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Loose monetary policy is the "bane" of private usury

Time: 2012-12-28         Source: Rong 360 original         Author: Li Jing

On September 29, 2011, Wenzhou Municipal Party Committee and Municipal Government issued the "Opinions on Stabilizing and Regulating Financial Order to Promote Economic Transformation and Development" (hereinafter referred to as "Opinions"), "Opinions" for the bosses who appeared in Wenzhou. On the one hand, the bank is required to "do not withdraw capital or pressure on loans".Lending ratesThe maximum increase rate should not exceed 30%, ensuring the target of 100 billion new loans determined at the beginning of the year. On the other hand, "for the business owners who leave, they should be urged to return as soon as possible and organize their disposal. For those who continue to evade, the public security, labor security and other departments must be strongly involved, and the investigation should be carried out in a strict manner; for malicious arrears, falsehoods and falsehoods If you leave or leave bankruptcy, you must deal with it strictly.
 
There is no doubt that Wenzhou has already loomed the collapse of the private usury financial crisis. This situation has long been expected. Whether it is Inner Mongolia or Jiangsu and Zhejiang, the winds of the private loan sharks have intensified in the past few years, and they have become unmanageable. OrdosPrivate lendingThe interest rate is 30%, and Wenzhou is also above 24%. If we look at the final outcome, it is easy to conclude that “the government’s monetary tightening has led to a break in private finances”, and many people have called for “the government cannot adhere to the path of currency contraction and immediately adopt a loose monetary policy”. However, if we look at the beginning of the game, the conclusion is exactly the opposite. It is precisely because the past monetary easing caused the private financial break in some areas. This is like a person who is addicted to drugs. Detoxification is very painful. Some people say that this pain is caused by not continuing to take drugs.
 
How does monetary easing promote large-scale private usury? Looking back at Chinese history, around the beginning of 1993, China has seen a wave of usury. At that time, cities like ShenzhenBank deposit interest rateIt is a common occurrence to reach a loan interest rate of more than 30%, which is almost the same as today's private usury. At that time, not only urban credit cooperatives but also high-interest credit institutions, trust companies, securities companies, etc. were actively involved, and even many commercial banks joined the ranks. Many branches of commercial banks engaged in off-balance-sheet operations. Wuhan and Haikou also appeared in the country. In the fund trading center, the member units are national commercial banks and non-bank financial institutions. Its excitement is not worse than it is now.
 
Why did we have a usury at that time? From the perspective of capital demand side, it was mainly caused by the loose monetary policy in 1992. After Xiaoping’s southern tour in 1992, the country’s investment “Great Leap Forward” was swept up, and money and credit soared. No matter the growth rate of investment or the growth rate of money and credit, it exceeded 35%. So, after 1 year, there was obvious currency. Expansion, began to carry out macroeconomic regulation and control in June 1993, and introduced 16 measures. Of course, the main measure is to tighten the credit gate and rectify and standardize the financial order. Money and credit suddenly tightened after easing, and there will inevitably be financial shortages. Many cities have “unfinished buildings”. The most typical representatives are Hainan and Beihai in Guangxi. These “unfinished buildings” have not been built until more than a decade later. Clean up. In the early days of monetary tightening, companies and individuals are often not psychologically prepared, and their expectations are still in a state of rising bubbles, so raising funds at all costs is their common choice.
 
The root cause of the usury boom in 2011 can also be explained by the loose monetary policy of 2008. The central bank adopts monetary stimulus and must create “hot industry” and “cold industry”. For example, real estate, which relies on large-scale capital, is the hot industry, and those relying on self-financing, such as family retail, are the cold industry. The “hot industry” is cheaper to obtain in terms of production, but it is not cheap to sell in terms of sales, because buyers are not only looking at low mortgage rates, but also have thresholds such as down payment. The higher the house price, the higher the expectation of real estate speculation, but the threshold will also become higher, so a large amount of private financing will be needed to enter this field, which is equivalent to raising the conditions for capital formation. In the process of financing and raising funds, the private interest rate will be greatly increased due to the high-yield expectations of real estate speculation, and eventually become a usury.
 
Therefore, it is a paradox to think that monetary tightening and killing small and medium-sized enterprises is precisely the monetary easing that has created a civil loan shark disaster.

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