On July 31st of this year, the United States federal debt surpassed the significant milestone of $35 trillion.

While these debts have provided the U.S. with more funds, the massive obligations behind the debt have also impacted the country.

Consequently, the U.S. has chosen to take an alternative route by intervening in interest rates to address its high debt.

So, what are the implications for the rest of the world after the U.S. dollar interest rate hike?

On July 31st, the U.S. federal debt reached a staggering figure, far exceeding that of other countries, thus making the U.S. a "global powerhouse" in terms of debt.

This enormous debt has led some multinational corporations to flee the U.S., and the living pressure on domestic residents has been continuously increasing.

Advertisement

Items that used to cost $1 in supermarkets now require $3 or $4, not to mention the complicated taxation and other rising pressures that make the domestic environment in the U.S. increasingly "troubled."

In order to repay its debts as soon as possible and to improve the domestic situation, the U.S. came up with a "brilliant" idea, which is to raise interest rates on the U.S. dollar.

After the interest rate hike, the U.S. dollar's exchange rate would increase, leading to an appreciation of the dollar, reducing the debt repayment burden for the U.S. and alleviating the living pressure on its residents.

In fact, the U.S. has previously stabilized interest rates on multiple occasions to maintain the balance of the dollar and minimize the impact on the U.S. economy.

However, the prolonged practice of stabilizing interest rates has not significantly improved the U.S. economy, leading to the decision to raise interest rates on the dollar to change the domestic economic situation.

It is evident that the continuous interest rate hikes by the Federal Reserve have caught everyone off guard.

So, what impact have these hikes had on the U.S.'s high debt?

When the U.S. was developing its economy and lacked sufficient funds, it decided to issue federal bonds to raise capital.

This move proved to be sweet at first, leading to the annual issuance of a large volume of bonds to raise funds.

While this approach may seem very "clever," it is essentially "drinking poison to quench thirst," as there are huge interest payments waiting for the U.S. At the beginning, the U.S. was indeed able to repay the interest on its bonds, but the amount of bonds issued by the U.S. has been increasing every year, as have the associated interest payments.

The U.S. issues bonds globally, and these countries are aware of the value of the dollar, attempting to generate revenue through such means.

It is important to note that the dollar holds a high position in international transactions, with some goods only tradable in dollars or precious metals like gold.

The announcement of the U.S. dollar interest rate hike has been disastrous for other countries, which will face more challenges in subsequent economic and trade activities.

It is not difficult to see that by choosing to raise interest rates, the U.S. has effectively alleviated its current burden, but this approach has merely maximized its own interests, while "suffering" are other countries.

So, which countries have been affected by this move, and is this method reliable?

Once the news of the U.S. dollar interest rate hike spread, the currencies of other countries depreciated to varying degrees, which has a significant impact on them.

Currency depreciation has a considerable negative effect on international trade, meaning more money is needed to purchase goods, and it also puts these countries at a disadvantage in other international trade activities.

After realizing the instability of the U.S. dollar, other countries have begun to "de-dollarize," seeking new trading methods and no longer considering the dollar as the only trading currency.

Moreover, the U.S. dollar interest rate hike has also had a significant impact on some multinational corporations that operate in multiple countries with different currencies, mostly transacting in dollars.

However, the news of the interest rate hike has led these companies to spend more on purchasing materials, which has greatly affected their profits.

The news of the U.S. dollar interest rate hike has the most significant impact on newly listed multinational corporations, whose foundations are not stable, making them more vulnerable in this turmoil.

In addition, the interest rate hike has a more significant impact on Japan, which holds a large amount of U.S. federal bonds.

After the interest rate hike, the debt repayment from the U.S. to Japan is undoubtedly substantial, which is a "catastrophe" for Japan.

One can imagine the pain of losing a few hundred dollars; imagine Japan losing hundreds of billions of dollars.

It must be said that the U.S. has come up with a "very clever" solution.

So, in the current situation where the global dollar is unstable, what impact will our country face?

How should our country respond to these impacts?

Our country began "de-dollarization" and used the renminbi for payment several years ago, which not only reduces our country's losses in international trade but also enhances the status of the renminbi in international currencies.

In 2009, our country started to settle international trade in renminbi, and in subsequent development, the renminbi has been used for settlement in more and more occasions.

Over the years, the status of the renminbi has gradually risen, with some countries even designating it as the currency for international trade.

The rise in the status of the renminbi has also brought many benefits to our country, not only enhancing our country's position in international trade but also helping our country avoid many risks.

The news of the U.S. dollar interest rate hike has a certain impact on our country's international trade, but fortunately, our country has abundant foreign exchange reserves.

Our country's abundant foreign exchange reserves have come into play at this time, allowing our country not to be too affected in international trade.

Faced with the increasingly unstable U.S. dollar, our country has fully utilized the role of the renminbi, allowing the renminbi to perform more brilliantly in this turmoil and allowing more countries to witness the stability of the renminbi.

It is believed that in subsequent transactions, the renminbi will perform even better.

The news of the U.S. dollar interest rate hike is a huge "disaster" for other countries, putting their currencies at risk of devaluation in international trade.

Our country began promoting "de-dollarization" several years ago, and our country's renminbi has also performed more brilliantly in international trade.

It is believed that in the future, our country's renminbi will shine in more trading venues.