Ready to get started?A massive inflation is coming, and the money in your pocket may depreciate. On November 13, the central bank released its report on financial statistics for October 2023. I found one big thing from this report that is very relevant to you and me – inflation is coming, which means that the money and assets in your pocket may depreciate. There are usually three main causes of inflation, the most familiar of which is the over-issuance of money, that is, the supply of money in the market is greater than the actual demand, resulting in currency depreciation and prices**.
There are two reasons for the current massive inflation. First of all, there is a huge deposit in the bank that is preparing to return to the market. Therefore, from the report, we can find that in the past year, the three indicators that measure the amount of money, M0, M1, and M2, have increased to varying degrees. Among them, the largest increase was in M2, and the amount of broad money** increased by 103%, up from 221 trillion in January last year to 28823 trillion. In contrast, M1 grew by only 1. year-on-year over the same period9%, which is a big difference. This shows that the market's expectations for the future economy are not good, and even if we continue to issue money, the money is still reluctant to flow to the housing market,**let alone consumption. On the contrary, the funds prefer to be kept in the bank and lie there quietly.
But is this what we expect to see?Of course not. The purpose of constantly printing money is to inject money into the market, activate the economy, and help it recover. Based on past experience, this logic works. With our accession to the WTO, the growth rate of M2 and the growth rate of GDP tend to be inversely proportional, that is, the faster the growth rate of M2, the lower the GDP growth rate. If the funds remain in a state of immobility, their flow can only be stimulated by various means. Therefore, we have seen that starting from the property market, Guangzhou has implemented the provident fund to recognize the house without recognising the loan, Dongguan has lifted the maximum limit on land price, and the interest rate of bank loans and deposits has also fallen, all in the hope that people can take out funds from the bank and use them for the market. While these measures have had some effect, the growth rate of M2 is still declining, and the economic recovery cannot be achieved quickly. Therefore, new measures are needed.
To solve this problem, the monetary policy of the past has been replaced by an active fiscal policy. In the past, monetary policy was printed by the central bank, but once printed, the flow of money was determined by the market. For example, in the big release of water in 09, the market jointly discovered the "reservoir" of real estate, and funds automatically flowed into it. But now in the market, A-shares have the problem of A-shares, and the property market has difficulties in the property market. People are more inclined to keep their money in the bank rather than investing in real estate and **. In this case, it is not enough to rely on monetary policy alone, so the logic of water release has been adjusted, led by fiscal policy, and the central bank has made a hard intervention to selectively mobilize funds to the right places. Therefore, those huge deposits lying in the bank will inevitably flow to the market under the impetus of various means, becoming a new driving force for economic recovery, and the phenomenon of price ** is inevitable.
Next, there is also a huge amount of money that enters the market, which comes from the account of the "beautiful country". I'm sure you've noticed that the exchanges between us and the "pretty country" have become more frequent recently. We communicate with each other and hope to solve our own problems. As a result, we are likely to take on imported inflation from the "pretty country".
In general, the arrival of inflation is inevitable. While this is a good thing for the economy, for individuals, inflation means that you can buy less and less with the money you save, and the value of your non-core property may also depreciate. So, can we just lie down passively?Not really. Since this round of inflation is driven by the over-issuance of money, coupled with the aforementioned change in the logic of water release, as long as we can find industries that are closer to water sources or more popular, we have the opportunity to obtain some dividends when inflation comes, so as to hedge the losses caused by inflation. So, which industries are like this?It depends on the policy guidelines. For example, the recent Shenzhen Reform Commission mentioned strengthening the construction of a beautiful China, which sounds like a new word, but is actually a new expression for carbon reduction and the development of a green economy, that is, carbon trading, which has been stalled for a long time, may re-enter the agenda. Second, the meeting emphasized the need to strengthen ecological and environmental control, which means that some industries that can cause serious pollution, such as steel, coal, chemicals, paper, etc., should be kept away as much as possible. Don't think that news and meetings are just about national affairs and have nothing to do with us. Always keep an eye out for the end of the year and meetings coming up. If needed, I will release some in-depth analysis in a timely manner to help you better find the direction of future water release. No one can always grasp the situation, but we can at least try to adapt to the situation. All right. If you think my point makes sense, please don't forget to give me a like and share.