Chapter 63 The reason why the US dollar can become the world currency is because of its hegemonic status!
After being silent for half a stick of incense, Ling Han asked, "Teacher Xiao Chen, since you said that the monetization of silver will do all harm but no good to the Ming Dynasty, then there should be a better way to solve the problem of the Ming Dynasty. It was a difficult situation at the time.”
Chen Han's tone was still heavy: "Actually, I just said the solution, but you, the village chief, didn't listen carefully."
Ling Han was confused: "Did you just say that?"
He turned around and looked at Zhu Yuanzhang, Zhu Biao and his son.
The father and son sat on the chairs and shook their heads, indicating that they did not know clearly.
I haven't heard Chen Han say that there is a currency that can replace the current status of silver.
Chen Han even criticized Ming Baochao for being like that.
It is said that Ming Dynasty banknotes have depreciated like waste paper. People have long lost trust in Ming Dynasty banknotes.
If you lose the trust of Ming Dynasty Baochao, what else can you do? They were all very confused for a while.
And then Chen Han didn't sell it, and explained directly, "The real solution is to issue banknotes with national credit, such as Jiaozi in the Song Dynasty, Baobao in the Yuan Dynasty, and Ming Baobao in the Ming Dynasty.
This is already the most advanced currency issuance theory in the world so far.
After various failed case tests of the gold standard and the Bretton Woods system, it has been shown that no currency can have a single anchor, not silver, not gold, not oil. "
After Chen Han finished his conclusion, Zhu Yuanzhang, Zhu Biao, Ling Han and the others looked shocked.
I never thought that the answer was hidden in it.
Chen Han indeed said that the issuance of banknotes was definitely a huge economic innovation, and it was also one of the most advanced monetary theories after the economy developed to a certain level.
It's just that they have been stuck in the same rut, that is, the Ming Dynasty banknotes have depreciated to such a degree that they cannot be saved at all. The people have long lost their trust in the Ming Dynasty banknotes and cannot use them at all.
So I always thought that the issuance of Baobao was wrong.
But he didn't expect that in Chen Han's eyes, the issuance of banknotes was right.
Moreover, banknotes issued with the credit of the country are one of the most advanced monetary theories so far.
This was something Zhu Yuanzhang and the others never thought of.
Chen Han explained, “The issuance of credit currency in ancient China was led by accident for more than 1000 years under a situation that no one expected.
To prove this statement, we need to start from the beginning.
First, let’s talk about the three mainstream currencies in human history, the silver standard, the gold standard, and national credit currency.
There is not much difference between the gold standard and the silver standard. The only difference is that gold is worth more than silver.
Because it is more scarce and more stable.
Silver will turn black and deteriorate when exposed to the air for a long time, but gold's various chemical properties are very stable and have a long-term value retention, giving it properties beyond ordinary metals and becoming a natural currency.
Due to the universal recognition of gold throughout the human world, it has become an anchor for various countries' collections and linked to their own national currencies.
A large number of countries issue currency based on the amount of gold they own. This is the gold standard.
Since Newton formulated the gold standard as a national policy for the British Empire, it has been promoted to the whole world through the huge influence of the British Empire, and once monopolized most most famous example of the gold standard is the Bretton Woods system.
After World War II, the entire world formed a pattern in which the United States was the hegemon. The United States wooed major Western countries and held a meeting at a club in Bretton Woods. The main content of the meeting was to directly link the . dollar to gold, while other countries' The currency is pegged to the US dollar.
This resulted in the hegemony of the US dollar.
Under the auspices of the Bretton Woods system, the . dollar became the world currency.
Central banks in other countries have reserved . dollars as their main foreign currency.
Since three-quarters of the world's gold reserves were in the United States at that time, central banks in various countries that wanted to issue currency had to purchase gold from the United States with equivalent . dollars, thereby supporting their country to issue currency based on the amount of gold it owned.
In this way, the United States has the ability to harvest the entire world.
But the lessons of history show that the United States under the Bretton Woods system did not fully prevail in this way.
After the Korean and Vietnam wars, in order to pay for huge military expenditures, . dollars began to be printed uncontrollably, and soon exceeded its gold reserves, causing inflation around the world.
So in 27, Nixon had to announce the collapse of the Bretton Woods system. This system only lasted for a short [-] years.
It can be seen from this that limiting the anchor of currency to gold has huge limitations.
The stability and scarcity of gold are a double-edged sword. Its advantage is that it is stable and not easy to deteriorate, but its disadvantage is that it is too stable and scarce to be able to issue additional currency to adapt to the market. Once the issued banknotes exceed the gold reserve, It will cause inflation.
After the collapse of the Bretton Woods system, the United States immediately anchored itself in oil.
It is probably due to the acceptance of the failure of the Bretton Woods system. In addition to visible tangible materials such as oil, the anchors of the United States are the US dollar foreign debt reserved by foreign banks and the countless overseas institutions established by the United States itself. Hegemonic means such as oil export controlled by military bases.
I have said so much just to tell you, the old village chief, something very important.
There can never be a single anchor for any currency.
Silver doesn’t work, gold doesn’t work, and oil doesn’t work.
The only thing that can truly serve as an anchor is the . dollar.
The reason why the . dollar has become the world's currency is that the .'s economy, technology, military, etc. have occupied a dominant position in the world, thus forming national credit.
Since the United States leads the world, no country will be able to shake the United States' dominance in a short period of time.
Therefore, its currency is regarded as the most stable currency by other countries, and everyone is willing to recognize it.
In transactions between countries, everyone is willing to use . dollars for transactions.
Because the dollar is linked to the hegemony of the United States.
So so far, if we insist on finding the only anchor for the US dollar, it is the United States' transcendent hegemony over the world.
It is totally feasible to place these in the Ming Dynasty, because the Ming Dynasty has something that can also have such influence. "
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(End of this chapter)