Did Powell's "Delay in Rate Cuts" Become the Biggest Blunder? Missing the Best Window in June, the U.S. Risks Falling into a "Triple Collapse" Crisis!
Recently, Federal Reserve Chairman Powell has been watching the A-shares surging and probably feeling anxious. He originally planned to stubbornly avoid cutting interest rates to drag down the Chinese economy, but the result is that the A-shares are rising uncontrollably, and this script completely deviated from expectations!
Now more and more people realize that June of this year was actually the "golden window" for the Fed to cut rates: at that time, A-shares had already fallen to low levels, U.S. employment data began to show signs of fatigue, and inflation was also under control within acceptable limits. If a decisive rate cut had been made then, the U.S. stock market wouldn’t have fallen into weakness so quickly. More importantly, U.S. capital could have seized the opportunity in June to buy the dips in A-shares and Hong Kong stocks, just like last October when it first pushed up prices before letting domestic retail investors take over, continuing to manipulate the Chinese economy.
But what did Powell do? On one hand, he clung to fantasies of "letting China's real estate collapse on its own" or "forcing A-shares back to their original positions," stubbornly refusing to cut rates; on the other hand, with fierce party disputes domestically, he might have wanted to let Trump's policies "fail," resulting in neither side being successful—China didn’t collapse, and the U.S. economy ended up having problems instead.
Now, cutting rates again has long missed the best timing, and the effectiveness will be greatly diminished. I dare say that Powell's "procrastination" is likely to be nailed to the Fed's monument of shame.
The next danger is: if the Fed does not accelerate rate cuts soon, global capital is likely to flow rapidly towards China, even withdrawing from U.S. stocks to invest in A-shares and Hong Kong stocks. Once a situation of "East Rising, West Falling" forms, combined with the massive debt in the U.S., U.S. stocks, U.S. bonds, and the dollar could all crash together—by then, the U.S. economy would truly be in serious trouble.
Therefore, the U.S. will definitely try its best to prevent this situation from happening. Either it accelerates rate cuts to "put out the fire," or it continues to raise dollar-denominated assets to attract capital to stay.
But no matter how it operates, the mistake of not cutting rates in June has already put the U.S. in a passive position, and Powell's "procrastination" is likely to make the U.S. pay a painful price.
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