Why does the Federal Reserve insist on not cutting interest rates? To drag down the global economy?

From the perspective of employment and economy, the rate cut by the Federal Reserve has failed, which indicates that neither employment nor recession is a consideration for the Fed. The monthly employment data is fabricated except for a small portion of people, which is known to the whole world, while the recession is mainly announced by them and has a lag of 11 to 13 months.

So we need to look for answers from a deeper level, what is the purpose of the Federal Reserve maintaining interest rates at a high level? What are the factors that truly determine the Fed's interest rate cuts?

Since 2008, the United States has embarked on a debt-driven economic growth model. Cyclical economic crises are inevitable, especially since 2020 when large-scale QE without bottom line printing money has been released, which has created excessive liquidity beyond market needs. This is the fundamental cause of inflation. Can the Federal Reserve truly curb inflation by raising interest rates and reducing its balance sheet? Obviously not. On the surface, this round of interest rate hikes has suppressed inflation in the United States from nearly double digits to below 3%, which seems to be close to success.

But raising interest rates did not eliminate liquidity; on the contrary, high interest rates generated a large amount of capital gains. If these additional gains were released into the market, one can imagine the consequences. Without evaporating the excess currency, inflation cannot go down.

As a result of the interest rate hike, the inversion of long and short-term government bond yields, especially short-term bonds, what does a risk-free return of over 5% mean? Just by keeping the money in the bank, or buying 3-month short-term U.S. bonds, can you achieve a risk-free 5% return? What other investment activities can achieve this? Not only Americans, but anyone holding US dollars worldwide, as long as they are not foolish, knows to buy US bonds. The interest rate hike suppresses the global supply side and drives capital to the equity market, rather than production activities.

But in the United States, the consumer side driven by high risk-free returns is actually benefiting, and all dollar holders are enjoying a 5% risk-free return. In this case, the downward inflation is temporary. Once the Fed starts cutting interest rates, inflation will come back with a vengeance, more fierce than in 2020. Coupled with inventory cycles in the United States, China, and globally, you can imagine what this means for commodities.

The most effective way to control inflation is to evaporate the excess currency, and there are only two paths:

First, push up the prices of USD-denominated assets, absorb excess liquidity, and let the money of these dumb buyers evaporate quickly as the assets fall.

2. Experience a depth economic recession, reprice labor and production material prices. #btc