Limitations of virtual currency
Publish: 2021-05-14 15:05:11
1. bitcoin is unique in that only 21 million bitcoins will be generated. But this is not a limitation at all, because bitcoin can be divided into smaller sub units in the transaction, such as bit - one bitcoin equals 1000000 bit. A bitcoin can be split to 8 decimal places (0.000 000 01). If the average scale of a single transaction is reced to a certain extent in the future, it can even be split into smaller units.
2.
Limitations of monetary policy:
1. Monetary policy has external time lag: that is to say, it takes a period of time for the policy to proce effect (the length of time is a controversial issue), so it may miss the opportunity and lead to the opposite effect
The implementation of monetary policy depends on the openness of the market and the flow of international capital. In November 2010, the quantitative easing monetary policy of the United States led to a large amount of capital flowing into emerging economies, weakening its role3. Monetary policy should also consider the velocity of money circulation. The stronger the velocity of money circulation, the more money demand, and the weaker the velocity of money circulation, the smaller the money demand. This may lead to the failure of money supply to keep up with the demand
Monetary policy is effective in dealing with demand driven inflation, but has little effect on cost driven inflation. For the economic contraction, the effect is not obvious 
extended data:
monetary policy, that is, financial policy, refers to the general term of various guidelines, policies and measures adopted by the people's Bank of China to control and regulate money supply and credit in order to achieve its specific economic goals. The essence of monetary policy is that the country adopts different policy trends of "tight", "loose" or "moderate" according to the economic development in different periods
various policies and measures to use various tools to adjust money supply to adjust market interest rate, to influence private capital investment through the change of market interest rate, and to influence macroeconomic operation by affecting aggregate demand. The three major tools of monetary policy to adjust aggregate demand are legal reserve ratio, open market business and discount policy
The monetary policy target is not an isolated target, but an organic whole composed of three progressive levels, namely, operational target, intermediate target and final target. Price stability is the primary goal of the central bank's monetary policy, and the essence of price stability is the stability of currency valuereference: network monetary policy
3. As far as the balance of payments monetary analysis itself is concerned, its limitations are mainly manifested in the following four aspects
(1) we only pay attention to the final result of balance of Payments - the change of official reserve account, but ignore the balance and interaction of current account and capital account< (2) currency is not the only factor of balance of payments imbalance and its adjustment 3) Assuming that money demand is stable, money supply is regarded as the only force determining the balance of payments
(4) the conclusion of long-term balance of payments analysis largely depends on the law of one price or the hypothesis of purchasing power parity.
(1) we only pay attention to the final result of balance of Payments - the change of official reserve account, but ignore the balance and interaction of current account and capital account< (2) currency is not the only factor of balance of payments imbalance and its adjustment 3) Assuming that money demand is stable, money supply is regarded as the only force determining the balance of payments
(4) the conclusion of long-term balance of payments analysis largely depends on the law of one price or the hypothesis of purchasing power parity.
4. Physical money is the earliest money in the world, which is used as money by some goods existing in nature or some goods proced by people
the limitation of physical currency: it is not easy to divide; Not easy to keep; The value of some physical currency is small, large commodity transactions need a lot of money to play the role of media, so it is inconvenient to carry.
the limitation of physical currency: it is not easy to divide; Not easy to keep; The value of some physical currency is small, large commodity transactions need a lot of money to play the role of media, so it is inconvenient to carry.
5. That is, money can only limit the amount of money in circulation, but in inflation and deflation, there must be a subsidy policy to solve the actual problem. For example,
when inflation occurs, all kinds of prices rise, but the government uses monetary tightening (bank interest rate increase). However, monetary policy can only restrict the entry of foreign hot money. Because inflation involves many factors, such as the rise of labor costs, monetary policy can not solve this problem. At this time, we need to use instrial adjustment to change the transformation in order to increase corporate profits
for example, in deflation, for example, in the United States, the government used monetary easing policy to print a lot of money and devalue the currency to benefit exports. However, the main problem lies in the problem of bank lending in the United States and the economic crisis caused by excessive use of loans. Only by adjusting the financial system can the next financial storm be stopped.
when inflation occurs, all kinds of prices rise, but the government uses monetary tightening (bank interest rate increase). However, monetary policy can only restrict the entry of foreign hot money. Because inflation involves many factors, such as the rise of labor costs, monetary policy can not solve this problem. At this time, we need to use instrial adjustment to change the transformation in order to increase corporate profits
for example, in deflation, for example, in the United States, the government used monetary easing policy to print a lot of money and devalue the currency to benefit exports. However, the main problem lies in the problem of bank lending in the United States and the economic crisis caused by excessive use of loans. Only by adjusting the financial system can the next financial storm be stopped.
6. 1、 From the perspective of monetary structure, the limitations of expansionary monetary policy
the author believes that expansionary monetary policy is based on the expansion of total money supply and the improvement of money liquidity. The growth of money supply realized by the general expansionary monetary policy is only in terms of broad money. In the social and economic environment of sluggish consumption and investment demand and depressed market, enterprises and residents will rece their cash and current deposit holdings and hold their assets in the form of broad money such as savings deposits, time deposits and foreign currency deposits, As a result, while the total amount of money increased, the liquidity of money decreased. For example, the ratio of M1 to M2 was 43.8% at the end of 1994, and it decreased to 35% in 1999, which greatly reced the policy effect of expansionary monetary policy. Therefore, it is not difficult for us to understand the reason why the expansionary monetary policy has been ineffective in stimulating effective demand since 1997
policy recommendations: (1) on the basis of continuing to implement the active fiscal policy, in order to alleviate the problems of deflation and insufficient effective demand, monetary policy must change the practice of blindly increasing the total amount of money supply. On the premise of maintaining the relative stability of the M2 growth rate of broad money, the focus of work should be shifted to regulating the structure of money supply, that is, improving the liquidity of money, We should encourage savings deposits, time deposits and other quasi currencies to be converted into cash and current deposits, so that the growth rate of M1 is relatively higher than that of M2 2) By encouraging consumption and investment, more than 600 million savings deposits will be diverted. The basic work of encouraging consumption is to establish a stable social security mechanism and a socialized personal credit evaluation system. To encourage investment, on the one hand, we should strengthen the innovation of financial instruments to increase the channels of financial investment; on the other hand, we must further rece the investment restrictions to encourage instrial investment< When the central bank adopts the expansionary monetary policy in order to stimulate social demand, it is mainly realized through the introction of base money and the rection of the legal deposit reserve ratio. However, in the economic background of low consumption and investment willingness of microeconomic subjects: (1) e to the consumer psychology of "buying up but not buying down" and the relatively low nominal interest rate, especially the nominal savings deposit interest rate, the economic behavior of residents is often characterized by holding money for purchase, This leads to the increase of social cash flow and the increase of cash leakage rate, which objectively reces the money multiplier and offsets the central bank's money supply 2) Due to the sluggish sales and shrinking proction and operation, the demand for current deposits by enterprises is reced, and their investment behavior is restrained. To a certain extent, the current deposits of enterprises will be converted into time deposits. As mentioned above, the rise of the time deposit ratio also plays a role in recing the money multiplier and offsetting the money supply of the central bank 3) With the decrease of deposit reserve ratio and the increase of the central bank's base money supply, the available funds of commercial banks have increased greatly. At the same time, the loan scale of commercial banks has not increased correspondingly. There are two reasons: first, the low loan willingness of enterprises and residents makes the whole society's loan demand sluggish; Second, the loan risk, especially the credit risk, is increasing. For the need of risk control and asset security, commercial banks strictly control the loan of funds, resulting in the phenomenon of "reluctant to lend". Finally, it reflects the changes in the asset structure of commercial banks, that is, the extraordinary growth of excess deposit reserves, which also plays a role in recing the money multiplier and offsetting the money supply of the central bank to a certain extent
to sum up, in the process of the central bank's attempt to expand the money supply to stimulate social demand, the economic behavior of other economic entities objectively runs counter to the policy intention of the central bank, thus inhibiting the realization of the effect of monetary policy to a certain extent
policy recommendations: (1) while paying attention to the decisive role of the central bank in the formulation and implementation of expansionary monetary policy, we must focus on guiding the economic behavior of commercial banks, instrial and commercial enterprises and residents, so as to "follow the direction of monetary policy", so as to maximize the effect of expansionary monetary policy in stimulating demand and promoting economic growth 2) In the formulation and implementation of economic policies, it is not feasible in theory and practice to pay attention to the comprehensive and coordinated use of many economic policies, such as fiscal policy, monetary policy, income policy, investment policy, instrial policy, social security policy, etc 3) To speed up and deepen the reform of the financial system is essential to get rid of deflation and promote economic growth< As an important part of macro-economic policy, the main purpose of monetary policy is to comprehensively use various monetary policy tools to regulate money supply, affect the monetary demand of economic subjects, and thus have an impact on the investment level and consumption expenditure scale of the whole society, And ultimately affect the total social supply and demand, to achieve a dynamic balance. Therefore, there must be a relevant transmission process from the specific formulation and implementation of monetary regulation by the central bank to the realization of the ultimate goal of monetary policy. Taking the transmission of expansionary monetary policy as an example, this process can be divided into three levels:
1. According to the established monetary policy objective of stimulating social demand and promoting economic growth, the central bank uses various monetary policy tools to increase the supply of basic money, improve the ability of commercial banks to create funds, and rece the interest rate level. This is the basis for the effectiveness of expansionary monetary policy. However, at this stage, a considerable part of the base money released by the central bank has not entered the creation process of multiple deposit money. The reason lies in the internal short-circuit phenomenon of bank funds, which means that the increased reserves of the banking system are not ultimately used for loans to instrial and commercial enterprises and residents, but stay in the banking system, It can be used for interbank lending and securities trading, or in the form of excess deposit reserve. This phenomenon objectively plays a role in recing the base money, which further reces the actual supply of money through the tightening of multiple deposit money, resulting in the relative rection of social funds
2. On the basis of accepting the basic currency provided by the central bank and increasing the excess deposit reserve, commercial banks respond to the specific regulation of the central bank, that is, adjust their business accordingly according to the intention of the central bank to expand the money supply, use the excess reserve to expand the scale of loans to instrial and commercial enterprises and indivial residents, and lower the interest rate level of loans, At the same time, it influences the increase of money supply through derivative deposit creation mechanism. As a transmission medium between the central bank, instrial and commercial enterprises and residents, whether the commercial banks can make a quick response to the macro-control intention of the central bank on the basis of interest driven is the basic guarantee for the smooth transmission of monetary policy. However, e to the simplification of the assets of commercial banks at the present stage, the existing bank credit rationing mechanism itself suppresses the demand and reces the currency in circulation, and for the purpose of risk control, when the central bank implements the expansionary monetary policy and relaxes the monetary policy, there is an increasingly common phenomenon of "reluctant to lend" and the internal short circuit of bank funds mentioned above, A large number of funds remain in the banking system without stimulating effect on investment and consumption
3. According to the policy intention of easing monetary policy issued by the central bank, instrial and commercial enterprises and indivial residents should expand their investment and consumption expenditure when commercial banks expand the scale of loans, the financial market is abundant in capital supply and the interest rate level drops, so as to achieve the goal of monetary policy to stimulate social demand and promote economic growth. This level is the key to the transmission of monetary policy. In recent years, the actual effect of China's macro-financial regulation and control has proved that, at this stage, even with the cooperation of active fiscal policy, the expansionary monetary policy can not effectively promote social consumption expenditure or investment expenditure. It should be said that the essence of the deflation trend in our country is institutional, and it is the concentrated reflection of many deep-seated contradictions in our current economy, including the financial system
through the above analysis, we can see that there is a serious blocking phenomenon in the current monetary policy transmission mechanism in China, which not only exists in the third level which has the final impact on the real economy, but also exists in the first two levels of monetary transmission, so that the limited pulling effect of expansionary monetary policy on the economy is discounted
policy recommendations: (1) to change the current situation that the central bank relies too much on the refinancing channel to release the base money, the central bank should use rediscount and open market business in a larger scale and scope, so as to expand the means and ways for the central bank to implement monetary policy and enhance the effectiveness of macroeconomic financial regulation and control 2) It is necessary to speed up the construction of China's financial market, especially the money market, and change the current unbalanced development of the capital market and the money market. Only in this way can we create a good foundation for establishing a smooth monetary policy transmission mechanism. Among them, it is urgent to improve the bill market, lending market and short-term treasury bond market 3) Make full use of the current favorable economic environment, speed up the pace of China's economic system reform, in order to eliminate the institutional constraints on consumption and investment. As far as the reform of financial system is concerned, it is necessary to transform the state-owned commercial banks as soon as possible, so as to eliminate the suppression of demand by the current banking system and rece the role of money in circulation.
the author believes that expansionary monetary policy is based on the expansion of total money supply and the improvement of money liquidity. The growth of money supply realized by the general expansionary monetary policy is only in terms of broad money. In the social and economic environment of sluggish consumption and investment demand and depressed market, enterprises and residents will rece their cash and current deposit holdings and hold their assets in the form of broad money such as savings deposits, time deposits and foreign currency deposits, As a result, while the total amount of money increased, the liquidity of money decreased. For example, the ratio of M1 to M2 was 43.8% at the end of 1994, and it decreased to 35% in 1999, which greatly reced the policy effect of expansionary monetary policy. Therefore, it is not difficult for us to understand the reason why the expansionary monetary policy has been ineffective in stimulating effective demand since 1997
policy recommendations: (1) on the basis of continuing to implement the active fiscal policy, in order to alleviate the problems of deflation and insufficient effective demand, monetary policy must change the practice of blindly increasing the total amount of money supply. On the premise of maintaining the relative stability of the M2 growth rate of broad money, the focus of work should be shifted to regulating the structure of money supply, that is, improving the liquidity of money, We should encourage savings deposits, time deposits and other quasi currencies to be converted into cash and current deposits, so that the growth rate of M1 is relatively higher than that of M2 2) By encouraging consumption and investment, more than 600 million savings deposits will be diverted. The basic work of encouraging consumption is to establish a stable social security mechanism and a socialized personal credit evaluation system. To encourage investment, on the one hand, we should strengthen the innovation of financial instruments to increase the channels of financial investment; on the other hand, we must further rece the investment restrictions to encourage instrial investment< When the central bank adopts the expansionary monetary policy in order to stimulate social demand, it is mainly realized through the introction of base money and the rection of the legal deposit reserve ratio. However, in the economic background of low consumption and investment willingness of microeconomic subjects: (1) e to the consumer psychology of "buying up but not buying down" and the relatively low nominal interest rate, especially the nominal savings deposit interest rate, the economic behavior of residents is often characterized by holding money for purchase, This leads to the increase of social cash flow and the increase of cash leakage rate, which objectively reces the money multiplier and offsets the central bank's money supply 2) Due to the sluggish sales and shrinking proction and operation, the demand for current deposits by enterprises is reced, and their investment behavior is restrained. To a certain extent, the current deposits of enterprises will be converted into time deposits. As mentioned above, the rise of the time deposit ratio also plays a role in recing the money multiplier and offsetting the money supply of the central bank 3) With the decrease of deposit reserve ratio and the increase of the central bank's base money supply, the available funds of commercial banks have increased greatly. At the same time, the loan scale of commercial banks has not increased correspondingly. There are two reasons: first, the low loan willingness of enterprises and residents makes the whole society's loan demand sluggish; Second, the loan risk, especially the credit risk, is increasing. For the need of risk control and asset security, commercial banks strictly control the loan of funds, resulting in the phenomenon of "reluctant to lend". Finally, it reflects the changes in the asset structure of commercial banks, that is, the extraordinary growth of excess deposit reserves, which also plays a role in recing the money multiplier and offsetting the money supply of the central bank to a certain extent
to sum up, in the process of the central bank's attempt to expand the money supply to stimulate social demand, the economic behavior of other economic entities objectively runs counter to the policy intention of the central bank, thus inhibiting the realization of the effect of monetary policy to a certain extent
policy recommendations: (1) while paying attention to the decisive role of the central bank in the formulation and implementation of expansionary monetary policy, we must focus on guiding the economic behavior of commercial banks, instrial and commercial enterprises and residents, so as to "follow the direction of monetary policy", so as to maximize the effect of expansionary monetary policy in stimulating demand and promoting economic growth 2) In the formulation and implementation of economic policies, it is not feasible in theory and practice to pay attention to the comprehensive and coordinated use of many economic policies, such as fiscal policy, monetary policy, income policy, investment policy, instrial policy, social security policy, etc 3) To speed up and deepen the reform of the financial system is essential to get rid of deflation and promote economic growth< As an important part of macro-economic policy, the main purpose of monetary policy is to comprehensively use various monetary policy tools to regulate money supply, affect the monetary demand of economic subjects, and thus have an impact on the investment level and consumption expenditure scale of the whole society, And ultimately affect the total social supply and demand, to achieve a dynamic balance. Therefore, there must be a relevant transmission process from the specific formulation and implementation of monetary regulation by the central bank to the realization of the ultimate goal of monetary policy. Taking the transmission of expansionary monetary policy as an example, this process can be divided into three levels:
1. According to the established monetary policy objective of stimulating social demand and promoting economic growth, the central bank uses various monetary policy tools to increase the supply of basic money, improve the ability of commercial banks to create funds, and rece the interest rate level. This is the basis for the effectiveness of expansionary monetary policy. However, at this stage, a considerable part of the base money released by the central bank has not entered the creation process of multiple deposit money. The reason lies in the internal short-circuit phenomenon of bank funds, which means that the increased reserves of the banking system are not ultimately used for loans to instrial and commercial enterprises and residents, but stay in the banking system, It can be used for interbank lending and securities trading, or in the form of excess deposit reserve. This phenomenon objectively plays a role in recing the base money, which further reces the actual supply of money through the tightening of multiple deposit money, resulting in the relative rection of social funds
2. On the basis of accepting the basic currency provided by the central bank and increasing the excess deposit reserve, commercial banks respond to the specific regulation of the central bank, that is, adjust their business accordingly according to the intention of the central bank to expand the money supply, use the excess reserve to expand the scale of loans to instrial and commercial enterprises and indivial residents, and lower the interest rate level of loans, At the same time, it influences the increase of money supply through derivative deposit creation mechanism. As a transmission medium between the central bank, instrial and commercial enterprises and residents, whether the commercial banks can make a quick response to the macro-control intention of the central bank on the basis of interest driven is the basic guarantee for the smooth transmission of monetary policy. However, e to the simplification of the assets of commercial banks at the present stage, the existing bank credit rationing mechanism itself suppresses the demand and reces the currency in circulation, and for the purpose of risk control, when the central bank implements the expansionary monetary policy and relaxes the monetary policy, there is an increasingly common phenomenon of "reluctant to lend" and the internal short circuit of bank funds mentioned above, A large number of funds remain in the banking system without stimulating effect on investment and consumption
3. According to the policy intention of easing monetary policy issued by the central bank, instrial and commercial enterprises and indivial residents should expand their investment and consumption expenditure when commercial banks expand the scale of loans, the financial market is abundant in capital supply and the interest rate level drops, so as to achieve the goal of monetary policy to stimulate social demand and promote economic growth. This level is the key to the transmission of monetary policy. In recent years, the actual effect of China's macro-financial regulation and control has proved that, at this stage, even with the cooperation of active fiscal policy, the expansionary monetary policy can not effectively promote social consumption expenditure or investment expenditure. It should be said that the essence of the deflation trend in our country is institutional, and it is the concentrated reflection of many deep-seated contradictions in our current economy, including the financial system
through the above analysis, we can see that there is a serious blocking phenomenon in the current monetary policy transmission mechanism in China, which not only exists in the third level which has the final impact on the real economy, but also exists in the first two levels of monetary transmission, so that the limited pulling effect of expansionary monetary policy on the economy is discounted
policy recommendations: (1) to change the current situation that the central bank relies too much on the refinancing channel to release the base money, the central bank should use rediscount and open market business in a larger scale and scope, so as to expand the means and ways for the central bank to implement monetary policy and enhance the effectiveness of macroeconomic financial regulation and control 2) It is necessary to speed up the construction of China's financial market, especially the money market, and change the current unbalanced development of the capital market and the money market. Only in this way can we create a good foundation for establishing a smooth monetary policy transmission mechanism. Among them, it is urgent to improve the bill market, lending market and short-term treasury bond market 3) Make full use of the current favorable economic environment, speed up the pace of China's economic system reform, in order to eliminate the institutional constraints on consumption and investment. As far as the reform of financial system is concerned, it is necessary to transform the state-owned commercial banks as soon as possible, so as to eliminate the suppression of demand by the current banking system and rece the role of money in circulation.
7. (1) statutory deposit reserve ratio: it refers to the ratio that commercial banks and other financial institutions are required by law to turn over part of their deposits to the central bank as reserve. The results are as follows: 1. Even if the adjustment range of reserve rate is very small, it will cause a huge fluctuation of money supply; ② Other monetary policy instruments are based on deposit reserve; ③ Even if commercial banks and other financial institutions hold excess reserves for various reasons, the adjustment of legal deposit reserves will have an effect; ④ Even if the deposit reserve remains unchanged, it also limits the ability of the commercial banking system to create derivative deposits to a great extent. The limitations are as follows: 1) the effect of the adjustment of the statutory deposit reserve rate is relatively strong, which leads to its tendency of being fixed; ② The impact of deposit reserve on various types of financial institutions and deposits is inconsistent, so the effect of monetary policy may be difficult to grasp because of these complex situations< (2) rediscount policy: it refers to the policy and regulation made by the central bank when commercial banks apply to the central bank for rediscount of unexpired bills. It includes two aspects: the determination and adjustment of the one-time rediscount rate; The second is to stipulate the qualification of applying for rediscount from the central bank. Results: 1) the adjustment of rediscount rate can change the total amount of money supply; ② The regulation of rediscount qualification conditions can restrain or support and change the flow of funds. Limitations: 1) the initiative is not only in the central bank, even the change of the market may go against its policy will; ② The regulation of rediscount rate is limited; ③ The rediscount rate is easy to adjust, but the adjustment at any time leads to frequent fluctuation of market interest rate, which makes commercial banks at a loss< (3) open market business: refers to the central bank's policy behavior of trading securities in the financial market to regulate the amount of money in the market. The results are as follows: 1. It has strong initiative and can operate according to the policy purpose; ② High flexibility, the quantity and direction of business can be controlled flexibly; ③ The control effect is gentle and the vibration is small; ④ It has a wide range of influence. Limitations: 1. The central bank must have a strong financial strength to intervene and control the whole financial market; ② There must be a developed and perfect financial market, and the market must be national, with a complete range of securities and a certain scale; ③ There must be the cooperation of other policy instruments
hope to adopt
hope to adopt
8. Limitations of monetary policy:
9. The limitations of monetary policy: 1. From the perspective of the equilibrium of the money market, if the increase or decrease of money supply affects the interest rate, it must be based on the premise that the speed of money circulation remains unchanged. If this premise does not exist, the impact of money supply changes on the economy will be dected. In the period of economic prosperity, the central bank needs to tighten the money supply or slow down the growth rate of money supply in order to curb inflation. However, at that time, the public generally will increase their expenditure, and when the price rises rapidly, the public is unwilling to hold money in their hands, but hopes to spend it as soon as possible, so that the speed of money circulation will be accelerated, This is no different from increasing the money supply in the field of circulation. At this time, even if the central bank reces the money supply, it will not be able to rece the inflation rate. On the contrary, when the speed of money circulation decreases in the period of economic recession, the impact of the increase of money supply by the central bank on the economy may be offset by the decrease of the speed of money circulation. If the increase of money supply is equal to the increase of money demand, the LM Curve will not move, so the interest rate and income will not change. 2. In the period of inflation, the effect of tightening monetary policy may be obvious, but in the period of economic recession, the effect of expanding monetary policy is not obvious. At that time, manufacturers were generally pessimistic about the economic prospects. Even if the central bank loosened its monetary policy and lowered its interest rate, those who did not want to increase their loans were not willing to engage in activities. For the sake of safety, banks were not willing to lend easily. Especially because of the liquidity trap, no matter how loose the money is, the interest rate will not decrease. In this way, as an anti recession policy, the effect of monetary policy is quite weak. Even from the perspective of anti inflation, the role of monetary policy is mainly reflected in the fight against demand driven inflation, while the effect of monetary policy on cost driven inflation is very small. If the rise of prices is caused by the increase of wages exceeding the increase of labor proctivity, or by the monopoly manufacturers seeking high profits, it will be more difficult for the central bank to control the inflation by controlling the money supply. 3. The external time lag of monetary policy also affects the effect of monetary policy. To change money supply, the central bank should affect interest rate, then employment and national income. Therefore, it will take a long time for monetary policy to play its full role. In particular, after the market interest rate changes, the scale will not change quickly. After the interest rate falls, it needs a process for manufacturers to expand the scale of proction. After the interest rate rises, it is not easy for manufacturers to rece the scale of proction. In a word, even if it doesn't take a long time to adopt the monetary policy at the beginning, it will take quite a long time from the implementation to the effect. In this process, the economic situation may change contrary to people's original expectation. For example, the central bank expands the money supply in the economic recession, but the economy has turned into prosperity before the policy effect is fully exerted, Since prices have begun to rise rapidly, the original expansionary monetary policy is not an anti recession policy, but has played a role in fueling inflation. The problems of monetary policy in practice are not only these, but only from these aspects, monetary policy as a means to stabilize economic fluctuations, the role is limited.
10. 1. From the perspective of money market equilibrium, if the increase or decrease of money supply affects the interest rate, it must be based on the premise that the speed of money circulation remains unchanged. If this premise does not exist, the impact of money supply changes on the economy will be discounted. In the period of economic prosperity, the central bank needs to tighten the money supply or slow down the growth rate of money supply in order to curb inflation. However, at that time, the public generally will increase their expenditure, and when the price rises rapidly, the public is unwilling to hold money in their hands, but hopes to spend it as soon as possible, so that the speed of money circulation will be accelerated, This is no different from increasing the money supply in the field of circulation. At this time, even if the central bank reces the money supply, it will not be able to rece the inflation rate. On the contrary, when the speed of money circulation decreases in the period of economic recession, the impact of the increase of money supply by the central bank on the economy may be offset by the decrease of the speed of money circulation. If the increase of money supply is equal to the increase of money demand, the LM Curve will not move, so the interest rate and income will not change. 2. In the period of inflation, the effect of tightening monetary policy may be obvious, but in the period of economic recession, the effect of expanding monetary policy is not obvious. At that time, manufacturers were generally pessimistic about the economic prospects. Even if the central bank loosened its monetary policy and lowered interest rates, investors would not increase loans to engage in investment activities, and banks would not lend easily for the sake of safety. Especially because of the liquidity trap, no matter how loose the money is, the interest rate will not decrease. In this way, as an anti recession policy, the effect of monetary policy is quite weak. Even from the perspective of anti inflation, the role of monetary policy is mainly reflected in the fight against demand driven inflation, while the effect of monetary policy on cost driven inflation is very small. If the rise of prices is caused by the increase of wages exceeding the increase of labor proctivity, or by the monopoly manufacturers seeking high profits, it will be more difficult for the central bank to control the inflation by controlling the money supply. 3. The external time lag of monetary policy also affects the effect of monetary policy. In order to change the money supply, the central bank should affect the interest rate, then the investment, and then the employment and the national income. Therefore, it will take a long time for the monetary policy to play its full role. In particular, after the market interest rate changes, the investment scale will not change correspondingly soon. After the interest rate falls, it needs a process for manufacturers to expand the scale of proction. After the interest rate rises, it is not easy for manufacturers to rece the scale of proction. In a word, even if it doesn't take a long time to adopt the monetary policy at the beginning, it will take quite a long time from the implementation to the effect. In this process, the economic situation may change contrary to people's original expectation. For example, the central bank expands the money supply in the economic recession, but the economy has turned into prosperity before the policy effect is fully exerted, Since prices have begun to rise rapidly, the original expansionary monetary policy is not an anti recession policy, but has played a role in fueling inflation. The problems of monetary policy in practice are not only these, but only from these aspects, monetary policy as a means to stabilize economic fluctuations, the role is limited.
Hot content