In my essay the previous day, I talked about the imbalance between the rich and the poor, centered on the savings rate. And I talked about the imbalance between the United States and other countries. And beyond that, there could be imbalances. Let’s do a little bit more at the national level.

The imbalance between countries that are favorable to the United States and those that are not favorable to the United States … can be considered one more. In fact, the signs started in 2017 when the trade war with China intensified during the Trump administration. The Chinese financial market, which had a certain level of correlation with the global financial market, became more distant. And at that time, the Vietnamese market was in the spotlight. The Chinese stock market was destroyed by slang, and it seemed like funds were flocking to markets that benefit from the reflection.

Recently, India, Japan, etc. have been in the spotlight. And the Chinese stock market on the other side is truly disastrous. After the Russia-U.S. war, the mood in the Russian stock market was also strong. There was also a strong movement of funds to countries close to the United States, but what’s stronger is the movement of funds to the United States. When growth is needed, the United States first uses the power of the key currency to draw future income. Future income? Yes, it’s loans. It’s a big increase in the issuance of government bonds to draw funds and actively stimulate the economy. The government bonds issued in this way become a burden to future generations, and it becomes like pulling future income and pouring it out now.

And when the debt limit becomes full and reaches its limit, it brings wealth to other countries. A case in point could be the transfer of wealth from emerging countries that I mentioned earlier, and among those emerging countries, it could bring in more capital from the countries on the opposite block to the United States. If you look at the long-term chart, this trend seems to have started in earnest since 2017-18. If you keep losing funds on one side and keep leaning to the other side…. When liquidity scarcity occurs, you become more shy about the outflow of funds… And you can be directed toward a concentration of funds. If this imbalance persists, certain blocks centered on the United States will show a really hot trend… U.S. monetary policy… interest rate cuts will slow down. The hard side waits for the bad side… The gift doesn’t explode easily. And it also has the effect of reducing trade worldwide. That’s why Korea is struggling, which is highly dependent on the Chinese economy and has a large share of foreign export growth.

Now, I’ve added to the imbalance between countries, and the next thing that we can consider is the imbalance within the industry. There’s a lot of talk about a recession at a really ambiguous level. I don’t know if it’s a mild recession or a deep recession, but there’s talk of a cool down in the U.S. labor market. As the economy slows down, there’s a growing expectation that liquidity can be released. Growth will slow down in the not-too-distant future, and money will loose in the not-too-distant future, as interest rates fall. Then the scarcity of growth will be highlighted… Is this an imprint of growth stocks? Companies that can take growth in a recession… And even if it’s a downturn, we can be cautious about actively releasing money in the past due to inflation, so the gift of stimulus can arrive late… So companies that even if they arrive late, they can hold out with their accumulated cash and receive the gift of releasing money. Shouldn’t we be looking for those companies? That’s the M7 that heated up last year. It’s the economic downturn that everyone is coming… So when that day comes… I waited and said… I think the biggest beneficiaries of that scenario were the M7.

Concerns about a recession are expected to be greater than this year. (I personally see a mild recession) Then the focus on certain growth industries or sectors could be stronger. Looking at the chart in the past, I think what was good about this similar situation… So, looking at the past, I think it’s a large growth stock. Then, if this atmosphere will continue for a while, investment will be large growth stocks. As more money flows toward this side, M7 dominates the S&P500. When you see that the S&P500 is hot… When you see that the asset market is hot, there is no big problem in the financial market as a whole, but marginalized friends are quite struggling. Many marginalized people need benefits such as actual interest rate cuts. However, it becomes hot with money flocking to them. The national apartment market is difficult… Are apartments in Gangnam in a hot atmosphere? Then, if we are the central bank, what should we do with interest rates? Should we lower interest rates while looking at the whole country? Should I raise interest rates while looking at Gangnam? Yes. With this imbalance becoming clear… If this imbalance distorts the overall average… There is a problem that the difficulty of monetary policy increases significantly.

Lastly, we’ve talked about how many times we’ve talked about ending quantitative tightening. We need a bigger bank reserve than in the past. It may be too much to continue quantitative tightening. The reason we need more reserve requirements than in the past is that small and medium-sized banks are more vulnerable than in the past. Because of the influx of funds to large banks, they swim in a sea of huge cash, but they’re struggling even with the slightest rise of small and medium-sized banks. If you look at large banks, there’s no problem even if we do quantitative tightening for two more years. If you look at small and medium-sized banks, I think they’ll have a seizure tomorrow. So what should we do? So today’s news says that the Fed is also considering ways to boost the use of the tools it has, such as re-discount windows. This is important.

Coping with imbalances with monetary policy that applies to everyone can lead to contradictions. This includes Gangnam apartments and National apartments. In this case, raising interest rates while looking at Gangnam… Rather than struggling with the dilemma of lowering interest rates while looking at the whole country, we should utilize the trick of regulating Gangnam and lowering interest rates in consideration of the whole country. Tools such as regulation should come out… Lower interest rates… It will not be easy to solve it with a big knife such as stopping quantitative austerity.

It deals with individual savings assets, between countries, between national blocks, between sectors, and between large banks and small and medium-sized banks. As the imbalance is strong, monetary policy is difficult, and so the back and forth could get worse. Instead of a stalemate, new solutions will likely continue to emerge. Less essays. Thank you.