Since the Federal Reserve raised interest rates and shrunk its balance sheet, the interest rate of the US dollar has been rising. Under such circumstances, the US dollar has become very scarce and expensive in the international foreign exchange market.
After the outbreak of the Russo-Ukraine War in 2022, the fragmentation and disintegration of globalization accelerated, and the United States sought to return its manufacturing industry to its own country, resulting in global energy and food prices remaining high. In this case, Europe and the United States suffered from imported inflation. bitter.
The source of the inflation encountered in Europe and the United States is of course the bad consequences of the Federal Reserve and European banks adopting zero or even negative interest rates in the past period. Under the loose monetary policy, the momentum of excessive currency issuance is as difficult to contain as a flood. The essence and source of inflation is actually "currency", which is the result of excessive currency issuance.
The reversal of globalization has worsened the situation of excessive currency issuance. The reversal of globalization has triggered very strong structural imported inflation, which can be said to have exacerbated the inflation caused by excessive currency issuance. In this case, the simple operation of raising interest rates is ineffective, after all, raising interest rates cannot change energy and food.
Sure enough, although the Federal Reserve raised interest rates by 50 basis points violently, inflation in the United States remained high. Not only in the United States, but also in European countries. There were serious riots in France, and there was a tendency to intensify.
In this case, European and American countries can consider using RMB loans to purchase cheap energy and food to alleviate the soaring prices of energy and food in their own countries. Now the U.S. dollar is soaring all the way, while the interest rate of the renminbi is very low, so the use of the renminbi at this time is very suitable for European and American countries suffering from inflation.
European and American countries can use RMB to buy China's cheap energy and food, and China can also provide RMB loans to help complete the internationalization of the RMB. It can be said to be mutually beneficial and complement each other.
