the timeline enters the period after 2022, I would like to call the third stage the "crisis transfer period".

The Federal Reserve began to close the net, and in just four months, it quickly raised the interest rate from close to 0% to close to 6%, which is an unprecedented strength in the past 40 years.

Global U.S. dollar assets quickly flowed back to the United States, and various countries began to find that funds became tight. The era when tens of millions or even hundreds of millions could be raised by just making a PPT and talking in a coffee shop for one or two hours is gone. Money began to tighten, and countless enterprises began to feel difficult.

The U.S. dollar debt borrowed at low interest rates quickly soared in interest rates, becoming the last straw that broke the camel's back, and U.S. dollar bonds also began to default one after another. It should be reasonable for various bankruptcies and acquisitions to start, but in reality, some changes have occurred.

Firstly, our country began to prevent the accumulation of risks at the policy level. In 2022, the country passed the "Regulations on the Review and Registration Management of Medium and Long-term Foreign Debt of Enterprises".In order to guard against the risks of external debt, corporate debts that are borrowed from abroad for more than one year must be approved by the National Development and Reform Commission (NDRC).

Starting from 2022, the scale of external debt began to continuously decrease, making it impossible for companies to continue to borrow US dollar debts that keep growing larger.

Secondly, on the policy level, efforts began to control the contagion and spread of risks. In various meetings and work reports in recent years, the prevention of systemic risks has been placed in a very important position.

What does it mean to prevent systemic risks?

For example, we all know that many real estate companies, including Evergrande, have successively faced financial crises.

Logically, each real estate company is associated with millions of homebuyers. According to the logic of small government and big market that public intellectuals advocate, there should be tens of millions of homebuyers and behind them, tens of millions of families, who would lose all their wealth overnight.

There should be numerous bankrupt homebuyers and bankrupt real estate companies, collectively driving up the non-performing loan ratio in the financial and banking industry. There should be a large number of bad debts leading to the bankruptcy of major banks.

There should be many residents starting to panic, lining up at banks to withdraw their deposits, thereby causing a run on the financial industry.

There should also be a collapse in the financial market, as well as a sharp sell-off of the yuan, with residents queuing up to exchange yuan for US dollars...

Starting with the first domino falling, there should be countless chain reactions. After two years, American capital should act as the savior, coming to buy our country's banks, electricity, railways, state grids, COFCO...acquiring various assets of countless bankrupt and soon-to-be bankrupt enterprises for liquidation and settlement, right?This is what they anticipated, what was supposed to happen. However, since the collapse of Evergrande, it seems as if there has been no further news.

But it's not accurate to say that nothing has happened, because in the past two years, indeed many friends have felt the economic hardships and difficulties. Yet compared to the difficulties that were originally expected to occur, they seem to be no big deal.

Under the logic of triggering a crisis to bottom fish, violent and rapid interest rate hikes are by no means the only means. Auxiliary methods also include making an impact in the public opinion arena.

Looking back now, you will find that since 2022, the United States has systematically inflated various data such as non-farm employment numbers and unemployment rates, boasting about how good the employment rate is and how robust the economy is.

It wasn't until a month before the interest rate cut that they began to systematically reveal that they would massively revise down the employment data from previous years.

Secondly, the methods also include destabilizing other countries, which includes the public opinion arena as well as various specific actions.

For example, in the public opinion arena, there will be countless voices telling you that the United States' interest rate hikes are to deal with their own country's inflation, not to harvest other countries.

But if you don't want inflation, the most fundamental thing is not to print 5 times the money all at once in March 2020, right?

Knowing that printing so much money will lead to inflation, you still print it, and then afterwards, you hypocritically say that you want to suppress inflation with violent interest rate hikes. So why don't you solve the problem at the source and just have less money?

So in 2022, I said that the real intention of the United States' interest rate hikes was not inflation, and for this, I suffered long-term and continuous cyberbullying. My phone was constantly bombed 24 hours a day, just because I said some things that were not good about the Federal Reserve, as if I had dug up the graves of those who cyberbullied me, and I was subjected to various slanders, rumors, threats, and harassment...So, we can observe that on the issue of Russia and Ukraine, is Russia truly the aggressor? You will notice many peculiarities, such as in December 2021, Russia was still repeatedly seeking opportunities for negotiations.

During the same period, the United States had already preemptively declared that Russia was going to attack Ukraine. How did the United States predict such an event?

Furthermore, in January 2022, before the Winter Olympics had even begun, the United States had already started shipping weapons to Ukraine and even began deploying additional troops to Europe.

We will also witness that behind the sabotage of the Nord Stream pipelines, unsurprisingly, there is the shadow of a certain country. We can also see fleets of warships intending to traverse straits, aiming to roam the South China Sea, with a constant shadow instigating the Philippines, Japan, and others.

However, whether in the realm of public opinion or current affairs, they serve as auxiliary roles in this financial battle. After struggling for two years, they have not obtained any desired leverage and have finally begun to lower interest rates.

Future

The most critical question arises: Has the financial war been won?

The rapid interest rate hikes and the strategic goal of magically moving assets have completely failed, so I believe it could be considered our victory.

But we should more clearly recognize, is this really a victory we have won? Likely not, because over the past five years, we have been on the defensive, we have been the ones being attacked, we have merely not been defeated.

What we can see is that in the financial arena, our country's long-term government bond interest rates have been suppressed to levels lower than those of Japan. This is as if to declare to the outside world that our domestic financial industry believes our own country is heading for long-term depression. With such a judgment, what role are those who drive these events playing?In the realm of public opinion, even in the financial data released by the central bank in August alone, we can still observe various instances of distortion, twisting, misguiding, and even falsification in the interpretation of financial news.

We have won, but it is merely because our foundation is solid and not easily toppled, rather than winning through unity or effective defensive counterattacks. In many areas, we still have numerous vulnerabilities.

Will they stop here? After the financial interest rate hikes are put to rest, what new fields and tactics will emerge? These will all be new challenges we must face in the future.