Reborn Industrial Tycoon

A business development forum is being held in a five-star hotel in Beijing.

Although it is called the Enterprise Development Forum, it is jointly sponsored by the National Development and Reform Commission and the Ministry of Commerce. In addition to the heads of major enterprises, there are also some well-known economists and some policy makers.

The theme of this forum discussion is how to deal with this global financial crisis.

Although China's financial system has not yet integrated with international standards, China's economy was still very dependent on foreign trade at that time. The biggest impact of the financial crisis on China was not financial risks, but losses in export trade.

Foreigners have no money to spend, which naturally affects China's exports. Therefore, many export-oriented companies came to participate in this forum, hoping to obtain policy support.

As soon as Li Weidong walked into the venue, he saw several acquaintances, all of whom were well-known domestic private entrepreneurs.

"Chairman Li, sit over here!" Familiar people have already begun to greet Li Weidong.

Li Weidong walked forward with a smile and said: "Mr. Zhang, I haven't seen you for a few days. You look thinner. You must be working out recently, right?"

"I am not slim because of fitness, but because of worry!" Mr. Zhang on the opposite side sighed, and then said: "The U.S. economy is not good, and our orders for the next quarter have suddenly dropped by 50%. If we didn't have this 50%

With export orders, I don’t even know how I will spend the next New Year!”

Another person next to him said: "Mr. Zhang, your situation is good. Our factory has not received overseas orders since May. Now it is all supported by domestic orders. If there are no more domestic orders,

, we have to go bankrupt!”

"Chairman Li, how is the situation of your Puppy Group? A large part of your profits come from exports, right?" a third person asked.

"We are all the same. The economic environment is like this, and our lives are not easy." Li Weidong paused, and then said: "However, our main business is small household appliances, kitchen appliances and beauty equipment, so the impact is greater than that of larger ones."

Home appliances are cheaper. It’s always easier for female consumers to make money.”

Mr. Zhang opened his mouth and said: "Leaders from ministries and commissions will be present soon, and they may explain the next policies. There are also well-known economists, and I heard there are think tank members, who will make predictions about the next international economic situation.

, we have to listen carefully. If the economy continues to decline next year, I will have to reduce the scale of production quickly."

"Yes, I also need to make a raw material procurement plan for next year. If the international economic situation is still not good next year, I will not dare to purchase too many raw materials." Another person said.

Li Weidong said: "You guys chat first, I'll excuse you for a moment."

Mr. Zhang looked at his watch and said, "The forum is about to start. You'd better find a place to sit quickly, otherwise there will be more people and there won't be any good seats."

"Aren't there a lot of empty seats in front?" Li Weidong said and pointed to the rostrum.

"The seats under the rostrum are reserved for leaders of ministries and commissions, as well as economists from think tanks. How can we, the business people, get our turn? It will be convenient for those economists to sit in front and speak on the stage later." Mr. Zhang said.

replied.

Li Weidong smiled slightly, lowered his voice and said, "Mr. Zhang, I am here to participate in the forum as an economist today!"

…

Li Weidong and three other economists sat on the rostrum.

"There are famous economists on the stage. What is Li Weidong doing there?"

"I never heard that Li Weidong received any important degree in economics!"

"We people are always so busy. Even if we have academic qualifications, we probably only have a diploma."

Many people who didn't know Li Weidong began to talk in low voices.

"You don't know yet, but Li Weidong accurately predicted the Asian financial crisis back then. He really understands economics."

"There are rumors that before the U.S. subprime mortgage crisis broke out, Li Weidong also issued an early warning to certain domestic financial institutions."

The two people talking had obviously heard rumors about Li Weidong.

At this time, the host introduced: "Today we have invited four guests to discuss issues related to the U.S. subprime mortgage crisis. First of all, welcome Professor Huang Dongsheng from Renmin University!"

When the applause started, Professor Huang Dongsheng stood up and bowed to everyone.

The host then introduced: "Welcome the special commentator of Economic Weekly, Professor Sun Haifeng of the National Institute of Economic Research!"

Applause rang out again. Everyone knows that the National Institute of Economic Research is an important economic think tank, so Professor Sun Haifeng is also a member of the think tank.

"Next, I would like to welcome Vice Dean Cai Guorong of the School of Economics and Business Administration of HKU! Finally, I would like to welcome Chairman Li Weidong of Puppy Group!"

After introducing these four guests, the host got to the main topic of the day.

I heard the person living there say: "The financial crisis caused by the U.S. subprime mortgage crisis is still getting worse. Not long ago, Lehman Brothers, the fourth largest investment bank in the United States, filed for bankruptcy. Recently, there is news that Freddie Mac and Fannie Mae will also file for bankruptcy."

Bankruptcy. Once Freddie Mac and Fannie Mae go bankrupt, it will be a fatal blow to the U.S. real estate industry.

In response to the financial crisis, the U.S. government recently proposed a financial rescue bill, which will invest US$700 billion to purchase financial derivatives related to U.S. subprime loans. Currently, this financial rescue bill is stuck in the U.S.

In the House of Representatives, do the four experts think this bill can be passed in the end? If you think it can be passed, please raise your right hand, and if you think it can't be passed, please raise your left hand."

All four people raised their right hands in unison.

The host continued: "It seems that the opinions of the four experts are relatively unified. Since the four experts all think that the law can be passed, then when will it be passed, the four experts will be asked to make analysis and predictions. Let's start with Huang

Professor, let’s get started!”

Professor Huang Dongsheng cleared his throat and said, "In my opinion, the sooner this financial rescue law is passed, the better. But the problem is that 700 billion US dollars is not a small amount. How should this money be spent?"

It will be a difficult problem, and I think the time will need to be determined after consultation between the U.S. Treasury Department and the Federal Reserve."

Professor Huang is a thief. He did not predict the accurate time. After all, who can say this kind of thing accurately? It would be so embarrassing if the prediction is wrong.

"What do you think, Professor Sun?" the host asked again.

"I very much agree with Professor Huang's point of view, but I would like to add a few words. Although this financial rescue bill was proposed by the US government, the specific amount and the specific content of the plan have not yet been finalized. The Democratic Party has not yet finalized

There are still different opinions on this law." Professor Sun replied.

It's also a chicken thief's answer, without giving the exact time.

"Dean Cai, what do you think?" the host then asked.

“Whether this bill is passed will affect the votes in the U.S. presidential election. I think there are two possible time points, one is before the U.S. election in November, and the other is after the U.S. election in November. Finally,

It should not be later than mid-December." Cai Guorong replied.

"Chairman Li, what do you think?" The host asked Li Weidong last.

"My prediction is bolder than President Cai. I think the Democratic Party will delay this bill until the end of the election. It is estimated that it will be implemented in late November, and the amount of the bill will increase to more than 800 billion US dollars." Li Weidong replied.

explain.

The first question was just a warm-up, and the next step was the real discussion topic. The host then asked: "Four experts believe that the U.S. financial rescue bill can help the U.S. economy get out of the current predicament.

Return to normal level? If you think you can, please raise your right hand; if you think you can't, please raise your left hand."

This time, Li Weidong decisively raised his left hand, while the other three economists raised their right hands.

"It seems that our experts have different opinions. Then I would like to ask Chairman Li directly, why do you think the US government's financial rescue law cannot restore the US economy to normal levels?" the host asked.

Li Weidong took the microphone and replied: "The financial rescue plan proposed by the U.S. government this time is mainly to purchase derivative financial products of non-performing mortgage loans. The purpose is to stabilize the financial system and rebuild the stability of financial institutions in the form of state guarantees."

Credit and restore liquidity to the credit market.

Therefore, this plan can only stabilize the market, but cannot stimulate the economy. The confidence that American consumers have lost due to the subprime mortgage crisis will not be restored. I think the U.S. economy wants to return to normal.

level, but these hundreds of billions of dollars are far from enough, and more economic stimulus plans are needed.”

Professor Huang was the next to speak. He took the microphone and said: "I am not so pessimistic. US$700 billion is already a very huge financial stimulus plan. What's more important is that this time the US government comes to purchase the financial derivatives of subprime loans."

With the guarantee of government credibility, I believe the U.S. financial market will soon regain confidence and liquidity!"

What Professor Huang said was exactly the judgment of most economists at that time. Everyone was generally optimistic about this financial rescue plan. Not only Chinese economists thought so, but American economists also thought so.

First, because the amount of US$700 billion is huge and unprecedented, spending such a large amount of money will definitely trigger a strong market reaction.

The second reason is that this time the U.S. government took direct action. The U.S. government purchased financial derivatives of subprime mortgages, which means that the U.S. government is willing to cover the bottom line for subprime mortgages. The academic community is naturally optimistic about the effectiveness of the financial rescue plan.

Dean Cai next to him also took the microphone and continued: "Let me add to Professor Huang, this kind of financial stimulus plan involving hundreds of billions of dollars is not something that can be launched casually. First and most importantly, it is

There is sufficient financial support. With the current financial situation of the United States, borrowing money is already needed to raise this 700 billion, and it is unlikely that there will be more economic stimulus plans in the future."

Dean Cai said and glared at Li Weidong, as if if you talk about the "more economic stimulus plan" in your mouth, it is impossible to be in danger.

Li Weidong replied: "Funds have never been a problem. The United States can completely use quantitative easing to solve the problem. By then, let alone 700 billion US dollars, even 7 trillion US dollars will not be a problem."

Speaking of quantitative easing, the other three economists frowned involuntarily.

It was Professor Huang who was the first to say: "This is impossible! Quantitative easing is a powerful medicine for the economy. Given the size of the US economy, if quantitative easing is implemented, it will have an immeasurable impact on the world's economy.

.There is no need for the United States to use such high-risk economic means."

Li Weidong replied: "Professor Huang, since the 9/11 incident, the United States has been at war, and the U.S. finance will definitely not be able to afford this 700 billion U.S. dollars. So I don’t think we need to wait until the future to use the 7000 billion U.S. dollars used in this financial rescue law.

billion, it must be solved through quantitative easing.

And if this 700 billion US dollars cannot solve the problem, there will be multiple quantitative easing in the future. If this 700 billion US dollars is QE1, then there will definitely be QE2, QE3, and even QE4.

Quantitative easing will not end until the U.S. economy returns to normal."

…

People nowadays are no longer unfamiliar with quantitative easing. They all know that it means printing money. After all, many countries are using this method during the epidemic, and they are even competing to see who can print more money.

In 2008, quantitative easing was still a new term.

It was the Japanese who first proposed the concept of "quantitative easing". Japan's economy stagnated after the Asian financial crisis. By the beginning of the 21st century, the economies of the Four Asian Tigers and Southeast Asian countries had begun to recover, and the Japanese economy remained the same.

No improvement.

Therefore, the Koizumi government that was in power at the time resorted to quantitative easing. It printed money and cut interest rates to release money into the market in the hope that inflation would promote economic growth. "Quantitative easing" was proposed at this time.

Japan's quantitative easing policy lasted until Abe's first term. After Abe resigned, the quantitative easing policy ended. It was not until 2011, when Abe became prime minister for the second time, that he used quantitative easing again. The so-called "Abenomics"

The core of "Abe's Three Arrows" and "Abe's Three Arrows" are quantitative easing.

From an economic point of view, since the collapse of the Bollington Woods system, the United States has begun to implement quantitative easing.

The interest rates in the United States are very low, which is very beneficial to consumers and businesses. When consumers sell their houses, they see that the annual interest rate is only a few cents, and they can save another house on a thirty-year loan.

Come.

Low interest rates make consumers more enthusiastic about taking out loans, not only for buying cars and houses, but also for many basic daily necessities. As for those who run businesses, they will seek loans as much as possible.

But when people go to banks for loans, the banks don't have the money.

This is of course also caused by low interest rates. Interest rates are not only loan interest rates, but also deposit interest rates. In the United States, loan interest rates are low, and deposit interest rates are also low. Low deposit interest rates also mean that no one is willing to deposit money in banks.

Most Americans live on loans. Even though they own several cars and live in large villas in the suburbs, they actually owe a lot of debt. Behind the glamorous appearance, they have no savings in their hands.

Rich people in the United States will not choose to deposit their money in banks because bank interest rates are too low. The U.S. financial system is so developed and there are many financial products that can make money, so why bother with the low interest rates of banks?

If the bank cannot absorb deposits, it will have no money to issue loans, and at this time the bank will go to the Federal Reserve to borrow money.

The Federal Reserve also has no money. Fortunately, they have another method, which is to print money.

As a result, the Federal Reserve prints money and then lends it to banks, which then distribute the money to the market in the form of loans. When the money reaches the market, it is either converted into public consumption or corporate loans, which ultimately promotes the development of the United States

economic growth.

The core of this model is still printing money, which is essentially the same as quantitative easing.

The difference is that this model of money printing is based on market demand, that is, the market first has this part of the loan demand, and then the Fed meets this demand by printing money.

This kind of money printing due to demand is actually something that central banks of various countries like to see, because both loan consumption and loan production can promote economic growth. Therefore, central banks of various countries are also doing such things. Generally speaking, as long as the market

If there is demand, the currency will definitely be released.

However, in response to the subprime mortgage crisis, the quantitative easing carried out by the United States was not based on market demand, but quantitative easing.

That is to say, regardless of whether the market has such demand, the Federal Reserve will use this money.

The financial rescue bill proposed by the Bush administration is mainly to purchase financial derivatives of subprime mortgages, with the purpose of stabilizing the financial market and releasing financial liquidity.

However, the Bush administration has been fighting a war, and the huge military expenditure has already emptied the U.S. finance. Therefore, the money to save the financial regulations can only be solved through quantitative easing. This is the first time that the United States has used quantitative easing with fixed quotas, so it has also been

Call it QE1.

The amount of this bill sent to the House of Representatives was 700 billion. Later, the Democratic Party requested that the amount be increased to 850 billion. In March after President Xi Jinping came to power, the amount had increased to 1.25 trillion. When QE1 ended, the data released by the Federal Reserve was the total amount spent.

1.725 trillion.

That is to say, during QE1, the Federal Reserve printed 1.725 trillion U.S. dollars, and this does not include the portion of daily loans issued by the United States.

QE1 was increased from 700 billion to 1.725 trillion, a full trillion US dollars more, but it did not save the US economy as economists predicted, because consumer confidence has not recovered.

The most difficult thing to build in the market is confidence. When you have confidence in the market, even if you have no money, you will borrow money from loan sharks to invest in the market. But when you have no confidence in the market, even if you have a lot of money, you will not invest in one.

Copper.

Therefore, those international rating agencies often publish various so-called "confidence indexes". Laymen do not understand what these indexes do, but insiders know that they are a barometer of future economic prosperity.

This is also the amazing thing about economics. No matter how sophisticated economic theory research is, it cannot restrict human behavior.

Many economists will feel this way. My research is obviously flawless. Why is it completely different from my research when the time comes for market operation?

Therefore, most economists only do hindsight analysis and use market behavior that has already occurred to confirm economic theories.

This was the case with QE1, which did not have the effect that economists expected, so the U.S. government launched the second round of quantitative easing, also known as QE2.

The content of QE2 is to purchase long-term government bonds and release funds into the market, that is, to stimulate economic recovery by increasing the injection of base currency.

As a result, the European debt crisis broke out at this time, completely negating the effect of QE2.

The Federal Reserve had no choice but to continue quantitative easing, launching QE3 and QE4 one after another. The entire quantitative easing process lasted until the second term of President Xi Jinping's term.

The Federal Reserve printed approximately five trillion US dollars during the four QEs, and the amount of funds mobilized by these five trillion US dollars is even more difficult to estimate. With so much money added to the market, inflation will inevitably occur.

Fortunately, the U.S. economy is large enough that even if inflation occurs, it will not be apparent immediately, and the market will need time to react.

In order to prevent the occurrence of inflation, after the end of QE, the U.S. government began to formulate a plan to shrink its balance sheet.

Shrinking the balance sheet refers to shrinking the balance sheet, including the reduction of assets and liabilities. Simply put, it means recovering part of the extra money printed to avoid inflation or economic overheating.

The originator of balance sheet reduction is also Japanese. When the Japanese real estate bubble burst in the early 1990s, Japan adopted the policy of balance sheet reduction.

But unfortunately, the U.S. policy of shrinking the balance sheet has just begun, and President Xi Jinping’s term is coming to an end. And the new president, Mr. Wang, is opposed to shrinking the balance sheet.

Understanding King has overturned many policies of the Communist Party, such as medical insurance policies and withdrawal from the TPP. He also wants to stop shrinking the balance sheet. Understanding King believes that shrinking the balance sheet is not beneficial to the economic growth of the United States.

However, stopping the balance sheet reduction requires the approval of the Federal Reserve, and the Fed prefers to continue shrinking the balance sheet to prevent serious inflation in the United States.

So Wang Dao found another way and launched a tax reduction policy. The corporate tax was reduced from 35% to 15%, the personal income tax was simplified from level 7 to level 3, and the threshold was significantly raised. He even wanted to cancel the inheritance tax.

Taxes are reduced, and the reduced money will naturally remain in the market. So from an economic point of view, tax cuts are equivalent to putting funds into the market.

And shrinking the balance sheet is to recover funds in the market. Shrinking the balance sheet and cutting taxes are completely opposite monetary policies.

Therefore, when balance sheet reduction and tax cuts are carried out at the same time, it is equivalent to filling the pool with water at the same time and draining water out of the pool. Shrinking the balance sheet becomes a useless effort.

To put it simply, the money printed during the four rounds of QE has not been recovered, but continues to remain in the market. This is tantamount to planting a time bomb for future inflation in the United States.

The next step was the arrival of the epidemic. The United States wanted to send money to the people, but the U.S. government did not have the money. So the market began to predict that the Federal Reserve would start the fifth round of QE.

As a result, the Federal Reserve came even more ruthlessly. What do I want for the fifth round of QE? It is directly unlimited QE. There is no need to make a plan. That would save trouble!

During the two-year epidemic, the Federal Reserve has been conducting QE. It is estimated that only the Federal Reserve itself knows how much money they have printed in the past two years. And the sequelae of printing money for many years is that inflation has finally arrived.

The supply chain disruption caused by the epidemic is the trigger of inflation. In the face of inflation, the U.S. government is very clear that it is time to shrink its balance sheet again.

However, the ruling authorities are somewhat hesitant about this. The U.S. economy has not fully recovered after the epidemic. Once the balance sheet is reduced, it will definitely be detrimental to economic growth.

The United States was deciding when to start shrinking its balance sheet, and the conflict between Russia and Ukraine broke out. Inflation, which had been relatively stable, quickly broke out, and it was a global inflation.

What is happening next is what is happening now. The Federal Reserve began to raise interest rates continuously, funds began to flow back to the United States, the euro depreciated rapidly and has become equal to the U.S. dollar, the Japanese yen fell even more fiercely, and the Korean won also fell to the level of the subprime mortgage crisis.

.

The United States once again takes advantage of the hegemony of the US dollar to cut Europe and Japan's leeks, just like it did in the "Plaza Accord" more than 30 years ago, but this time there is a new crop of leeks, called South Korea!