The CPI is negative again, why is the currency still being issued, but the price of goods is falling?
Introductory. It's a thought-provoking question. This article will analyze the relationship between the increase in currency issuance and prices, and the causes of prices. By analyzing the circulation of money, consumer psychology and commodities, we can better understand the impact of various factors in the operation of the economy on the development of the economy.
Currency growth and ** change.
Normally, an increase in the issuance of money stimulates *** because an increase in money means an increase in purchasing power, which in turn promotes an increase in consumer demand, which in turn drives *** However, when the increase in money issuance is followed by a decrease in the issuance of money, the reasons may be as follows.
1.Insufficient currency circulation.
If the amount of additional money issued to consumers is small, it will be difficult to increase the demand for goods, which will push up prices. In November's lending data, personal loans grew by less than 300 billion yuan, and most of them were long-term loans, which means that new loans have not fully entered the consumer market and have had a limited effect on stimulating prices**.
2.Low consumer availability.
Even if consumers have enough cash on hand, they don't necessarily spend more, but instead choose to save. In times of slower economic growth and lower income expectations, people tend to be more cautious and save ahead for a rainy day. Therefore, even if there is some purchasing power, if the majority of people choose to save rather than consume, the impetus for prices from additional money issuance will be weakened.
3.There is an oversupply of goods.
Even if the issuance of money increases, it will still be difficult if there is an oversupply of goods in the market. For example, if you issue a currency for $1, but at the same time the value of the goods produced increases by $2, then the buyer must use $1 to buy $2 worth of goods, and the price will naturally fall. Therefore, if we want prices, we need to issue more money, but too much money will lead to other problems, so the amount of money issued should be kept within a moderate range.
* Other reasons for the decline.
In addition to factors such as insufficient monetary growth, weak willingness to spend, and oversupply of goods, there are a number of other reasons that can also lead to ***
1.Recession.
Recessions are often accompanied by falling demand and overcapacity, which puts pressure on **. In times of recession, businesses may lower their lives to attract consumers and maintain sales. In addition, a recession can lead to a decline in people's incomes, further reducing purchasing power and inhibiting them
2.The impact of international markets.
Fluctuations in the global economy and the impact of international markets will also have an impact. When the international market lasts, the level of imported goods will also be affected, which in turn will affect the level of the domestic market. In addition, exchange rate fluctuations can also have an impact on **.
3.Policy supervision.
The regulation of economic policy is also an important factor affecting the change. Levels can be influenced by adjusting fiscal policy, monetary policy, and regulation. When measures such as raising interest rates or tightening monetary policy are taken to curb inflation, it leads to ***
Summary. Generally speaking, additional currency issuance can usually stimulate prices, but there are many reasons for prices. Insufficient currency circulation, weak willingness to consume, and oversupply of commodities are important factors leading to ***. In addition, the economic recession, the impact of international markets and policy regulation will also have an impact. Therefore, it is necessary to deeply analyze the reasons for the changes and adopt appropriate economic policies and measures to maintain economic stability and a balance between the price level.
Personal summary. The economy is a complex and volatile system, and changes are influenced by a variety of factors. Although the issuance of additional currency is a common means of stimulating ***, its effect is often limited by other factors. By analysing the circulation of money, consumer psychology and commodities, we can better understand why the phenomenon of price increases in currency issuance. Understanding the impact of these factors on prices can provide policymakers with a more scientific and effective benchmark for economic policy. At the same time, we consumers should also pay attention to the factors that lead to price changes, and rationally adjust our concepts and consumption behaviors to adapt to changes in the economic environment.