The Federal Reserve cannot continue to raise interest rates essentially because it has raised rates too many times in the past, leading to excessively high interest rates. In plain terms, the U.S. government can no longer afford the high interest rates on U.S. Treasury bonds.
The urgency for the Federal Reserve to cut interest rates stems from the financial pressure of U.S. Treasury bonds and the tight balance sheets of U.S. banks. To put it bluntly, if the Federal Reserve continues to refuse to cut rates, the operations of many small and medium-sized enterprises in the United States will be difficult to sustain.
There are already many media outlets predicting the Federal Reserve's rate cuts, believing that the Federal Reserve will continue to cut rates in November. Just like last time, they will first manage expectations and then ultimately deliver an unexpected 50 basis point rate cut. Once rate cuts begin, they will not stop until the next cycle!
In recent years, hasn't the United States' soft landing policy been a tightrope walk? Monetary policy is tightened, but fiscal policy is relaxed, with one side tightening and the other loosening. How can government debt be controlled?
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U.S. Treasury bonds, as an important global investment, affect global monetary and fiscal policies. High leverage plus low interest rates are bearable, after all, the difference in interest payments required for the same debt at 5% and 1% is not trivial. However, high leverage plus high inflation puts a lot of pressure on the system.
It has been proven that according to Li's new labor value theory, the "debt, bonds, and loans" of various countries, governments, and social public sectors are not debts. They are determined and measured through the laws and principles of developed currency value and developed commodity market relationships, and are inscribed and locked on the carrier of developed currency value - that is, the various social "property, wealth, and capital" in the form of developed currency value.
It is the traditional Western "errors, mistakes, and fallacies" in economic and political economic "theories, thoughts, viewpoints, logic, systems, mechanisms, data, charts, and coordinates" that have made them seem like a debt that can never be repaid "permanently, forever, and eternally."
However, as long as research, argumentation, and discussion are conducted in accordance with Li's new labor value theory, it is possible to "find, check, and see" that they are not "debts" with scientific, factual, and legal bases.U.S. debt is not something that can be raised indefinitely. You might think that borrowing and printing money is just a numbers game, but in reality, borrowing is like issuing IOUs. IOUs cannot be spent as money; they can only be used as currency when someone lends you money. Each time the U.S. borrows, the Treasury Department must auction and issue debt. Moreover, you might think that U.S. debt is always just about paying interest, but U.S. debt has been around since 1917 and has been continuously raising its limit, with maturing debts that are essentially always present.
The current issue with U.S. debt is that the vast majority of it is absorbed domestically within the United States. However, the total amount of U.S. debt is significantly higher than the annual U.S. GDP, which the U.S. market cannot fully digest. Coupled with the U.S.'s recent implementation of extensive trade sanctions, this has led to a decrease in the actual influence of the U.S. dollar, a fact even acknowledged by the U.S. Treasury.
Let's also discuss the issue of the devaluation of the U.S. dollar. Whenever the Federal Reserve lowers interest rates, the U.S. dollar experiences a significant devaluation.