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top fashion jewelry wholesalers "Western Economics" Guidance (4) (Chapter 14-17)
Chapter 14 The role of currency and economy first currency and financial system currency in the economy and a economic financial financial The system is closely related. Therefore, understanding how currency affects the economy must first understand the financial system. A economic financial system includes central banks, financial intermediaries and financial markets. I. Central Bank Central Bank is an institution used to monitor the banking system and control the amount of currency in the economy. The economy of any country needs such a central bank that maintains the banking system and the normal operation of the economy. Therefore, strengthening the independence of central banks has become a trend of current countries. Regardless of the differences in the form of central banks in various countries, there are four basic characteristics: first, not for the purpose of profitability; second, do not engage in business banks and other financial intermediaries business; Dual -role, it not only supervises commercial banks and other financial institutions and provides them with services; fourth, it regulates the economy through monetary policy. No matter how much independent it is, whether it is a government department, it is an important institution that the government regulates the economy. Because of this, the role of central banks in the economy is becoming more and more important. The function of the central bank is a supervision and service of the banking system. For example, monitoring the financial status and business activities of each bank to ensure that all banks and financial intermediaries operate in accordance with the relevant government laws and regulations; Provide loans when banks need funds; assist in settlement business between banks; and so on. These activities ensure the orderly operation of the entire banking system and normally, preventing economic turmoil caused by bank financial issues. Another function is that the central bank as the only currency issuer can control the money supply in the economy and regulate the economy by controlling this currency supply. That is to say, the central bank uses monetary policy to regulate the economy. 2. Financial intermediaries financial intermediary agencies are bonds that connect residents and enterprises and financial markets. It absorbs deposits from residents and enterprises and issues loans to other residents and enterprises. It also provides residents and enterprises with Enterprises for financial services. Pay attention to two points when understanding financial intermediaries: First, it is an enterprise. Like other companies that provide products and labor services, it is aimed at maximizing profits. Second, its business is to provide various financial intermediary business as a middleman in residents and enterprises and capital markets. It provides deposits and loans and various financial settlement services, and profit from this service. Financial institutions in various countries also have different types, but the most important thing is commercial banks, and commercial banks are companies engaged in financial intermediaries. In addition to commercial banks, there are other financial institutions, no matter which financial intermediary institution, its functions are common. Financial intermediaries have a special role in the economy that can create currencies. This is not to say that financial intermediaries can issue currencies by themselves, but it means that it can create currencies through normal deposit and loan business. Creation currency by banks is that banks can increase the amount of currency in circulation through the deposit and loan business. This mechanism is very important for the economy. We take commercial banks as an example to explain the bank's mechanism for creating currency. The key to banks that can create currencies is that modern banks are part of the reserve system, that is, only a part of deposits are used as a reserve system. That is to say, the bank does not need to leave all the deposits they absorb as the reserve in the vault or deposit the central bank. As long as the statutory preparation rate prescribed by the central bank, the reserve can be reserved, and other deposits can be issued as a loan. The statutory preparation rate is the ratio of the minimum reserve to deposit by the banks prescribed by the central bank. How does a bank create currency? We explain this from the balance sheet of Bank A: Assuming that the Bank A absorbs 1 million yuan deposit, the 100,000 yuan is used as the reserve, and the rest are loan as a loan to the customer A Essence In modern society, generally speaking, Customer A who gets loans does not use loans as cash, but instead of depositing banks B with a business relationship with him, because he can use this loan to use this loan for each. Item payment. When Bank B gets this deposit of 900,000 yuan, its balance sheet is: This means that after Bank B gets 900,000 yuan of loans, the 90,000 yuan is used as the reserve. Loan supply B. After receiving the loan, B also deposited the 810,000 yuan to deposit people with a business relationship with themselves. So the balance sheet of Bank C is: Bank C gets 810,000 deposits and still put it 8. 10,000 yuan as the reserve, the remaining 72. 90,000 yuan as a loan loan ... This process will continue, deposit is currency, and the increase in deposits is the increase in currency in circulation: the increase in deposits in this process is: 1 million yuan 900,000 yuan 81,000 yuan 72. 90,000 yuan ...: At the end of the process of 10 million yuan, the currency in circulation was 10 million yuan. The deposit of 1 million yuan passed the process of issuing loans and absorption of deposits through various banks. The currency in circulation increased to 10 million yuan: This is the bank's creation of currency: how much currency can banks create when the initial deposit is set? ), The formula of the amount of money created by the commercial banking system is: D = R / R can be seen from this formula that the amount of currency volume created by the commercial banking system is inversely proportional to the legal preparation rate, which is compared with the initial deposit. Positive proportional. This shows that the level of statutory preparation rate determines how much currency the bank can create. In this example, the statutory preparation rate is 10 %, so the currency created by banks is 10 million. The ratio of currency and initial deposits created by banks is called simple currency multiplication. In our example, the simple currency multiplication is: m = d/r = 1/r Simple currency multiplier indicates how much the initial deposit can create. This is very important for analyzing currency supply. 3. The impact of financial instruments and financial market currencies on the economy is realized through the activities of various economic entities in the financial market. Therefore, to know how currency affects the economy, we must understand financial instruments and financial markets. Financial instruments are the carrier of currency to flow, including long -term and short -term bonds issued by the government (long -term bonds are bonds of more than 1 year, and short -term bonds are bonds of less than 1 year). These bonds are also known as government bonds, financial bonds and corporate bonds. ; Stocks; Tabletables for transfers; commercial bills, repurchase agreements, bank acceptance bills, etc. Among these tools, short -term bonds issued by the government are very important and are important tools for central banks to control the supply of currency. The common feature of various financial instruments is the positive correlation between returns and risks. That is to say, the greater the risk, the greater the income, the smaller the risk, the safer, and the smaller the income. Financial instruments are flowing in the financial market. This flow is part of the entire economic activity, and it has an extremely important impact on the overall economy. The financial market, also known as the open market, is a place for various financial instruments. The central bank mainly uses monetary policy to adjust the economy through activities in the open market. The financial market is divided into the currency market and the capital market. The currency market is a financial market engaged in short -term credit tools. It is a market for short -term credit tools and currency. The short -term credit tools traded in the currency market include: commercial bills, treasury vouchers, bank acceptance votes, and transferred regular deposit orders. The main parts participating in the currency market activities are: the government in charge of the state treasury, it has obtained short -term funds through the sale of the treasury coupon; the central bank, it regulates the currency supply and interest rate through the currency market; commercial banks, it needs to engage in it through the currency market to engage in it need Adjustment of the number of reserves; other financial institutions, they engage in the use and raising of their funds through the currency market. The capital market is a place for long -term credit tools to buy and sell. Long -term credit tools refer to credit tools with a loan period of more than one year, such as public bonds, corporate bonds, stocks, and real estate mortgages. In addition, the securities market for stock transactions, foreign exchange markets for foreign exchange transactions are also financial markets. Section 2 The decision of the currency market and interest rate in the short term. How to determine. I. Currency demand theory Personal and enterprises need to hold currency out of their motivations, which forms currency demand. Economists use various theories to explain currency demand. Keynesist economists believe that the motivation to hold currency has trading motivation, prevention motivation and speculation. We will introduce factors that determine the demand for currency. The transaction motivation refers to the purpose of people holding currency to make the convenience of daily transactions and reduce transaction costs. The currency required for the transaction motivation depends on the transaction volume. The greater the transaction volume, the more currency required for this motivation. The size of the transaction depends on the level of people's income. The higher the income, the greater the transaction volume, the more currency required. Prevention motivation is a payment that people need to do in order to cope with accidents. This motivation can also be called cautious motivation. In a world full of uncertainty and risks, unexpected accidents are always poisonous. To deal with this incident, people need currency. The currency required to prevent motivation also depends on the income, that is, the more people withdraw, the more currencies used to prevent motivation, the greater the currency demand. Changes in the same direction. Speculation motivation is the most reasonable combination of people in order to get their assets. Currency is a form of assets, and people's assets can take multiple forms, such as currency, real estate, bonds, stocks or other. The purpose of people is to make their assets the greatest. Various asset forms are both risks and benefits. The greater the risk, the greater the income. People all hate risks, hoping to realize the expected income with risks. In this way, people cannot hold their own assets in one form, but should hold assets with different risks and income. This is what the asset portfolio or asset is generally referred to. The basic principle is not to put all eggs in a basket. Starting from this theory, people hold currency to reduce risks and make their assets liquid. Currency is the most liquid asset form, which can be converted to other forms of assets at any time. Speculation motivation means that holding currency can be flexibly transformed into other favorable asset forms at any time. People also cost when holding currencies, that is, interest or other assets of interest or other assets for holding currency. Such interest rates are very important for the currency demand for speculative motivations. If interest rates are low, people are willing to hold currency, so as to use this currency to buy other assets at appropriate time, such as buying stocks or bonds in the financial market, thereby high currency demand; It will reduce the currency demand of this motivation. Therefore, the currency demand of this motivation is related to interest rates, that is, changes in the opposite direction. In reality, it is difficult for people's currency demand to distinguish what kind of motivation is. Therefore, we combine the above three motivations together to analyze the factors that determine the demand for currency. In summary, the factors that determine the demand for currency are the level of price, the actual GDP (income) and interest rate. When we analyze the demand of currency, if we consider the nominal currency demand, we must take the price level as one of the important factors. If the actual currency demand is considered, the price level can be ruled out. Second, the theoretical currency supply of currency supply is the amount of currency in circulation. We have explained that central banks can control currency supply in the economy, but commercial banks can create currencies through the deposit and loan mechanism. Therefore, both central banks and commercial banks have a decisive role in the supply of currency. The tools for central banks to control the supply of currency are mainly: open market activities, discounting policies, and preparation rate policies. These tools are also called monetary policy tools. The open market activity is that the central bank buys or sells securities in the financial market. Among them are Treasury vouchers, other federal government bonds, federal institution bonds and bank acceptance bills. Buying or selling securities is to regulate the money supply. Buying a price securities is actually issuing currency to increase the amount of currency supply; the sale of the securities of securities is actually returning the currency to reduce the money supply. Open market activities are a tool to regulate the amount of currency flexibly and effectively affect interest rates. Therefore, it has become the most important monetary policy tool. Discounting is a way for commercial banks to loans from central banks. When commercial banks are insufficient, the bills provided by customer borrowings can be discounted to the Central Bank, or other "qualified securities" agreed by government bonds or central banks are used as guarantee. Both discount and mortgage loans are called discount, and at present, one way is mainly. The duration of discounting is generally short, one to two weeks. The interest rate paid by commercial banks to the central bank is called discount rate. The discount policy includes the discount rate and discounted conditions of the change, and the most important thing is the variable discount rate. The central bank reduces the discount rate or relaxation conditions, so that commercial banks get more funds, so that it can increase its lending on customers. Rate. On the contrary, the central bank increases the discount rate or strict discounting conditions to make the shortage of funds of commercial banks. Increase interest rates. In addition, the discount rate as the official interest rate, its changes will also affect the general interest rate level, making the general interest rate change in the same direction. The preparation rate is the ratio of reserve in the deposit absorbed by commercial banks. The reserve includes inventory cash and deposits in the central bank. The preparation rate of central bank changes can adjust the currency supply by the impact of the reserve. In addition to the above three main tools, the central bank has several major tools to control the supply of currency: moral advice, the header of the head, the upper limit of interest rate, also known as the Q number Q number, control installment payment and mortgage loan conditions conditions Essence In reality, the tools for central banks in various countries to control the supply of currency are not exactly the same. However, the central bank can control only the basic currency through public market activities. Because commercial banks have a mechanism for creating currency, the variable volume of basic currencies does not mean the change in currency in circulation. The currency supply we call refers to the amount of currency in circulation. The formula is: mm = m / h In reality, the person who gets the loan will leave some loans as cash. This part of the cash left will no longer participate in the currency creation process, which is called cash leakage. At this time, the currency created by the bank is less than the number of cash leaks. The size of the cash leaked is represented by the cash -deposit rate held. The formula is: mm = m / h = Cu 1 / Cu 1 currency multiplier is particularly important. For example, if a currency multiplication in an economy is 5, then if the central bank wants to increase the currency supply of 5 million yuan, There is no need to purchase 5 million yuan in government bonds in the open market, that is, no need to increase the basic currency of 5 million yuan. As long as you purchase 1 million yuan of government bonds, you can realize the increase of 1 million yuan in basic currency. Third, the decision of interest rates is the price of the currency, as the price of all items and labor is determined by the supply and demand relationship in the currency market. We can explain the decision of interest rates on the basis of understanding the demand and currency supply. Therefore, when the supply and demand of the currency market is balanced, that is, the amount of currency that people want to hold is equal to the actual amount of currency, which determines the equilibrium interest rate. The interest rate is determined by the supply and demand of the currency market, so changes in currency supply and demand will affect interest rates. Section 3 IS -LM model In the simple Keynesian model, it only studies the total demand of the total demand for balanced domestic product when interest rates and investment unchanged. But in fact, interest rates and investment have changed, and it has a greater impact on total demand and GDP. In the IS -M model, we analyze the decisions of total demand for total domestic product under the condition of changes in interest rates and investment changes, as well as the relationship between interest rates and domestic GDP. The IS -LM model is a model that explains the domestic GDP and interest rate decisions when the item market and the currency market reaches a balanced at the same time. Here, I refers to investment, S refers to savings, L means currency demand, M refers to currency supply. This model is theoretically a comprehensive summary of the analysis of overall demand, and it can be used to explain fiscal and monetary policies in terms of policy. Therefore, it is called the core of Kanesian macroeconomics. I. The IS curve IS curve is to describe the balance of the item market, that is, when I = S, there is a curve of the opposite direction change relationship between the GDP and the interest rate. That is, high interest rates are low in domestic GDP, and low interest rates are high. In the inverse direction of interest rates in the item market to the opposite direction in the inverted direction of interest rates and investment in the inverted direction. We know that the purpose of investment is to maximize profits. Investors generally need to invest in loans, and loans must pay interest, so the maximum profit is actually the maximum profit after repayment of interest. In this way, investment depends on profit margins and interest rates. If the profit margin is set, the investment depends on interest rates. The lower the interest rate, the greater the net profit, and the more investment is; on the contrary, the higher the interest rate, the smaller the net profit, and the less investment. As a result, interest rates and investments are inverse directions. Investment is an important part of total demand. Investment increases, increased total demand, decrease in investment, and decrease in total demand. The total demand has changed in the same direction as the GDP. As a result, interest rates are in opposite directions with GDP. In addition, changes in the spontaneous expenditure will move the position of the IS curve parallel. Second, the LM curve LM curve is to describe the balance of the currency market, that is, when L = m, there is a curve between the relationship between the GDP and the interest rate of the same direction. That is, high interest rates are high in domestic GDP, and low interest rates are low. In the currency market, interest rates and GDP change can be explained by Kanesian currency theory in the same direction. According to this theory, currency demand (L) consists of L1 and L2. L1 represents the currency transaction demand and prevention needs, depending on the GDP, the same direction as the domestic GDP, the speculative demand of the L2 represents the currency speculation, depends on interest rates, changes in the opposite direction with interest rates. Refers to the actual currency supply, which is determined by the central bank's name and price level. The condition of the balanced currency market is: M = L = L1 L2 can be seen from the above formula that when the currency supply is established, if the currency transaction demand and prevention demand increase (L1) increase, in order to maintain the balanced currency market, the currency of the currency then Specification demand (L2) will inevitably decrease. The increase in L1 is the result of the increase in GDP, and the decrease in L2 is the result of rising interest rates. Therefore, when the currency market is achieved in equilibrium, the total domestic product and interest rate must be a relationship of change in the same direction. Changes in currency supply will move the position of the LM curve parallel. 3. The IS -LM model IS -LM model is a model that indicates that interest rates and domestic GDP are determined when the item market is equalized at the same time. Put the IS curve and the LM curve on the same graph, and we can see that when the two markets are equalized at the same time, the IS -LM model determined by the GDP and interest rates. The spontaneous expenditure changes will cause IS curve movement, which will make the GDP and interest rate change. This is, when the LM curve is unchanged, the total spontaneous expenditure increases, the IS curve moves parallel to the upper right, thereby increased domestic GDP and increased interest rates. Conversely, the spontaneous expenditure decreases, and the IS curve moves parallel to the lower left. As a result, domestic GDP decreases and interest rates have decreased. In the economy of the three departments, government expenditures are determined by government policies. They are also used as a spontaneous expenditure in economic analysis. It is also a component of total spontaneous expenditure: Therefore, if we use changes in fiscal expenditure as a total of white hair, we will be the total of white hair. The changes in expenditure are analyzed here that the influence of the GDP and interest rates of the fiscal policy Liu Guodo; changes in the amount of currency will cause the LM curve to move, which will make the GDP and interest rate change. In the case, the amount of currency increases, and the LM curve moves parallel to the bottom right, thereby increased domestic GDP and the interest rate decreases. On the contrary, the amount of currency decreases, the LM curve moves parallel to the upper left, thereby decreased domestic GDP and rising interest rates. If the change in currency volume is caused by changes in the monetary policy of the central bank, the impact of monetary policy on GDP and interest rates here is analyzed here. Of course, we can also analyze the impact of changes in spontaneous total expenditure and changes in the amount of currency on the total domestic product and interest rates, thereby explaining the common role and cooperation of fiscal policy and monetary policy. Here we do not explain this problem in detail. In short, the IS -LM model analyzes how savings, investment, currency demand and currency supply affect GDP and interest rates. This model not only refined the analysis of total demand, but also can be used to analyze fiscal and monetary policies. Therefore, this model is the core of Kanesian macroeconomics.
Chapter 15 The unemployment of unemployment, inflation and economic cycle Section 1 The long -term unemployment is called natural unemployment, and the unemployment in the short term is cyclical unemployment. This section is analyzed in short -term periodic unemployment. First, periodic unemployment cyclical unemployment is also called unemployment with insufficient total demand, which is a short -term unemployment caused by insufficient total demand. This unemployment is consistent with cyclical fluctuations in the economy. When the economy is prosperous, the total demand is sufficient, such unemployment is low or even does not exist; when the economy declines, the total demand is insufficient. This kind of unemployment is high because it has this relationship with the total demand, so it is called cyclical unemployment. Keynes emphasized the analysis of total demand in the short term and explained the existence of such unemployment with insufficient overall demand. Keynes believe that the level of employment depends on GDP, and GDP depends on the total demand in the short term. When the total demand is insufficient and the domestic GDP does not reach the level of full employment, this unemployment will inevitably occur. Keynes explained the cause of such unemployment with the concept of a tightening gap. Keynes analyzed the cause of the tightening gap. Keynes divided the total demand into consumer demand and investment demand. He believes that the factors that determine consumer demand are the level of domestic GDP and marginal consumption tendencies. What determines investment demand is the expected future profit margin (that is, capital marginal efficiency) and interest rate level. He believes that consumer demand depends on marginal consumption tendencies when the total domestic product is set. He explained the reasons for insufficient consumption demand by the decrease in marginal consumption. That is to say, of the increasing increasing increasing consumption, consumption is also increasing, but the increase in consumption is lower than the income increase, which causes insufficient consumption. Investment is to obtain the maximum net profit, and this profit depends on the profit margin (that is, the marginal efficiency of capital) and the interest rate paid when loan for investment. If the expected profit margin is greater than the interest rate, the greater the net profit, the more investment; otherwise, the smaller the expected profit margin is less than the interest rate, the smaller the net profit, and the less investment. Cairns decreased with the decreased capital efficiency of capital, which explained that the expected profit margin decreased, and also explained that due to the existence of currency demand (that is, psychological flow preferences), the decline in interest rates has a certain limit. As you get closer, investment demand is also insufficient. The lack of consumer demand and the lack of investment demand have caused the lack of total demand, which has caused non -voluntary unemployment, that is, the existence of periodic unemployment. We can also explain the reasons for the existence of periodic unemployment with a total supply model. As mentioned earlier, the analysis of the total supply model of the total demand tells us that when the macroeconomic balance is achieved, there are three states: full employment balance, less than full employment balance, and greater than full employment balance. It is less than the equilibrium of periodic unemployment than sufficient employment. Second, the impact of unemployment: The most important loss of Austrian rational unemployment is the impact of growth rate. What is the loss of growth in the unemployment? In the 1960s, American economist Okken estimated the economic relationship between the unemployment rate and the actual GDP growth rate based on the actual data of the United States. This is the Austrian theory in economics. Australia is suitable for periodic unemployment. If the actual GDP growth rate is higher than the actual actual GDP growth rate of 2 %, the unemployment rate will decrease by 1 %. If the actual GDP growth rate is less than 3 %, such as 1 %, there is a change in unemployment rate: at this time the unemployment rate increases by 1 %. Australia is based on the statistics of the United States in the 1960s. It is an experience statistical formula, which is not necessarily applicable to other countries, nor does it necessarily apply to other times in the United States. However, the relationship between the unemployment rate and the actual GDP growth rate is common. When using Austrius, economists generally establish the relationship between unemployment rate and actual GDP growth rate to 1: 2. In actual use of this principle, we must adjust this proportional relationship based on actual statistical data. In addition to affecting the actual GDP growth, unemployment also caused other economic and social problems, such as waste of resources, intensive social problems, and so on. Therefore, achieving full employment has always been one of the main goals of macroeconomic policies in various countries. Section 2 Theoretical inflation theory is another important issue in the macroeconomic. It is also the center of this section discussion. I. The meaning of inflation is not exactly the same as the explanation of inflation in the category economics community. Generally, what is accepted is this definition: inflation is a general level of price and continuous rise. When understanding inflation: First, the rise in prices does not refer to the rise in the price of one or more commodities, but the general rise of the price level, that is, the increase in the total price level. Second, it does not mean that the level of price rises at a time, but the price of prices continues for a certain period of time. The indicator of measuring inflation is the price index. Economists classify inflation according to different standards. What we introduce is classification based on the severity of inflation. According to the severity of inflation, it can be divided into three categories: First, the inflation of crawling, also known as mild inflation, is characterized by low inflation rate and relatively stable. Second, accelerated inflation, also known as Mercedes -Benz's inflation, is characterized by high inflation rate (usually above double digits), and is still intensifying. Third, speeding inflation, also known as malignant inflation, is characterized by the high inflation rate (the standard is that the monthly inflation rate is more than 50 %) and completely lost control. This inflation can cause the financial system to completely collapse and economic collapse, and even the change of the regime. There is also a suppressed inflation, also known as hidden inflation. This inflation refers to the pressure of inflation in the economy, but because the government has implemented strict price control and distribution system, inflation has not occurred. Once the price control and the distribution system is lifted, more severe inflation will occur. The original planned economy state had this inflation before economic reform, and its performance was that the supply was less than demand. Severe inflation occurred when economic reform liberalized prices. 2. The impact of inflation on the economy should first distinguish the expected inflation and unpredictable inflation when analyzing the impact of inflation on the economy. Expected inflation is inflation that people can properly foresee. In other words, the expected value of the inflation rate is consistent with the actual value. Generally speaking, mild inflation is expected. Unpredictable inflation is inflation that people cannot properly expect. In other words, the expected value of the inflation rate is inconsistent with the actual value. When predictable inflation, the problem that inflation brings to the economy is: first, the cost of leather shoes. When inflation, the purchasing power of the currency is declining. In order to avoid this loss, people deposit more money to deposit banks, so they must go to a few more banks. Scholars are called leather shoes cost -multi -grinding sole. Second, the menu cost. This is the cost to adjust the price based on inflation. Third, tax twisted. The tax standard is determined according to the currency income. When inflation occurs, if the tax standards remain unchanged, the increasing increasing income of the name and the actual income of people will actually increase. Fourth, fixed income people suffer losses. Generally speaking, the salary will also be adjusted with the expected inflation. Therefore, people who work are not affected by this inflation, but those who rely on deposit interest or fixed income live Life suffers. Moreover, the currency of the deposit bank will also depreciate.
wholesale jewelry supplier Virtual currency book refers to non -real currency. In the case of virtual and reality, virtual currency has its real value. Well -known virtual currencies such as Baidu's Baidu of Baidu, Q coins from Tencent, QP, and Shanda's dots, Sina launched U coin rice tickets (for iGame games), chivalrous ingot (for chivalry game), Tattoo silver (for Bixue Love Game). If you do not count the electronic currency of the banking system, the network virtual currency can be roughly divided into virtual currency first categories is the familiar game currency. In the era of stand -alone games, the protagonist accumulate currency by defeating the enemy and winning money in the gambling hall. It can only be used in their own game consoles. At that time, there was no "market" between players. Since the establishment of a portal, community, and game networking on the Internet, virtual currency has a "financial market", and players can trade game coins. The second category is a dedicated currency issued by the portal or instant messaging tool service provider, which is used to purchase services on this website. The most widely used is Tencent's Q coins, which can be used to buy value -added services such as membership qualifications and QQ shows. The form of virtual "and its performance is not the first important. The first important thing is the internal value issue. That is, the value of the virtual currency represents the value and difference between the value of the general currency representative. In view of the depth of the background of the problem, it is necessary to stand higher at the starting point of research. Monetary problem is a problem in the category of modernity. It is the difference in paradigm, not the virtual phenomenon, which leads to the difference between the two. The value of virtual currency value formation mechanism is different from the value foundation of general currencies and virtual currencies. As a general equivalent, the "price" of its "waiting" is called value in language, but it actually refers to the use of validity. The virtual currency does not mean . Virtual currency is not a general equivalent, but a manifestation of value relativity, or a symbol of performance; it can also be said that virtual currency is a personalized currency. In another statement, it can also be called information currency. Their commonality of them. It is a symbol that expresses the uncertain value and relative value. When speaking, the traditional meaning of the currency has been broken. It can be used as a symbol of general equivalent or as a symbol of the relatively set of value sets. The currency decision mechanism is determined by the central bank, and the virtual currency is determined by the individual. Individual nodes. From the perspective of information economics, general currency is a special case of virtual currency. The special point of this special case is: First, the reference point is unchanged. Therefore When the reference point is unchanged, the value is equivalent to effectiveness; second, the loss of the reference point is unchanged. This means that the value of the reference point is a stable rational value and equilibrium value. In the rational economy, the reference point may remain unchanged, but it is still a scattered set. The difference is that every point (actual transaction price) of this scattered concentration is unstable, only the equilibrium value is stable; but in the virtual currency, in the virtual currency The value concentrated, each point may be stable. On the contrary, the rational balance value may be unstable. It is reflected in the currency decision mechanism. The virtual currency market (such as the stock market and the game currency market) is determined by the forces outside the central bank. In this sense, in the economics, some people call the stock market as the virtual currency market, and the stock market and derivative financial market formed The economy is called the virtual economy. The essence of the virtual economy is an individual -centered information economy. The value conversion of different currencies in the value exchange mechanism is completed in the currency market; and the value conversion of virtual currencies is completed in the virtual currency market. The value exchange of currency and virtual currency is completed through the overall exchange of the two markets. Individual market exchange relationships. Therefore, it can be said that general currency and virtual currency are in different markets. Fisher Formula (QP = MV) describes the value conversion relationship between the commodity market and the currency market; the expansion of the Fisher Cube (MV = BH) describes the value conversion relationship between the currency market and the virtual currency market. Some people worry that the game virtual currency may cause inflation. This is because he does not understand the market exchange mechanism of the virtual currency, and mixes the currency market with the virtual currency market. Just as the supply and demand of the commodity market can not directly lead to the imbalance of supply and demand in the currency market, and must be issued by increasing currency in the overall market to lead to inflation; supply and demand in the virtual currency market cannot directly lead to inflation in the currency market. The key to the problem is whether there is a unified virtual currency market. At present, the stock market is a unified market, and the game market is not the case. For example, the ratio of a certain game virtual currency to the renminbi may initially 800,000 ratio 1, and then it may change to 8 million. Maybe you can buy a virtual currency of a castle today, and it may be enough to buy a Tomahawk tomorrow. This phenomenon does happen; if virtual currency forms a unified market, it may indeed put pressure on the currency market. The problem is that there is no such unified market now. The status is not to mention the exchange between the level of the financial market and currency. And more importantly, whether it is basic currency or value -added currency, currency (M) and currency price level (V, that is, circulation speed) have not changed, so it is not considered that currency expansion or tightening will occur. Regarding the current depreciation of the gaming currency, it is better to interpret the service conditions of a game as a value -added service. Due to the general increase in the level of players or the increase in the number of players, the demand for virtual currency increased, the price of the service involved and the price level of the virtual currency decreased. Due to the changes in the supply and demand conditions of service, the price of service is reduced. This is a phenomenon that can be explained by a physical commodity market.