The Increase In US Dollars Means That The Cost Of All Trade And Pactions In The World Will Rise.

The Fed's rate hike itself is not a sudden factor, but it will tend to be more difficult to repair than the emergencies. The main reason is the impact of sudden factors on the whole market. It mainly stays at the emotional level, and the time goes a step further, and the market will soon return to normal.

If the Fed raises interest rates, it is like injecting a chronic drug into a person's body. This effect will continue to release to every link as the amount of physical activity increases. Eventually, from the brain to the fingers, it will be stimulated.

The increase in the US dollar means that the cost of all trade and pactions in the world will increase.

We know that in a country's economic level, if electricity prices, oil prices, water prices, land prices and other rising, will lead to a series of production costs rise, and the currency's "price increase", the impact on the economy is more comprehensive than these.

In the past thirty years, the Federal Reserve has launched four interest rate cycles. These four cycles have different effects on the global market. Although interest rates are equal to the global market, it is quite different in view of the fact that many markets are in different economic cycles.

If the Fed

It's a gun, so it can be said that this gun is used for hitting the head bird.

When the Federal Reserve started raising interest rates from 1988 to 1989, the biggest bubble in the global market was the Japanese real estate market.

From 1986 to 1989, Japan's housing prices soared more than two times, but with the Federal Reserve raising interest rates (from March 1988 to May 1989, the Federal Reserve raised interest rates for 16 times, the federal funds rate rose from 6.75% to 9.81%), the US dollar quickly returned, and international capital began to withdraw in the Japanese market. In 1990, the Japanese real estate bubble burst and the real estate economy began to collapse. The main 21 banks in Japan declared bankruptcy, resulting in bad debts of 110 billion dollars.

From 1994 to 1995, the background of the Fed's interest rate increase is not only the inflation factor, but also the need to reduce the cost of debt and maintain the credibility of the US dollar.

In 1994, the yield of us ten - year bonds rose slightly from 5% to 8%, and the gold price denominated in US dollars was a sign of re entering the bull market. In less than two years before raising interest rates, gold prices broke away from a five year bear market, rising more than 25% in two years.

As inflation worries became more apparent, the Fed raised interest rates from 3% to 6%, bringing inflation to control and bond yields sharply down.

Gold prices in dollar denominated gold prices have just entered a five year bear market.

From 1995 to 1999, international gold prices fell by nearly 40%.

So in 1999, in order to avoid the collapse of gold prices by central banks, the European Central Bank, the Bank of England, the Bank of France, the Bundesbank and the Central Bank of Italy signed the "restricted sale agreement" (there is no federal reserve in the agreement countries). The agreement stipulates that in the next 5 years, the signatory countries only allow 400 tons of gold to be sold each year.

The rate hike between 1999 and 2000 pierced the capital bubble of Internet tech led, so that 15 years later, in 2015, the NASDAQ index exceeded the 2000 Internet bubble record.

From 2004 to 2006, the Fed's rate hike brought a "deleveraging" and "hard landing" to the US real estate market, and indirectly led to the financial crisis tsunami in 2008.

Throughout the past four increases in the Federal Reserve, the first impact was on Japanese real estate, the second was the global monetary system and gold, the third was the NASDAQ Internet bubble, and the fourth was the US subprime mortgage (real estate).

So what will be the biggest impact this time?

Recently, in Merrill Lynch, Merrill Lynch is global.

In the monthly survey, 84% of investors thought that US stocks were the most overvalued assets in the world, the highest ever recorded, even more than the US tech stocks bubble in 1999.

But compared with US stocks, the more overvalued assets in the world may be in the Chinese market, otherwise the world will not be so worried about China's "deleveraging" problem.

The survey shows that China's credit crunch is at the top of the list of major events affecting investors in the global economy. Nearly 1/3 of investors see this as the biggest worry of global economic growth.

China's credit crunch has three background, one is the slowdown of China's economic growth, and the foreign exchange reserves have been substantially reduced in the past two years (total reduction of more than US $800 billion). The devaluation of RMB is always expected. If flooding continues, it will not only stimulate the economy, but also create asset price bubbles and increase the leverage of debt.

The second is the start of the Federal Reserve raising interest rate cycle, and China's resolute attitude to stabilize the RMB exchange rate, which requires that domestic interest rates continue to be pushed to maintain the advantage of interest margin. The third is that China has adopted a "shortening and lengthened operation" in order to curb speculation and reduce short-term liquidity. The yield of one year treasury bonds is higher than that of the ten year period.

Therefore, it is difficult for China to make a big reversal in monetary policy, and sustained slow tightening is an important trend.

The figures released by the people's Bank of China showed that by the end of 5, the broad currency (M2) grew by 9.6% over the same period last year, and the growth rate was 0.9 and 2.2 percentage points lower than the end of last year and the same period last year. For the first time in history, it fell below 10%.

You know, in 2009, the M2 growth rate had reached 29.7%, which is three times this time.

The impact of the Fed's future interest rate increases may be focused on two "head birds", one in the US and the other in the Chinese market, which, in particular, may be the real estate market in China.