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Part Two: Maybe a Sin....
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A brief recap: Japan makes bad life decisions and the US has to play fair.
We're all aware that the Fed has had their eyes on some nice hikes for this year, and I don't mean scenic mountain climbing in the Appalachians. Last December, the greatest person of all time, Janet Yellen, made the executive decision that the United States economy was strong enough to handle a slight raise in interest rates, after almost 10 years of levels at nearly 0 percent. The battle plan was to enact 4 different rate hikes throughout 2016 to raise interest rates to a nice healthy level. Welp, it turns out the enemy has a trump card: being economically helpless little failures.
In a competitive universe, economic failure in one country should translate to an advantage for the other side, that being America. Our US-centric world, much like the ideal competitive world, thrives on competition and strategy. However, there's one caveat: we are surprisingly not the independent go-getters many Americans believe ourselves to be. The presence of a united, world economy that is composed of equally dependent nations for imports and exports is what allows countries to survive and thrive. This idea is how the world makes economic decisions. Of course we aren't all completely altruistic nations, but we do often take into consideration how we can best improve our own lives without bringing damaging effect to our allies. This is why something as devastating as the drastic, economic measures used to prop up the Japanese economy is so important to the United States.
Recently, the Fed held a meeting to announce their decision to put on hold the expected rate hikes for this year. Cue my immediate shock. Now, let's first take note of the fact that I hadn't yet learned of Japan's financial crisis and was only basing the following opinions on Fed decisions.
... Yea. I'm even ashamed of myself right as I type this all out, gosh how I could make such brash decisions. My reasoning at the time seemed clear, but I realize now the ignorance. I thought it was a bad decision on Janet Yellen's part to actually put the rate hikes on hold. In December, the simple announcement of raising interest rates had boosted American hopes that we have actually, finally recovered from our economic meltdown during the Great Recession of 2008. The responses in the stock market and some news outlets were albeit a little frantic, but that's only because some people immediately hit the brakes and had little crises when they hear the words, "interest rate hikes." Chill. But there was lots of optimism in the health of our economy when the Fed had laid out their plan to continuously raise interest rates throughout this next year, because that meant our economy had finally recovered and was fully capable to handle any increase in money required to satisfy the interest rate.
This was my mistake. There are many things that affect what the Fed decides, not just what happens on the domestic scale. Although the plan was for four rate hikes, there can be outside factors that change the Fed's decision. In this case, the outside factor was Japan. The US and Japan both have strong trade relations, so we depend greatly on Japanese imports as Japan depends on America's exports. For this reason, raising interests rates would not be in any nations' s best interest, because then the natural order following raised interest rates is a stronger American dollar. The dollar strengthens because foreign investments increase due to the benefit of higher interest rates. So, if the dollar for the US is stronger, then that means our foreign exchange is a lot greater. While this is all great, when one of our allies is struggling, it's not very considerate. So, it makes sense for the US to force their hand by putting off the rate hikes once again, because we do depend a lot on our trade with Japan, and those exports to the Japanese would be suffering greatly if the dollar exchange is so different.
Sometimes being a strong country and doing what's right for our people is the best plan, but often times it's important to remember we aren't alone in this world. Sometimes what is right for our citizens means what is right for other nations's citizens. So, I'm sorry Janet Yellen, you were right again. I'm sorry I ever doubted you.
We're all aware that the Fed has had their eyes on some nice hikes for this year, and I don't mean scenic mountain climbing in the Appalachians. Last December, the greatest person of all time, Janet Yellen, made the executive decision that the United States economy was strong enough to handle a slight raise in interest rates, after almost 10 years of levels at nearly 0 percent. The battle plan was to enact 4 different rate hikes throughout 2016 to raise interest rates to a nice healthy level. Welp, it turns out the enemy has a trump card: being economically helpless little failures.
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| You had ONE job Japan. ONE JOB. |
In a competitive universe, economic failure in one country should translate to an advantage for the other side, that being America. Our US-centric world, much like the ideal competitive world, thrives on competition and strategy. However, there's one caveat: we are surprisingly not the independent go-getters many Americans believe ourselves to be. The presence of a united, world economy that is composed of equally dependent nations for imports and exports is what allows countries to survive and thrive. This idea is how the world makes economic decisions. Of course we aren't all completely altruistic nations, but we do often take into consideration how we can best improve our own lives without bringing damaging effect to our allies. This is why something as devastating as the drastic, economic measures used to prop up the Japanese economy is so important to the United States.
Recently, the Fed held a meeting to announce their decision to put on hold the expected rate hikes for this year. Cue my immediate shock. Now, let's first take note of the fact that I hadn't yet learned of Japan's financial crisis and was only basing the following opinions on Fed decisions.
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....Nearly a Tragedy
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For about the first time in my life, I actually doubted Janet Yellen...
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| Sound fx: gasp! |
This was my mistake. There are many things that affect what the Fed decides, not just what happens on the domestic scale. Although the plan was for four rate hikes, there can be outside factors that change the Fed's decision. In this case, the outside factor was Japan. The US and Japan both have strong trade relations, so we depend greatly on Japanese imports as Japan depends on America's exports. For this reason, raising interests rates would not be in any nations' s best interest, because then the natural order following raised interest rates is a stronger American dollar. The dollar strengthens because foreign investments increase due to the benefit of higher interest rates. So, if the dollar for the US is stronger, then that means our foreign exchange is a lot greater. While this is all great, when one of our allies is struggling, it's not very considerate. So, it makes sense for the US to force their hand by putting off the rate hikes once again, because we do depend a lot on our trade with Japan, and those exports to the Japanese would be suffering greatly if the dollar exchange is so different.
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| Such friendship. Very ally. Many trade. |
Sometimes being a strong country and doing what's right for our people is the best plan, but often times it's important to remember we aren't alone in this world. Sometimes what is right for our citizens means what is right for other nations's citizens. So, I'm sorry Janet Yellen, you were right again. I'm sorry I ever doubted you.
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