Preface

The Federal Reserve has been going through a tough time lately! This is not a rumor, but a fact that has genuinely happened to the Federal Reserve. The Federal Reserve, the central bank of the United States, oversees the world's most powerful monetary system, yet it has now been revealed to have suffered a loss of 200 billion dollars, and this is still public data—the actual scale of the loss could be much greater!

The United States has truly had a major setback this time. It's important to remember that they have been leveraging their strong dollar hegemony to reap countless global wealth, but now they have been cut back, which is a rare occurrence in nearly a century.

So, what exactly led to the massive losses of the Federal Reserve? What secrets are hidden behind this?

Advertisement

The Federal Reserve Suffers a Loss of 1.4 Trillion

The way the Federal Reserve makes money is actually quite simple: it invests its assets and earns returns. These assets mainly include U.S. government-issued Treasury bonds and various types of bonds.

In the past, the Federal Reserve was able to earn a substantial profit every year through this method, even contributing tens of billions of dollars to the U.S. Treasury. However, this year's situation is completely different; the Federal Reserve not only failed to make a profit but also suffered a loss of over 200 billion dollars (equivalent to approximately 1.4 trillion yuan).

The reasons behind this are quite complex. Essentially, the United States, in an attempt to curb China's economic development, has been continuously raising interest rates, only to end up shooting themselves in the foot.

We all know that the United States, in order to maintain its hegemonic position, has been using dollar hegemony to reap global wealth, especially in recent years, they have been continuously raising interest rates in an attempt to harvest Chinese assets.However, the United States' well-laid plans have backfired. They initially believed that by raising interest rates, they could cause global capital to flow back to the United States, thereby suppressing China's economy. The outcome, however, has been the opposite, as it has instead accelerated the development of China's economy.

China's economy is resilient and robust. Even in the face of the United States' interest rate hikes, China has been able to maintain steady growth, thanks to its strong industrial chain advantages and a vast domestic market.

The Chinese government has also taken a series of proactive measures, such as lowering reserve requirements, interest rates, and existing mortgage rates, as well as introducing securities fund insurance swaps. These measures have not only stabilized China's economy but also attracted a significant influx of foreign capital into the Chinese market. Ultimately, this has led to a reassessment of the value of Chinese assets and a rapid increase in their worth.

All of this has been a significant blow to the Federal Reserve.

The Federal Reserve holds a large amount of assets, primarily in the form of long-term government bonds, which do not yield high returns. To combat high inflation, the Federal Reserve has had to continue raising interest rates, leading to a substantial increase in short-term government bond rates. This, in turn, has caused the value of the long-term government bonds held by the Federal Reserve to plummet, resulting in substantial losses.

It's akin to spending $100 on a lottery ticket, only to see the ticket's value drop to $50 later, incurring a loss of $50 on the ticket you hold.

The Federal Reserve is currently in this predicament, holding a vast amount of long-term government bonds whose value is continuously decreasing. Behind this is the strong development of China's economy and the proactive response of the Chinese government, which has thwarted the Federal Reserve's plans.

Moreover, the Federal Reserve's massive losses also reflect the underlying crisis in the United States' economy.

To alleviate the pressure on the Federal Reserve, the United States has had to lower interest rates. However, this move could lead to a significant outflow of capital, which would be a further blow to the already fragile U.S. economy.

What's even more alarming is that Warren Buffett, a global investment icon, has also begun to reduce his holdings in U.S. banks, undoubtedly adding insult to injury for the U.S. economy.The Federal Reserve's massive losses, Buffett's reduction in holdings, and various signs indicate that the crisis in the American economy has already emerged, while China has gained an absolute advantage in this financial game.

Who will take over the bubble of the American empire?

The massive losses of the Federal Reserve are not a simple economic issue but a matter concerning the collapse of the American financial hegemony! From a deeper perspective, the huge losses of the Federal Reserve are actually a signal of the collapse of American financial hegemony.

The American empire has always relied on the dollar hegemony to harvest countless global wealth, but now their plans have failed, and their financial hegemony has also begun to collapse.

So, what impact will the Federal Reserve's massive losses have on the American economy?

The huge losses of the Federal Reserve will make the American economy more fragile, meaning that the financial situation of the American government is even worse. To make up for the losses of the Federal Reserve, the American government may have to increase debt or reduce government spending, which will have a negative impact on the American economy.

To alleviate the pressure on the Federal Reserve, the American empire may be forced to lower interest rates. However, lowering interest rates will reduce the interest rate advantage of the American empire, making it unable to attract more foreign capital. Instead, it will lead to the outflow of American capital, ultimately exacerbating the crisis in the American economy.

The bubble of the American economy has always been based on the loose monetary policy of the Federal Reserve. Now, the huge losses of the Federal Reserve force the American empire to tighten its monetary policy, which will inevitably burst the bubble of the American economy and trigger an economic crisis.

So, what impact will the Federal Reserve's massive losses have on the global economy?

The Federal Reserve is one of the most important central banks in the world. The huge losses of the Federal Reserve may cause global investors to worry about the American economy, leading to turmoil in the global financial market.The Federal Reserve's massive losses imply that the US economy may be heading towards a crisis, and a crisis in the US economy will impact the development of the global economy. So, facing the collapse of the US financial hegemony, what should we do?

We must seize the opportunity to accelerate the development of China's economy. The Federal Reserve's losses mean that global capital will flow towards more stable markets. The rapid development of China's economy has become a safe haven for global capital. We must seize this opportunity to speed up the development of China's economy, attract more foreign investment, and enhance the international competitiveness of China's economy.

In conclusion, the collapse of financial hegemony has accelerated the process of global de-dollarization. We must seize this opportunity to accelerate the internationalization of the renminbi, create a more diversified international monetary system, strengthen international cooperation, jointly address global economic risks, and maintain the stability of the global economy.