5 thoughts on “What are the effects of currency tightening”
Lucy
1. Accelerate the economic recession The economic recession caused by the tightening of the currency in three aspects: First, the continuous and general decline in prices has caused corporate product prices to decline, decreased corporate profits or even losses. Producers reduced production or even discontinued production, and the economic growth of society was suppressed. Second, the continuous and general decline in prices increase the actual interest rate, which will help creditors to harm the interests of the debtor. Most of the debtors in society are producers and investors. The aggravation of debt burden will undoubtedly affect their production and investment activities, which will have a negative impact on economic growth. Third, the decrease in corporate profits and production enthusiasm caused by the decline in prices will increase the unemployment rate. The actual employment rate is lower than the full employment rate, and the actual economic growth is lower than the natural growth. 2. As a result, social wealth shrinks During the tightening of currency, the total price of the whole society decreased, the prices of enterprises' product prices naturally decreased, and the profit of the enterprise decreased. The decline in corporate profitability has also reduced the market price of corporate assets. In addition, the decline in product price levels makes it difficult for a single enterprise to sell it. In order to maintain the production week, the company has to increase liabilities, and the increase in debt ratio has further reduced the price of corporate assets. The decline in corporate asset prices means that the decline in the net worth of the enterprise and the decrease in wealth, and the relative surplus of the supply will inevitably cause many workers to lose their jobs under the condition of deflation. At this time reduce. Even if the wages are not reduced, the increase in the number of unemployed people has reduced the overall income of social residents, leading to the shrinking of the wealth of individual social individuals. 3. The allocation of negative effects of allocation The distribution effect of the tightness of the currency can be divided into two aspects to investigate, that is, the distribution between the social wealth between the debtor and the creditors and the social wealth between the government, the enterprise, and the residents distribute. Overall, debtors in the economy are generally enterprises, while creditors are generally residents. Therefore, the distribution of social wealth between the debtor and the creditors is the distribution between residents and enterprises. 4. It may trigger a bank crisis The contrary to inflation. The tightening of currency is conducive to the creditors and damage to the debtor. The tightening of the currency makes the currency more expensive. This actually aggravated the borrower's debt burden, making the borrower unable to repay the loan, which caused banks to form a large number of non -performing assets, and even closed the bank and the financial system collapsed. Therefore, many economists point out: "Currency appreciation is the common cause of all economic problems in a country." Reason: The tightening monetary fiscal policy changes in the economic cycle The insufficient valid demand for investment and consumption The adoption of new technologies and increasing labor productivity r r r r r r r r This of the efficiency of the financial system system and system factors The defects of the exchange rate system
Deflation: When the currency circulating in the market decreases, the people's currency income decreases, the purchase power decreases, affects the decline in prices, and causes currency tightening. Long -term currency tightening will inhibit investment and production, leading to an increase in unemployment rate and economic recession.
How to define the deflation (default)? According to the Nobel Prize winner of Economics, Samuel's definition: "Price and costs are generally declining, which is a tightening of currency." Economists generally believe that when the consumer price index (CPI) falls for two consecutive seasons, it means that it has appeared as a deflation. Failure tightening is the continuous decline of prices such as prices, wages, interest rates, food, energy, and other prices that cannot be paused, and all of them are in the case of excessive supply.
In economic practice, determine whether the price decline in a certain period is deflation, and see if the inflation rate is changed from positive to negative, and the second to see if the continuity of this decline continues to exceed a certain time limit.
The curriculum tightening -cause
(1) Logistics tightening caused by insufficient total demand
(2) supply inflation caused by absolute excess overcurrent
The economic tightening of Japan is the focus of the world's attention. The Fed recently published an article by a number of well-known economists, "Prevent currency tightening-from the experience of experience from Japan in the 1990s (Defiation; Lessons from Japans Experence in the 1990s). This article describes that Japan ’s economic tightening originated from the country’ s economic bubble in the 1980s. It is very similar to the situation in the United States today. Japan ’s deflation began in 1999. Due to the imbalance of supply and demand, the price of goods fell. On the other hand, one of the main reasons for the tightening of Japan's economic tightening in this article is also that the central bank in Japan has not actively reduced interest rate reductions and relaxes silver root stimulus to stimulate Japan's economic growth. In addition to the trend of economic tightening in the world, the prices of France, Germany, Brazil, and Switzerland have been declining in the past six months. Destiny. In the past five years, prices in mainland China have fallen by about 20%, and the prices in Hong Kong have fallen by about 16%in the past five years. Some economists have begun to expect that the US economy has already fallen into a tightening of currency tightening. Sex. Srephen Roach, chief economic analyst of Morgan Stanley, said that "the United States has hovering on the edge of economic tightening." The possibility. The distance between low inflation and currency tightening is only separated by a line. How to prevent the United States from entering the state of tightness from low inflation into the tightening of currency is the government's primary position. In the 1930s, the reason was that the main reason was that the central bank's policy was incorrect; today's service industry is relatively high, most of which are labor-intensive, and the price (salary) is difficult to reduce. Falling is a rapid improvement of productivity, so it can grow synchronously with the economy.
Cofer tightening -influence
(1) The impact of currency tightening on economic growth n n n n n n n n n n n n n n n n n n n n n n n n n R n1. Promotional theory: Failure tightening will inhibit economic growth, and even decline in the economy.
Reason:
① The continuous decline in prices will reduce the profit of producers or even even Losses, then reduce production or discontinue production.
② The continuous decline in prices will damage the debtor, which will affect production and investment
③ The continuous decline in prices. Decreased production investment will lead to increasing unemployment residents. Decreased income, insufficient total demand
2, promotion theory: Moderate currency tightening is conducive to economic growth.
Reason: Promote the decline in long -term interest rates, which will help enterprise investment to improve equipment and improve productivity.
② Under the state of appropriate currency tightening, economic expansion Time can be extended without threatening the stability of the economy.
③ If the currency tightening is linked to technological progress and the improvement of benefits, the decline in price levels and economic growth can be promoted.
(2) Fortune revenue of currency tightening income
1. The holders of physical assets are damaged, and cash assets will appreciate.
2, the creditor of the fixed interest rate is profitable, and the debtor is damaged.
3, currency tightening reduces corporate profits, and some wealth is transferred to residents; currency tightening has increased the actual interest rate of corporate liabilities, and income has further transferred to individuals.
4. Government wealth transfer to the public
Stochriometer aggravation → reduction of lenders 'reducing expenses, selling assets → decline in corporate profits and deletion of labor costs, lenders' income and asset prices Decrease → increased substantial loans of lenders and decreased economic demand (began). Analysis of basic economic sciences, currency tightening is caused by insufficient excessive supply and demand. To solve the positive method of deflation, it should be given priority to boosting effective domestic demand, and then supplemented by government cooperation to expand public expenditure, it is expected to soothe the threat of currency tightening.
Cofer -profile
Generally speaking, moderate currency tightening, through exacerbating market competition, help adjust the economic structure and squeeze the "bubble" in the economy It will also promote enterprises to strengthen technological investment and technological innovation, improve product and service quality, and have a positive side of economic development.
but excessive currency tightening will cause the total price of the price to decrease for a long time, a large -scale decrease, the market silver root is tightening, the currency circulation speed is slow, the market sales are small, the enthusiasm of the company's production and investment, strengthening the enhancement With the psychology of residents' "buying up, not buying and falling," the "citizen investment" of the enterprise and the "citizen buying" of the residents, a large amount of funds were idle, which limited the effective growth of social needs. It is not good for the long -term development of the economy and the long -term interests of the people. From this point of view, the tightening of the currency has a disadvantage of economic development. To this end, we must strengthen government investment, stimulate domestic demand, suppress the decline in price, and maintain the basic stability of prices.
The opposite of inflation. The tightening of currency means that consumer purchasing power increases, but continuing will lead to worsening debt burden, decreased investment income of corporate investment, negative consumption consumption, national economy may fall in price decline and economic recession The severe situation of mutual influence and vicious cycle. The hazard of shrinking is that the price has declined, but it has increased the liabilities of individuals and enterprises secretly, because the actual value of holding assets has shrunk, and mortgage loans to banks have not decreased. For example, people's mortgage purchases may make the buyers the value of real estate, far lower than their debt.
This tightness -circulation
Stocks increased in substantial debt → Loader reduce expenses, sell assets → corporate profits decrease, and then delete labor costs, lenders' income and asset prices decreased → increased substantial loans and decreased economic demand (the start of the vicious cycle).
The analysis of basic economic sciences, currency tightening is caused by insufficient excess supply and demand. To solve the positive method of deflation, it should be given priority to boosting effective domestic demand, and then supplemented by government cooperation to expand public expenditure, it is expected to soothe the threat of currency tightening.
This tightness —
(1) Loose monetary policy
The loose monetary policy can increase the amount of currency in circulation. This stimulates the total demand.
(2) Loose fiscal policies
Puging fiscal expenditure can directly increase the total demand, and it can also drive the increase in private investment through the "multiplication effect" of investment.
(3) Structural adjustment
The curriculum tightening caused by absolute excess products due to products in certain industries or a certain level of commodity production. Generally, structural adjustment methods are used. , That is, reduce the output of excess departments or industries, and encourage emerging departments or industries to develop.
(4) Change expectations
The government has increased the public's confidence in the future economic development trend through various publicity methods.
(5) Improve the social security system
Senging and improved the social security system, appropriately improve the distribution pattern of national income, and improve the income level and consumption level of middle and lower residents to increase Consumer demand.
(6) The malignant tightening model
The national comprehensive price index, only issued currency with the same number of citizens, the consequences of the currency increased infinitely, such as Qi Dao coins during the Warring States Period, Wang Mang usurped us usurpted French currency issued by Han Dynasty.
The currency tightening refers to a currency phenomenon that the general price level continues to decline.
. The impact of currency tightening on socio -economic About the impact of currency tightening on the economy. Different economists have different views. Generally speaking, there is the following views,
(1) The impact of currency tightening on economic growth 1. Promotional theory: Failure tightening will inhibit economic growth and even decline the economy.
The reason: ① The continuous decline in prices will reduce the profit of producers or even losses, and then reduce production or discontinuation.
② The continuous decline in prices will damage the debtor, which will then affect production and investment
③ The continuous decline in prices. Insufficient
2. Promoting theory: Moderate currency tightening is conducive to economic growth.
The reason: ① Failure tightening will promote long -term interest rates to decrease, which is conducive to improving equipment in enterprises and improving productivity.
② In moderate currency tightening state, the time of economic expansion can be extended without threatening the stability of the economy.
③ If currency tightening is linked to technological progress and improvement of benefits, the decline in price levels and economic growth can be promoted.
(2) Fortune revenue re -distribution benefits of currency tightening 1. The holders of physical assets are damaged, and cash assets will appreciate.
2. The creditor of the fixed interest rate is profitable, and the debtor is damaged.
3. Deflation reduces corporate profits, and some wealth is transferred to residents; currency tightening has increased the actual interest rate of corporate liabilities, and income has further transferred to individuals.
In the case of shrinking, the same amount of currency can buy more items and increase in currency purchasing power, so that people have more savings and less expenditure, especially the expenditure of reducing durable consumer goods, and private consumption expenditure. What's more serious is that the decline in commodity prices will cause consumers to delay consumption, thereby curbing production, further lower prices, and forming a vicious circle of contraction. During the shrinkage, the decline in general prices has increased the actual interest rate level. Instant nominal interest rates have decreased, and actual interest rates may be high. Therefore, the cost of funds is high, and the projects that can be investable are reduced. At the same time, the increase in debt burden will undoubtedly affect the production and investment activities of the enterprise. The decline in the final product price has adversely affected the newly started investment projects. In this way, investment projects are even more attractive, resulting in a decrease in total social investment expenditure. Due to rigid wages, the decline in price will increase the actual salary. In this way, enterprises will reduce employees to reduce costs, further reduce the employment rate, and make the economic recession more serious.
What is currency tightening? n00:00 / 05: 2470% shortcut keys to describe space: Play / pause ESC: Exit full screen ↑: increase volume 10% ↓: decreases by 10% →: Single fast forward 5 seconds studio Here you can drag no longer appear in the player settings to reopen the small window shortcut key description
1. Accelerate the economic recession
The economic recession caused by the tightening of the currency in three aspects: First, the continuous and general decline in prices has caused corporate product prices to decline, decreased corporate profits or even losses. Producers reduced production or even discontinued production, and the economic growth of society was suppressed. Second, the continuous and general decline in prices increase the actual interest rate, which will help creditors to harm the interests of the debtor. Most of the debtors in society are producers and investors. The aggravation of debt burden will undoubtedly affect their production and investment activities, which will have a negative impact on economic growth. Third, the decrease in corporate profits and production enthusiasm caused by the decline in prices will increase the unemployment rate. The actual employment rate is lower than the full employment rate, and the actual economic growth is lower than the natural growth.
2. As a result, social wealth shrinks
During the tightening of currency, the total price of the whole society decreased, the prices of enterprises' product prices naturally decreased, and the profit of the enterprise decreased. The decline in corporate profitability has also reduced the market price of corporate assets. In addition, the decline in product price levels makes it difficult for a single enterprise to sell it. In order to maintain the production week, the company has to increase liabilities, and the increase in debt ratio has further reduced the price of corporate assets. The decline in corporate asset prices means that the decline in the net worth of the enterprise and the decrease in wealth, and the relative surplus of the supply will inevitably cause many workers to lose their jobs under the condition of deflation. At this time reduce. Even if the wages are not reduced, the increase in the number of unemployed people has reduced the overall income of social residents, leading to the shrinking of the wealth of individual social individuals.
3. The allocation of negative effects of allocation
The distribution effect of the tightness of the currency can be divided into two aspects to investigate, that is, the distribution between the social wealth between the debtor and the creditors and the social wealth between the government, the enterprise, and the residents distribute. Overall, debtors in the economy are generally enterprises, while creditors are generally residents. Therefore, the distribution of social wealth between the debtor and the creditors is the distribution between residents and enterprises.
4. It may trigger a bank crisis
The contrary to inflation. The tightening of currency is conducive to the creditors and damage to the debtor. The tightening of the currency makes the currency more expensive. This actually aggravated the borrower's debt burden, making the borrower unable to repay the loan, which caused banks to form a large number of non -performing assets, and even closed the bank and the financial system collapsed. Therefore, many economists point out: "Currency appreciation is the common cause of all economic problems in a country."
Reason:
The tightening monetary fiscal policy
changes in the economic cycle
The insufficient valid demand for investment and consumption
The adoption of new technologies and increasing labor productivity r r r r r r r r
This of the efficiency of the financial system
system and system factors
The defects of the exchange rate system
Deflation: When the currency circulating in the market decreases, the people's currency income decreases, the purchase power decreases, affects the decline in prices, and causes currency tightening. Long -term currency tightening will inhibit investment and production, leading to an increase in unemployment rate and economic recession.
How to define the deflation (default)? According to the Nobel Prize winner of Economics, Samuel's definition: "Price and costs are generally declining, which is a tightening of currency." Economists generally believe that when the consumer price index (CPI) falls for two consecutive seasons, it means that it has appeared as a deflation. Failure tightening is the continuous decline of prices such as prices, wages, interest rates, food, energy, and other prices that cannot be paused, and all of them are in the case of excessive supply.
In economic practice, determine whether the price decline in a certain period is deflation, and see if the inflation rate is changed from positive to negative, and the second to see if the continuity of this decline continues to exceed a certain time limit.
The curriculum tightening -cause
(1) Logistics tightening caused by insufficient total demand
(2) supply inflation caused by absolute excess overcurrent
The economic tightening of Japan is the focus of the world's attention. The Fed recently published an article by a number of well-known economists, "Prevent currency tightening-from the experience of experience from Japan in the 1990s (Defiation; Lessons from Japans Experence in the 1990s).
This article describes that Japan ’s economic tightening originated from the country’ s economic bubble in the 1980s. It is very similar to the situation in the United States today. Japan ’s deflation began in 1999. Due to the imbalance of supply and demand, the price of goods fell. On the other hand, one of the main reasons for the tightening of Japan's economic tightening in this article is also that the central bank in Japan has not actively reduced interest rate reductions and relaxes silver root stimulus to stimulate Japan's economic growth. In addition to the trend of economic tightening in the world, the prices of France, Germany, Brazil, and Switzerland have been declining in the past six months. Destiny. In the past five years, prices in mainland China have fallen by about 20%, and the prices in Hong Kong have fallen by about 16%in the past five years. Some economists have begun to expect that the US economy has already fallen into a tightening of currency tightening. Sex. Srephen Roach, chief economic analyst of Morgan Stanley, said that "the United States has hovering on the edge of economic tightening." The possibility. The distance between low inflation and currency tightening is only separated by a line. How to prevent the United States from entering the state of tightness from low inflation into the tightening of currency is the government's primary position. In the 1930s, the reason was that the main reason was that the central bank's policy was incorrect; today's service industry is relatively high, most of which are labor-intensive, and the price (salary) is difficult to reduce. Falling is a rapid improvement of productivity, so it can grow synchronously with the economy.
Cofer tightening -influence
(1) The impact of currency tightening on economic growth
n n n n n n n n n n n n n n n n n n n n n n n n n R n1. Promotional theory: Failure tightening will inhibit economic growth, and even decline in the economy.
Reason:
① The continuous decline in prices will reduce the profit of producers or even even Losses, then reduce production or discontinue production.
② The continuous decline in prices will damage the debtor, which will affect production and investment
③ The continuous decline in prices. Decreased production investment will lead to increasing unemployment residents. Decreased income, insufficient total demand
2, promotion theory: Moderate currency tightening is conducive to economic growth.
Reason:
Promote the decline in long -term interest rates, which will help enterprise investment to improve equipment and improve productivity.
② Under the state of appropriate currency tightening, economic expansion Time can be extended without threatening the stability of the economy.
③ If the currency tightening is linked to technological progress and the improvement of benefits, the decline in price levels and economic growth can be promoted.
(2) Fortune revenue of currency tightening income
1. The holders of physical assets are damaged, and cash assets will appreciate.
2, the creditor of the fixed interest rate is profitable, and the debtor is damaged.
3, currency tightening reduces corporate profits, and some wealth is transferred to residents; currency tightening has increased the actual interest rate of corporate liabilities, and income has further transferred to individuals.
4. Government wealth transfer to the public
Stochriometer aggravation → reduction of lenders 'reducing expenses, selling assets → decline in corporate profits and deletion of labor costs, lenders' income and asset prices Decrease → increased substantial loans of lenders and decreased economic demand (began).
Analysis of basic economic sciences, currency tightening is caused by insufficient excessive supply and demand. To solve the positive method of deflation, it should be given priority to boosting effective domestic demand, and then supplemented by government cooperation to expand public expenditure, it is expected to soothe the threat of currency tightening.
Cofer -profile
Generally speaking, moderate currency tightening, through exacerbating market competition, help adjust the economic structure and squeeze the "bubble" in the economy It will also promote enterprises to strengthen technological investment and technological innovation, improve product and service quality, and have a positive side of economic development.
but excessive currency tightening will cause the total price of the price to decrease for a long time, a large -scale decrease, the market silver root is tightening, the currency circulation speed is slow, the market sales are small, the enthusiasm of the company's production and investment, strengthening the enhancement With the psychology of residents' "buying up, not buying and falling," the "citizen investment" of the enterprise and the "citizen buying" of the residents, a large amount of funds were idle, which limited the effective growth of social needs. It is not good for the long -term development of the economy and the long -term interests of the people. From this point of view, the tightening of the currency has a disadvantage of economic development. To this end, we must strengthen government investment, stimulate domestic demand, suppress the decline in price, and maintain the basic stability of prices.
The opposite of inflation. The tightening of currency means that consumer purchasing power increases, but continuing will lead to worsening debt burden, decreased investment income of corporate investment, negative consumption consumption, national economy may fall in price decline and economic recession The severe situation of mutual influence and vicious cycle. The hazard of shrinking is that the price has declined, but it has increased the liabilities of individuals and enterprises secretly, because the actual value of holding assets has shrunk, and mortgage loans to banks have not decreased. For example, people's mortgage purchases may make the buyers the value of real estate, far lower than their debt.
This tightness -circulation
Stocks increased in substantial debt → Loader reduce expenses, sell assets → corporate profits decrease, and then delete labor costs, lenders' income and asset prices decreased → increased substantial loans and decreased economic demand (the start of the vicious cycle).
The analysis of basic economic sciences, currency tightening is caused by insufficient excess supply and demand. To solve the positive method of deflation, it should be given priority to boosting effective domestic demand, and then supplemented by government cooperation to expand public expenditure, it is expected to soothe the threat of currency tightening.
This tightness —
(1) Loose monetary policy
The loose monetary policy can increase the amount of currency in circulation. This stimulates the total demand.
(2) Loose fiscal policies
Puging fiscal expenditure can directly increase the total demand, and it can also drive the increase in private investment through the "multiplication effect" of investment.
(3) Structural adjustment
The curriculum tightening caused by absolute excess products due to products in certain industries or a certain level of commodity production. Generally, structural adjustment methods are used. , That is, reduce the output of excess departments or industries, and encourage emerging departments or industries to develop.
(4) Change expectations
The government has increased the public's confidence in the future economic development trend through various publicity methods.
(5) Improve the social security system
Senging and improved the social security system, appropriately improve the distribution pattern of national income, and improve the income level and consumption level of middle and lower residents to increase Consumer demand.
(6) The malignant tightening model
The national comprehensive price index, only issued currency with the same number of citizens, the consequences of the currency increased infinitely, such as Qi Dao coins during the Warring States Period, Wang Mang usurped us usurpted French currency issued by Han Dynasty.
I. Definition of currency tightening
The currency tightening refers to a currency phenomenon that the general price level continues to decline.
. The impact of currency tightening on socio -economic
About the impact of currency tightening on the economy. Different economists have different views. Generally speaking, there is the following views,
(1) The impact of currency tightening on economic growth
1. Promotional theory: Failure tightening will inhibit economic growth and even decline the economy.
The reason:
① The continuous decline in prices will reduce the profit of producers or even losses, and then reduce production or discontinuation.
② The continuous decline in prices will damage the debtor, which will then affect production and investment
③ The continuous decline in prices. Insufficient
2. Promoting theory: Moderate currency tightening is conducive to economic growth.
The reason:
① Failure tightening will promote long -term interest rates to decrease, which is conducive to improving equipment in enterprises and improving productivity.
② In moderate currency tightening state, the time of economic expansion can be extended without threatening the stability of the economy.
③ If currency tightening is linked to technological progress and improvement of benefits, the decline in price levels and economic growth can be promoted.
(2) Fortune revenue re -distribution benefits of currency tightening
1. The holders of physical assets are damaged, and cash assets will appreciate.
2. The creditor of the fixed interest rate is profitable, and the debtor is damaged.
3. Deflation reduces corporate profits, and some wealth is transferred to residents; currency tightening has increased the actual interest rate of corporate liabilities, and income has further transferred to individuals.
4. Government wealth transfer to the public
In the case of shrinking, the same amount of currency can buy more items and increase in currency purchasing power, so that people have more savings and less expenditure, especially the expenditure of reducing durable consumer goods, and private consumption expenditure. What's more serious is that the decline in commodity prices will cause consumers to delay consumption, thereby curbing production, further lower prices, and forming a vicious circle of contraction. During the shrinkage, the decline in general prices has increased the actual interest rate level. Instant nominal interest rates have decreased, and actual interest rates may be high. Therefore, the cost of funds is high, and the projects that can be investable are reduced. At the same time, the increase in debt burden will undoubtedly affect the production and investment activities of the enterprise. The decline in the final product price has adversely affected the newly started investment projects. In this way, investment projects are even more attractive, resulting in a decrease in total social investment expenditure. Due to rigid wages, the decline in price will increase the actual salary. In this way, enterprises will reduce employees to reduce costs, further reduce the employment rate, and make the economic recession more serious.
What is currency tightening?
n00:00 / 05: 2470% shortcut keys to describe space: Play / pause ESC: Exit full screen ↑: increase volume 10% ↓: decreases by 10% →: Single fast forward 5 seconds studio Here you can drag no longer appear in the player settings to reopen the small window shortcut key description