The Central Bank'S Reduction Is A Double-Edged Sword That Cannot Be Described By Good Or Bad.

The central bank's reduction should be disclosed when President Zhou Xiaochuan issued a monetary policy declaration before the G0 finance ministers and central bank governors' meeting.

At that time, President Zhou Xiaochuan pointed out that China's monetary policy is in a moderate and relaxed state, and there are more space and tools for monetary policy.

Therefore, in less than a few days, the central bank will drop its quota.

The Central Bank of China suddenly dropped the market.

It is speculated about what the purpose of the central bank's approval is, whether it is for the declining stock market or for the exciting real estate market.

Because both require more liquidity inflows.

The cheering of the market is that it can lead to capital flows into the stock market, allowing the stock index to go up again.

Market cheers, some people are particularly excited that it will fully stimulate the second line as far as the three or four line real estate market prices rise, a comprehensive digestion of China's real estate inventory.

It's a good deal.

However, we can see that, since the 2008 financial crisis in the United States, central banks around the world have adopted various loose monetary policies, both quantitative easing and negative interest rate policy, as well as China's interest rate reduction.

However, the excessive expansion of this credit policy, in addition to the United States through the prosperity of the stock market has been a bit of improvement, the economies of countries are also trapped in the mire.

In China, for example, the excessive expansion of credit between 2009 and 2013 (that is, the credit granted in the past 5 years is larger than the sum of the previous 64 years).

This is a blow to China's real estate bubble which has created a short-term economic boom and guaranteed GDP growth. However, the problems and sequelae of the prosperity created by the "real estate" economy will not be resolved in the next decade or so.

It can be said that all the problems existing in China's economic life are caused by the "real estate" of the economy.

I wonder if the government has understood this. In fact, it has not been understood yet.

This is in the large sense.

Interest rate cuts, especially the negative impact of excessive credit expansion, can not be estimated at all.

Moreover, excessive credit expansion or quasi interest reduction is also an important factor in the instability of the RMB value.

Especially in the case of RMB depreciation expectations have not yet completely reversed.

You can see that China

After the announcement, the offshore RMB exchange rate dropped to 0.19% against the US dollar, at 6.5567, while the dollar on the shore dropped to the 6.55 level, at 6.5511, once hitting the lowest point since February 5th.

That is to say, when the expectation of RMB depreciation is not completely reversed, the Central Bank of China will have a great negative impact on the reduction or reduction of interest rates at this time.

If the renminbi once again depreciates with the easing of the monetary policy of the Central Bank of China, and thus triggering China's capital flight again, the effect of reducing liquidity will be offset by the flight of Chinese capital.

However, China

The excessive credit expansion of monetary policy or the reduction of central banks may make housing prices in the first tier cities more crazy.

Because this year, the government aimed at the inventory of real estate, and comprehensively increased leverage and tax reduction on the housing market, thereby causing the madness of the real estate market in many cities in China.

Such as Beijing, Shanghai, Nanjing, Hangzhou and other cities appear buyers queuing to buy a house, but also let these cities a lot of real estate almost a day to buy.

The daily disc of one city and another city appears.

This crazy real estate market, even now limited to a few cities, is likely to spread to other three tier, four line cities, thus triggers another wave of real estate speculation in China.

But this wave of real estate speculation is quite different from that of the real estate speculation in 2009.

In the current high housing prices, this wave of real estate speculation is basically a small number of investors playing and hyping, housing consumption simply do not even want to enter.

Because such a high housing price housing consumption can only look at the housing sigh, there is no payment capacity to enter.

If prices rise, these developments will soon be launched.

More new stocks in the Chinese housing market are beginning to grow.

In this case, the government hopes to ease monetary policy and preferential tax policies to reduce real estate inventory. In fact, such a real estate policy can only make future inventory of real estate more and more, instead of going to stock, it will increase inventories.

As long as there is profit, real estate developers will develop large quantities of housing, and local governments will sell large quantities of land.

Under such circumstances, the main body of the purchase of housing is the fried author, and the government has all kinds of policy support and promotion, so the housing price immediately pushed up and crazy is also normal.

If housing prices are rising rapidly, not only will many cities' existing housing stock soon be able to digest, but 30 trillion of the local government's debt burden will soon be pferred to these housing writers, and more importantly, a new wave of new housing will soon be launched.

As I have said, there is a huge building on the side of my residence, which has not been started for more than 5 years because of the sale problem.

For example, the real estate boom and GDP growth may occur in the short term. For a long time, the problems caused by the "real estate" will definitely become bigger and bigger.

This is the inevitable result of the excessive expansion of government credit.

It seems that the government hopes to build a stock market boom without success. It is too slow to carry out the "one belt and one road". Now we have to blow up the real estate bubble once again so that local governments can get rid of the debt crisis to promote GDP growth.

But from a global point of view, it is impossible to achieve this goal and will only get into deeper predicament.