Rely on fiscal policy to stimulate the economy, particularly in public investment mainly rely on stimulus, will expand the Government's share of the allocation of resources, reduced the share of the market allocation of resources, it and marketing processes is incompatible. Although in response to the crisis had to strengthen the Government intervention, but are in a market-oriented reform process in the economy, the Government's strong intervention time easily lead system reverted. While monetary and credit policies do not exist in this side-effect, at the same time you can play the market allocation of resources and the basic role, more conducive to the formation of endogenous economic recovery.
Since the gold and silver and other "commodity money" from the historical stage, inflation as a kind of public risk to people psychologically cast shadows always. Inflation risk is like a mystery, is always difficult to see their true colors. The founders of modern currency · Milton Friedman (Milton Friedman on inflation risks of prescription, just tap the "close currency could halt in bathroom uncontainable Montreal inflation", he advocated by a single rule, "monetary policy is difficult to implement in practice. Facing the international financial crisis, the world has to loosen monetary taps on the water in a big way, the performance of the United States. In November 2008 has launched a two-year 4 trillion economic stimulus plan, supported by appropriate loose monetary policy and credit policy. For this reason, current views on inflation expectations have been disseminated to the community, and on the current moderate easing of monetary policy is concerned, some believe that the current monetary policy has a dilemma.
At this point, how to judge the inflation risk, determine the current macro-economic policies, in particular monetary policy and credit policy trends.
Currency not only represents a "quantity" and also have different "State"
Money invested, will result in inflation. Generally, this understanding is correct, but on policy development or adjustment has no meaning. Because the "more" and the "least" is always relative, or past experience data than either of the plans or data than, than with the theory, in a variety of different circumstances, just put the number of currencies, not an absolute standard. In the first half of this year, the scale of monetary credit release have been described as the "day of" actually is and past historical data and schedule data to compare.
The classic definition of inflation is a monetary amount that exceeds the actual needs in the circulation of currency amounts. But the question is "what exactly is the actual requirement", is still unable to measure accurately, and can only be based on the status of the General level of prices to General estimation. In the current fight against the international financial crisis situation, how much money to put both guaranteed growth without triggering inflation? no answer. From a realistic point of view, monetary and credit growth, but prices are still a negative growth. At the end of July 2009, M2 balance 57.3 billion, an increase of 28.42% increase compared to the end of 2008 10.6 percentage points; M1 balance 19.59 billion, an increase of 26.37%. Judging from the credit and financial institutions was RMB loan 33.9% increase compared to the end of 2008, 15.17 percentage points. By contrast, the price has been low, the July CPI and PPI are negative, are-1.8% and-8.2%. This set of data shows that rapid monetary credit put on prices almost did not have any effect. According to the quantity theory of money, in other conditions unchanged (monetary circulation speed and output unchanged), the money supply expands accordingly reflected a rise in the general price level. Since last September, began to relax base currency, to July this year already have 10 months, just think that is because the time to (time delay) is difficult to interpret. This should reflect the traditional theory and understanding of the existence of bias, not hold laohuangli look today.
In the popular modern monetary theory, the currency in any of the conditions are "homogeneity". Considered the quantity theory of money, money supply growth, in the long term, will lead to inflation, the modern monetarism welcom Friedman also considers only on short-term nominal income and output, to his experience, money supply growth delay average a year and a half years, will lead to inflation. The current view on inflation is actually is from this theory. From a practical point of view, the currency of the "homogeneous" assumption is difficult to set up, the money actually has a different "State", which makes the different period of currency supply impact is different. This is the point from which the currency structure reflects currency demand can be seen. Money supply eventually through money demand, and demand for money is not an independent, stable, with the changing economic environment, it will change the size and structure, to form the different status of the "currency." In other words, a different period of currency flows and monetary stock is not a "homogeneous", but the statistics cover the difference.
Make an analogy: money like water, but in different conditions will produce different forms: just take the temperature of this condition, the more than 100 ° c, water will become gaseous volatile from the bottom up; below zero degrees Celsius, the water becomes ice does not flow; only between 0-100 ° c, water will remain liquid, from above low flow characteristics. Currency and this is similar. In a crisis State, the economy turned cold, put out a substantial portion of the currency will be "frozen", "cash is King" concept is exacerbating this State, the increase in precipitation by currency, liquidity from widespread variation is nervous. My early 2008 liquidity still under discussion, how to curb inflation, to the fourth quarter of 2008 is a dramatic contrast State, many mobility suddenly disappeared, by tight monetary policy becomes loose. If only the number from the "currency", the amount of currency in circulation and does not decrease, on the contrary, relative to the economic
Landslide, the actual output reduced demand for the currency, the currency should be the "excess", follow this logic, adjust monetary policy by the end of 2008 is superfluous. However, the reality does not follow the logic of the quantity theory of money, which is based on the status of the "currency" of the monetary policy.
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