Talked About By The More And The Less Money - The Velocity Of Money In China Study

We cannot make a conclusion easily that whether the amount of money is more or less, even we have no decision on measuring. As is known to all, the GDP and price index of Japan went down all the times recently .So the Japanese think they should add money because of less money storage. But when they researched carefully, they found that the amount of money in Japan had been the NO.1 in the world. However the latin-american think they have more money than they can bear because of high inflation, but when comparing with GDP, they may lack enough money in fact. So the author think that the focus is that they had ignored the monetary velocity. Because the factor that can determine the validity of monetary policy is the product of monetary amount and monetary velocity, not only the monetary amount itself. In other words, the monetary velocity can operate on the validity of monetary policy. In fact, with the growth of extra-economy demand for the money supply and the slowing down of monetary velocity, the theory of monetary policy and monetary experience in China are facing great challenges recently. This article wields artery metrology method nowadays to analysis this issue. The core of this issue are four questions:1.what the trent our country's monetary velocity is recently.2.What the exact relation in metrology between the monetary velocity and the money amount is.3.Which exteriors can be the real factors that determine the monetary velocity.4. what the trents the developed country's monetary velocity are and if there is real orderliness in this issue. There are six parts in this paper. The first one is talked about the basic theory. From the second part to the fifth part are the answers to those four key questions. The last one the sum-up and conclusion of this paper.On the basis of statistical analysis, this article makes an conclusion that the way of focusing on the quantity of the money supply only while neglecting changes of monetary velocity is not very suitable when discussing some problems of Chinese monetary policy. The author also rejects the opinion that central bank should beincrease money supply because of the downward monetary velocity. The factors that can affect the monetary velocity are very intricate. If we only add money amount to work on monetary policy when the monetary velocity goes down, the monetary velocity will go down more quickly. Then we will lack enough money more seriously. We also will face more serious stress of inflation. Under the condition of keeping the money supply increasing steadily, Chinese monetary policy should adjust the monetary velocity with the aid of exogenous variables and avoid the inflation caused by the unusual speeding up of monetary velocity. From this point of view, the research of monetary velocity in this paper will do some good for the vadility of monetary policy.