Chinese central bank paper: Innovating the currency system and vigorously developing digital currency based on human value

Author: Principal Investigator Institute of Finance, People's Bank of China Zouping Block

Source: Securities Times

Editor's Note: The original title was "People's Bank of China Paper: Research on Market-oriented Synergy and Big Data Mechanisms of Monetary Policy"

The effectiveness of macroeconomic policies depends on the level of information. The wave of informatization caused by the scientific and technological revolution has impacted or even revolutionized the previous macro-control models; "market failure" and "government failure" [i] are superimposed. Under the influence, the global economy is turbulent; the amount of information generated by the information revolution has grown geometrically, which has produced the so-called "information explosion". "Information explosion" poses serious challenges to government macro-control. On the positive side, how a government is good at managing information and digging information will significantly improve the efficiency of the government; on the negative side, huge amounts of information will cause the government to "informate drowning" [ii], and extreme macro management will occur. Confusion, all kinds of risks rise sharply. The information revolution has changed the value function. This change has changed the law of value and the law of economic growth, and destroyed traditional economic theories and models. If the government cannot quickly adjust the macro management method, it will cause macro regulation and control to fail and generate economy. And social crisis [iii].

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2020 is an important turning point [iv]. Both the traditional liberal monetary theory and policy implementation framework and the government-led monetary policy framework have encountered the challenges of the scientific and technological revolution; the global economy at the beginning of the year was accompanied by violent fluctuations such as the new crown virus, the US election, and the breakdown of oil negotiations. Certainty is like the abyss; the Chinese economy is also full of fog and increased risks; the central banks, mainly in the United States, have started to drive monetary policy to regulate the economy, and the myth of currency accompanied by the emergence of digital currencies is full of mystery and unknown charm.

It can be seen from Figure 1 that China's M2 / GDP index is significantly larger than that of other countries. Many people mistakenly believe that China's currency is over-issued, and even that China's financial efficiency is very low, and it advocates monetary tightening. This data is very important as the main economic indicator of the country's macroeconomic regulation and requires in-depth understanding and grasp. To sum up, the following three issues need to be addressed: The first issue that needs to be addressed is how much is China's GDP? [v] The second question is how to find accurate and timely sufficient GDP data? The third question is, where does China's monetary policy go in the face of huge uncertainty? This series of questions, such as the "Godbach conjecture" of monetary finance, is a question that needs to be answered urgently at the moment. It is also a question that people who care about money, wealth, and growth are concerned about every day [vi].

The key is how to solve these problems. The development of information technology and the development of science and technology finance under the background of the scientific and technological revolution have provided us with ideas to solve this problem. That is to establish the micro-foundation of monetary policy through marketization methods, give full play to the market's information discovery function, and use the Internet, big data, blockchain and other technologies to establish a market-oriented micro-model of monetary policy [vii] to achieve accurate monetary policy Timeliness, timeliness, completeness, and scientificity; management of income big data, wealth big data, consumption big data, investment big data. These data are the means of production themselves. The marketization process of this digital asset will make the macroeconomic data more clear, complete, timely and accurate.

It is more important to expand the function of currency and make currency finance a tool and means of creating value. Currency becomes a tool for creating value, which not only has the function of value scale, but also unifies the scale of money and value. The process of money creation is the process of value creation. Inflation and deflation no longer occur. Monetary, monetary theory and monetary policy have entered a new era and a new world. This is an epoch-making revolution. No matter which country first realizes, it will evolve first, and become strong and competitive. Just like the Shang Yang reform made Qin country unify China, it realized the super system dividend.

The first question is is the GDP of the China Statistics Bureau accurate? This issue is related to the overall situation of macroeconomic policies. My research believes that the data released by the National Bureau of Statistics cannot accurately reflect the true amount of GDP, and there are still large errors; due to the difference in statistical caliber and the national conditions of different countries, the GDP of each country is not comparable. If the traditional monetary policy model is applied dogmatically, there will be obvious "monetary policy failure". Therefore, the data of the National Bureau of Statistics cannot be used as the sole basis for decision-making. Instead, a big data model of GDP must be established, and market-oriented, microscopic, and dynamic management must be implemented.

The issue of China's GDP is indeed a matter of major right and wrong in terms of macroeconomic regulation and control. In 2015, the International Monetary Fund (IMF) predicted for the first time in the latest report that the "American era" is nearing its end. The total GDP of China calculated by purchasing power parity will surpass the United States in five years, and will become the "China Century Yuan" in 2016. year". This news is like throwing a "blockbuster", which has caused controversy in Western countries, and the media of various countries have issued different voices such as doubt, anxiety, and sigh. In fact, this algorithm is not scientific. The key to calculating the RMB exchange rate using purchasing power parity is to select the target of the product. From the current situation, some Chinese products are overvalued and some are undervalued. At present, the prices of China's major agricultural products and durable consumer goods are both higher than those abroad. The IMF's conclusion is not valid [viii].

On the other side of the coin, we should see that China ’s GDP is different from any other country. The actual statistics are far underestimated. This is an important aspect of the so-called Chinese characteristics. Macro managers must have a clear understanding of the problem of "statistical leakage of GDP," otherwise "government failure" will become the norm, and macroeconomic management will be like a blind eye [ix].

China's GDP distortion (also called underestimation) can be discussed logically and empirically. It can be studied from five aspects.

First, China's economic structure is very complicated. The cells of the economy are dominated by families. There are also a large number of state-owned enterprises and state-owned enterprises. There are a large number of "internal transactions" in this economic structure. The economic subjects between a family are often unpaid. For example, the son has no income to work for Lao Tzu, and the income of rural households for self-retained land does not include GDP. Asset transfers between state-owned enterprises (unlisted state-owned enterprises) also belong to internal transactions.

Second, China has a low degree of marketization. A large number of products and services have not entered the transaction process due to unclear property rights, and are not yet commodities. Markets find value and information. The statistic of a country's GDP is directly proportional to its degree of marketization. First, there are a large number of intangible assets in China, such as intellectual property rights, artworks, antiques, etc., without clear property rights. In addition to affecting their efficiency, most of these intangible assets cannot be traded, and the number is very large. Second, a large number of Chinese service products cannot form commodities, such as legal services and social services. Third, China currently has a large number of means of production, such as rural land, without clear property rights and cannot be traded.

Third, China is a public ownership country of means of production. The means of production transactions are mainly the right to use, such as real property rights such as land, mines, and real estate. These assets must affect the output price of the commodity and are bound to be lower than the ownership assets. This piece affects GDP to varying degrees and various assets are different [x].

Fourth, there are a large number of public goods in China [xi], which not only seriously underestimates GDP, but also changes China's consumption rate, because most public goods only count investment and not consumption. China's public goods are different from Western countries. One is that the huge consumption of the huge government system and its affiliates is of a public good nature, and the quantity is staggering. General government departments have a large amount of expenditures on consumption and services. These expenses include insurance, housing, food, transportation, services, medical care, education, and even health, tourism, travel abroad, and entertainment. , Fitness, etc. are all paid by the state or are free. For example, all government agencies have free cafeterias, and even some have kindergartens. The staff of the government has so far allocated housing. Medical expenses for civil servants are also reimbursed. Some units include barber rooms, hospitals, stadiums, movie theaters, and so on. Second, a large number of products and facilities produced by Chinese state-owned enterprises are public goods and "quasi-public goods." This amount is very large, with dozens of trillions each year, such as highways, parks, squares, water conservancy, gymnasiums, etc. Third, a large number of China's service industries are provided by the government, such as security, education, culture, law, etc., and the degree of commercialization is far lower than that of market economy countries. The outbreak of the new crown virus in 2020 reflects the huge number of public goods in China.

Public goods often have only investment and no consumption statistics. Many economists believe that China's consumption is insufficient. The introduction of policies to encourage consumption has led to a sharp rise in Chinese household debt in recent years. In fact, China's consumption data is seriously distorted. A considerable number of people can live without their wages. This means that whether it is the output method or the income method, China's GDP is seriously underestimated, and total consumption is seriously underestimated, and the consumption rate is seriously distorted [xii].

Fifth, China's statistical system is not complete, there are a large number of gray economies that have not been included in GDP, and the tax system cannot achieve data validation. The statistical errors are large, the planning is strong, and the objectivity is weak. It is difficult to use the data of the Bureau of Statistics for economic analysis, and there is almost no important reference value. China's economic composition is very complex. It is said that the red, orange, yellow, green, cyan, blue, purple, gray, black, and white colors of the economy all have [xiii]. Statistics departments are unable to collect comprehensive data, especially gray incomes and the underground economy.

In general, the GDP and M2 statistics of each country in the world have their particularities, and they should be treated differently in actual analysis and application [xiv]. To accurately grasp the GDP of a country requires multiple channels for statistics, and then iterative revision. In countries with strict tax systems, tax growth is a very good reference indicator, because the GDP measured by the income method is highly correlated with taxation. However, the correlation between taxation and GDP is weak in China, because China's taxation system is not yet complete. Others such as electricity consumption and transportation volume can be used as reference.

The GDP indicators referenced by monetary policy should pay attention to the following aspects: First, the output method and the income method should be mutually verified. The second is to verify the national statistics with the regional statistics. Third, GDP data should be verified with various relevant indicators such as taxation. Fourth, the macro data and the micro [xv] data should be mutually verified. Fifth, government data must be verified with market data.

The second question is how to find accurate and timely sufficient GDP data? Research and explore the process of generating market-oriented big data and micro-GDP data, establish an economic analysis model with personal value function as a single variable, and use modern information technology to solve historical problems.

What the current macroeconomic data needs to innovate is to establish a macroeconomic data industry. In the digital economy era, make full use of modern information technology to establish a scientific, dynamic, accurate and timely macroeconomic big data system, and turn this process into a The process of creating value. The Fourth Plenary Session of the 19th CPC Central Committee has made it clear that data is a means of production and participates in the distribution of the national economy. Macroeconomic analysis models can be built on this basis, solving scientific, accurate and timely economic big data, and realizing the scientificity and timeliness of monetary policy.

First, we construct big data of multivariate GDP and design four sectors: household (individual), business, government, and foreign countries. Let Y = GDP, there are four value chain functions f (vf), f (vb), f (vg), and f (ve). Y = f (vf) + f (vb) + f (vg) + f (ve). We distribute the data right to each department and use the income method and expenditure method to solve GDP separately. On the income side, we use labor income, profit income, tax revenue, and foreign exchange net income to express it. On the expenditure side, we use consumer expenditure, investment expenditure, government expenditure, and overseas expenditure. Use v to represent the value variable, and the value of each person is used as the basic variable of the value function. The total social value is equal to the sum of all people's values ​​and constitutes various value functions. Enterprises, governments, and foreign countries are a type of value chain function. The human value V is the total objective function. And V = Y, the two can verify each other. Then:

Y = V = f (vf) + f (vb) + f (vg) + f (ve).

Secondly, the univariate decomposition of the big data model is carried out to establish the market subject and transaction structure of big data. Entrust and confirm the big data of each person so that the relevant data becomes the assets of each subject, establish a balance sheet, and survive statistics. In order to make the model simple and practical, we take the individual as the only subject variable, thereby measuring the value of each person, hosting each person's income and expenditure, and more easily solving the total GDP. In this way, as long as the model can solve the value of each person, the investment and consumption of each person on the expenditure side, and the labor income and capital income of each person on the income side, it can simplify complex problems and achieve docking with digital currencies. , Unified with monetary policy.

Y = V = f (V), V∈ (Vi), i = 1, 2 … n.

Multivariate solution faces many difficulties. In addition to the difficulty of statistics and calculation, there is great uncertainty in the solution and decomposition of the value function of multiple departments and units. But multivariate functions make us understand the transmission mechanism and verification path of univariate functions.

The univariate solution to GDP simplifies the economic analysis process and makes tax verification more feasible. In the overall research path, first determine that the total value of people is the socio-economic total, and the time integral of the value increase of people constitutes a period of GDP (this number automatically eliminates intermediate products and other noise). Secondly, this function model makes the goals and tasks of social production more clear. All economic activities of human beings serve human beings in the end, in order to increase their value. In the past, we used commodities and currency as the target variables of economic development, which led to the misleading of money fetishism and even the direction of social development, leading to disparity between the rich and the poor, and a moral crisis . The third is to use human value as a univariate function to solve GDP, making human value data a real digital asset, and further combining with blockchain technology to generate digital currency, this digital currency is not only a value scale, but also can create value . Once this is achieved, monetary and monetary policy will make a real leap [xvi].

Third, the establishment of consumer big data and investment big data models and micro operation systems

The important function of the market is to discover value and information. Here, we have established a consumer supply chain operation system and an investment value chain operation system. And give these two systems to the market separately.

In the first step, we establish the functional relationship between GDP and human value and consumption and investment:

In the formula, V represents the total value of the person, and v represents the independent variable of the total value of the person, which is still the value of the person. Human value is divided into human value flow vI and human value stock Vw. c represents consumption, i represents investment, rl represents labor income, and rk represents capital income. In this way, GDP represents the integral of the value of all people over a period of time, which is also equal to the integral of the investment and consumption functions calculated by the expenditure method, and also equal to the integral of the two variable functions of labor income and capital income calculated by the income method.

Therefore, solving GDP requires solving the consumption and investment of everyone at the micro level. In terms of income law, it requires the interpretation of everyone's labor income and capital income.

Further research, the production function and economic growth function in Western economics also obey this formula. Therefore, this proposition has no contradiction with traditional economics, and it is also unified with Marx's theory of labor value. Data can solve the value of everyone, and it solves the "Marx problem". [xvii]

Below we analyze the relationship between the production function and the economic growth theory of the Sulow model in Western economics and the human value function. The study found that the theory of human value function is consistent with these two theories. The difference is the production theory and growth theory of human value function, which makes the economic analysis from multivariable to univariate. That is to say, there is only one variable in the complicated economic movement. If we can solve this variable, economics will become scientific and concise. With the development of information technology, the technological revolution has solved this problem for us.

Equations 3 and 4 demonstrate the production function and economic growth function using human value as a univariate. The first is to replace labor and capital with human values, and use labor as the flow of human value, and capital as the stock of human value. In fact, there is also an important significance in optimizing the economic analysis model and making the original function unreasonable. Improved [xviii]. The second is the single-variable production function and growth function. The production and growth theory solved through blockchain and big data is more scientific and accurate, revolutionizing the disadvantages of traditional economics [xix].

In the second step, we need to discover the micro-mechanism of the consumption function and investment function of univariate big data and blockchain model [xx].

An important sign that the world economy is shifting from a commodity economy to a digital economy is that the traditional model of accounting management value shifts to the value of blockchain management. The economy was fissioned, and the joint-stock economy turned to the token economy. The blockchain gives everyone a distributed account to manage and account for the value of people, thereby democratizing the economic system. A stock is a voucher that uses equity as a distribution dividend. However, in the context of the digital economy, everyone's data has value. Participation in distribution will result in a human value voucher-token, which is a value voucher for people. Blockchain accounting. This change changed the distribution system of human beings, so that everyone has the right to participate in distribution. Everyone's big data is scientifically measured and essentially reflects one's ability to create value. The token economy will make the civilization of human society a big step [xxi], fully discover the value of people, better manage the value of people, and create more value for people. Under this system, everyone has a right to freedom based on personal values, and there is no longer any exploitation and inequality.

Here, Token V = bIock (C) + block (i). Big data company B hosts everyone's consumption data and investment data, and legally forms a clear property right through custody and confirmation of rights. This property right participates in the value distribution of big data company B. This process finds accurate consumption data and investment data through Walrasian equilibrium and super accounts, and finally solves accurate GDP [xxii]. Randall Knight's theory is still researched along the lines of utility value theory, and does not consider the revolutionary impact of modern information economics on value measurement and value models. The logic of micro-marketization proposed in this article is that the macro-economic model involves micro-markets and creates value. The theory used is the human value theory based on blockchain. What is interesting is that Knight believes that money creates value, and the process of creation is to expand production by solving the problem of information asymmetry. This article also puts forward the idea that money creates value, because money is the value itself, and money creates value [xxiii]. On this issue, the United States has the means to create value globally and occupy the value of others. The world economy is facing the possibility of being once again occupied and monopolized by the United States.

Fourth, establish an income big data model and operating system. Through the personal value management system, study the stock value and flow value of people, and calculate their labor income and capital income. From the perspective of the production function and growth function of traditional economics, It is logically unified and continuous.

The above discussed the micro-marketization mechanism of monetary policy from the perspective of expenditure (c, i). Below we continue to discuss the micro-marketization mechanism of GDP from the perspective of income (labor income, capital income, data income), and establish a market-oriented operation paradigm .

According to the univariate model of the production function, labor income, capital income, etc. are merged into a human value univariate function y = f (v). Let V∈ (V1, V2 … Vn), and V = f (rI, rk). Well,

Suppose everyone has time value, and each person has a blockchain distributed account that manages their personal value. Each person can trade their future time use rights and earn income in the blockchain account. Capital income as the time value of people in the past can also be converted into time value of people, that is to say, the value of human labor and capital can participate in the production process to create new value. This value can be traded as a token (personal value certificate). After entering the market, national income and GDP will eventually be formed through the enterprise value chain and the commodity value chain. Therefore, the token economy will be very important, and it will be the most important target tool for the future market. Because of it and its market transactions, the data needed for monetary policy was discovered. More importantly, the process of generating this data is a micro-marketization process that creates value, and the token can be transformed into a currency issue mechanism, which is completely realized and discovered objectively by market movements. Money is the value of people, and it is the token [xxiv].

The macroeconomic data measured by the expenditure method and the big data calculated by the income method can be mutually verified. This process is a market-oriented process and is dynamic. The monetary policy framework constructed on this basis is timely and continuous. The central bank's deepening to specific value discovery, management and creation processes is an important feature of the digital economy era. The emergence of the new functions of the central bank and currency depends on the continuous innovation of information technology generated by the technological revolution.

For China, the application of this model will be very important. It can quickly increase the per capita value of Chinese people. If the per capita value of Chinese people is equal to the United States, China's GDP will be 3-4 times that of the United States. The far-reaching significance is that this is a change, an epoch-making change [xxv].

The third question, where does China ’s central bank and monetary policy go? The first step should take full employment as the most important goal of monetary policy, vigorously develop the private economy and small and medium-sized enterprises, and create the world's best business and currency environment for them; the second step is to gradually establish a dynamic, precise, The market-oriented mechanism of macro and micro synergy realizes the value creation function of currency, making China's per capita value catch up with the United States; the third step is to innovate the digital currency system based on human value, and gradually achieve the goal of maximizing human value. Modern and scientific monetary governance system.

In 2020, China's economy and finance will face a more complicated situation and huge uncertainty. From the beginning of the year, the new crown virus attacked the world, the European and American stock markets cracked and fluctuated, and the US stock market even appeared the spectacle of being melted several times in a month. The global economic development was facing a huge crisis. In response to the crisis, the United States offered extremely loose monetary policy, lowered interest rates to zero, and launched policies such as a $ 5 trillion stimulus plan.

We can consider the following special risks that China should pay attention to:

1. The extremely loose monetary policy of the United States may be a global risk. The US dollar is the world's currency. Driven by zero interest rates, a large amount of money from the United States is bound to spread to the world, acquiring global low-cost and high-quality assets, and rapidly converging global resources to the United States and its multinational companies. As a result, the material base of the US dollar has been greatly increased in the short term, forming a new US dollar advantage. Relatively speaking, China has lost its competitive advantage, and even the monetary and financial fields have suffered long-term crushing by the United States. If at this time, the Federal Reserve cooperates with Facebook to launch a digital currency based on the expanded dollar, and this digital currency has a cross-border payment function, then this financial aggression will be fatal.

2. The United States has increased the possibility of financial and currency shocks to China. Combined with the above-mentioned "currency variant attack", China's globalization process must be hindered, and even decades of export-oriented economic achievements may be lost. The US dollar and the US-controlled global financial system are economic disasters no matter what they do to any country. China must take precautions in terms of trade settlement, monetary system, and digital currency, and must not hold any chances.

3. China's domestic risks are still relatively large, and there are "three big cliffs" [xxvi]. The "Munich Security Conference" [xxvii] has actually constituted a "separation strategy" of anti-China forces in the world. Due to the promotion of financial opening to the outside world, financial risk exposure has increased. Economic and financial development faces many bottlenecks such as systems and structures, and it has never been more difficult.

Although China's economic and financial reform and development face huge uncertainties, it also has many advantages, and some advantages are not available in any other country. Therefore, for China's monetary policy, it is necessary to consistently implement the central government's various policies, adhere to a sound monetary policy, scientifically and cautiously promote financial opening to the outside world, and build a financial and currency firewall step by step for camps. In view of the possible problems of "government failure" and "market failure", possible external shocks, and "three major cliffs", the following steps can be considered in steps in the near future:

1. Strengthen the implementation of "full employment" [xxviii] as the most important goal of monetary policy. Check the quantity and quality of full employment. Full employment is actually the maximization of human value. Once full employment is achieved, several other monetary policy goals can basically be achieved. Not only must the number of jobs be increased, but the quality of employment must be continuously improved.

Traditional monetary policy often focuses on the goals of economic growth and inflation. But these two goals are increasingly prone to displaying false signals. The reason is that due to the impact of the scientific and technological revolution, the value function, production function, and growth function have changed from the original linear state to a geometric series of "invisible and multidimensional", and it is obviously wrong to control the growth rate. Coupled with the peculiarities of China's GDP statistics and the particularity of the M2 structure, institutional structural "digital traps" are prone to arise, leading to the "government failure" problem.

In fact, the goal of economic growth is to maximize human value [xxix], and full employment is the sole goal of economic growth [xxx]. Once true full employment is achieved, other goals can be achieved. China has a population of more than 1.4 billion. As long as the value of China ’s 1.4 billion people has increased, it is not afraid of any external shocks. Therefore, China's monetary policy should create the world's best monetary and financial environment for private enterprises and SMEs.

At present, China has a huge space for full employment, and its economic development has serious "underdevelopment" problems. In particular, we must pay attention to changes in the human value function caused by the scientific and technological revolution. This issue requires in-depth theoretical and technical research in the field of monetary policy. In the past, the practice of focusing monetary policy on GDP and M2 / GDP actually caused huge "theoretical inertia trap losses [xxxi]". This problem has always been a global problem. China's economic development and monetary policy must come out of this misunderstanding. China's economic development still has huge dividends, and even the technological revolution can bring China greater institutional dividends than in the past 30 years [xxxii]. In real life, we also deeply understand that there is a huge space to achieve full employment. The value that each of us actually generates is far from what it should be. The fundamental task of the socioeconomic system is to discover the value of people, manage the value of people, and create people. Value to maximize the value of people.

Therefore, if China's monetary policy is adjusted to achieve full employment as the standard for maximizing human value, employment will be both quantitatively and qualitatively sufficient.

2. The second step is to gradually establish a dynamic, precise, market-oriented mechanism with macro and micro synergy to realize the value creation function of the currency and make China's per capita value catch up with the United States.

The reform of the central bank will change from the "credit currency era" to the "value currency era" in the future. Since the time when the central bank was born, it has undertaken the task of creating money, but in the process it has always been accompanied by inflation, so the central bank must both create inflation and counter inflation. Our evaluation criteria for a good central bank is that it creates more money without generating inflation. This process will show that the central bank has created employment and therefore created human value or imported value abroad. Therefore, while the US Federal Reserve issued a large number of currencies at the same time, the US dollar index is still rising, indicating that the US central bank is a very successful central bank because it has successfully imported huge amounts of value for the United States and is a "blood draw machine" for the world. [ xxxiii]. This exploitative nature of the US monetary system must be recognized and debunked. Because China is a relatively independent economy, especially its blood market and finances are not very smooth, and the "blood-sucking model" of the United States is still immature. Therefore, the United States still imposes various economic sanctions and suppressions on China.

Therefore, China's rise cannot depend on the United States and the existing world currency order. Under the current monetary system, China's reform and opening up is full of risks. China must base itself on domestic efforts and increase the value of the Chinese yuan.

In practice, it is necessary to establish the micro-mechanism and market-oriented mechanism of monetary policy. On the one hand, through the market-oriented mechanism, the information system of the central bank, mainly the blockchain and big data systems, is composed of multiple subjects. Make full use of the digital asset mechanism in the digital economy, discover and manage human value, discover and manage consumer big data and investment big data, take these two data as residents' property and participate in the distribution of enterprises and countries, and make full use of market discovery information and The value function can accurately measure full employment and GDP, and realize the accuracy, timeliness and effectiveness of big data on monetary policy. The central bank can purchase services from high-level information technology companies and big data companies that have met domestic standards (such as Ali, Tencent, Baidu, Xiaomi, Zhongke Shuguang, Quanjin Chain, Ping An Yi account, etc.). The construction of enterprise-oriented, market-oriented, micro-scale information systems and operating systems will create a highly sensitive "central brain" for the central bank [xxxiv]. This central brain can discover value, manage value, create value, and dynamically Regulating finance, truly improving financial efficiency, can prevent various financial risks and financial crises, and in particular can accurately measure international financial risk inputs, especially the United States.

What's more important is that the central bank's currency creation process is transformed into a value creation process. Through monetary policy to increase the value of each Chinese person, continuously improve the number and quality of people's employment, and innovate institutional mechanisms to make the average value of Chinese people catch up with the United States in about 5 years, then China's GDP will be 3 to 4 of the United States. Times [xxxv].

3. Innovate the currency system and vigorously develop digital currency based on human value, which will make important contributions to China and even human beings, both theoretically and practically.

Both the Monetary School and the Keynesian School did not realize that "money can create value", and this creative process is divided into two types: intensional creation and extensional creation.

The monetary system studied along the direction of scientific value theory can create value, and the digital currency transmission mechanism is a market process of value creation. At present, the digital currencies launched by central banks in various countries do not have this function. The main reason is that they lack a correct and far-reaching understanding of the law of value, the law of money, and the law of economic growth [xxxvi].

The human value management industry may be the most profitable industry in the future, especially in the context of RMB industrialization, marketization, and internationalization. In the next 5-10 years, China will see "value industries" based on blockchain technology . This industry is caused by changes in the value function caused by the scientific and technological revolution, and through the digital economy and the token economy, China's transition to the third civilization of mankind-the scientific society, has triggered deep social changes. Such changes may become Global benchmarking.

The transmission mechanism of this monetary system has the following points: 1) Use the blockchain's super account to define the value of each person, and generate big data of each person's value. This big data is related to everyone's income function. The big data of the expenditure function are mutually evidenced, and each person's token is generated through the market. The token of human value is digital currency. 2) The consensus mechanism of the blockchain is extended to form a transaction process in the market. Everyone can buy their own time use right in the market, referred to as "time right". This time right is also a personal and time stamp Blockchain token. 3) Use "blockchain + human value" to innovate digital currency, make currency a tool for discovering value, managing value, creating value, realizing value, integrating the value function of currency with currency and increasing the creation of currency Value function, and fundamentally eliminate inflation and deflation. 4) Implement strict and scientific access system and supervision system to prevent and resolve all possible risks and crises.

This monetary system negates the existing credit-based currency system based on the US dollar from the mechanism, and protects the world from dollar hegemony and "pumping blood." The promotion of China's large-scale technology companies to the world will play a key role in the rise of the Chinese nation and make an important contribution to human development.

The new monetary system transmission mechanism is highly compatible with China's existing monetary, economic, and social systems and can be transformed into each other. It is feasible in both theory and practice. What's more important is to maximize the value of people. In essence, it is to realize the freedom of wealth, spirit and life, to achieve the harmonious development of people, people, and nature. The ideological contradictions of the state.

2020 is destined to be an extraordinary year and a year of great turning. The global new crown virus that broke out at the beginning of the year is still in progress. It leaves people with a lot of reflection, most importantly, reflection on values. We must recognize that the theory, system, market, and society of the world and even China need to be reformed and opened up. We look forward to a new theory, an innovative currency and economic system, a new national governance system and social system, a harmonious, healthy, and safe global value and destiny community. There will be no more viruses and no economy or currency. There is no longer "vampire hegemony" and there are no economic sanctions or trade barriers. We look forward to a "new world".

The following sections are notes to the article:

[i] Market failure is also called market failure. It is defined as the problems of moral hazard, adverse selection and free-riding caused by insufficient information and asymmetric information, which make the market pricing function and resource allocation function invalid. Government failure means that when the government's information level is less than the market's information level, the government's macroeconomic policies are invalid.

[ii] Informatization makes the amount of information increase rapidly, and the entropy of information increases rapidly. If this information cannot be better identified and mined, the lack of a systematic scientific value function and objective function will eventually sink in these information entropies and a huge system will appear. Chaos has led to the death of the economy, and in reality many people and businesses are addicted to it.

[iii] The Great Crisis of 1929 was the change in the global economic structure and the disintegration of the gold standard, which changed the original value function. The Hoover Administration believed that the free market mechanism at the time would solve these problems spontaneously, resulting in serious "market failures" and " Government failure ". The global financial crisis in 2007 also rose from the "BRICs", which changed the original value function and production function of the United States, and the "value function variation" caused by the financial bubble, causing the supply and demand chain of goods and the financial chain to both break and explode. Global crisis.

[iv] The wave of informatization and value revolution caused by the scientific and technological revolution are profoundly changing the world. One world is to enter the information black hole, stick to the traditional model, return to vicious competition, and the world economy has stepped into darkness. The other is the new world we look forward to, which is Mankind follows the scientific and technological revolution, studies and recognizes new economic, monetary and financial laws, and recognises new value functions and value laws. The scientific and technological revolution has brought mankind into the third civilization, the scientific society. The first civilization is a primitive society, the second civilization is a class society, and the third civilization is a scientific society. The scientific society is a whole new world. The science here is the word Ology instead of the word Sciense in English. The former refers to a state of civilization and ecology, while the latter is mainly metaphysical positivism.

[v] GDP refers to the gross domestic product of a country, and GNP is the global gross domestic product of its nationals. There are two ways to calculate GDP, one is the output method, which is the total domestic output minus the intermediate product; the income rule is the net income of all citizens for a certain period of time. The traditional method of calculation is GDP = G + I + C + E (where G is government expenditure, I is investment, C is consumption, and E is net export). The income rule is GDP = RL + Rc + RG.

[vi] Evaluation of China's macroeconomic policies is quite difficult and complex. Several important variables and rules in concentration and monetary policy may be more conducive to in-depth problem discovery and solution. Other problems can only be gradually extended and researched solutions. On the surface, we have made various arrangements for monetary policy in an orderly manner based on various common sense, and it is reasonable to see that these arrangements are based on existing knowledge. Once we open a new value analysis and a new information system, we will discover new laws and value functions, and find that many problems and solutions need to be considered. The methods and results are too far away from the new world. And China has its problems, characteristics, and laws that are different from any other country. What needs to be resolved is finding these problems and finding solutions.

[vii] Traditional monetary policy data mainly come from the government's statistical system. However, when the government fails, it is difficult for the government statistics department to obtain these data accurately. Especially under China's current statistical system, statistical errors are quite large, and it is easy to make mistakes in macro-decisions. Therefore, we transfer the work of data collection to market entities, and combine this behavior with market competition behaviors to make these data valuable, and the market will effectively and accurately find this information in a timely manner, thereby improving the effectiveness of monetary policy.

[viii] From my research experience, IMF research conclusions and research methods are basically not applicable. I have attended the IMF's Global Central Bank Senior Management Training Course. Many of the research methods they use are not suitable for China's national conditions. For example, the life cycle curve theory is a tool that the organization often uses to analyze investment and savings rates, but they ignore the countries' Traditional habits and special economic structures. China takes the family as the basic cell of the economy, and the life cycle theory is modeled after the United States and other developed countries take the individual as the basic cell of the economy. The life cycle curves formed by these two structures are very different, one is basically a normal distribution, and the other is Linear upward. The savings rates of China and East Asian countries must be higher than those of Western countries.

[ix] China's GDP has always been difficult to identify, not just for the Bureau of Statistics, but for the particularity of China, which I have long been concerned about. China's M2 / GDP is over 200%, which is obviously inconsistent with China's current financial depth. On the one hand, the molecule M2 may be overestimated by the financial structure problem, mainly because the financial system originated from the planned economy. The capital-oriented direct The insufficient development of the financing system and the currency market has led to the direct financing of China's financial structure, which has led to a large amount of funds being concentrated in the banking system and even idling. On the other hand, GDP is underestimated for various reasons. (In recent years, the disappearance of a large number of micro-gray gray economies has alleviated this problem to a certain extent, and has also greatly reduced the total volume and driving force of China's economy. Thousands of small and micro enterprises in China are like "under Stenda boots" "The ants", self-destruction, and deterioration of the micro-environment, many of these enterprises have embarked on the road of no return, which may be the biggest loss invisible to the Chinese economy. They are the soil for China's economic development.).

[x] The public ownership of the means of production has a great impact on asset prices. It has expanded to the global model and affected its global pricing. We rarely see real estate companies in Western countries purchasing land in China. Foreign residents are rarely willing to buy a house in China. In addition, China's investment figures are also different from those of Western countries. Because the investment is only a right to use the asset. Similarly, the capital market is also difficult to price. As a listed company's net assets, it is only a right of use, which is more linked to the way of use and the age.

[xi] Public goods refer to the government's public facilities, which provide residents with services and consumption for free. In developed capitalist countries, this is part of fiscal budget payments and transfer payments. But in China, a large number of state-owned enterprises also participate in the production of public goods or the production of "quasi-public goods".

[xii] So far, the housing of civil servants in China's state organs has been divided. It is said that the institutional cafeteria of Xinhua News Agency is very good, and it can be said that the food per meal exceeds the level of the upper and middle families in the UK. Therefore, millions of students apply for national civil servants every year in China because the differences between the system and outside the system are too great. Many phenomena have formed the "aristocratic class of the Public Service House", and officials and officials help each other, which makes many families enjoy government dividends even for generations.

[xiii] Give some examples around you. I'm in Beijing and I often take a taxi. Through communication with the driver and my own investigation and statistics, there are about 70,000 regular taxis in Beijing, and an estimated 150,000 non-regular taxis in Beijing. The ratio of white to gray is 1: 2. . If each black car earns 50,000 yuan per year, the total annual income should be about 8 billion, which is not even a modified tricycle. Beijing's bicycle roasted sweet potatoes are estimated to have a population of 10,000; Beijing's waste purchases are also tens of thousands; the sale and lease of small property houses is even more amazing. According to data, there are 6 billion square meters, equivalent to the total real estate development in the past 10 years. . Recently, I went to Changsha for three days. Three of the six taxi rides were in black cars and I talked with the drivers. They said that there were six or seven thousand regular taxis in Changsha, and there were 10,000 black cars. There are 7 black cars in the small Orange Island.

[xiv] In the United States, GDP is analyzed and counted by the Department of Commerce. The practice is to estimate and count quarterly. Each time after the preliminary estimates are published, the first revision & the final revision will be published twice, mainly in the third week of each month. GDP is usually compared with the same period of last year. If it is increased, it means that the economy is faster, which is conducive to the appreciation of its currency; if it is reduced, it means that the economy is slowing down, and its currency is under pressure to depreciate. For the United States, a 3% increase in GDP is an ideal level, indicating that economic development is healthy, and higher than this level indicates inflationary pressure; a growth rate lower than 1.5% indicates economic growth. There are signs of easing into the recession. In addition, the GNP of the United States is very large. There are a large number of multinational companies in the United States that produce globally. It is obviously not enough to use the indicator of GDP to evaluate the US economy.

[xv] The Microfoundation of Monetary Policy is a book published by Fudan University Press in 2010 by Chen Xuebin. The "Micro-foundation of Monetary Policy: A Dynamic Simulation Study of Consumption and Investment Behavior of Chinese Residents" is a monograph on "Dynamic Simulation of Consumption and Investment Behavior of Chinese Residents". Research on the theory of time preference and risk preference in investment decision-making, consumption and investment simulation analysis based on time-varying time preference.

[xvi] In traditional economics, the value of a commodity or price is used as the main variable of a value function. This function model is contrary to the original meaning of value. Value is a kind of usefulness to people, and value is also created by people. The value function is a continuous function. This function changes the three breakpoints of the previous value function: supply and demand breakpoints, market and society breakpoints, and human and nature breakpoints. The greatest significance of the technological revolution and the information revolution lies in the value revolution, especially the blockchain technology and big data technology, which enables everyone to discover, manage and innovate the value, and integrates currency with its fundamental function-the value scale. Eliminates the possibility of inflation and deflation. Currency can create value, the key is what currency. This is probably the most important function and significance of the new digital currency.

[xvii] Marx's theory of labor value has two important problems. One is that Marx's solution to value also starts from commodities, and considers labor as a function of commodities. Second, due to the limitations of the era's technology, Marx could not solve simple labor and complex labor, and adopted the average method. It is this treatment that ignored the importance of the difference in human values ​​and fell into egalitarianism. This was also one of the important difficulties that many socialist countries later faced.

[xviii] In the original production function p = f (I, k), labor and capital were separated, and the correlation between these two variables was hidden. In western economics, the logarithmic exponential method is also used to divide k Transformation into I, this transformation has increased the difficulty and uncertainty of economic analysis. If the calculation is based on a single variable of human value, this problem can be circumvented and the production function and growth function can be unified. A more in-depth study will also find that the revolutionary significance of the human value function model is that it no longer uses the utility value theory for the Walrasian equilibrium study of microeconomics, but instead introduces blocks on the basis of the Walrasian model. This research is even more interesting with chains and big data, and using them to solve the Walrasian equilibrium and the Phillips curve.

[xix] An important disadvantage of traditional economics is its non-scientific nature. The main reason is that its basic theory-utility value theory is subjective and human perception is incalculable. This theory has introduced the study of human economics. " A Hundred Years of Misunderstanding ". This problem exists in many current theories and requires serious reflection. Whether it was Adam Smith or Marx, they were great and valuable in the historical context of the time as a theorist, but any theory is only a small part of human society at a certain point in time. They are not enough to be dogmatic and metaphysical. In principle, these two theories are affecting Chinese and Western cultures and models, and they should be constantly developed and changed.

[xx] In this part, I have studied the "all-gold chain" model, that is, the global consumer supply chain and investment value chain model. This model is microscopic and market-oriented. Asset custody turns these data into means of production, mobilizes the market's value discovery mechanism and incentive mechanism, and solves macroeconomic data. In China, the government's central enterprises or state-owned enterprises should be involved, or the government (People's Bank) should involve large domestic technology companies in operations through service outsourcing. SMEs are involved as market makers.

[xxi] We call this civilization a "scientific society" because its operating logic is scientific and it uses the highly developed information technology, blockchain technology, big data technology and artificial intelligence technology to calculate the value. From a historical perspective, mankind will enter the "third civilization"-"scientific society. The first civilization is a primitive society, which is distributed by human physical strength, and the second civilization is a class society, which is distributed by human ownership of the means of production. The third civilization is a scientific society. Based on science and technology + market calculation of human value distribution, this value can be (block chain + human value): token.

[xxii] Randall Wright, one of the most academically influential scholars in the field of contemporary monetarism. He is currently a senior professor at the Wisconsin Business School, an advisor to the Minneapolis and Chicago Federal Reserve Banks, and a fellow at the National Bureau of Economic Research. The main research directions are monetary theory, macroeconomics, and labor economics. His research in the field of monetary theory is very groundbreaking, and is the forefront and main representative of currency search theory. According to Randall Knight's research, the micro-foundation of monetary policy assumes that the production and exchange of commodities is not based on the frictionless Walras market, but that there is always a situation of "double matching of demand and unsatisfaction". That is, in the case of face-to-face transactions, individual consumption preferences and social division of labor determine that in most cases, the two parties to the transaction cannot barter, and we call this "search friction." In such a market, it is obvious that the transaction will encounter difficulties. This requires some recognized medium of exchange to make the transaction easier to reach, and this medium is currency. In the presence of currency, even if your counterparty does not like the commodity in your hand, you can still exchange currency for the commodity in his hand, because he expects that he can also exchange the commodity he wants with this currency. From the perspective of game theory, this constitutes a monetary equilibrium. Compared with no monetary equilibrium, in most cases, the two parties will give up the transaction. Currency equilibrium makes everyone happier because trading becomes easier. At this time, fiat money realized its positive value endogenously.

[xxiii] Therefore, we should pay more attention to major changes in US monetary policy in 2020. On March 16, 2020, Federal Reserve Chairman Powell announced that in response to the global new crown pneumonia virus and the stock market crash, a currency of US $ 5 trillion and zero interest rate was launched. In a combination of policies, under the conditions of an open economy, these currencies will actually extract the "sweat and sweat" of people around the world and create great value for the United States. This is because the US dollar is the world currency. Under the new value theory, it Will freely occupy the value of people in various countries around the world.

[xxiv] There are various interpretations of tokens. The token defined in this article refers to the value certificate of a person. As for the token economy, it has aroused the attention of all countries in the world. Germany and the United Kingdom have issued national token economy strategies. Following the launch of Bitcoin, Ethereum and other technical tokens in the United States, Facebook is studying the launch of a digital currency that replaces the US dollar. Combined with the current extremely loose monetary policy in the United States, it is likely to use Libra as a platform to create The token of human value created digital dollars and ruled the world currency for another 100 years. In this model, more factors are good for China because there are more Chinese. So the future international competition is the competition of human value and currency competition based on this. It comes to mind that China's digital currency design must be combined with human value.

[xxv] If it was said that the Shang Yang Reform led Qin to move from a slave society to a feudal society, the productive forces increased rapidly and eventually unified China. Then, the change referred to in this article will make China transition from a class society to a scientific society, and will certainly make a huge contribution to the community of human destiny.

[xxvi] The three major cliffs mainly refer to the huge gaps between finance and the real economy, the value and price of RMB, house prices and the real income of the people.

[xxvii] While discussing the lack of the West, the Munich Conference actually attempted to build a policy enclosing China. Some European countries are also exploring how to reshape the West. For example, Swedish Foreign Minister Holberg invited Denmark, Germany, Finland, the Netherlands, and the Czech Republic ’s trade ministers to meet in Stockholm on February 18. The background of this meeting is that France, Italy and even Germany are pushing the new European Commission to implement stricter trade defense and looser subsidy policies, and cultivate more heavyweight "European champions" to confront China. These measures reflect the rising trend of protectionism, which has hit European liberals. The Swedish initiative is intended to reawaken the forces of liberalism in Europe.

[xxviii] China's monetary policy includes four major goals: economic development, full employment, price stability, and balance of payments. These four goals are interdependent and mutually restrictive.

[xxix] The core question of economics is to study the value of people or the value of commodities? This is an important issue. Value is a kind of usefulness to people. Economics studies value, so economics studies the value and price of people. Once the value or price of a person is solved, the price of the commodity can be calculated. The key is to solve this problem. Both the production function and the growth function in economics can be solved. Marx also divided the value of goods into use value and value when analyzing goods. In fact, people should study use value more. A major contribution of the information revolution caused by the scientific and technological revolution to mankind is that human value can be accurately measured and managed! This change in the value function will have a profound impact on economic theory, financial theory, and monetary theory, and even have an important impact on the history and historical research of human society!

[xxx] The objective function of the economic growth function is the value of people, not the value of goods. The significance of this transformation lies in the continuity of economic analysis, that is, the production of goods is to increase human value, and at the same time, value is also created by humans. One important significance of the new crown virus that occurred in 2020 for human beings is the transformation of achieving this growth goal and the transformation of the value function. This transformation has epoch-making significance. In the new value function, the value of money and people are integrated, there is no longer inflation and deflation, and once the value of people and the value of money are integrated into one function, full employment will enhance international competitiveness and achieve international income. Support balance.

[xxxi] Many tragedies in human society are because they put themselves in a "thinking cage" and they don't know it, even generations.

[xxxii] According to my research, China's economic development has six major dividends: institutional dividends, labor dividends, science and technology dividends, resource dividends, internationalization dividends, and ecological dividends.

[xxxiii] The U.S. stock market plummeted by the new crown virus at the beginning of 2020, and the Fed used this as an excuse to sacrifice super-loose monetary policy, which is a reshuffle of wealth around the world, and needs to be taken seriously by countries around the world. Opportunity, play the role of the world currency of the US dollar, and acquire global assets under the guidance of zero interest rates, this will be disastrous for other countries outside the United States. This can explain why backward countries such as South America, Africa, and the Middle East are always getting poorer (now the former Soviet Union region has also entered this trap), that is, the United States can use these market mechanisms and currency mechanisms to occupy these countries for free. the value of. In fact, the entire world is producing for the United States, but the existing president of the United States is not satisfied. He believes that the United States is not enough to exploit, and it still suppresses these countries by every means (just like the cruelty of slave owners to slaves).

[xxxiv] Many of our current "central brain" cells are transplanted, especially in theory, they are basically controlled by the United States, and are not accessible or even numb to the central nervous system. Your expensive problem has never been resolved because the nerve center of this system is numb and numb between the macro and micro, the government and the market.

[xxxv] The information revolution is actually rapidly improving the learning speed and labor efficiency of the Chinese people. The scientific and technological revolution can promote a profound "value revolution" in China, so that the average labor productivity of the Chinese people can rapidly increase, catching up within 5 years Or beyond America. The Chinese nation is a hardworking and intelligent nation. It should be possible to achieve this goal. Therefore, China's economic development should not set a GDP ceiling target, or even assess GDP, but it must set a full employment target and a per capita value target.

[xxxvi] As far as China's upcoming DECEP is concerned, its function is still a credit currency, and it can only replace part of the cash. It is only the digitization of a legal credit currency and cannot create value. This design is inadequate in currency theory and value theory, and needs to be improved.

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