On The Transition Between Inflation And Deflation

From 1830s'Great Depression in the United States to the Asian financial crisis and even to today's globally-swept financial crisis beginning from the U.S, they are with no exception related to two economic phenomena: the inflation and deflation. Inflation and deflation are two economic phenomena in fundamental antagonism in the socio-economic life, which have both the differences and linkage. Their linkage lies in their inter-transition under some specific conditions, that is, the inter-transition between inflation and deflation. This state have a profound impact on our social life: it threatens the development of real economy in the field of production, make an unfair transformation of material interests in the field of distribution, make people flagging in investigation and consumption, and, more importantly, make impact on the country's financial stability and security.With the continuous deepening of reform and opening up, China's macro-economy, not only in the 20th century to the mid-80's mid-90's, there have been a number of more serious inflation, but also in the late 90's experienced an unprecedented deflation. In this century, when China's economy is about to come out of deflation, the consumer price index (CPI) continues to climb unexpectedly, and a breakthrough the signs mark of 5% in 2007 which was considered "serious inflation", set a new high level since February 1997 for the last 10 years, the inflation comes back to China again after 10-year absence, as long as China's inflation back again unexpectedly. The transition between inflation and deflation has restricted China's economic and social development, and is of grave threat to China's financial stability. Therefore, Concerning about the transition between inflation and deflation, uncovering the reasons of their transition and preventing its happening have been major issues in the theory and practice in our country.To comprehensively implement the concept of scientific development, and to prevent the transition between inflation and deflation, the theory of inflation and deflation are required to advance with the times and to be continuously making innovations. With the "transition" as a core, this thesis revealed general characteristics of the transition between inflation and deflation via analysis of definition and related theories of the transition between them. Furthermore, the article explored process and characteristics of the transition between inflation and deflation, analyzed causes of the transition in China and put forward our measures of preventing the transition between inflation and deflation to maintain Chinese financial stability and promote development of a harmonious society. The thesis is divided into five chapters: The first chapter is about the concept of the related theoretical study about the transition between inflation and deflation. The concept of the transition of inflation and deflation is defined and illustrates the related theories of the transition of inflation and deflationChapter II illustrates the general trajectory, the basic characteristics and their differences on the transition of inflation and deflation. It reveals the general trajectory on the transition of inflation and deflation: the transition from inflation to deflation and from deflation to inflation. It explores the general characteristics and differences on the transition between inflation and deflation.Chapter III presents the process and characteristics on the transition between inflation and deflation in China. It illustrates the process of the transition between inflation and deflation in China and reveals the characteristics of transition between inflation and deflation in China by analyzing each of the performance of the transition process.Chapter IV analyses the reasons on the transition between inflation and deflation in China. It illustrates the transition between inflation and deflation in China occurs under multiple and joint elements: the excessive deviation and the reversed movement between the fictitious economy and real economy; the defect of market systems; the impropriety of macro-control; and international economy.Chapter V is the study of countermeasures to prevent the transition between inflation and deflation in China. We must based on the scientific development concept and realize the scientific development of fictions and real economy in order to lay foundation for the prevention of"transition between inflation and deflation"; we must improve the socialist market system and its mechanism so as to provide institutional guarantees to prevent the "transition"; we must implement scientific macro-control in order to provide the right policy support to prevent the "transition"; and we must achieve balanced economic development both inside and outside in order to create the necessary external conditions to prevent the "transition" .