How Does 2012CPI Fall?

In November 2011, inflation fell to 4.2%, possibly lower in December, and many people predicted that China would be high. inflation Cyclical inflection point formation, inflation in 2012 is expected to fall below 3%. I disagree with this optimism. Forecast Because the analysis of inflation trends requires a lot of variables, the annual inflation rate falls below 3% is not a gospel. It may be a sign of economic recession.

In 2012, did the economic environment change? Not only did it fail, but it increased the difficulty. The value of labor force increased into a strong cycle and needed steady growth. For the first time, the central economic work conference explicitly decided to "increase the proportion of middle income people". This is the signal that once again put forward the concept of decent work, it will again send out a large scale and a large proportion of workers' income. This is in line with the law of China's economic and social development.

What do we need to raise our income? Rely on a positive fiscal policy. The so-called positive fiscal policy is to expand. finance Expenditure, and the expansion of fiscal expenditure is also necessary to make money. There are two ways to make financial statements: first, expand expenditure on the basis of fiscal revenue growth. In this way, the central bank's votes can be pressure on commodities through commodity withdrawal, but it will not lead to stagflation, nor will it lead to vicious inflation. Two, when the economy is depressed, it will have to rely on issuing bonds, expand the deficit to fulfill the promise to the people, and take the old road of Europe and America. This road is likely to make people eat, drink and have fun for a year and a half, but they have to repay their debts for a lifetime. The eurozone has confirmed that the debt crisis and stagflation are twins. More importantly, too much debt has been issued. Once the recession is expected, it will inevitably lead to a super loose currency and then a vicious inflation. In my view, in order to ensure that there is no stagflation or vicious inflation, we must maintain steady and rapid economic growth and choose moderate inflation. This is why the central economic work conference did not put inflation first.

Steady growth requires stable prices, but not stable prices. From this basic point of view, the money supply in 2012 needs to be increased moderately, so as to prevent the economic growth from falling sharply.

Some people say that in the past few years, China's currency has been excessive. Why can't it be properly withdrawn within one or two years? This is what we have done in the past two years. It has an effect - the M2 growth rate has dropped from the highest close to 30% to below 14%; there is a price - some provinces' economic growth has been below 6%, and the risk of falling too soon is too risky. Because over the years, many of the currencies we have exceeded have become houses. If the money is too fast and the economy can not bear it, the property of the people will depreciate greatly and the total wealth of the country will shrink. Excessive monetary investment and rapid return are all manifestations of cancer economy. They are not the cause of "stability". In 2012, the macro-economy should advance steadily, and the monetary increment must be "stable". Prices should be stabilized, but not equal to CPI falling below 3%.

Stabilizing the money supply has relatively stabilized inflation expectations. I predict that in 2012, M2 will increase by about 16.5%, the total amount of loans will increase by about 8 trillion and 500 billion yuan, and too little can not maintain 8.5% of the economic growth rate. The inflation rate should be five, strictly controlled to six and below 3%. The growth rate of CPI will be the lowest in the first quarter, and the trend at the end of the year is even higher than 4.2%~4.5%. The positive factors include the large agricultural harvest and the low price of agricultural products; the commodity market has been relatively depressed due to the global economic recession, the import inflation pressure has been reduced; the US dollar has risen and the current account surplus has narrowed sharply; the stock market downturn and the property market continue to adjust, and the negative growth of the residents' property income in the first half of next year will inhibit consumption and suppress CPI. Unfavorable factors include the wage and bonus of the employees before and after the Spring Festival, which should be more than that in 2011; the money should be put more in the first quarter; the implementation of the fiscal reduction scheme will also stimulate consumption; the energy price will increase by 5% and the animal price will rise; in order to raise the farmers' income, the agricultural products will be raised by 10%; the economy will gradually accelerate in the second half of next year, and commodities, stock market and property market will stabilize and have a positive effect on consumption. Positive negative factors hedging, upward trend is slightly greater than downward pressure, CPI annual growth should be controlled within the amplitude of 4.2%~4.5.

But we should think of unexpected factors, including the economic slowdown, resulting in passive currency throwing after hard landing. The inflation rate is lagging behind. The speculators are making waves. Oil prices unexpectedly surged, breaking through 150 US dollars / barrel for a short period of time. In short, only by working hard and anticipation of the worst, can CPI growth be controlled at medium speed.