In recent years, there has been a phenomenon that has caused particular distress to everyone. In 20 months, broad money M2 has increased by more than 50 trillion, which can be said to be very amazing.
However, the strange thing is that there is so much more money in the market, not only do we not feel it at all, but in recent months, prices have fallen, house prices have fallen, and stock prices have fallen, is this phenomenon reasonable?
.01
Let's start with broad money M2
Broad money M2 is an economic concept, a term artificially invented by economists for the convenience of research.
In fact, in our ordinary life, we ordinary people will not say that the currency in our pockets is called M2, but simply call it "money".
But in economics, "money" is subdivided into many types. The daily pocket money is called M0, the pocket money + demand deposit is called M1, and the pocket money + demand deposit + time deposit is called M2.
So, a large part of the money in M2 is not cash in our hands, but deposits in the bank.
But banks are financial intermediaries, and they don't lock all these deposits in safes and let them keep them all the time, but they take them out and lend them, which creates more M2. For example, if it is 100 yuan, we ordinary people can only use it as 100 yuan, but in the hands of the bank, 100 yuan can be used as 500 yuan.
As long as the bank gives the 100 yuan to five people at the same time, then each of them has an extra 100 yuan in their account, and the bank creates 400 yuan of M2 "out of thin air" in this way.
The reason why the bank dares to bring the 100 yuan to five customers at the same time is mainly because in real life, after the vast majority of people deposit money in the bank, they will not withdraw at the same time, and the bank can play the time difference.
Of course, the creation of money by banks is also subject to supervision, and the central bank will require banks to submit a certain percentage of reserves to the central bank after receiving deposits to ensure that banks have sufficient withdrawal capacity. After these reserves are handed over to the central bank, they will be withdrawn from circulation, and M2 will be reduced accordingly.
At the same time, the central bank has the power to set interest rates and control the cost of borrowing in society. If interest rates are lowered, there will be more borrowers, and banks will do well, which will create more M2.
So, there are many ways to increase M2, and it's not just by printing money.
Data show that at the end of February, the balance of the mainland's broad money (M2) reached 299.56 trillion, but more than 20 months ago, this balance was only 235.6 trillion, which is equivalent to almost two years, an increase of more than 60 trillion, which can be said to be very amazing.
But with so much extra money, why do we feel that prices haven't risen much in recent months, house prices are falling, and stock prices are falling, and is this phenomenon reasonable?
.02
Why don't you feel it?
What about over-issued currency
As we all know, any release of water will inevitably lead to an increase in prices, and once too much money is printed, it may even trigger serious inflation.
For example, from September to December 2008, the central government cut interest rates five times in a row and cut the reserve requirement ratio four times, as well as the 4 trillion yuan of base currency released in November of that year.
As soon as these measures were implemented, the market rebounded rapidly in less than a year, and even in 2010, the market began to develop rapidly, and finally had to tighten the property market.
It stands to reason that the over-issuance of money will inevitably drive up prices, including the real estate market and the stock market.
However, now everyone's feeling is that the average price of newly built commercial housing in the country has dropped from 12,400 / square meter to 9,600 / square meter, a decrease of 22.6% from the peak;
The stock market has maintained a bouncing rate of 3,000 points for nearly two years, and has fallen below 3,000 points many times during this period; in terms of prices, since the end of last year, the prices of meat, vegetables, and fruits have fallen, and even though vegetables and fruits have begun to pick up in recent months, meat prices have remained low.
What's going on here?
Regarding the special situation that occurred this time, we can analyze it through several aspects:
1. The impact of the epidemic.
Although the epidemic has ended, this crisis has had a huge impact on the mainland's real economy, and the continuous wave of overseas interest rate hikes in the past year has led to huge pressure on domestic enterprises and a growing sense of crisis among the domestic people.
Against this backdrop, all walks of life have fallen into a situation of market surplus. In addition, the people's consumption demand has decreased sharply, and the willingness to save has increased significantly, and businesses have to take various price reduction promotions in order to destock, so the current situation has been formed, even if the currency continues to be overissued, but many goods are cheaper than before.
2. Demand is expanding.
Different from the passive release of water in the past, many of us have taken the initiative in this water release. The reason for this is also very much related to the monopoly of enterprises on the mainland by overseas countries in recent years.
If it is difficult for domestic enterprises to develop externally, they have to turn to internal development and seek a way out from within. In the past, we have been importing from developed countries such as the United States, but during this period, we can only purchase them domestically.
You have to do everything by yourself and buy it yourself, and the market that was originally the outer circulation was directly put into the inner circulation. In this case, enterprises can only expand production capacity and increase industrial investment, while the state level gives more support, so it has taken the initiative to increase currency in recent years to meet market demand.
3. The economy has entered a stage of transformation.
In recent years, the mainland has been increasing its horsepower to carry out industrial transformation, such as artificial intelligence industry, new energy industry and so on.
The rise of these industries will inevitably have a huge impact on traditional industries, and those traditional commodities have to be stocked in the form of price reductions.
For example, with the rise of new energy vehicles, traditional fuel vehicles can only achieve sales by giving more benefits in terms of price. Therefore, this also verifies one point: the rise of emerging industries will inevitably bring a wave of price reductions to traditional goods.
Therefore, a current market price is formed, and a situation with a different trend from the over-issued currency is formed.
4. Policy regulation
Regarding policy regulation, the most regulated in the past one or two years is the real estate market, as long as the currency is released in the past, the real estate market will inevitably usher in a big rise.
However, the situation in the past two years is completely different, with huge debt pressure on real estate companies, lack of market confidence, high housing prices, etc., all of which are the reasons for the continuous downward trend of the current market.
And once there is a lack of confidence in the market, even if there is a big release in this area, even if the lending rate is reduced to zero, it is difficult to guarantee a market reversal.
In short, in recent years, the over-issuance of money has failed to drive sharp inflation in the market, breaking the traditional perception of many people.
However, it is undeniable that the downturn caused by any reason cannot last forever, and the transformation and upgrading of any industry will also allow some discerning people to seek new business opportunities.
Therefore, as ordinary people, we must not only be prepared for danger in times of peace, but also not stop the pace of progress, otherwise new opportunities may be missed.
The best way is to increase your savings and skills, not to invest blindly, to look at the market rationally, and to wait for the right time, so that you can usher in a higher chance of a turnaround.
Wan Ziwen said: Every word of the article was typed out by me, and I clicked "watching" to let me know that you are also "doing your best" for life.
*Image source network*