Inflation and deflation can always bring economic development under mild conditions. The direct result of inflation is to increase the market currency, make social investment funds enter the entity, and promote the development of production and enterprises, including reducing taxes for enterprises, driving consumption and stimulating the increase of various social consumption. These measures can obviously improve the vitality of social economy. After deflation, it will often promote the development of industry and upgrade its production, thus driving the industrial revolution.
Generally speaking, inflation and deflation are both financial phenomena. We can see here that inflation will lead to currency depreciation, which will affect the decline of exchange rate and purchasing power, while deflation is the decline of prices, which will also lead to production stagnation, debt and other problems. Therefore, neither can be serious at the same time, and only mild is a better economic form.
Financial crisis refers to the crisis of financial assets, financial institutions and financial markets, which is often accompanied by the closure of a large number of enterprises, rising unemployment rate, general economic depression in society, and sometimes even social unrest or national political turmoil.
Systemic financial crisis refers to those crises that affect the whole financial system and even the whole economic system, such as the financial crisis that triggered the Great Depression in the West in 1930 and the financial crisis that broke out in September 15, 2008 and triggered the global economic crisis.
Financial crisis refers to the crisis of financial assets, financial institutions and financial markets, which is often accompanied by the closure of a large number of enterprises, rising unemployment rate, general economic depression in society, and sometimes even social unrest or national political turmoil.
Systemic financial crisis refers to those crises that affect the whole financial system and even the whole economic system, such as the financial crisis that triggered the Great Depression in the West in 1930 and the financial crisis that broke out in September 15, 2008 and triggered the global economic crisis.
First of all, there is a difference between financial crisis and economic crisis.
Theoretically, "finance" and "economy" are very different. "Finance" is a general term for a series of activities centered on money and capital. The corresponding main concepts are "consumption" and "production", and the latter two mainly focus on goods and services.
The so-called financial crisis refers to some persistent contradictions in the operation of activities related to monetary capital, such as the credit crisis in bill cashing and the currency crisis caused by the disconnection between buying and selling. As far as the subprime mortgage crisis in the United States is concerned, the fundamental reason is that the monetary credit in the capital market has been infinitely amplified through financial derivatives, which has brought about a huge gap between the supply and payment capacity of monetary credit for a long period of time, and finally seriously deviated from the limited demand for credit in the physical product market. When this deviation generally exists in all fields of financial markets, it is inevitable that the subprime mortgage crisis, that is, local financial contradictions, will evolve into a financial crisis.
The connotation of "economy" is obviously broader than "finance", including consumption, production, finance and all other activities related to people's needs and supply. Its core lies in creating value and obtaining welfare through the integration of resources. In this regard, "economy" is a result with value orientation, and "finance" is the process of realizing this result. Therefore, the economic crisis means that the increase of value and welfare can not meet people's needs for a period of time, such as a large number of overproduction caused by the disconnection between supply and demand (economic depression in the traditional sense), such as excessive demand caused by credit expansion (recent economic crisis). By comparison, we can find that the biggest difference between economic crisis and financial crisis lies in their different impacts on social welfare. The financial crisis is only a process crisis in a sense, while the economic crisis is a result crisis.
Secondly, the financial crisis is related to the economic crisis.
Judging from several large-scale financial crises and economic crises in history, most economic crises are accompanied by financial crises. In other words, before the economic crisis, there is often a wave of financial crisis, and the recent global economic crisis is no exception. This shows that there is an internal relationship between the two. The main reason is that with the introduction of money and capital into the process of consumption and production, the combination of consumption and production with money and capital is getting closer and closer. Taking the production process as an example, capital began to intervene in the first stage of the production process-the investment stage, and monetary capital was transformed into production capital; In the second stage, that is, the processing stage, the form of capital is transformed from investment to commodity; In the third stage, that is, the sales stage, the form of capital is restored from commodity to currency. It is these transformation processes of monetary capital that make the input and acquisition of monetary capital separate from each other in time and space. The uncertainty and contradiction at any stage are enough to lead to the interruption of monetary capital movement and the irrecoverable capital investment, thus leading to a direct monetary credit crisis, that is, a financial crisis. When this kind of uncertainty and contradiction appears in many production fields, the production process will be unable to continue because of insufficient investment, which will lead to a serious decline in output and a wider economic crisis. This is why the financial crisis is always accompanied by the economic crisis and always occurs before the economic crisis.
In some cases, we can't rule out the possibility that the financial crisis is independent of the economic crisis, especially when the government takes strong policy measures at the beginning of the financial crisis, such as effectively blocking the connection between the money and credit crisis and the production process through a large-scale "blood transfusion" policy, and it is possible to avoid the occurrence or deepening of the economic crisis at this time.