Recently, the housing prices in Beijing and Shanghai have also started to show signs of activity, especially for school district housing. Those who are interested can pay attention. The stock market has risen sharply in the early stage, but it seems that it can't keep rising recently. The U.S. stock market has soared, and many friends are puzzled, unable to understand why stocks and housing prices are still rising when the economy is so bad now.

Let me talk about the logic behind these things, I will write a short article for everyone to understand. Once you understand these, you will know why the rich become richer during every economic crisis. If you have some money in hand, you will know how to invest next time. Also, I will organize the posts of these days.

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1. Massive Money Printing

Every time there is an economic crisis, banks lend a large amount of money, and the market is filled with a large amount of currency.

In fact, no country's government says that they like to print money, and it is often a forced move. For example, this year, the epidemic has hit hard, and many companies seem to have a lot of money on their books, but they can't actually get the money because their money is often owed by others. When others' business is affected, they also have no money, and this causes a deadlock. Everyone has no money in hand, and business cannot be carried out.

If the government doesn't intervene, these companies may all go bankrupt, leading to massive unemployment and countless bad debts. For example, if this company owes a lot of money to the bank, and if it goes bankrupt, it can't even repay the bank's money.

So, cash needs to be injected to let these companies ease the pressure and not die first. This kind of capital injection is called "money printing," and the money printed is not given for free, but is lent out through loans.

However, the intentions may be good at the top, but the implementation may be distorted. For example, at the beginning of this year, there was a surge in housing prices in Shenzhen, which was actually the relief funds for small businesses provided by the government, but they were used by everyone to speculate on housing.

Now, the most active country in the world in printing money is the United States. The U.S. government gives money to ordinary people and large companies, and this money will eventually flow to the whole world to buy things (this is also why our country can't give money, our money can only circulate within the territory, giving money will lead to inflation). For example, after the U.S. dollar comes to China, it cannot circulate within China and will be exchanged for RMB. A large influx of U.S. dollars will lead to a significant increase in the domestic currency of China, which is called imported inflation.

In addition, Chinese banks have also lent a lot of money to companies, so there is a lot of money in the market.But at this point, everyone should have noticed the problem. It seems like a lot of money is being released, but the ordinary people do not actually have more money in their hands.

Yes, this is the problem with banks giving out money. Banks are the most biased towards the rich. The rich have more assets and sufficient collateral, so banks are willing to lend to them. In addition, large enterprises are also the focus of banks, but the money never reaches the hands of ordinary people.

2. What to do with the excess money

Suppose you are an entrepreneur. After an economic crisis, it was originally difficult to get through, but now you have a lot of money in hand, what would you do?

Eating and drinking will not spend much. If you deposit it in the bank, the interest is not much. If you want to increase its value, you can only think of selling something that can appreciate.

What is it?

Different countries have different answers to this question. For example, in the United States, Americans like the stock market the most, and their pensions are also in it. When the stock market rises, everyone benefits, and they have a consensus that "the stock market will keep rising."

This is very different from the Chinese understanding. Chinese people generally believe that houses are the ones that will always rise, and they are full of distrust for the stock market.

For example, in the past few days, the stock market has just risen for a while, and various institutions are already discussing how to leave. Everyone feels that each stock has reached its historical highest value, and they are afraid that others will leave, and they will be buried if they can't leave. Everyone thinks this way, and the stock market can be good if there are ghosts.

The stock market is originally a good reservoir, but Chinese stock investors do not have martial virtues. They want to run as soon as it rises a little. The Chinese stock market will always be in the current unfortunate state unless it cleans up most of the retail investors and only leaves institutions, just like in the United States.However, the Chinese believe that houses, especially those in first-tier cities, inherently possess a strong financial attribute. Once purchased, they are basically impossible to devalue, and can be listed for sale at any time when money is needed.

Everyone should pay attention that the price increase of a house is not important; what matters is the ability to sell it, otherwise, it becomes like a diamond. Diamonds may look expensive, but they are actually hard to sell. The real estate in second-tier cities also has this problem. Some houses look very expensive, but it is difficult to sell them. They are listed online for half a year. In professional terms, this is called "poor liquidity," which is also why the housing prices in first and second-tier cities will diverge significantly in the future.

So, when the wealthy have money, they will prioritize investing in houses in first-tier cities. After all, these houses can be sold quickly if they urgently need money.

This is why, at the beginning of this year, despite the severe pandemic, the housing prices in Shenzhen soared, and now Shanghai and Beijing are also showing signs of rising.

3. Upward Channel

Generally, when everyone focuses on buying a certain thing, it will drive up the price of that thing.

The most obvious example is this year's stocks. If you pay attention, you will find that many people have made a profit this year, and there is even a saying that the average person has made a profit of 100,000 (mainly due to the large profits of institutions).

In the future, everyone must pay attention. If a crisis occurs, almost 99% of the time, there will be a monetary easing, which will drive up assets and various things priced in US dollars, such as iron ore. In this situation, it is often possible to make a profit by investing blindly, and it is easy to pick up good things at the bottom.

Speaking of this, people may not understand, if there is a crisis, what to do if there is no money in hand?

There is no way out. Now you know why every crisis makes the rich richer, right? The rich have money in hand, and it is easier for them to make money during a crisis because it is easier to borrow money during a crisis. They buy assets, and the assets appreciate. The middle class will use the money they have saved and the loans they have obtained from the bank to take over, and then they cash out by selling their assets.Of course, the rich are not a monolithic entity. Some people have earned their wealth, having weathered several cycles, so they understand these principles and naturally know how to operate. However, there are others whose wealth seems to come from nowhere, certainly not earned through hard work. In such situations, these people's money is often lost completely.

Now, if housing prices in the first-tier cities like Beijing, Shanghai, and Guangzhou start to rise and the government doesn't want them to, is there a way to prevent it?

Absolutely, it's very easy. Most of the money used to buy houses is borrowed. By introducing loan restrictions, only allowing the wealthy to play and not letting the grassroots middle class borrow money to take over the market, housing prices won't rise. In fact, every time the government has suppressed housing prices in history, it has basically done so through this method. There is a popular saying in the real estate speculation circle, "Loan restrictions are the ultimate move." Once loans are no longer available and leverage is gone, there is no way to take over the market, and the game cannot continue.

Let's stop here for now. If you have an urgent need to buy a house in a first-tier city, don't waste time reading articles and looking for experts these days. Go see houses over the weekend, get a real feel for it. A transaction worth millions of dollars requires careful attention.