After the end of the Cold War, peace and development have become the mainstream of the world. However, due to the existence of complex international interests. Undercurrents are still surging on this blue planet. In the past three decades, we have experienced the riots of the Southeast Asian financial crisis, the collapse of the US subprime mortgage crisis, and the outbreak of the European debt crisis. We have also witnessed the rise of the artificial monster of cryptocurrencies, and the rise and fall of gold, the anchor of the old currency.
The chess players took the lead in fighting in the economic field. In the past six months, there have been constant news in the financial field. Just recently, there have been all kinds of history-making events.
First of all, let’s take a look at cryptocurrencies. A month ago, the collapse of cryptocurrencies LUNA exposed the drawbacks behind cryptocurrencies. In just a few days, the price dropped from $90 to $0.00017, almost back to zero. And these days, Bitcoin has also fallen below $19,000. It has fallen by 70% from the price of $69,000/piece set in 2021.
Then we look at the national debt market. According to the latest report on international capital flows released by the US Treasury Department, China has reduced its holdings of US Treasury bonds for five consecutive months, and they have fallen to the lowest point since 2010. In the 16 months to April 2022, China reduced its holdings of US Treasuries by $108 billion. Japan, the largest holder of overseas U.S. bonds, has also reduced its holdings of U.S. bonds by 110.1 billion in the past six months. At the same time, in April alone, in addition to China and Japan, 27 major U.S. bondholders, including the United Kingdom, France, Canada, India, Germany, Israel, Vietnam, etc., also sold a total of 158.3 billion U.S. Treasury bonds. That was 1.6 times the size of the sell-off and was the largest monthly sell-off in two years.
The latest analysis of the US financial website ZeroHedge on June 20 said that higher interest rates and promises of higher yields are not enough to attract foreign investors to the US bond market, which is now facing the worst collapse in half a century. The U.S. yield curve has inverted again, and long-term bonds are losing their edge.
The situation of Japanese government bonds is also not optimistic. The previous week, the Bank of Japan purchased Japanese government bonds of up to 10.9 trillion yen in one fell swoop, and the purchase amount in a single week hit a record high. Converted to 10.9 trillion yen at the current exchange rate, it is equivalent to 80.8 billion US dollars, which also means that the scale of the Bank of Japan’s purchase of government bonds in the past week is equivalent to the total purchases of government bonds in one month during the Fed’s epidemic rescue (the Fed purchased 80 billion yuan per month at that time). U.S. Treasuries). Adjusting for the different GDP sizes of the respective economies, the results are undoubtedly more exaggerated: last week, the pace of quantitative easing in Japan was more than 20 times that of the Fed in 2021. In the context of the United States, Switzerland and other central banks raising interest rates sharply last week, what the Bank of Japan has done to defend the quantitative easing policy is not only alternative, but also crazy.
At the same time, Bridgewater, the world’s largest hedge fund, disclosed its net short position in European companies. Bridgewater’s latest net short position has reached $6.7 billion, according to the latest data.
At the same time, some central banks led by China are constantly buying gold. According to data disclosed by Silverbullion, an American precious metals research institute, in May this year, more than 6,700 tons of gold were shipped to China by Chinese gold buyers only through overseas.
To sum up, the current world situation is:
Russia is at war; America is raising interest rates to offset massive inflation at home. The Chinese stock market, which has experienced a sharp fall at the beginning of the year, has maintained its upward momentum in recent days as the peripheral stock markets have fallen sharply. Japan continued its massive quantitative easing as countries such as the U.S. began deflation.
While Europe faces an influx of refugees and a crisis of freezing, it is shorted by the world’s largest fund.
Cryptocurrencies are depreciating significantly.
The current situation is that the United States still has the largest military power, Russia has the most stable fundamentals among the five permanent members, and Europe and Japan are relatively blind.
The chess game continues. And the cryptocurrency, a tool used to de-monetize gold, may have reached the moment to complete its historical mission.
Whatever the outcome, we are all witnessing history.