5 thoughts on “Why does inflation cause currency depreciation? Intersection”
Traci
Inflation This inflation initially refers to the depreciation of the currency depreciation caused by the actual needs of the banknotes in the circulation of the goods. The law of banknote circulation shows that the amount of banknotes cannot exceed the amount of gold and silver currency represented by the land. Once this amount exceeds this amount, the banknotes will depreciate, and the price will rise, thereby inflation. Inflation will only appear under the conditions of banknotes, and this phenomenon will not occur under the condition of gold and silver currency circulation. Because the gold and silver currency itself is valuable, as the function of the storage method, it can spontaneously adjust the amount of currency in circulation and enable it to adapt to the amount of currency required for commodity circulation. Under the condition of banknotes circulation, because the banknote itself is not valuable, it just represents the symbol of gold and silver currency and cannot be used as a storage method. Therefore, if the amount of banknotes exceeds the number of commodity circulation, it will depreciate. For example, the amount of gold and silver currency required in the circulation of goods remains unchanged, and the amount of banknote issuance exceeds double the amount of gold and silver currency. If the price is used to measure the price, the price doubles, which is usually the currency depreciation. At this time, the amount of banknotes in circulation has doubled compared to the amount of gold and silver currency required in circulation, which is inflation. In macroeconomics, inflation mainly refers to the general rise of prices and wages.
This inflation means that the overall price level is rising in modern economics. General inflation is the decline in the market value or purchasing power of the currency, and the currency value of currency is reduced by the currency value between the two economies. The former is used to describe the national currency value, while the latter is used to describe the added value in the international market. The correlation between the two is one of the disputes in economics.
The antonym of inflation is currency tightening. No inflation or extremely low inflation is called stability price.
In several occasions, the word inflation means to increase the supply of currency, which sometimes causes prices to rise. Several (Austrian School) scholars still use the term inflation to describe this situation, rather than the rise in prices itself. Therefore, several observers call the United States "inflation" in the 1920s, even if the prices at that time did not rise at all. The following, unless it is specified, the term "inflation" means general prices rising.
The antison of inflation can be "re -expanded", that is, the degree of price increases or tightening decreases under deflation. In other words, although the general price level decreases, the amplitude is reduced. The related words are "slowing inflation rates" (en :), that is, the increase in inflation increases slowly, but not enough to cause currency tightening.
The measurement of inflation
The measurement of inflation is observed by observing a large number of labor income or changes in the price of items in an economy. Data, and trade unions and business magazines have also conducted such investigations. The price index of the price and labor income forms the price index, which is the measurement benchmark for the average price level of the entire set of items. The inflation rate is an increase in the index. The overall price of price measurement is measured, and inflation refers to the rise of the overall price.
This does not have a independent measurement method for inflation. Because the inflation value depends on the price proportion of the specific items in the price index, and the scope of the measured economic area. The general measurement method includes:
The theoretical increase in the theoretical increase of the cost of the living index CLI (Cost of Living Index) is an estimated by the consumer prices index (Consumer Price Indexes). Economists should have different views on specific CPI values higher than or lower than the CLI value. This is because the CPI value is "biased" (bias). CLI can adjust the extensive gap between the "purchasing power parity" (PPP, Power Parity) to reflect the extensive gap between regional goods and world prices.
The consumer price index CPI (Consumer Price Index) is measured by the price of the shopping items of 'typical consumers'. In many industrial countries, the annual changes of the index are reported by the most common inflation curve. This measurement value is usually used in salary remuneration negotiations because employees hope that salary (name) can be equal or higher than CPI. Sometimes the labor contract contains the Cost of Living according to the living index, which means that the name salary will automatically adjust with the increase of the CPI. The timing of the adjustment is usually lower than the actual inflation rate after the inflation occurs.
The price of the producer price index (PPI) measured the price of the producer's acquisition of materials, which is different from the CPI on the price allowance, profit, and tax burden. gap. PPI reflects the rise of CPI and rises, with typical delays. Although it has a diverse combination, it is generally believed that the characteristics of this delay make the CPI inflation of tomorrow's CPI inflation based on today's PPI inflation; various discussions and content are extremely important.
The wholesale price index (WHOLESALE Price Index) to measure the wholesale price of selective goods (especially sales tax) is very similar to PPI.
The commodity price index measurement changes in the price of selective commodity. If the gold standard system is used, the goods they choose are gold. The United States uses the relics system, and its index contains gold and silver.
GDP flat reduction index (GDP Deflator) is calculation based on GDP: GDP and GDP (that is, constant-PRICE) after inflation correction (ie, constant-price) The proportion of money used between people (see the essence and the name economy). This is the most ambitious observation of the price level. This index is also used to calculate the components of GDP, such as personal consumption expenses. The Federal Reserve uses the Personal Deflator and other leveling indexes as a reference for formulating the "anti -inflation policy".
The personal consumption expenditure price index PCEPI (Personal Price Index). On February 17, 2000, in the semi-annual Congress financial policy report (that is, Humphrey-Hawkins Report), the Federal Open Marketing Committee FOMC (Federal Open Market Commitee) claimed that the main inflation measurement method was changed from the CPI to the chain. Personal consumption expenditure price index.
Because each measurement method is based on his species measurement method and is combined with a fixed mode. Economists often controversy whether there is a 'deviation' in each measurement method and inflation model. For example, the BOSKIN Commission found the CPI calculated by the US Department of Labor Statistics (BLS) in 1995. After quantitative analysis of its deviation, they believed that the inflation of the year was too exaggerated. Due to the increase in scientific and technological innovation brought about by the "Hedonic" and replacing expensive products with affordable products, both will reduce the increase in CPI-U. Another example is that in the early 1980s, the unmanned rental units did not count the rental income part of the CPI-U and CPI-W; after the addition of this part, the inflation rate was actually extremely undervalued, so This change was added to the CPI calculation in 1982.
The existing debate is whether it should be included in the adjustment part of happiness, including people who will not be relocated to cheaper areas in time in high -priced areas. Some people think that the house purchase part of the index is extremely underestimated by the impact of daily life costs on house prices, and it also underestimates the importance of medical expenses in the daily expenses of retirees.
The role of inflation in economics
one of the impacts of stable small inflation is difficult to re -negotiate price reduction, especially for salary and contracts. in this way. Therefore, if the price rises slowly, the related price is easier to adjust. There are a variety of prices that will "reserve prices', but quietly rise. Therefore, the effect of zero -inflation (the price is maintained) will affect other aspects in the way of lowering prices, profit, and employees. Therefore, the executive departments of several companies regard mild inflation to 'lubricating business giant'. The pursuit of complete price stability will bring a very devastating currency tightening (the continuous decrease in prices) will lead to bankruptcy and economic recession (even economic depression).
The financial system depending on the 'potential risk' of inflation is the basic investment inducement higher than savings cumulative wealth. In other words, inflation is the word value of the market for money. In other words, because today's one yuan is more valuable than one yuan next year, the future capital value will be deducted in economics. This view depends on inflation is uncertainty of future capital value.
For those who are low, inflation usually increases the negative effects of discounting before economic activities. Inflation is usually derived from the government's improvement of monetary supply policies. The impact of the government on inflation is to tax the stagnant funds. When inflation increases, the government increases the tax burden of stagnation funds to stimulate consumption and borrowing, which increases the flow rate of funds, and enhances inflation and form a vicious circle. In extreme cases, malignant inflation ()
In enhancement uncertainty may crack down on investment and savings.
The re -assignment
The fixed income such as pension pensions may be re -distributed to non -fixed income, and most of the salary income is used to deal with inflation. Essence
The same, the fixed amount of loans may be re -assigned to the lender (if the loader caught the amount of inflation or cannot adjust the amount). For example, the government is usually a loan party, reducing government liabilities to re -assign funds back to the government. This situation is sometimes regarded as inflation tax
If international trade: If the domestic inflation rate is low, the reduced trade balance will destroy the fixed exchange rate.
The sole cost: Because the value of cash will shrink when inflation, people will tend to hold less cash during the inflation period. This word indicates that the real cost will often flow to the bank. (The term sole cost is a joke, which means the cost generated by worn the sole due to the way to the bank.)
Menu cost: The business must be more diligent in changing the price of the product. This word means that the restaurant is used to change the cost of the menu.
The malignant inflation: If the degree of increased inflation is lost, it will interfere with normal economic activities and damage the supply capacity.
In a economy, several departments will be incorporated into the inflation index, and there are no departments, and the inflation behavior will be re -distributed to the departments that are not incorporated into the departments. At the time of affecting the amplitude, this is a policy of choice. It does not pay the priority and tax on the monetary priority and the funds at hand. If the impact exceeds a certain range, its effect is distorted and become an individual's ‘investment in inflation’, that is, the expected psychology of encouraging inflation.
The reasons for cracking down on inflation are higher than the slight impact of cracking down on its expected behavior and cracking down on holding a large amount of funds. Inflation is the goal.
MISERY Index
The pain index was published in the 1970s, which represents the uncomfortable economic situation, which is equivalent to the total inflation and unemployment rate. The formula is: Pain Index = Percentage of Inflation Unemployment Rate, indicating that the general public feels unpleasant to the same degree of inflation rate and unemployment rate of the same increase. Modern economists do not agree to describe the negative impact of the above -mentioned inflation machines with the term "pain". In fact, many of the economists think that the public's prejudice to mild inflation is that it affects each other: the masses only remember economic difficulties related to the high inflation period. From the perspective of modern economists, mild inflation is a less important economic problem, which can be suspended by partial part of the stagflation [] (may be stimulated by monetary []].
The economists (especially in Japan) have advocated that high inflation is a solution for economic recession.
All investigations for inflation show that neo -classical economics scholars and the general public's damage caused by mild inflation are good. Its damage is insignificant, and many scholars even say that there is no harm.
This due to the distribution of the inflation gear, the opinions of the inflation and inflation have fallen into the wind. Because capital gains tax is the name, inflation is advocated as important as the "rich tax", and society with low inflation will tend to condense wealth.
The causes of inflation
The doctrine of different academic inflation.
The interpretation of monetary
The most direct theory for inflation and the most direct theory is: inflation guidance is due to the increase in the economic scale of the currency. This statement is measured to measure the growth of the GDP settlement index and the growth of currency supply, and the central bank sets interest rates to maintain the number of currencies. This view is different from the Austrian school in the following in the number of currencies but not essential. Under the currency architecture, the gathering of currency is the focus.
The theory of currency quantity, simply speaking, the total currency consumed by the economy depends on the total current currency. The following formulas have since said:
p are the level of general consumer goods, DC is the total demand for consumer goods, while the total supply of SC consumer goods. The concept behind the formula is that when the total demand for consumer goods has decreased from the total amount of consumer goods, or the total amount of consumer goods demand on the total supply of consumer goods has increased, the general price of consumer goods will increase. Based on the total expenses based on the view of the total existing currency, economists calculate the total demand for consumer goods with total currency. As a result, they determined that the total expenses and consumer goods demand increased with total currency. Therefore, the only reason for scholars who believe that the theory of currency number theory also believe that the rise in prices is economic growth (indicating that the total supply of consumer goods is increasing), and the central bank increases the total amount of existing currency due to monetary policy.
In this point of view, the most fundamental reason for inflation is that currency supply is more than demand, so ‘inflation is a currency phenomenon that will definitely occur everywhere’, and Friedman said. It means that the control of inflation depends on currency and finance restrictions. The government cannot make it too easy for borrowing, and it cannot be excessive. This view focuses on the central government budget deficit and interest rates, as well as economic productivity, that is, the Cost -Pull Inflation promoted by production costs (total supply).
The Neo-Keynesian
It three main forms of inflation, inflation, is the "triangle model" in Robert J. Gordon Part of:
The demand to pull inflation-inflation occurred in high demand and low unemployment due to GDP, also known as Felipus curve inflation.
The cost promotes inflation -today, it is called "Supply Shock Inflace", which occurs when the oil price is increased suddenly.
Built -in inflation -caused by reasonable expectations, it is usually related to price/wage spiral. Workers hope to continue to increase salary, and their costs are passed to product costs and prices, forming a vicious circle. Inherent inflation reactions have occurred as residual inflation, also known as 'inertial inflation', and even 'structural inflation'.
The inflation of these three types can be combined at any time to explain the current inflation rate. However, most of the first two types of inflation (and its actual inflation rate) will affect the size of inherent inflation: the continuous high (or low) inflation is increased (or decreases) in the inherent inflation inflation Essence
has two basic elements in the triangular model: moving along the Philips curve, such as low unemployment stimulation to increase inflation; influences.
The Phillips Curve (or demand surface) Inflation theory
Economic supply (potential output) related. This is particularly distinctive when the government (maybe during the foreign war or the civil war) caused the overtime currency to cause the financial crisis, and sometimes the malignant inflation causes prices to soar (or to double the monthly increase).
The currency supply also plays the main role in a mild inflation, but its importance is controversial. Monetary economists believe that it has a strong connection; on the contrary, Keynesist economists emphasize the role of overall demand, and currency supply is only a decisive factor in the overall demand.
The basic concept of Keynesian interpretation is the relationship between inflation and unemployment rate, which is called Philips curve model. This model is weighed between price stability and unemployment rate (Trade OFF); therefore, to minimize the unemployment rate and allow a certain degree of inflation. The Philips curve model excellent description of the United States' experience in the 1960s, but it was not enough to interpret its increase in inflation in the 1970s and the combination of economic stagnation. Today, the Felipus curve is used to increase the relationship between the total salary growth and the general inflation rather than the loss rate and the inflation rate.
The displacement of the Philips curve
Thefish has become a fixed factor for economic activities because of supply shock and inflation. The choice between stability and unemployment rate) describes inflation. Supply shock means that the oil price fluctuates in the 1970s, and the inherent inflation means that the price/salary cycle and inflation expectations are expected, which means tolerated inflation in normal economic conditions. Therefore, the Philips curve only represents the demand in the triangle mode to pull inflation.
. Another Keynesian view is potential output (sometimes called GDP) -the the GDP level of the economy under the condition of reaching the highest productivity -it is a habitual and inherent limit. This output standard corresponds to NAIRU -inherent unemployment, natural unemployment or full -time unemployment rate. Under such a structure, the inherent inflation rate is internal internal depending on the labor volume in the economy:
GDP exceeds its potential level (and the unemployment rate is lower than NAIRU). The theory pointed out that when other conditions are equal, inflation is intensified as the supplier increases prices, and the inherent inflation will worsen. Furthermore will lead to the Philips curve towards high inflation and high unemployment. This "accelerated inflation" was once seen in the United States in the 1960s. At that time, the expenses of the Vietnam War (offset by a small amount of tax) lowered the unemployment rate below four percent.
GDP is lower than its potential level (and the unemployment rate is higher than NAIRU), and when other conditions are equal, inflation will reduce the price as the supplier attempts to reduce the price, allowing the market to digest the number, and lower the estimation of inhive inflation and inflation. Decrease; that is, prevent inflation. It will cause Philips curve towards the direction of low inflation and low unemployment. Preventing inflation was seen in the United States in the 1980s. At that time, the Federal Reserve Chairman Paul Walker's anti -inflation measures brought a high loss rate of several years, of which 10 % were two years.
GDP is equal to its potential level (and the unemployment rate is equal to NAIRU), as long as there is no supply shock, the inflation rate is unchanged. In the long run, most of the new Keynes' overall economist regards Philips curve vertically. In other words, if the inflation rate is high enough to overwhelm the unemployment rate, the unemployment rate is the premise, and it is equivalent to the NAIRU.
. However, the theory is a defect for the target of the policy. The number of potential output (and NAIRU) is usually unknown and will change over time. In addition, the occurrence of inflation rates is not symmetrical, and the increase in rising is faster; even worse, it is still changing with the policy. For example, during the period of Prime Minister Sachel, the unemployed found that he was in a structural unemployment, that is, he could not find the employment opportunities of appropriate talents in the British economy. To. When an economy avoids the thresholds across high inflation, the improvement of structural unemployment rate implies that only a small amount of manpower can find employment opportunities in NAIRU.
Ifly that both NAIRU and potential output are unique and quickly achieved, the vast majority of non -Keynesian inflation theory can be understood as the point of view containing New Keynesian. When the "supply surface" is fixed, inflation depends on the overall demand (aggregate demand). The fixed supply side also implied that the expenses of public and private institutions conflicted with each other. Therefore, the government's deficit expenditure will have a crowded effect on private institutions, and it will not affect the level of employment. In other words, funds and financial policies are the only those who can affect inflation.
The supply doctrine theory
This Economics theory assumes that inflation must be caused by insufficient funds and insufficient capital demand. For these two factors, the number of funds is purely the target. As a result, the inflation that occurred during the epidemic of black death in the medieval century in Europe could be regarded as caused by the reduction of capital demand; and the inflation of the 1970s could be attributed to the golden standards set by the United States to leave the Bretton Forest system Excess funds generated. Supply school assumptions that when the supply and demand of funds will not lead to inflation at the same time.
The elements elaborated by the theory of supply and facial economics, saying that the economic expansion led by the low tax burden in the United States in the 1980s to ending high inflation is ended. Its argument is demand for basic funds on economic expansion, and this approach offsets the impact of inflation. Economic expansion can be regarded as regular demand for funds, and other conditions are equivalent to increasing the number of funds. In the international currency market, this policy is irrelevant. Supply facial economics advocates that economic expansion not only increases domestic evaluation of funds, but also improves international evaluation.
The anti -inflation
The central bank of the country, such as the Fed, can effectively affect the inflation rate by setting interest rates and other monetary policies. High interest rates (and slow growth in funding demand) are typical methods of anti -inflation of the central bank to reduce employment and production to suppress prices.
. However, central banks in different countries have different views on controlling inflation. For example, some central banks pay close attention to symmetrical inflation targets, while others are only controlled when the inflation rate is too high. The Central Bank of Europe was blamed for the latter when facing a high unemployment rate.
The monetist persons focus on improving interest rates through financial policies to reduce funding supply. Kanesists focus on reducing demand for universally reducing demand through tax increases or reducing government expenditure. Its interpretation of financial policies comes from Robert Solo's research results in rising daily necessities. The method of resisting inflation advocated by the school's school is: the exchange rate of fixed references such as fixed currency and gold, or reducing the marginal tax rate in the floating currency structure to encourage the formation of capital. All these policies can be achieved through the open market operation.
. Another method is to directly control salaries and prices (see wages for bargaining, Incomes Policies). In the early 1970s, Nixon had tried this method under Nixon. One of the main problems is that these policies and stimulus demand are implemented at the same time. Therefore, the restrictions (control methods, potential output) of the supply surface conflict with the growth of demand. Economists generally depending on price control into bad practices, because they promote shortage and reduce production quality, thereby distorting economic operations. However, if the cost is increased due to serious economic recession, or in inflation during the resistance of the war, such a price may be worth it.
In fact, price control may have a more influential economic recession due to resisting inflation (increased the unemployment rate due to reducing demand). Essence
1. Money depreciation is only a kind of inflation performance. Inflation generally refers to the depreciation of banknotes and price increases caused by the amount of money in the circulation of goods exceeding the actual needs of the product. 2. The performance of inflation is: first, currency depreciation, two, prices continue to rise, three, economic overheating, essentially the total social demand is greater than the total supply. 3. Currency depreciation, the decline in the value or the value contained in the unit currency, that is, the unit currency price decreases. There are many reasons for currency depreciation. Reason one is: inflation, reason two: rising foreign exchange rates, reasons 3: The amount of currency issued by the state issued more than the amount of currency required for actual life 4. Inflation refers to the comprehensive and continuous appearance of economic operations. The phenomenon of rising prices. The amount of banknotes exceeds the actual amount of currency in circulation is one of the main reasons for inflation. 5. Sometimes inflation does not necessarily lead to depreciation of the local currency, and sometimes currency appreciation will exacerbate inflation. This information The currency depreciation (also known as currency depreciation, foreign language name) is the symmetry of currency appreciation. It refers to the decline in the value or the value of the unit currency, that is, the decline in unit currency prices. The currency depreciation causes rising prices in China. However, because the depreciation of currency can stimulate production under certain conditions and reduce the price of domestic products abroad, it is conducive to expanding exports and reducing imports. Species. (References Baidu Encyclopedia Currency Decade)
The reasons for the "depreciation of inside" in RMB domestic inflation, but the reason for "external appreciation" at the same time is:
(1) The currency policy of overseas countries (especially the Federal Reserve) is equally loose, even more than Chinese monetary policy. Loose loose! (2) Currency (such as the euro and yen) of the dollar and other developed countries (such as the euro and the yen) is a complete free exchange of currencies. It is an international circulation currency. It is much easier to buy and sell US dollars (euro) or transfer USD funds. The US dollar released by the Federal Reserve's loose currency policy is a large part of the international capital market and the currency market. No inflation has been seen in the United States for the time being, but shrinks! Overseas investment channels for domestic residents in my country are still not smooth, and the scale is still small. The RMB funds released by the loose monetary policy of the People's Bank of China are mainly circulated in China. Theoretically, if the speed of inflation in the United States is the same as the depreciation of the US dollar, the Midland's quantitative easing monetary policy cannot stimulate US exports. The unique status of the US dollar has made the United States at least not inflation for the time being, and it will transfer inflation to overseas! (3) The internal power of the name exchange rate of the RMB nominal exchange rate (the appreciation of the real exchange rate is the trend of the trend). International speculative hot money follows political pressure crazy hype, which has led to the increasingly intensive exchange rate appreciation of the name of the RMB. The unilateral appreciation of the nominal exchange rate is deprived of the mechanism of normal appreciation of the real exchange rate (that is, the normal process of hindering or interrupting the continuous rise of the employment, salary and welfare of Chinese workers). If according to normal logic, domestic currency inflation, the name exchange rate of RMB should have depreciated (this is one of the basic logic of the Fed's quantitative easing monetary policy). Why does it appreciate? The conclusion is simple:
(1) The RMB "depreciation of internal depreciation and external appreciation" seems to be contradictory, but it is the same, the latter helps the former (the RMB appreciation expected syndrome). (2) RMB "depreciate internal depreciation and external appreciation" (appreciation of nominal exchange rates), both are not advisable, both should be rest! (3) Stable nominal exchange rate is not only the basic policy criteria for controlling domestic currency supply, but also the most important means to eliminate the "RMB appreciation expectation syndrome". In short, to ensure the stability of the name exchange rate of the RMB, it is possible to eliminate the strange implication of the RMB "internal depreciation and external appreciation". (By the way, it is not a clear statement if the People's Bank of China should adopt what monetary policy criteria should we take to control the amount of money. After repeated discussions, judging according to the development stage of China's economy today, stable nominal exchange rates are the best monetary policy criteria). (4) Facing the extremely irresponsible quantitative loose monetary policy and the rolling international hot money in the face of the Federal Reserve's extreme irresponsibility, we must continue to strengthen the supervision of hot money inflows, and at the same time relax the restrictions of overseas investment in Chinese enterprises and residents, encourage encouragement, encouragement Chinese companies and residents invest in overseas. This Reading: The mechanism of domestic currency inflation caused the depreciation of the local currency has three channels: trading markets, currency markets, and asset markets.
. First, domestic inflation has made domestic products expensive, stimulating people to increase import, increased foreign exchange demand, and decreased demand for national currency. If, the inflation of the local currency stimulates domestic residents to replace the local currency into foreign currencies, increase the demand for foreign exchange, and the demand for local currency decreases. The local currency has depreciated, which is the currency market channel. It, domestic inflation, asset prices (such as real estate) have also skyrocketed, domestic investors have shifted asset investment abroad (such as Chinese people to buy real estate). It is the asset market channel. In normal circumstances, as long as the three channels play a role, the inflation of the local currency must be accompanied by depreciation of the local currency (the internal depreciation must be accompanied by depreciation of the outside world).
Reference information: Talking about the contradiction between the appreciation of the renminbi and inflation -Baidu Academic Inflation — Baidu Encyclopedia
The relationship between the two: inflation refers to the increase in the overall price level in modern economics. General inflation is the decline in the market value or purchasing power of the currency, and the currency value of currency is reduced by the currency value between the two economies. The currency depreciation part will cause inflation, but it is not the only cause of inflation. This for your small problems: Inflation is mainly manifested as rising prices. For currencies, because currencies are measured by price, and currency appreciation is a two -code thing about the relative foreign currency of local currencies. Extended data . When the price of most commodities and labor in the economy continued to rise in different forms (including explicit and implicit) in a consecutive period of time, macroeconomics called this Economy has experienced inflation. According to this explanation, if there is only one product's price increase, this is not inflation. Only the prices and labor prices of most commodities continue to rise. The interpretation of inflation in the economics community is not completely consistent. Generally, the concept recognized by economists is that under the credit currency system, the number of currencies in circulation exceeds the actual needs of the currency and the level of price is comprehensive and comprehensive. Continuously rising. Popularly, the circulation of banknotes exceeds the number required in circulation, which causes banknotes to depreciate and price rises. We call this phenomenon inflation. The rise in prices in the definition does not refer to the rise in the price of one or more commodities, nor the rise in the price level. Generally, the price level continues to rise in a certain period of time, or that the currency value is certain in a certain amount Continuously decline during the period. It, inflation does not refer to the rise in the price of this or that kind of commodity and labor, but the rise in the total price of prices. The total price or general price level refers to the weighted average of the total price of all goods and labor transactions. This weighted average is the price index. The price index for measuring inflation rates generally: consumer price index, producer price index, and national GDP price conversion index. Simply put, when the government issued too much currency, prices rose. Reference data Inflation Baidu Encyclopedia
China's domestic inflation must bring the currency depreciation of the RMB, but we must understand that the depreciation of the currency here is the depreciation of the RMB value in the country; the currency appreciation is In terms of value, the two situations can coexist. The depreciation of the RMB in the country will not depreciate from the relative value of other currencies. We we must understand that currency depreciation is divided into two different concepts. The first is the decline in currency value in a specific economy (such as China) caused by inflation. Another currency depreciation refers to the decrease in the relative value of currencies in the economy, affecting the value of this currency in the international market.
The expansion Answer: The cause of inflation:
banknotes are compulsive and used in the country or region. Under the condition of currency circulation, if the issuance of banknotes is issued The amount exceeds the actual number of circulation, and the excess part continues to circulate in circulation, which will cause inflation. The direct cause of inflation is the increase in national currency circulation. The government usually adds currencies to make up for fiscal deficit or stimulate economic growth (such as four trillion stimulus plans in 2008), or balance exchange rates (such as China's input -type inflation). Iflation may cause social wealth to the rich class, but in general, inflation is the consequences that the state takes measures to effectively take measures to effectively affect the macroeconomic operation. Many economists believe that mild and benign inflation is conducive to economic development. Reference materials: Baidu Encyclopedia-Inflation
Inflation
This inflation initially refers to the depreciation of the currency depreciation caused by the actual needs of the banknotes in the circulation of the goods. The law of banknote circulation shows that the amount of banknotes cannot exceed the amount of gold and silver currency represented by the land. Once this amount exceeds this amount, the banknotes will depreciate, and the price will rise, thereby inflation. Inflation will only appear under the conditions of banknotes, and this phenomenon will not occur under the condition of gold and silver currency circulation. Because the gold and silver currency itself is valuable, as the function of the storage method, it can spontaneously adjust the amount of currency in circulation and enable it to adapt to the amount of currency required for commodity circulation. Under the condition of banknotes circulation, because the banknote itself is not valuable, it just represents the symbol of gold and silver currency and cannot be used as a storage method. Therefore, if the amount of banknotes exceeds the number of commodity circulation, it will depreciate. For example, the amount of gold and silver currency required in the circulation of goods remains unchanged, and the amount of banknote issuance exceeds double the amount of gold and silver currency. If the price is used to measure the price, the price doubles, which is usually the currency depreciation. At this time, the amount of banknotes in circulation has doubled compared to the amount of gold and silver currency required in circulation, which is inflation. In macroeconomics, inflation mainly refers to the general rise of prices and wages.
This inflation means that the overall price level is rising in modern economics. General inflation is the decline in the market value or purchasing power of the currency, and the currency value of currency is reduced by the currency value between the two economies. The former is used to describe the national currency value, while the latter is used to describe the added value in the international market. The correlation between the two is one of the disputes in economics.
The antonym of inflation is currency tightening. No inflation or extremely low inflation is called stability price.
In several occasions, the word inflation means to increase the supply of currency, which sometimes causes prices to rise. Several (Austrian School) scholars still use the term inflation to describe this situation, rather than the rise in prices itself. Therefore, several observers call the United States "inflation" in the 1920s, even if the prices at that time did not rise at all. The following, unless it is specified, the term "inflation" means general prices rising.
The antison of inflation can be "re -expanded", that is, the degree of price increases or tightening decreases under deflation. In other words, although the general price level decreases, the amplitude is reduced. The related words are "slowing inflation rates" (en :), that is, the increase in inflation increases slowly, but not enough to cause currency tightening.
The measurement of inflation
The measurement of inflation is observed by observing a large number of labor income or changes in the price of items in an economy. Data, and trade unions and business magazines have also conducted such investigations. The price index of the price and labor income forms the price index, which is the measurement benchmark for the average price level of the entire set of items. The inflation rate is an increase in the index. The overall price of price measurement is measured, and inflation refers to the rise of the overall price.
This does not have a independent measurement method for inflation. Because the inflation value depends on the price proportion of the specific items in the price index, and the scope of the measured economic area. The general measurement method includes:
The theoretical increase in the theoretical increase of the cost of the living index CLI (Cost of Living Index) is an estimated by the consumer prices index (Consumer Price Indexes). Economists should have different views on specific CPI values higher than or lower than the CLI value. This is because the CPI value is "biased" (bias). CLI can adjust the extensive gap between the "purchasing power parity" (PPP, Power Parity) to reflect the extensive gap between regional goods and world prices.
The consumer price index CPI (Consumer Price Index) is measured by the price of the shopping items of 'typical consumers'. In many industrial countries, the annual changes of the index are reported by the most common inflation curve. This measurement value is usually used in salary remuneration negotiations because employees hope that salary (name) can be equal or higher than CPI. Sometimes the labor contract contains the Cost of Living according to the living index, which means that the name salary will automatically adjust with the increase of the CPI. The timing of the adjustment is usually lower than the actual inflation rate after the inflation occurs.
The price of the producer price index (PPI) measured the price of the producer's acquisition of materials, which is different from the CPI on the price allowance, profit, and tax burden. gap. PPI reflects the rise of CPI and rises, with typical delays. Although it has a diverse combination, it is generally believed that the characteristics of this delay make the CPI inflation of tomorrow's CPI inflation based on today's PPI inflation; various discussions and content are extremely important.
The wholesale price index (WHOLESALE Price Index) to measure the wholesale price of selective goods (especially sales tax) is very similar to PPI.
The commodity price index measurement changes in the price of selective commodity. If the gold standard system is used, the goods they choose are gold. The United States uses the relics system, and its index contains gold and silver.
GDP flat reduction index (GDP Deflator) is calculation based on GDP: GDP and GDP (that is, constant-PRICE) after inflation correction (ie, constant-price) The proportion of money used between people (see the essence and the name economy). This is the most ambitious observation of the price level. This index is also used to calculate the components of GDP, such as personal consumption expenses. The Federal Reserve uses the Personal Deflator and other leveling indexes as a reference for formulating the "anti -inflation policy".
The personal consumption expenditure price index PCEPI (Personal Price Index). On February 17, 2000, in the semi-annual Congress financial policy report (that is, Humphrey-Hawkins Report), the Federal Open Marketing Committee FOMC (Federal Open Market Commitee) claimed that the main inflation measurement method was changed from the CPI to the chain. Personal consumption expenditure price index.
Because each measurement method is based on his species measurement method and is combined with a fixed mode. Economists often controversy whether there is a 'deviation' in each measurement method and inflation model. For example, the BOSKIN Commission found the CPI calculated by the US Department of Labor Statistics (BLS) in 1995. After quantitative analysis of its deviation, they believed that the inflation of the year was too exaggerated. Due to the increase in scientific and technological innovation brought about by the "Hedonic" and replacing expensive products with affordable products, both will reduce the increase in CPI-U. Another example is that in the early 1980s, the unmanned rental units did not count the rental income part of the CPI-U and CPI-W; after the addition of this part, the inflation rate was actually extremely undervalued, so This change was added to the CPI calculation in 1982.
The existing debate is whether it should be included in the adjustment part of happiness, including people who will not be relocated to cheaper areas in time in high -priced areas. Some people think that the house purchase part of the index is extremely underestimated by the impact of daily life costs on house prices, and it also underestimates the importance of medical expenses in the daily expenses of retirees.
The role of inflation in economics
one of the impacts of stable small inflation is difficult to re -negotiate price reduction, especially for salary and contracts. in this way. Therefore, if the price rises slowly, the related price is easier to adjust. There are a variety of prices that will "reserve prices', but quietly rise. Therefore, the effect of zero -inflation (the price is maintained) will affect other aspects in the way of lowering prices, profit, and employees. Therefore, the executive departments of several companies regard mild inflation to 'lubricating business giant'. The pursuit of complete price stability will bring a very devastating currency tightening (the continuous decrease in prices) will lead to bankruptcy and economic recession (even economic depression).
The financial system depending on the 'potential risk' of inflation is the basic investment inducement higher than savings cumulative wealth. In other words, inflation is the word value of the market for money. In other words, because today's one yuan is more valuable than one yuan next year, the future capital value will be deducted in economics. This view depends on inflation is uncertainty of future capital value.
For those who are low, inflation usually increases the negative effects of discounting before economic activities. Inflation is usually derived from the government's improvement of monetary supply policies. The impact of the government on inflation is to tax the stagnant funds. When inflation increases, the government increases the tax burden of stagnation funds to stimulate consumption and borrowing, which increases the flow rate of funds, and enhances inflation and form a vicious circle. In extreme cases, malignant inflation ()
In enhancement uncertainty may crack down on investment and savings.
The re -assignment
The fixed income such as pension pensions may be re -distributed to non -fixed income, and most of the salary income is used to deal with inflation. Essence
The same, the fixed amount of loans may be re -assigned to the lender (if the loader caught the amount of inflation or cannot adjust the amount). For example, the government is usually a loan party, reducing government liabilities to re -assign funds back to the government. This situation is sometimes regarded as inflation tax
If international trade: If the domestic inflation rate is low, the reduced trade balance will destroy the fixed exchange rate.
The sole cost: Because the value of cash will shrink when inflation, people will tend to hold less cash during the inflation period. This word indicates that the real cost will often flow to the bank. (The term sole cost is a joke, which means the cost generated by worn the sole due to the way to the bank.)
Menu cost: The business must be more diligent in changing the price of the product. This word means that the restaurant is used to change the cost of the menu.
The malignant inflation: If the degree of increased inflation is lost, it will interfere with normal economic activities and damage the supply capacity.
In a economy, several departments will be incorporated into the inflation index, and there are no departments, and the inflation behavior will be re -distributed to the departments that are not incorporated into the departments. At the time of affecting the amplitude, this is a policy of choice. It does not pay the priority and tax on the monetary priority and the funds at hand. If the impact exceeds a certain range, its effect is distorted and become an individual's ‘investment in inflation’, that is, the expected psychology of encouraging inflation.
The reasons for cracking down on inflation are higher than the slight impact of cracking down on its expected behavior and cracking down on holding a large amount of funds. Inflation is the goal.
MISERY Index
The pain index was published in the 1970s, which represents the uncomfortable economic situation, which is equivalent to the total inflation and unemployment rate. The formula is: Pain Index = Percentage of Inflation Unemployment Rate, indicating that the general public feels unpleasant to the same degree of inflation rate and unemployment rate of the same increase. Modern economists do not agree to describe the negative impact of the above -mentioned inflation machines with the term "pain". In fact, many of the economists think that the public's prejudice to mild inflation is that it affects each other: the masses only remember economic difficulties related to the high inflation period. From the perspective of modern economists, mild inflation is a less important economic problem, which can be suspended by partial part of the stagflation [] (may be stimulated by monetary []].
The economists (especially in Japan) have advocated that high inflation is a solution for economic recession.
All investigations for inflation show that neo -classical economics scholars and the general public's damage caused by mild inflation are good. Its damage is insignificant, and many scholars even say that there is no harm.
This due to the distribution of the inflation gear, the opinions of the inflation and inflation have fallen into the wind. Because capital gains tax is the name, inflation is advocated as important as the "rich tax", and society with low inflation will tend to condense wealth.
The causes of inflation
The doctrine of different academic inflation.
The interpretation of monetary
The most direct theory for inflation and the most direct theory is: inflation guidance is due to the increase in the economic scale of the currency. This statement is measured to measure the growth of the GDP settlement index and the growth of currency supply, and the central bank sets interest rates to maintain the number of currencies. This view is different from the Austrian school in the following in the number of currencies but not essential. Under the currency architecture, the gathering of currency is the focus.
The theory of currency quantity, simply speaking, the total currency consumed by the economy depends on the total current currency. The following formulas have since said:
p are the level of general consumer goods, DC is the total demand for consumer goods, while the total supply of SC consumer goods. The concept behind the formula is that when the total demand for consumer goods has decreased from the total amount of consumer goods, or the total amount of consumer goods demand on the total supply of consumer goods has increased, the general price of consumer goods will increase. Based on the total expenses based on the view of the total existing currency, economists calculate the total demand for consumer goods with total currency. As a result, they determined that the total expenses and consumer goods demand increased with total currency. Therefore, the only reason for scholars who believe that the theory of currency number theory also believe that the rise in prices is economic growth (indicating that the total supply of consumer goods is increasing), and the central bank increases the total amount of existing currency due to monetary policy.
In this point of view, the most fundamental reason for inflation is that currency supply is more than demand, so ‘inflation is a currency phenomenon that will definitely occur everywhere’, and Friedman said. It means that the control of inflation depends on currency and finance restrictions. The government cannot make it too easy for borrowing, and it cannot be excessive. This view focuses on the central government budget deficit and interest rates, as well as economic productivity, that is, the Cost -Pull Inflation promoted by production costs (total supply).
The Neo-Keynesian
It three main forms of inflation, inflation, is the "triangle model" in Robert J. Gordon Part of:
The demand to pull inflation-inflation occurred in high demand and low unemployment due to GDP, also known as Felipus curve inflation.
The cost promotes inflation -today, it is called "Supply Shock Inflace", which occurs when the oil price is increased suddenly.
Built -in inflation -caused by reasonable expectations, it is usually related to price/wage spiral. Workers hope to continue to increase salary, and their costs are passed to product costs and prices, forming a vicious circle. Inherent inflation reactions have occurred as residual inflation, also known as 'inertial inflation', and even 'structural inflation'.
The inflation of these three types can be combined at any time to explain the current inflation rate. However, most of the first two types of inflation (and its actual inflation rate) will affect the size of inherent inflation: the continuous high (or low) inflation is increased (or decreases) in the inherent inflation inflation Essence
has two basic elements in the triangular model: moving along the Philips curve, such as low unemployment stimulation to increase inflation; influences.
The Phillips Curve (or demand surface) Inflation theory
Economic supply (potential output) related. This is particularly distinctive when the government (maybe during the foreign war or the civil war) caused the overtime currency to cause the financial crisis, and sometimes the malignant inflation causes prices to soar (or to double the monthly increase).
The currency supply also plays the main role in a mild inflation, but its importance is controversial. Monetary economists believe that it has a strong connection; on the contrary, Keynesist economists emphasize the role of overall demand, and currency supply is only a decisive factor in the overall demand.
The basic concept of Keynesian interpretation is the relationship between inflation and unemployment rate, which is called Philips curve model. This model is weighed between price stability and unemployment rate (Trade OFF); therefore, to minimize the unemployment rate and allow a certain degree of inflation. The Philips curve model excellent description of the United States' experience in the 1960s, but it was not enough to interpret its increase in inflation in the 1970s and the combination of economic stagnation. Today, the Felipus curve is used to increase the relationship between the total salary growth and the general inflation rather than the loss rate and the inflation rate.
The displacement of the Philips curve
Thefish has become a fixed factor for economic activities because of supply shock and inflation. The choice between stability and unemployment rate) describes inflation. Supply shock means that the oil price fluctuates in the 1970s, and the inherent inflation means that the price/salary cycle and inflation expectations are expected, which means tolerated inflation in normal economic conditions. Therefore, the Philips curve only represents the demand in the triangle mode to pull inflation.
. Another Keynesian view is potential output (sometimes called GDP) -the the GDP level of the economy under the condition of reaching the highest productivity -it is a habitual and inherent limit. This output standard corresponds to NAIRU -inherent unemployment, natural unemployment or full -time unemployment rate. Under such a structure, the inherent inflation rate is internal internal depending on the labor volume in the economy:
GDP exceeds its potential level (and the unemployment rate is lower than NAIRU). The theory pointed out that when other conditions are equal, inflation is intensified as the supplier increases prices, and the inherent inflation will worsen. Furthermore will lead to the Philips curve towards high inflation and high unemployment. This "accelerated inflation" was once seen in the United States in the 1960s. At that time, the expenses of the Vietnam War (offset by a small amount of tax) lowered the unemployment rate below four percent.
GDP is lower than its potential level (and the unemployment rate is higher than NAIRU), and when other conditions are equal, inflation will reduce the price as the supplier attempts to reduce the price, allowing the market to digest the number, and lower the estimation of inhive inflation and inflation. Decrease; that is, prevent inflation. It will cause Philips curve towards the direction of low inflation and low unemployment. Preventing inflation was seen in the United States in the 1980s. At that time, the Federal Reserve Chairman Paul Walker's anti -inflation measures brought a high loss rate of several years, of which 10 % were two years.
GDP is equal to its potential level (and the unemployment rate is equal to NAIRU), as long as there is no supply shock, the inflation rate is unchanged. In the long run, most of the new Keynes' overall economist regards Philips curve vertically. In other words, if the inflation rate is high enough to overwhelm the unemployment rate, the unemployment rate is the premise, and it is equivalent to the NAIRU.
. However, the theory is a defect for the target of the policy. The number of potential output (and NAIRU) is usually unknown and will change over time. In addition, the occurrence of inflation rates is not symmetrical, and the increase in rising is faster; even worse, it is still changing with the policy. For example, during the period of Prime Minister Sachel, the unemployed found that he was in a structural unemployment, that is, he could not find the employment opportunities of appropriate talents in the British economy. To. When an economy avoids the thresholds across high inflation, the improvement of structural unemployment rate implies that only a small amount of manpower can find employment opportunities in NAIRU.
Ifly that both NAIRU and potential output are unique and quickly achieved, the vast majority of non -Keynesian inflation theory can be understood as the point of view containing New Keynesian. When the "supply surface" is fixed, inflation depends on the overall demand (aggregate demand). The fixed supply side also implied that the expenses of public and private institutions conflicted with each other. Therefore, the government's deficit expenditure will have a crowded effect on private institutions, and it will not affect the level of employment. In other words, funds and financial policies are the only those who can affect inflation.
The supply doctrine theory
This Economics theory assumes that inflation must be caused by insufficient funds and insufficient capital demand. For these two factors, the number of funds is purely the target. As a result, the inflation that occurred during the epidemic of black death in the medieval century in Europe could be regarded as caused by the reduction of capital demand; and the inflation of the 1970s could be attributed to the golden standards set by the United States to leave the Bretton Forest system Excess funds generated. Supply school assumptions that when the supply and demand of funds will not lead to inflation at the same time.
The elements elaborated by the theory of supply and facial economics, saying that the economic expansion led by the low tax burden in the United States in the 1980s to ending high inflation is ended. Its argument is demand for basic funds on economic expansion, and this approach offsets the impact of inflation. Economic expansion can be regarded as regular demand for funds, and other conditions are equivalent to increasing the number of funds. In the international currency market, this policy is irrelevant. Supply facial economics advocates that economic expansion not only increases domestic evaluation of funds, but also improves international evaluation.
The anti -inflation
The central bank of the country, such as the Fed, can effectively affect the inflation rate by setting interest rates and other monetary policies. High interest rates (and slow growth in funding demand) are typical methods of anti -inflation of the central bank to reduce employment and production to suppress prices.
. However, central banks in different countries have different views on controlling inflation. For example, some central banks pay close attention to symmetrical inflation targets, while others are only controlled when the inflation rate is too high. The Central Bank of Europe was blamed for the latter when facing a high unemployment rate.
The monetist persons focus on improving interest rates through financial policies to reduce funding supply. Kanesists focus on reducing demand for universally reducing demand through tax increases or reducing government expenditure. Its interpretation of financial policies comes from Robert Solo's research results in rising daily necessities. The method of resisting inflation advocated by the school's school is: the exchange rate of fixed references such as fixed currency and gold, or reducing the marginal tax rate in the floating currency structure to encourage the formation of capital. All these policies can be achieved through the open market operation.
. Another method is to directly control salaries and prices (see wages for bargaining, Incomes Policies). In the early 1970s, Nixon had tried this method under Nixon. One of the main problems is that these policies and stimulus demand are implemented at the same time. Therefore, the restrictions (control methods, potential output) of the supply surface conflict with the growth of demand. Economists generally depending on price control into bad practices, because they promote shortage and reduce production quality, thereby distorting economic operations. However, if the cost is increased due to serious economic recession, or in inflation during the resistance of the war, such a price may be worth it.
In fact, price control may have a more influential economic recession due to resisting inflation (increased the unemployment rate due to reducing demand). Essence
1. Money depreciation is only a kind of inflation performance. Inflation generally refers to the depreciation of banknotes and price increases caused by the amount of money in the circulation of goods exceeding the actual needs of the product.
2. The performance of inflation is: first, currency depreciation, two, prices continue to rise, three, economic overheating, essentially the total social demand is greater than the total supply.
3. Currency depreciation, the decline in the value or the value contained in the unit currency, that is, the unit currency price decreases. There are many reasons for currency depreciation. Reason one is: inflation, reason two: rising foreign exchange rates, reasons 3: The amount of currency issued by the state issued more than the amount of currency required for actual life
4. Inflation refers to the comprehensive and continuous appearance of economic operations. The phenomenon of rising prices. The amount of banknotes exceeds the actual amount of currency in circulation is one of the main reasons for inflation.
5. Sometimes inflation does not necessarily lead to depreciation of the local currency, and sometimes currency appreciation will exacerbate inflation.
This information
The currency depreciation (also known as currency depreciation, foreign language name) is the symmetry of currency appreciation. It refers to the decline in the value or the value of the unit currency, that is, the decline in unit currency prices.
The currency depreciation causes rising prices in China. However, because the depreciation of currency can stimulate production under certain conditions and reduce the price of domestic products abroad, it is conducive to expanding exports and reducing imports. Species.
(References Baidu Encyclopedia Currency Decade)
The reasons for the "depreciation of inside" in RMB domestic inflation, but the reason for "external appreciation" at the same time is:
(1) The currency policy of overseas countries (especially the Federal Reserve) is equally loose, even more than Chinese monetary policy. Loose loose!
(2) Currency (such as the euro and yen) of the dollar and other developed countries (such as the euro and the yen) is a complete free exchange of currencies. It is an international circulation currency. It is much easier to buy and sell US dollars (euro) or transfer USD funds. The US dollar released by the Federal Reserve's loose currency policy is a large part of the international capital market and the currency market. No inflation has been seen in the United States for the time being, but shrinks! Overseas investment channels for domestic residents in my country are still not smooth, and the scale is still small. The RMB funds released by the loose monetary policy of the People's Bank of China are mainly circulated in China. Theoretically, if the speed of inflation in the United States is the same as the depreciation of the US dollar, the Midland's quantitative easing monetary policy cannot stimulate US exports. The unique status of the US dollar has made the United States at least not inflation for the time being, and it will transfer inflation to overseas!
(3) The internal power of the name exchange rate of the RMB nominal exchange rate (the appreciation of the real exchange rate is the trend of the trend). International speculative hot money follows political pressure crazy hype, which has led to the increasingly intensive exchange rate appreciation of the name of the RMB. The unilateral appreciation of the nominal exchange rate is deprived of the mechanism of normal appreciation of the real exchange rate (that is, the normal process of hindering or interrupting the continuous rise of the employment, salary and welfare of Chinese workers).
If according to normal logic, domestic currency inflation, the name exchange rate of RMB should have depreciated (this is one of the basic logic of the Fed's quantitative easing monetary policy). Why does it appreciate? The conclusion is simple:
(1) The RMB "depreciation of internal depreciation and external appreciation" seems to be contradictory, but it is the same, the latter helps the former (the RMB appreciation expected syndrome).
(2) RMB "depreciate internal depreciation and external appreciation" (appreciation of nominal exchange rates), both are not advisable, both should be rest!
(3) Stable nominal exchange rate is not only the basic policy criteria for controlling domestic currency supply, but also the most important means to eliminate the "RMB appreciation expectation syndrome". In short, to ensure the stability of the name exchange rate of the RMB, it is possible to eliminate the strange implication of the RMB "internal depreciation and external appreciation". (By the way, it is not a clear statement if the People's Bank of China should adopt what monetary policy criteria should we take to control the amount of money. After repeated discussions, judging according to the development stage of China's economy today, stable nominal exchange rates are the best monetary policy criteria).
(4) Facing the extremely irresponsible quantitative loose monetary policy and the rolling international hot money in the face of the Federal Reserve's extreme irresponsibility, we must continue to strengthen the supervision of hot money inflows, and at the same time relax the restrictions of overseas investment in Chinese enterprises and residents, encourage encouragement, encouragement Chinese companies and residents invest in overseas.
This Reading: The mechanism of domestic currency inflation caused the depreciation of the local currency has three channels: trading markets, currency markets, and asset markets.
. First, domestic inflation has made domestic products expensive, stimulating people to increase import, increased foreign exchange demand, and decreased demand for national currency.
If, the inflation of the local currency stimulates domestic residents to replace the local currency into foreign currencies, increase the demand for foreign exchange, and the demand for local currency decreases. The local currency has depreciated, which is the currency market channel.
It, domestic inflation, asset prices (such as real estate) have also skyrocketed, domestic investors have shifted asset investment abroad (such as Chinese people to buy real estate). It is the asset market channel.
In normal circumstances, as long as the three channels play a role, the inflation of the local currency must be accompanied by depreciation of the local currency (the internal depreciation must be accompanied by depreciation of the outside world).
Reference information: Talking about the contradiction between the appreciation of the renminbi and inflation -Baidu Academic
Inflation — Baidu Encyclopedia
The relationship between the two: inflation refers to the increase in the overall price level in modern economics. General inflation is the decline in the market value or purchasing power of the currency, and the currency value of currency is reduced by the currency value between the two economies.
The currency depreciation part will cause inflation, but it is not the only cause of inflation.
This for your small problems: Inflation is mainly manifested as rising prices. For currencies, because currencies are measured by price, and currency appreciation is a two -code thing about the relative foreign currency of local currencies.
Extended data
. When the price of most commodities and labor in the economy continued to rise in different forms (including explicit and implicit) in a consecutive period of time, macroeconomics called this Economy has experienced inflation. According to this explanation, if there is only one product's price increase, this is not inflation. Only the prices and labor prices of most commodities continue to rise.
The interpretation of inflation in the economics community is not completely consistent. Generally, the concept recognized by economists is that under the credit currency system, the number of currencies in circulation exceeds the actual needs of the currency and the level of price is comprehensive and comprehensive. Continuously rising. Popularly, the circulation of banknotes exceeds the number required in circulation, which causes banknotes to depreciate and price rises. We call this phenomenon inflation.
The rise in prices in the definition does not refer to the rise in the price of one or more commodities, nor the rise in the price level. Generally, the price level continues to rise in a certain period of time, or that the currency value is certain in a certain amount Continuously decline during the period.
It, inflation does not refer to the rise in the price of this or that kind of commodity and labor, but the rise in the total price of prices.
The total price or general price level refers to the weighted average of the total price of all goods and labor transactions. This weighted average is the price index.
The price index for measuring inflation rates generally: consumer price index, producer price index, and national GDP price conversion index. Simply put, when the government issued too much currency, prices rose.
Reference data Inflation Baidu Encyclopedia
China's domestic inflation must bring the currency depreciation of the RMB, but we must understand that the depreciation of the currency here is the depreciation of the RMB value in the country; the currency appreciation is In terms of value, the two situations can coexist. The depreciation of the RMB in the country will not depreciate from the relative value of other currencies.
We we must understand that currency depreciation is divided into two different concepts. The first is the decline in currency value in a specific economy (such as China) caused by inflation. Another currency depreciation refers to the decrease in the relative value of currencies in the economy, affecting the value of this currency in the international market.
The expansion Answer:
The cause of inflation:
banknotes are compulsive and used in the country or region. Under the condition of currency circulation, if the issuance of banknotes is issued The amount exceeds the actual number of circulation, and the excess part continues to circulate in circulation, which will cause inflation.
The direct cause of inflation is the increase in national currency circulation. The government usually adds currencies to make up for fiscal deficit or stimulate economic growth (such as four trillion stimulus plans in 2008), or balance exchange rates (such as China's input -type inflation).
Iflation may cause social wealth to the rich class, but in general, inflation is the consequences that the state takes measures to effectively take measures to effectively affect the macroeconomic operation. Many economists believe that mild and benign inflation is conducive to economic development.
Reference materials: Baidu Encyclopedia-Inflation