Questioner's adoption of

can theoretically reduce the cash flow, but how is it possible to alleviate inflation?

how to reduce the pressure of inflation

the causes of inflation

?

?

?

the most direct cause of inflation is the excessive money supply.

The money supply is compatible with the money demand,

which is the requirement of

the law of money circulation. Once this economic law is violated,

issuing too much money will

lead to currency depreciation,

prices

rising continuously and

inflation. The underlying causes of inflation are mainly demand pull, cost push, structural factors < P > and insufficient supply, improper expectations and institutional constraints.

?

demand pull.

This refers to the surge of social consumption expenditure and investment expenditure in economic operation,

the excessive increase of total demand,

exceeding the supply of goods and services at a fixed price level,

which leads to currency depreciation,

the rise of the overall price level,

the formation of inflation

.

cost drive.

this refers to the phenomenon that prices continue to rise due to rising production costs.

The main reasons for the increase in costs

are the demands of trade unions for higher wages and the monopoly prices set by monopoly industries and monopoly large companies in pursuit of monopoly profits.

So

cost-driven inflation is divided into wage-driven inflation and profit-driven inflation.

structural factors.

in addition to the aggregate factor,

even when the total demand and total supply are in a state of balance,

due to the problems of economic structure,

the price level will continue to rise,

which will lead to inflation.

there are mainly two

models to analyze this kind of inflation.

One is a Nordic model that targets some small countries with open economies in Northern Europe.

Because small countries are the recipients of prices in the world market,

world inflation is transferred from the open economic sectors of small countries to the closed economic sectors,

which leads to overall inflation

inflation.

The other model is a dual economic structure

model for developing countries where traditional agricultural sectors and modern industrial sectors coexist.

constrained by the structural factors such as capital shortage,

low degree of marketization and low degree of monetization in the dual economy, to develop the

economy, it is often necessary to rely on deficit budget and multiple currencies to accumulate funds, thus driving prices to rise in an all-round way and triggering inflation.

If the change of the general level of consumer prices is taken as a representative indicator of inflation, then the inflation in China in recent years is mainly

driven by demand,

but the factors such as cost promotion,

structural imbalance,

institutional reform and unreasonable price increase by microeconomic entities have also formed a strong resultant force to promote the overall price increase,

Therefore, <

the impact of inflation on economy

1.

the impact of inflation on production

the impact of inflation on production is mainly manifested in two aspects.

first,

inflation destroys the normal progress of social reproduction.

During the period of inflation,

because of the imbalance of price rise, the profit distribution of various production departments and enterprises is unbalanced, so that some rare resources in the economy are transferred to non-production fields,

resulting in waste of resources and

hindering the normal progress of social reproduction.

At the same time,

inflation hinders the normal development of functions of money,

because the currency value is unstable and the volatile currency can't express its value,

the market price

is disordered,

which is not conducive to reproduction. Secondly,

inflation reduces productive investment,

which is not conducive to the long-term stable development of production. The expected price increase will promote the increase of social consumption and the decrease of social savings, thus reducing social investment and

restricting the development of production.

2.

The influence of inflation on circulation

Inflation breaks the original balance in the circulation field and

hinders the normal circulation.

Inflation will encourage enterprises to hoard

a large number of commodities, and

artificially aggravate the contradiction between supply and demand in the market.

And because of the decrease of the currency value,

the potential purchasing power of money will be transformed into the real purchasing power of money, which will speed up the circulation of money and further aggravate inflation.

3.

Impact of inflation on distribution

Inflation has changed the original proportion of income distribution and the original proportion of wealth.

The proportion of people who rely on fixed income in the overall income distribution has become smaller.

people who hold wealth in the form of money are also hurt.

Inflation affects

the primary distribution and redistribution of national income. Inflation transfers

part of the income held by residents and enterprises to the government departments that issue money through the "compulsory saving effect".

the increase of the total money supply will increase the nominal income of the society, while the real income of the society will not increase.

Different classes have different consumption and expenditure tendencies, which will inevitably lead to changes in national income redistribution.

4.

The influence of inflation on consumption

Inflation reduces the real income of residents,

This means that the consumption level of residents has declined,

The imbalance of price increase

and the prevalence of hoarding and speculation in the market have caused greater losses to ordinary consumers.

How to control inflation

Because inflation has a considerable adverse impact on the normal development of the economy,

So many countries attach great importance to controlling inflation. The main measures are:

1.

Controlling the money supply.

As inflation is a monetary phenomenon in the circulation of paper money,

the most direct reason is that there is too much money in circulation.

Therefore, one of the important countermeasures taken by countries to control inflation is to control the money supply,

make it adapt to the demand of goods

and reduce the pressure of currency depreciation and inflation.

2.

Adjust and control the total social demand.

For demand-driven inflation,

regulating and controlling the total social demand is the key.

this is mainly achieved by implementing correct fiscal

and monetary policies.

In terms of fiscal policy,

it is achieved by tightening fiscal expenditure,

increasing taxes,

seeking budget balance and

reducing fiscal deficit.

In terms of monetary policy,

it is mainly to tighten credit,

control money supply and

reduce money supply.

Fiscal policy and monetary policy want to cooperate with each other to comprehensively control inflation.

The important way is to control the total social demand by controlling the scale of investment in fixed assets and the excessive growth of consumption funds.

3.

Increase the effective supply of commodities and adjust the economic structure

Another important aspect of controlling inflation is to increase the effective supply of commodities.

The main means are to reduce costs,

reduce consumption, improve economic benefits, increase the proportion of input and output, and at the same time, adjust the structure of industries and products to support the

production of commodities in short supply.