Why Does the US Dollar Strengthen Despite Massive Printing?

Since the outbreak of the pandemic in the United States,the U.S.stock market has been hit hard,experiencing four circuit breakers within two weeks,which is unprecedented in both American financial history and global financial history.Zhang Zhaozhong said,"The U.S.stock market has evaporated $20 trillion,equivalent to Trump working for three years in vain,and ultimately it's all for nothing."

Following the stock market crash,there was also a plunge in oil prices,and the number of unemployed people in the United States soared to over 20 million,setting a historical record.In order to save the U.S.stock market and the economy facing huge risks,the Federal Reserve has used a series of financial tools,and ultimately directly launched unlimited quantitative easing,with a massive release of dollars.

At the beginning of March,the Federal Reserve's balance sheet was $4 trillion,which broke through $6 trillion in April,and as of April 29,the Federal Reserve's balance sheet had reached $6.7 trillion,and the expansion scale is still ongoing.If we add the $2 trillion economic aid plan introduced by the U.S.Department of the Treasury and the funds from other economic stimulus plans,then the United States has released nearly $10 trillion this time,with an extremely large scale.

For the U.S.economy,does this massive release of dollars by the Federal Reserve have any effect?In the short term,the effect is still very obvious.The U.S.stock market has started to rise,which everyone has seen,and the U.S.stock market will continue to rise for a period of time in the future.

At this time,many people will be puzzled.Since the Federal Reserve prints a large amount of dollars in the market,and there is a large amount of dollars in the market,it should theoretically lead to the devaluation of the dollar,and it will also cause inflation...Why doesn't the dollar fall but rise,and there is no serious inflation in the United States?

In fact,it's also very simple to say.Whenever a global crisis occurs,the first thing most people think of in their minds is to use dollars and gold as safe-haven assets,especially dollars.So,when the Federal Reserve massively overprints dollars in the market,countries hold a large amount of dollars to deal with the possible economic crisis,and various institutions and individuals will also hold a large amount of dollars for safety.In this way,the dollars in the market are held in large quantities,ultimately leading to a tight dollar liquidity.

Yes,although the Federal Reserve has released a large amount of water,the dollars in the market were quickly "sold out," so the dollar did not fall but rose,the dollar index rose rapidly,the dollar appreciated,and relatively,other currencies depreciated.Why does everyone want to hold dollars?Because no matter how you belittle the dollar,how you belittle the United States,the dollar is still very strong,and there are still a large number of institutions and individuals continuously increasing their holdings,because they still believe that the dollar is the safest currency in the world.

Since that's the case,why can't we print a large amount of yuan?To be honest,the status of the yuan cannot be compared with the dollar at present.The dollar is a global currency,while the yuan is not.Printing a large amount of yuan can only circulate domestically and will cause serious inflation.Therefore,this is also the reason why the Federal Reserve has massively overprinted money,but the United States has not experienced serious inflation.Because the dollar flows globally,it can allow the whole world to help the United States bear the risk.

This is the dollar hegemony.From the Bretton Woods system to the decoupling of the dollar and gold,and then to the "oil-dollar" system,the United States has established a solid global financial empire dominated by the dollar through a series of measures.In addition,the United States is still the world's top power,with its economy,culture,finance,and military all at the world's top level.We have to admit this.The United States is still very powerful at present.

In summary,the United States has printed a large amount of dollars,and the dollar has not only not depreciated but has appreciated.The main reason is the panic caused by the epidemic,which has made the dollar the world's preferred safe-haven asset,leading to tight dollar liquidity and an increase in the dollar index,causing the dollar to appreciate.The fundamental reason is the dollar's hegemonic system.On the one hand,the massive release of dollars stimulates the economy and the rise of the stock market; on the other hand,it conveniently exports dollars to the world and shifts the crisis to the whole world.As long as the dollar is still the world's main currency,the United States will not experience inflation,and the United States can continue to reap the wealth of the whole world.For us,the first thing is to stay sober,not to be self-aggrandizing,to do well ourselves,and to develop ourselves well.Recently,all kinds of news on the Internet are overwhelming,and various media are singing the decline of the United States,saying that the U.S.economy is going to decline sharply.Even if the United States declines,it is a very long process.Don't expect to see the decline of the United States within a few years,which is impossible.Moreover,after the epidemic,the United States can still use the dollar hegemony to harvest high-quality assets from all over the world again and make a lot of money.

This is a world of the strong and the weak.We need to keep strengthening ourselves.Strong strength is the cornerstone of proving everything.