There has always been a typical argument that real estate is a reservoir. Therefore, everyone often has a very natural conjecture that the housing market has absorbed a large amount of funds.
Once the housing market collapses (cannot save), then the funds flow out of the housing market (flood to other places), and the flood is bound to end. It sounds fine, but
Looking back, it seems that this is not the case with Hohhot septic tank .
Even more surprising is that the actual conclusion is exactly the opposite. Falling house prices will not only cause inflation, but will also cause deflation. Give two simple examples, Japan
Has the inflation of this property bubble burst? No, on the contrary, it has been in deflation for more than 20 years. Is inflation in the US real estate subprime crisis? Neither, but the United
In response to the risks of deflation, Chu offered an unprecedented four rounds of quantitative easing.
So what kind of misunderstanding exists between people's cognition and reality? Last week I quoted Wesson from Fudan University in a post
A classic little story (explaining the creation of currency). From this little story we know that the money supply is both endogenous and exogenous.
We can apply Professor Wesson's little story to the real estate market. Now we start to make a very simple assumption, there are several roles: real estate developer, bank,
Building material suppliers, construction teams, and home buyers (except for home buyers who are fully paid, only those who need a loan to buy a home).
First of all, let's sort out a simple logic: after a resident deposits 1 million in a bank, a bank loan of 500,000 to a company will not make the residents' available deposits less.
500000. At this time, the amount of deposits available to residents was still 1 million, but corporate deposits increased by 500,000, and at the same time liabilities increased by 500,000. And overall deposits
It increased from 1 million to 1.5 million Hohhot reservoirs .
After clearing this logic, come to the real estate company. If a real estate company obtains land from the government and a 1 billion mortgage loan to a bank, the real estate company's deposits and liabilities will increase by 1 billion at the same time.
The housing company then pays the building material dealer and the construction team. If the payment is not immediate (with a delay period), then the material supplier and the construction team also need a bank loan.
The overall debt scale of society and deposits have increased together.
Here, the liabilities of the housing enterprises, materials suppliers, and construction teams are the assets of the bank. Banks count on future interest on these loans as their future cash flow income. This
In the process, the assets of banks have grown rapidly. However, we will find that in this process, the central bank did not increase the total supply of base money, but the currency was not affected by credit activities.
Zhongsheng has created it.
After the house is built, if the housing company settles the material and engineering funds, then at this time, the deposits of the material supplier and the construction team will increase, and the deposits of the housing company will decrease. The number is
Exactly the same, and the increase in deposits is consistent with the decrease in deposits by real estate enterprises. At the same time, the total amount of money does not change during this process. Of course, if
At that time, the material supplier and the construction team repaid the loan, so the total amount of money fell, but because the company has a profit, compared with the credit activity before and after the company's credit activity, the company's deposit amount was
The next stage is the sales stage. After the sale is started, buyers will enter the market to buy a house. Most home buyers still need a mortgage to buy a house. Mortgage is essentially a mortgage on your own home
Loans made. In the above process, we have found that credit activities increase money. The principle is the same. After you deposit 1 million to the bank, the next door Pharaoh borrows to buy
The house has been added. At this time, the deposit of the real estate company in the bank has increased the amount of the house next door, but it will not reduce your 1 million deposit. At this time the buyer's down payment + bank loan
Deposit = the amount of deposits added by the housing company.
And in this process, bank loans are also new currencies, and the total money supply of custom-made society has risen again.
After the real estate company sold the house, it paid off the bank loan. As long as the real estate business is not trading at a loss, the amount of real estate business deposits will increase before and after development.
Then calculate the general ledger, the housing company, the bank, the construction team, the material supplier are all profitable, and the deposits have increased. And as long as the person who repays the mortgage has n’t paid off, the credit is still there, so the whole
The total amount of money in the body is still rising-the sum of deposits of all people in society is increasing.
Intuitively, as if the buyer bought the house, his wealth was "fixed" in the house and "stored". And in order to pay off the mortgage, often need to shrink and diet.
But in reality, because of the properties of real estate (the properties of the house's natural collateral), the development, construction and final sales stages are accompanied by relatively large credit activities, and
In the process of having credit, the total amount of money will increase, not decrease. Therefore, real estate is actually the creator of money, not the absorber.
Of course, at this time, the attentive person may find a problem. Since real estate is a money printing machine, then the currency added to the real estate will enter the real estate, which will push up the housing price, thereby
Forming a positive feedback, in fact, this is indeed one of the reasons for the surge in house prices, but not the only reason for house prices to rise.
Many people have previously argued that house prices are out of frustration because of the real demand for the population influx into the city or because of the bubble brought by the government to release water.
Strange presets, it seems that there can only be one cause of one thing. In fact, the two are intertwined and strengthened, and cannot be discussed simply or otherwise. Here we
The issue of house prices will not be discussed in detail for the time being.
Continue to today's topic. Theoretically speaking, as long as developers build houses and buyers continue to buy houses, broad money (M2) will continue to flow.
Was created. But what happens once this chain breaks? For example, the developer went bankrupt. For example, the buyer could not afford the mortgage. At that time, those
The money created will not be transferred (flooded to other places), but will disappear directly with the collapse of credit.
For example, once house prices fall, it will reduce the effective demand of all related industries, coupled with the continued decline in asset prices, people will be more inclined to hold money rather than assets.
Asset prices enter a downward spiral, banks' willingness to lend is reduced, and social financing requirements are also reduced. The growth rate of broad money (M2) created by the currency multiplier is reduced, and the banking system
You will slowly lose the ability to create new currencies.
After the U.S. subprime mortgage crisis, a large amount of base currency was invested in the market through quantitative easing, but the overall money supply and credit did not increase much, and a large amount of liquidity was used as excess standard.
The reserve flowed back to the central bank and was deposited in the reserve accounts of the banks in the Federal Reserve. It can be said that the interest rate channel and credit channel of the Federal Reserve ’s monetary policy transmission after the crisis were essentially both
In a state of failure, trapped in a liquidity trap. The same situation has lasted for more than 20 years in Japan. In 2016, the Bank of Japan even imposed negative interest rates on excess reserves, forcing
Banks lend money and don't put it in central bank accounts.
In fact, hundreds of years ago, smart bankers have learned that the essence of money is credit, market confidence and prosperity have declined, credit has entered a tightening cycle, and currencies have naturally contracted.
House prices fell, a large number of bad debts appeared, creditor's rights and debts were wiped out at the same time, and credit and currency were also wiped out. Where the broad money (M2) comes from, how it disappears.
Some people may ask, since real estate is a money printing machine, not a cistern, where have all the natural currency created by the booming real estate development over the years gone? It's actually very simple.
Thirty years ago, people made enough money to feed and warm themselves;
Twenty years ago, everyone was eating and warming, and they also used appliances;
Ten years ago, we had enough food and clothing, used appliances, and bought a house and a car;
And now, in addition to the above necessities of life, many people go to KTV to sing a song every three to five. At night, the King of Glory buys a skin, travels twice a year, and so on. In addition, it is also reflected in rising inflation and asset prices.
When the social economy is booming, the richer and more wealthy people are, the closer they are to printing machines, the easier it is to get over-issued currency, which also largely creates a gap between the rich and the poor in society. Step up.
However, the feast cannot last forever. When economic growth cannot keep up with the high debt, the tightened credit chain will become more and more fragile, so that at that time it will come from any point in the market
Wind and grass may be the last straw to crush the foam.
In the final analysis, it is still necessary to dig new economic growth points and improve total factor productivity. This is the fundamental meaning of the so-called "retreat from reality."