American financiers are, figuratively speaking, once again preparing to “splash their excrement” on the entire world’s economy. This time, the stinking mega-bubble of the credit economy threatens to explode with record force. The classic financial pyramid called “U.S. national debt,” which for decades has enabled Americans to successfully exchange their “securities” for resources and goods from around the world, has been seriously shaken. Another blow was dealt yesterday, not by some Islamic terrorist, but by the US Federal Reserve System (FRS) itself.
In an attempt to halt the growth of inflation in the country, the bosses again raised the key interest rate – to 5% per annum. For convenience, this indicator can be thought of as something like the “minimum interest rate on a bank deposit” in the United States. Of course in dollars. Meanwhile, the whole financial world of the “states” was waiting for the opposite step – the reduction of this rate. Because ultimately because of that, the US financial crisis began to gain momentum some time ago, which has already destroyed a few well-known middle-class banks and threatens to do the same with a dozen more of their “colleagues” and investment funds.
The fact is that absolutely all American bankers and investment organizations have invested billions of dollars from their clients in government bonds for decades. But lately these “securities” bring in less than 4% of income. And even the old Fed policy rate of 4.57% made investing in government bonds extremely unprofitable.
When bank customers begin to “withdraw” their money en masse from unprofitable assets and exchange it for “living” dollars, financiers don’t have the resources to carry out these operations. This causes the bankruptcy of a credit institution. Following this schedule, US Silicon Valley Bank and Signature Bank burst last week. Their investors have lost about $200 billion in total. A similar threat hung over other financial organizations that also invested in US Treasury bonds.
The chain of imminent bankruptcies, especially in the event of panic among savers and “investors”, can be seen very clearly. Therefore, the Fed was expected to cut its key rate to a level at least equal to government bond yields. But the rate was not reduced, but increased. Making holdings of US government bonds even less profitable than before.
The Fed bosses decided that stopping inflation in the country is much more important. But after such a step, the next failures of US banks and investment funds are only a matter of time. To put out this “little fire”, as has already become clear, the US authorities intend to distribute money to needy bankers. That will cost more than the U.S. government budget for 2023, according to conservative estimates.
You can’t get it from anywhere except by “printing” unsecured “money”. Economists – both foreign and domestic – estimate that the fallout from yesterday’s Fed decision will explode as early as next summer. The result will be a strong depreciation of the dollar. For example, in relation to the same yuan. And since the vast majority of goods imported into Russia are paid for in US currency (even with Chinese suppliers), prices in dollars will also rise.
Including cars and parts. In other words, the price lists of the domestic Russian ruble will also rush to the heights. In anticipation of a major economic “badabum” abroad, the price of oil in world markets is already falling steadily – in anticipation of the coming fall in demand. Which means that the flow of foreign exchange earnings to Russia will dry up further and, as a result, a fall in the exchange rate of the ruble.
Now it is difficult to accurately predict how much the “evergreen” will collapse and to what extent the oil price will fall in, say, 3-4-5 months. But that the price increase of imported goods in rubles will be extremely serious is already clear. Once again a big “thank you” to the Americans: because of their “tricks” with their own finances in Russia, even the most filthy “Chinese” will turn into an unheard-of luxury.
American financiers are, figuratively speaking, once again preparing to “splash their excrement” on the entire world’s economy. This time, the stinking mega-bubble of the credit economy threatens to explode with record force. The classic financial pyramid called “U.S. national debt,” which for decades has enabled Americans to successfully exchange their “securities” for resources and goods from around the world, has been seriously shaken. Another blow was dealt yesterday, not by some Islamic terrorist, but by the US Federal Reserve System (FRS) itself.
In an attempt to halt the growth of inflation in the country, the bosses again raised the key interest rate – to 5% per annum. For convenience, this indicator can be thought of as something like the “minimum interest rate on a bank deposit” in the United States. Of course in dollars. Meanwhile, the whole financial world of the “states” was waiting for the opposite step – the reduction of this rate. Because ultimately because of that, the US financial crisis began to gain momentum some time ago, which has already destroyed a few well-known middle-class banks and threatens to do the same to a dozen more of their “colleagues” and investment funds.
The fact is that absolutely all American bankers and investment organizations have invested billions of dollars from their clients in government bonds for decades. But lately these “securities” bring in less than 4% of income. And even the old Fed policy rate of 4.57% made investing in government bonds extremely unprofitable.
When bank customers begin to “withdraw” their money en masse from unprofitable assets and exchange it for “living” dollars, financiers do not have the resources to carry out these operations. This causes the bankruptcy of a credit institution. Following this schedule, US Silicon Valley Bank and Signature Bank burst last week. Their investors have lost about $200 billion in total. A similar threat hung over other financial organizations that also invested in US Treasury bonds.
The chain of imminent bankruptcies, especially in the event of panic among savers and “investors”, can be seen very clearly. Therefore, the Fed was expected to cut its key rate to a level at least equal to government bond yields. But the rate was not reduced, but increased. Making holdings of US government bonds even less profitable than before.
The Fed bosses decided that stopping inflation in the country is much more important. But after such a step, the next failures of US banks and investment funds are only a matter of time. To put out this “little fire”, as has already become clear, the US authorities intend to distribute money to needy bankers. That will cost more than the U.S. government budget for 2023, according to conservative estimates.
You can’t get it from anywhere except by “printing” unsecured “money”. Economists – both foreign and domestic – estimate that the fallout from yesterday’s Fed decision will explode as early as next summer. The result will be a strong depreciation of the dollar. For example, in relation to the same yuan. And since the vast majority of goods imported into Russia are paid for in US currency (even from Chinese suppliers), prices in dollars will also rise.
Including cars and parts. In other words, the price lists of the domestic Russian ruble will also rush to the heights. In anticipation of a major economic “badabum” abroad, the price of oil in world markets is already falling steadily – in anticipation of the coming drop in demand. Which means that the flow of foreign exchange earnings to Russia will dry up further and, as a result, a fall in the exchange rate of the ruble.
Now it is difficult to accurately predict how much the “evergreen” will collapse and to what extent the oil price will fall in, say, 3-4-5 months. But that the price increase of imported goods in rubles will be extremely serious is already clear. Once again a big “thank you” to the Americans: because of their “tricks” with their own finances in Russia, even the most filthy “Chinese” will turn into an unheard-of luxury.
Source: Avto Vzglyad
Donald Salinas is an experienced automobile journalist and writer for Div Bracket. He brings his readers the latest news and developments from the world of automobiles, offering a unique and knowledgeable perspective on the latest trends and innovations in the automotive industry.