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Teng Tai: High Interest Rate Is The Root Cause Of Monetary Policy That Has Crushed The Industry.
< p > < strong > 1, attracting high value from high interest rates to promote appreciation, to the central bank's unbalanced hedging, raising interest rates < /strong > /p >
< p > because the ultra-low interest rates in Europe, the United States and Japan are in sharp contrast to the flooding of China's "a href=" http://www.91se91.com/news/index_cj.asp "usury" /a, the international hot money continues to pour into China, which will undoubtedly increase the pressure of RMB appreciation. In order to maintain the stability of the RMB exchange rate, the central bank passively buys foreign exchange and issues Renminbi for the purpose of buying foreign exchange. Because of the worry that the RMB issue will impact the domestic economy, the central bank has been raising the deposit reserve rate and Issuing the number of votes to quantify the hedging measures for many years. However, due to the existence of a fatal defect of unbalanced hedging in the whole process, the domestic RMB interest rate is increasing, and the appreciation of RMB is expected to intensify. < /p >
< p > the unbalanced hedging policy that results in the policy effect is that the total amount and structure of the people's Bank of China in the process of purchasing foreign exchange for currency and hedging back currency are unbalanced. The large commercial banks that sell to the central bank's foreign exchange reserves and take away Renminbi every month are large commercial banks with large foreign exchange settlement. Behind them are large state-owned enterprises, foreign trade and foreign capital enterprises, and interest rate arbitrage. < /p >
Less than p years, the result of the game of "buying foreign exchange for issuing notes and hedging" has caused more and more funds for small and medium-sized banks, domestic funded enterprises and small and medium-sized enterprises, and the domestic real interest rates are getting higher and higher. At present, the average interest rate of short-term financial products and trusts is above 5%. The average financing cost of private debt of SMEs is more than 10%, and the interest rate of private short-term loans is more than 20%. < /p >
Under the background of zero interest rates in Europe and the United States, the interest rate in China will further attract hot money inflow and strengthen the expected appreciation of RMB. As a result, the vicious circle of "hot money inflow - the central bank's purchase of foreign exchange and unbalanced hedging will result in structural capital shortage in China, and the overall interest rate upturn - hot money accelerated inflow", P. < /p >
< p > obviously, the only way to change this vicious circle is to stop the central bank as soon as possible, and take various effective measures to reduce the domestic interest rate rapidly, reduce the arbitrage space and fundamentally reduce the power of hot money inflow. < /p >
< p > strong > two, high interest rates crush the industry, and the policy to combat capital flight further raises interest rates < /strong > /p >
< p > the operation of many traditional industries in China is less than a href= "http://www.91se91.com/news/index_cj.asp" > gross margin /a > 10~15%, while the actual financing cost of SMEs and private enterprises is as high as 10%~20%. The high cost of actual financing has reduced the profits of the original enterprises to losses or struggled to survive. As a result, more and more enterprises are forced to close and use limited funds to raise "usury". In the environment where industrial capital is spanformed into capital business, not to mention those commercial banks with capital advantage, many commercial banks have started a disguised "usury" business through shadow banking in the background of actual shortage of funds and high capital prices. More and more funds are running idle in the financial system. < /p >
< p > obviously, the long-term error, unbalanced hedging, loose foreign policy and tight internal interest rate policy are the fundamental reasons for capital flight. However, the central bank did not solve the problem from the essence of high interest rates and usury, but instead, from the phenomenon of capital flight, it tried to tighten the money supply, forcing commercial banks to reduce leverage, and wishful thinking to make idle capital return to the real economy in this way. < /p >
At first, according to the law of money flow, "big rivers and small rivers full of rivers and dry rivers and small rivers", first, small and medium-sized banks and private enterprises are withered and deeply injured. Secondly, industries with real estate and overcapacity are hard to get assets, and the most profitable assets are venture capital enterprises, private enterprises and technological enterprises. The result is that the economic structure is reverse adjusted, and the most vulnerable ones, such as bond market and stock market, are not easy to get out of capital. The result is that the financing cost of government debt and real economy is further increased, and the stock market falls down on consumption and investment, and the risk is enlarged. Finally, the increase of capital interest rate, more entity bankruptcy, and more capital flows from industry to usury. < p > results, and the results of the central bank's policies are Obviously, by tightening money, we can not only "adjust the structure" and "return capital to the real economy", but also further promote the reverse flow of funds, and attract more funds to usury and shadow banking market, which has the opposite effect. {page_break} < /p >
The reform paradox of < p > strong > three and high interest rate: the central bank pushes interest rate marketization away from each other. < /strong > < /p >
< p > there is a story about the marketization of water price: one year, the Tibetan emperor arranged Taibai mercury to help the Jade Emperor manage the water policy. Taibai mercury was supported by the Jade Emperor, saying that the water price marketization had won the applause of the Western Paradise and the Central Plains public opinion; however, Taibai mercury monopolized the water supply, tightened the faucet without releasing water, and consequently the water price rose sharply, even the Dragon Kings were all thirsty to have a high fever. < /p >
< p > the history of the reform of global interest rate marketization tells us that choosing a loose monetary environment to promote the marketization of interest rates, the real interest rate will inevitably descend; if we choose the tight background to carry out the interest rate marketization, the real interest rate will go up. In spite of the fact that the central bank has promoted the so-called marketization of interest rates in recent years, it has not been wrong, but because of the tight monetary environment, the real interest rate has been rising, resulting in a severe deflation effect. Not only the stock market and bond markets have been defeated, but also a large number of industries unable to afford high capital are broken down by high interest rates. < /p >
< p > the interest rate marketization and < a href= "http://www.91se91.com/news/index_cj.asp" > currency < /a > supply marketization, it is easy to recall the debate in the early 90s: "whether to start with the reform of the market system or start with price reform?" Obviously, evading the system reform and carrying out price marketization reform under the background of strict supply control, the so-called price marketization is inevitable. < /p >
The high interest rate paradox of < p > strong > four and "neutral" monetary policy < /strong > < /p >
P, the central bank's overnight lending is the most important monetary policy guidance tool in market economy countries. If interest rates are raised, interest rates on Treasury Deposits, interest rates on treasury bonds and interest rates on bonds and loans will surely rise, and the stock market will plummet and crack down on consumption and investment. 6, the monthly interest rate is still above 4%, the interest rate of treasury bonds has reached a new high of 10 years, and usury has become widespread. The central bank still considers it a neutral monetary policy. < /p >
< p > how does this so-called neutral monetary policy come from? A micro-blog fable with a neutral clothing policy can illustrate the problem: < /p >
< p > "the East is hot and cold, and the people are clothed. Sometimes the clothes officer did not respond promptly, and found that the weather had warmed up when the weather was cold and allowed to wear cotton clothes. When it was discovered that the weather was warm and allowed to wear a single coat, the weather had cooled. The clothes officer then asked the prime minister to carry out the policy of neutral clothing in order to change all the time. When the coldest season coincided, the people wore short sleeves and announced that the current policy of implementing neutral clothing was not to change clothes. < /p >
< p > obviously, China's so-called neutral monetary policy is also produced in a similar context. When people are tired of the regulation of throttle, the neutral monetary policy is indeed an option. The problem is that neutral monetary policy should start from a neutral position. In the history of hundreds of years of Finance in the world, who put 20% of the deposit rate and the two digit real interest rate as neutral monetary policy? < /p >
< p > experts also use quantity theory, for example, the total amount of M2 is 100 trillion. However, China's 100 trillion M2 balance not only has more than 20 trillion yuan frozen by the central bank, but also has more than 20 trillion in idling in real estate and usury (shadow banking), and the real economy funds are already seriously insufficient. < /p >
< p > back to the basic knowledge of money and banking, interest rate is the "thermometer" which is short of funds: the real interest rate is high, which proves that funds are scarce; the real interest rate is low, which proves that the funds are sufficient. Therefore, in the monetary policy of various countries, interest rate, as a price type monetary policy tool, takes precedence over quantity type tools such as reserve ratio and open market. Before the zero interest rate policy failed, Europe, America and Japan seldom used quantitative tools. < /p >
Before the end of May, China's overnight interest rate was only 2%, but it has been above 3% since the beginning of June, reaching 4%~6% at the end of the month and reaching 13% in late June. P Obviously, the overnight interest rate as a guide price in the national financial market has increased by 50%~100% compared with the beginning of this year. What kind of neutrality is there? The central bank has implemented the tight monetary policy in disguise. {page_break} < /p >
< p > < strong > five, effective measures should be taken as soon as possible to reduce the real interest rate and to break the financial chaos in China from < < /strong > > /p >.
< p > June, the shortage of money almost led to financial crisis: if the bank liquidity crisis, people run and commercial banks fail, the consequences will be disastrous. Fortunately, on the last week of June, the central bank not only promised to provide the necessary liquidity for financial institutions, but also used various innovative financial instruments, but also restarted the tools of shelving many years of refinancing and rediscount. The bank liquidity crisis was finally lifted. < /p >
< p > however, after October, the central bank first released the wind slightly tighter, then stopped 7 days, 14 days of reverse repurchase, also sent the central bank votes, the overnight interest rate rose to more than 5%, and once again caused the stock market to plummet. Then, on Tuesday, the central bank abruptly changed 180 times, put 13 billion reverse repurchases, put 16 billion repurchase on Thursday, and overnight interest rates began to fall. As for the Central Committee why the central bank suddenly became tight before the third plenary session, why did it turn to an emergency and whether there was high-level intervention behind it? < /p >
< p >, however, looking back, the overnight lending rate since July has been 50% higher than that of the first five months, except for the short-term drop in interest rates after the money was wasted. Monetary policy has never returned to its normal level before June, and has been tightened in the name of neutrality, which is obviously inconsistent with the central policies. < /p >
< p > more worthy of attention are: unbalanced hedging, high domestic interest rates caused by internal tightening, accelerating the inflow of hot money and further unbalanced hedging policy are still continuing; the fact that high interest rates have been forced to collapse has not changed. Monetary policy is still in the name of "neutrality", reversing the structure and pushing more funds away from the real economy. Under the premise of financial restraint, especially under the strict control of money supply, tightening the faucet in the name of "marketization of interest rate reform" is continuously raising the price of China's capital. < /p >
< p > obviously, under the complicated background of the rapid international capital flows, the profound changes in the domestic monetary flows and the huge difference in availability of funds among different sectors, it is inevitable to calculate and control the amount of money in a complicated way. The essential meaning of the financial sector lies in building a bridge between savers and enterprises. In countries with the world's most abundant savings, we need to believe in the market, believe in the price signals of the funds, manage the things that we change, reduce the financial restraint, and let the interest rate reflect the relationship between the supply and demand of the funds. Soon we can see the real downward trend of the real interest rate. This is not only the only choice to break the financial chaos in China, but also the urgent need to restore the power of China's economic growth. < /p >
< p > because the ultra-low interest rates in Europe, the United States and Japan are in sharp contrast to the flooding of China's "a href=" http://www.91se91.com/news/index_cj.asp "usury" /a, the international hot money continues to pour into China, which will undoubtedly increase the pressure of RMB appreciation. In order to maintain the stability of the RMB exchange rate, the central bank passively buys foreign exchange and issues Renminbi for the purpose of buying foreign exchange. Because of the worry that the RMB issue will impact the domestic economy, the central bank has been raising the deposit reserve rate and Issuing the number of votes to quantify the hedging measures for many years. However, due to the existence of a fatal defect of unbalanced hedging in the whole process, the domestic RMB interest rate is increasing, and the appreciation of RMB is expected to intensify. < /p >
< p > the unbalanced hedging policy that results in the policy effect is that the total amount and structure of the people's Bank of China in the process of purchasing foreign exchange for currency and hedging back currency are unbalanced. The large commercial banks that sell to the central bank's foreign exchange reserves and take away Renminbi every month are large commercial banks with large foreign exchange settlement. Behind them are large state-owned enterprises, foreign trade and foreign capital enterprises, and interest rate arbitrage. < /p >
Less than p years, the result of the game of "buying foreign exchange for issuing notes and hedging" has caused more and more funds for small and medium-sized banks, domestic funded enterprises and small and medium-sized enterprises, and the domestic real interest rates are getting higher and higher. At present, the average interest rate of short-term financial products and trusts is above 5%. The average financing cost of private debt of SMEs is more than 10%, and the interest rate of private short-term loans is more than 20%. < /p >
Under the background of zero interest rates in Europe and the United States, the interest rate in China will further attract hot money inflow and strengthen the expected appreciation of RMB. As a result, the vicious circle of "hot money inflow - the central bank's purchase of foreign exchange and unbalanced hedging will result in structural capital shortage in China, and the overall interest rate upturn - hot money accelerated inflow", P. < /p >
< p > obviously, the only way to change this vicious circle is to stop the central bank as soon as possible, and take various effective measures to reduce the domestic interest rate rapidly, reduce the arbitrage space and fundamentally reduce the power of hot money inflow. < /p >
< p > strong > two, high interest rates crush the industry, and the policy to combat capital flight further raises interest rates < /strong > /p >
< p > the operation of many traditional industries in China is less than a href= "http://www.91se91.com/news/index_cj.asp" > gross margin /a > 10~15%, while the actual financing cost of SMEs and private enterprises is as high as 10%~20%. The high cost of actual financing has reduced the profits of the original enterprises to losses or struggled to survive. As a result, more and more enterprises are forced to close and use limited funds to raise "usury". In the environment where industrial capital is spanformed into capital business, not to mention those commercial banks with capital advantage, many commercial banks have started a disguised "usury" business through shadow banking in the background of actual shortage of funds and high capital prices. More and more funds are running idle in the financial system. < /p >
< p > obviously, the long-term error, unbalanced hedging, loose foreign policy and tight internal interest rate policy are the fundamental reasons for capital flight. However, the central bank did not solve the problem from the essence of high interest rates and usury, but instead, from the phenomenon of capital flight, it tried to tighten the money supply, forcing commercial banks to reduce leverage, and wishful thinking to make idle capital return to the real economy in this way. < /p >
At first, according to the law of money flow, "big rivers and small rivers full of rivers and dry rivers and small rivers", first, small and medium-sized banks and private enterprises are withered and deeply injured. Secondly, industries with real estate and overcapacity are hard to get assets, and the most profitable assets are venture capital enterprises, private enterprises and technological enterprises. The result is that the economic structure is reverse adjusted, and the most vulnerable ones, such as bond market and stock market, are not easy to get out of capital. The result is that the financing cost of government debt and real economy is further increased, and the stock market falls down on consumption and investment, and the risk is enlarged. Finally, the increase of capital interest rate, more entity bankruptcy, and more capital flows from industry to usury. < p > results, and the results of the central bank's policies are Obviously, by tightening money, we can not only "adjust the structure" and "return capital to the real economy", but also further promote the reverse flow of funds, and attract more funds to usury and shadow banking market, which has the opposite effect. {page_break} < /p >
The reform paradox of < p > strong > three and high interest rate: the central bank pushes interest rate marketization away from each other. < /strong > < /p >
< p > there is a story about the marketization of water price: one year, the Tibetan emperor arranged Taibai mercury to help the Jade Emperor manage the water policy. Taibai mercury was supported by the Jade Emperor, saying that the water price marketization had won the applause of the Western Paradise and the Central Plains public opinion; however, Taibai mercury monopolized the water supply, tightened the faucet without releasing water, and consequently the water price rose sharply, even the Dragon Kings were all thirsty to have a high fever. < /p >
< p > the history of the reform of global interest rate marketization tells us that choosing a loose monetary environment to promote the marketization of interest rates, the real interest rate will inevitably descend; if we choose the tight background to carry out the interest rate marketization, the real interest rate will go up. In spite of the fact that the central bank has promoted the so-called marketization of interest rates in recent years, it has not been wrong, but because of the tight monetary environment, the real interest rate has been rising, resulting in a severe deflation effect. Not only the stock market and bond markets have been defeated, but also a large number of industries unable to afford high capital are broken down by high interest rates. < /p >
< p > the interest rate marketization and < a href= "http://www.91se91.com/news/index_cj.asp" > currency < /a > supply marketization, it is easy to recall the debate in the early 90s: "whether to start with the reform of the market system or start with price reform?" Obviously, evading the system reform and carrying out price marketization reform under the background of strict supply control, the so-called price marketization is inevitable. < /p >
The high interest rate paradox of < p > strong > four and "neutral" monetary policy < /strong > < /p >
P, the central bank's overnight lending is the most important monetary policy guidance tool in market economy countries. If interest rates are raised, interest rates on Treasury Deposits, interest rates on treasury bonds and interest rates on bonds and loans will surely rise, and the stock market will plummet and crack down on consumption and investment. 6, the monthly interest rate is still above 4%, the interest rate of treasury bonds has reached a new high of 10 years, and usury has become widespread. The central bank still considers it a neutral monetary policy. < /p >
< p > how does this so-called neutral monetary policy come from? A micro-blog fable with a neutral clothing policy can illustrate the problem: < /p >
< p > "the East is hot and cold, and the people are clothed. Sometimes the clothes officer did not respond promptly, and found that the weather had warmed up when the weather was cold and allowed to wear cotton clothes. When it was discovered that the weather was warm and allowed to wear a single coat, the weather had cooled. The clothes officer then asked the prime minister to carry out the policy of neutral clothing in order to change all the time. When the coldest season coincided, the people wore short sleeves and announced that the current policy of implementing neutral clothing was not to change clothes. < /p >
< p > obviously, China's so-called neutral monetary policy is also produced in a similar context. When people are tired of the regulation of throttle, the neutral monetary policy is indeed an option. The problem is that neutral monetary policy should start from a neutral position. In the history of hundreds of years of Finance in the world, who put 20% of the deposit rate and the two digit real interest rate as neutral monetary policy? < /p >
< p > experts also use quantity theory, for example, the total amount of M2 is 100 trillion. However, China's 100 trillion M2 balance not only has more than 20 trillion yuan frozen by the central bank, but also has more than 20 trillion in idling in real estate and usury (shadow banking), and the real economy funds are already seriously insufficient. < /p >
< p > back to the basic knowledge of money and banking, interest rate is the "thermometer" which is short of funds: the real interest rate is high, which proves that funds are scarce; the real interest rate is low, which proves that the funds are sufficient. Therefore, in the monetary policy of various countries, interest rate, as a price type monetary policy tool, takes precedence over quantity type tools such as reserve ratio and open market. Before the zero interest rate policy failed, Europe, America and Japan seldom used quantitative tools. < /p >
Before the end of May, China's overnight interest rate was only 2%, but it has been above 3% since the beginning of June, reaching 4%~6% at the end of the month and reaching 13% in late June. P Obviously, the overnight interest rate as a guide price in the national financial market has increased by 50%~100% compared with the beginning of this year. What kind of neutrality is there? The central bank has implemented the tight monetary policy in disguise. {page_break} < /p >
< p > < strong > five, effective measures should be taken as soon as possible to reduce the real interest rate and to break the financial chaos in China from < < /strong > > /p >.
< p > June, the shortage of money almost led to financial crisis: if the bank liquidity crisis, people run and commercial banks fail, the consequences will be disastrous. Fortunately, on the last week of June, the central bank not only promised to provide the necessary liquidity for financial institutions, but also used various innovative financial instruments, but also restarted the tools of shelving many years of refinancing and rediscount. The bank liquidity crisis was finally lifted. < /p >
< p > however, after October, the central bank first released the wind slightly tighter, then stopped 7 days, 14 days of reverse repurchase, also sent the central bank votes, the overnight interest rate rose to more than 5%, and once again caused the stock market to plummet. Then, on Tuesday, the central bank abruptly changed 180 times, put 13 billion reverse repurchases, put 16 billion repurchase on Thursday, and overnight interest rates began to fall. As for the Central Committee why the central bank suddenly became tight before the third plenary session, why did it turn to an emergency and whether there was high-level intervention behind it? < /p >
< p >, however, looking back, the overnight lending rate since July has been 50% higher than that of the first five months, except for the short-term drop in interest rates after the money was wasted. Monetary policy has never returned to its normal level before June, and has been tightened in the name of neutrality, which is obviously inconsistent with the central policies. < /p >
< p > more worthy of attention are: unbalanced hedging, high domestic interest rates caused by internal tightening, accelerating the inflow of hot money and further unbalanced hedging policy are still continuing; the fact that high interest rates have been forced to collapse has not changed. Monetary policy is still in the name of "neutrality", reversing the structure and pushing more funds away from the real economy. Under the premise of financial restraint, especially under the strict control of money supply, tightening the faucet in the name of "marketization of interest rate reform" is continuously raising the price of China's capital. < /p >
< p > obviously, under the complicated background of the rapid international capital flows, the profound changes in the domestic monetary flows and the huge difference in availability of funds among different sectors, it is inevitable to calculate and control the amount of money in a complicated way. The essential meaning of the financial sector lies in building a bridge between savers and enterprises. In countries with the world's most abundant savings, we need to believe in the market, believe in the price signals of the funds, manage the things that we change, reduce the financial restraint, and let the interest rate reflect the relationship between the supply and demand of the funds. Soon we can see the real downward trend of the real interest rate. This is not only the only choice to break the financial chaos in China, but also the urgent need to restore the power of China's economic growth. < /p >
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