Recently, the global financial market has been extremely chaotic due to the instability of the Federal Reserve's monetary policy and the impact of the US elections, with the unusual scene of traditional risk assets and safe-haven assets rising together. In the foreign exchange market, with the support of the Bank of Japan and the Bank of Canada, the US dollar has remained strong against other sovereign currencies. However, there are also reports that the United States' attempt to use paper gold to suppress international spot gold prices has failed.

As the timeline approaches, it will become clear who is swimming naked when the tide recedes. Has the US dollar and stock market really survived the ordeal, or has it accumulated greater risks in secret?

Signed a 3.4 trillion yen swap agreement

According to the latest news, on October 25th, with approval, the Bank of China and the Bank of Japan recently renewed their bilateral local currency swap agreement, with the swap scale remaining unchanged, exchanging 200 billion yuan for 3.4 trillion yen.

This is the third time that the yuan and yen have signed a bilateral local currency swap agreement. Looking back to 2013 and 2018, both the yen and the yuan signed swap agreements of the same scale.

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Originally, this was a routine operation under the internationalization of the yuan, but at this point in time, it has shown extraordinary significance.

Firstly, if we look at the depreciation of the yen at that time, 200 billion yuan could have been exchanged for 4.2 trillion yen. On the surface, this swap agreement seems disadvantageous for the people, as the yen has depreciated significantly under the dominance of the United States in recent years.Especially in recent days, the US dollar, in order to maintain its strong position, has used various dishonorable means to force the yen to depreciate.

Originally, after the domestic inflation of the yen exceeded 2%, Japan intended to rely on this advantage to raise interest rates. However, after June, both the Japanese Prime Minister and officials in charge of the Bank of Japan were forced to resign one after another.

Subsequently, the yen continued on the path of depreciation. After World War II, Japan established an export-oriented economic development strategy with the principle of "trade-based nation."

However, Japan is an island country, and all manufacturing raw materials need to be satisfied by imports. Therefore, the exchange rate of the yen needs to be balanced. Excessive depreciation of the yen will directly lead to a rapid increase in import prices, and the living standards of the Japanese people will decline rapidly. The recent increase in the price of Japanese rice is a good reflection of this.

Now, the renewal of the yen-renminbi swap agreement, and still at the previous exchange rate, can be said to be China's way of alleviating Japan's economic pressure to a certain extent.

Japan will use the renminbi to purchase the energy and food it needs overseas.

This swap agreement is helpful to a certain extent in promoting the internationalization of the renminbi. In the past, Japan earned and spent dollars, and most of Japan's foreign exchange reserves were mainly in dollars and US bonds.

The yen has depreciated by 50%.

In June of this year, in order to maintain the stability of the yen, the Bank of Japan sold a large amount of dollars, which was strongly opposed by the United States, and even listed Japan as a currency manipulation country. This had a great impact on Japan's monetary policy.

This time, Japan wants to successfully get rid of the suppression of the dollar against the yen, it must rely on the strength of the renminbi. From the perspective of international rules, it is a regular practice for two countries to swap currencies due to trade and economic relations. From any angle, the United States cannot find a point to make things difficult for Japan.Doing this can be said to kill three birds with one stone, as it not only helps Japan alleviate the pressure of imports, but also helps the renminbi to advance internationalization once again, and finally, directly supports the yen while indirectly giving the US dollar a kick.

The US dollar credit crisis has not been eased.

Within the current US financial system, the only things that can maintain strength through manipulation are the US stock market and the US dollar.

De-dollarization has now penetrated every corner of the globe, especially after the BRICS meetings, the process of de-dollarization will accelerate. The United States is very anxious about this situation, not just the Federal Reserve.

Even the US Secretary of Defense has spoken out, hoping that the BRICS organization will not expand into the West.

Does this sound familiar? When NATO expanded eastward, Russia also said that if NATO expanded to Ukraine, Russia would send troops.

Now it's the United States' turn to be nervous?

This situation actually reveals a fact, that is, the dollar hegemony and military hegemony are to some extent one and the same, they prosper together and decline together.

On the one hand, dollar hegemony provides a foundation for the US military, and military hegemony, in turn, maintains the expansion of the dollar.

So after the BRICS, the United States is very nervous. The rise in the US dollar index is not due to its scarcity, which leads to global scramble for it, but due to the fake strength caused by sucking the blood of its allies.Once countries like Europe, the UK, Canada, and Japan announce that they will stop cutting interest rates in order to protect their national interests, the US dollar will immediately fall.

Nowadays, there are already some disloyal sentiments within the US dollar system. Whether it is South Korea's unwillingness to implement the US's anti-China plan or Japan's renewal of the currency swap agreement with China, to a certain extent, they are all subtly going against the policies the US wants to enforce.

The US dollar and stock market are at their last gasp.

As of last night, the market value of Nvidia in the US stock market has exceeded the entire stock markets of Canada, the UK, France, and Germany.

The concentration of the US stock market has reached the highest level in 90 years. The top 10 largest market value stocks in the S&P 500 index account for 36% of the S&P 500 index and 18% of the global stock market. This proportion is even higher than during the internet bubble period.

No one knows how long this distorted strength can be maintained. The Federal Reserve has been prolonging the life of the US dollar and stocks by tampering with economic data.

This approach is not without aftereffects. The entire US banking system is paying the price for the strength of the US dollar and stocks, resulting in a significant increase in the rate of non-performing loans and the entire banking industry falling into losses.

When the bubble bursts, all currencies closely linked to the US dollar will bear the losses.

However, in the face of this situation, there are still people singing the praises of the strength of the US stock market.