Chapter 73 The Golden Circle's Last Struggle

Hyperinflation only shows one problem, that is, people's complete abandonment of government paper money.The root of the fiat currency bankruptcy is a serious fiscal deficit, and government spending is 10 times more than tax revenue!Printing banknotes became the main means of making up the deficit, and paper credit would soon go bankrupt.When people no longer trust paper money, prices rise even faster than money can be printed. In the first half of 1947, the issuance of paper money tripled, while the price of rice rose sevenfold, people were no longer willing to exchange goods for paper money, and commerce and production shrank due to the lack of credible currency, further weakening the government's tax.People have regarded banknotes as hot potatoes, and once they get them, they immediately throw them out and exchange them for physical products. As a result, prices soar and hyperinflation is out of control.At the same time, hyperinflation has led to the loss of people's confidence in the government, the middle and lower classes have become more hostile to the authorities, and riots and riots have occurred one after another.

The root cause of the fiscal deficit was the all-out civil war launched by Chiang Kai-shek.The consumption of the war seriously depleted the financial resources of the national government. By 1947, the military expenditure of the national government accounted for half of the fiscal expenditure!The continuous defeat in the battlefield has aggravated the people's suspicion of the government's banknotes.In this vicious circle, the fiat currency moves towards its ultimate collapse. In order to clean up the mess of legal currency, Ji Chaoding urged the government to carry out the reform of gold-dollar coupons.Since legal currency has no credit, new currency must be issued to rebuild currency credit.Citing classics, Ji Chaoding talked about how Schacht in Germany used the land rent mark to replace the Weimar mark, thereby reversing the hyperinflation in Germany in the 1920s in one fell swoop.He spoke clearly and logically, and the senior officials nodded frequently.Therefore, on August 20, 1948, Chiang Kai-shek carried out what is known as the world's largest currency system reform-the reform of the gold circle coupon. [21] The core of the gold circle certificate is to use the gold circle as the currency standard, with 40% of gold, silver, foreign exchange and 60% of state-owned assets as collateral to issue a "fully prepared" new currency, with an upper limit of 2 billion; stop legal currency Circulate, and exchange 1 gold round coupon for 3 million French currency to return the old currency; all the gold, silver and foreign exchange of the people are redeemed within a time limit, and the common people are not allowed to privately own gold, silver and foreign exchange, and those who violate it will be confiscated.At the same time, people's deposits abroad must be registered and declared, otherwise they will be sentenced and their property will be confiscated.

It was basically robbery with open fire.The common people are not stupid. When they heard that the government is going to introduce a new currency, people who have long lost trust in the government immediately rushed to everything they could buy. "Ta Kung Pao" reported on October 7: "The market in Beiping is deteriorating day by day, and panic buying has spread throughout the city. The rice, wheat and grain stores have long been empty, and the black market for cigarettes is full of asking prices, and the number changes every day. Citizens always ask 'how to get it' when they meet. .Daily necessities and so on are all rare goods.”

The situation in the capital Nanjing is not good either. "Central Daily" reported: "In today's capital, after a rush of buying, the market is empty...housewives can no longer buy anything they need from the small market in the morning. Pork has long since disappeared, fish, shrimp, chicken and duck , have also 'retired' with pork, Nanjing's vegetable market is a standard vegetable market, except for wealthy families who seek high prices on the black market, the citizens can only naturally pursue vegetarianism." In Shanghai, where the market is the most prosperous, panic buying is also the public's response to the golden round coupons. The November 1948 issue of "Haiguang Monthly" introduced the scene of panic buying in Shanghai: "It happened to be Sunday, which excited the panic buying of Shanghai people. Nanjing Road was unusually lively, crowded with people, just like ants moving, and there were swarms of people on the road. The four major companies, department stores, silk shops, and cotton shops are all crowded with people, and these people can be said to have surplus purchasing power. Ordinary small households compete for food, sauce gardens, Chaidian and Nanhuodian buy daily necessities such as rice, oil, sauce, sugar, soap, etc. For ten days in a row, the store windows are all sold out. Walking into large and small stores is like entering a cold temple. Although there are pilgrims for sightseeing, there are no Bodhisattva, this situation has devastated the people who have no food and no food. They run all over the street and line up everywhere, but they still can’t take care of their heads and feet. They are either worried about rice, or vegetables, and firewood. paralyzed."

The "full preparation" promised by Chiang Kai-shek is nothing more than a scam. 40% of its gold and silver foreign exchange have long been insufficient, and 60% of marketable securities are just a cover. No one cares about the stock offerings of several companies, but their prices are calculated at high prices.Even so, the promised upper limit of 2 billion gold round coupons was broken immediately, reaching 8.3 billion by the end of the year; in January 1949, it exceeded 20.8 billion; in April it exceeded 5 trillion; in May it reached an astonishing 68 trillion! The provinces have broken away from the central government's gold round notes and issued their own silver and copper dollars.When the People's Liberation Army fought the Yangtze River, the national government's currency system had completely collapsed, its finances were completely paralyzed, the army was on the verge of collapse, and the Jiang family dynasty was at the end of its rope.

The famous American scholar Fairbank later analyzed that the little remaining wealth in the hands of the most anti-communist urban upper middle class at that time was tied up in gold round notes, and the last support of the common people for the cause of the Kuomintang disappeared like the gold round notes. The blockbuster "bad idea" of the "golden coupon reform" that Ji Chaoding participated in the design finally ruined the country of the "party state"! After completely losing the support of the people, the "party-state" was so poor that it only had money left, and finally returned to Taiwan with only 2.5 million taels of gold.

Currency is a country's wealth distribution system, and any manipulation of currency will change the flow of wealth in society, thereby intensifying social conflicts, destroying government credibility, and losing public morale.Currency is the blood circulation system of the national economy. Currency corruption will disintegrate the economy, paralyze finances, destroy trade, and overturn the market.Ji Chaoding directly injected the super virus of "struggling with the people for profit" into the currency blood of the Kuomintang, and then circulated in the entire economy, directly accelerating the collapse of the Kuomintang regime.From this point of view, the lethality of the Ji Chaoding currency war is no less than a million soldiers on the battlefield!