Need to Redefine the Global Imbalances

Submitted By: Himfr Tian
The U.S. government the U.S. balance of payments deficit is defined as the global imbalances, and, accordingly out oppression and encourage appreciation of the renminbi exchange rate fluctuations of the prescription. However, according to my "credit system - Virtual economy - general equilibrium model of the real economy," the current global economic system, economic system or human performance of the most fundamental imbalance between the two aspects. First, from the global economy as a whole, is the virtual economy and a serious departure from the real economy. Second, from the global economic structure, is the center of the virtual and the real economy to create a serious departure from the center of wealth creation.

Focus on global imbalances reflected in the global monetary and financial center of manufacturing centers and rapid separation. Manufacturing Centre has decisively shifted to developing countries, especially to Asia, the focus is China, monetary and financial center is still controlled by the developed countries. In other words, the East has a real center of wealth creation, the Western control of monetary and financial center; Oriental manufacture real products, the West and create purchasing power of money; Eastern manufactured products around the world, the West is the world pricing; Western issuance of bonds and the creation of a large number of various financial products, Oriental will use their savings to buy the financial products; Eastern Savings, Western consumption; East thrift, Western extravagance; West to the East to borrow money, the East to the West financing.

Present and future, Western developed countries, macroeconomic management is the main contradiction facing huge budget deficit and debt problems, and China there is a surplus of social mobility and how to effectively manage the problem. Only China has this problem solved, I believe China's macroeconomic management will not be a big problem. Especially his on how China to actively promote international monetary system reform, focus and improve the international coordination of monetary policy, specific measures, to the point, Gangjumuzhang, admirable.

Virtual economy and real economy away from the true center of wealth creation and financial products to create a departure from the center, is the basic pattern of the global economy today is the economy over the past 40 years, the strange history of the human phenomenon, unprecedented. It is all the major global financial crisis and the overall macro-economic root causes of problems.

A fundamental consequence is that the Western economic system in the virtual economy or the financial size of the rapid economic expansion, increasing the financial economy or the formation of a self-expanding virtual economy, self-loop system.

Meanwhile, the real economy and the employment rate has remained low. Atmosphere of the whole economy is very strong speculative gambling. However, the virtual economy or the financial economy is highly unstable system, its operation depends on expectations about the future and the central bank's monetary policy, a sign of trouble, you can instantly collapse.

Once the collapse of the virtual economy, virtual wealth is shrinking rapidly, people are extremely optimistic about the expected switch from extreme pessimism, financial institutions, entities and individuals all the family was forced to "deleveraging", sluggish consumption and investment weak. Ending up virtual economy, the real economy worse, recession and depression is almost natural law. Substantial expansion of the quantitative easing monetary reason is invalid, because no matter how rampant the currency, it can not help financial institutions, entities and individuals repair household balance sheets, not help them, "deleveraging" process. More importantly, money can not solve the flooding has long been deeply rooted in Western economic and social structure rigidity problems, such as the aging population, the minimum wage and benefits system is totally rigid, high government deficits, debt-ridden society. The latter is the real economic growth restriction biggest problem.