"We at Dream Town, or more precisely Green Core Development, have never thought of selling off Dream Town, a project that has not yet been built, even though selling it could quickly bring us hundreds of millions or even billions in profits."
Nan Yi moved his body and changed his sitting position. "Mayor Duan, I need to introduce you to our Green Core Development. Green Core Development is an investment company, which is somewhat similar to a private equity fund, but not entirely.
We at Green Core Development want to invest in projects that can generate long-term cash flow. The time span of a plan will be very long, five years, ten years, or even twenty to thirty years. Take Dream Town for example. Internally, this is a 30-year project.
Five years of investment, five years of observation, if everything develops well, we will enter a five-year period of growth; of course, if we find that this project is not feasible during the observation period, we will find a way to cash out and recover our investment.
Mayor Duan, can you understand this?"
Duan Wenxuan: "I understand that any investment is expected to get a return. No businessman will continue to hold a project that does not have a return."
"Yes." Nan Yi nodded and continued, "The contract I personally got is not bad. Even if I leave Green Core Development in the future, as long as it is a project I am in charge of and as long as the project is still profitable, I can always get the dividends from the project.
So, for my own personal benefit, I want every project I work on to have as long a life as possible.
Maybe, in two years, I will switch to Huanghe Development or Lanhe Development and continue to fight for similar contracts. Then I just need to work hard for ten years and then I can retire, sleep in every day, and when I get up, I will eat, go fishing, play chess, and practice Tai Chi in the park. "
"Haha, President Nan, it's too early for you to consider retirement now. Ten years later, you still won't be as old as I am now. Just when I think I'm making achievements, you're thinking about retiring." Duan Wenxuan said with a smile.
"Mayor Duan, I can't compare with you. My consciousness is not high. I don't have the idea of ​​serving the people, nor do I have the idea of ​​devoting my whole life to work. My biggest wish in this life is not to work."
Duan Wenxuan picked up the teacup and took the opportunity to organize his thoughts while drinking tea. "President Nan, in the planning of your Dream Town project, does the Coconut Tree Building have any other functions besides driving up the surrounding housing prices?"
"Of course, to build a building, including the frame and interior decoration, it will cost at least hundreds of millions of yuan. If it is just a gimmick, then the price we pay is too high. The Coconut Tree Building is expected to have 60-62 floors. The floors below 17 will be planned as hotels, and the floors above 17 will be office buildings. There will also be a 2-story parking lot planned underground.
We hope that the Coconut Tree Building will be used for a longer period of time, so we must consider the parking problem when the number of cars increases in the future. We originally planned to build an underground shopping mall, but the budget for the underground project was too high, so we had to give up. "
“When is the building expected to be completed?”
“It’s hard to say for now. We plan to find a top foreign architect to design it. Considering the seasonal typhoon climate here in Coconut City, we also need to install dampers inside the building, which makes the construction more difficult. We have to wait until the design drawings are out before we can evaluate the construction period.
However, in terms of construction, we intend to learn from Shenzhen's speed. In order to speed up the construction progress, I have invited the general manager of Jingjun Construction to come to Yecheng for an on-site inspection. Jingjun Construction is a military enterprise of the Beijing Military Region, and the construction efficiency is absolutely guaranteed. "
"Very good, President Nan, please inform me once the construction period is estimated. If your Dream Town encounters any difficulties during the 'construction' process, our municipal government will definitely actively cooperate."
"Okay, Mayor Duan, I won't disturb you from working."
"President Nan, I'll see you off."
…
In the afternoon, Nan Yi went to Dayingshan Airport to pick up Tang Jiangong. After arranging for him to stay, he treated him well. The next day, he asked Du Tiangong to take people to see the construction site.
Nan Yi was not idle either. He invited Li Jialong to his office, and the two of them started whispering.
"President Li, take a look at these prices for several building materials on the market. 240 load-bearing hollow bricks are 1,632 yuan per 10,000 pieces, three-hole non-load-bearing hollow bricks are 5,390 yuan per 10,000 pieces, and clay red bricks are 0.1 yuan per piece.
This year, the price of steel bars has hit the bottom. Ordinary steel bars are only 1,500 yuan per ton. Rebars are more expensive, about 2,000 yuan. Last year, all kinds of steel bars were around 3,000 yuan or more.
The current retail price of ordinary Portland cement No. 425 paper packaging bag is about 277 yuan/ton. I have asked someone and found that we don’t need much paper packaging bag. We mainly need bulk. The ex-factory price of bulk is about 183 yuan/ton.
Cement cannot be hoarded, and orders must be placed with manufacturers. We have to sign supply agreements with one or two cement factories in advance at the current price.”
"President Nan, what about the sand and stones?" Li Jialong looked at the price list that Nan Yi handed him and asked, "And the workers. Jingjun Construction will undertake our main projects. Who will we find to do the other projects?"
"Sand is easy to get. There is sand in every river in Coconut City, and there are sand fields by the rivers. Just contact a few suppliers. As for stones, there are a lot of volcanic rocks in Shishan Town, and there are also several stone factories there. Just let Ma Mingyu contact them.
President Li, today I want to discuss the issue of stockpiling with you. The price of steel bars will soon go up, so I plan to pull back the steel bars first. "
"We haven't calculated the amount of steel bars we'll need yet, so we don't know how much we'll need," said Li Jialong.
Nan Yi waved his hand, "It doesn't matter. Pull as much as you can. Coconut City will soon be bustling with construction everywhere. When we calculate our own usage and the price of steel bars goes up again, we will sell the excess."
Li Jialong thought about it and nodded, "I agree, how much is appropriate to stockpile, I mean the capital investment."
"Haha, this is not up to us. Steel is a controlled material. We can't pull much more even if we want to. That's why I said we can pull as much as we can. You go and find Mayor Duan. The steel bars are a difficulty in the construction. He should help solve it."
"All right, I'll go."
Nan Yi paused and said, "As for the workers you mentioned, this is also easy. Projects that are not important and not technically difficult can be outsourced, especially local construction teams. We must find one or two to come. For such a large project like ours, if we don't give the locals some benefits, it will easily cause trouble.
Other miscellaneous items such as safety helmets, work gloves, and work shoes also need to be purchased first, and you also have to go to the insurance company to ask if you can provide insurance for the workers .
Our construction site is too large and the management is too strict, so the workers will complain. If the management is lax, accidents are likely to happen. It is normal for a few people to get injured or even one or two to die. The Construction Committee formulated compensation standards last year. With reference to that, we must also formulate our own compensation standards and not let people feel disappointed.
There are also construction site management regulations. I think the management in Japan is pretty good. We hired two Japanese supervisors. We don’t speak the language, so we don’t have to give face to anyone. If something doesn’t meet the standards, we have to redo it.”
“Will the Japanese be easily exploited to stir up ethnic hatred?”
"It's okay. We are Party A, and it's easy to find fault with Party B. We will let anyone who makes trouble experience how difficult it is to calculate money and settle payments. We can make the project profit a little higher, set up a separate account for the project payment, and then hand it over to the city for supervision and safekeeping. In this way, the settlement will be guaranteed for Party B.
With this guarantee, we can request detailed construction and building specifications when signing a contract with the construction team, and we can also ask them to advance funds. Forget about the material costs, at least they have to advance the labor wages.
The standards for specifications should be set higher, exceeding our actual needs. Normally, as long as they meet the standards we need, we can get away with it. But if anyone wants to make trouble, we can use the standards as an excuse to prevent them from running around and not getting paid a penny.
By the way, we also need to formulate a rule that the wages of construction workers must be paid monthly, and the settlement must be made once a quarter at the longest. We can tell Party B that if anyone does not comply, we will deduct part of the project payment, and we will investigate the construction workers every quarter. "
"President Nan, isn't this a contradiction? I have some knowledge of the construction teams in China. They are all makeshift teams. The contractors don't have much money, so it is very difficult for them to advance the funds. They simply cannot pay the workers in advance before settling the project payment."
"We don't necessarily need them to pay the workers on time. We just need the workers to tell us that they have received their wages during the investigation. President Li, since you have learned about the construction team, you naturally know that the workers in the construction team are most likely the contractor's fellow villagers, and it is easy for the contractor to let the workers speak for him.
We ask the workers to sign and confirm each time we conduct an investigation. If the workers who do not receive their wages make trouble in the future, we will be cleared of our responsibility. Then, you, a wanderer who has lived abroad for many years, can come forward to solve the workers' wage problems.
Oh, by the way, we should pay workers a little more than they deserve, either as travel expenses or interest compensation. In short, we should let people outside know that our Dream Town is a company with social responsibility, love and compassion.
We take the good reputation, and let the contractor take the blame. The bigger the pot, the bigger the lid. If they want to challenge higher-level people, they will naturally have to bear high risks. It's ok to strictly follow the standards, but if anyone tries to be sneaky or have crooked ideas, he will be punished to death."
Li Jialong wiped the non-existent sweat from his forehead and muttered in his heart, "This Nan Yi is too cruel. He dug a trap in advance and waited for others to jump into it."
"President Li, go talk to Mayor Duan about the steel bars. I'll go check out the sand field and brick kiln. The supply of building materials must be finalized first. I don't want to see workers waiting for building materials during our construction."
"Okay, I'll make a call first." Li Jialong responded and left Nan Yi's office.
As soon as Li Jialong left, Nan Yi called Zhou Jina to his office.
"Director Zhou, before you leave work today, please make a list of the labor protection needed on the construction site for me. Please indicate all the items that we don't need to prepare, and also indicate the approximate rate of wear and tear. Bring them back when they are ready, and I will pick them up from you myself."
Du Tiangong and Zhou Jina's home is also in Longkunxia Village, not far from Nan Yi's residence.
"OK."
After arranging everything, Nan Yi went out and walked upstream along the estuary of the Nandu River. Along the way, he passed many sand mining sites. Every time he arrived at a sand mining site, Nan Yi would grab a handful of sand and bring it back. If he could get on a cement boat, he would get on the cement boat to collect samples. If not, he would just grab a handful from the sand pile.
When you get the sand, use the method you learn on the spot to judge whether the sand is good or not.
"If you grab a handful and it clumps together, it means the sand has too much mud in it. If it breaks into small pieces, it means the quality is good. The sand should be moist, not too dry. If the sand is very fine and dry, like soil, it cannot be used either."
While muttering to himself, Nan Yi tested the sand. After the initial inspection, he put the sand into a bottle, added water and shook it to see how quickly the sand would settle and the turbidity of the water.
If the sand settles quickly and the water is clear enough to drink, then the sand is top-notch. Of course, top-notch sand is not used on construction sites, it is used for beach volleyball at the Olympics.
Taking samples and testing along the way, with his rather poor testing level, Nan Yi selected the sand produced by the sand mining sites in Coconut Head and Xiapo Village Jiangduan. However, it did not count and he had to let professionals test it again.
After returning to Longkunxia Village, he first went to Du Tiangong's house to get the list, then asked Su Meng to add a pair of chopsticks, and Nan Yi called Ma Mengyu over.
Ma Mengyu was driving a Xiaobawang, so Nan Yi didn't prepare any wine.
"Lao Ma, the land acquisition has not started yet. Go and find out about the sand mining forces in Coconut City tomorrow. I don't care who is the boss or the second in command. As long as the sand is qualified, the price is low, and the payment period is good, I will use their sand."
"Boss, the sand mining industry here in Coconut City is quite chaotic. Someone may be the boss of a sand mining site today, but he may not be the boss tomorrow. It's no use for us to talk about long-term supply. We must be prepared to talk to new people at any time." Ma Mingyu said.
"Will anyone die?"
"No one died, but they were chased away."
"That's fine. We only talk to the business license, not to a specific person. When you settle the bill, bring a copy of the business license and the official seal. I don't care who comes, I only recognize the official seal. Whether they want to kidnap or blackmail, it has nothing to do with us.
Why do I need a credit period? I am just worried that if the owner of the sand mine dies halfway through the supply, who will I turn to? "
Nan Yi said as he took out the list Zhou Jina had made, circled a few items with a pen, and handed the list to Ma Mingyu, "Except for the circled ones, you can find someone to supply the others. You should know who to find."
Ma Mingyu nodded and said, "I'll hand it over to the Labor Bureau's connections."
"You can also use decoration materials, garden plants, vegetables, meat, rice and noodles for construction workers, shell boards, and transportation vehicles to do favors. An important principle is that I can tolerate a higher price, but I cannot tolerate inferior products. If anyone gives me inferior products, I don't mind turning the table against them."
Nan Yi said, patting Ma Mengyu's shoulder, "Old Ma, you are older than me, but I still want to tell you that I, Nan Yi, will never treat my own people badly. I will help you make big money that feels good to the touch. Plus you have a basic salary of 200,000 a year, so your life should not be too bad. Don't think about anything that is too hot.
I could have turned a blind eye to it if it was just for food and drink, but I can’t do that now. We are building a house. If the building materials are not up to standard and the house collapses, how many people will be crushed to death?
Human life is at stake, don't take it lightly, understand?"
"clear."
"Really understand?"
"Boss, don't worry. I really understand and will never let defective products flow into our construction site." Ma Mingyu promised solemnly.
"Okay, let's eat."
After dinner and seeing Ma Mengyu off, Nan Yi and Su Meng began to reconcile the accounts.
I didn’t get the chance yesterday, so I had to postpone it until today.
Although it is said to be a reconciliation of accounts, in fact, Nan Yi is concerned about the changes in vegetable prices. No matter how stingy he is, he would not care about a few dollars for buying vegetables.
“Why did the price of chicken increase by several cents from May 20 to the end of May?”
"I heard that a ship carrying chickens encountered big waves and most of the chickens on board fell into the sea. The price of chicken went up in those days."
"oh."
Whenever there were questions, Nan Yi would ask, and it would take more than an hour to reconcile the accounts.
“In the company, there are many senior employees, including you, who have already completed one year of service or are about to complete one year of service. Pension insurance and medical insurance should also be put on the agenda. Call a meeting tomorrow and ask for everyone’s opinions.
There is no way to pay for old-age care. There is no place to pay, so we can only give everyone subsidies;
As for medical insurance, it can be either a monthly subsidy for everyone, or a medical expense fund pool can be set up within the company, with the company and individuals injecting funds into it on a monthly basis at a ratio of 4 to 1. When someone gets sick, the money will be used to reimburse the medical expenses.
If it is a major disease that the fund pool cannot afford, then we will analyze the specific issue on a case-by-case basis. The company cannot bear all the costs. We have to look at the specific case.”
"What if you quit?" Su Meng asked.
"Calculate the amount of medical expenses reimbursed by the resigned personnel, and return the personal portion according to the proportion. If there is no surplus or the overspending does not need to be paid. You decide how much money to inject, and the company will inject it according to the proportion.
Also, you can nominate three people to open a joint account, and the funds will be placed in the account. You should be careful. If three people run away with the money, the company will not be responsible. The company only pays the money and will not manage or supervise the joint account. "
"Then we can ask all employees to sign a petition... It doesn't seem possible. It will be troublesome if someone resigns."
"Oh, think about it slowly. I won't get involved. The ones in Xiangkeng don't need to be taken into consideration. I will help them pay the MPF in Xiangkeng."
Nan Yi said as he walked into his room. These days, "Looking Backwards" was being rerun. He had never watched this TV series before. It was about things happening in the mainland in the 1960s and 1970s. It was produced by ATV. In the past two years, ATV has been producing many good dramas, which are worth watching.
…
As time goes by, everything in Dream Town is moving forward in an orderly manner.
After communicating with the shareholders, Nan Yi transferred Ma Jiayan to serve as the financial director of Dream Town, and found himself a secretary named Zhang Min, who was good-looking but had average abilities. Nan Yi did not expect her to be able to help him. She only needed to be a vase when guests came and went. All the miscellaneous expenses added up to 700 yuan a month, plus a little clothing fee, and he considered it as spending money to add some color to his office.
"Boss Nan, there is a lady named Liu Xin who wants to see you."
One day, Nan Yi was in the office, and Zhang Min's voice came from the intercom on his desk.
"Please ask her to come in."
After a while, Zhang Min brought Liu Xin into Nan Yi's office. After Zhang Min closed the door and left, Liu Xin walked straight to Nan Yi's big chair, raised her hips and sat on Nan Yi's thighs, and put her hands around Nan Yi's neck.
"Why did you hire a slutty vixen as your secretary?"
"How do you know she is a slut?" Nan Yi pulled Liu Xin's tightly bound hands and said with a smile.
"Hehe, I'm a slutty fox, how can I not smell the scent of my own kind? You need a secretary, why don't you let me come?" Liu Xin said coquettishly.
"Seven hundred a month, you come?"
"I'd be willing to be your secretary for 70, not to mention 700."
"Stop talking nonsense, go down, sit down opposite, and I'll tell you something serious."
"oh."
When Liu Xin heard Nan Yi's stern tone, he immediately sat down opposite him obediently.
Nan Yi likes Liu Xin because he knows his limits and knows when to advance and retreat.
"Go to Shencun, rent a villa and live there, then find a way to get close to this person."
With a click, Nan Yi threw a stack of documents on the table.
Liu Xin glanced at the information, "Zhang Yu? Woman? Who is she?"
"In terms of seniority, I'm going to call her Auntie. You want to be friends with her. I want to know her thoughts, um, about men."
"Huh?" Liu Xin picked up the information and just read a few lines before exclaiming, "She's my fellow villager?"
Nan Yi did not answer, but directly said: "The mistress of the big boss of Xiangzhen, this is your basic character setting, and you are free to play with the rest."
"Which big boss, you?" Liu Xin looked up and said.
"Don't worry about who it is for now. Read the information carefully. You don't need to remember it specifically. Don't be too deliberate when approaching Zhang Yu. Just think of it as accidentally meeting a fellow villager and two lonely souls talking to each other."
"Why would you assign me this kind of mission? I'm a bad guy, not a spy."
"It's simple. I trust you. Besides, you said that you are a slutty fox. Zhang Yu is also a slutty fox. It's just that she is slutty in her bones and doesn't show it."
Liu Xin asked: "What about me? Where is my sluttiness?"
"I'll give you two slaps on the face for being so naughty." Nan Yi frowned.
"snort!"
Liu Xin quickly took the order and left, and Nan Yi continued his normal work.
Actually, there is not much work to do. All the tasks have been assigned. Li Jialong and Han Zhenhe, who represent him, are responsible for coordinating, while Lai Hu Ri is responsible for communication with the government. Most of the time, Nan Yi only needs to open his mouth and sign documents. In the eyes of many people, this is a job that can be done by anyone else.
As October was drawing to a close, Nan Yi began to visit the People's Armed Forces Department and the army. Dream Town needed its own security team. And the demobilization season was about to begin, so he made arrangements in advance. By the time they took off their collar badges, he could be wearing the "Special Service" armbands.
There are more and more real estate companies registered in Coconut City, and the number of rich people is also increasing. When there are more rich people, public security begins to deteriorate. Not only can you see people carrying knives, you can even see people carrying guns.
In November, with the approval of the foreign affairs department, Richard Schiff, who was sent by Johnny, registered Black Star Defense Company in Coconut City. The first thing he did was to get the land for building factories and office buildings. He applied for industrial land and commercial land for the factories and office buildings respectively.
Needless to say, this must have been Nan Yi's idea.
By the middle of the month, seeing that there was nothing to do, Nan Yi started his journey to pay his taxes around the world. His first stop was London, so that he could pay his taxes and visit his daughter's city at the same time.
Catherine has been learning Chinese in the past few years and has become very fluent in using idioms. Nan Yi said that single-minded devotion was enough, but she was not happy and insisted that good things come in pairs. After Nan Yi agreed, she wanted three Yangs to bring good luck, followed by four seasons of prosperity, five blessings, and everything going smoothly.
Fortunately, she had not yet learned the Seven Stars, otherwise Nan Yi would have died on the Tropic of Cancer in London.
"What do you think of this Conservative Party leadership election?"
The wind stopped and the rain ceased. Catherine, with a rosy complexion, asked Nan Yi, who was pale and emaciated.
"What about you, who do you think is good?"
"Anyone can do it, as long as it's not Thatcher. Collecting poll taxes and raising interest rates, it will be a disaster for us if she is still in office."
"It's not that exaggerated. It doesn't matter who becomes prime minister. It's not without benefits for Thatcher to continue in office. Let's not talk about that. Let's talk about the economy." Nan Yi sat up and turned up the bedside lamp. "I'll go see Kate first."
Nan Yi went to Nan Ruojin's room to check on her, tucked in the quilt for her, went downstairs to pour two glasses of milk, went back upstairs, and handed one of the glasses to Catherine.
Catherine took the milk, took a sip, and put the cup on the bedside table.
“Speaking of the economy, I think the UK’s economic prospects are very good. Although the past decade has been full of talk about the American dream, Japan fever, and British disease, it is true that our British Empire, as an old capitalist empire, has been declining in its position in the world economy from after World War II to ten years ago.
This situation is essentially related to the rise of the United States, Japan and Germany, but it is also inseparable from the mistakes and problems in our own economic development.
From the end of World War II to the 1970s, due to its belief in Keynesian theory, Downing Street intervened strongly in the economy for many years to ensure that the unemployment rate remained at a low level. This policy played .
However, the two oil crises of 1973-1975 and 1979-1981 severely hit the British economy. On the one hand, they led to inflation driven by rising energy prices; on the other hand, they led to a decline in British export competitiveness and high unemployment due to rising costs, and Britain fell into a state of stagflation.
In this historical context, between 1980 and 1986, there was also a typical excess of liquidity. But in dealing with the economic and financial development under the conditions of excess liquidity, our British Empire is a very successful case. "
Nan Yi waved his hand and said, "Just talk about the matter. Don't mention the British Empire all the time. Just use "we" or "Britain". It sounds irritating to me."
"I, Katherine Boleyn, Duke of the British Empire..."
"The pauper duke." Nan Yi said sarcastically.
"Shut up, your daughter, Catherine Boleyn II, will also be a duke in the future."
"Nan Ruojin."
"Katherine."
"Okay, I won't argue with you. Let's continue with your economic analysis." Nan Yi shrugged and scratched his buttocks.
“From the perspective of asset price changes, the six-year bull market in the British Empire from 1983 to 1989…the simultaneous bull market in real estate and the stock market in the UK also meant that there was excess liquidity at the time.
1983 was the turning point when stock prices and real estate prices accelerated. The Financial Times Index FT100 rose from 800 points at the beginning of 1983 to 2422 points at the end of last year.
The average price of a single house [All house] rose from 26,307 pounds to 61,495 pounds, and the average price of a new house sales [New house] rose from 33,868 pounds to 64,971 pounds, an increase of 202.8%, 133.8% and 91.8% respectively, while the nominal GDP growth rate in the same period was only 170.0%.
What is more telling is the asset price growth rate after adjusting for inflation. Whether it started or ended, the bull market in the stock market started one year earlier than the bull market in real estate, and 1983-1989 was the overlapping period of the two, and the length of time and magnitude of the period are far beyond the comparison of other periods.
This substantial appreciation in asset prices is not primarily determined by fundamental factors. From the perspective of the valuation indicator, the price-to-earnings ratio, 1980 was a clear turning point. The price-to-earnings ratio rose from 5.4 at the beginning of the year to 6.2, and has continued to rise since then.
By the peak in 1986, it had reached 13.2, an increase of 144.4%. From the perspective of another valuation indicator, 'P/E ratio × long-term nominal interest rate', 1981 was a clear turning point, rising from 86.18 at the beginning of 1980 to 123.67 at the end of the year, and reaching a peak of 133.32 in 1986, an increase of 54.7%, and has remained above 110 since then.
These data show that a major factor behind the rise in UK asset prices was the excess liquidity at the time.
Judging from the market interest rate, an indicator of capital price, the decline in capital prices from 1982 to 1989 also meant that the British economy was in a state of excess liquidity at that time.
From the perspective of nominal interest rates, after the overnight lending rate was raised to a record high of 15.4% in 1980, the UK entered a cycle of interest rate cuts in 1982. In 1984, the overnight lending rate was reduced to 9.5%. As the CPI reached 6.1% in 1985, the Bank of England once again raised the interest rate to 12.6% in 1985, but soon began to cut interest rates again after inflation fell to 5%;
The interest rate was 10.7% in 1986, 9.5% in 1987 and 10.0% in 1988. Since then, as inflation began to intensify again, the UK entered a cycle of interest rate hikes. At the end of 1989, the overnight lending rate had been raised to 13.6%, and this year it was further raised to 14.7%.
Overall, the UK was in a low interest rate cycle from 1982 to 1989, which also reflected the excess liquidity at that time.
The appreciation of the pound against the US dollar from 1985 to 1989 meant that excess external liquidity was being channeled into the UK, and the rapid growth of the pound's foreign exchange reserves meant that this trend had become a reality and that the UK had accepted huge amounts of external liquidity.
The pound began to appreciate against the U.S. dollar at the end of 1985. In 1986, it rose from $1.3 per pound to $1.5 per pound, an increase of 15.4%. By the end of 1988, it had risen to $1.8 per pound, an appreciation of 38.5% in four years.
Foreign exchange reserves surged from $6.971 billion at the end of 1984 to $41.117 billion at the end of 1988, a 4.9-fold increase in four years. In 1987, the foreign exchange reserves increased by $23.669 billion, equivalent to 1.479 billion pounds, accounting for 33.9% of the total M4 of 43.62 billion pounds that year, while this figure was still negative in 1984.
Although the depreciation and appreciation cycles of the British pound and the Japanese yen are consistent, in terms of magnitude, the British pound has depreciated more than the Japanese yen, while the appreciation has been much smaller than the Japanese yen.
From 1980 to 1985, the pound depreciated by nearly 43%, while the yen depreciated by less than 20% during the same period. From 1985 to 1988, the pound appreciated by 38.5%, while the yen appreciated by 99.7%. This difference means that the wealth taken away from the UK by funds aimed at taking advantage of the appreciation interest rate differential was not as serious as that from Japan. This also provided an exchange rate support for the UK's excess liquidity, which ultimately prevented a bubble economy from forming.
Whether from the perspective of asset prices or from the perspective of excess money supply EM indicators, we can conclude that
The conclusion is that the UK's excess liquidity situation will end this year.
It must be said that Thatcher has made good achievements. The British economy is expected to surpass Japan and will enter a track of healthy development, which is mainly reflected in: low inflation, low unemployment, stable economic growth, and rapidly improving international financial status. "
Nan Yi scratched his butt again, "Think carefully about the reasons why there is excess liquidity in the UK. I'm going to take a shower."
"No need to go. You don't have skin allergies. I scratched you. I'll help you clean the wound." Catherine said with a smirk.
"Damn it, help me deal with it quickly."
"Go get the medicine box."
After a while of struggling, Catherine helped Nan Yi treat his wounds, and the two continued to talk about the British economy.
“There are multiple reasons for the excess liquidity in the UK from 1982 to 1990, but the basic reason lies in the UK itself. The dogmatic Keynesian economic policy has severely constrained economic vitality due to changes in the economic situation, leading to the emergence of a liquidity trap. In the process of reforming the system to release economic vitality and then solve the liquidity trap, excess liquidity has become a necessary monetary condition for economic reform.
It can even be said that it was precisely because the liquidity trap was transformed into excess liquidity that the UK's economic reforms obtained sufficient monetary lubricant and were successfully completed.
From the perspective of economic logic, there are roughly two basic ideas for dealing with cost-push stagflation, but no matter which idea is chosen to control stagflation, it will create excess liquidity.
Judging from the development of British economic history, the emergence of excess liquidity in the UK occurred after stagflation in the UK. In terms of time, the two are successive.
Logically speaking, excess liquidity is not only a response to the previous response to stagflation, but also an inevitable result of Thatcher's cabinet's policy of governing stagflation.
The first approach is to prioritize unemployment control, that is, to first implement an expansionary fiscal policy to expand demand, increase output, and increase employment, but at the same time lead to higher inflation. This was the strategy chosen by the United Kingdom to control stagflation in 1970-1980.
This approach does not seem to generate excess liquidity, but expansionary fiscal policy will lead to more severe inflation, thereby increasing people's inflation expectations;
Inflation and inflation expectations will reduce liquidity preference. Under the condition that the existing liquidity supply remains unchanged or even decreases, the liquidity originally held for speculative motives will be transferred to the purchase of assets for investment and value preservation or the purchase of goods for consumption.
The former manifests itself as asset price inflation, while the latter manifests itself as high CPI, creating a situation where excess liquidity turns into inflation.
The second approach is..."