Simple/Kangxi radical 118

A New Round of Economic Thinking

Long-term economic stagnation means embarrassment for the original economic thinking.70-80In the 1980s, Western economics entered a highly mathematical era, dominated by neoclassical economics, which, together with the economic policies guided by its ideology, had been covering the world for a long time.30Year.

This economic thinking is characterized by"A piece of harmony", that is, the market can automatically achieve the optimal allocation of resources in society, and a laissez-faire regulatory policy has been adopted for financial institutions.

from2007Since 2007, this theory of economics has suffered major setbacks, first by failing to predict the coming global financial crisis, and then by failing to offer a single remedy for the decade-long economic stagnation that followed the crisis. So much so that the Queen of England asked: What are these economists up to?

2009surname Nian10In January, there was a new library of economic ideasINET(The Institute For New Economic Thinking) Founded with the backing of speculator Ralph Soros, the organization has a large network of economists-mostly those who had some notoriety before the crisis.

Its expert committee includes members from Stiglitz, Krugman, Samatya, and others.-Many of the Nobel Prize winners, including well-known financial writer Ferguson (2009The most important experts in the field of international finance areCharles Goodhart,Carmen ReinhartfrontIMFChief EconomistKen Rogoff, former shock therapy expert and post-climate change propagandist Geoffrey Sacks, among others, and the UK's Financial Services Authority (FSA) Former President Adair Turner (Adair Turner), former Federal Reserve Chairman Paul Volcker is also a member, and it is also co-sponsored by Rockefeller family heir David Rockefeller, the Sloan Foundation, and other American celebrities.

INETSome of the experts on the web: center-left economist Stiglitz, international finance expertReinhartMr. Sachs is a former shock therapist and consultant to the United Nations on poverty reduction.

This organization deserves special attention because it has been the most important base for reflection and the source of new ideas in Western thought in the years following the crisis, and because of its obvious political orientation.

A common feature of a significant number of the foundation's experts is that they recognize the failure of economics, especially pre-crisis laissez-faire economics, and advocate government spending such as fiscal spending, but they are vague on how to achieve it and on what industries to target. Thus, the arguments they put forward are like those of Keynesian andThe idea of a mixture of "direct money printing by the central bank" has sparked off a heated debate.

Adair TurnerHis new work has influenced the West and has galvanized the movement in China.

2016At the beginning of the year, a key player in the group: the UK's Financial Services Authority (FSA).FSA) Former President Adair Turner wrote a book that galvanized the Western elite, Debt and the Devil - Money, Credit and the Reconstruction of the Global Financial System.

This is a book.The author of the book "Speaking Heavily" means to completely rethink the established Western economics, to overturn most of the theories, and to come up with a rather shocking theory: the current Western quantitative easing.QEUnder the completely ineffective and exhausted situation, it is necessary to implement "central bank printing" to directly "stuff" the real economy and solve the problem in a lump-sum manner - this is what he meant by "the devil". This is what he meant by "the devil".

Contrary to the popular media's interpretation, in Turner's view, quantitative easing is not yet"printing money" - because quantitative easing is also a way for the central bank to get money from the bond market/Commercial banks buy the bonds in the hands of the newly created base currency, but the commercial banks are unwilling to lend i.e. create the currency circulating in the real economy, meanwhile the national bonds still exist in the world and have to be paid interest by the government.

Turner's proposal is for the central bank to lend directly to non-financial corporations, while at the same time transferring the central bank's holdings of treasury bonds to the central bank for the benefit of non-financial corporations."Check off" means no interest is charged./A "permanent non-interest bearing certificate of indebtedness" was returned. This book was introduced to China and attracted the attention of Chinese scholars Li Yang and Yu Yongding.

Interestingly, at the core of Turner's work is a reflection on the fact that the creation of massive amounts of credit (money) in the West over the last 20 or 30 years has not been used for real economy nascent productivity formation, but rather for buying and selling stock assets (in the case of the UK it was mainly stock real estate), provoking an increase in asset prices.

But the proponent of this think tank is someone who has benefited fully from the financial system over the last two or three decades.--Soros. This shows how in the current game of Western politics, which is changing dramatically, ideas that were originally rational have been captured by the relaxationists.

Source: The New Monetary Theory and Its Metamorphosis  

In fact, Sir Turner's ideas came from another German economist, and he was in close contact with Japan.21This German economist is called Weiner (1977), and he has been involved in the quantitative easing policies of the last century. A German economist named Weiner (RichardWernerHe was the first Westerner to systematically study Japan's economy, politics, and central bank decision-making system.

He spent the first decade or so of Japan's lost two decades, visiting Japan's former Ministry of Finance, the Industrial Bank of Japan (equivalent to China's China Development Bank), and a former British brokerage firm during the Asian financial crisis.Jardine FlemingChief economist, Weiner was a severe critic of several Bank of Japan presidents from the 1980s and 1990s, and authored the book The Prince of the Yen, which exploded in popularity in Japan (2000The Japanese edition of the Prince of Yen was published in Japan in 2007 and was sold out.15(This led to the establishment of the "Committee for the Reform of the Bank of Japan" within the Liberal Democratic Party (LDP), but it did not shake the internal political system of the Bank of Japan).

This economist came up with a whole new theory of money creation called credit money theory, meaning that the main source of the modern monetary system is loans--Loans to create deposits.

This is true (in China, the main advocates of this theory include Sun Guofeng and Li Bin of the central bank, Wu Ge of Huarong Capital Management, Jian Lian, a researcher at CITIC Foundation, and Ji Tianhe, a contributing writer for Central Bank Watch). Based on the transformation of the Bank of Japan and the situation in Japan at the time, he proposed thatThe concept of "quantitative easing" - yes, that's what came later.QuantitativeEasing (QE)The

But Weiner's intention was to commit to theThe "real economy" to go, but the Bank of Japan implementation has become pure financial operations. This set of play and was inherited by Bernanke, into today's western world collectively into the quagmire. Weiner invented anotherQE2(Not the Fed's secondQE)This is the prescription that Sir Turner is advocating today. Sir Turner is in the2013-2014Very active in communicating with Weiner during the year and organizing numerous meetings for Turner and his circle of friends.

It should be recognized that Weiner, Turner, and others have been sincere in their hearts since90From the mid-to-late 1990s, Weiner and a number of European and American economists formed an international mail discussion group, the "Gang of Eight" (the "Gang of Eight").Gang8The coterie is the world fountainhead of the "New Credit Monetarism", a continuation of the German-style "national currency" theory, and the heir to the once non-mainstream monetary doctrines of Schumpeter, Minsky and others, who believed that the base currency could be created by the state on its own initiative but that the majority of the society's money was generated by the banks themselves. They believed that the base currency could be created by the state, but that most of the society's money was internally generated by the banks, which could be used for both production and speculation.

They were in Russia.1998It has played an important role in the political turnaround after the financial crisis in 2008, and has been a key player in the2008After the financial crisis of 2008, the influence of the organization began to spread. Turner began to think systematically about the problems of the Western financial system after he became involved in the group's activities. Now the organization has begun to become a source of economic policy for the non-establishment side of the U.S. election.

However, there is indeed a danger that the views of Sir John WENNER and Sir John TURNER will be exploited and distorted. This is because they do not understand the industry, and once empty talk is given, they will not be able to realize that there is a need for the industry to be taken for granted."Promoting monetary investment in the real economy" can easily be utilized to continue to support speculative forces. Continuing to discuss within the fiscal and monetary policies without touching on the industries is unlikely to lead to strong insights.

In addition, there is a paradox of contemporary central banking.--Monetary policy is the greatest power in modern society, and should ideally be in the hands of a "strict father" type of person (such as Paul Volcker) with real-world experience and political skills, but since90This has not been the case in many important countries since the 1970s.

The central bank crowd in Europe and the United States is second to commercial organizations in terms of competence and treatment. In the wake of the crisis, many central banks have become passive agents in satisfying the needs of interest groups around the world.The "mother of mercy". How central banks have become "central mothers" in the past few years is a real question worth pondering.

Current International Economic Thought/Three camps in the policy sector  

According to the above clues, the current Western economic thought/The policy community can be broadly divided into three camps:

1The former and current chairmen of the Federal Reserve, Ben Bernanke and Yellen, and the president of the Bank of Japan, Tohiko Kuroda, are the direct power players in U.S.-Japanese finance, and they have contributed to the development of a new financial system.QEDefend, don't admitQEThe failure of the current Western downturn is seen as merely cyclical. Tohiko Kuroda has even taken the initiative to play the role of the bishop of the world's water faucet.

2They include Krugman and Summers of the United States, Turner and Weiner of the United Kingdom. They are of the view thatQEIt is no longer effective, the West has been in a long-term economic stagnation, the need to pull through fiscal spending or "direct hard money to enterprises" to save the economy. This school of thought has attracted the attention of Prof. Li Yang and Prof. Yu Yongding in China. It is the mainstream of the Soros-funded think tanks.

3, Trump and his staff. Trump has publicly opined thatQEIneffectively, Fed Chair Yellen is Hillary's co-conspirator, and has gone out of her way to deliberately manipulate interest rates to keep the bubble in US stocks high. Trump is currently surrounded by few economic advisors, and indeed many Republican traditionalists and former speculators in the financial markets.

As it stands, the only celebrity in Silicon Valley to publicly endorse Trump, Peter-Till (Peter Thiel) may be an important "thinker" because he's more familiar with the tech industry (but he didn't donate to the Trump campaign either).

Plus, Trump absorbed the chief economist of the original Democratic contender, Bernie SandersStephanieKeltonof a plethora of ideas, non-establishment economic platforms are beginning to emerge-suggesting that a Republican non-establishment like Trump is likely to achieve cross-party policy adoption.

Trump has also begun to reach out to a large number of industry entrepreneurs in middle America in an attempt to draw strength from common sense, and of particular note here are Trump's statements about the energy industry (oil, natural gas, coal, and foliated gas).

The first two of these three blocs are either clearly or leaning toward supporting Hillary in the upcoming election (Weiner in the second camp supports Trump).

Contrasting with the intense game of the West's current policy directions, there is also a major debate about the situation and policies in China.

2013China's real economy has been weakening since 2007.2014In 2007, the Party Central Committee made the assertion that China's development had entered a new normal state.2015surname Nian11In January, the Central Financial Leadership Group (CFLG) proposed "supply-side structural reform". For more than a year, China's leading economists have made their own judgments on this topic.

Some economists still insist that it is a cyclical downturn and will return to a high growth rate in the future."Supply and demand cannot be separated", another group of economists believe that China has entered a "non-cyclical downward spiral", "structural downward spiral", the trend is impossible to reverse.

2016surname Nian9moon20The Financial Times, a subsidiary of the central bank, suggested on Sunday that local governments should take responsibility for the property market. This is a response to the fact that currency overshooting is the main reason for the rise in housing prices.

2016Panic buying has been occurring in first-tier cities and some second-tier cities since the beginning of the year and the middle of the year. When everyone in a city is talking about houses, the city must be seriously ill. This illustrates the severity of the problem in China. The situation in China is very similar to the long-term economic stagnation in the West.

Any further loosening of the currency at this time will inevitably lead to a rush into the speculative area of stock assets and aggravate social division. In this sense, supply-side structural reform has an extremely important and special historical role. This is also the purpose of naming this issue Supply-Side Economic Observations.