The purchase of hard to tame inflation
Inflation is the essence of too much money in circulation.coach handbag outletHowever, manifested and cause public concern, then the price increases. This poses a problem: how to deal with what the issue price, in order to more effectively curb inflation?Clearly, the limited suppression of the price of certain commodities, although the limit can be achieved temporary purpose, but it does not mean that therefore suppress inflation. Failed, one after another, the prices of goods from a "thrust" to another commodity.
Inflation because too much money in circulation. People driven by inflation expectations, hold in hand, trying to use to purchase goods and assets to hedge against inflation losses. This includes behavioral logic as hard as iron, can not easily repealed. Government introduced the ban on the purchase of a thing, of course, you can "smooth" a matter of price. But people are still the monetary assets, the market purchasing power of money is still not allowed to purchase a property, people turned to purchase B material. You then purchase or ban the purchase of material B, C people and to purchase materials. Move to shove, the purchasing power of money in the market, "Roaming," prices one after another, a ban on the purchase of road may become a positive general price cheap designer handbagslevel rose promoter.
Can be another point of view. Given the high side of money in circulation, interest rates can not step reality, the higher the market price is not only "reflect" inflation, which itself will "release" part of the inflationary pressure. For example, people spend money to buy rice, buy a plane, or buy a car, bought a house, this part of the money to take out goods in kind, or to physical assets. Hand of rice, flour, car, house, of course you can then sell again to monetary assets and purchasing power of money, but generally not so easy, because the goods or need immediate consumption, or assets, transaction costs and then deformation of the trouble. More importantly, since the money because they do not optimistic about the store of value only joined the ranks of those who spend money, which some buyers generally prefer to hold out no longer, and would rather hold commodities and physical assets. As a result, they may hand-held mobility naturally "corpuscles" of the.
On this point, you can use my experience to illustrate a story. The 1960s, I was in Shanghai elementary school or secondary school, the way to school every day will be subject to the temptation of delicious food. It is the "three difficult years," Food and non-staple food supply is extremely tight, after the government relaxed the policy to allow "free market" open. So both sides of the street leading to the school, filled with all kinds of food stalls. What to eat there is a lot of money, than with the supply of this program many times more expensive. Unfortunately, my mother never gave pocket money, the only way she thought was a reasonable need for discretionary funding.
In this way, I need food, of course, attractive street "rigid zero." Fortunately, there are spared the home where her mother bought a large pot of Iraqi dates, locked in the coat closet, each over a period of time, sent out a few kids had fun. At the time Iraqi dates, wholesale coach handbagimported, sold for five yuan per jin.
Then read "Works of Chen Yun election", and understand that dealing with inflation in the 1960s one of the measures. Chen Yun said, "money in circulation in 1962 reached $ 13.0 billion, while the social circulation as long as 7.0 billion additional six billion yuan how to do? Is engaged in several high-priced goods, once recovered billion yuan, the market price to stabilize. "(" Select Works of Chen Yun "Volume 3, People's Publishing House, 1995, p. 377). Here, "several high-priced goods", including the year I never ate a name to remember that the Iraqi state dates.
Under the planned economy has inflation, causes, too, "made too much money, leading to inflation." More money was made because "four years since 1958 (national financial) support the carrying on income greater than the number 'is clearly a false', in fact, 'four years of deficit countries have great'. ' preliminary estimates, there may be two hundred billions of dollars, or some more. 'which, in 1961 state deficit 5.77 billion yuan. 1962, ... in fact there is a considerable deficit, namely, five billion yuan "(see" Chen Yun Biography ", Central Literature Press, 2005, p. 1300).
As a result, "Business inventories dug in recent years, prices have gone up, spent a large part of gold, silver and foreign exchange reserves in foreign trade also owe a debt, and a six-seven billion yuan multiple tickets to cover the budget deficit These are inflation performance. " "The reason is simple: on the one hand, spending more money; the other hand, agriculture, light industry production, commodity less state control, these two aspects can not balance." Permanent cure, of course, is to increase the supply of agricultural products and light industrial products, while controlling the money supply and to keep the money already in circulation back to the stock.
A very important lesson here is do not think that all prices are juicy couture handbags frozen up, it means controlling inflation. Must be clear, by no means stable prices and stable inflation, as manage and control the thermometer does not mean living temperature. The year of RMB 5 yuan per catty into Iraq candied Price Index - measures the price of the thermometer - and of course will increase the price of the readings, but experience says that it is one of the effective governance of inflation. Crucial point is that this part of the price index with high commodity prices, is not like the above point to as the seller to recover more than the amount of money, spend less money out? If you do, some price increases during inflation, the price impact may be to avoid more sensitive areas of the community, until finally issued too much money to eradicate inflation towards the right direction.
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