Why money? Why wealth? Money itself is not wealth, but simply because money can be easily bought and bought into real wealth, money becomes a symbol of wealth. The great powers not only pursue physical wealth, but are also very good at playing the game of wealth. The so-called "wealth game" is when the great powers themselves print virtual wealth tokens (their own currency) and then take these virtual wealth tokens in exchange for the real physical wealth of other countries, and when the amount of virtual wealth tokens that other countries have is sufficient, they create a financial crisis to eliminate it on a large scale. With the recent currency war in full swing, let's look back at the famous ten currency wars in history and hope to be inspired by them.
It is well known that the world's earliest money exchange was introduced in China during the Northern Song period. After the practice of the Yuan and the Golden Age, the development of paper money in the Yuan Dynasty was quite mature. But by the middle of the Ming Dynasty, although the issuance and circulation of paper money was legally guaranteed by the court, it caused severe inflation due to the overproduction of paper money in the court, which eventually had to be withdrawn from circulation and replaced by white silver.
At the same time, driven by the desire for gold and silver, Spain and Portugal actively supported the shipping industry, opening new routes directly to India and China. Establishing overseas colonies, pillaging local gold and silver, completing the primitive accumulation of capital, Europe gradually rose.
When China established a silver-based system, Europe implemented a gold-silver dual-based system, in which gold and silver circulate as money at the same time.
China's huge demand for silver has led to high silver prices, and Europeans have been shipping silver to China to make huge profits. These shipments to China include silver mined in the Americas and currency withdrawn directly from European circulation. Large quantities of silver have been withdrawn from circulation, resulting in a widespread shortage of silver in Europe, causing inflation.
In order to resolve the currency disorder under the gold-silver replacement system, Britain decided to re-coin the currency in 1696, but this failed. In 1717, Newton suggested that silver should no longer be minted and gold should be priced.
Thanks to Newton's contributions, Britain pioneered the establishment of a gold-based economy in Europe, and the gold-silver coupon purchases in countries with a widespread gold-silver replacement economy in Europe created huge gold reserves, thereby establishing British financial dominance.
In the early 20th century, the world's territories were partitioned, with Britain holding the largest share. The pound, with the rise of the pound flag, spread to all corners of the globe and became the world's currency at the time.
When the pound became the world's currency, it had endless magic. First, it collected huge coin taxes from the world, and second, it had the power to regulate the world's currency.
Britain's position as the world's currency not only earned it huge global gains, making it the superpower of its day, but it also delayed the decline of the hegemony of the British Empire. To this day, Britain still benefits from its position as the world's currency.
By about 1893, the United States had overtaken Europe as the world's first economic power and gradually widened the gap between Europe and the United States. After World War I, Europe was in ruins, British power was greatly weakened, while the United States grew stronger in borrowing, a third of the world's gold flowed to the United States, the dollar became hard currency, and New York replaced London as the most powerful financial center. By the end of World War II, two-thirds of the world's gold was in American hands.
In July 1944, 44 nations convened the United Nations and the Allied Powers International Monetary and Financial Conference in Bretton Woods, New Hampshire. After 20 days of heated debate, a compromise monetary agreement was finally reached, led by the United States' Dwight Plan and the United Kingdom's Duncan Keynes Plan. The result was the so-called Bretton Woods monetary system.
In the early days, the Bretton Woods system was relatively stable. The world economy grew rapidly, and the size of the dollar was also growing rapidly, but the growth of gold was very limited. Therefore, the dollar should depreciate relative to gold, but the Bretton Woods system also requires the dollar to remain stable and strong, thus creating the Pantheon dilemma.
After 1958, the United States' persistent balance sheet deficit caused a worldwide flood of the dollar, the devaluation of the dollar shook confidence in the dollar, and people threw the dollar out to buy gold, the large outflow of U.S. gold reserves, and a surge in foreign short-term debt. To maintain the stability of the dollar, the United States introduced a gold duopoly and special drawing rights in consultation with the members of the gold reserve, but never fundamentally solved the Triffin dilemma.
On August 15, 1971, Nixon announced the launch of a new economic policy in the United States, the core of which was to decouple the dollar from gold, and the United States would no longer exchange gold for any other country, and the Bretton Woods system would survive.
As a result of exploitation and oppression, Latin American colonies fought for independence in the late 18th and early 19th centuries, but national independence did not help Latin American countries enter the life of their dreams, and Britain and the United States replaced Spain and Portugal as the new colonialists of the enslaved Latin American people.
Afterwards, the United States used the neoliberal exports of cocaine to Latin America by the Chicago school, which did in the short term alleviate Latin America's economic difficulties, but instead led to the country becoming increasingly dependent on foreign debt.
In 1979, the United States tightened the dollar and raised the federal funds rate. Due to the inability to pay the debt, the unpaid interest was re-calculated in the capital, and the more the debt accumulated. By the end of 1985, the total debt had risen to $800 billion, the so-called Latin American debt crisis.
In order to pay off their debts, Latin American countries began to print horsepower, which led to severe inflation. In 1990, the average inflation rate in the entire region reached 1491.5%.
For the United States, the enormous amount of dollars floating outside the US mainland that threatened the national security of the United States had to be destroyed on a large scale. The destruction of the enemy's coins had to be done first by finding targets, which were mainly in the foreign exchange reserves of governments, and Japan was the country with the largest foreign exchange reserves at the time. Unfortunately, Japan was doomed to be looted by the United States.
In November 1983, U.S. President Reagan visited Japan, where he proposed to the Japanese Prime Minister that the Japanese yen should be adjusted to the dollar to achieve the internationalization of the yen, and proposed the establishment of a special committee on the yen-dollar.
On September 22, 1985, the United States, Japan, West Germany, Britain, France, and Central Bank of the United States, led by the US Secretary of the Treasury, reached the Shanghai Agreement.
The five governments intervened in the foreign exchange market, selling off the dollar, causing a sell-off among investors. The US thus destroyed Japan's foreign exchange reserves on a massive scale. The fall of the Yangtze Square Accord brought Japan not only a stock market crash and the bursting of the housing bubble, but a complete financial defeat.
In December 1991, the 46th summit of the European Community was held in Maastricht, the Netherlands, and the Treaty of Maastricht was signed. In addition to changing its name to the Treaty of the European Union, the Treaty explicitly stipulates that the European Central Bank will be established by 1 July 1998 at the latest and that a single European currency, the euro, will be introduced on 1 January 1999.
The Puma proposal immediately stimulated the sensitive nerves of the Americans. If a single European currency, the euro, were to be introduced in all EU member states, then transactions in EU member states would no longer require the dollar, and the strong strength of the EU is quite possible to support a strong euro currency. This is unacceptable to the Americans, and the birth of the euro currency must be prevented as much as possible.
After the unified floating exchange rate system and the merger of the two Germanys, the Finnish mark, the Italian lira, the British pound and the French franc fell into decline and were significantly devalued.
In 1995, the yen suddenly depreciated, causing Asian exports to fall and economic development to slow down. To maintain the high growth rate, Southeast Asian countries adopted a strategy of increasing the inflow of foreign capital to boost economic development. Unfortunately, in the 1990s, Southeast Asian countries made the same mistake that Latin American countries made a decade ago, with large amounts of foreign capital being used to create economic bubbles or consumed, which provided an opportunity for the poaching of international capital.
On 2 July 1997, the Central Bank of Thailand was forced to declare a hunger strike after a Soros-backed hedge fund attacked the Thai currency. The failure of the Thai currency triggered a domino effect, and Southeast Asian currencies sold out in the foreign exchange market. In July, the Philippines' massive intervention in the peso failed, and the peso began to depreciate significantly.
Hedge funds swept through Southeast Asia, pointing their fingers to the north.
In 2007, the sub-prime crisis in the United States hit the US financial sector and the global financial markets. The sub-prime crisis then evolved into a global financial disaster, with financial and economic shocks and losses in many countries.
In retrospect, rather than saying that it was Wall Street's greed and fraud that created the crisis, it was the overconsumption of the American people and the electoral politics that determined the inevitable outbreak of the crisis.
Surprisingly, at the height of the financial crisis, the dollar was at an innovative high, not only because Europe's economy was worse than the United States, but more fundamentally because the dollar was heavily repaid, causing global dollar tensions.
What's behind this currency war?
These two currency wars also began with the US secondary debt crisis, which triggered the global financial crisis. At the time, the US Federal Reserve implemented quantitative easing, US debt rates fell, and global capital shifted to a prosperous Europe. The scenery of the eurozone was endless, and there were also comments on the market that the euro would replace the dollar. However, the prospects were not good, US rating agencies downgraded the ratings of countries such as Greece, and the eurozone debt crisis was gradually triggered.
The contemporary opinion circles have also turned to praising the emerging economies as the new saviors of the emerging economies, and they have praised the emerging economies for the recovery of the world economy. Among them, the most prominent are the gold-rich countries Brazil, Russia, India and China. The foreign media have once again come up with a good way to kill: let's hurry to replace the evil dollar.
The United States is slowly recovering under the guise of a smoggy economy, and the central banks of the world are in a state of shock after the US Federal Reserve issued a wind of quantitative easing this year. At this time, the eurozone's economic recovery is suddenly faced with new problems, and it is necessary to continue monetary easing, and Japan is on the path to a massive monetary stimulus policy.
After reviewing all this, the hidden BOSS of the US, which had been a poor trailblazer for global waterlogging, was finally exposed. Let's clean up the entire path of the currency crisis: sub-debt crisis, global financial crisis, quantitative easing of capital flows to Europe, US rating agencies downgrade the debt ratings of several countries in the eurozone, the outbreak of the eurozone debt crisis, the depreciation of the euro, the inflow of hot money into emerging countries, Asia and other emerging countries, the emerging countries' economy overheating, the emergence of bubbles, the outflow of capital, the emerging countries' economic crisis, the rise of cash, the decline in the US investment rate, the recovery of the economy, the recovery of the economy, the decrease in the value of exports, the global countries facing more capital withdrawal, the countries having to take measures to restore the normal growth of their domestic economies, the return of capital flows to the US.
In this era of global economic downturn and decline, the US economic data is positive, as the world's number one power, the attraction of capital is unparalleled. The capital that has turned around, the bloodthirsty capital that has turned around the world, the profits that have been generated and the smooth return to the United States. The capital flow back into the US industries, further promoting the American economic recovery, the economy into the positive cycle. This is what the United States has simultaneously triggered two currency wars.
In such a situation, the US is now like a sword with a sword in its hand, which can be wielded at will to make the other opponents jump. Russia has tragically become the first testbed for the US. While Europe, Japan and the emerging economies can only hope for monetary easing to revive the economy. Who remembers that the first to drag us into the mud was the United States, when the eurozone and the emerging economies had no limits?
Translated by insking