The latest statement from the Federal Reserve, which has attracted much attention from the industry, has finally come out.

After reading this statement carefully, its content is far more relaxed than the market expected. Not only did it not mention raising interest rates at all, but it did not even mention the reduction in the scale of bond purchases that the financial community was generally worried about beforehand.

At the press conference, Federal Reserve Chairman Powell also commented on the Evergrande incident, believing that it will not pose systemic risks to financial institutions in China and the United States. I very much agree with this point of view. But I think this does not necessarily mean that the Federal Reserve really understands the specific situation of Evergrande, and it is more just the Federal Reserve's appeasement to the market.

With this reassuring report and Powell's reassuring speech, U.S. stocks rose sharply. As of writing, all three major U.S. stock indexes rose.

Since Powell took charge of the Fed, in the past, before the Fed released a report, there were always "rumors" in the market, worrying about the Fed's aggressive measures, and then the stock market cooperated with the market's worries to "play dead" to threaten the policy; The big event really started to worry about financial risks, and there was a collective escape. But no matter what the reason is, the Fed will do everything in its power to appease the market afterwards and let the bubble expand step by step.

This has almost become a rule, without exception!

This increasingly makes people doubt the real determination and courage of the Fed to exit the easing policy.

I remember that in the Greenspan era, he would issue some warnings in due course, warning investors that there was a certain bubble in the stock market. And it seems that he has never heard similar words since then. Not only did they not dare to warn about the bubble, they even refused to respond positively to the obvious facts.

Take inflation as an example: the current inflation in the United States is obvious. In this statement, the Federal Reserve described the current inflation rate as "with inflation having run persistently below this longer-run goal" ("With inflation having run persistently below this longer-run goal"). This rhetoric has not changed in a year. The fact is that the prices of basic domestic consumer goods in the United States, including food, energy, automobiles, housing, etc., have soared this year, not to mention 2%, 20%. This is really puzzling, how is this long-term 2% target calculated? What is the basis?

Some people say that the current chairman of the Federal Reserve is too weak. I think weakness may be a factor, but it is more likely that the current bubble in the US financial market is too big to be contained. Everyone is now acting like an ostrich, and no one dares to pierce the bubble easily.

I estimated in the previous article that with the introduction of stricter new crown control measures in the United States, the epidemic in the United States will be brought under control in about 2 months, and the economy will begin to return to the right track. With the arrival of winter, the continued soaring of oil and natural gas prices will have a huge impact on the lives of ordinary people. At that time, inflation will no longer be just a numbers game, but will affect economic, social and political stability in an all-round way. key factor.

This time point is in November or December. At that time, the Federal Reserve may have to face this severe test and be in a dilemma: if it continues to indulge, social instability may appear; if it really starts to scale back measures, Wall Street will pretend to be dead. At that time, the market will fluctuate greatly under the attack of various news. No matter what the Fed does, a little carelessness will send the market into the abyss.

Renowned investor Rogers has been warning recently that a crisis bigger than the 2008 financial crisis is coming. Bridgewater's Dalio also said recently: The market bubble is very big, and the Fed will eventually take measures, but the consequence of taking measures is that the market plummets, and then the Fed restarts a new round of large-scale release.

All this will come soon, let us wait and see how the Fed walks through this difficult process on the tightrope.