Fruit prices are rising, pork prices are rising...... It's all about our lives, and it's all about a series of reactions triggered by inflation. So what exactly is inflation?
In plain language, there are too many currencies circulating in the market, and in fact there is no need for so much, which leads to currency depreciation and shrinkage, and prices rise, so there is inflation.
In other words, inflation makes your money worthless, for example, you used to buy two buns for one dollar, but now you can only buy one for two dollars. When the purchasing power of money falls, it depreciates and prices rise.
So what's going on with this wave of inflation? And how can ordinary people prepare?
.01
The tide of inflation is coming
"On January 24, Pan Gongsheng, governor of the central bank, said at a press conference of the State Council Information Office that the current price level is still far from the expected price target, and domestic banks have moderately lowered deposit interest rates in the early stage, and the People's Bank of China has lowered the re-lending, rediscount interest rate and deposit reserve ratio for small rural branches, which will help promote the downward trend of LPR as a benchmark for credit pricing."
Immediately afterwards, the central bank clarified that the interest rate on loans with a maturity of more than five years was adjusted to 3.95%, down 0.25 percentage points from the previous month. Compared with the previous decline, this adjustment is unprecedented, and it has been described as a "super decline" by many self-media, which is rare.
Combing through the mortgage interest rates over the years, after the housing reform in 98, there have been two largest interest rate cuts in the mainland, one in 2009 and one in 2015, and both times because of the financial crisis.
The 2009 crisis was triggered by the subprime mortgage crisis in the United States; 2015 was because of the financial defense war;
The two sharp interest rate cuts have prompted the property market to "rebound", to "pick up", and even to "soar housing prices".
Now, we are in such a critical period.
Taking Japan as a reference, the bursting of the real estate bubble in Japan in the 90s gave us profound inspiration, and the current adjustment of China's real estate market is also similar to them. In order to stimulate the "bailout" in Japan, Japan's mortgage interest rates have fallen from their peak to almost zero, and now, our interest rates have begun to fall.
Just like the repeated operations of the central mother in the past two years, it has not only injected more liquidity into the market, but also exceeded the market's expectations in terms of scale. This also means that the market's expectations for future inflation are rising.
On this point, Governor Pan Gongsheng's statement gave us some clues, the central bank believes that "the current price level is still far from the price expectation target"; And it is clear that "the money supply is matched with the expected target of economic growth and price level".
Not only that, but it also gave a specific price growth target, setting the consumer price increase in 2024 at 3%, 2.8 percentage points higher than the 0.2% at the end of 2023.
This also means that in the future, there is still room for further release of funds in the market. Faced with this situation, how should we ordinary people deal with the coming "inflation wave"?
.02
Plan ahead
Historical experience tells us that when inflation expectations are heating up, there is no panic in holding "two things":
1. Gold
As a precious metal, gold occupies a unique position in the global economic system, and its value will not depreciate due to the easing of monetary policy.
From the beginning of 1932 to the present, the price of gold has risen from $20.67 per ounce to $1982.1, that is, in the past 100 years, gold has appreciated by 99% against the dollar.
In addition, the scarcity of gold itself is not in doubt. Only 3,000 tonnes of gold can be produced annually in the world. It is precisely because of its rarity that it is very precious in the eyes of people.
2. High-quality real estate.
As a fixed asset, real estate also has a good value preservation function in an inflationary environment. Although the real estate market has ushered in a correction in recent years, in the long run, high-quality real estate is still an indispensable part of household asset allocation.
In fact, it is clear from the sharp rise in global housing prices since the outbreak of the epidemic, not only because of the recovery of the economy itself, but also as a direct result of monetary policy easing.
Our adjustments in recent years are more out of the prevention of financial risks. With the gradual recovery of policies, the mainland real estate market will inevitably return to the track of healthy development.
Therefore, for the general public, once the inflation tide hits, holding "gold" and "high-quality real estate" in their hands, they can still do not panic.
Wan Ziwen said: Every word of the article was typed out by me, and I clicked "watching" to let me know that you are also "doing your best" for life.
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