On April 10, Cai Fang, a member of the Central Bank’s Monetary Policy Committee, spoke about how the demographic turning point would adversely affect consumer demand; on April 15, the Central Bank’s working paper confronted aging and child rearing.
Why did the problem of fewer children arise?
Houses will eat people (mouth)!
1 House will eat people
From the observation of the phenomenon, can’t afford to buy a house, can’t get married; can’t afford to buy a school district house, children go to school difficult. High housing prices, people (mouth) will be eaten.
From the essence of the digging: behind the high housing prices is nothing more than the sale of land is too expensive, too much money. Behind is the financial land dependence problem, is the monetary easing dependence problem, but ultimately is the financial deepening problem.
Financial deepening to M2/GDP as a reference, the larger the value, the higher the degree of financial deepening, the larger the value, it is nothing more than the funds are going to speculate in finance, dry the real relatively less.
The entity has a smaller wage gap and more jobs, which is conducive to the equal distribution of resources and the raising of children in society. And financial jobs less, the wage gap is large, the more financial, the more conducive to a few people dominate the majority of resources (someone a lot of housing, someone no housing), is not conducive to social child rearing. Financial deepening is an important reason for less children, financial deepening is high, the zero-sum game is powerful, raising children is difficult, and the population is eaten up.
Whether you are observing from the phenomenon or digging from the essence, the house is going to eat people.
The higher the price of housing, the harder it is to eat people.
2 Inflation also eats people
The more money is printed, the faster the house price rises; the faster the house price rises, the more money goes to speculation, the lower the inflation will be.
The other side of high housing prices is that it avoids money to speculate on basic livelihoods. High house prices and low inflation will certainly lead to less children, but if you don’t buy a house or get married, it’s still easy for individuals to survive. And if inflation is high, even personal survival is difficult, certainly less likely to want to have children. As you can imagine, if inflation is high, the phenomenon of childlessness will become more pronounced.
Inflation, too, will eat up the population.
3 the lesser of two evils
Money is to print, printing money is certainly a problem, it is only a matter of choice. House up merely can not afford to raise children, inflation up is even they can not afford to raise.
The lesser of two evils, let the house rise is a natural thing, but the question is, so printed money, inflation will remain low?
In March, U.S. inflation of 2.6% exceeded expectations – and the Federal Reserve’s target is an average of 2%.
4 Stable supply is stable inflation
Regarding the trend of inflation, the author’s view has been clearly bullish. But one thing that cannot be ignored is that as long as there are no problems with supply (capacity), even if more money is printed, hyperinflation is almost impossible.
The key question of whether inflation will happen is whether there will be problems with supply. China is the world’s factory, and to a large extent, Chinese supply will affect world inflation.
Looking at the response to the epidemic in China and the U.S. in comparison.
1) The U.S. epidemic period focused on leveraging the government to give money to residents. Characterized by a faster recovery in demand and a slower recovery in capacity.
2) The Chinese Communist Party focused on policy to push bank credit and get companies to leverage, characterized by a faster recovery in capacity and a slower recovery in demand.
The U.S. demand recovery is fast, in March, the U.S. CPI was 2.6%, but the official CPI of the Chinese Communist Party was only 0.4%; in March, the U.S. PPI reached 4.2%, the largest year-on-year increase since 2011, and the Chinese PPI was 4.4%, higher than the United States.
Upstream PPI rises and always transmits to the end demand, but this transmission has to go through the downstream enterprises. If the downstream capacity is relatively overcapacity, poor transmission will occur, and if we can preserve the downstream capacity, we can contribute to suppressing inflation.
Obviously, China’s epidemic policy has contributed to depressing world inflation, while behind the scenes, the transmission from China’s PPI to CPI is apparently even more poor. China (at least downstream) has obvious overcapacity, and downstream factories face the problem of de-capacity.
If China’s downstream starts to de-capacity, the supply will change and inflation will lose its suppression.
China’s ability to generate foreign exchange from exports and attract financial term flows will decline, affecting China’s ability to print money; the ability of U.S. imports to depress inflation will also decline, affecting the ability of the U.S. to print money. The cycle repeats itself.
Spiral amplification becomes spiral compression.
China’s ability to generate foreign exchange from exports: in March, in dollar terms, China’s exports grew 30.6% and imports grew 38.1%, with imports outpacing exports and a significant narrowing of the trade surplus.
China’s ability to run a surplus on financial items: in March, the value of Chinese government bonds held by overseas investors decreased for the first time in 2 years.
U.S. ability to depress inflation: In March, the U.S. CPI exceeded expectations, reaching 2.6%.
From the March data, we can find that a double-loop internal and external reverse feedback has emerged and the spiral compression of money-printing capacity has begun. The spiral compression of money-printing capacity will accelerate the process of downstream de-capacitation in China and push inflation to rebound.
7 Will political problems occur?
The inflation issue is also an important domestic political issue. In order to curb inflation, countries may take some policy measures to curb the upward movement of inflation.
Logically, if inflation goes up further, China may restrict the export of commodities using bulk resources as raw materials to keep down its own inflation, while the U.S. may restrict the export of bulk raw materials, including food, to keep down its own inflation.
Inflation will only be a problem if there is a problem with capacity. And once inflation is a problem, you have to start eating people (mouth)!
Whether the house eats people, or inflation eats people, the essence is printing money in eating people! ……
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