Last month, I studied Professor Fu Qiang's course on macroeconomics. In class, the teacher discussed the relationship between the central bank, commercial banks, and enterprises, which was a very interesting description.
First, let's look at some basic concepts:
: Directly provided by the central bank to the economic entities (printing money)
: Created by the commercial banking system through credit creation (lending)
Base money is the foundation of broad money
Bank lending is an important part of money creation:
It’s not enough for the central bank to just print money; it needs the support of commercial banks, and banks need to lend in order to have liquidity. Only then can the economy function.
In Japan, however, the central bank charged negative interest rates (-0.1%) on excess reserves deposited by commercial banks in an attempt to encourage them to lend to enterprises. But the commercial banks were unwilling to lend, and good companies were also unwilling to finance further investments for future development.
If all loans were repaid, bank deposits would cease to exist, and the entire monetary circulation would dry up. This is a startling thought. We (the Federal Reserve) completely depend on commercial banks. Every dollar in our monetary circulation, whether in cash or credit, must be borrowed to come into existence. If commercial banks create enough money through lending, our economy will flourish; otherwise, we will fall into recession.
- Robert H. Hemphill, Federal Reserve Bank of Atlanta
Helpless, the Bank of Japan had no choice but to step in personally and start lending itself.
We lead the cattle to water and tell them how good it tastes, but they refuse to drink. So we should drink the water ourselves to show them how good it tastes.
- Miyako Suda, former member of the Bank of Japan
As a result, the Bank of Japan has now become a major shareholder in Japanese listed companies. However, relying solely on the central bank's efforts cannot bring about economic prosperity.
In this process, none of the participants are doing anything wrong from a local or short-term perspective. But from an overall and long-term perspective, it has led to the stagnation and decline of Japan's economy.
The same situation applies in corporate management:
The core team is akin to the central bank, responsible for formulating monetary policy and fiscal policy. The core management team is responsible for positioning, building a good corporate culture, setting strategies, and finding appropriate paths.
The management team is similar to commercial banks, responsible for issuing loans to excellent enterprises and helping them grow. The management team helps teams grow and leads them to achieve better results.
Each team member represents a company. Excellent companies must continuously invest in the future and enhance their competitiveness. Team members also need to invest in themselves, delay gratification, step out of their comfort zones, and accept greater challenges.
Every element within this system is important. Only when all three elements can continuously iterate and grow, constantly break through self-imposed limits, focus on long-term benefits and global optimal solutions, will the organization have vitality, the economy prosper, and everyone's opportunity cost receive better returns.
Finally, let us return to the history of the Ming Dynasty:
When Li Zicheng was about to attack Beijing, Emperor Chongzhen asked his ministers for donations, but each minister claimed poverty. The next day, they all wore tattered official robes, appearing extremely impoverished. For these officials, life would go on as usual even if there was a change of emperor.
Chongzhen failed to raise sufficient funds to resist Li Zicheng's attack, and eventually Li Zicheng entered Beijing.
Emperor Chongzhen hanged himself, and Li Zicheng ascended the throne. However, when Li Zicheng checked the treasury, he found only a few hundred thousand taels of silver, which shocked him. He realized that the treasury was truly empty, having been embezzled by corrupt officials. Thus, he began to pursue the recovery of stolen funds through General Liu Zongmin. While Emperor Chongzhen sought 8,000 taels, Li Zicheng demanded 80 million taels.
Ultimately, all the ministers were tortured to death.
By March, the capital fell. Jingwen died, while Zhaode, Yuegong, and Yu were captured and imprisoned by Liu Zongmin. The rebels ordered the cabinet to pay ten thousand taels of gold, seven ten-thousand taels for the imperial court and Jin Yi officers, or five-three ten-thousand taels, with varying amounts for censors, inspectors, ministry officials, and scholars ranging from five ten-thousand to one ten-thousand taels. Departmental officials were required to pay several thousand taels, while noble families had no fixed amount.
- "History of Ming"
People are often bound by immediate interests, focusing only on local optimization and vying for power and profit. Paying attention to long-term interests and realizing that the team's well-being ensures my own well-being is not something that comes naturally. From a psychological perspective, it belongs to the part of developmental achievement and requires unlocking to gain such mental maturity.
Self-motivation.