Chapter 3 2. Why China has inflation

●More than 70 dollars a barrel, 147 dollars a barrel, seems very strange. ● They have created an unprecedented new market based on supply and demand. ●Why do you think it makes sense?Because they were all fooled. ●What we all know, international financial speculators know better.How do they manipulate it? In 2008, the consumer price index rose as high as 8.7%, which made ordinary people feel the pressure and doubts.Many people feel that their lives are quietly undergoing some kind of change in the fluctuation of commodity prices. Behind familiar things such as rice, pork, and vegetables, there seems to be some inexplicable power hidden, these inexplicable mysteries What exactly is power?Are the necessities of life around us also related to the so-called financial unrestricted warfare?

Have you ever studied microeconomics?I have learned, but what you have learned is all wrong. You find that many of what our teachers teach are wrong, why are they wrong?Because in microeconomics, what determines the price?It is determined by supply and demand.How did the teacher teach us?The teacher said that if the supply exceeds demand, the price will rise, and if the supply exceeds demand, the price will fall.How much has the price of iron ore increased in the past three years, 19% in the first year, 19% in the second year, and 95% in the third year. At the beginning of September 2008, Brazil's Vale notified China that the price would rise by another 20%.Wow, the price of iron ore is soaring, the demand must be greater than the supply.

Demand exceeds supply, right, because that's what microeconomics says.As long as you are in the steel industry, you know that the supply of iron ore is greater than the demand, and the production capacity is very abundant. The real problem with importing iron ore today is not the price increase of iron ore itself, but the sharp increase in shipping and freight costs. More than ten times, the output of iron ore itself is very rich.Since there is an oversupply, why have prices risen so much? Let me give you a piece of data. The price of oil rose from $70 a barrel to $147 a barrel, and then fell to $35 a barrel. Is this an imbalance between supply and demand?However, the actual data shows that the daily consumption should be more than 87 million barrels, and the daily output is also about 87 million barrels, and there is often a slight oversupply.Well, since the supply and demand of oil are basically balanced, and there is even a slight oversupply, according to the theory of microeconomics, the price should be stable or soft, right?Why so up so down?

Before September 2008, the price of international agricultural products also soared, and the price of international high-quality rice was five times that of our country.But let me take the data of 2008 as an example. In 2008, the world's total grain output was 2.16 billion tons, and the demand was 2.15 billion tons. At the end of the year, there were a total of 100 million tons of accumulated stocks that were not consumed, so the supply was also in excess of demand. As I just said, whether it is iron ore, oil, or mass agricultural products, there is basically a slight oversupply. I have not seen a large-scale shortage of supply.

So, I would like to ask everyone, why are the prices of these products still rising sharply? I am not saying that the theory of supply and demand is wrong, but that the theory of supply and demand itself is right.The problem is that today's situation is not so simple.Today's price components are incredibly complex.I can tell you that the prices of these bulk commodities are determined by international financial speculators.It is no longer determined by supply and demand.They have created an unprecedented new market on top of supply and demand, and they determine the price of these products.

This is why when many countries asked OPEC to increase production, their reaction was that this was done by international speculators, so increasing production was useless.They are right, at least on this point I agree with OPEC. Before I answer the question, as long as you pay attention to media reports, you must have seen some interesting reports recently, that is, in addition to the items just mentioned, what are the prices of various international materials including copper, tin and nickel? They said it was all because of the fault of us Chinese, because there are too many of us Chinese, with a population of 1.3 billion, and whatever we buy, the price goes up. Have readers heard of it?When you hear it, you think it makes sense. Why do you think it makes sense?Because they were all fooled, do you believe that these are all rumors made by international financial speculators?