If there are those engaged in the bulk commodity trading industry, they will find that since the second half of last year, the prices of domestic bulk raw materials have been rising, such as copper, iron ore, crude oil, pulp, sugar, cotton, etc.; especially since this year, the increase is more obvious, and the prices of some raw materials have even increased by more than 20% in a month, which is shocking.
Ordinary people don’t know about the price changes of raw materials, but they have a personal feeling about the terminal price. For example, copper is used to make motors, petroleum extract is the main source of plastics, and iron ore is used to produce more iron. Therefore, the price rise of raw materials will certainly drive the price rise of terminal goods, for example, from the end of December 2020 to the end of the year In recent years, the price of domestic white household appliances has increased to varying degrees. For example, the price of many household appliances, including TV sets, range hoods and washing machines, has increased by more than 10%, and the price of individual products has even increased by more than 20%. So why does the price of raw materials keep rising?
The reason for the price rise
In fact, there are no more than two reasons for the rise in the price of raw materials: one is the over issuance of money; the other is the decline in production!
1. Excess of money: according to the principles of economics, the total amount of goods in the society is fixed within a certain period of time. If the amount of money corresponding to the total amount of money is issued, then the value of goods and money in the whole society is equal. For example, the value of all goods in the society is 100 trillion, and the amount of money issued is also 100 trillion. At this time, 1 yuan is 1 bag of instant noodles If the amount of money actually issued exceeds the real value of goods, it will lead to inflation (currency depreciation, price rise). For example, the value of all goods in the society is 100 trillion, but the money issued is 200 trillion. At this time, 1 bag of instant noodles = 2 yuan. Invisibly, the price of goods will rise, and the value of money will fall.
In 2020, the world’s biggest event was COVID-19. After the outbreak, countries adopted quantitative easing economic stimulus policies and constantly printed banknotes. For example, from the balance sheet data of central banks, in the first half of 2020, the rest of the world’s main economies were growing except for China’s negative growth. From the end of January to June, the balance sheet of the Federal Reserve expanded by more than US $3 trillion, because the US dollar is the world’s currency. This way of printing money is equivalent to making each of the 7.5 billion people in the world have to bleed US $400 to help American enterprises and individuals. Therefore, the over issuance of money by central banks will inevitably lead to the rise of the price of raw materials. Of course, it takes a certain amount of time for the over issued money to circulate to the market and affect the terminal, so the price of raw materials began to rise in the second half of last year, while the price of terminal commodities began to rise at the end of last year. This is due to the timeliness of price transmission.
2. Output decline: since the global outbreak of the epidemic in 2020, in addition to China’s strong control, other countries are still under the influence of the epidemic. Under the influence of the epidemic, the production of many enterprises has been affected, such as the automotive chip industry. Affected by the epidemic, global chip suppliers are facing a shortage. CCTV finance and economics reported twice in January and February 2021 As for the shortage of automobile chips, Bernstein research company of the United States predicts that the global shortage of automobile chips in 2021 will cause the loss of 4.5 million automobile production, which is equivalent to nearly 5% of the global annual automobile production. Therefore, the short supply of products in the market will inevitably lead to the rise of product prices.
Before the epidemic situation is under comprehensive control, it can be predicted that the prices of raw materials and end products will continue to rise in 2021. At the same time, affected by the epidemic, people’s income will continue to decline. Therefore, we must learn financial planning, so as to avoid the lack of money when it comes to use!