Beware: High Income Trap

As the Federal Reserve sharply cut interest rates, it is widely expected that the Central Bank of China will cut interest rates again in the near future.

It can be said that in order to reduce the impact of the financial turmoil, global currencies have entered the "zero interest era".

How can we manage our wealth in the zero interest era?

The supply of financial products has been greatly reduced. With the continuous spread and persistence of the global financial crisis, China's economic growth has begun to slow down. In order to ensure the steady and steady development of the economy, China has begun to adopt a moderately loose monetary policy.

After November this year, the people's Bank of China has no longer "hard constraints" on the credit planning of commercial banks, and has lowered the reserve requirement ratio since December 5th. These measures have increased the available funds and credit lines of commercial banks, thus solving the problem of the amount of loans issued by commercial banks.

The difference between loan to deposit and loan interest rate is greater than that of financial products and loan interest rates. Compared with loans issued through financial products, direct loans can enable commercial banks to get higher returns. This solves the problem of commercial banks' direct loan price.

Therefore, after the liberalization of credit restrictions, commercial banks can directly issue loans without having to bypass the issuance of financial products, and the motivation for banks to issue credit assets and financial products to make up for the shortage of credit lines has been greatly weakened.

In addition, when countries around the world have cut interest rates to stimulate the economy, China has entered the interest rate reduction channel, which directly leads to the uncertainty of loan interest rates.

Uncertain interest rates will not only bring difficulties to the pricing of credit assets of commercial banks, but also affect the stability of credit asset management products.

The dollar's attractiveness has declined. With the rapid decline of the dollar last week, some industry insiders believe that the mid term rally in the US dollar since the middle of this year may end.

After the US Federal Reserve cut interest rates to the lowest level in history, and said that it would buy large quantities of securities in the market, many financial institutions including Bank of America and Brown brothers saw the performance of the US dollar behind.

They believe that the massive quantitative easing policy will increase the supply of global dollars, which will damage the value of the US dollar.

The housing market is still unresolved, coupled with the huge current account deficit and budget deficit. Unless the US stock market is improving, there is little reason to invest in US dollar assets.

In fact, the US dollar interest rate may completely replicate the trend of the yen in that year.

In 2003, under the guidance of zero interest rate policy, Japan's long-term interest rate hit a record low of 0.43%.

Because Japanese depositors earn no money at all costs, many people simply put their money at home.

In particular, Japanese retail banks have very high withdrawals fees, and money is placed in banks. If they are not careful at night, weekends, holidays and other non business hours, they will lose interest this week or this month.

For more than a decade of ultra low interest rate policy, the Japanese call it a "fraud low interest policy".

Obviously, today's US dollar is also likely to fall into the "liquidity trap".

In the zero interest era, we should guard against the financial fraud, the Japanese zero interest rate policy. The first thing to do is to retire. The financial blueprint is totally out of shape. Therefore, there are a lot of fraud cases in the rat and overseas shell investment cases.

In fact, the bitter lesson of the Japanese society was that low interest rates forced the middle and old age investors to seek more highly remunerate and high-risk investment opportunities, thus causing serious financial fraud cases.

Similarly, when RMB deposits and all kinds of formal financial returns gradually slipped, various kinds of "low risk and high yield" products began to appear: there are unsecured trust products issued by bank channels, insurance and financing with hidden fraud clauses, PE financing for investment in non-listed company, private equity funds with overseas financial groups, and all kinds of property rights that are called guaranteed rent.

In this regard, investors should bear in mind that "risk is directly proportional to earnings" and never try all kinds of "Shanzhai" banks, securities and fund companies' so-called high-yield products.

Earlier, the business sector in Beijing was in the International Building of Shangdu, Chaoyang District, and found a company counterfeiting Citibank in the name of engaging in financial investment and other banking businesses. All kinds of "Shanzhai" financial companies and overseas funds were already overrun on the Internet.