Brothers, how long can the United States hold on? Haven't we been saying that the U.S. is on the verge of a financial crisis? Yet, after all these years, the U.S. debt hasn't exploded, the dollar remains strong, and the stock market has hit new historical highs, hasn't it?
The recent series of data released by the United States has left us completely stunned. The number of new non-farm employment in September was 254,000, which is 104,000 more than the expected 150,000. Then, the unemployment rate dropped to 4.1%, one of the lowest levels in history. At the same time, the CPI was 2.4%, which is also higher than the expected 2.3%.
Retail data increased by 0.4% month-on-month, which is also higher than expected. The number of first-time unemployment benefit applicants last week was 241,000, estimated to be 260,000, and the previous value was 258,000.
All data are proving one thing, that is, the U.S. economy has suddenly rebounded. Before the interest rate cut in September, many institutions in the United States predicted that there was a 50% chance of an economic recession in the United States. But as soon as the interest rate cut just began, all the problems of the United States seem to be solved.
However, on the other hand, there are two sets of data that are also very worth our attention.
The first is that the budget deficit of the United States in the fiscal year of 2024 increased to 1.833 trillion U.S. dollars, an increase of 8% from the 1.695 trillion U.S. dollars in the fiscal year of 2023. This is the third-largest federal fiscal deficit in the history of the United States, second only to the 3.132 trillion U.S. dollars in the fiscal year of 2020, when the outbreak of the epidemic was for economic recovery and to combat the epidemic, followed by the 2.772 trillion U.S. dollars in the fiscal year of 2021.
The second is that for the first time in the fiscal year of 2024, the interest on U.S. Treasury bonds exceeded 1 trillion U.S. dollars. Three years ago, that is, in the fiscal year of 2021, the total interest on U.S. Treasury bonds was only 500 billion U.S. dollars. Subsequently, the United States raised interest rates, and the scale of U.S. Treasury bonds increased rapidly, and the fiscal expenditure of the United States also increased.
The fiscal revenue of the United States in 2023 is about 4.4 trillion U.S. dollars, and this number is basically stable. In the fiscal expenditure of the United States, the main purpose is to cope with social security expenditure, interest on Treasury bonds, medical expenditure, and military expenditure. In the past, military expenditure ranked first, but now military expenditure has dropped to fourth. If the United States does not significantly reduce interest rates this year, then next year the total interest on U.S. Treasury bonds will exceed the social security expenditure of 1.4 trillion U.S. dollars, becoming the largest fiscal expenditure of the U.S. government.
After the recent interest rate cut in the United States, the yield on 10-year U.S. Treasury bonds has risen from 3.65% to 4.1%. Don't think this is a good thing, this indicates that more people have recently sold U.S. Treasury bonds. The yield on Treasury bonds is inversely proportional to the price of Treasury bonds. The more people sell, the lower the price, and the higher the yield. The rise in U.S. Treasury bond yields is precisely because a large number of U.S. Treasury bonds have been sold recently.The U.S. economy is experiencing a strong rebound; does this mean that the pace of interest rate cuts should slow down? The Federal Reserve has also been sending similar signals recently. However, not only would an interest rate hike in the U.S. be a problem, but even a slower pace of rate cuts would be enough to give the U.S. government a headache due to the high interest expenses on U.S. debt.
If the U.S. doesn't cut interest rates, the dollar will continue to be strong, which will continue to impact U.S. exports. If the U.S. manufacturing industry cannot regain its former glory, their fiscal revenue will not improve. Without an improvement in fiscal revenue, they can only rely on borrowing new money to repay old debts to cover the maturing U.S. debt. This will only make the growth rate of U.S. debt faster and faster, eventually leading to complete loss of control. From 2017 to now, U.S. debt has increased by $15 trillion, almost doubling.
At this rate, within 5 years, U.S. debt will have to exceed a scale of $50 trillion. As U.S. debt interest continues to increase, the U.S. deficit will grow more and more, and can only be resolved by borrowing new money to repay old debts or by cutting other expenditures. At that time, contradictions within the United States will erupt. If military spending is cut, how can the U.S. military-industrial interest group be willing to let it go?
So don't look at the recent sudden rebound of the U.S. economy; they are gambling. They are gambling that by slowing down the pace of interest rate cuts, they can withstand it, while China cannot. In essence, it's still the old game of low blood sugar and high blood pressure. As long as we explode first, the U.S. can solve its debt problems by sucking our blood.
So now it's time for the final battle, and we must not be blindly confident; we must proceed step by step. The U.S. has the advantage of the dollar as the world's currency, so we will be very uncomfortable.
You see, we have not yet been able to cut interest rates to promote the rise of the stock market, and the Federal Reserve has only managed expectations for rate cuts, immediately taking away our bull market. Now we must still hold our positions. As long as we hold on until the U.S. can no longer withstand it, that will be the time of our victory.