The illusion is that the People's Bank of China and the Ministry of Finance can create prosperity.
The reality is: In fact, the Central Bank of China and the Ministry of Finance are non-production sectors. They can only optimize the allocation of resources in the end. Or under ideal circumstances, and to stimulate consumption, the Central Bank and the Ministry of Finance have achieved new goals, which are the driving goals of economic growth.
In fact, no monetary policy and fiscal policy can drive the economy to exceed the potential growth rate. If it can, it must take the future money to spend now; as the saying goes, overdraft the future.
Since the future is unlimited, if the overdraft is not enough for ten years, we will get overdraft for the next twenty years. So it seems that this can be sustainable and sustainable to a certain extent until we find that, in fact, most credit is not necessary. This is called an excess and credit default.
Economists call the interest rate that the government does not intervene the natural interest rate or the equilibrium interest rate. Most countries tend to suppress the interest rate below the natural interest rate. Then, in the decision-making process, those companies and people who could not borrow money under the natural interest rate get loans, and then?
Since these loans are not necessary, the rate of return on investment may not be enough to maintain interest payments, or it may be inefficient.
As a result, in debt circulation, these loans will eventually become unpaid and go to default.
Japan's mistake was not the "Plaza Accord." Still, Japan reduced interest rates from 5% to 2.5% during the economic boom after the "Plaza Accord," which resulted in many inefficient mortgages and financial leverage until the explosion in 1990. , The bad debts that year were about 40% of Japan's annual GDP.
Any organization and country will choose to stimulate consumption and give you a lot of personal credit because consumption promotes the current prosperity. Debt is the future money to subsidize the present capital. Encouraging consumption can increase the government's ability to grasp resources. The more stimulus, The more industrial policies, the more power.