Understand economics from scratch

Chapter 24 How Much Do You Know about the Economic Situation and Government Behavior——Macroeconomics You Must Know (4)
Raising interest rates is a good policy for ordinary people. Raising interest rates increases the interest on money deposited in banks by ordinary people.If ordinary people deposit money in the bank, they will not spend it, and if ordinary people do not spend money, it will not put pressure on prices.However, the more important role of raising interest rates is to curb consumption.As a business leader, if he wants to expand investment, he has to borrow money from the bank.After borrowing money, you will go to buy raw materials and production equipment, which again involves the issue of spending money.After the money is spent, it is likely to put pressure on controlling prices.How can the government keep companies from spending money, use monetary policy to raise interest rates, and increase the cost of borrowing money for companies.In the past, the loan interest rate was 6%, but now the interest rate has changed to 10%, and the enterprise will pay 4% more for borrowing money.As a result, many people will not borrow money.If no one borrows money, they will not buy raw materials for production, and they will not buy other products, so the inflationary pressure will be reduced.Therefore, the interest rate is one of the means to control inflation.

The third is the government to issue public bonds.Public bonds are issued by the government, which can recover the money of the common people, so that the common people do not spend money.If the common people don't spend money, they won't put pressure on price control. This is the current practice of the central bank.Monetary policy includes interest rate policy, deposit reserve ratio policy and issuance of public bonds.

The specific method of using monetary policy is that when the economy is prosperous, the central bank adopts a contractionary monetary policy, that is, sells government bonds in the financial market, increases the discount rate and reserve rate, reduces the money supply, raises interest rates, and reduces investment. , suppressing demand.When the economy is in recession, the central bank adopts an expansionary monetary policy, that is, buys government bonds in the financial market, reduces the discount rate and reserve ratio, increases the money supply, lowers interest rates, increases investment, and stimulates demand.

Market Supervision: The Law Cannot Be a Decoration

A pike is guilty of a heinous crime and needs to be judged.The court consisted of two donkeys, two old horses, and two goats, and appointed the fox as the prosecutor.No one could point out any injustice in the trial, and the pike had no way of denying it, and was at first sentenced to be hanged from a tree.At this time, Prosecutor Fox became the key man. He said that for a guy like pike who has done so many crimes, hanging is too light, and he should be sentenced to an unheard of heavy sentence-let him drown in the river!The court accepted the recommendation and changed the sentence to drowning in the river.

In this story, the law does not play a punitive role.

In the same book, there is another story about "the bear takes care of the beehive".

Beasts recommended the honey-loving bear to watch the beehive, but the bear guarded it and stole all the honey into its nest.After the incident was revealed, all the beasts punished it to confine it in its den for a winter.

Fables are the refraction of human life, and the social phenomena satirized by Krylov in the fables are still unavoidable facts in our real life.Every year on the "March 3" Consumer Rights Day, fakes and shoddy products are exposed, but the fakes and shoddy products come one after another, like leeks, which are cut and grown again.The benefits of breaking the law are far greater than the costs paid, and it is not uncommon to make and sell counterfeit goods.

A market economy is an economic operation mode and a competition platform that allocates social resources based on the market. The basic principles of market transactions are fairness, openness, and justice.Without laws, the market order will be in chaos.

We all know that a market economy is a competitive economy.It is one of the advantages of a market economy to achieve the survival of the fittest through competition and rationally allocate resources.However, market competition must be fair and legal; otherwise, the market mechanism may fail or be distorted.In market competition, some competitors will not hesitate to take the greatest risk in pursuit of profit, and adopt various unfair means to conduct or restrict competition, which will inevitably hinder normal market competition.It is necessary to use legal means to regulate and sanction abnormal competition and monopolistic behavior to maintain fair and reasonable market competition.It's like in a ball game, players must play according to certain rules.Without rules, the game cannot be played.Therefore, the legal system of the market economy is equivalent to the rules of the game, which is the guarantee for maintaining fair competition.

Therefore, the more developed the market economy, the more developed the legal system will be. Although our country is now in the primary stage of socialism, we must always adhere to this principle, that is, "the socialist market economy is a legal economy."

If the law is not followed, especially if the punishment for economic crimes is weak, the law will become a straw man for decoration, and the order of the market economy will inevitably be destroyed, and ultimately the whole society will pay for it.In a society composed of economic people, the social order is not established by sweet-talking preaching, but by perfect legislation and strict law enforcement.

A philosopher once said: "Half of a person is an angel, and half is a devil." The economic order of a society is mainly established and consolidated by legal norms and even legal punishment. If there is no strict law and discipline, angels will also become devils.In the early days of the development of the commodity economy in the UK, there were many counterfeit and shoddy products, and it was quite common to fail to repay borrowed money.But when the law is seriously enforced, those who manufacture and sell counterfeit goods will be punished to lose their fortunes and become prisoners; borrowers and debtors will not only have their homes confiscated to repay their debts, but will also be imprisoned. Who dares to flout the rules of the market economy?It is precisely in this way that the British market order has become orderly, and punishment according to law has created a civilized and honest Britain.In Italy, well-known international film stars have evaded taxes for many years and were immediately arrested as soon as they got off the plane. Who dares not to pay taxes in accordance with the law?In Singapore, a fine of 5000 Singapore dollars is charged for spitting. Who dares to compete with the sacred law?

If the law is not followed, the law becomes a straw man.If the government management department is limited to conducting surprise inspections on the market, and no one conducts daily product quality inspections on the market, I am afraid that fake and inferior products will continue to flow into the market.There are so many illegal acts in the market economy in our country. In fact, the solution is very simple: we should intensify the crackdown on illegal acts in the market economy, so that the cost of illegal crimes far outweighs their benefits, and the law enforcement is immediate, and orders are prohibited. When the crime is the same, then no one will violate the laws of the market economy.

In the socialist market economy, the government acts as the "regulator" of the market economy. While serving the market well, the government should also take up the "big stick" in its hand to severely crack down on illegal activities in the market, and effectively Maintain the order of the market economy, so as to create a perfect market transaction order for the society.

Fiscal deficit: A matter of interest to taxpayers

Clinton was once rated as the best US president in the 20th century. One of the important reasons is that the US government has always been famous for its fiscal deficit, but the deficit turned into a surplus in the Clinton era.

During Clinton's eight years in office (8-1993), the growth rate of the U.S. gross domestic product (GDP) was very strong, with an average annual growth rate of 2001%, which was higher than that of Jimmy Carter and Reagan when they were in office. Slightly worse than Kennedy and Johnson's performance in the 3.5s when the US economy took off.Moreover, during his tenure, the employment situation in the United States was very good, and the number of new job opportunities was far more than that of any other post-World War II US president except Carter.In addition, Clinton is also very good at seizing the opportunity. He decided to raise taxes at the right time when the growth rate of per capita income in the United States had stagnated for many years and was just showing an upward trend.In the end, with one of the smallest government agencies under his command, Clinton achieved the strongest increase in US GDP since Johnson's presidency, and also put the US government in a real fiscal surplus for the first time since President Truman.

The United States today is a typical representative of developed countries living beyond their means.After Bush Jr. came to power, it coincided with the economic recession and continued to use foreign troops, resulting in high deficits again.The huge fiscal deficit led to a trade deficit, and the United States became the country with the most serious twin deficits in the world.Now that the severe financial crisis is breaking out in the United States, the Obama administration has to prepare a large amount of budget to resist the financial crisis. It is estimated that the US fiscal deficit will exceed one trillion U.S. dollars within a few years.

A fiscal deficit occurs when the government has little revenue and spends too much.That is to say, the government's expenditure is greater than its income, forming a gap.On the contrary, if the government has more fiscal revenue and less expenditure, there will be a gap, which is called a fiscal surplus.However, in today's countries in the world, there are very few fiscal surpluses, and the vast majority of national governments have fiscal deficits.

If the country's finances are in a situation where it can't make ends meet, then this kind of expenditure difference needs to be written in red letters when performing accounting treatment, which is also the origin of the deficit.There are two situations for the occurrence of deficits: one is intentional arrangement, which is called deficit finance or deficit budget, which belongs to a type of fiscal policy; deficit or budget deficit.

In reality, many countries with rising economies need a lot of wealth to solve a lot of problems, and there is often a situation where they can't make ends meet, so fiscal deficits seem inevitable.However, this also reflects the certain role of the fiscal deficit, that is, within a certain limit, it can stimulate economic growth.In the case of insufficient consumption of residents, the usual practice of the government is to increase government investment to stimulate economic growth, but long-term fiscal deficits will cause a great burden on the national economy, and it is not a long-term solution.

(End of this chapter)