The "dollar hegemony" that the United States has spent nearly a century building is beginning to crumble.

Recently, the Federal Reserve announced a significant interest rate cut of 50 basis points, marking its first rate cut since 2020.

Wall Street economist Sophia Drosos pointed out that as the Federal Reserve lowers interest rates, the dollar is further weakened, and all major global currencies may benefit, "which also signifies the official entry of the dollar into a downward channel."

What's more concerning for the United States is that less than 24 hours after the rate cut was announced, China immediately took action to freeze the assets of nine American companies, dealing a surprising blow to the United States.

01 The growing U.S. debt and the Federal Reserve's emergency rate cut: Over the past four years, the Federal Reserve has frequently raised interest rates, increasing them from 0% to 5.5%.

This has sucked money from the global market into the United States, leading to a significant increase in asset prices worldwide, with housing and stock prices being particularly affected.

During the previous interest rate hike process, about $2 trillion of Chinese capital remained within the dollar system.

Advertisement

However, the influx of a large amount of funds also brought the hidden danger of inflation.

Especially after the mask issue, the United States has stimulated the economy by issuing a large amount of debt, leading to a snowballing debt.

From 2020 to 2024, the U.S. debt scale skyrocketed from $30 trillion to $35 trillion.

This is equivalent to each American bearing at least $100,000 in debt.

The excessively high interest rates have also exacerbated the burden of debt repayment.

Data shows that in August alone, more than 60 American companies filed for bankruptcy, including companies with debts exceeding $1 billion.

According to incomplete statistics, the number of layoffs in the United States has exceeded 536,000 in the first eight months of this year.

Under the superposition of multiple factors, to alleviate economic pressure, the Federal Reserve had to urgently lower interest rates.

Some economists analyze that there may be further rate cuts in the future, with a range of 25-50 basis points.

This rate cut action will undoubtedly lead to global capital flows, with some funds flowing out of the United States and heading to emerging markets in search of higher returns.

China's economic development prospects and the valuation attractiveness of the renminbi assets are both visible, and it is expected to attract a global trend of capital inflow.

02 China's intensified countermeasures worry the United States: As the saying goes, "It is advisable to pursue the enemy while he is in a desperate situation."

Against the backdrop of China's major favorable situation, it once again took action against nine American companies such as the Sierra Nevada Corporation and the Yaw Control Company, freezing all their assets in China, sounding an alarm for the United States.

This also means to some extent that in this currency confrontation, the positions of attack and defense have changed, and the balance of advantage has begun to tilt towards us.

The financial high-level officials of the United States previously revealed that they may visit China again during their term to strengthen the economic and trade ties between the two countries.

In fact, what the United States should worry about is not only the currency war but also that in the market, China's dependence on the dollar is gradually decreasing.

As the world's largest trading country, China has been using the renminbi for transactions with Saudi Arabia, Russia, and other major energy countries.

In the Chinese market, we are also gradually getting rid of the import dependence on the United States.

Taking nuclear magnetic resonance as an example, the United States once dominated this market, earning nearly $40 billion from China every year; in the field of big health, the United States once relied on the anti-aging oral products that help slow down the aging of the human body, and harvested hundreds of millions of people who longed for "retaining youth" in China at a high price of 20,000 per gram.

Data shows that among the more than 300 million middle-aged and elderly people in China, 54% are "afraid of getting old."

And this kind of anti-aging product has been confirmed by Harvard, Washington, and other universities: it can improve aging indicators such as muscles, bones, memory, and slow down the aging speed of organisms.

Under the fear of aging, there are many people in China who eat a house a year.

But now, with the continuous growth of China's economic and scientific research strength, domestic nuclear magnetic resonance instruments have been successfully mass-produced, with a price only 1/5 of that of American products; domestic achievements "Yihaota" also benefit the people at a low price of three digits, squeezing foreign goods on platforms such as Jing and Tao, and taking back the market.

Relying on higher cost performance, domestic "Yihaota" quickly radiates to hundreds of millions of middle-aged and elderly people aged 35-60.

Data shows that this single product has been on platforms such as Jing and Tao for less than a year, with a transaction growth rate as high as 422%, and has repeatedly created a consumption myth of seven-digit transactions overnight.

Flipping through its message area, there are many feedbacks such as "full of energy like a 20-year-old state" and "sleep quality has improved."

Now, we are gradually reducing our dependence on the dollar.

The warning of the chairman of the Federal Reserve that "the status of the dollar may fall sharply" is gradually becoming a reality.

03 Give up illusions!

The more terrible thing is behind: Although the Federal Reserve's rate cut measures are intended to stimulate the economy and boost market vitality, the problems of debt pressure, high inflation, and slow employment still exist and will not be solved by a single rate cut.

On the contrary, frequent interest rate adjustments are gradually eroding global trust in the United States.

For the United States, the more terrible thing may still be behind.

Under the dollar crisis, even Japan has also "stabbed in the back," reducing its holdings of U.S. debt for four consecutive months, with a cumulative scale of 24 billion; the "big financier" Saudi Arabia has also sold more than 50 billion U.S. debt, turning to buy 40 billion yuan of Chinese government bonds, reflecting its pessimistic view of the U.S. economy.

In this way, the Federal Reserve's rate cut is not only a necessary move to deal with domestic economic pressure but also the beginning of a global economic change.

The influence of the United States in the global economy is weakening, and the days of dollar hegemony may be numbered.