Chapter 94 6. Gold, silver and Chinese yuan: the road to the world reserve currency

If the Chinese government and people consume gold at a scale of 200 billion U.S. dollars every year, if calculated at a price of 650 U.S. dollars per ounce, China will be able to buy 9,500 tons of gold, which is equivalent to buying up the United States in a year ( 8,136 tons) of all gold reserves.In the initial stage of the battle, international bankers will desperately suppress the price of gold through financial derivatives. The central banks of western countries may jointly sell gold, and the price of gold may temporarily plummet.If China sees through its opponent's cards, lowering the price of gold will become the most generous financial aid to China in Western history.

You know, the total amount of gold mined in the world in six thousand years is only 140,000 tons, and the book gold reserves of all European and American central banks are only 21,000 tons. Considering that in the 1990s, the European Central Bank frantically leased gold Behavior, its total wealth may be far less than 20,000 tons.Converted at the current price of gold (650 US dollars an ounce), this is only a small plate of 400 billion US dollars. China's trade surplus is so huge that it will only take two to three years to absorb the 400 billion US dollars of gold reserves. .The bullets of the European and American central banks will all be fired in a not too long time.

If China eats gold with such an appetite for five consecutive years, the soaring international gold price will pierce the armor of the US dollar’s ​​long-term interest ceiling set by international bankers, and people will be fortunate to witness the seemingly strongest US dollar currency system in the world. How it fell apart. The question is not whether China can use the price of gold to destroy the dollar system, but whether or not.The gold price issue is a matter of life and death for the U.S. dollar. Don’t say that China has really bought 200 billion U.S. dollars in gold. The Taiwan issue that has plagued China for decades will turn into a question of whether the United States wants Taiwan or the US dollar.Naturally, China cannot really die with the United States financially. As long as the conditions offered by the United States are reasonable, they may also help the dollar if necessary.

While China is gradually increasing its official and private gold holdings, China can start currency reform and gradually introduce gold and silver into the currency system.China's monetary system will gradually realize the transformation of the Chinese yuan under the gold and silver standard, which will be an important contribution of China to the world economy. The implementation of the Chinese yuan can be carried out in stages.The first thing that can be done is to issue gilt-edged bonds and silver-edged bonds of the Ministry of Finance, and settle the principal and interest of the bonds with physical gold and silver.For example, the interest rate of five-year gilt-edged bonds can be set at 1% to 2%. Since gold itself is the final settlement method of principal and interest, people will actively buy this financial product that truly preserves wealth.

The difference between the yield rate of gilt-edged bonds and silver-edged bonds in the bond trading market and the yield of ordinary government bonds of the same amount in the same period will truly reflect the market's acceptance of gold and silver currencies.This important parameter will serve as a frame of reference for the next phase of the pilot. The second stage of work can carry out the readjustment of the reserve fund structure of the banking system.Whether it is a foreign-funded or state-owned bank, its reserves must include a certain proportion of gold or silver, and at the same time reduce the proportion of debt notes in the reserve. The higher the ratio of gold and silver in the reserve, the higher the loan amplification factor. Similarly, the debt The larger the proportion of bills, the lower the lending capacity.Central banks should stop discounting everything except gold and silver.This measure will strengthen the status of gold and silver in China's monetary system and increase banks' demand for gold and silver assets.Not having gold and silver as reserves would severely restrict its ability to extend credit.At the same time, the banking system will gradually drive debt instruments out of currency circulation.Banks will also be interested in offering custody and buying and selling of physical gold and silver to the people.A circulation market for physical gold and silver has been formed nationwide.

All high-profit industries in the country, such as real estate, banking, tobacco, telecommunications, petroleum, etc., must include a certain proportion of gold and silver in their business taxes, which will further stimulate the market demand for gold and silver. In the third stage, the Chinese gold dollar and Chinese silver dollar banknotes are issued with the gold and silver of the Ministry of Finance as full collateral. One Chinese gold dollar is the benchmark measure of Chinese currency. According to China's gold and silver reserves, each Chinese gold dollar contains several grams of pure gold. .Chinese gold dollars are mainly used for bulk trade settlement, transfers between banks, and large cash payments.Chinese gold dollars above a certain amount can be exchanged for physical gold at the Ministry of Finance.Chinese silver dollars can be used as auxiliary currency, and each dollar contains several grams of pure silver, which is mainly used for small payments.Chinese silver dollars above a certain amount can also be exchanged for equivalent silver at the Ministry of Finance.The exchange rate between Chinese gold dollar and Chinese silver dollar is announced by the central bank and adjusted regularly.

It is generally believed that bad money must drive out good money in circulation. In fact, there is an important prerequisite, that is, the government intervenes to forcefully stipulate that bad money is equivalent to good money.In a natural market, the opposite is true, and good money must drive out bad money, because no one in the market will accept bad money. When China used gold and silver Chinese yuan, ordinary renminbi with debt components was still circulating in the market.The government needs to stipulate that all taxes must be paid in gold and silver Chinese yuan. The market can freely choose gold and silver Chinese yuan pricing or ordinary RMB pricing. The financial market will determine the price comparison between gold and silver Chinese yuan and ordinary RMB according to the relationship between supply and demand.At this time, people will find that the purchasing power of ordinary RMB credit issued by commercial banks with debt components will gradually depreciate compared with gold and silver Chinese yuan.The comparison of the two currencies in financial markets will clearly reveal this information.

It is the Ministry of Finance, not the commercial banking system, that ultimately controls the issuance of gold, silver, and Chinese yuan. The reason is simple. The creation of wealth begins with the people and ends with the people. No private person is allowed to monopolize or get involved in currency issuance. Although the strong momentum of China's exports will gradually decline with the strengthening of the Chinese yuan, in fact this is an indispensable part of GDP weight loss.The export-driven economy itself has too many side effects. Its essence is to rely on the increase in debt in the United States to drive its own economic development. The American people have already been overwhelmed with debts. The continued overdraft of their debt affordability will cause greater damage to the structure of China's export economy. The imbalance and overcapacity will become more serious, and the adjustment process will inevitably be more painful in the future.Such a result is actually the ultimate lose-lose.

When the circulation of Chinese yuan backed by gold and silver increases, the Chinese yuan is bound to become the focus of attention of the financial industry around the world.Since the Chinese yuan can be freely converted into gold or silver, it will be the strongest and most powerful currency in the world, and it will naturally become the preferred reserve currency of all countries in the post-dollar era. Wealth has always flowed automatically to places where it can be protected and appreciated. Strong wealth creation and a stable currency will surely make China the center of world wealth gathering.