Chapter 90 Important Characteristics of a Good Currency

For ordinary people, money is both familiar and unfamiliar.Familiarity is because people use money every day, and strangeness is that people do not understand how money comes from.Simply put, currency is a receipt of wealth, and currency can only be issued with wealth as collateral.So what is wealth?Wealth is the variety of goods and services created through the work of people. People hand over their labor income to the society, and the society gives the receipt of wealth as a voucher.The reason why everyone accepts this kind of receipt is that people can use this kind of receipt to go to the society to exchange the fruits of other people's labor they need when they need it.

Receipts of such wealth constitute the basic means by which societies exchange ownership of wealth.Therefore, currency determines the distribution and flow of social wealth.If anyone can tamper with the currency, he will be able to change the ownership of wealth without anyone knowing it. Manipulating the value of currency is quietly transferring the wealth of society. It is precisely because currency is the core means of social wealth distribution, so the core basis of currency is the moral principle, that is, who exactly does currency serve.In the western monetary theory, the issue of the moral principle of currency is avoided, and this is precisely the most unavoidable issue of currency.

Without the moral principles of money, there would be no basis for a just distribution of wealth in society.A society that lacks a fair distribution system will inevitably condone the theft or even plunder of wealth.Few people realize that the root of widespread social injustice and the divide between rich and poor lies in the immoral monetary principle. On the basis of the moral principles of currency, any kind of good currency must meet the following conditions at the same time: · Monetary sovereignty is complete; ·Excellent currency credit; · Strong currency usability; Good currency stability;

· Currency is easy to obtain; · High currency acceptance. Currency sovereignty means that a country can fully control its own monetary policy, and the currencies of other countries have no decisive influence on it. For example, the pound sterling in the 19th century and the dollar in the 20th century, other countries basically have no say in their monetary policies. Currency credit means that currency issuers never break their promises and are deeply trusted by the public.A negative example is that the US dollar's "quantitative easing" policy has been criticized by various countries, but they still go their own way and use the excessive issuance of US dollars to covert debts in disguise.There is also Chiang Kai-shek's French currency and gold coupons, which were dishonest and repeatedly deceived the public, and finally ended up being completely abandoned, ruining the currency and losing the country.

The usability of currency is reflected in its ability to purchase the desired goods. No matter how high a currency’s claimed value is, if it cannot buy what it needs, then it does not have the usability of currency.If a consumer needs to buy oil, he can buy it in dollars, but not in yen.The less restrictions money has on purchasing goods, the more useful it is. Currency stability means that the purchasing power of the currency can maintain its value. For example, the British pound and the U.S. dollar in the gold standard era can maintain basically stable purchasing power for hundreds of years. In 1664, 1 pound can buy the same amount of beef after 250 years. In 1800, 1 pound Dollars, by 1939, could buy basically as much bread, a good sign of stable purchasing power. In 1971, the U.S. dollar was decoupled from gold, and 39 years later, its purchasing power has shrunk considerably. The U.S. dollar has lost about 90% of its purchasing power.

It is also important to obtain currency easily. Without sufficient financial infrastructure, the cost of currency acquisition will be relatively high and the time will be relatively long.If people traveling overseas need to obtain RMB, it is basically useless, because not all banks have RMB deposits, and if they have to obtain it, the time and cost will be very alarming. The acceptance of currency is essentially the size of the circulation domain of currency and the wide range of people who are willing to accept it.Holding renminbi is not a big problem in Hong Kong, and you can still walk in Southeast Asia, but it may be very difficult to go to other places.This is even more so in the field of international trade.Currency swaps are a good idea, but there is still a long way to go.

If the renminbi is to become a world currency, the above issues must be taken seriously.To be sure, the gap is still huge.In addition to the large gap between the strength of the currency and the international currency, another important factor is that China lacks the mentality to become an international currency.This is evident in the exchange rate confrontation between China and the United States.