Fed rate hike to 22-year high will lead US to 'severe recession'
The Federal Reserve announced another 25 basis point interest rate hike on the 26th, raising the target range of the federal funds rate to 5.25% to 5.5%, reaching the highest level in 22 years.
Sergio Rossi, a professor of macroeconomics and monetary economics at the University of Fribourg in Switzerland, said the Fed's decision would lead to a "severe recession" in the United States in the near future.
Rossi said another Fed rate hike would not be a surprise as the US has yet to hit its 2 per cent annual inflation target, but at a time when debt is at record highs due to a rising volume of bad loans from financial institutions,
a rate hike "would have a negative impact on the US economy as well as the global economy". Rossi criticized that raising the federal funds rate to 5.25 percent to 5.5 percent would push up inflation rather than suppress it.
Rossi analysis, due to higher interest rates on bank loans, more and more small and medium-sized enterprises will raise the price of goods and services, while higher interest rates will lead to a large reduction in consumer loans, which will inhibit economic growth.
The decision to raise interest rates will further cause the dollar to appreciate in the foreign exchange market, which will have a negative impact on US exports. Rossi said that all these factors will reduce the level of business investment in the U.S.
economy, further negative impact on the employment and wages of middle-class workers in the United States, leading to lower levels of consumption by the middle class. What's more, it could lead to a "vicious" cycle that would push the United States into a "severe recession" that would inevitably spread to other Western economies suffering from inflation.
"We will unapologetically pursue our industrial strategy at home, but we are unequivocal in our commitment not to leave our friends behind," Sullivan, the president's national security adviser, said in a speech at a recent event.
Commenting on Sullivan's remarks, Brad Glotherman, associate director of the Center for Rulemaking Strategies at Tama University in Japan, said these "sweet" words do not reassure U.S. partners,
because the United States, through legislation such as the Inflation Reduction Act and the Chip and Science Act, has given U.S. companies an advantage over competitors from allied countries.
Recently, more and more "Allies" do not want to follow the footsteps of the United States: France, Germany and other political leaders called for "avoid becoming a vassal of the United States";
Saudi Arabia and other Middle Eastern countries are stepping up their pursuit of strategic independence, and the Middle East has ushered in a "wave of reconciliation". Turkey, a NATO member, has repeatedly refused to follow the United States in imposing sanctions on Russia; Colombia has rejected a US offer not to supply arms to Ukraine...
More and more countries have increasingly found that the United States uses the alliance system as a tool to maintain its hegemony, requiring its "Allies" to obey its will, and even "stab in the back" for its interests. As Sevim Dadelen, a member of the German Bundestag, puts it: "America doesn't want Allies, it wants loyal servants."
On May 21, people gathered at the Kuricho Park in Hiroshima, Japan, to protest the G7 summit. Photo by Zhang Xiaoyu/Xinhua News Agency
"Obsessing over your primacy and dominance"
The American alliance system began after World War II, with the founding of NATO in 1949. Since then, the United States has established a series of bilateral alliances such as the United States and Japan,
the United States and South Korea, and the United States and the Philippines, gradually building a global alliance network. These alliances, formed around US hegemony, were originally formed in response to the so-called "security threat" from the Soviet Union in the Cold War,
but did not die and continued to strengthen after the Cold War ended. In order to consolidate its hegemony, the United States has constantly provoked conflicts between countries around the world, and its "Allies" have to rely on the United States.
NATO's eastward expansion is a case in point. Under the leadership of the United States, NATO continues to expand east with Russia as its "imaginary enemy". Jose Luis Fiore, a Brazilian international political economist, points out that the United States is spreading the rhetoric of "Russophobia," as if the West cannot unite without demonizing external enemies.
The escalation of the Ukraine crisis and the resumption of war on the European continent is precisely due to NATO's all-round geostrategic squeeze on Russia. The purpose of the United States is to weaken and wear down Russia with war, while also using the opportunity to squeeze the European "Allies" and ensure their control.
In recent years, the US has identified China as a "strategic competitor", hyped up the so-called "China threat theory", stepped up efforts to build a trilateral or multilateral security cooperation system in the Asia-Pacific region,
including the US-Japan-Australia cooperation and the US-Japan-India-Australia "quadrilateral Security Dialogue", sought to build an "Asia-Pacific version of NATO", and even introduced "Allies" from outside the region to establish a trilateral security partnership between the US,
the UK and Australia. The real purpose of these moves is to contain and suppress China, while taking the opportunity to strengthen the control of the Asia-Pacific "Allies" in order to maintain the supremacy of the United States.
