But as ordinary people, they also have a heart that they are not willing to be leeks, so they have their own understanding of the financial market (commonly known as becoming a monk halfway). Since finance is the dependence of economy, we should first understand the concept and operation mode of economy, such as what is market and what is credit. This article mainly includes basic economic concepts.
The word "market" has almost become the word we hear the most in our daily life, but it seems that few people (I have never thought about what a market is anyway).
To put it simply and rudely, the market is the sum of all transactions, which is expressed by mathematics:
This concept is consistent with the composition of the whole market and various market segments. For example, the notebook computer market is the sum of all notebook computer transactions, and the stock market is the sum of all stock transactions.
So, what is a transaction? It's easy to find the answer from the wiki.
Wikipedia is simple and rude. However, it is worthy of scrutiny. It mentioned two trading modes, namely barter trading mode and currency trading mode. It seems that both ways are easy to understand, but in fact, it is the evolution of human beings in trading (using money) that makes our economy so complicated today. Therefore, we will directly look at the development of transactions through history and follow the development of human history, so as to better understand the currency and market.
First of all, let me mention the definition of equivalence: universal equivalence is a commodity separated from the commodity world and represents the value of all other commodities.
In primitive society, what is human life like at this time? Every day, we need to go out hunting or farming to make a living. At this time, human productivity is quite low, so it is good to support yourself. However, as the IQ of human beings is higher than that of ordinary animals, human beings have discovered various tricks to improve productivity, such as grinding forks or using fire to help hunting, taming cattle to help farming. In a word, with the development of human beings, human beings began to have enough productivity to chase the materials needed for basic survival.
At the same time, another characteristic of human beings has promoted the formation of the primitive market: social division of labor. It can be said that the separation of animal husbandry and agriculture is the first social division of labor in human history. Social division of labor promotes the development of productive forces and brings more labor products. The products of labor not only meet the consumption of the tribe, but also appear surplus. The variety and quantity of products entering the exchange have increased. Some clan and tribal leaders began to take the surplus products for themselves, private ownership appeared and clans and tribes began to disintegrate. On this basis, the slave society came into being. With the gradual development of other industries (such as metal smelting), these slave societies began to divide part of their productive forces for self-protection and internal notification, that is, the primitive army. This development trend also promoted the formation of early civilization and so on. It seems too much.
In short, the social division of labor and the improvement of productivity make labor products surplus, and human beings exchange their surplus products for other products, which is the early transaction. Of course, they are still bartering things. The sum of these transactions is the market.
With the continuous progress of human society, more and more products can be exchanged by human beings, and the concept of market is becoming more and more common, but the original barter transaction method has brought problems to people. A transaction can only occur if there are products to be exchanged at the same time, that is, both parties hold the products needed by the other party at the same time (note: all transactions are instantaneous at this time). On the other hand, there are many other restrictions. For example, I went to the market today to change a pig and carried 100 sets of rice, but there are no pigs in the market today to change into rice, so I will carry this 100 kg of rice back.
At this time, the original equivalent appeared. Humans began to think that things that are not easy to obtain (so the quantity in the market is basically the same) are equivalent, and began to use equivalents in transactions to settle transactions. For example, the earliest people in the Central Plains rarely saw shells and didn't know where there were shells. Shells are rare at this time, and people who have enough to eat and wear warm clothes are willing to spend a lot of rice for a shell. One day, a rice seller offered to exchange 100 kg of rice for this shell, because he knew that this shell could be exchanged for other things, such as pork, and he didn't need to change it immediately, so he could change it whenever he wanted (because he was sure that shells were rare and wouldn't pop up many shells out of thin air). So the next time he goes out to buy pork or something else, he doesn't have to carry 100 Jin of rice, just put this shell in his crotch. This kind of transaction greatly lightens the burden on human beings. On the basis of a large number of transactions, human beings also began to have the concept of equivalents for certain items, such as shells, salt, bronze, gold and so on. Without exception, they are rare products of their time or products that have not been obtained, because this ensures that the value of equivalents will not change at will. At this point, the earliest concepts of money appeared, although they did not appear in the form of money.
With the continuous development of human beings, a concept similar to "country" has been gradually created. A country or ruler has considerable credibility for the people under its jurisdiction (if you want to ask why you read history books, it is not beside the point here), and this credibility is the initial basis of currency issuance. So at the turn of the Shang and Zhou Dynasties in China, copper shells began to replace shells as equivalents. In the late Zhou Dynasty, the Spring and Autumn Period and the Warring States Period, the vassal states began to cast money independently, which broke away from the original equivalent form.
Here we summarize and mention some incidental concepts:
-currency has the characteristics of equivalent exchange, which was initially guaranteed by the scarcity of commodities, and then gradually transferred to the government, rulers or institutions or individuals with great credibility to ensure the effectiveness of equivalents (for example, the value of paper money itself is almost zero, but it is valuable because of the recognition of rulers and all traders). This recognition is the concept of "endorsement" in economics.
With the development of money, a new concept, price, has emerged. Due to the gradual standardization of money, it is difficult to describe the value of goods, and people begin to describe the value of goods in the way of "how many monetary units is a commodity worth", that is, the price.
With the appearance of price, it brings a phenomenon, because the flow of information is usually not instantaneous, and the price will fluctuate near the value line instead of being completely equal to the value. The fluctuation of price is determined by the relationship between market supply and demand. If you buy pork one by one in the market. If they are located in an adjacent booth, it can be considered that their information is instant, because one person can see it when another transaction is made. If it is distributed at both ends of the market, it is obviously impossible to obtain the transaction information of the other party immediately. Suppose one day a rich man wants to hold a banquet on a whim and needs so much pork that the whole market can't satisfy it. When he sold out the pork in the first store, the price of the second store would go up under the condition of instant exchange of information, because he knew the buyer needed it, and I was the only pork supplier at present, and the price went up at this time. The next day, if fewer people buy pork, in order to sell it out, go home and heat the kang with my wife faster, and the pork seller may reduce the price. At this time, the price will drop. But macroscopically, in the case of stable market, the price fluctuates within the value line.
In modern society, money is usually issued by the central bank where the region is located. In China, it is called the People's Bank of China (issuing currency), and in the United States, it is called the Federal Reserve Bureau (issuing the Federal Reserve), which is the so-called Federal Reserve.
We can understand the currency in our hands in this way, that is, it is the debt owed by the central bank to the currency holders. Because we know that we sell our own goods in exchange for other goods or universal equivalents (such as gold) in the hands of others. In modern society, the central bank almost centrally manages all social equivalents and corresponding issuing currencies, so it can be considered that the currency issued by the central bank is a substitute for equivalents. In this environment, we say that the equivalent assets in the hands of the central bank, or the equivalent assets corresponding to the currency, are currency anchors.
When the currency circulating in a market increases, but the equivalent assets held do not increase, it will cause the currency to depreciate. On the other hand, when money decreases and assets do not increase, it will lead to currency appreciation.
The Bretton Woods system needs to be emphasized here. Under the framework of this system, the dollar has replaced the role of gold in other countries in the world and become the universal equivalent of all countries in the world. That is, the Federal Reserve issues US dollars with gold as the anchor, while other central banks around the world issue their own currencies with US dollars as the anchor. This system established a fixed exchange rate system linked to the dollar and gold, ended the chaotic international financial order, and created favorable external conditions for the expansion of international trade and world economic growth.
With the development of economy and society, simple transactions can no longer be satisfied, so the most important and largest component of modern society-credit has appeared. He is the most closely related but neglected part of our daily life.
Credit is different from money. In today's society, money can only be issued by the central bank of a region, but any two people can create a credit out of thin air.
The following figure compares the difference between using cash and using credit card for spending. In this consumption situation, the bar owner is equivalent to the lender and the consumer is equivalent to the borrower.
For a bar, your credit has become his asset. Note that when he needs to use this asset, your credit is no different from the cash in the market. Because in such a scene in real life, we use a credit card to spend money, and this asset can actually be divided into two parts, that is, you borrow money from the bank (transaction 1) and the bank uses the cash of the bar owner (transaction 2, the same as the cash transaction process).
Similarly, we can extend this transaction to commodities such as houses. For example, when making a mortgage, the consumer borrows a large sum of money from the bank and promises a certain amount of interest, which is the debt of the consumer and the asset of the bank. On the other hand, the bank directly transferred this asset to the bank account of the real estate developer. The transaction has been completed.
In fact, because of the existence of banks, when we use credit for consumption, it is no different from cash, because for individuals, it is just a number in a bank account, and no one will spend millions with real money.
In the real economic environment, most of the money we talk about is actually credit. The total amount of credit in the United States is about 50 trillion dollars, while the total amount of money is only about 3 trillion dollars.
We know that in the market environment, one of our consumption is the income of others. This income will become his expense and the income of the next person. In this cycle, there is an infinite cycle. Of course, when we improve our short-term spending power through credit, this chain reaction will also begin.
Here we give an example to illustrate the leverage of credit on the economy. Suppose the bank limits the personal loan amount to 10% of its existing capital. Mr. Zhang originally had a fund of one million yuan. Borrowed RMB 654.38+million from the bank and purchased RMB 654.38+065.438+million from Mr. Song. Therefore, Mr. Song earned an income of 165438+ ten thousand yuan, which can be used for consumption. So Mr. Song also got a loan from the bank and got a loan of 1 1 000 yuan, which was spent. In this way, we can find that credit can create "money" in large quantities. Therefore, a creditable economy can make social income far exceed the growth of productivity in the short term, but this is not the case in the long run, because loans have to be repaid and interest has to be increased. This feature of loans is also the reason for the formation of the economic cycle, and the part of the economic cycle will be discussed separately later.
We will ask, since the loan is 100 yuan, not only the principal of 100 yuan has to be repaid, but also the interest has to change, why should people borrow it? The answer is because loans have the ability to change our productivity curve.
We assume that the efficiency of a person's wealth creation is expressed by a productivity curve P, and the total wealth he accumulates in a period of time is the integral of this productivity curve in time.
When the loan does not exist, his productivity curve is represented by the black line p 1(t). In an environment with credit, suppose he bought a tractor by borrowing money from a bank at the moment of t=2, and he can instantly increase the productivity to the blue curve p2(t). Obviously, the area under the blue curve will be much larger than that under the black curve. As long as the extra wealth can exceed the principal and interest that the loan needs to repay, the loan is obviously beneficial to him.
First of all, we should put forward a misunderstanding that many people have. Many people think that a loan means borrowing money from a bank, but it is not. In fact, a loan should be understood as borrowing money from your future self: increasing your future productivity for consumption.
Since credit can rapidly increase our expenditure in a short time, from a macro perspective, credit can increase the total expenditure of the whole society in a short time. This is also easy to understand.
Because the total amount of goods in the market has not increased in a short period of time, credit leads to an increase in social expenditure, which will cause the price of the whole market to rise, which is inflation. Inflation will increase the daily expenses of residents. The central bank can curb this problem by raising the deposit and loan interest rate, because raising the loan interest rate will make the borrowing cost higher (people need to repay more interest), so the number of people willing to borrow will usually decrease. Therefore, the growth trend of social expenditure will be restrained. Generally speaking, inflation is a sign of economic growth, but high inflation rate is unhealthy, which will lead to many problems, such as the decrease of export commodities, the increase of import commodities, exchange rate fluctuations, and the impact on the credit of domestic currency. Therefore, the pattern of high inflation and high growth cannot last long.
On the contrary, the antonym of inflation is deflation. When deflation comes, the central bank will lower interest rates to stimulate loans and consumption, thus stimulating economic development. Deflation is usually regarded as a sign of economic recession, because deflation means that the value of money increases because of the decrease of funds in the market. At this time, people tend to store money instead of investing or spending, which will lead to the complete loss and decline of vitality in the long run.
Therefore, the central bank needs to constantly adjust interest rates according to the environment to ensure the health of the economic environment. This process of constantly adjusting inflation-deflation-inflation-deflation is what we usually call the economic cycle.
Of course, the real economic cycle is far from simple. In the real market, there are different cycles because of the dependence on a certain industry (industrial structure) in a single country, the influence of international political and economic relations, domestic policies and many other aspects. However, the impact of interest rate changes is one of the economic cycles that we are most exposed to every day.
The next update will begin to involve more complex concepts such as transnational market, foreign exchange and financial products, and will begin to be explained by market phenomena.
Reference:
1./ watch? v=rFV7wdEX-Mo
4./item/% E8 % B4 % A7 % E5 % B8 % 8 1% E4 % B9 % 98% E6 % 95% B0