Investing must not only pay attention to the fields we invest in, but also pay attention to the macro financial and economic environment, because the long-term trend of all investment markets is inseparable from the impact of the financial and economic environment.
When the general trend of the times comes, “the pigs on the wind will fly”, this old saying is the truth.
Investors in the currency circle should pay more attention to this point, because the currency circle is a small brother in all existing investment fields. Its size is very small. As long as a little capital spills into this circle, it will cause the entire market to skyrocket .
The speech delivered by the Chairman of the Federal Reserve on the evening of August 27, Beijing time was the fuse for the continued surge in global assets .
The Fed Chairman’s speech has attracted great attention from all walks of life around the world before it was published, because everyone expects to observe the Fed’s judgment and plans for future development from this speech, so as to formulate the next investment strategy.
And this report did not disappoint everyone. It really gave a clear answer, and this answer even exceeded everyone’s expectations to some extent.
In the entire report, I think the most critical point is that the Fed changed its previous inflation target from 2% to an average inflation rate of 2%. In other words, low interest rates will be implemented for a long time and the inflation target will be allowed to exceed 2% for a period of time.
This means that the Fed’s regulatory policies will undergo major changes. In the past, when the inflation rate rose slowly and approached 2%, the Fed would take measures in advance to gradually tighten liquidity, striving to control the target within 2% or at most 2%. After this change, the Fed will allow inflation to continue to rise above 2%, and as long as the average inflation rate does not exceed 2% over a period of time, it may not tighten liquidity.
After making this policy adjustment, the Fed can be said to have loosened itself again. Then it is reflected in the specific policy that if money is given to individuals, it will continue to issue money, if it is given to enterprises, it will continue to issue money, and if it is printing money, it will continue to print money.
As soon as the news came out, the market fell sharply for fear of pessimistic economic prospects, but then rose sharply again: U.S. stocks, gold, and silver all did so. The US stock Dow Jones index has risen to 28,653 points at the time of writing, which is less than 3% from the record high of 29,568 set this year.
We should note that this was achieved when the unemployment rate in the United States reached a record high and the economy was in a severe recession. The U.S. stock market, which is an economic barometer, is now completely distorted and cannot reflect the true state of the economy at all.
Why did U.S. stocks come out of such a weird market? Robinhood, an investment platform that is enthusiastically sought after among young Americans, gives the answer: American young people invest all government-issued money in the stock market.
I believe this is just a microcosm. It reflects that the money used by the US government to help the people and companies did not enter the real economy at all but squeezed into the financial market .
The Fed’s bottomless policy of printing money has now developed a habit for the entire society: as long as I fail, the government will send money; now that the economy is not good, the money sent to the entity will definitely not make money, then Invest in financial market speculation. If the financial market collapses, the government will send money again…, so no matter whether the market is good or bad, the government will print money.
This road into an endless loop has completely opened the door. Voting in the November U.S. general election is about to begin, and I don’t think whoever becomes the next president will close this door. Regardless of whether the market collapses in the future, the money will be printed correctly, and if the market does collapse, the move to print money may be even more beyond imagination.
Now that the epidemic has not been brought under global control, I believe that no matter how long the epidemic is tossing, there will be a day when it will gradually dissipate. When that day comes, the global panic gradually calms down and the economy gradually returns to normal. The money paid will flow unscrupulously to the world, including China, like a flood. Therefore, even if my country’s fiscal and financial policies remain under control, it may be difficult to resist the influx of external funds in the future.
With such a flood of funds, the stock market (including A shares), gold, silver, and cryptocurrencies may all usher in a big bubble.
Not only ordinary investors like me can feel this future scenario, many investment banks have also expressed similar views, including the former CEO of Goldman Sachs Raoul Pal. It is worth noting that they now mention gold as well as Bitcoin.
Bitcoin has begun to frequently enter the vision of these traditional investment elites, and the entire Crypto currency headed by Bitcoin will not miss this upcoming bubble feast .