Chen Geng found that after this incident, everyone's eyes on him changed from before, and before the 22nd, he made a decision, although Ji Shengcheng would not "argue with reason" with himself , but occasionally he will express some of his own opinions, but after the false alarm between Iran and Iraq on the 22nd (Iran and Iraqi soldiers did not fight because of this, and there was only a brief exchange of fire between the two sides), Ji Shengcheng almost obeyed any instructions to himself brainlessly, not only Ji Shengcheng, but also those traders who he invited at a high price.

Knowing why they had such a reaction, Chen Geng couldn't help but laugh in his heart.

From 11:40 p.m. on the 22nd (Washington time), investors in the world's major stock markets began to sell dollars and instead invested their funds in the futures market, snapping up hard currencies such as gold, silver, oil, rubber and even sugar.

Because of a large number of investors from all over the world, concentrated shipments, the dollar depreciated sharply, in just two days, the dollar depreciation as high as 22%, creating the largest dollar depreciation after World War II, at this time, even the United States led by the Western developed countries desperately tray, can not stop the entire market to collapse at an avalanche-like speed, the only fortunate thing is that the 23rd is Friday, when the 23rd passes, governments and central banks have two days to close, discuss countermeasures.

Ji Shengcheng humbly asked Chen Geng for advice: "Boss, you say, can governments come up with strong rescue measures?"

"Enough," Chen Geng shook his head and said bluntly: "Our ancestors have a saying called 'follow the trend', and there is also a saying called 'mantis arm as a car', to see whether the governments can successfully save the market, not to see what rescue measures the governments will take, but to see how this crisis is formed, only to find the root of the problem, in order to know where the root is, and to prescribe the right medicine, instead of the current headache and foot pain." ”

As soon as Chen Geng's words came out, not only Ji Shengcheng was thoughtful, but several traders on the side also pricked up their ears.

In the past week, we have heard a lot of bad news, heard a lot of government rescue measures, and heard a lot of financial reports and development plans urgently announced by various enterprises, which are like "heart-saving pills", but no one has heard about the reasons for the formation of this stock market crash, so the question is, how did this big stock market crash come about?

"What about the boss, how did this stock market crash come about?" asked Kelly Hicks.

"There are three main reasons," Chen Geng did not sell off, and became a good teacher with all questions: "The first and most important reason is that the West, which is also the world's largest economy: the huge fiscal deficit and trade deficit of the United States,"

Speaking of this, Chen Geng looked at the crowd and asked, "Who knows what the fiscal deficit and trade deficit of the United States were in the past 1986?"

“......”

No one spoke, and everyone was confused: who cares about this kind of thing.

I knew it was so!

Chen Geng sighed and said: "Let me tell you, in the past 1986, the US fiscal deficit was $221 billion and the trade deficit was $156.2 billion, both of which set the highest deficit record -- everyone, you are all masters in the economic and financial fields, tell me, what does it mean when a country has such a serious fiscal deficit and trade deficit, and what does it need to do?"

"It means that there is not enough money in the country. ”

One of the traders shouted.

"There is a need to absorb external funds to supplement the lack of domestic funds. ”

Immediately after, another trader shouted.

"That's right, the fiscal deficit and trade deficit are both high, which means that domestic funds are insufficient, and if you want to solve the problem of insufficient domestic funds, the solution is very simple, as long as you can absorb enough funds from the outside to solve the problem," Chen Geng nodded: "But at the same time, another problem arises: that is, you don't say you want to attract external funds, and external funds will come in obediently, so the question is, how can you attract external funds?"

As a senior executive in the banking sector, this question is not a problem for Ji Shengcheng, and he immediately said: "Keep interest rates high. ”

"That's right, by maintaining a high interest rate level, you can successfully attract enough external funds to come in, and the United States has the best investment and political environment in the world today, so it is understandable that a large amount of external funds have poured into the United States, which is proved by the relevant data released by the Federal Statistical Office, I will not expand on it," Chen Geng nodded: " But everything has pros and cons, maintaining a higher interest rate is a double-edged sword, as a master in the field of finance and economics, everyone should understand a disadvantage of doing this, or a potential disadvantage, that is: higher interest rates will have a direct impact on the stock market price, so here, for today's big stock market crash planted a bomb that does not know when it will explode. ”

Everyone pondered Chen Geng's words, and they found that it seemed to ...... It really is.

"This is the first bomb," Chen Geng continued: "Since there is the first bomb, there will naturally be a second bomb, and this second bomb is that since the 80s of the 20th century, the economies of the European and American Western countries led by the United States have been in a period of low growth, and the demand for productive investment is insufficient, so this directly leads to a problem: those who are attracted by the high interest rates of the United States, in addition to investment, there is a large amount of surplus.

After all, there is no capital to invest in after this part of the industry is entered, or in other words, it is just hot money, and it is certainly not willing to withdraw like this, right? After all, it costs to come in and go out, and the US government is certainly not willing to let this money run away like this, after all, in the eyes of us Americans, as long as this money comes into the United States, it is ours. ”

Everyone chuckled: yes, they couldn't know what kind of virtue capital is.

"In order to keep this hot money 'for my use', the Li Gen administration has relaxed the regulation of the financial market, and also relaxed the tax cut on stock investment, now it's good, not only these hot money that came to the United States before refused to go out, but also those international hot money that has not come in before, well, to give you a crazy example of these hot money: just in the first nine months of this year, from Dongying, The new investment in the purchase of US stocks amounted to about $15 billion, and here we are grateful for the Plaza Accord, which led to a sharp appreciation of the yen.

Going back to this economic crisis, we all know that the most damn hot money likes to do in the financial markets is to drive up stock prices...... Do they want to make money...... These surplus capitals, which have no investment direction and are unwilling to go out, also do the same, and when they go around the United States, they find that the financial industry in the United States seems to be very interesting, so they ...... it."

Speaking of this, Chen Geng shrugged: "A large amount of surplus capital has poured into the securities market, and so much capital not only matches the real economy of the United States, but also directly leads to rampant and overflowing investment in the financial sector, and the debt is even more unprecedentedly inflated."

So we see that before this stock market crash, the financial market in the United States was booming, but we must understand that this prosperity is a false prosperity, a prosperity full of bubbles, and such a false, bubble-filled prosperity must be formed and difficult to last, and sooner or later there will be a day when it will be punctured, and this day is the day when the stock market, futures, and foreign exchange markets plummet, and we all understand that this is actually the market itself to 'detoxify' and 'correct' its own abnormal situation. ”

“......”

No one spoke, and everyone was thinking about Chen Geng's words.

The more they thought about it, the more they found that the situation seemed to be really what Mr. Fernandez said, and it was precisely because of this that everyone became more and more in awe of Chen Geng: the mysterious wizard of the East...... Is it terrifying? Can you even observe such a deep problem?

It was Ji Shengcheng, who opened his mouth to Chen Geng again after some contemplation: "Boss, since there is a first and second reason, there should be a third one, right?"

"That's right, there is a third one," Chen Geng nodded approvingly: "This third reason belongs to a deeper reason, that is, the decline of US hegemony." ”

What the?!

As soon as Chen Geng's words fell, everyone in the huge conference room froze: This third reason turned out to be the decline of the US hegemony?!

The first reaction of the crowd was that they could not accept it: The United States is so powerful, the entire Western world is only the United States, and the United States is not only the world's ally, but also has boiled the Soviet Union to the ground in more than 30 years of military confrontation with the Soviet Union.

Are you kidding?!

Chen Geng's point of view was unacceptable even to Ji Shengcheng: "Mr. Fernandez, I can't accept your point of view, this is impossible, the United States is the most powerful country in the world, and our GDP in the United States accounts for 30% of the world's GDP......"

Speaking of this, Ji Shengcheng was suddenly stunned, he couldn't say any more, and then his face slowly showed an unacceptable look.

"Have you found a problem too?" Looking at Ji Shengcheng's appearance, Chen Geng knew where he had discovered the problem: "When was the most powerful time for the United States? There is no doubt that it was the period from the mid-50s to the late 60s, when the GDP of the United States accounted for as much as 40 percent of the world's GDP! And now, the GDP of the United States accounts for only barely 30 percent of the global GDP.

Of course, you may have to say, even if it's 30%, the United States is the most powerful country on the planet!

Of course, this is true, but I would like to draw attention to one key word: "Speaking of this, Chen Geng paused, and then said heavily: "This key word is: Bretton Woods system! And now, the Bretton Woods system has disintegrated." ”

Bretton Woods?

The crowd at the scene slammed it!

What is the Bretton Woods system?

This system, established by representatives of major Western countries at the United Nations International Monetary and Financial Conference in July 1944, before the end of World War II, constitutes the core cornerstone of the world economic and political order of the entire Western world and even except for the Warsaw Pact countries from the end of World War II to the present.

Under the Bretton Woods system, there are two cores:

One is that the dollar is pegged to gold, while the currencies of other countries are pegged to the dollar, and the saying that the dollar is the dollar is also based on the Bretton Woods system, because at this time, $35 is fixed equal to one ounce of gold;

The second core is the establishment of two major international financial institutions, the International Monetary Fund and the World Bank.

Yes, you read that right, the International Monetary Fund and the World Bank, the two major international financial institutions, when they were first established, actually relied on the Bretton Woods system, and the United States is the core of the Bretton Woods system!

It is very appropriate to use the words "once it is proud, it will be rampant", "the villain will get rich", and "the virtue is not worthy" to describe the United States, a country with no background, and after establishing itself as the core of the world, the United States began to cause trouble everywhere in the world, and the two biggest incidents were the Korean Peninsula War and the Vietnam War.

These two wars directly led to a serious deterioration in the balance of payments of the United States, so that by 1971, the proportion of US GDP in the world's GDP not only fell from 40.21% in 1960 to 35.81%, creating the highest (low) proportion after World War II, and that year, the United States' gold reserves were only 10.21 billion US dollars, while in contrast, the United States' foreign current liabilities were as high as 67.8 billion US dollars.

Brothers, this is 67.8 billion US dollars in 1971, which also means that the United States has completely lost the ability to exchange dollars for gold at this time, so that then US President Nixon had to announce on August 15, 1971 that he would stop assuming the obligation to exchange dollars for gold.

This move by the United States not only means that the dollar is decoupled from gold, but also declares the failure of the gold standard, and it is not an exaggeration to say that the Bretton Woods system in which the United States controls the world has broken a leg.

But that's not all, although a leg is broken, but there is still a leg, in 1973, many countries around the world (in fact, the United States' own small actions) appeared to sell dollars and rush to buy gold, in this case, on March 16, 1971, nine European countries held a meeting in Paris and reached an agreement, the Federal Republic of Germany, France and other countries to the United States dollar to implement a joint float, between each other to implement a fixed exchange rate, and the United Kingdom, Italy, Ireland floated separately, and other major Western currencies also floated against the dollar, and the fixed exchange rate system that the Bretton Woods system frightened completely collapsed.

The end of the gold standard and fixed exchange rates heralded the final dissolution of the Bretton Woods system.

From controlling the world by relying on the Bretton Woods system to the disintegration of the Bretton Woods system, although the United States is still the most powerful country on the planet, it is undeniable that the United States' position as the world hegemon has indeed declined.

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PS: Sorry brothers, the second update last night was only 2000 words, and this chapter is 4000 words for you to make up.