In the case of its own high inflation, the United States relies on the hegemony of the dollar to export inflation to the world through fiscal and monetary policies. This move by the United States disturbed the global financial market, transferred risks to other countries and regions, looted the wealth of other countries, and became a major source of chaos in the world economy.
In recent years, in response to the impact of the new crown epidemic, the United States has adopted a large-scale stimulus policy, resulting in a soaring fiscal deficit and a serious over-issue of currency. At the beginning of last year, economists warned that the large-scale stimulus policy in the United States could trigger “inflationary pressures not seen in a generation”. The U.S. government has insisted that inflation is a “temporary phenomenon” and continued to push ahead with a multi-trillion-dollar stimulus plan.
This year, the United States turned to aggressive interest rate hikes, pushing up the dollar index and international commodity prices, putting pressure on imports from other countries and regions, and high imported inflation.
Among them, the inflation rate in the euro area has recently hit a new high. Inflation in the euro zone reached 9.1 percent on an annualized basis in August, Eurostat data showed. Nine of the 19 euro zone member countries have double-digit inflation on an annualized basis. In order to curb the deterioration of inflation, the European Central Bank started raising interest rates for the first time in more than 10 years in July, and raised interest rates by 75 basis points in September. The German “Süddeutsche Zeitung” commented that the European Central Bank has been brought into the rhythm of interest rate hikes by the Federal Reserve and has to raise interest rates more significantly to deal with inflation, and the risk of recession in the euro zone has increased sharply.
The latest survey by Japanese private institutions shows that there will be more than 18,000 kinds of goods in Japan with price increases. Japanese media and experts generally believe that the imported inflation faced by Japan is rooted in the sharp rise in the price of imported goods denominated in US dollars.
In addition to developed economies, some developing countries have also recorded new highs of inflation, which is constantly impacting the economy. According to statistics, the annualized inflation rate in Egypt reached 13.6% in July, the highest level since May 2019. In the 12 months ended in June this year, Brazil’s national broad consumer price index rose by 11.89%.
Some commentators believe that the United States exports inflation by virtue of dollar hegemony, which continues to push up and detonate financial risks in other countries. According to its own economic cycle, the United States repeatedly switches between “opening the gate to release water” and “closing the gate to cut off the flow”.
