news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

i don't know when the fed started to meddle in other people's business and started to care about employment. whenever the employment situation is bad, they will release money to save the economy. when the economic situation is particularly good and the unemployment rate is very low, they will start to tighten the currency to protect the value of the dollar.

developing the economy and ensuring employment should be the government's responsibility, and the central bank's primary responsibility remains to maintain currency stability.

paper money has been destined to depreciate continuously since its birth, but even so, mankind should not return to the barbaric era of the gold standard.

1. why is gold a relic of barbarism?

1. human society has long been in the era of metal currency

for thousands of years, humans have always used gold and silver as currency or copper coins and cloth as general equivalents.

gold and silver can only be mined, traded, or robbed, but there is no way to print them out for no reason. cloth has been used as currency for a long time, after all, you won't starve to death if you skip a meal, but you can't go out without clothes.

until modern times, the issuance of paper money required sufficient gold and silver as reserves. it was only after the disintegration of the bretton woods system in 1971 that human society began to independently issue paper money based on economic conditions. this was only more than 50 years ago.

to this day, there are still people calling for a return to the gold standard, but the wheel of history keeps moving forward, and we have finally gotten away from gold, so how can we go back?

2. insufficient money has always been a chronic disease that restricts the development of human civilization

according to the productivity level in ancient times, both mining and business were hard work, and plundering gold and silver through war was even more risky.

even if they made money through business, many people were unwilling to let their descendants endure the hardship of running around. after all, road transportation was inconvenient in ancient times and long-distance trafficking was extremely risky. not only were bandits rampant, but heavy taxes were also levied at various checkpoints.

in ancient china, many merchants would buy houses and land after making money, and dig a cellar to store silver for their descendants, rather than improving technology to expand reproduction. there are still many spectacular earthen buildings in the south, many of which were built by overseas merchants in the qing dynasty with silver earned from the west.

the reason why the west had a long and dark middle ages was largely due to the long-term deflation. after the fall of rome, european civilization was interrupted for a while, but chinese civilization has continued to this day. given that chinese civilization has been ahead for a long time, the west does not have much to sell to the east.

china and the west have a history of trade for thousands of years, and the west has been in a trade deficit for most of that time. ten ships set out from china, loaded with porcelain, tea and other handicrafts. nine of the ten ships returned empty, and one was full of silver.

things didn't turn around until spain drove away the arabs and the ambitious royal family began to fund columbus's great voyages. although the indigenous people of south america suffered a catastrophic disaster, a large amount of precious metals flowed into europe, eventually promoting the industrial revolution in the west.

3. the development of human society is a history of constantly getting rid of the control of precious metals and moving towards freedom

the storage and mining of precious metals are limited, but the development of human civilization has not yet seen an upper limit.

if gold and silver were still currency, and mankind had not entered the era of paper money, productivity would not have exploded as it has today.

suppose a country has only 1 million gold, but its productivity explodes and its gdp reaches 2 million. the consequence is that prices can only fall by half, a large number of factories go bankrupt, and debtors are burdened with heavy burdens.

the money supply must be consistent with the development of productivity, otherwise wealth will be created but there will not be enough funds to realize the circulation of goods.

even though the construction project has been completed, there is not enough money to settle the project payment, resulting in the construction industry, from upstream design institutes and raw material suppliers to downstream contractors, all workers have no money to get.

in this situation, paper money came into being. as long as a country's currency issuance does not exceed the scale of economic growth, it will not lead to serious inflation.

for example, china's gdp is 100 trillion rmb, and its annual economic growth rate is 5%. as long as the annual money supply does not exceed 7%, there will be no serious inflation, people will not lose confidence in the currency, and the normal life of residents will not be disturbed.

4. in the era of paper money, humans must learn to coexist with inflation

in the era of paper currency, inflation has become a normal phenomenon. even if nothing is done, prices will rise every year. the scale of currency issuance must be appropriately higher than the actual economic growth rate.

if the amount of money issued fails to keep up with the rate of economic growth, deflation will occur, and over time all industries in the market will be depressed.

modern society is a credit economy, and most companies sell and buy on credit. if the money supply is in short supply for a long time and there is not enough capital in the market, the payment for goods sold on credit cannot be collected. if the payment cannot be collected, there is no way to settle accounts with upstream suppliers. over time, a large number of small and medium-sized enterprises will go bankrupt one after another.

2. without paper money, there would be no technological explosion today

the more developed the economy is, the higher the degree of social organization is, and only through large-scale socialized production can costs be reduced.

only massive capital investment can improve infrastructure, update machinery and equipment, and cultivate skilled workers.

these investments are difficult to achieve through the accumulation of individual households, and funds must be raised from the entire society through the capital market.

1. if there were no stocks, we might not have trains now.

marx also said that if there were no stocks, we might not have trains now. he fully affirmed the great role of the capital market.

the capital market, which plays a huge role in modern society, historically originated from the notorious colonial plunder.

the earliest company was the east india company, which was established by westerners in order to trade and plunder in the east.

the west plundered enough funds from the new world through capital market fundraising to continuously improve its financial system.

it is precisely because of the developed and perfect financial system that we can accumulate small amounts into large amounts, continue short-term investments into long-term investments, and provide a continuous supply of funds for the real economy.

without banks absorbing short-term deposits from small and medium-sized savers, there would be no way to accumulate large amounts of funds.

there are depositors depositing money today and depositors withdrawing money tomorrow, so there is always a large amount of long-term funds in the bank account.

through the method of maturity conversion, banks can lend large amounts of long-term funds to enterprises to purchase equipment, build factories and expand production capacity.

but even so, the rate of increase in productivity is still much faster than the rate of mining of metal currency.

in the era of metal currency, the capital market mainly focused on pooling funds, accumulating small amounts of money into big amounts, and turning short-term funds into long-term funds, but there was no way to create money out of nothing.

2. without getting rid of gold, human civilization cannot reach a new level

the main reason why the great capitalist crisis that affected the whole world broke out in 1929 was that the gold standard was still in place at that time. without enough gold, there would be no way to issue enough paper money, and without enough paper money, the government would have no way to rescue the market.

in the end, they could only watch the crisis ferment, a large number of companies went bankrupt, a large number of workers lost their jobs, and eventually the outbreak of world war ii.

given the current level of global governance, the financial crisis of 1929 was not that serious.

if the government and central banks had sufficient means to deal with the crisis, the tragic world war ii would not have broken out.

humankind is advancing in twists and turns through trial and error. without the painful experience of world war ii, people would not have made up their minds to abandon the gold standard and fully embrace credit currency.

after all, once the issuance of paper money is not constrained, it is particularly easy to lead to inflation. once inflation occurs, it will be very difficult to control and will eventually evolve into a social crisis.

3. the current internet revolution is completely dependent on the paper currency system

if we were still on the gold standard, many things that we are familiar with would not appear, there would be no internet and no smart phones.

as we all know, china's public opinion circles have always been in turmoil. not only do internet platforms not speak for china, even the official media do not speak for the chinese.

in fact, the reason is very simple. the internet exploded in the mid-to-late 1990s. at that time, china happened to be in the process of reforming its state-owned enterprises. limited resources were all used in state-owned enterprises. there was not enough money to cultivate new industries.

after joining the world trade organization, traditional industries have relied on exports to generate funds, continuously purchased equipment, built factories, and conducted research and development to gradually achieve technological breakthroughs and industrial upgrades.

china's internet industry has been developed from the beginning by overseas students. these students went to the united states, learned internet technology, made connections on wall street, and finally returned to china with funds and technology to start businesses and replicate the american model in china.

today, all large internet platforms have foreign backgrounds. they were started through venture capital in us dollars or japanese yen, and then grew bigger and stronger by raising large amounts of funds through listing in the united states or hong kong.

4. today’s technology is developing at an accelerated pace

without the massive printing of us dollars after 2008, dong ge would not have had so much funds to build his own logistics system.

without so many years of loose monetary policy, how could the smartphone industry chain have defeated feature phones represented by nokia in such a short period of time?

in the past, new technologies were difficult to implement and took a long time to industrialize. in modern society, technology is advancing very fast. as long as a technology can be implemented, a large amount of capital will directly enter, promoting rapid iteration of technology and quickly occupying the market.

the premise of all this is that there is no shortage of funds in the market. as long as there is a new breakthrough direction, large amounts of funds will come along, from the initial angel round investment, to the subsequent a round, b round, c round, until the final exit through listing.

3. leaving gold is equivalent to quitting your job to start your own business

1. the bretton woods system began to disintegrate in 1971

after world war ii, the western world established the bretton woods system, in which the us dollar was pegged to gold, other countries' currencies were pegged to the us dollar, and the united states guaranteed to redeem one ounce of gold at a fixed price of us$35.

it is precisely because there is sufficient gold as a reserve for issuance that the us dollar is called the american dollar, and other countries can use the us dollar as an international reserve with confidence to conduct international trade.

this system operated for more than 20 years. due to the function of the gold standard in stabilizing currency value and the long-term peaceful environment after world war ii, the western economy was able to recover and ushered in the golden 20 years.

after world war ii, germany and japan were vigorously transformed by the united states, which eliminated militarist factors, achieved a certain degree of social equality, and eliminated many obstacles to economic development.

during the cold war, japan and germany became the bridgeheads of the confrontation between the united states and the soviet union. in order to support these two countries, the united states no longer restricted their industrial development. instead, it opened its market to them, transferred technology, and turned these two countries into export-oriented economies, which continued to expand exports to the united states.

gradually, the united states changed from a country with a trade surplus to a country with a trade deficit, and other countries accumulated a large amount of us dollars. in addition, during the vietnam war, the united states was extremely unlucky, and the huge military expenditures led to excessive currency issuance.

these over-issued us dollars were held by other countries through import and export trade. western countries, represented by france, were worried that the united states would not be able to redeem gold, so they began to sell a large number of us dollars in the financial market and redeem gold for shipping back to their countries.

in 1971, because the united states no longer had sufficient gold reserves, nixon had to announce a suspension of gold redemption. in the end, there was no way to redeem gold at all, and the bretton woods system collapsed.

this was a thrilling leap in human monetary history. we now think that this was the starting point of the us dollar hegemony, but at the time people were extremely frightened and did not know how the economy would develop in the future.

2. in the past few decades, china and the united states have been a de facto monetary alliance

in order to save the credit of the dollar, the us government made a lot of efforts. in 1972, nixon visited china, sino-us relations eased, and the united states was able to get out of the quagmire of vietnam and get rid of heavy military expenditures.

it also provided security commitments to saudi arabia, requiring saudi arabia to settle its future crude oil exports in us dollars. this is the famous petrodollar.

this was not enough, and the united states underwent a painful and long-term economic structural adjustment, and finally began to emerge from the quagmire of stagflation in the 1980s and the economy recovered.

during this period, the united states also experienced a painful tightening policy. from 1979 to 1981, the federal reserve raised interest rates sharply from 10% to 20%, causing many small and medium-sized enterprises to go bankrupt, and eventually brought inflation down.

many people are grateful to the united states for allowing china to join the world trade organization in 2001. this was actually a decision made by the united states for its own interests. after joining the wto, china's production capacity exploded, greatly suppressing inflation in the united states and making a huge contribution to the stability of the dollar.

over the past 20 years, the united states has fought two wars and spent countless military expenses, and invested huge amounts of money to establish the internet and smartphone industry chains. despite spending so much money, the value of the us dollar remains stable. if it weren't for china's production capacity support, the us inflation would have skyrocketed long ago.

for so many years, china and the united states have been a de facto monetary alliance. after the collapse of the soviet union, both the japanese yen and the euro were able to challenge the us dollar. it is precisely because of the close cooperation between china and the united states that the united states has been able to use its financial and military strength to continuously weaken and suppress the euro.

in the 1990s, japan was actually able to integrate asia and make the yen and the dollar compete with each other. after china joined the world trade organization, its economy exploded. in addition, after junichiro koizumi came to power, he visited the yasukuni shrine, which completely made japan lose its ability to integrate east asia.

3. america can no longer be great again

some people say that even though the u.s. interest rate has reached 5.5%, historically the federal reserve has raised the interest rate to 20%, so the u.s. still has room to raise interest rates and may not necessarily cut interest rates in the near future.

the current situation is completely different from that time, and there is no comparison at all. after all, the us national debt was not that large at that time, and the us dollar had not yet achieved global hegemony because the soviet union was still in power.

if the united states allowed inflation to run rampant, it would surely fall behind the soviet union in international competition. in order to preserve the status of the dollar, the united states was willing to bear the cost of austerity, but even so, president carter failed to be re-elected in 1981.

the struggle between the two parties in the united states is now extremely fierce, and no party is willing to sacrifice its own interests for the benefit of others.

during biden's term, if the united states can continue to raise interest rates as aggressively as it did in the early 1980s, coupled with limiting government spending and carrying out drastic industrial restructuring, the united states may still be able to restore its former glory.

it’s a pity that biden is unlikely to sacrifice his party and personal interests to save the united states. doing so would save the united states but sacrifice the democratic party and his own family.

now that the united states can no longer sustain its high interest rates, someone must bear the responsibility for the failure of the financial war. biden and his son are very likely to bear the blame, because it was biden who methodically messed up the us financial war.

since the collapse of the bretton woods system, the us dollar has gradually gained global hegemony, and it has only been more than 50 years to date.

according to the chinese, death before the age of 60 is called premature death, while death after the age of 60 is called natural death.

i don’t know how long the us dollar hegemony can last.