Chapter 194 Time can heal everything
"Then, how can we solve this severe inflation?" Zhao Xinyue blinked and said in confusion.
"solve?"
Li Feng chuckled and said,
"Why should we resolve this? Look, over the years, not only the United States, but also our country has accumulated a large amount of government debt and household debt. Why not take advantage of this difficult opportunity to clear these debts all at once?"
"The United States, in particular, can leverage the dollar's status as a global reserve currency to directly transfer the cost of these inflationary costs to other countries. Why not do that?"
"After several years, or even more than a decade, of inflation, interest rate hikes, further inflation, and more interest rate hikes, it would be best to gradually address the causes of inflation while resolving the debts of the government and residents. After that, everyone would be able to start a new economic cycle and a new prosperity would arrive..."
"Why not do something good that kills two birds with one stone?"
Li Feng is a sinister person.
Zhao Xinyue felt that Li Feng had some conspiracy theories and could not help but refute:
"You're overthinking it. If they really want to do that, then the US should just go ahead and have a major inflation. Haven't you seen them raising interest rates and curbing inflation over the past two years?"
"A few days ago, many people expected a rate cut in March, but the Federal Reserve once again reduced the possibility of a rate hike in March. The Federal Reserve is independent of all legislative bodies and political groups. Any decision it makes is not subject to approval by others, including the president. It is only responsible for employment and inflation..."
Li Feng chuckled and said, "Xinyue, why do you still believe this?"
"Look at what the United States and even Europe have done in recent years. They really put up tariff barriers when they're poor, and free trade when they're rich."
"Similarly, how can the Federal Reserve, which controls U.S. monetary policy, be an independent institution free from the influence of the U.S. government? I'm afraid only dreamers would believe that."
"Why do people say that?" Zhao Xinyue asked.
"It's just brainwashing," Li Feng said slowly. "A lie repeated a thousand times becomes the truth. This rhetoric spreads through various channels and means to wherever they want it to go, controlling their minds and reaping their wealth without them even noticing."
"Therefore, when investing, we must have the ability to think independently and not blindly trust any authority, especially those who are our counterparties, such as various influencers, various institutions, and even various economists."
"Because, in this negative-sum money game, most people are destined to be leeks, providing nutrition to the market, and only a small number of people are winners and hunters. As small leeks, as humble retail investors, we must never believe the sickle and the lies of the jackals."
"Otherwise, you'll be like a sheep in the mouth of a wolf, doomed to eternal damnation."
Hearing this, Zhao Xinyue fell silent.
After a long pause, she said, "If inflation can't be solved, why was the hyperinflation and stagflation of the 1970s solved?"
"Time heals all problems," Li Feng analyzed. "The causes of the last round of hyperinflation were also very complex, but after more than a decade, the US made improvements in these three areas and finally resolved the problem."
"First, the currency issue. The Bretton Woods agreement collapsed, leading to a significant devaluation of the US dollar. Second, a diplomatic breakthrough was sought. On the one hand, an agreement was reached with the Middle East, which directly crashed oil prices, driving down inflation. On the other hand, the US joined forces with China to dismantle the Soviet Union, gaining a massive amount of assets and suppressing inflation. Third, a large amount of low-end production capacity was transferred to the "Four Little Dragons." Cheap human resources directly drove down the prices of various commodities, and also brought down inflation in the US..."
"After this round of hyperinflation, hyper-valuation, hyper-transfer, and massive victory, the U.S. government even had a fiscal surplus for a while. It was simply a miracle..."
"So, to completely resolve this period of hyperinflation, or even stagflation, we must either resolve the Middle East issue and bring down oil prices, or end the Sino-US dispute and reverse the trend of economic deglobalization. Or, we must replicate the previous success and relocate the industrial chain to other countries to suppress inflation, or stabilize the value of the US dollar..."
"It now seems that only the last option has a shred of possibility. The two solutions proposed two years ago have shown no hope, and instead have intensified. Even the Houthi armed forces have begun to blockade the Red Sea, challenging Europe and the United States..."
"Do you mean that our Guo Jia is also going to have a round of major inflation? To solve housing prices and various debt problems?" Zhao Xinyue continued to ask.
"I really want to, but I don't have the ability for the time being," Li Feng sighed. "After all, our Guojia currency isn't a world currency yet. If there's a surge in inflation over a short period of time, we can only levy taxes internally, but not externally. So, regarding inflation, we want to, but we don't dare, and we can't..."
"The best approach is to buy time and space, slowly and gradually reducing inflation and gradually resolving it...stability is paramount."
"So, although I'm optimistic about the market in 2024, I don't think there will be a full-scale bull market, especially for blue-chip stocks. Although they have been driving up the index recently, if the index shows signs of a bubble, I believe they will definitely cool the market down..."
"We must be cautious in anticipating the enemy. We must trust the superiors' ability to manage the market. In this world of great power competition, all departments and policies must prioritize stability. The stock market is no longer what it used to be, and neither is finance. It can be said that everything is under control."
After hearing this, Zhao Xinyue sighed softly and said, "If that's the case, then this cycle is still very long?"
Li Feng also looked out the window and sighed, "Yes, as a small person, we are caught in the vortex of this great power struggle. How can we remain immune?"
"Now, it's not the time before 2017. The good old days are gone forever. The stock market is just a small microcosm of this great era and great changes. All we can do is recognize this reality and avoid risks as much as possible. We don't seek significant asset appreciation, but only to preserve our wealth."
"It could be said that the turbulent stock market in recent years is merely a ripple in the vortex of the Sino-US dispute."
"We are born in this era, which is both our great sorrow and our great fortune. After all, crisis, crisis, only crisis can bring opportunities. The greater the crisis, the greater the opportunity."
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