What is the impact of the fiscal deficit?

The problem of fiscal deficit is complicated to talk about, and those nerdy professors in colleges and universities may be able to write a book.

I'm practical, so let's put it simply: the fiscal deficit is conducive to the steady development of the economy. The reasons are as follows:

There is a characteristic of production and consumption under the market economy: there is a transitional process between the production and consumption of commodities, which is what we often say to sell commodities to consumers. If the goods produced are not bought, they will become waste products, which is a waste of human resources. Since this intermediate process exists, it is inevitable that the products produced do not meet the needs of consumers and lead to investment failure. For example, if a commodity is produced too much and can't be consumed, many commodities will become waste products (even waste products are not as good as waste products, and waste products can be sold to fee purchasing stations). This is the root of the economic crisis. You may ask, since the products can't be sold, why are there so many people investing in such enterprises? Because the construction of an enterprise has a construction cycle, it often takes a long time. Goods are not produced during the construction period. Therefore, there is no surplus of goods in the construction process. Once all the enterprises were completed and put into production, the surplus immediately appeared. Then the economic crisis broke out. Moreover, in the process of construction, a lot of investment is needed, and investment is also a kind of consumption. For example, it is necessary to buy steel bars and cement to build a factory, so the reinforced cement factory will be fine. If the reinforced cement factory is well managed, it will inevitably lead to strong coal sales. The whole industrial chain is thriving. Enterprises have improved, and workers' wages have also increased, which in turn has increased the consumption of goods. The increase in consumption has stimulated people to increase investment in this industry. This is a link, a cycle of stimulation, climbing, until most enterprises put into production. At this time, there was a surplus of commodities, a lot of resources were wasted, a large number of enterprises were closed, and workers were unemployed. The less enterprises invest, the lower their wages, which will stimulate the economy to fall sharply. On the other hand, it is a link, and the economic decline has led to a more violent economic decline, and the whole society has been destroyed before the crisis can end. The American crisis in 1929 is an example. Fundamentally speaking, the economic crisis actually comes from the dark psychology of human beings, such as jealousy, greed and selfishness.

this kind of economic ups and downs is extremely destructive to society. At this time, the state needs to come forward and find ways to prevent the economy from falling excessively. How to prevent him from overdoing it? As we said before, investment itself is a kind of consumption. Investing in an industry can drive a large number of industries to prosper through the industrial chain. Take the state's investment of 4 trillion yuan as an example. This investment is mainly concentrated in infrastructure investment, which drives industries such as cement, asphalt and steel, which in turn drive industries such as coal and petrochemical. When the cement, asphalt, steel, coal and petrochemical industries are well developed, workers' wages will increase, so will their consumption, and the consumption of clothing, catering and entertainment will increase, thus driving the whole economy to prosper. Therefore, as long as the state invests in a few industries, the whole economy will live.

however, we know that a certain currency represents a certain physical product. If there are as many things as there are, there should be as much money. In an economic crisis, there must be less things and less money. How can the country have the funds to invest? If there are as many things as there are, there will be as much money. If you invest with this money, you will actually buy the existing production, which will not stimulate the economy at all. The state must try every means to let enterprises expand production and investment, so as to ensure that the economy will come out of the bottom. At this time, the easiest way is to print more money. Originally, we didn't have so much money. By printing with a printing machine, the scale of investment will be large, and the output of enterprises will also increase. As a result, the investment of enterprises will be large, so that the whole industrial chain will live, and the economy will be able to get out of the crisis after another link. Printing more money is a deficit. Therefore, the deficit has prevented the economic crisis from seriously damaging the society.

deficit will definitely lead to currency depreciation! There is only one yuan in the market, and now there is 5 yuan all of a sudden. If there is more money, there will be a big demand, and if there is a big demand, the price will increase, which will definitely lead to the price increase of things in 1 yuan rising to 5 yuan. In other words, the purchasing power of 1 yuan is different from that of 1 yuan, and the currency has depreciated.

to put it bluntly, the deficit is actually giving money from people with stable incomes to investors for free. Think about it. With the price rising, your fixed savings can't go up (1 yuan will still be in 1 yuan a few years later), which means that the value of savings has dropped, and the falling part won't disappear for no reason. He must have given it to someone. Who did you give it to? People who invest are different. As prices rise, so do the prices of their products. They will not be affected at all, and even make more money. Therefore, the declining part of your savings is actually given to the investors for free. Deficit means killing the poor and helping the rich. But after all, this kind of killing the poor and helping the rich can bring about economic recovery, and the two evils are less, so countries like to use deficits.

Although the fiscal surplus looks beautiful on the surface, it only applies to the original traditional agricultural society and the primary stage of capitalism. In modern times, the whole society is connected into a whole through commodity trading, and any link accident will affect the whole society, and the economic crisis has been extremely destructive. It has already been said that the market economy will inevitably lead to economic crisis. The idea of fiscal surplus is that there should be as much money as there are things, and we can't print more money. This is tantamount to letting the economic crisis break out and being indifferent, which will inevitably lead to the collapse of society. The crisis in western countries in 1929 was so serious because of the idea of fiscal balance. After Roosevelt took office, he directly adopted the deficit policy and saved the American economy.

therefore, under the condition of market economy, a moderate deficit is conducive to the steady development of the economy. Of course, an excessive deficit will not do either, because too much money will inevitably lead to a sharp decline in the wealth of most people, lead to poverty of most people, stimulate the polarization between the rich and the poor, and the result will be destructive. Therefore, excessiveness is not enough, and it should be moderate.

Therefore, since 1929, all market economy countries have always adopted a moderate deficit policy, including China. Therefore, in the long run, the currency has been depreciating. The dollar has depreciated sharply in the past 1 years. I forgot the specific ratio. Anyway, it has depreciated sharply. China: I have calculated that the devaluation of the currency has caused the purchasing power of 1 yuan to be equivalent to that of 3 yuan about 1 years ago, which is about two-thirds. Isn't it terrible?

If you want to prevent the devaluation from damaging your wealth, don't save and don't live on a fixed salary. You should invest your wealth and make money by investing. Of course, investing in stocks is a good choice. In the long run, the return of stocks is far greater than inflation.

I have summed this up in my long-term investment, and the words can't be very long. There must be something wrong. Please forgive me!