Recently released financial data shows that at the end of March 2024, the balance of broad money (M2) exceeded 300 trillion yuan, reaching 304.8 trillion yuan. In this regard, Zou Lan, director of the Monetary Policy Department of the People's Bank of China, said at a press conference in Beijing on the 18th that the current huge monetary aggregate growth may slow down, and there will be disturbances in the data, so it is not appropriate to simply compare the same period. On the whole, the current stock of money is indeed not low.
The ancient Greek physicist Archimedes famously said, "Give me a fulcrum, and I can pry up the earth." "Archimedes is talking about the principle of leverage, which is later known as the law of leverage. The principle of leverage applies not only to physics, but also to many other areas. In particular, in the fields of economics, finance, and sociology, it is difficult to use the principle of leverage to analyze and solve problems, such as currency issuance.
As we all know, finance is the lifeblood of the economy, and the more developed finance is, the greater the impact on the economy. In turn, the more developed the economy, the higher the financial requirements. The relationship between finance and the economy, to a certain extent, is also the principle of leverage, and finance plays a very important role in leverage. Moderate and effective monetary supply will have a positive and positive effect on the economy, while excessive monetary supply will have a negative and negative impact on the economy.
In specific work, how can we rationally and objectively analyze the role of monetary investment on the economy, not only to see the amount of monetary investment, but also to see the effect of monetary investment, especially when the economy is in an unstable state, it is necessary to calmly and rationally analyze the role and efficiency of monetary policy, neither oversimplification nor over-complication, so as to correctly grasp the strength and rhythm of monetary policy.
As far as the current monetary supply is concerned, when the economic growth rate is not very fast and the economic scale has not reached a very high level, the balance of broad money exceeds 300 trillion yuan, which indeed needs to be analyzed more rationally, objectively and rationally. First of all, don't do a simple year-on-time comparison. If we make a simple comparison of the same period, the current amount of money is indeed too much, and it has not matched the scale of the economy and the rate of economic growth. However, what needs to be rationally faced is that this is a very big change in the economic environment, the lag effect of the global financial crisis has not left for a long time, the negative effect of the impact of the epidemic on economic and social development is still affecting the confidence of enterprises and residents, the trade protection, technical barriers, economic sanctions against China and Chinese enterprises are becoming increasingly serious, and market competition is becoming increasingly intensified. The contradictions faced by enterprises in their operations are very acute, and if we only use fiscal policy to maintain economic stability, not to mention that the financial sector does not have such capabilities and conditions, even if it does, it will not play an adequate role in stabilizing the economy. Therefore, more support and protection from monetary policy are needed. Under such circumstances, it is necessary to maintain a relatively high level of currency issuance, increase the supply of funds, and ensure investment, so as to ensure economic stability, stable employment, and stable income levels of residents. It is easier to understand if more money is issued. This is also in line with the principles of economics and the essence of finance, and in line with the laws of economic development and market rules.
Second, not making a simple comparison of the same period does not mean that a simple analysis can be done. Simply making comparisons over the same period can easily lead to misjudgments in terms of excessive monetary supply and monetary policy mistakes. However, it does not mean that all the currencies put have played a role, and they are all successful, orderly and effective delivery. It is precisely that there are certain problems in the evaluation and evaluation of the effect of currency delivery, and there is no scientific, objective and rational analysis of the use of currency that has been put in. In more cases, it is an overly simplistic qualitative analysis, even in the face of such a serious debt risk of the development enterprise, the evaluation of the relevant parties is still far greater than the problem, and there is no realization that there is a big problem in the investment of funds in the development enterprise, and the risk of the development enterprise is directly related to the bank's capital investment. If banks had been more rational in investing money in development companies, such serious problems would not have arisen. Not only development enterprises, but also government financing platforms, large state-owned enterprises, overcapacity enterprises, and other non-entity enterprises have also received a lot of credit support from banks. Conversely, the real economy, especially manufacturing firms, has been marginalized by banks. At this time, the central bank still believes that the monetary scale of 300 trillion yuan is a reflection of the continuous financial support for the development of the real economy over the past years, and it is indeed a bit difficult to understand that there are problems in the process of bank funding.
In fact, emphasizing that the broad currency exceeded 300 trillion yuan, not to hold financial institutions accountable, but just to hope that the central bank can really objectively and rationally analyze the effect of money delivery, especially after such a scale of currency delivery, why the price index has been kept at a very low level, whether the currency has not produced due efficiency and effect, where the currency is deposited, whether it has been extracorporeal circulation by the bank and the idling of funds, otherwise, it does not make sense in theory, and it cannot be analyzed in practice. Therefore, the central bank needs to be calmer, analyze the problem from the large-scale expansion of the monetary scale, and put forward solutions, instead of using qualitative methods to show credit for monetary policy, thinking that there is no problem with monetary policy.