Zhongshan Park – Shanghai Office

Can directly giving money to the people stimulate consumption and boost the economy?

admin — Tue, 08 Oct 2024 11:52:28 +0000

This noon, a heavyweight news flashed in front of the public fighting against the epidemic. The Hong Kong government is going to give red envelopes to Hong Kong citizens, estimated at HKD 10000 per person. Upon hearing this, Chad felt envious and jealous, thinking 10000 times that it would be great to send them to me.

Speaking of which, is it good or bad to directly send money to everyone? Does it have a positive effect?

Let’s argue with the viewpoint of supporting direct payment:

Step * depends on how much it costs to send?

What form should we send it in the second step?

If there is too little money and the stimulus for expanding domestic demand is not sufficient, the basic goal is to achieve as much as possible. Too much money makes it easy for ordinary people to deposit it in banks, which is not conducive to expanding domestic demand. Moreover, the national finance cannot support it.

Directly discovering that gold is less desirable is for a simple reason, which is that the use of funds is not directed and it is difficult to control whether they are used to purchase products; It is also feasible to distribute shopping vouchers, but attention should be paid to the difference between long-term and short-term. Shopping vouchers have no time limit and have the same effect as not distributing them. Having appropriate time limits is better, but it only treats the symptoms rather than the root cause.

In fact, domestic demand during a certain period of time can be seen as fixed, and only when ordinary people have spare money will they make extra purchases, which is the actual expansion of domestic demand. Idle money refers to funds that can be used without considering the opportunity cost of this portion of money.

The fundamental way to expand domestic demand is to improve the social security system and reduce the opportunity cost of funds in the hands of the people.

Let’s also argue against the viewpoint of directly issuing money:

After understanding China’s national conditions from an economic perspective and analyzing them in combination with the actual situation, it can be concluded that the claim that directly giving money to the people can stimulate domestic demand is unreliable and lacks accuracy.

Firstly, the method of directly sending money to the people is not feasible. Let’s think about where this money comes from, and the state does not have the right to directly print money to distribute to people. Moreover, this will directly lead to inflation. The money received will shrink, and when converted into the purchasing power of the entire market, it will be the same. In the past, people could buy how many goods with the currency they held. If you print more money and send it to the people, the currency will depreciate, and the total amount of goods that people can buy with the currency they hold will not change. Therefore, this method is not feasible.

Even if the government can directly send money to people, we still need to consider whether this money will be directly used to boost domestic demand. If you send this money to thousands of farmers, working class, and so on, everyone’s first reaction is to save the money, because in case of any major illness in the future, such as buying a house or having children go to school, the boosting effect on the entire domestic demand will be minimal.

Furthermore, even if everyone spends all their money and buys all the shoes, clothes, medicines, and other items they need to buy for the year within a month, they will not engage in significant consumption for the next six months. Such consumption will only stimulate domestic demand by drinking poison to quench thirst. The temporary peak of consumption will be replaced by a long-term off-season of consumption, which will have a worse impact on the economy.

Overall, I believe that directly sending money to the people cannot fundamentally stimulate domestic demand, and more policies and measures that are suitable for China’s national conditions need to be taken.

Let’s talk about the choice of most experts: don’t just send money, find ways to stimulate domestic demand is the key

Establishing a sound housing provident fund, social security, and medical insurance system is of utmost importance. People are only willing to spend their money when they feel that they have no worries;

Lowering deposit interest rates, lowering benchmark loan interest rates, and encouraging the development of small and medium-sized enterprises will make people unwilling to deposit money in banks. If we encourage the development of small and medium-sized enterprises and stimulate the growth of the ChiNext board, more people will be willing to invest their money in stocks, funds, and so on, which can revitalize the entire market economy;

Take more holidays, establish a good public holiday system, and combine national statutory holidays with each other. Holidays are the primary productive force that stimulates consumption. It is not uncommon for many middle-aged people to buy tens of thousands of yuan worth of things during a trip. Therefore, giving more holidays to the working class is also a truth;

Improving the quality assurance system, perfecting various supervision systems and accountability systems, as long as people feel confident in buying things, eating healthily, enjoying transparent service fees, and so on, they will be able to spend money with peace of mind. Otherwise, they will feel cheated everywhere, how dare they spend money;

Improving education level means that the more pyramid shaped people are, the more money they spend. If the overall education level can be improved a bit, the economic development it drives will not be just a little bit. Education drives the overall development of the tertiary industry, which has a much greater impact than just supporting the secondary industry. However, this is very invisible and few people will pay attention to it.

When can real estate go up?

admin — Sat, 14 Sep 2024 11:52:28 +0000

To be honest, I envy the stock market and exchange rate these past few days, they have been very lively. We (real estate) have been waiting for loneliness. The comments in the background contain a lot of distrust and discouraging words. I couldn’t help but wonder, when will the real estate market come back? After all, we once had glory.
Many people may want to know about this question, many are afraid to know, and how many have seriously considered it. Apart from the polarized discourse of self media, many people are angry about discussing this frustrating topic and don’t know where to start. In their hearts, they actually want to know the answer to this question.
In the context of securities firms, speaking too deeply can easily cross the red line; Talking too much and easily getting embarrassed. The selling institution can only talk about data indicators, the bottom of the market, and the possibility of repair, and does not want to delve into this thankless topic. Because there is no benefit. Based on my experience of interacting with real estate market analysts from sellers, I guess that in the financial category, they really don’t care about this behemoth. They are still concerned about stocks.
But this topic is a concern for millions of families, because in the asset structure of most middle-class families, the weight of real estate assets is over 50%, and some even over 80%, including myself.
Practitioners are more interested in knowing this question. Although the emotion is pessimistic, the heart still expects it to come back, to the past, although it is clear that there cannot be a ‘past’. But I always hope that this storm will pass and return to normal commuting days, instead of waiting for the fear of “N+1”.
In the past few days, two articles have become popular, one with a reading volume of over 15000 (Nomura: Asia Special Report on China’s Second Wave Impact Notes), and the other with a reading volume of over 40000 (Is the 930 New Deal for Real Estate Coming?). To be honest, it gave me great confidence and encouragement. Carefully track the data, in fact, more of this traffic comes from system recommendations, which are algorithms, to put it bluntly, machines. Perhaps machines understand me better than ourselves.
A simple review shows that before September 24th, everyone would have preferred to see how serious our problems are, and I am no exception. Therefore, most of the content I posted is the opinions of authoritative figures on the economy, and I would have preferred to see other powerful individuals who have profound insights into our problems. On September 24th, when the new policy was introduced, everyone wanted to see what hope it could bring us. I woke up early this morning and started thinking again, what should I write and do next?
What is there in my knowledge structure that everyone wants to see, combined with current hot topics, after more than ten years of career in my mind? As a practitioner, I am clear in my heart. When can we get through this storm. If we were an ordinary family, to be frank, when would we be able to stop the decline? Can it be replaced? Do you want to make up for a set?
From 21.7 to now, the long bear of 3 years and 2 months has directly closed off the topic of cycles. No one talks about a rebound anymore. Now we only talk about the bottom and repair, and there is no fundamental basis for a rebound economy. Recently, we have been discussing topics such as balance sheet repair, consumption downgrade, and communication.
After rambling for so long, returning to the theme of the article, I still want to seriously study these issues, set a flag for myself, and answer and research the topic of real estate seriously. Return to the state of my passion for research driven work. I would like to start with the following topics and continuously update them, as follows:
The three major mountains of real estate: population, debt, and saturation;
Lessons from the past: Real estate reviews in developed Asian economies: Japan, South Korea, Hong Kong;
The stones from other mountains: the path of real estate development in developed countries: Germany, Singapore, the United States, and the United Kingdom;
Market Review: Our Real Estate Development Path in Recent Years;
Market opportunities in real estate: structural opportunities, urban opportunities, and category opportunities;

end.
Recommended reading:
The quantity of “houses” included in high-quality meetings of vernacular finance

Is the 930 New Policy for Real Estate Coming?

Nomura: Notes on China’s Second Wave of Shock in Asia Special Report

Gao Shanwen: Record of the latest speech on the real estate crisis
Full version of Fu Peng’s speech on September 3, 2024

Traffic is selected by machines for you, so liking is what you truly want in your heart.