Surplus, deficit, stagnation, devaluation …… Why economists teach you the concept may have been wrong?

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Lead: economists teach our concept may be wrong?

text | Shanghai Yang Tao, chairman of investment elevation source | Jan military strategy, ID: yangtaolue1968 Edit | Poker investor, please indicate the source < / p>

* Pi Kaidi French scholar Thomas of “Das Kapital 21st century” eloquent hundreds of thousands of words, the Chinese translation of nearly 700-page length.
This book has been highly praised in the West, the author also received an award of the European Economic Association.
A recent study by Pi Kaidi data a hundred years of national income and capital of the United States and Europe, came to the conclusion: the long-term rate of return on capital is higher than economic growth, which will lead to serious social inequality.
For social stability, it should be limited to the rate of return of capital, or impose high progressive tax rate on capital.

Not to mention that this book presents policy proposals are reasonable, just from the research methods, according to historical data and national income deduction some capital, some projections using several pre-set formula
, actually also works as an economist, discusses the model and its conspiracy theory China’s so-called currency war like no different, with Marx’s “Das Kapital” more different.
From this book, we do not see the development of contemporary Western economic theory, but instead saw the decline of Western economics: mathematical models of the past, even abandoned, but Ben subject directly, said the results, similar to China’s stock analysts stereotyped

This decline of western economics of it is nothing strange place.
Since the 1990s, with the bursting of Japan’s so-called bubble economy, with the failure of some countries, Russia and Latin America-style shock therapy, as the US economy of scale is quietly catch up with China, the basis of Western economic theory has long twilight.
It can not save the increasingly aging US and European economies, but also unable to help Japan out of the quagmire, can not even explain the Chinese miracle.

decline of more than theory, deduced from Western economic theory some conceptual errors are still in circulation, unfriendly.
According to the results of Western economic theory conceptual conclusion repeatedly thwarted at every turn in reality, can not explain the phenomenon of everyday economic life.
This time to carry out the order out of chaos.
Today, we tried some of the misconceptions some anatomy.


the end of August this year, the British “Financial Times” quoted sources reported that the US president last month, Trump refused to cut excess steel production capacity of the program proposed by China.
It is said that the Chinese side will propose to the 2022 excess steel production capacity to cut 150 million tons, but this proposal was rejected twice Trump.

It is noteworthy that, at the 12th China-EU Business Summit in June this year, Chinese Premier Li Keqiang says that the overcapacity blamed China is not objective and unfair.
China’s efforts to capacity in the world is unique.
Basis of the previous years, eliminate backward steel production capacity of 90 million tons, based on 2016 and quit over 65 million tons of steel production capacity, by 2017 China will Yajian about 50 million tons.
Responsibility to the needs of all parties sharing capacity, the most important thing is not blame each other but act together.

Note the different expressions of the news.
In the presentation Americans, the direct call “excess capacity”, while Chinese premier stressed that “backward production capacity.”
Clearly, the American concept is wrong.

What are overcapacity never existed in the world.
If a family eat 1 kg of grain per year, 10 acres of land just to meet demand.
But this family has 20 acres of land, is the extra 10 acres is excess capacity?
We need to put 10 acres of unproductive land to destroy it?
It is clearly absurd.

The extra 10 acres of land, even if it is also up weeds stronger than destroy it!
Land extra yield can be used as savings, external output can be, how it will become useless?
In the absence of the consumer or rot, no one food is surplus.

farmers farming yet understand the truth, but why to the national level was distorted.
In fact, any business, in any industry, should have capacity backup in case contingencies.
Normal society, should at least set aside beyond the normal capacity of 20% of energy consumption as disaster recovery, and must not be temporary because it will eliminate the current production can not be satisfied simply comes down to excess capacity.

this year to domestic production, some backward production capacity, but some simply because there is no license to handle such issues.
At this point, the correct way is to allow companies to re-submit a variety of documents, will exceed capacity planning permission or temporary storage pending future re-open when needed, how can they be called simply brutally destroy excess capacity across the board?

You know, harvest time, people did not eat bread, when famine, sweet potato leaves excellent cuisine.
The current production capacity in some industries appear to be more than demand, but if in the future there is a demand, I’m afraid but also staged a short supply, resulting in soaring prices.
20 years ago, there had been a limited production of spindles and limit the production of electric power, how the results like China do?
A few years time there have been serious short supply.

By the same token, in the micro-economic field, there is a mistake traders useless argument.
Some people think we should advocate a comprehensive manufacturer directly to the user’s mode, the removal of part of traders.
They ignore the role of traders, individual industries may be able to use this mode, but most of the industry still needs to traders.
Traders like a reservoir.
Traders have some stock, you can ease the contradiction between supply and demand on downstream commodities may reduce short-term spike.

So, even if the Americans and the Trump really do not understand that our capacity is surplus, we can not destroy the Great Wall, naive to think that excess production capacity exceeded demand, it is necessary across the board
go productivity.
Children from poor families, how can I not tasty tasty tube, hug the basket are food, we should guide enterprises to reasonable expansion of production capacity, to prevent one-sided capacity.


A lot of people will be directly opposed, say business is to take the profit, loss-making enterprises like the zombies in general exist, not only should clean up the capacity, should clean up the business, it should make all
loss-making enterprises are out of the market.

This is the pernicious influence deluded by the Western point of view of economics.
Who says business must make money?
Amazon was founded 20 years is only just profitable, how Americans do not turn off the enterprise?
Its current price-earnings ratio as high as 240 times, no one say the valuation is too high, this is hardly a profitable enterprise, but the total market capitalization of more than $ 460 billion, is the world’s largest company by market value – but no one ever said
it is the zombie business.

So, enterprises do not always make money, do not have to make money opening.
Loss of a few years can earn a few years deficit years is also possible.
For private companies, investors can accept the status quo, then why not state-owned enterprises sustained losses for a long time it?

You know, business losses, the destruction of wealth is not no reason, but simply because companies will be left to the welfare of consumers and society – every copper business losses, means that there must be a social
a person or a copper enjoy this one, will not destroy the currency, wealth will not go away, until rice is not eaten, but in a cauldron circling it, you do not find it, does not mean there is not a grain of rice.

For example, a bottle of mineral water, comprehensive cost $ 5, when the company sold only sell 3 yuan per bottle, each bottle a loss of $ 2.
Enterprise is a loss, but who benefit from it?
Consumers buy mineral water, save two dollars.
This process is, in theory, is equivalent to the consumer business development subsidies.
In the same country, business losses, is consumer welfare, similar to the state financial subsidies.

Many state-owned enterprises are not profitable, but it is still in the creation of wealth.
For example, China’s railway companies, public transport companies, almost every one of the cars are operating at a loss.
It’s a loss, equal to the State to subsidize passenger, brought immeasurable social benefits.
Other state-owned enterprises have similar problems, such as loss largely was due to the national grid rural power loss is too high and the price can not be set too high; the high cost of oil, Sinopec high oil prices, even though state subsidies may still be a loss.
But the loss so what?
Are they the loss can not refining, not the transmission?
Obviously not.
Business losses, but social benefits far outweigh the profit and loss situation of enterprises.
For example, China Telecom in the South China Sea islands, in remote border, whether or not profit, must establish communication with the base station.
These investments, how light can be considered profitable or not it?

By the same token, we can not be based on the profitability of the enterprise to determine the economic status quo.
Internet was once a loss-making enterprises to infer the size of a city of this city to be finished, the results have been mercilessly hit reality face.
A period, a region, or certain sectors of industry, some companies losses, but reflect the revenue and expenditure imbalance on the financial statements, but that does not mean there is no economic development.


2017 Nian 9 21, after Fitch and Moody’s, Standard & Poor’s lowered China long-term sovereign credit rating from AA
– adjusted to A +, short-term debt rating from A-1 + adjusted to A-1, outlook has been changed from negative to stable.
This is since 1999, the first time the S & P sovereign rating lowered China.
S & P explained that the strong growth in China for a long time the debt has increased China’s economic and financial risks, but in the next three to four years, China’s economy will continue to grow, the financial situation will continue to improve.

Not to mention that Standard & Poor’s rating paradoxical – since China’s economy will continue to grow, the financial situation will improve, then why downgrade it, but on the S & P negative attitude to China’s growth in debt
, we can see arrogance and ignorance under the theoretical guidance of Western economics.

First, the government’s internal debt can not be considered liabilities, its essence is to issue currency in disguise government initiatives to promote economic growth.
A country’s currency, is endorsed by the national government, the amount of money is entirely subjective decision of the Government.
For the government, it means the issue (additional) monetary printing presses start of both, as well as the issuance of bonds, the government expanded credit and so on.
The bonds of the way, there is no increase in the stock of money in society, just to concentrate funds on building community together to engage in it.
In this case, in fact, it is a kind of virtuous circle: government borrowing on construction and construction is lagging behind the people still use, but also back the money back to creditors.
It played a personal function completely unable to do – no individual will take the initiative to come up with tens of billions of billions of billions of funds to carry out his infrastructure, only the government can do.

So, if the government is responsible, then the higher the government’s debt, the country’s wealth grows, the faster, the better the economy.
Of course, the premise that the government must borrow funds for efficient infrastructure.

On the other hand, if the government actually appeared in a fiscal surplus, is a completely wrong thing, which is equal to the government withdrew the money in society, there has been deflation in disguise, is harmful for economic development
, the welfare of the people is also harmful.
During the Clinton years, the US government fiscal surplus was $ 400 billion, Clinton also was known as understand the economy of the president.
But think about why the government would balance nothing more than taxes too much and too little spending, its essence is not “compete with the people” do?

Western economists see positive than government borrowing, but only know looking at bad debt, worried about government debt burden is too heavy or fear the government will go bankrupt, did not understand the nature of money is government credit.
Government debt need to pay it back?
Do not think of the government is a separate entity.
To repay debt between individuals, between corporate debt have also, but the government does not issue debt repayment exist – government debt burden can be eliminated by way of issuing new currency.

“rotten meat in the pan.”
Debt within a country is not a burden, but the general welfare.
As long as claims and liabilities within a system, as long as the continued wealth creation, there would be a big problem.
Banks have a little bad, because the loss of business, loss of business is selling cheap commodity prices, the equivalent of profit to consumers, consumers saved more money, but also other consumer goods and services or to buy a house, the overall economic environment
It does not deteriorate even better.
Household debt to buy a house, the high prices are only the surface of the low profit and loss, house building wealth has increased, buy a house, to have and to enjoy the wealth, as long as people bought a house loan continues to work on the line.
Government debt first, so that companies and workers earn more, fuller employment, create more wealth, more vigorous consumption, the combined effect of social debt is much higher than that point.

As long as money is autonomous, ultimately any sum of internal debt are just a number that can be used to hedge a way to deal with this and have a lot of numbers.
Debt is a digital problem, the problem all standard digital generated can be solved or alleviated, but if it is a problem with the production of wealth, and there is no better solution, it is apt to cause a big problem.

But if the debt owed to the outside of the system, it is easy to go wrong.
Foreign debt needed to pay off their wealth, this is the fundamental problem.
All countries while problems due to foreign debt is too large, the fundamental reason is the lack of national wealth, lack of capacity to create wealth.
However, the United States there is no such problem for the United States, whether it is domestic debt or external debt, are denominated in US dollars.
No matter how much debt the US government is not a burden, but the welfare of people in the country.
Unfortunately, Americans are not aware of this only.

For China, the current domestic debt is no problem, the scale of internal and external debt are absolutely safe level.
China’s debt is not a problem, but the debt is not a problem!


no foam on beer dull.
Liquor did not make foam, but unfortunately most people can not afford to drink.
Easiest drunk liquor rather than beer – beer foam rich, relatively low alcohol content, not easy to get drunk.
Instead, Fed officials have said, to the withdrawal of red wine before the feast was going on, note that he wants the withdrawal of red wine instead of beer.
Because relatively speaking beer, wine and spirits more likely to be drunk.
That being the case, does it mean there is a bubble beer is a good alcoholic beverages?

But people frequently criticized on the economy but would say “bubble economy”, completely ignoring the joy and pleasure brought under the bubble economy, but always thought he could imagine to see the bubble burst the bubble
when the tragedy.
However, any time after the bursting of the economic frenzy in human history, has nothing to do with the foam, but the man of the withdrawal of red wine (the Federal Reserve or the Bank) related.

good wine, a little drunk to talk.
Wine on the table, we can see tipsy people can open their hearts forever, others face crimson spirited wine on the table filled with a relaxed atmosphere.
Economic life, too, proper inflation, a slight economic bubble, it is the best time of economic dynamism: Most corporate earnings, most people rising wages, state tax increases, bank lending actively, corporate expansion warm, personal
venture enthusiastically, economic growth accelerated, the whole society can feel the vitality and hope.

such a good environment and atmosphere, should even care protection.
But Western economics is precisely the so-called bubble hated, frequently take inflation that matter, do not see improvement in the employment data of an inflationary environment.
The only means to deal with the so-called Western Economics bubbles and inflation is to tighten the money supply, even reckless, as a result, first, the United States in 1929 after the Great Depression, the Japanese economic downturn after 1990, as well as the subsequent 2008
the global financial crisis.
Western countries do not learn, I’m afraid there is human intervention next time the so-called bubble, artificially created so-called recession.

So, we should change the understanding of the foam.
For example, the so-called real estate bubble, the price may be a bubble, but the house itself there is no bubble, build more houses, more wealth is a good thing, not a bubble.
Some experts have said the house started much, much vacant, there is a bubble, and now it turns out the house is not enough.
Wealth is always better, the labor to create wealth never too much, where there are bubbles?
If the house built more capacity than demand is the bubble, then we must welcome the foam, the more the better!


stagflation, stagflation is called for short, is a newly discovered western economics, namely unemployment and inflation and economic stagnation occur simultaneously phenomenon.
Simply put, that is, the price rose to economic stagnation.
This is a new concept proposed by the British in 1965.
And accordingly it indicates the failure of Keynesianism, as conventional economics, rising prices accompanied by certain low unemployment, and falling prices must be accompanied by rising unemployment.

In the view of western economics, the price ups and downs seem inevitable reaction to how much the quantity of money, so simple to say that inflation is inflation.
In fact, long-term price increases slow, gradual increase reflects the reality of the currency, but prices over a period of time more ups and downs reflect changes in supply and demand.
For example, in 1973 the first oil crisis, when oil prices rose from $ 3 a barrel above $ 10, short-term or more than 200%; in 1978 the second oil crisis, the oil price from $ 13 to $ 34; 2008
crude oil prices above $ 100 even for a long time.
The price of a large number of modern industrial products related to oil prices, in the case of high oil prices, corporate short term can not control costs through technological innovation, prices appear only global.
At this point, regardless of economic data, it can not be classified as stagflation category.

On the other hand, the so-called inflation and the economy does not grow, but also a doubtful thing.
In theory, inflation, means an increase in demand, meaning output is about growth.
In this case, the level of the community to create wealth is to improve the wealth is in the stock of social growth.
However, due to insufficient statistical methods may not accurately reflect the real situation of the economy.

If prices rise at the same time, the total amount of wealth is to enhance the wealth is to enhance production efficiency, as long as inflation is under control, is acceptable.
In addition, if prices rose slightly this year, even if production and as last year, it does not matter, because the price rise will promote the production, annual production capacity next year to go up is a good thing.
Prices rose modestly, corporate profits increased gradually, gradually increase the amount of wealth production and create efficiency, this type of moderate inflation without fear.

So, faced with the so-called stagflation, there is a difficult trade-offs so-called government, the government only needs to turn on the water to maintain the rhythm, an appropriate increase in money supply, accelerate the promotion of productive labor, the economy will continue to follow
original rhythm forward.

middle-income trap?

Many people worry that China will step footsteps of some Latin American countries, into the so-called middle-income trap, or divide across the economy, but the transition from developing to developed countries.
This is a mechanical, metaphysical economics point of view.

First, the development of any country could fall into the trap – whether poor, middle-income countries, rich countries, if there was greater economic or political problems, and there is no better solution or mitigation
, they are likely to fall into the trap of so-called long-term economic stagnation or decline.
Conversely, if the issue is resolved, we can maintain the development.
This phenomenon is not patented so-called middle-income countries, or whether fall into the trap of “middle income” are not necessarily linked.
The reason why people would think that middle-income countries will fall into the trap, simply because several economies economic growth after a certain stage of development to the sudden loss of direction only.

In fact, whether a country can continue to develop, in addition to factors such as policy, in terms of population, depending on the quality of labor.
Economic development, must continue to improve the quality of workers.
The so-called quality of workers, the core of wealth creation reflected in the efficiency of workers.
Improve the level of education, improvement of labor skills, you can improve labor efficiency.
Those countries economic stagnation, not the root cause of the failures of transition production, has nothing to do with the fair, the root cause can not be improved labor efficiency.

For example, if a worker prime time blacksmith, in the creation of wealth is $ 10,000.
In old age, if he was a blacksmith, or 10,000 yuan to create wealth, economic growth will certainly not.
If his son generation to continue to strike while the iron is in the creation of wealth, or 1 million, it must be economic trap.

However, if the former blacksmith learn new technology to the steel-making blast furnace, the son of a blacksmith or his wealth created each year continues to increase from 10,000 yuan to 100,000 yuan and 100 million yuan, economy
how you could fall into the trap?

This is where the problem lies.
A country should make education a strategic position is very important to continuously improve the quality of workers, which also includes a variety of ways innovative working tools in order to effectively improve the labor efficiency.

For example, many people worry that China’s “old before getting rich”, said China’s “aging” will hinder economic development, the emergence of so-called “demographic dividend” disappearing phenomenon.
In fact, as China’s scientific and technological progress, labor efficiency has long been greatly improved, older people can also create more wealth.
For example, before the elderly can not come down to earth to harvest the dealer, but when sickle into a harvester, a little older man driving a harvester into the fields, harvest can easily complete the task, the number is now a 60-year-old man could harvest crops
more than the previous 1000 strong labor.
Not only that, when turned into a shovel excavators from the excavator, with textile weaving, with the high-speed rail subway travel, labor efficiency greatly improved the whole society, thus freeing labor and labor time is extremely huge, how can you say
aging means that the demographic dividend disappear?

Look at China six or seven million university graduates each year graduates, a conservative estimate, by 2030, the number of university graduates in the 25-34 age group in China will increase by 300%, while Europe and the US
It increased only 30%.
Look at this data, what is necessary to worry about China’s economy will stagnate it?


In recent years, the debate about whether the RMB exchange rate depreciation there has been a lot of rich people to make a choice with real action, and some domestic factories and enterprises to sell to overseas swaps,
some so-called currency to preserve wealth through the relocation of factories to overseas fashion, some pretending to acquire foreign assets of the monetary transfer, of course, a lot of people to emigrate, that become foreign citizens, holding the dollar even realize their dream.

This is absurd approach.
Because not only did not devalue the RMB basis, but there is a great appreciation potential.

The exchange rate is an indicator of total labor productivity and wealth accumulation two countries.
Currency exchange rate level of core support of a country is the country’s labor efficiency (productivity) and the stock of wealth.
The stronger production capacity of the country, its exchange rate is bound more strong; the greater the country’s stock of wealth, the more its currency strong.

We can look at the logic.
A poor white country, the people food and clothing are a problem, it’s strong exchange rate will it?
Of course not!
Because in this case, money can not buy things in this country!
Suddenly, the more the lack of stock of wealth, the wealth, the higher the price.
The more poor, the weak domestic purchasing power of its currency, which is why a pack of toilet paper in Zimbabwe worth billions of dollars necessary to the truth.
Conversely, if a very large number of the nation’s wealth, strong domestic currency to buy the country’s currency exchange rate will inevitably strong.
This performance to be realized on the yen.
A lot of people always say that the Japanese economy is losing 20 years, but 20 years, the Japanese economy is only slow growth or no growth, but millions of Japanese or in hard work, great wealth of material in Japan, the price will remain a long-term
The purchasing power of the yen in Japan is relatively strong, which determines the international status of the yen.

On the other hand, if a country’s wealth is not too much, but the country’s high labor efficiency, ability to create wealth, the future purchasing power of the currency’s rise, the country’s currency
exchange rate will be very strong – in this case, the continuous influx of foreign capital will seek to add value, which led to exchange rate appreciation.
2005–2015 year of this decade, the Chinese yuan against the dollar from 8.27 all the way to appreciate the reason to 6.10, it has benefited from this.

As 2016– devaluation between 2017, the fundamental reason is that some people do not understand the true meaning of the exchange rate, blindly follow confuse Western economists and politicians that the yuan to depreciate, that the Chinese currency over
hair will lead to depreciation of the exchange rate, thus excluding the cost of selling domestic assets intent flight.

In fact, the additional money does not necessarily lead to exchange rate depreciation.
As long as production capacity to keep up with the growth rate of the stock of wealth is greater than the rate of currency issuance, not only will not devalue the currency, they may appreciate.
But, conversely, if no additional money, but the decline in production capacity, fewer stock of wealth, currency devaluation is inevitable.
Therefore, a stable exchange rate of currency issuance is not a fundamental factor, but how much productivity and wealth stock.

China look back, we went through a golden decade greatly enhance production efficiency, the RMB appreciation enjoyed a decade.
Today, the Chinese economy is in transition, productivity there is still much room for growth, the basis of the exchange rate depreciation does not exist after adjustment.
At the same time, the stock of China’s domestic wealth after years of accumulation has been a very large increase, the total amount of wealth hidden in the unit of currency far better than in the past.
At this time, our monetary gold is the basis of the exchange rate appreciation.
RMB devaluation of how likely it?


In recent years, many people bearish on the Chinese economy, China’s housing prices, some economists such words were frequently collapse alarmist to predict with prices.
Ruthless fight face reality again and again, because they do not look at the mystery of the rise of China, did not see the potential of China’s growth.

For example, say that the collapse of housing prices to people who may have thought that there are more than 400 million Chinese farmers go to town?
30 square meters of housing per person is 12 billion square meters of building area.
Reconsider China over the past 20 years the completion of commercial residential area of ​​less than 100 billion square meters, corresponding to only 3-4 million people live in the new house, which means that there are at least 5-6 million urban residents in need of housing improvement
still need 20 billion square meters of housing.
The two together, the Chinese demand for new housing over 30 billion square meters.
According to the 2016 China completed 770 million square meters of residential area of ​​computing, you need 40 years to meet the initial demand by that time, the age of many houses has more than 60 years.

So, that Chinese prices to collapse, in fact, do not understand the economy, understand the real estate investment, do not understand the situation of simple judgments.
Last year or two, around the country to implement the purchase of houses, this is not a precursor to collapse prices, but on the contrary, is to curb housing prices rise further – as a second-tier cities of new homes was not enough, three or four lines of the house
enter stage shortage, rigid demand of urban residents has just entered the stage of the outbreak, some of the real estate speculators hoarding around the house, distorts the market supply and demand, the local government was introduced a policy to limit real estate speculators.

The most telling figures.
By 2016, the national housing sales area of ​​1.37 billion square meters, but only completed 770 million square meters, which means not many houses had been completed and sold out.
The end of the year, the residential area of ​​the country for sale only 400 million square meters, equivalent to the level of sales four months.
If you take out some of the low quality and unfinished houses, the actual balance can there?
For example, a city rebuilt after the demolition of villages in the Yangtze River Delta, the amount of monetary compensation for more than 10,000 households in more than 500 million, they want to market their own time to buy a house only to find the city almost no new houses completed, which led to the purchase
Faced with this scenario, who say housing prices collapse?

house so the Chinese economy, too.
China’s current problem is not excess, but a shortage, whether it is a house or car, whether road or rail, are faced with a serious shortage.
At this point, we should do is to continue to increase horsepower, start the engine of development, and guide people to continue to work hard to create wealth, the size of the Chinese economy upgraded.
Those less potential for Chinese people to see the future, those who transfer assets to overseas, those who immigrated to other countries, will one day regret it.
Because China is still huge potential for development, the prospects are very good.
At this point, we should not blind chilling by cold air cooling, but more should be consistent from top to bottom, one mind on construction for the Chinese economy to become the world contribute to a pole.

So, there is a strong government, there are people hard-working, independent currency, and went on a correct path of development, all the people are creating wealth in the single-minded labor, countries such as the outlook is infinitely good
, not only collapse no worries, there are bright prospects of a better future.

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