Recently, the art style has become strange, and the movements have started to deviate.
At present, the economy is facing severe deflationary pressure, and many policies to stimulate consumption and domestic demand have been introduced, while CPI and PPI are still declining.
The CPI fell 05%, the largest decline in three years, and the ** index continued to decline.
There is a perception in the macro field that deflation is more troublesome than inflation, because fiscal and monetary policies are not very effective at this time.
Therefore, everyone is very wary of deflation.
For example, on December 8, 2023, ** published an article titled "China Should Push Inflation to Around 6% as Soon as Possible".
The main logic is that China's economy has strong downward pressure and weak consumption, so it is necessary to increase the wealth effect of residents by pushing up inflation, and then stimulate consumption and economic growth.
Specifically, in addition to not restricting property prices, China's central bank should push the annual inflation rate to about 6% as soon as possible, and then adjust it to 4%, and then let the 4% inflation rate continue until the overall economy has a comprehensive and considerable development.
This also shows that promoting inflation and resisting deflation have become everyone's consensus.
The point is, how do you achieve inflation?
The specific path is not given in the article, and now the means of raising inflation are starting to drift off.
Recently, the people of Shanghai received a "Letter to Residents" to raise the price of water in an all-round way.
Starting from New Year's Day 2024, most areas of Shanghai will begin to increase prices, with the first tranche increasing by 20%, the second tranche increasing by more than 30%, and the third tranche rising by more than 50%.
With the release of the national "Urban Water Supply Management Measures", Shanghai's water price is by no means an individual case, and water prices may be available all over the country.
Under this logic, the A-share water sector rose sharply across the board.
What's more, we expect not only water prices to be comprehensive, but also electricity prices, natural gas, transportation, communications and other utilities.
The question is what?
Inflation, which is a consequence of the economy's operation rather than a cause, is like a thermometer of the state of the economy.
If a person has a fever, it means that there is inflammation in the body, and the correct thing to do is to reduce inflammation instead of focusing on the thermometer.
When deflation occurs, we should first find out whether aggregate demand is insufficient or aggregate oversupply, and then either stimulate aggregate demand or supply-side reform.
At present, the core lies in the lack of aggregate demand, so logically speaking, if you want to increase inflation, you should stimulate aggregate demand, such as increasing household income, raising consumption levels, and so on.
This is to hit the root and "de-inflammatory" the economy.
What is the current style of painting?Skip the relationship between supply and demand, and directly greatly increase the ** level, and greatly increase the ** level of public utilities.
There is no doubt that as long as the price of water, electricity, communications, transportation, etc. is significantly increased, our inflation will definitely pull up, and there will definitely be some performance on the thermometer.
But pay attention, LV and other luxury goods have risen in price, and it is the rich who are harvested;The price of durable goods such as automobiles has risen, and the harvest is the middle class;The price of water and other necessities has risen, and it is the poor who are harvested.
It is not caused by the relationship between supply and demand, and it is directly aimed at the poor, so this direction of raising inflation is completely wrong and should be corrected in time.
Why are utilities being raised at a higher rate?Jumping out of the case of Shanghai's water price, it is actually very simple, that is, the land finance is unsustainable and the fiscal revenue is increased.
Do you understand this?
Next, let's look at another point: you can't subsidize the poor, which will cause inflation, which is equivalent to no subsidy.
If you are poor and support this point of view, you can only say that you have a hole in your head.
On the one hand, the transmission mechanism is not linear, and subsidies to the poor do not necessarily cause inflation
On the other hand, even if the poor are not subsidized, even by harvesting them, inflation will increase.
The harsh reality is that raising inflation by subsidizing the poor is the most benign way to inflation for the poor, so get on your knees.
There is only a difference between high and low inflation, and there is no good or bad will in itself, but there are ways to achieve it.