War (provocation) Preparation Trade Beware Of Optimism Over Bubbles

If you want to persuade them to buy it now because it has no choice but to go up even if it looks expensive, you have to make the logic that “bubble has no choice but to come.” The bond side talks about QE, the stock side preaches the AI revolution (which is still below dot-com bubble), and real estate consulting has a lot of advice such as “buy this if that’s the only money you have” considering your professional interests. It’s not that it’s wrong, but because each hope has no choice but to be projected.

What the United States cites as a painful error is that the timing to check China was too late due to the 2008 housing market bubble collapse. China has thoroughly studied the case of Japan’s collapse due to domestic demand stimulus and the collapse of the real estate bubble since the Plaza Agreement. In a war that does not use force, the best strategy to topple an opponent is to collapse the bubble. To do that, I am not a bubble, but he is advantageous in a bubble state. China was able to use its real estate stimulus policy in 2015 because it was not the US-China war as it is now, and the US was not in conditions to attract high interest rates.

In a war without gunfire, the government should continue to stimulate the economy while preventing the bubble from collapsing. Rather than letting go of the overheating pattern, it is best to cool it down in advance. If you do something wrong, you will collapse first and that person will win. Growth (stimulus), inflation (collapse of supply chain) + bond issuance (fiscal deficit) are all set to prevent low interest rates, and a bubble can be limited unless it is low interest rates. Do you have to… Is there a need to take the risk of deepening the bubble with low interest rates? Of course, it is painful to continue the fiscal deficit in a situation where interest rates are high. In order to lower the pain, it is possible to guess the intention on the path of stablecoins and allies, not low interest rates.

It may be an effective strategy to use non-recession easing to make the other party’s guard down and raise the interest rate at an appropriate time. The U.S. interest rate hike makes it difficult for all non-U.S. countries to focus on non-U.S. exports. In the process, the country that neglected the bubble will collapse, and if it is not an enemy country, the U.S. should not worry about it (the case of the Asian financial crisis), if it achieves its goal. China may be curbing its real estate stimulus as much as possible in preparation for a long-term war…

The argument that the U.S. will take the path of self-destruction in the midst of the U.S.-China war, even though the U.S. interest rate hike makes it hard for the non-U.S., and the U.S. knows that the bubble burst is self-destruction, is weird. (Does it project the non-U.S. wishes because we are non-U.S. interest rates are just good for the weak non-U.S.?) Rather, it is convincing if it says, “The U.S. capital market is not a bubble at the moment, and we will tighten if bubble concerns grow.” Personally, I don’t think the U.S. is a serious bubble yet (high interest rate situation, low private debt to GDP ratio, etc.)

For the time being, interest rate cuts will come first, but the future path will be to raise interest rates rather than low interest rates (0-2%)