Inflation is commonly explained in economic terms that the total amount of material produced has not changed significantly, and more money has been issued. In the people's feeling, the so-called inflation is money is not worth money, the original one hundred dollars of tickets, put in the pocket was still a lot, and now it seems to be not enough for the family to eat a meal at McDonald's. Currency hair more, commodities have to rise in price, some say it is imported inflation, that is, China's imports of raw materials and commodities have risen in price, such as iron ore prices, naturally led to an increase in the cost of downstream products, which in turn increased prices across the board. In the context of the continuous appreciation of the renminbi, this inflation brought about by price increases have predicted that is about 5%. And the main reason for the substantial rise in commodities abroad is that China's population is in great demand. Another argument is that too much money printing inflation is endogenous. Loan 20 years to buy a house, the market has more money in circulation for the next 20 years, but with this money corresponding to the next 20 years of materials have not yet produced, money is more.
Central banks and various commercial banks can determine whether there is inflation or not by narrow money (M1) and broad money (M2) as known, which is roughly divided internationally:
Special money (M1)=cash in circulation+checking deposits (as well as money transfer credit card deposits);
Broad money (M2)=M1+savings deposits (including both demand and time deposits);
M1 reflects the real purchasing power in the economy; M2 reflects not only the real purchasing power, but also the potential purchasing power.M2 is too high and M1 is too low, indicating overheated investment, weak demand, and the risk of a crisis; M1 is too high and M2 is too low, indicating strong demand, underinvestment, and the risk of a price hike.
If the inflation judgment is made according to monetarist economics, the growth rate of M2 is much higher than the growth rate of GDP, which means a very high inflation rate;
According to the statistics, the size of the GDP in that year 1978 was 364.52 billion yuan, and the size of the GDP in 2009 was 3.354 trillion yuan, an increase of 92 times.
The money supply of M2 in 1978 was 85.945 billion yuan, and in 2009, the size of the GDP was 3.354 trillion yuan, an increase of 92 times. In 1978, the M2 money supply was 85.945 billion yuan, and in 2009, the M2 money supply was 60.62 trillion yuan, an increase of 705 times. So in the past 30 years, China has provided an excessive amount of money for the rapid development of the economy. The inflation caused by this is also staggering, and it can only be said that China is standing on a big platform of inflation.
GDP size?M2 money supply ratio1978?364.52 billion yuan?85.945 billion yuan?1/4 weak
2009?33.54 trillion?62 trillion nearly 2 times
Growth times 92 times?705 times