On The Relationship Between Monetary And Economic Development

It is a fact that the relationship between finance and modern economy is more and more close, the effect of finance is more and more important. The economic crisis of 1930s' made people realize that finance influence the economy deeply. And people even call the economic crisis of Asian happened in 1997 as "The financial crisis of Asia" directly.Why finance has a so important status in economy?The basic reason comes from money. Money is the core of finance. The finance has so important status, it is because that it is the main representative field of money, and the relationship between money and the development of economy is more and more close.The clue of the beginning part of this article is : first , find the basic force which push the wheel of economy forward , second , analyze the relationship between money and this basic force, and with the analysis of this relationship infer the inherent relationship of money and the development of economy. This train of thought is the clue of the first chapter, and it is also make up the frame of the third chapter: first segment, discuss "division of labor" which is the basic force of the development of economy; second segment, discuss "exchange" which is the tie between money and this basic force, and make it clear that exchange is a very important factor for the division of labor; third segment, analyze the relationship between money and exchange, and emphasize that money is very important for exchange. The conclusion of the first chapter is: the division of labor is the basic force of the development of economy, and exchange make the system of the division of labor become more effective, and money is the important factor which decide whether exchange can give its effect, and it even can make exchange become much more effective。 The origin of money is come from exchange, and the development of money also comply with the development of commodity exchange. However, the development of money itself will also do something on the development of commodity exchange and economy. And how important of those something is the main problem we will discuss in the second chapter "the influence of the development of money on the development of economy". The main direction of our study in chapter two is the relationship between the development of money and the development of exchangeFollow the clue of the development of money, we divided the development of money into three phase: commodity money, metal money, credit money. And take the link point of metal money and credit money as a boundary, we call the money in the front of this link point as commodity money and the money after this link point as un-commodity money.Compare the money's development with the development of commodity economy of the same time, we got some of the conclusion in the second chapter. In these conclusions, there are two things which are very important: first, in the early time of the development of money, the main problem is to resolve the convenience of exchange. And for this reason, money developed from many kind of commodity into a single thing---metal, and then develop from the form of weigh into the form of coin, and also make the expensive metal getting rid of the cheap metal. And with the scale of the commodity exchange becomes more and more large, the main problem of the development of money changed into how to satisfied the more and more big demand of money in quantity by commodity exchange. This problem made money developed from the form of metal into the form of credit at last. Second, money's change from commodity money into un—commodity money cause the most famous economic crisis in human history---the big depression of 1930s, the main idea of this conclusion is: the contradiction between the more and more large demand for money with the development of economy and the limitation of the quantity of the metal money made the money itself changed from commodity into un—commodity money ,and the un—commodity money is the credit money which is produced by bank. However the spontaneity of credit money system is not mature, and this un-maturity lead to the collapse of itself in 1930s, and this collapse of money system made the system of division of labor which take money as its exchange medium can not continue to work.We had use a lot of words to discuss the second conclusion. The reason is: for the economic crisis , Keynesianism has its own authoritative analysis, and give a effective macro economy policy correspondingly. And the more important thing is that supporting by the effectiveness of its policy, Keynesianism deny thoroughly the basic thought of laissez-faire which direct the development of economy, and lead the thought of economy into the time of macro-control. The focal point of our analysis is to discuss the money substance of "deficiency of effective demand" and the substance of effective marco—economy—policy, and the final aim is to show that free competition should also be the basic leading thought in the development of economy. And the substance of macro—control is to stabilize credit money.We mainly discuss the influence come from our nation's money to our nation's development of economy in the back part of this article. Leading by the conclusion of second chapter we divided this part into two sections---third chapter: section of antiquity, fourth chapter: modern section.The conclusion of second chapter: cheap metal is not helpful for the development of economy, and the main problem of money development changed into how to satisfied the increasing demand of money by the increasing quantity of commodity make up the basic thread of the third chapter.According to this clue, the main problem we discussed in the third chapter is : why our nation's development of economy fall behind the west after the 15 century? Why commodity-economy grow up rapidly in the west but slowly in our nation? Can we find some reason from money to explain this problem?After the analysis of the third chapter, we got those main conclusions: taking cheap metal coin as main money is a important reason that made our development of economy fall behind of the west. Not only because that cheap metal coin is not helpful for the development of commodity exchange, the more important thing is that it restrict the expanding of the scale of commodity exchange by the quantity of money. And we used the equation: MV=PT, in order to make the analysis more clear.Our nation's antique money's influence on the development of economy is the main problem that we discuss in the third chapter. And the time scope of this "antiquity" is mainly from Tang to Song dynasty. Because in this period, our nation had a very good chance to develop developed commodity economy, and avoid the fact of falling behind the west. And we also add an additional segment at the end of this chapter specially and tryingly to analysis the reason of why we use cheap metal money in antiquity.The main problem that we discuss in the fourth chapter is the money's influence on our development of economy after the Reform. In the beginning of this chapter, according to the conclusion of the second chapter, we discuss the relationship between credit money and the development of economy. By contradict the basic assume of "Keynesianism", we try to make it clear that the effectiveness of macro economy policy is not the result of the interfere of economy. In the times of credit money, the essence of the relationship between money and economy is the relationship between government and economy, and whether the macro economy policy can stabilize the work of economy effectively depend on whether it keep the stability of credit money. This conclusion is the basic theory basis with which we analyze other problems in the fourth chapter. From the direction of money, we divided the development of economy of the Reform into to part. First part is the period of inflation (1979—1995), second part is the period of deflation (1997—2002). The analysis of this two part make up the back two part of the fourth chapter.