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US Interest Rates and China’s Debt Burden in 2019-2020

Changes in US interest rates will affect China’s financial system and economy, with a financial crisis centered on China being likely in 2019 and 2020.

The Saturn-Pluto conjunction in Capricorn will have a big impact on China and also the Federal Reserve. Both entities have their natal Jupiter at 22°-23° Capricorn in their charts, where the conjunction will be exact in January 2020.

At the same time, transiting Uranus moving through the early degrees of Taurus will form a square aspect to key natal and progressed planets in their charts.

Saturn conjuncts Pluto at 22°46' Capricorn on January 12, 2020. January 10 is a lunar eclipse at 20° Cancer.

With transiting Saturn and Pluto conjunct the Fed’s natal Jupiter in the seventh house, the focus is on the Fed’s relationship with major trading partners of the US, as Pisces/Jupiter rules the ninth house of international commerce. The Fed may tailor its policies, especially interest rate levels, to influence the position of trading partners. With the lunar eclipse aligning with the Fed’s ASC-DESC axis and forming a T-square with the Fed’s progressed Sun 18° Aries, the Fed is in a strong position to do just that. With Sagittarius/Jupiter ruling the sixth house here, which is the twelfth house to the seventh by derived houses, the Fed’s actions could undermine the position of international partners.

For China, Saturn and Pluto conjunct its natal Jupiter also, but in the twelfth house. Pisces/Neptune/Jupiter rules China’s second house of its financial system and currency. With transiting Neptune moving through 16°-20° Pisces while opposing progressed Saturn 19° Virgo in the eighth house of foreign banks and interest rates during 2019 and 2020, China’s currency and financial system may be in a weakened condition as a result of what foreign banks and investors do. Furthermore, the Saturn-Pluto conjunction in China’s twelfth house echoes what was implied by the Fed’s chart, that this configuration will cause trouble for China.

As for how Uranus in Taurus affects China, Uranus is squaring China’s natal Ascendant and Moon, and progressed Venus and Jupiter 2°-3° Aquarius. Thus Venus, the natural ruler of the second house of banks and currencies, is conjunct Jupiter, China’s chart ruler of its second house. This conjunction was exact in April 2017 and has been within 3° orb since 2012. A very similar configuration occurred for Indonesia’s chart prior to the 1997 Asian currency crisis, and indicated that although Indonesia’s economic situation looked great on paper, it was really anything but.

Through 1988 to 1997 Indonesia’s situation seemed very good at first glance, which was due to progressed Jupiter conjunct natal Venus 15°–16° Aquarius in the ninth house, and progressed Venus conjunct natal Jupiter 5°–6° Aquarius in the eighth house. The country had amassed foreign exchange reserves of over $20 billion and had a healthy banking system, as shown by Venus/Jupiter in the eighth house; and it was running a trade surplus over $900 million, as shown by Venus/Jupiter in the ninth house.

But these conjunctions also show Indonesia’s weakness at that time: Both the public and private sectors had a lot of dollar-denominated debt, and these sectors were intertwined in the activities of Indonesia’s crony capitalism (Taurus/Venus rules the twelfth house; Jupiter is natural ruler of the twelfth). This was a favorable arrangement during the 1990’s because of the favorable exchange rate with the US dollar. But when the currency crisis hit, companies were unable to service their dollar-denominated debt because of the plunge in the rupiah’s value.

The same applies to China: an overload of debt in their domestic market, involving SOE’s, property development, and shadow banking will lead to another financial crisis that could have global ramifications. Note that Taurus/Venus rules China’s fourth house of real estate, and Sagittarius/Jupiter rules China’s eleventh house of SOE’s. Uranus in Taurus squaring China’s progressed Venus and Jupiter at the same time that transiting Neptune opposes progressed Saturn in the eighth house will likely result in a severe currency devaluation that will affect China’s companies from servicing their debt.  

Transiting Uranus in Taurus will square the Fed’s natal Uranus at 5° Aquarius in 2019. In August 1935 when this aspect previously occurred, the Banking Act of 1935 was passed. This legislation gave more power to the Fed, as it restructured the Fed, ensured the Fed’s independence of political concerns, and changed the way that failing banks were bailed out. Note that Aquarius/Uranus rules the Fed’s eighth house of death (or failure), regeneration, interest rates, foreign exchange and the resources of other entities, and natal Uranus is on the cusp of the eighth house.

Prior to the Banking Act, shareholders in banks (and this would include officers of those banks) were held accountable for the bank’s losses. This was double liability, in which these shareholders not only lost money on the shares they held, but they were also responsible for paying $100 per share if the bank failed. This was meant as an incentive to keep reckless practices to a minimum. But it had the side effect of discouraging investment in banks during the Great Depression, when the system needed reinvestment to recover.

The Banking Act did away with double liability; if a bank failed, shareholders were no longer liable for the $100 per share fee and the FDIC, which was formalized into permanent form by the Act, picked up the tab for the bailout – which basically meant the taxpayers paid the tab. Thus transiting Uranus in Taurus, through its interaction with the Fed’s eighth house, changed the way that losses within the system were managed.

Prior to the Act, district banks could pursue their own independent policies. The Act shifted power from the regional reserve banks to the Board based in Washington, DC by restructuring the Federal Open Market Committee (FOMC) to coordinate the needs of district banks into a binding, comprehensive policy that all banks were expected to follow.  

That the Federal Reserve Board’s power would be increased by the Act is shown by the progressed Sun conjunct natal Jupiter in Capricorn, in trine with transiting Venus which had just gone retrograde. Saturn 7° Pisces in the ninth house opposing Mercury 4° Virgo in the third house of regional branches indicates the nature of the Fed’s new power. Saturn is the ruler of the progressed Sun conjunct natal Jupiter in Capricorn, so more power is concentrated in a central body.

But the initial version of the Banking Act of 1935 contained provisions to change how board members were appointed and their term limits; essentially, the proposed changes would have allowed the president to replace a majority of Federal Reserve Board members with new appointees at any time and for any reason. This would have allowed the president to control the Fed’s actions, including open market operations, and thus to directly dictate interest rates, exchange rates and acceptable rates of inflation. The initial version also proposed that the FOMC should consist of the Fed’s Governor, the secretary of the Treasury, and the comptroller of the currency.

There was fierce opposition to this initial version, especially regarding the provisions that could have increased political influence over the Fed. The Senate Committee on Banking and Currency held hearings on the these matters, and added amendments that nullified the provisions that would have allowed political meddling in the actions of the Fed, as well as removing the secretary of the Treasury and the comptroller from the Board of Governors, thus increasing the Fed’s independence from political pressure. (Read more on the history of the Banking Act of 1935 here: Federal Reserve History )

This consolidation of power over regional reserve banks while the Fed’s independence from political pressure was assured is shown by transiting Neptune 13°36' Virgo in 1935, forming a T-square with the natal Mercury-Saturn opposition – Mercury 13° Sagittarius, Saturn 13° Gemini. Neptune is in the Fed’s third house of regional groups. The progressed Venus-Mercury-Ceres conjunction in the sixth house, which is ruled by Sagittarius/Jupiter, indicates that the regional banks would now be required to follow a national policy, rather than function independently as they had before (Mercury = regional; Venus = banks; Ceres = banking transactions and policies).

It’s not surprising that the thorny issue of the Fed’s independence from politics is raising its head again at this time, for transiting Neptune is currently (December 2018) forming a T-square with the natal  Mercury-Saturn configuration again, except Neptune is now at 13° Pisces in the ninth house. This time, Neptune is aligning with the progressed Nodes (conjunct the North Node 13° Pisces) and soon the progressed Moon will oppose them.

Transiting Neptune forms this T-square with natal Mercury and Saturn twice: first from February 7 to March 6, 2018, and again while it is retrograde and turning direct, from October 22 to December 26, 2018. (For both of these periods, the configuration is within 1° of exactness, but its influence continues in 2019.) Under the first pass, Jerome Powell was sworn in as Chairman of the Federal Reserve Board (his term began on February 5, and there was a ceremonial swearing-in on February 13), so his tenure as Chairman began under this configuration. This issue of the Fed’s independence of political ideology and pressure will dominate his term as Chairman, and it’s not surprising that he has come under attack and been pressured by political motivations during the second pass of this configuration.

On December 7, 2018, transiting Mars was conjunct transiting Neptune at 13° Pisces, conjunct the Fed’s progressed  North Node. Transiting Mercury had just gone direct at 27° Scorpio, in trine to transiting Chiron in Pisces, with Chiron conjunct Jerome Powell’s natal Mars. In late December, transiting Mars is moving to conjunct transiting Chiron and Powell’s natal Mars 28° Pisces: although he’s in a world of hurt, he will not cave to political pressure. In fact, he may ask the courts to intervene to enforce the Fed’s independence.

What might unfold under this Neptune configuration in 2019?

With transiting Neptune in the Fed’s ninth house, the courts may be asked to intervene to enforce the Fed’s independence. Neptune sextiles transiting Saturn on January 31, 2019, giving an opportunity to use the court system and existing laws to preserve the status quo in an amiable way. One month later, the progressed Moon is exactly conjunct the progressed South Node in Virgo, activating the T-square of transiting Neptune with natal Mercury and Saturn. With the Fed’s progressed Sun 17° Aries in the tenth house of power and status, and with transiting Uranus now in direct motion and moving to square the Fed’s natal Uranus, the separation of Federal Reserve policy from politics will probably be preserved. However, with transiting Saturn passing over the Fed’s Descendant in 2019, criticism from the executive branch of the US government will be scathing, yet this criticism could perhaps be the catalyst for far-reaching legislation to preserve the Fed’s independence.

This time the Fed’s power may increase in relation to the policies of foreign banks, whereas in 1935, its power over domestic banks increased. In 1935, transiting Pluto in Cancer was in the Fed’s first house of its basic composition and actions; in 2019, transiting Pluto in Capricorn is in the Fed’s seventh house of interactions with significant “partners.”

Transiting Neptune 18°43' Pisces turns retrograde the same day as transiting Uranus squares the Fed’s natal Uranus, which just happens to be the day of the summer solstice, June 21, 2019. Neptune is almost exactly conjunct the Fed’s natal North Node in the ninth house, and it opposes the progressed Moon 17° Virgo; with both Neptune and Uranus interacting so closely with natal points of the Fed’s chart while Mars and Mercury pass over the Ascendant, a massive shift is indicated between June 10-24, 2019.

These combined influences indicate there could be a change to the US banking system that impacts foreign banks and currencies; the Fed’s action might be meant to weaken the influence of foreign banks’ policies by raising US interest rates. This may mean an upset in the value of the US dollar, but it is temporary. It seems this action is designed to pull USD reserves out of foreign countries.

The approaching Saturn-Pluto conjunction indicates limiting circumstances for the Fed with regard to adjusting interest rates: they must balance the need to keep the US economy going vs. the need to address global concerns such as foreign exchange rates, the position of the US dollar, and protecting emerging economies yet possibly wanting to obstruct those foreign economies which the US sees as a threat.

From May 19 to September 30, 2019, transiting Saturn and the South Node are closely conjunct and pass over the Fed’s Descendant together. The last two times when Saturn passed over the Fed’s Descendant were December 1960 to mid-January 1961, and again throughout most of 1990. These periods were near the end of recessions or extreme lows in US interest rates, and rates were beginning to rise. The 2019 time frame could again see the Fed raising interest rates in earnest.

A sudden rise in US interest rates would really affect China. The effect of transiting Uranus on China’s SOE and property development debt has already been discussed. But at the same time, transiting Neptune 18° Pisces going retrograde on June 21, 2019 in China’s second house of its financial system and currency, will oppose China’s progressed Saturn 19° Virgo in the eighth house of interest rates. This opposition forms a T-square with transiting Jupiter conjunct the progressed Sun 18° Sagittarius. Thus the co-rulers of China’s second house are in square formation, forming a very tight T-square with progressed Saturn.

A rise in US interest rates would probably force China’s central bank to raise its rates also, in order to support the yuan’s peg. But doing so would squeeze China’s SOE’s servicing of their debts. China may have to resort to using its foreign currency reserves to prop up the yuan. Either way, China could get squeezed severely, beginning in this time frame of June 10-24, 2019.

Capital flight from China could accelerate in mid-September 2019. With transiting Mars 28° Virgo in China’s eighth house squaring progressed Mercury 28° Sagittarius (ruler of China’s eighth) in the time band when the transiting Jupiter-Neptune square forms a T-square with China’s progressed Saturn, the possibility of a major default by a Chinese SOE or failure of a Chinese bank is more pronounced in early October, especially on October 2. China’s banks, financial system and currency come under extreme pressure as the progressed Moon in Leo is moving to exactly conjunct natal Mars and Pluto, natural co-rulers of the eighth house of debt.

From October 30 through November 27, there is increased pressure on the yuan, due to concerns over China’s debt levels. Extremely volatile conditions with respect to China’s property market and its currency could develop in November-December 2019. This will likely affect the yuan’s exchange rate and, by extension, global financial markets. The Chinese government and Communist Party will have a very hard time containing the fallout of these events.

For China, Mercury is the ruler of the eighth house. Transiting Jupiter, along with Ceres, Venus and the Sun pass over China’s progressed Mercury 28° Sagittarius in November 2019. As they do so, Venus and Jupiter are exactly conjunct progressed Mercury on November 24, 2019.

On the same day, transiting Mars and the Moon 3° Scorpio oppose transiting Uranus 3°33' Taurus and they form a T-square with progressed Venus and Jupiter, indicating the exposure of the depth of China’s debt problems.

The Mars-Uranus opposition acts as the trigger, but so does the progressed Moon, which is now exactly conjunct natal Mars. This would seem to be the day when global markets decide that the amount of China’s corporate debt and its property valuations are excessive, and investors run for the hills. With the aspects from Uranus, a decline in China’s stock market and the value of the yuan could lead to a rout in global markets.

What’s happening with the Fed’s chart in late 2019?

In October, transiting Jupiter and Ceres are moving closely together and conjoin the Fed’s natal Venus 19° Sagittarius, as Venus and the Sun move into Scorpio and oppose the Fed’s progressed Venus 1° Taurus. As Venus and Taurus are the natural rulers of banking and currencies, it looks as if the US dollar is gaining in value.

The supremacy of the US dollar is uncontested at this time, as the progressed Sun 18° Aries – chart ruler of the second house, which has Leo on the cusp – is almost exactly square the Ascendant/Descendant axis.

This interpretation fits with the capital flight shown by China’s chart. As transiting Venus and Jupiter move to conjoin at 28° Sagittarius in late November, they conjoin the Fed’s natal Sun and oppose its natal Pluto, indicating an extreme valuation of the US dollar.

November 24 could see a sudden change in foreign exchange values, as the transiting Mars-Uranus opposition aligns with the Fed’s progressed Venus. That the Moon and Mars are conjunct this day underscores the Moon-Mars mutual reception in the Fed’s chart: Mars 19° Cancer is in the sign ruled by the Moon, and the Moon 14° Scorpio is in a sign ruled by Mars.

The Fed must take quick action, and it seems to be a reaction to events involving foreign banks and currencies, due to the influence of Uranus, the ruler of the Fed’s eighth house. However, with the Fed’s progressed Sun squaring the Ascendant (this also ties together the Moon and Mars, as the progressed Sun is in Aries, ruled by Mars, and the Ascendant is in Cancer, ruled by the Moon), the Fed’s reaction is taken to protect its status (and that of the US dollar and economy) as the global financial leader.

However, it may be a struggle to contain events as things move quickly. It helps the US that transiting Jupiter moves into Capricorn in early December 2019 and conjoins the Fed’s natal Sun while it also trines the progressed Venus-transiting Uranus conjunction, tying together the US financial system, interest rates and foreign exchange rates in a favorable way.

Just as added confirmation of this late 2019 time period as one of turmoil in financial markets, and especially exchange rates, the US Sibly chart is aspected by the Mars-Uranus opposition also, and its progressed Venus has just moved into Taurus, very near the position of the Fed’s progressed Venus. This involves the fifth house of speculation and the stock market.

Also, transiting Saturn is conjoining the Sibly chart’s progressed Moon 17° Capricorn in the second house of the currency. Transiting Chiron conjuncts progressed Ceres in Aries, and transiting Ceres opposes natal Venus and Jupiter, more evidence of exchange rates as the focus of events.

Several astrological configurations that were present in past financial upheavals – Latin American defaults in the 1980’s, the collapse of the British pound in 1992, and the SE Asian currency crisis of 1997-98 – cluster in the period from December 11, 2019 to January 5, 2020 for China’s chart. Due to severe pressure on China’s financial system, the yuan could be forcibly devalued at least once in this time band, especially on January 2 when there are eclipse triggers occurring for China’s chart.

Without exploring the research into those past financial upheavals (you can read my analysis of past cases and my detailed forecast for 2019 through 2022 in my book The Dragon’s Debt), I will outline what three of those configurations are (though there are more):  

  • Transiting Neptune opposing natal or progressed Saturn with a link to the eighth house;

  • A stellium in a sign in which Saturn has essential dignity (i.e., Capricorn, Aquarius, or Libra);

  • The progressed Moon of an eclipse triggering the eclipse.

All three of these conditions are satisfied for China’s chart in December 2019 to mid-January 2020, and again in late March 2020.

From March 2019 to March 2021, transiting Neptune 16°–20° Pisces opposes China’s progressed Saturn 19° Virgo. This long-term aspect is actually the most important for identifying which countries are most likely to experience a financial crisis, especially one related to debt and currency values, and in which time period such a crisis could occur. Transiting Neptune in harsh aspect with natal or progressed Saturn was present at the times of the devaluations of the currencies of Thailand, Indonesia, Russia, Mexico, and the UK.

What is unfortunate for China about this aspect is two-fold: Neptune is co-ruler of China’s second house of its financial system and currency; and the aspect becomes close to exact during the time when other harsh configurations form. Furthermore, progressed Saturn resides in China’s eighth house, indicating that the consequences of past behavior with regard to debt buildup and depletion of foreign reserves can no longer be delayed—in other words, the can hits the brick wall at the end of the road.

Transiting Uranus turns direct on January 10, 2020, the same day as the lunar eclipse; this acts as a trigger to the Fed’s chart, for Uranus is conjunct the Fed’s progressed Venus. Whatever action the Fed took in late November may be dramatically reversed. Uranus is doubly important for the Fed’s eighth house of foreign financial institutions, for Aquarius rules the eighth and natal Uranus is in Aquarius near the cusp of the eighth.

The exposure of US banks to foreign financial institutions is important now, mainly their secondary exposure to the Chinese market. US banks have less exposure than European and Japanese financial institutions do to China, but the US has plenty of exposure to those European and Japanese institutions. This probably plays out via currency exchange rates – Venus – and interest rates – Mars and Uranus. Note that the Fed’s natal Mars at 19°32' Cancer is triggered by the lunar eclipse.

March 20-29, 2020 is another critical time period for a financial upset centered on China. On March 20, 2020, transiting Mars conjoins transiting Jupiter and Pluto 24° Capricorn, so they are translating the stellium that formed in January and they are conjunct China’s natal Jupiter, ruler of the second house.

There could be a sharp change in the value of the yuan, perhaps more than expected, and a reversal in China’s stock market. This time marks a further shift in the legal status of foreign capital and/or property investment. Property use rights and regulations surrounding them that were introduced in the past may be voided.

In the Sibly chart, the Mars-Saturn conjunction 0° Aquarius on March 31, 2020 is in the second house of the currency (along with the progressed Moon 21° Capricorn) and forms a T-square with progressed Venus 0° Taurus opposing progressed Saturn 2° Scorpio, Saturn being the chart ruler of the second house and Venus the natural ruler of the second. The transiting Nodes align with this chart’s natal Venus-Jupiter conjunction 3° Cancer while squaring progressed Ceres 2° Aries, the asteroid associated with fluctuations in currency exchange rates. All of these aspects emphasize the US dollar, and indicate strength.

Thus, from June 2019 to March 2020, the Fed’s actions in regard to US interest rates could weaken China’s position. This forecast is not implying a “conspiracy” to do so, just that the Fed, as the de facto regulator of global interest rates, uses their power to ensure the supremacy of the US dollar as the world’s reserve currency, which gives the US many advantages.

In summary, transiting outer planet aspects in 2019 and 2020 favor the Fed and weaken China. The Fed is able to use the global situation to enhance the US dollar and financial system.

One final note about the status of the Federal Reserve over the coming years:

On February 20, 2026, transiting Saturn will conjunct transiting Neptune at 0°45' Aries, conjunct the Fed’s Midheaven 0°23' Aries. Prior to this, the Fed will have weathered some storms due to its progressed Moon passing through Sagittarius and activating the natal Mercury–Saturn opposition. It looks as if the Fed is very strongly established in 2026, due to progressed Mars 22°09’ Cancer conjunct the progressed Midheaven 23°08' Cancer in the Fed’s first house; as Aries/Mars rules the tenth house of status and power, the Fed looks to have a lot of it. In this same early 2026 time period, transiting Mars will pass through Aquarius and the Fed’s eighth house – trials and challenges are successfully concluded. This Saturn-Neptune conjunction forms a quintile (72° angle) to the Fed’s natal  Saturn 13°20' Gemini, so while a phase of dominance is reaching its peak, this quintile hints that this dominance will continue.