Chapter 243: Who Earns and Who Loses?
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Chapter 243: Who Earns and Who Loses? (Ask for subscription)
The federal government's budget deficit was unprecedented, so the Reagan administration had to do something to reduce it. Reagan borrowed money from Lin Yu this time in order to pull Lin Yu into this matter, and use Lin Yu's money to create jobs, although 5 billion is not a lot, but it is enough to attract the attention of many people, you must know that Lin Yu is the most opportunistic person, and he is also recognized as the most poisonous person, what kind of situation will such a person take money to invest in the United States?
Those big people may not be fooled, but Reagan didn't want them to be fooled either, Reagan wanted those small and medium-sized companies, and the more such companies were, the better it would be for the recovery of the American economy.
In addition, in order to solve the budget deficit, the Reagan administration borrowed a large amount of domestic and foreign national debt, and by the time of Reagan's second term, the national debt held by the private sector had risen sharply from 26 percent of GDP in 1980 to 41 in 1989, the highest since 1963. In 1988, the total national debt was $2.6 trillion, and the total amount of foreign debt exceeded that of China, and the United States changed from the world's largest creditor country to the world's largest borrower.
It can be said that the current economy of the US government is good on the surface, but only they know that the current US economy has some precursors of economic crisis, so they will do everything possible to borrow money and grab money.
This is why Japan's Plaza Accord is here. Since 1980, there have been two changes in the domestic economy of the United States, the first is that the foreign trade deficit has widened year by year, reaching $160 billion in 1984, accounting for 3.6% of GNP that year. The second is the emergence of government budget deficits. Under the shadow of the twin deficits, the US government raised the domestic base interest rate and introduced international capital to develop the economy, and the large inflow of foreign capital caused the US dollar to continue to appreciate, and the competitiveness of US exports declined, thus expanding to the crisis of foreign trade deficit. Under the pressure of this economic crisis, the United States hopes to strengthen the external competitiveness of American products through the depreciation of the dollar in order to reduce the trade deficit. In 1977, Treasury Secretary of the Carter administration of the United States, Brumessa, used the trade surplus between Japan and the former Federal Republic of Germany as an excuse to verbally intervene in the foreign exchange market, hoping to stimulate American exports and reduce the U.S. trade deficit through measures to depreciate the dollar. His speech led to a frenzied sell-off of the dollar by investors, which depreciated sharply against the currencies of major industrial countries. At the beginning of 1977, the exchange rate of the U.S. dollar against the yen was 290 yen per dollar, and in the fall of 1978 it fell to a minimum of 170 yen, a decline of 41.38. The U.S. government was shocked, and in the fall of 1978, President Carter launched a "Dollar Rescue Package" to prop up the dollar. From 1979 to 1980, the world's second oil crisis broke out. The second oil crisis led to a sharp rise in energy prices in the United States, and the consumer price index in the United States rose sharply, and the United States experienced severe inflation, with inflation exceeding double digits. For example, if you put money in the bank at the beginning of 1980, the real rate of return by the end of the year was negative 12.4. In the summer of 1979, Paul? Volcker becomes Chairman of the Federal Reserve Board. In order to control severe inflation, he raised official interest rates three times in a row and implemented a tight monetary policy. As a result of this policy, the official interest rate and the market interest rate in the United States reached as high as double digits, and the short-term real interest rate, that is, the real rate of return after adjusting for inflation, rose from an average near zero between 1954 and 1978 to 3 to 5 between 1980 and 1984. High interest rates attracted large amounts of foreign capital into the United States, causing the dollar to soar, rising by nearly 60 percent from late 1979 to the end of 1984, and the dollar was trading against major industrial countries above what it had reached before the collapse of the Brettonson system. The sharp appreciation of the dollar led to a rapid widening of the U.S. trade deficit, and by 1984, the U.S. current-account deficit reached a record $100 billion.
100 billion, this is only the surface of the fiscal deficit, coupled with the domestic economic situation in the United States, all kinds of data are indicating that a new round of economic crisis is coming.
The U.S. fiscal deficit has grown sharply, the foreign trade deficit has grown sharply, and the U.S. hopes to increase the export competitiveness of its products through the depreciation of the dollar to improve the imbalance in the U.S. balance of payments, but this hope is based on Japan's pain.
On September 22, 1985, the finance ministers and central bank governors (G5) of the United States, Japan, the Federal Republic of Germany, France, and the United Kingdom held a meeting at the Plaza Hotel in New York, and reached an agreement on the joint intervention of the five governments in the foreign exchange market to induce the exchange rate of the US dollar to depreciate against major currencies in an orderly manner, so as to solve the problem of the huge trade deficit of the United States. Because the agreement was signed at the Plaza Hotel, the agreement is also known as the "Plaza Agreement".
But that was all later, before the Plaza Accord, the United States borrowed a lot of money, and most of the objects were rich people from all over the world, and then attracted businessmen to invest, so as to increase jobs, I have to say, this measure of the United States once eased the employment pressure in the United States.
Reagan was able to come to Lin Yu to borrow money, because he took a fancy to Lin Yu's influence in the world, Lin Yu has a good relationship with China and the United Kingdom, and also has a relationship in Italy, in the United States, Lin Yu has a friendly relationship with the little Rockefeller of the Rockefeller family, and has some relationships with some other families, in addition, the most important thing is that Lin Yu has an indescribable relationship with the little princess of the Welf family, which is really important.
"Mr. President, I wonder why you are asking me to borrow money? I'm curious. Lin Yu said with a smile.
"Mr. Lin should also know the current situation in the United States, the government budget deficit is serious, the domestic employment pressure is too great, plus some other reasons, the United States is now in urgent need of a fund to alleviate the domestic pressure, in addition, we also value Mr. Lin's influence in the world, so it is completely reasonable to ask you to borrow money." Reagan said with a shrug.
Lin Yu smiled and said, "Mr. President, I joked, what influence can I have in the world." However, since Mr. President said so, I don't think I can agree to it. ”
5 billion US dollars, although it is a lot, but it is not much for Lin Yu, the whole world knows that the current US government is Republican, and it is still very good to use 5 billion US dollars to show favor to Rockefeller to show his friendship, and besides, the 5 billion US dollars are not not repaid, so when you think about it, you can't see who makes and who loses.
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