During the 35 years from 1985 to 2020, China's broad money M2 increased by 420 times. If you have a deposit of 1000 in 1985, congratulations, you will be a rich man by then. If you deposit this bank account today, I'm sorry you may have gone from 10 thousand yuan to poor.
From 2000 to 2020, m 2 increased by 14.8 times in 20 years, with a compound annual growth rate of 14.8%. If you don't want your cash to be overwhelmed by money, you must do a good job in investment and financial management, so that your return on assets will exceed 14.8%. To do this, you must look at money with new eyes and thinking.
The essence of money is the iou created by the government, that is, the debt certificate of the government. As long as the government has monetary sovereignty, it cannot repay its debts. It is very simple for the government to pay off all debts, so the government deficit can be infinite. The deficit mentioned here is not a fiscal deficit, not a corporate deficit, not a personal deficit, but a source of money and cannot be regarded as a deficit.
So, isn't the government worried about inflation by printing money indefinitely? The production capacity of countries with hyperinflation in the world has been seriously damaged. As long as the productive capacity in the economy is not fully utilized and unemployment persists, printing money will not bring about high inflation. From 20 13 to 2020, it took China seven years to print the monetary sum of the previous 62 years, while the average inflation rate from 2008 to 2020 was only 2.58%.
The government is the issuer of money, and enterprises and private individuals are the users of money, so we can't understand the pros and cons of government accounting with the pros and cons of enterprise and private sector accounting. Government debt is a private surplus. Therefore, government debt is actually a good thing. It strengthens the balance sheets of enterprises and individuals by increasing private income.
The above viewpoints are the main theories of modern monetary theory MMT. We should not laugh at MMT. As long as you master the logical structure of MMT, it is not difficult to draw the conclusion that the tap of the central bank will always be on, there will be more and more water in the market, and the government's debt is private assets. Therefore, where water flows, assets will rise, and there will be the best assets. What we feel most is the property market and the stock market.
People misunderstand MMT because the preconditions in its theory are not clear. For example, MMT believes that it is problematic for government debt to be purchased by the private sector, that the government should have institutional constraints in issuing sovereign currency, and that the use direction of government debt is to improve labor productivity. If these preconditions are broken, it will bring problems, and these problems happen to be private investment risks.