The Fed'S Interest Rate Hike Has Been "Excessive".

If we believe that the central bank is rational, then we can basically judge that although there is no guarantee that the interest rate will not fluctuate in the second half of the year, it should be said that the probability of re emergence in the first half of the year is "very small."

Sheng Songcheng, the director of the central bank counselor and the former director of the Department of restructuring, also made the same judgement. Yesterday, many media gave prominence to the position of Sheng Songcheng and Qiao Yongyuan.

According to their explanation, the so-called "market interest rate smoothing downward" has two meanings.

First, interest rates are stable or even slightly down in the second half; second, interest rates fluctuate less than the first half of the year.

The main implication of "tight liquidity is slowing down" is that market liquidity in the second half of this year may still be in a tight balance and will not be loosely loosed, but it will not be tightened again, but will be eased.

In fact, liquidity was tighter in the first half of the year. An intuitive reflection is that the broad money supply M2 grew only 9.6% in May, and has dropped to a historical low.

Qiao Yongyuan cited six reasons: first, China's economy has not yet found new growth momentum, so the economic growth cycle is hard to say, and the growth rate of GDP is difficult to reach the 6.9% level in the second half of the year. So, at least, monetary policy can not be tightened. Second, the price level has tended to decline, and the PPI has been negative for two consecutive months. Third, financial risk prevention, bubble squeeze and deleveraging have achieved initial success. M2 is far from the control target set by the government at the beginning of the year. The liquidity of the banking system has been relatively tight. Fourth, the RMB exchange rate has stabilized and foreign exchange reserves have increased slightly. Why do we draw such a conclusion? Sheng song Cheng He

China's central bank raised interest rates based on the Fed's interest rate increase.

The Congress misled the world and thought China's economic risk was huge. But from a macro perspective, the problem of China also existed in the United States.

The main difference in China lies in the degree of strength of the micro economic entities. As a capitalist country, the government of the United States embodies more capital services.

So after the financial crisis, the US government and the Federal Reserve do a lot of work. There is only one core: maintaining the stability and health of the micro capital entities.

The government and the Fed therefore absorb a large number of financial and corporate bad assets, and then pass on these rotten assets through the unique US dollar hegemony. In fact, this is the key for the Federal Reserve to dare to large-scale QE.

Large scale QE will dilute the intrinsic value of the dollar and encroach on the reserve value of the US dollar.

If the currency issue of a country is related to the dollar reserves, it is not only a problem of the loss of foreign exchange reserve value, but also a depreciation of the sovereign currency of the reserve countries.

The renminbi is actually facing such a problem, so its depreciation is, in a sense, an inevitable outcome after the large-scale QE in the US.

It is worth noting that this is a direct impact on China's interest rate policy.

In fact, in the past long time, the change of interest rate in China is closely related to this.

Fortunately, Trump did not want the appreciation of the dollar to stop the growth of the US real economy, so we saw that the US dollar interest rate did not further raise the US dollar index, but the US dollar index continued to decline. This actually gave the RMB interest rate a respite, but we must be very vigilant against this matter.

In my view, the central bank should further strengthen the management of cross border flows of foreign exchange and RMB, making monetary policy more concerned about domestic economic needs and avoiding external fluctuations as far as possible affecting domestic economy.

This is probably the choice that can not be achieved under the current RMB exchange rate formation mechanism.

Sheng Songcheng and Qiao Yongyuan told us: International

During the period, the Fed launched a large amount of basic currency through the four round of quantitative easing policy. The size of the Federal Reserve's balance sheet expanded from 5 US dollars in 2007 to less than US $900 billion in 2014, while the balance sheet expansion of the Central Bank of China was less than 2 times in the same period.

Why do we think this data is very important? Because it undeniably denies that "China's currency issue is far ahead of the US".

For some reason, some economists ignore the basic knowledge of "issuing the central bank's currency with the growth and quantity of M2".

Therefore, we need to reiterate that the currency issued by the central bank is called the base currency. The data at the end of March this year is 30 trillion yuan, while the M2 mainly reflects the monetary derivation ability of financial institutions.

Yes, China's M2 level is very high at the moment, but that is the role of money multiplier, and it is the embodiment of China's financial high leverage.

Therefore, lowering leverage is not a problem of reducing the supply of basic money, but a problem of reducing the multiplier of money.

Another important question is whether the central bank refuses to "drain" or the lower the supply of basic money is, the more misunderstandings China has on this issue.

In my opinion, the stock of basic currencies, the total amount of M2, and the monetary multiplier are closely related to the economic scale of a country and the economic structure of the country.

Generally speaking, the country's monetary multiplier should be 3.5 to 4 times as high as the real economy. Otherwise, it can not be very high.

Too long capital and excessive currency speculation will not only be harmful to the development of the real economy, but will destroy the real economic development.

However, China's monetary multiplier has reached a record 5.33 times, which is exactly the fundamental cause of China's financial "de going to reality".

On the contrary, after the massive base money in the United States, the money multiplier has dropped from 8.93 times in 2007 to 2.98 times in 2013, which means that the United States has succeeded in "deleveraging".

But for the United States, a highly developed financial country, is the monetary multiplier 2.98 times too low? In fact, this is the bottom line of the Fed's willingness to "shrink", reduce the number of basic currencies and increase the monetary multiplier.

Our question is: what is the best of the two situations between China and the US? So do not simply criticize the central bank's currency issue.

In the past few years, a lot of strange and absurd arguments have been seen in my mind, which is more like someone's intention to help the US push up the RMB interest rate and achieve the purpose of forcing the renminbi to appreciate. This not only causes the Chinese economy to be highly leveraged, but also the financial sector is "getting rid of reality and being virtual", and it has seriously damaged China's real economy.

Therefore, we must "look back" and conduct a serious review.

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