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The shoe that the United States has been holding high has finally dropped.

On the local time of the 18th, the Federal Reserve announced that it would lower the target range of the federal funds rate by 50 basis points, to between 4.75% and 5.00%. This is the first time since 2020 that the Fed has cut interest rates, and the magnitude of the cut is also rare in history.

After announcing the decision to cut interest rates, at the subsequent press conference, Powell stated that the rate cut was not the rumored "emergency action" to deal with an economic recession, and emphasized several times, "There are no signs of a recession in the U.S. economy at present."

The reason for rushing to clarify this point is that several institutions have analyzed that whenever the Fed starts a significant interest rate reduction cycle, it means that the U.S. economy has encountered a major crisis.

For example, the oil crisis in the 1970s, the energy crisis in the 1990s, the internet bubble at the beginning of the 21st century, and the global financial crisis in 2008, the Fed would adopt a strategy of multiple interest rate cuts, with the highest cumulative reduction reaching 550 basis points.

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According to Powell, this interest rate cut is a mature decision based on "already controlling inflation."

How severe inflation has been in the United States in recent years is obvious to all, with housing prices and gasoline prices being the most outrageous increases.

To reduce inflation, the best way is to raise interest rates.

Although it has the meaning of treating the symptoms rather than the root cause, it can at least quench the thirst for a while. Now that inflation is easing, it is also reasonable to adopt a rate cut.

However, this superficial statement is hard to convince major media. After a long period of questioning by reporters, Powell finally confessed, "To help the U.S. job market."To a certain extent, the Federal Reserve can be seen as indirectly acknowledging that the U.S. economy is facing the danger of a recession.

According to a report from the U.S. Department of Labor, the number of non-farm jobs added in June was revised from 179,000 to 118,000, and in July, it was further revised down from 114,000 to 89,000. In simple terms, the employment figures for June and July in the United States were at least overestimated by 30%.

Another piece of data shows that the new jobs added from June to August were mainly in the service industry, with the majority being part-time positions. Not only did core employment sectors such as manufacturing and information technology not increase, but they also showed a trend of negative growth.

This indicates that the number of unemployed people in the United States is higher than imagined, which can be seen from the continuous rise in the number of unemployment benefit applications.

If the average unemployment rate over three consecutive months is 0.5% higher than the lowest point of the unemployment rate in the previous 12 months, it will trigger an indicator, the "Sum Rule."

This indicator, established by the Federal Reserve, is specifically used to predict economic recessions and has been verified in multiple economic downturns in the United States.

Even though they remain verbally tough, the United States has taken preemptive measures by implementing a defensive interest rate cut to deal with the risk of economic slowdown.

Faced with this rare gift from the United States, various countries and regions have acted very quickly. For example, Kuwait, the United Arab Emirates, and Qatar have followed suit, announcing interest rate cuts ranging from 25 to 55 basis points.

Starting from the beginning of March this year, when Switzerland fired the first shot in interest rate cuts, the central banks of Sweden, New Zealand, and Canada chose to cut interest rates ahead of the Federal Reserve. The European Central Bank has also cut interest rates consecutively in June and September.

After all, stubbornly maintaining interest rate hikes is too damaging to the economy.It's not that everyone is thrilled about the interest rate cut; figures like Trump and Republicans have voiced strong opposition.

Not lowering rates late, not lowering them early, but choosing to do so right before the election is undoubtedly the biggest boon for the Democrats. If you say there's no political implication in this, Republicans would never believe it.

The timing of subsequent rate cuts is uncertain, but the magnitude is likely to be significant, because to truly achieve a soft landing, a mere 50 basis points is far from enough, not to mention the relentless pressure of the $35 trillion debt package and the increasing risk of global de-dollarization.

It can be said that the more aggressive the rate hikes have been in recent years, the more the future rate cuts, even if not a complete match, should at least not be too far off.

The wave of consecutive rate hikes initiated in 2020 was a well-calculated move by the United States. On one hand, it aimed to curb domestic inflation caused by financial bubbles. On the other hand, it conveniently harvested a round of gains from various countries, which is the ultimate play brought by the dollar as an anchor.

Not to mention weaker economies like Nigeria and Egypt, which basically succumbed directly, even the European economic circle has been laid with several major traps by the U.S., with significant exchange rate fluctuations, high inflation, and substantial capital outflows. Many European companies have moved their production lines to the U.S.

This is because the U.S. not only wants to recapture dollars but also aims to attract a large amount of capital back, achieving the effect of industrial reflow.

Regardless of the overt and covert struggles and mudslinging between the Democratic and Republican parties, at least when it comes to revitalizing industry, they are quite united.

From the significant tax cuts during the Trump era, trillion-dollar infrastructure, and America First Energy Plan, to Biden's CHIPS and Science Act and Inflation Reduction Act, with subsidies here and sanctions there, they have created a grand momentum.How did it turn out, did the United States successfully complete the reflow of industry?

It can only be said that, apart from causing trouble for NATO members, especially shattering the hard-earned morale of the European industrial circle, the effect is better than nothing.

One is the degree of industrial hollowing out in the United States, which far exceeds their imagination.

Ever since the transfer of low-end industrial chains abroad in the last century, the dividends brought by industrial outsourcing have made the United States unable to quit, creating additional profits for capitalists and reducing industrial pollution in their own country, killing two birds with one stone.

This is originally unobjectionable, as long as you hold the high-end technology chain and implement strict quality inspection, the insignificant chains can be spread outwards, but when the high-end chain is eroded by political correctness and financial bubbles, the situation begins to deteriorate.

Under the influence of the political correctness storm, a large number of immigrants, transgender groups, and people with intellectual disabilities have been recruited into various military-industrial complexes or large manufacturing enterprises.

After all, labor is not distinguished by nobility or inferiority, and there is nothing wrong with this, but the problem is that many people are assigned to positions with high technical requirements without professional training, and the original group of engineers is eliminated.

It meets the wishes of the people and hires amateur beginners with low salaries to replace high-priced professional engineers, which will reduce labor costs, make the company's annual report more beautiful, and also meet the shareholders' pursuit of profit.

They are not worried about quality issues at all, not to mention that there are still three nails on a rotten boat, even if something really happens, Congress will help them cover the bottom, they are all on the same boat, and they should bear more.

As a result, the airplanes made by Boeing are getting worse and worse, with accidents of all sizes, and turning astronauts' short space trips into long-term stays; the Kennedy aircraft carrier has been launched for five years, not to mention formal sea trials, even the catapult has not been installed; there is also the Gaza port that costs hundreds of millions, which will fall apart when encountering a little wind and waves.The "American Standard" is gradually collapsing.

Another issue is the numerous obstacles faced by industrial revitalization, which is a top-down phenomenon.

The U.S. government is quite generous with funding, offering subsidies to companies that establish factories in the United States. However, no matter how substantial the funds are, they tend to vanish once they reach the state and county levels. As for the promises made by state governments to expedite the construction of factory buildings, they have become a joke.

It's bad enough that local governments have low efficiency in processing procedures, but local environmental protection, animal welfare, and labor unions also take turns visiting, either demanding rectifications here or conducting reviews there, which indefinitely postpones the actual construction period.

Companies like TSMC have suffered greatly. They have invested over $60 billion in building an industrial park in Arizona over several years, yet they haven't produced a single chip.

In fact, the general public's desire for industrial revival is not very high either.

At a gathering, Trump's economic advisor bluntly confronted the former president, saying that American workers no longer want to work in assembly factories. Compared to "standing in front of a 2000-degree furnace," people would rather "sit in a beautiful office with air conditioning and a desk."

The offshoring of industries in the last century provided American citizens with more opportunities to work in office buildings and join the middle class. Now, suddenly being asked to shed their formal attire is psychologically unacceptable.

Unless the compensation is substantial enough.

Therefore, to get American citizens to enter factories, companies can only meet the ever-increasing demand for wage increases. If they don't, labor unions will take the lead in organizing strikes.All of the above are significant factors affecting a company's production capacity.

Fortunately, Tesla had early laid out its production line in China; otherwise, not to mention the supercharging stations, under the effective dragging tactics of its home country, the United States, the Model 3, which made its fortune, might not have been able to be produced at all.

By the way, the interest rate hikes that the United States takes pride in are actually quite criticized by American business owners.

Many businesses have most of their capital coming from bank loans. Originally, they bear high loan interest rates, and it's already quite an achievement to make a profit after working hard all year round. As a result, the deposit interest rate has reached 5%.

This is not telling them that, rather than working hard and not necessarily making money, it's better to just deposit the money in the bank and earn a 5% return while lying flat.

In this way, even if the entrepreneurs' patriotic heart and the ambition to revitalize the national industry are as deep as ever, they are always at a loss for how to serve their country.

The interest rate hike has indeed hit the thigh.

The failure of industrial reflow reflects that the United States' national capabilities are indeed on the decline. Apart from the consistent strength in extracting fiscal capabilities, other regulatory capabilities, legalization capabilities, and coercive capabilities are continuously weakening.

The reason is related to the long-term implementation of the "small government model."

To be honest, this is a fake move. Economically, it adopts a big government-style control, managing everything and even managing beyond the national borders. However, when it comes to taking responsibility and fulfilling obligations, it becomes a turtle-like small government that shrinks back, focusing on not getting involved in anything.In the end, the U.S. government has become a Schrödinger's government, where when a crisis arises and there is a genuine desire to accomplish something, it is either impossible to do so or the efficiency is extremely sluggish. This leads to domestic contradictions growing like a snowball, getting larger and larger.

However, the U.S. has its own tricks for dealing with contradictions.

In the past, whenever internal contradictions became unmanageable, the U.S. would externalize the blame, making people around the world pay the price together. But now, this tactic is gradually losing its effectiveness.

Take, for example, the interest rate hike wave that has been going on for several years.

For decades, the U.S. dollar tide has been invincible, but now it can only harvest weak economies and has intensified the actions of countries actively de-dollarizing.

Because the yield on U.S. debt continues to decline, it has triggered a wave of selling by various countries. No one wants to guarantee the credit of the U.S., let alone the U.S.'s flip-flopping behavior, which is utterly untrustworthy. Therefore, the dollar hegemony is declining at a肉眼可见 speed, bit by bit.

The U.S. used to be the most eager to profit from globalization, but now it is eager to promote de-globalization because it really can't shear the wool of various countries anymore.

Originally, it could increase the weight of the dollar by strengthening its military strength.

I have also mentioned in my previous articles that under the wave of de-industrialization, whether it is military research and development or military construction, the U.S. is doing inexplicable subtraction. Now, apart from the existing advantages and the still large military budget, there is nothing worth praising.

In the past, with countless overseas bases and international prestige, it could arbitrarily bully other countries. But after the rise of the East, countries that have been bullied for a long time seem to have found a breakthrough, leading to the continuous anti-American wave in the Middle East, Eastern Europe, and Latin America.Everyone is betting that America's fangs are no longer sharp.

The situation is certainly far from the point where America is doomed, but if it wants to regain its status as the beacon of human civilization, with all eyes bowing in submission, it might be a bit challenging.

This is because the trend of a global reshuffling is getting closer and closer.