Virtual Economy Under The Conditions Of Monetary Energy Function And Policy Implications

In the traditional Neo-classical theory——the quantity theory of money, money is justonly a medium for transactions,in the long run it does not affect the real economic process, the determination of prices, profits or interest has nothing to do with the number of money.They are all decided by real variables such as marginal utility and marginal productivity,money is regarded as neutral and it is just the medium of exchange vehicle regarded by economists;The birth of Keynesian theory posed a challenge to the quantity theory of money,which connect money market with commodity market,he points out that money plays an important role in the process of real economy and money is not only a medium for transactions.Money is a store of value and current assets, it needs to enter into a wide section of financial assets . In Keynesian theory the money is no longer neutral,the quantity of money will affect interest rates and then influences consumption and investment,thus affect aggregate demand and the whole economic process.Following later Friedman enhanced the money stock's impact on real economic cycles.Through the sorting and analysis of the U.S. and international monetary historical data,he proved the basic concept that "in a period of time money is essential,it matters with real economy".This is the mainstream analysis on the function of money in literature.In this paper we point out that in the existing frame theory ,the importance of money's function has been greatly underestimated.In fact in the classical textbooks on economics,there is no position for money in the Microeconomics,even in the Macroeconomics and international economics on the occasion dealing with monetary and exchange rate policy,money is treated as an external object and it is not one part of the whole "real production process".Even in the view of the head of monetarism Friedman who confirms that "Only money is important", money is able to exert influence on the production process at most in short terms, but it is still neutral in long terms.However applying with Taylor's argument, "This is not consistent with our current money economy ".We think that the difficulties and controversies in the basic theory roots in the understanding of the money function . Through the study of money's function changeness the paper finds out that the emphasis on the function of money is actually changed with the change of economic's run mode and structure. So on the basis of the money's fictitiousness and economic's fictitiousness ,mainly we refer that in the new economic states of economic's fictitiousness ,we point out the money has evolued into an energy,which gives economic entities in the economic system with energy.The money's energypromotes the high-speed circulation of the contemporary economy——the fictitiouseconomy and the global economy.Money is an energy in today's economy, for any economic area when there is a large inflow of money,the prosperity appears(though this may be entirely virtual prosperity),otherwise the depression appears when there is a large outflow of money.In this article we firstly analyze the background of the evolution of the money'senergy function——the money's fictitiousness and economic's fictitiousness,in thispart we mainly analyze the economic's fictitiousness through data,we don't discuss the cause and the mechanism of the economy's fictitiousness. Then on the basis of the analysis of the process and mechanism of U.S. Economic's fictitiousness,we come to an conclusion that in the contemporary economy money is an energy,it is just the dollar's role of international money that stimulates the development of American economic's fictitiousness. And then on the basis of the money's energy function empirical analysis ,the paper continues discussing.Besides the aspect of experience,we have to analyze the energy function of money in the aspect of theory. Therefore we deeply ananlyse the monetary's energy effect through the economic's fictitiousness energy formula and use a simplified model of new economic operation (In fact, a higher degree of economic's fictitiousness like the United States )to discuss money's energy.Then from the depth of the theoretical point of view,we discuss the function of money's energy.After that we further review the function of money's energy from the aspect of the content ,the injection ,the flow and the cycle of the currency energy.Until that the basic analysis of the core theory of money's energy has come to an end.In order to further deeps the understanding of the functions of money's energy,we discuss from many aspects such as the currency energy's affection on American's leverage activity and American's injection of a large number of money energy without the effect of relaxing crisis.And we point out that under the condition of economic's fictitiousness the money's energy closely ties to its normal circulation,the main reason for the failure of government's policy is that the money's energy movement and the creation of income which establish on the basis of American private credit has almost stopped.After the theoretical analysis on the money's energy,finally from the aspect of practice paper points out the money's energy affect on macrocontrol policies:firstly from the contemporary international money's energy function which allocate the global real resources, we propose to actively promote he RMB's internationalization and seek RMB's energy function.In this paper we pose detailed analysis on the basic conditions,the needs ,the opportunities,the risks and the solution on the process of RMB's Internationalization;Secondly from the money's energy functional perspective, money flow is the energy flow in the economic system ,whose direction and flow decides nominal economic variables in all areas of economy and it also affects the relationship between fictitious economy and real economy to some extent.Therefore there is great practical significance to improve the flow of funds analysis in the existing national accounting system .We should observe ,monitor and even control the direction and flow of the money between the real economy and fictitious economy and between every maket of the fictitious economy to reveal the mechanism of the risk's emergence,enlargement and circulation. We specifically discuss and expand the analytical method of the money flow through input-output analysis and introduce the method's ultimate goal—the establishment of "the whole money flows observing system"...