Observing the establishment of the modern monetary system from the perspective of the rise and fall of currency and hegemony

The economic system of the world today is far more prosperous than any time in human history. Commodities and currencies are circulating around the world and the Internet at an astonishing speed. The turnover rate is also beyond the reach of the ancients. This depends on shipping The development of air transportation, the instant supply of fossil energy, and the dollar currency system that dominates the earth today.

In the ancient world thousands of years ago, human beings relied on barter as a means of material exchange. However, this method is very inefficient. When both parties have the goods that each other needs, the transaction can be successfully completed, but otherwise the transaction will be blocked. It was difficult. At that time, there were no merchants who could store and handle a large amount of goods. Therefore, currency was on the stage as a great invention in human history, and the invention of currency also solved three major problems. 1. Measurement and pricing: Currency used to exist in the form of precious metals or food. Setting an absolute value system helps people calculate profits and losses when trading, reducing the frictional cost of trade. 2. Transaction medium: When currency is invented, the transaction does not need to find the goods the other party wants, and it can be paid directly in currency, which facilitates life. 3. Storage of value: products such as milk and eggs spoil quickly at room temperature, while precious metals have stable physical properties, are not easy to volatilize, and have low storage costs. It is so easy to corrupt. According to the records of the New Tang Book, it can be stored for nearly ten years under good preservation. Of course, there may be hidden dangers to health, but the ancients did not know it)

The earliest large-scale monetary system can be traced back to the currency reform of Solon in Athens, Greece, which completed what may be the first inflation in history by changing the way of weights and measures. Then went through the era of the Roman Republic and the Roman Empire. The currency minted in Rome became the standard in the Mediterranean region. It was circulated and used in Europe, Asia and Africa. With the expansion of the Roman iron shoe, it grew into the largest system. It is worth noting that bad money chases good money. The phenomenon of coinage was also discovered at this time. There will always be someone who intends to scrape some powder from the heavy coins, and the ancient weighing technology is not very accurate. In the long run, the wear and tear of the currency circulating in the market is much higher than normal, and Many people will keep beautiful and important new coins, and use a lot of worn out old coins to circulate in the market, and scraped metal powder will be collected and re-minted in currency factories, which also completes the process of inflation.

Another important phenomenon is that the standard-exporting countries not only export currency, but also generate large fiscal deficits. As the standard in the Mediterranean region, the currency of Rome is also adopted by other countries and used in circulation. Therefore, the outflow of currency has led to the insufficient circulation of currency in Rome itself, which has caused deflation. In order to solve this situation, the Roman authorities only Fiscal spending can be increased to address the austerity. But the financial discipline is also destroyed, and with limited precious metal stocks, it is tantamount to drinking poison to quench thirst, and this situation will recur in future empires.

The same situation was repeated in the Holy Roman Empire of the Eastern Roman Empire after that, until things changed after the 15th century. After the end of the plague of the Black Death, another major problem is that the increase in population has made competition intensified and the lack of resources more prominent. Some people are introverted and some people seek solutions outward. The development of navigation technology is The product of this period, the era of great voyages (also known as the Great Geographical Discovery) followed, and the abundance of the American continent made the triangular trade feasible. The black slaves were captured from Africa, and the raw materials, spices and precious metals were harvested in the Americas and brought back. Processing in Europe is the prototype of the early triangular trade. The abundant gold and silver in America has become the blood of the trade, flowing between the three places, and capital has also grown and thrived in it. In this period, there is no need to face the problem of currency shortage and outflow, because the abundant gold and silver in the Americas and the trade with Daming allow a large amount of precious metal input to meet the growing demand for trade. Among them, Spain and Portugal are very dominant, but they are not as large as the later British Empire in terms of population and strategic depth of land.

The British Empire, which once had colonies all over the world, has naturally become a widely circulated currency, especially in the colonies. During the high-speed import period, the British royal family was more troubled by the monetary system than Spain and Portugal. At the end of the 17th century, England, which implemented the gold and silver double standard system, was profited by arbitrage merchants because of the imbalance of the exchange system, resulting in silver The massive outflow to mainland Europe may be one of the early forms of brick-moving.

The way that empires solve currency inflation and devaluation is to use currency recasting. The government collects gold and silver coins originally circulating on the market when necessary, and returns them to the furnace for reconstruction, but the purity or weight of the metal is attenuated. Achieving the use of less and less precious metals, but able to mint coins of more denominations, invisibly charged seigniorage to the citizens. It was also at this time that the currency was no longer guaranteed by pure precious metals, but mixed with government credit, which became an early calculation stability.

Since the 19th and 20th centuries, the United States has developed rapidly after independence. The vast hinterland and labor force have allowed cheap American goods to conquer the European market and earn a lot of precious metals. The two world wars after the 20th century made it even more difficult. Productivity around the world has declined seriously, and the United States, which has not been damaged at home, is producing more vigorously. After World War II, the gold held by the United States alone accounted for about 80% of the world's gold. At this time, the United States intends to replace the abandoned The United Kingdom went up and became the exporting country of the world currency, because other countries were unable to return to the gold standard system due to the lack of their own gold. The United States proposed that the Bretton Woods system was established in 1944, and the ratio of gold: US dollar = 1 ounce: 35usd was on the way. , countries do not need to use the gold standard, because the United States has gold, let all countries come to Mao to set the dollar. In conjunction with the Marshall Plan, a large amount of US dollars flowed out to Eurasian countries along with US goods and troops. Compared with gold and silver coins, the cost and difficulty of banknotes were much simpler. Therefore, the US dollar became the blood of the global economy. After the war, the economy recovered and dominated the global financial industry.

However, with the economic recovery of various countries, governments of various countries do not want to set the dollar in Mao, and always feel that the gold standard is still relatively safe, so they use the whitelist qualification to redeem a large amount of gold, which has caused a crisis of confidence in the US dollar many times, because the large-scale issuance of US dollars has long been insufficient. Guarantee, If it is run, it will cause a big blow to the economic system, and then the US government will first close the exchange window and then coordinate with other countries, first to achieve a floating exchange rate, establish the IMF to stabilize the world currency rules, and because of the existence of economic inertia, even if the dollar is delinked from gold. Since then, everyone is still used to clearing in dollars as children. After all, the United States was still the largest gold reserve country at that time. In October 1973, with OPEC listing the dollar as the global oil settlement currency, no one has yet figured out that the reserves behind the dollar are Gold, American productivity, the credit of the American government, or proof of army or oil or air

So far, a modern monetary system has been constructed, and central banks of various countries usually buy US dollars as part of their foreign exchange reserves. Everyone guarantees each other. An era when Americans print money and collect seigniorage from the world has appeared. When an emerging market needs funds , there will be dollars, Americans will print money to invest, and the world will suffer from inflation. Although there are many side effects, companies and individuals all over the world have sought solutions from all sides, or the RMB and BTC have emerged as challengers, so far the confidence in the US dollar is still there, and there is no run or harm.

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Later, I should consider writing an article on how RMB and BTC try to reach places that the US dollar cannot reach from different directions.