The banknote printing machine didn't stop
China's central bank recently announced that the M2 balance of 210.02 trillion yuan, the growth rate of 11.1%, the same as last month, and last month and set a new high since 2017.The stock of social financing scale is 268.39 trillion yuan, the growth rate is 12.5%, which is a new high since April 2018.
But the economic growth background is different, the GDP average speed in 2017-2018 is about 6.8% positive, compared with the negative 6.8% GDP the first quarter of 2020.
In the case of negative economic growth, the printing rate is particularly alarming.
This is also extremely incompatible with the central bank's M2 and slightly higher targets that match nominal GDP.
The acceleration of Ponzi financing
In theory, the current printing of money enough to drive the housing stock skyrocketing, the extent of the surge should be close to 2009.
But the stock market performance is flat, the housing market slightly improved, but the degree of improvement is even less than the first quarter of 2019.
The metaphor is:
1) the amount of capital alone can not continue to push up the housing market and stock market, because of high fundamental risks, the formation of capital speculation housing stocks suppression.
Funds released by 2)M2 Gao Zeng did not enter the housing unit, but did not enter the entity. This represents a large amount of money outside the trading system, and holding money is cost-effective, a large amount of money in the urgent search for opportunities to invest in a certain area of speculation.
Who will be the next hype area? Rigid-demand consumer goods are most likely, but this may require an opportunity to catalyze the convergence of public expectations and drive capital inflows.
The consensus is expected to be the beginning of a spiral of inflation.
The final madness of printing money
Because of the accumulation of risk caused by the long-term rise in asset prices (mainly housing), the M2 increase does not continue to drive asset prices up, but a low increase will certainly drive asset prices to burst.
M2 the need to maintain higher growth rates does not create additional shocks to asset prices, creating systemic risks, which determines that central banks are motivated not to let M2 slow down.
But the maintenance of the debt chain requires growth at the banconeri level, which determines that social-finance growth is bound to rise even M2 steady growth.
February social finance 10.7%, March social finance 11.5%, April social finance 12.0%, May social finance 12.5%, feel the acceleration of social finance!
Besides speed and scale, the stock of social financing scale at the end of May was 268.39 trillion yuan, of which each dollar needed to repay interest, while GDP negative growth.
Debt growth and the GDP! of free fall
Entities have no hope of paying interest on nearly 270 trillion of debt, and only accelerated incremental debt can ease the tension of the debt chain, but printing money has limits, inflation crisis, currency (trust) crisis, exchange rate crisis, are the constraints of printing money.
Printing money to stimulate the economy, but the cost of printing money has become a stumbling block to real economic growth.
Banknote printing has a stimulative effect on the economy, debt costs have a drag on the economy, the current drag effect has been greater than the stimulus effect, the more the printing of banknotes to suppress the effect of GDP growth been formed in 2012.
But debt chains without printing money will break and asset bubbles will burst.
After the mountain top, left to right are down the mountain. The effect is simply to stop printing money immediately jump from the third floor, accelerate printing money delay from the tenth floor.
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