Blowing bubbles in agricultural products, high inflation is near or far

In the real estate market, the hot money to change the speculation of agricultural products, international hot money main resources input type and structural inflation inevitable â–¡ Agricultural Bank of China High Commissioner He Zhicheng Fed to fulfill the second round of quantitative easing, oil prices, gold prices, including commodity market prices have risen significantly, enter Sexual inflation pressure reached the highest point since the global financial crisis. I expect that the October CPI will exceed 4%. As of the end of the year, including early next year, it is expected that there will be a lot of basic commodities, including resource prices, which will adjust or follow suit. The CPI is likely to remain above 3.5% for the next year.

Liquidity is a long-term, global economic phenomenon. But why has China's currency issued faster than GDP for more than a decade, and liquidity has flooded without serious inflation? Let me give you a simple example: Ten years ago, Chinese people rarely had real estate and stocks. Now, the total value of Chinese real estate is almost 80 trillion yuan, and the stock market value is close to 30 trillion yuan. Virtual financial markets include semi-virtual financial markets. A great deal of liquidity. Twenty years ago, the total assets of China's banking industry were less than 10 trillion yuan, but now it is more than 90 trillion yuan. Such a huge and rapid expansion, if there is no support for rapid growth of wealth, the virtual financial market will provide "flooding" and inflation. Has been "bent" long ago.

However, the growth of the virtual financial market may see the short-term “top”. When its “story” overflows, it may trigger structural inflation in the real economy. Including intermittent inflation caused by the temporary shortage of certain commodities, spurious inflation triggered by liquidity. So we will see that when the stock market bubble ebbs, when the real estate market suffers from policy pressure, excess liquidity will start to choose the agricultural product market and will choose the commodity market. This year's inflation performance in China is: When the falling house price expectations are formed, agricultural products, commodities and stock markets will rise. Fortunately, China's stock market is at the bottom stage and can absorb part of the liquidity that has withdrawn from the housing market. Otherwise, the price of agricultural products will rise even more fiercely. This is why this year's autumn harvest was good. The price of grain still rose, and the reason for the general increase in agricultural products. The head of real estate is too heavy. It is swelling and fast, and liquidity will soon shift to the stock market, agricultural products, and commodity markets, triggering an excess of liquidity.

Faced with new situations, managing inflation requires new thinking. Chinese-style inflation will also accelerate in the short term. Because both the domestic liquidity environment and the international hot money pressure are currently in a state of “non-equilibrium,” and the tight “short-board” effect of domestic agricultural products and resource products also makes speculators have sufficient reasons for more intense speculation. Since agricultural products and resources account for a large proportion of China's CPI, the price index will not be able to come.

Fortunately, the inflation we face today is still structural; fortunately, China's overall agricultural products this year are still high in productive years. The inflation caused by the increase in agricultural product prices has not yet been widespread and is still controllable; fortunately, the Chinese stock market is still at present Liquidity "hungry thirsty" state can absorb more liquidity; fortunately, there is room for appreciation of the renminbi, which can export liquidity. These "positive" factors can give us room to manage inflation. The so-called management is not blindly pressure, pressure and ease can be parallel. The price increase of resource products needs to be eased. Some commodity prices can no longer be scrutinized, and even they can actively raise their prices. Through economic means, they can increase the consumption threshold and achieve price reductions.

The author believes that a modest appreciation of the renminbi can increase the international purchasing power of the renminbi, prompt the developed countries to change their low interest rate policy, and allow the world to invest in the struggle against inflation; the management of liquidity can not rely entirely on austerity, and liquidity should be tightened. At the front, there is no more than a stock market that can play a role in liquidity. The moderate rise in the stock market and modest rise will help absorb excess liquidity and curb the spread of inflation in the real economy. Of course, raising interest rates is also an option in the future, but it needs special care. At the same time, when prices continue to be high, they must introduce price subsidy policies for low-income groups, especially for retired employees and special hardship families.

The "bubbles" that have brought out inflation in the domestic agricultural product market have been half a year old. They will "give garlic to you" for a while, "beans you to play" and "Gong Youjun" for a while. Recently, the Fed implemented the second round of quantitative easing, the US dollar depreciated sharply, international commodity prices surged, domestic agricultural product prices rose, and many commodities even “jumped up”. From a global perspective, not only China faces inflationary pressure, but also emerging market countries such as India face the same difficulties. Is this awkward inflation aggravated by hardship or blindness?