There has been too much blockbuster news in the property market recently.
During the May Day holiday, several large cities issued orders to lift purchase restrictions, but they were all relatively half-hidden.
But today, the approach of Hangzhou, the core city of the Yangtze River Delta, and Xi'an, the core city of the northwest, is resounding.
There is not so much nonsense, and the purchase restriction is lifted directly in the whole city, unlike a few days ago, which had to be delineated. Where the house is in a good location and where the house is not bought, do the locals not know? …
Of course, you say that the introduction of the new policy will have a great effect... It can only be said that there will definitely be stimulus in the short term.
All kinds of logic have long been said to be rotten, and I don't think there is much need to talk about the big truth.
It's nothing more than two points.
First of all, the common people have no money to buy.
Secondly, even if there is money, are the people willing to buy it? Why should you buy it?
What are you most afraid of now?
If you don't let go, you can still hold it, pretending that I won't let you buy it.
I'm afraid that more and more cities will follow up after the full liberalization, and they will fall...
Fake inflation, real deflation
According to the data released by the central bank, as of the end of March 2024, the total amount of M2 in the country reached 304.8 trillion RMB.
300 trillion, is it much?
Many, too much.
Since 1955, it took 57 years for China's M2 to exceed 100 trillion, another 7 years to exceed 200 trillion, and then 300 trillion in just 4 years.
This speed is a bit scary.
Compared with other major economies, China's M2 even exceeds that of the United States + Eurozone + Japan combined.
If you just look at the numbers on paper, we have printed so much money, and prices, prices are bound to skyrocket – and this was true before 2021.
But in the past two years, things have suddenly changed, and both car prices and house prices have plummeted.
Why?
First of all, there is a big misunderstanding in the fact that the statistical caliber of each country is different.
For example, M2 in the United States does not include deposits of more than $100,000.
This moisture is too much.
Whether in China, the United States, or even in any country in the world, the savings of the rich are the main force and the lion's share.
According to data from China Merchants Bank, the total amount of personal deposits in the country is 143.6 trillion yuan, of which 116 trillion yuan is contributed by the first 28 million people, and the per capita deposit is more than 4 million.
All the rest add up to 27 trillion, less than 20,000 yuan per capita.
According to the statistics of the United States, the vast majority of our deposits are not in M2.
Why does it seem that we have printed so much money, and inflation is not alive and well, but deflationary? This is an important reason.
M0 is cash in circulation, M1 is narrow money = M0 + corporate demand deposits, M2 is broad money = M1 + corporate time deposits + personal deposits + securities margin, etc.
To put it simply, M2 represents how much money you have, and M1 represents how much money you can spend.
The latter is the purchasing power of the Eight Classics.
However, in 2023, the national M2 growth rate will be 9.7%, and the M1 growth rate will only be 1.3%. The total amount of money is so much, but the amount of money that can be spent is only so much.
Almost all the money was saved.
In 2023, M2 will increase by 25.84 trillion, and bank deposits will account for 25.74 trillion.
Among them, deposits of non-bank financial institutions increased by 1.64 trillion yuan, deposits of non-financial enterprises increased by 4.22 trillion yuan, financial deposits increased by 792.4 billion yuan, and household deposits increased by 16.67 trillion yuan.
Individuals, businesses, and organizations are desperately trying to save money.
Residents save money because they dare not and are unwilling to spend; Enterprises save money because they do not plan to increase investment and update equipment.
The chain of stimulating production→ expanding employment→ raising incomes→ boosting consumption, has been broken from the source.
Why?
Expectations are one thing, but more importantly, the burden is too great.
The biggest burden is debt, whether it is real estate companies, local ZFs and even residents, they all owe huge debts.
The first two can borrow money, but they finally borrow some money, which is only enough to pay off the interest on the old account.
Residents could not borrow at all, resulting in a large amount of money in the hands of the bank could not be borrowed, so they had to repay it to the central bank.
Money is transferred in this system, and if it can't be circulated, M1 won't be able to get up.
In the past two years, the state has introduced various policies to stimulate the economy, with the aim of accelerating the transformation of M2 into M1.
But it is clear that the effect is not good, and everyone is still not confident.
As a result, while our M2 has risen rapidly, prices have fallen instead of rising.
It's a very difficult situation.
Before, you said that the house price was too high and it fell and you bought it.
Well, now that the house price has gone down, no one is buying it, saying that it has not fallen in place, and desperately stuffing the money into the bank.
Even if the price is lower, as long as there is money circulating into the market and opening up the economic cycle, it is also a good thing.
I believe in your wickedness!
As a result, it is now a stagnant pool and everyone is uncomfortable.
Since he loves to save money so much, he has no choice but to make a big move.
The more interest rates are cut, the more money is saved
You've probably heard the following story:
Everyone in the town is in debt and lives on credit.
One hot and lazy day, a rich traveler came from out of town, he walked into the hotel, took out a thousand yuan bill and put it on the counter, saying that he wanted to look at the room first and pick a suitable room for the night.
As soon as the man went upstairs, the shopkeeper grabbed the money and ran to the butcher's shop next door to pay for the meat he owed.
The meat seller took the money and crossed the road to pay off the money owed to the pig farmers.
The pig farmer took the money and rushed to pay the feed money he owed.
The fodder was in a hurry to pay off his prostitutes.
The prostitute took the money and ran to the hotel to pay the $1,000 she owed.
The innkeeper hurriedly put the 1,000 yuan on the counter so that the travelers would not be suspicious when they went downstairs.
At this time, the outsider came downstairs, said that none of them were satisfied, and that he would not stay, and then put the money in his pocket and left.
No one produced anything on this day, and no one got anything, but the town's debts were paid off, and everyone was happy.
This 1,000-yuan bill, which only changed hands 5 times, corresponds to the value of 5,000 yuan.
That's why the state has always encouraged everyone to consume.
In the same way, if you spend 1,000 yuan less, you will lose much more GDP than that.
The more people save, the tighter the market becomes, and the harder it is for everyone to make money.
It is still a trivial matter that capital cannot cut leeks, and the operating efficiency of the entire society will decline as a result.
From an objective and grand point of view, money is only called money and meaningful when it is circulated.
Looking back on the past few years, the national commercial bank deposit interest rate was cut 1 time in 2021, 2 times in 2022, and 3 times in 2023.
Interest rates have been cut six times in three years, resulting in a lot of fixed deposit products with interest rates of more than 3% in the past, but now almost all of them.
And this trend continues this year.
Recently, small and medium-sized banks in Yunnan, Shanxi, Shaanxi, Henan and other provinces have issued intensive announcements, announcing a reduction in time deposit interest rates by 5-45 basis points.
In addition, on April 10, due to the strong willingness of depositors to make fixed deposits, China Merchants Bank no longer issued new three-year and five-year large-value certificates of deposit quotas.
Subsequently, since May 7, Minsheng Bank has also stopped selling large-value certificate of deposit products with a maturity of six months or more across the country.
More banks are bound to follow in the coming months.
This move is equivalent to forcing depositors to deposit products with lower interest rates and shorter maturities, which is tantamount to a disguised interest rate cut.
All in all, the benefits of saving money are getting lower and lower.
But even so, it is still difficult to stop the general trend.
No matter how the bank operates, the money still keeps pouring in like snowflakes, and the money that comes out of the water is always circling in the banking system.
No matter what you say or what you say, the common people just have to hold their money bags tightly.
At the very least, they will no longer be willing to go into debt to spend big.
Looking at it the other way around, it is precisely because there are fewer and fewer people who buy houses, cars, and consume famous brands, which leads to many people having more living money in their hands.
Without a mortgage or car loan, you will suddenly find that you can live quite comfortably.
That's what we've talked about before, and it's a lot like a combination of the "lipstick effect" and the "Disney effect": people will be more likely to please and numb themselves with relatively cheap consumption behaviors.
The frequency of small consumption will increase, and the frequency of large consumption will decrease.
At the end of the day, it's still the house that's not cheap enough.
If you look at the financial attributes of the house, its asset value has certainly fallen a lot. But as a consumer product, housing prices are still too expensive.
The logic of consumer goods is that the more the price falls, the more people buy, which is spending money because it is affordable! The more it rises, the less people will buy it.
And the logic of assets is that the price rises more and more people buy it, which is to make money because there is an increase in value! On the contrary, the more it falls, the more no one buys it.
Since it's an asset and not a consumer good, don't always tie the house to consumption.
Do you need money to eat? Do I need money to see a doctor? Do children need money to study?
Ordinary people must have solved these basic survival problems before they think about investment.
And this is also the contradiction between the micro and the macro.
End
When money flows out, it's good for society as a whole.
But how many of these benefits can fall on all sentient beings? Don't blame everyone for not being highly motivated, people must think about their own interests first.
Residents are crazy about saving money, banks are desperately restricting you from depositing money, and both sides have their own interests.
Real estate is the greatest product of a bank.
Banks are social financial institutions, and the main source of profits is interest rate differentials, which are absorbed at low interest rates and lent at high interest rates.
Every loan that a bank gives you is creating money, creating money with your credit.
You borrow money from the bank, the bank charges a fee, you get the cash flow to keep for other purposes, and finally use the proceeds to cover the expenses incurred by the loan.
Both sides rejoiced.
But there is a tipping point in this situation, which is that there is a cap on the number of lenders.
Once the tipping point is reached, the problem arises: money is kept coming in, but it can't be borrowed, and more and more are even repaid early.
Now, now not only do you not let the bank make money, but you are also trying to find all kinds of large certificates of deposit to get the bank wool.
It's just the opposite!
But we don't feel that way, because we live for ourselves.
Where is the contradiction? No one is willing to take risks, let alone make profits.
Would you like to?
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Author | Wanlian Mountain
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