Don’t be dragged into the loop, even knowing lots of information
- Personal investment strategy in the bizarre world
by Hedy
(Proofread by Chaos)
After we watching the news of the relationship between U.S. and China for a while, seeing the changes in China’s foreign policy and Mr Trump’s delay wish yesterday, I think it’s time to write a series articles about macro economy and also the crypto world，just for your maybe entertainment and give you a different angle.
Highlights:
>In the at least next quarter, we will see a bizarre world like a maze of glass. We could see the lots of information and lots of news like we see things through a glass, but we might be stuck in somewhere and dragged in the loop which someone big already set up.
>The bizarre also applied to some financial rules like, Mr Trump will pay lots of attention to protecting the stock market to keep him getting the votes for the next November, which is totally different from the basic real economy world, even ‘data’. But now China has realized no matter Trump or Biden, the conflicts where I mentioned in the last article are the core. China just grows quickly and then got their target position. On August 7, the defense ministers of the two countries have made telephone calls on military issues. The arms race is the key instead of language.
>The capital wars are always there. How to invest the bizarre world？
- No USD in the epidemic time.
- Can invest US stock in a while, long term not that clear to see. Also, try equity assets.
- Hold gold and bitcoin!
- Most importantly, invest yourself!
The last one article is about telling the fundamental conflict is that life is miserable for most people as rich people are just taking a little %, some countries are going to the negative development of their own economy, and also the crypto world might have the possibility for the little % to be treated as a tool just like the traditional market. Smart money always has the same doctrine. For many people like me which is not a professional institution, the only way is to see a clear picture about what we are staying with and follow the trend. After that, for the long term, you could see the benefits no matter the wealth or the wisdom. I am on the way to do that.
Why need to watch U.S. in financial way?
“Finance has always been the third pillar of American foreign policy, and the first two pillars are politics and military respectively.”- John Taylor, former deputy secretary of the Treasury and professor of economics at Stanford University.
The financial sanction of the United States is based on its financial hegemony, which is embodied in its right to issue the standard currency and control the flow of funds.
Keywords: Dollarization, Financial deficit
Dollarization
In practice, although the United States has a limited share in international trade (about 10%), the USD is the world’s leading reserve currency (accounting for 61% of official foreign exchange reserves), and about 50% of international trade and 40% of international payments (through SWIFT) are settled in USD. With the increasing dependence on finance and dollarization, the United States can control the global capital and grasp the global credit, which endows the United States with unequal financial sanctions.
From the perspective of historical evolution, before the end of the Cold War, the United States’ financial sanctions were limited by the division between the East and the West camps, mainly through multilateral means of cooperation with allies or through the United Nations: after the Cold War, the US financial sanctions tend to be unilateral. Especially after the “9 · 11” incident, the Patriot Act strengthened the US president’s discretion on financial sanctions (the financial sanctions system is controlled by the executive department in the United States, and the president as the head of the executive department has the decision-making power of financial sanctions). The status of financial sanctions has further increased and played an important role in the subsequent sanctions against North Korea, Iran and Russia. (I will pass the long stories here about the differences in financial sanctions between Iran and Russia.)
Financial deficit
We cannot simply see a country the same as a company. An increase in the fiscal deficit, in theory, can boost a sluggish economy by giving more money to people who can then buy and invest more. Long-term deficits, however, can be detrimental for economic growth and stability which outsider could see.
But sadly, at least the excuse, on the face of it, the financial deficit could be one reason for financial sanction.
The recent news is that the US will speed up ‘printing money’ for the collapse GDP. That’s why USD recently looks like a drowning dog. But the giant is still the giant. So in a short term, no USD. The more money is printed, the more the dollar depreciates. Therefore, the more serious the epidemic situation is, the more money the United States prints, and the more devalued the dollar, this logic still applies.
Why gold and bitcoin?
In addition, the Swiss central bank also suffered heavy losses because of its large holdings of US debt. In the Q1 alone, Switzerland lost more than CHF 38.2 billion. India’s rupee is even worse, devaluing 8.3% in the second quarter, and the rupee’s exchange rate against the US dollar has reached an all-time low of 75.86:1.
As one of the safe-haven asset, gold investment has increased significantly. Demand, including ETF, gold bars and gold coins, was 583 tons, has been increased 98% year on year. The driving force was gold demand flowing into ETF, reaching 434 tons, which surged to 5.7 times of the same period last year. Against the background of increasing uncertainty in the economic outlook, the demand for gold as a safe asset has increased. With low-interest rates and fiscal deterioration, there are buying activities to avoid the risk of future currency devaluation and price rise. Also, you could try JPY, also another safe-haven asset.
As for bitcoin, because of its relative small Cap, the price fluctuates greatly. For a while, it dances along with the price of gold and then the US stock market. It can also reveal the mindset and actions behind it. Greyscale has more than doubled its crypto currency holdings in the past month. Since the third half reduction of bitcoin, Greyscale has purchased more than 1.5 times the number of bitcoin mined. Now, the organization has bought almost all the bitcoin mined and wants as many as possible.
Besides the trading investment, bitcoin can even reach nearly 1.7 billion people in the world who are not qualified to have a bank account. They don’t need complex infrastructure. They only need mobile phones and networks to meet their transfer payment needs. Similarly, the manpower and material resources required by traditional finance will be much higher.
Best time for self-improvement
Survival struggle seems the eternal theme of human society. When the economic crisis came, all businesses were in a depression. This period time is also the best time for people to buy very high-quality assets at distressed levels and get yourself ready when the next upwards round is coming in the next years.
Thank you for your time. Hey, at last please read this:
The bulk of the content is based on the subjective thoughts and robust analysis with personal consideration. None of them can be an investment advice. Any investment has risk.
