The Research On The Abandon Of Money Target In U.S. From Fictitious Economy Perspective

The intermediate target of monetary policy is the essential part of monetary policy, in which proper choice of intermediate targets could significantly promote achieving the ultimate objective of monetary policy. In different historical periods and macroeconomic backgrounds, individual countries selected different intermediate target variables corresponding to their actual situation. This paper reviews the development of intermediate target of monetary policy in USA from 1970 to 1990, summarizes the reason to quit the money supply as the intermediate target, and indicates the development of fictitious economy is the key point to reduce the efficiency of setting money supply as the intermediate target, since the influential of fictitious economy to money supply and money demand has to be considered when money supply been used as the intermediate targets of monetary policy.Firstly, this paper epitomizes the continent and standard of monetary policy intermediate target, and summarizes the selection process of monetary intermediate targets and the background of fictitious economy development. Through the combination of the Quantity Theory of Money and the background of fictitious economy, the paper establishes a new analysis structure to reveal the interaction mechanism between fictitious economy with money supply and money demand, and interprets the grand challenges of setting money supply as the intermediate target in USA. Finally, we re-examine the current choice of the intermediate target of monetary policy in China, and closely monitor and track the impact of the fictitious economy on the intermediate goals of money supply.