Ordinary people are most afraid of inflation, why? Because everyone is afraid of the collapse of "monetary credit".
Ordinary people habitually believe that rising prices are inflation. But the first thing that needs to be discussed is the cause of "rising prices".
Rising prices mean rising costs of living, which will inevitably have a great impact.
According to the Bureau of Statistics, inflation in Europe and the United States is basically hovering at 8%-10%, South Korea is 5%-6%, and Japan, which has been deflationary for 10,000 years, is also moving towards 3%+, while our CPI is 2.1%, what is this level?
From the data alone, developed countries such as Europe and the United States are experiencing dizzy inflation, but a few of our countries are stable.
But if it is not inflationary, it is not necessarily "the scenery is only good".
From the physical point of view, air tickets, hotels and other service industries are rising in price.
Moreover, in the past, the currency has been overissued, coupled with the central bank releasing 28 trillion yuan this year, everyone habitually believes that inflation and currency depreciation are the established trend.
But CPI data continues to fall: so what's the problem?
First, we need to know what causes inflation.
1. Hyperinflation
Reference News Network reported on May 15 that according to EFE News Agency reported on May 12, Argentina's inflation showed no signs of slowing down, with an inflation rate of 8.4% in April and an annualized inflation rate of 108.8% in the past 12 months, and prices have climbed 13.1%. This means that prices for many consumer goods have more than doubled since 2022. With a basic living requirement of about 12,000 pesos a day, an Argentine family is not far from the future of having to carry a sack of money when going out for a meal.
Usually this has entered the realm of a serious economic crisis, a nightmare for the collapse of the monetary credit system.
2. Overheating consumption
This kind of inflation is usually because the people's spending power is rising rapidly, market demand is rising rapidly, and supply cannot keep up with the speed of consumption, resulting in rising prices.
When a person is not fat, he will also worry about the mirror: Is this going to be fat?
But when fat becomes a habit, there will be no more yelling.
But the supply is short, a lot of water is released, but inflation cannot rise? Isn't that even weirder?
There can only be one explanation for this – demand is falling, consumption is downgraded.
We don't have inflation because our aggregate demand has fallen. To put it bluntly: if you raise the price, I won't buy it!
From Double 11 in 2022, this year's 618, the disappearance of "war reports" on major platforms is very illustrative of this problem.
Consumption is sluggish→ industries are frustrated, enterprises are closed→ wages fall, unemployment and layoffs are reduced→ incomes are reduced, and consumption is sluggish, entering a whole vicious circle.
On the one hand, there are goods that cannot be sold and have to be destroyed, on the other hand, there are people who are unemployed at the age of 35 and unemployed after graduation, and on the other hand, there are 996 "roll kings".
Most of the ordinary people are salaried people or farmers, it is not easy to earn money, and it is difficult to achieve "sunny weather and rain" in the state of maintaining daily expenses.
Coupled with the impact of the epidemic, it has led to a series of economic problems today.
The economy is not money, it is the flow of money.
The development and prosperity of a society cannot be separated from production and consumption, and consumption is the purpose of production, the driving force of production, and it will also create new labor force for production.
In order to solve today's "stagnant" economic environment, the state has also implemented a series of policy programs, one of which is the "Implementation Plan for Promoting Green Consumption", which has established a mechanism of "consumption rebate points".
The emergence of this mechanism also shows a clear way for the operation of the commercial economy.
This is an innovative mechanism for consumers to become consumers, users earn points through the points mall, and then use points to consume, forming a closed loop, users save money, merchants are easier to retain users, and it is also in line with the current general trend of transformation to digital economy.
From the considerations of manufacturers' overcapacity, high inventory, market promotion, expanding sales scale, and driving economic consumption, consumption rebates are indeed effective promotional tools.
The more frequent the transaction and the less friction, the healthier the economic machine. In this way, only by selling businesses and working by the people can the normal operation of the social economy be maintained, and the market economy can enter a virtuous circle of prosperity.
But at the same time, we also need to build a sense of distress and raise our spirits, and in the end victory will belong to us.