In view of the fact that the mainstream economic and financial circles, either out of a position or out of their own ignorance of the nature, laws and reality of money, they cannot give a correct explanation on the issue of the credibility of money and the so-called "anchor", or do not explain it at all.
Here, I will explain the question of the credibility of money and the so-called "anchor".
Mainstream economic and financial experts confuse the credibility of money with the so-called "anchor" problem. Credit is credit, and the so-called anchor is so-called, which is not the same thing.
The main purposes of advocating the theory of monetary "anchors" are:
The first is to deceive the recipients of Western currencies into believing that Western currencies have credit. The currency of the capitalist world in the West, because the issuer of its currency refuses to fulfill its credit responsibility and shirks the responsibility of monetary credit openly and covertly, invents the concept of "anchor" and pushes the credit of money to the so-called "anchor" of money, that is, the so-called Western currency "anchor" gold, "anchor" silver, and "anchor" treasury bonds, so as to facilitate the acceptance of Western currency as a reason for settlement and payment of trade. The Western-controlled media, academic, educational, and propaganda outlets have propagated that Western currencies have credibility because they are "anchored" to gold, silver, and national bonds. In this way, countries deceived by Western monetary theory have accepted the shackles of using Western currencies (such as the US dollar) as payment currencies for trade settlements.
The second is to mislead the recipients of Western currencies to give up the right to settle and pay in their own currencies. Relatively speaking, the West has an advantage in the field of currency, for example, the United States has huge gold reserves, and the West's industrial advantages, which gives the West the ability to defraud the recipients of its currency, give up the settlement and payment qualifications of its own currency, and accept the settlement and payment qualifications of Western currencies. This is the second important purpose of the West's propagation of the monetary "anchor" theory.
Third, the fundamental purpose of the West's propagation of the monetary "anchor" theory is to deprive other countries of their sovereignty over currency issuance. However, those who believe that money should be "anchored" to certain materials and assets may ignore a most crucial issue: The amount of such materials, assets, and taxes will inevitably become a limit on the quantity of base money issued! This restriction is enough to destroy the regime's right to issue money independently.
However, judging from the fact that the US dollar has been issued indiscriminately in recent years (i.e., the so-called quantitative easing), we should note that there is no quantitative limit on the issuance of US dollars! On the surface, the US dollar corresponds to its treasury bonds, but there is no upper limit on the US Treasury bonds! This means that there is no quantitative limit on the issuance of US dollars! However, because we believe in the monetary "anchor" theory advocated by the United States, there is a quantitative limit on the currency issuance of other countries! If the currency "liquidity" in a certain country's market In order to issue sufficient currency, the country must introduce foreign capital in US dollars, open its finance to US dollar financial capital, and seek financing from US dollar financial capital in the international and domestic financial markets, and absolutely not allow the issuance of its own currency.
As a matter of fact, Western currencies, such as the US dollar, have never been "anchored" to gold, silver, and treasury bonds! The number of bonds issued has never been limited by the amount of gold and silver in reserve, nor by the amount of treasury bonds issued. Whether Treasury bonds can be sold or not, the dollar can be quantified. What gold, silver, and national debt do you think the Western currency is "anchored into" is misleading propaganda by the Western capitalist regime, and it is also your delusion. It is necessary to wake up from this delusion.
Fourth, the dollar can be issued at will, and the number is not limited in any way, that is, "quantitative easing" at will, which is a long-term fact, not a recent fact. Countries that have accepted the "anchor" theory will inevitably be limited by the number of "anchors" in terms of the amount of money issued. If its national currency does not meet the needs of the market, it will inevitably turn to the hegemony of the dollar for help. This is also the result of the deceptive pursuit of monetary academics, education, public opinion, propaganda under the hegemonic control of the dollar. This is also the most fundamental conspiracy of the "anchor" theory.
Fifth, if a country introduces foreign capital, opens up finance, and raises funds in the international and domestic financial markets in order to solve the problem of insufficient "liquidity" of currency in its own market, this means: first, it has transferred the right to issue its own currency to US dollar financial capital, because the currency issued on this basis must either be given priority to the use of US enterprises, and harsh conditions are put forward for the use of currency by domestic enterprises, and second, it will use its own economy, resources, enterprises, commodities, infrastructure, etc. Labor force, etc., has endowed and supported the international credit of the originally creditless dollar financial capital, so that the dollar financial capital can rely on its control over the country's economy to engage in financial colonization all over the world, and carry out economic control and aggression against these countries!
Sixth, you think that using the US dollar foreign exchange reserves as an anchor means that the US dollar gives your country's currency international credit, which is wrong. The credit of your country's currency is supported by your country's goods, services, labor, resources, and enterprises, and is not given by the foreign exchange of US dollars. The issuance of currency with the US dollar foreign exchange reserve as the "anchor" only means that the currency issued by your country can only be preferentially used by foreign investors in the US dollar, and it is difficult or impossible to use it by the sovereign economy of your country, and it is the US dollar financial capital that controls the issuance of your country's currency, which determines the amount of base currency issued by your country, so that your country has to give up the sovereign right to issue currency. This means that the lifeline of your country's economy is controlled by US dollar financial capital, and the quantity, field, and object of your country's currency issuance are also controlled by US dollar financial capital, which of course seriously weakens the local sovereign economy, and is of course conducive to the expansion of foreign capital and the comprador economy. If the currency issued in this way has the right to settle and pay in the country's foreign trade, it is also a manifestation of the internationalization of the dollar, a variant of the dollar, and a manifestation of the internationalization of the dollar voucher, not the internationalization of the country's sovereign currency.
Seventh, the worst thing is that when the dollar variant and dollar coupon type currency issued in this way circulate to other countries, foreign enterprises, and foreign citizens because they have the qualification of settlement and payment in the country's foreign trade, and even "go abroad", and are stored in the accounts of foreign banks or financial institutions, then the country must also provide for the domestic currency (essentially the dollar variant, dollar coupon) that circulates to foreign countries, foreign enterprises, and foreign citizens To assume credit responsibility means that foreign governments, foreign enterprises, and foreign citizens must be allowed to use these currencies to purchase goods of this country, acquire enterprises of this country, employ labor of this country, exploit the resources of this country, and carry out economic activities in all areas of the market open to this country...... That is to say, this country must also bear extraordinary and even unbearable credit responsibilities for a currency that is ostensibly the currency of this country, but is essentially a variant of the US dollar and a substitute for the US dollar! Isn't this a big injustice?
Eighth, the essence of the "anchor" theory is that international financial capital headed by the US dollar wants to seize and control the important enterprises, materials, financial assets, resources, commodities, labor, and services "anchored" by the currency! Where the currency "anchors" are, it means where the international financial capital headed by the US dollar wants to control. Therefore, the theory of monetary "anchor" is essentially a conspiracy of colonialism.
Ninth, considering that if the national currency is allowed to "go offshore", that is, to enter and exit the "country" at will, from domestic banks and financial institutions, to the accounts of foreign banks and financial institutions, it may lead to a huge risk of "money laundering", that is, those national currencies obtained through corruption, bribery, theft, gambling, drug trafficking and other illegal means can be smoothly transferred to the accounts of foreign banks and financial institutions and become legal currency (essentially money laundering), then this allows the national currency to be "offshore" The monetary credit responsibility to be borne by this country is simply unimaginably heavy, and this country cannot bear it at all. This ill-gotten currency should be "confiscated", and the government is not at all obliged to fulfill its fiduciary responsibilities to it.
Tenth, the so-called "anchor" of the currency has nothing to do with the credit of the currency. It is not permissible to think that "anchor" means the credit of the currency. Money itself cannot guarantee its creditworthiness, and it is the responsibility of the issuer of the currency to guarantee the credit of the currency, not the problem of the currency itself. The method by which the issuer of money fulfills its credit is and only to provide the legitimate holders of the currency with goods and services of reliable quality, sufficient quantity, complete variety, reasonable and stable prices, easy accessibility, and necessary for production and life. The reason why Western capitalism implements currency "anchors" is to make foreign governments, enterprises, and citizens who have accepted their monetary settlement and payment qualifications and hold such currencies believe that the credit of this currency is the so-called "anchor" objects, such as gold, silver, and government bonds, rather than the corresponding goods and services, and thus no longer buy these goods and services from currency issuers. In this way, the international monopoly financial capital, as the issuer of the currency, shirks its own credit responsibility.
On the one hand, this "anchor" will inevitably limit the number of Chinese people's currency, and second, when the US dollar hegemony controls the issuance and circulation of the yuan, it will inevitably master a huge amount of yuan, and after mastering a huge amount of yuan, it will inevitably use the yuan to be "anchored" in these mineral resources, high-quality bank assets, bulk commodities, land, important enterprises, etc. The repayment of electricity and energy will inevitably lead to the annexation of these important resources, assets, commodities, land, enterprises, and energy resources by the US dollar financial hegemony.
Twelfth, the monetary "anchor" theory propagated by the US dollar hegemony is also aimed at refusing to fulfill the credit responsibilities of the US government and US financial capital for US dollar foreign exchange. You have dollars in your hand, you have a huge amount of dollars, and you ask the U.S. government and dollar financial capital, which are the issuers of the U.S. dollars, to take credit responsibilities, that is, to purchase important U.S. commodities, acquire U.S. enterprises, mine U.S. resources, hire U.S. labor, and use U.S. infrastructure such as communications, electricity, transportation, and education. Virtual currencies and other financial products, saying that these things can maintain and increase their value is actually a scam), and you are resolutely not allowed to buy important goods, resources, enterprises and other tangible things in the United States. Or, the Americans say, you can go to a third country that accepts dollar settlements and payment qualifications, and invest, purchase, merger, acquisition, employment, investment, etc.
This perfectly shirks the credit responsibility of the US government and US financial capital for the US dollar, or pushes the credit responsibility of the US dollar to a third country.
In accordance with the needs of the development of industry, agriculture and commerce under the public ownership (state-owned enterprises), it is necessary to regard the public (state-owned) enterprises as the sole issuance targets, the basic industry and agriculture, cutting-edge industry, education, scientific research, health care, and so on as the only areas of issuance, determine the amount of currency to be issued according to the needs, issue currency to cutting-edge basic industry, agriculture, education, and medical care in the form of appropriations, and issue currency to light industry, commerce, and commerce in the form of loans. It is sufficient for small and medium-sized private enterprises to issue currency, for sovereign banks to undertake currency issuance business, and for state-owned industry, agriculture and commerce to recover renminbi with the cooperation of banks and ensure the credit of renminbi.
Fourteenth, socialist public ownership can minimize the amount of currency issued. Money is merely a measure and a unit of measurement for commodity transactions between different units of production. Transactions between public-owned enterprises do not need to be carried out through the issuance of currency at all.
Fifteenth, socialism cannot abolish money, because socialism still exists commodity production, and there is also a large amount of private production, and these private productions are of great significance to the economy and people's livelihood, so socialism must also respect the law of labor value and develop commodity exchange. The absence of currency will cause great inconvenience to society and will not be conducive to economic development and the improvement of the living standards of working people.
Sixteenth, because the public-owned industrial, agricultural, and commercial enterprises can recover money in a timely manner with the cooperation of the state-owned sovereign banking system, the amount of money circulating in the market can be controlled, and it can be more or less. It's not that there is more and more money circulating in the market, and it is impossible to decrease. The reasonable demand for money in the market will also gradually decrease due to the increase in public ownership.
Seventeenth, since socialism still needs money, it is necessary to completely control the power to issue money in the hands of the political power, and not allow international and domestic financial capital to usurp it through financial markets and financial means.
Eighteenth, the circulation of Western capitalist currencies, such as the US dollar, in the market (i.e., the so-called liquidity of mainstream academics) is also controllable, controlled by the Wall Street financial oligarchy as the issuer of the dollar and the bureaucratic comprador financial capital it supports, by weakening and disintegrating the sovereign economic components such as the state-owned economy and the national economy, and by spreading absurd sovereign-destroying currencies. What financial theory thus controls by misleading the thinking of other countries in the dollar system is controlled by the bureaucratic comprador capital forces of the countries in the dollar system.
Nineteenth, the specific methods of the Wall Street financial oligarchy to control the circulation of dollars in the national score market: On the one hand, they control the issuance of dollars; although the indiscriminate issuance of dollars is the norm, other countries in the dollar system are absolutely not allowed to issue their own currencies on their own. If all countries were to issue their own currencies, they would not have to rely on US dollar foreign exchange reserves. On the other hand, the United States has withdrawn a large number of dollars issued indiscriminately by inducing and deceiving governments, enterprises, and residents who have mastered the US dollar foreign exchange to purchase US treasury bonds, futures, stocks, wealth management, trusts, funds, insurance, reinsurance, virtual currency, and reserve US dollar foreign exchange as the basis for maintaining the exchange rate of its own currency! In this way, the US dollar financial hegemony can take the initiative to create the problem of insufficient dollar liquidity in the market, and then force the relevant countries to continue to open their markets and finance. The introduction of foreign capital in US dollars betrays the country's economic sovereignty, and of course sells its own goods, labor, services, resources, enterprises, etc. This is known as the dollar harvest, or dollar cycle.
Twentieth, the so-called "reserve currency," "the dollar is the world's main reserve currency," and "the dollar is the world's currency" concepts are deceptive and must be exposed and discarded. For countries with monetary sovereignty such as the right to issue, settle, and pay, there is no need for any "reserve currency". Of course, it is also possible to reserve a little foreign exchange. But not too much, in order to prevent the United States from shirking its credit responsibilities, that is, to prevent it from defaulting on its debts.
Twenty-first, if a country has the right to issue currency, there is no problem of monetary liquidity tightening at all.
Twenty-second, the notion that over-issuance of money will lead to inflation is also wrong and misleading, and it is a kind of abscurity by the international monopoly financial capital, as the issuer of money, using this concept to cover up its credit responsibility for the currency it issued.
Inflation is not spontaneously generated by the market, but is essentially the consequence of the capitalist government and financial capital, which are the issuers of money, shirking their credit responsibilities. The over-issuance of money is not the direct cause of inflation. As you know, the direct manifestation of inflation is the rise in commodity prices and the corresponding depreciation of currencies. However, it should be noted that commodities are sold to the market through commercial distribution channels. The channels for the sale of commodities are also controlled by financial capital! The pricing of commodities is of course controlled by financial capital. That is to say, the financial capital, which is the issuer of money, has completely grasped the pricing power of commodities! The price increase of commodities is completely the result of the self-manipulation of financial capital that has mastered the commercial sales channels! Raising the prices of commodities and services is in fact a disguised depreciation of the currency it issues and a shirking of its responsibility for the credit of the currency.
On the one hand, it issues currency to purchase commodities at lower prices, wage labor, invest in development, mergers and acquisitions, etc., and on the other hand, it uses the commercial system it controls to raise the prices of goods and services and recycle the currency it issued.
23. When discussing the nature, laws, and characteristics of money, many comrades do not pay attention to their own perspectives: Are you a user of money, or are you the issuer of money? Different standpoints and understandings of money are completely different.
24th, it should be noted that the monetary theory of Western capitalism has too many errors, contradictions, and deliberate misdirections, which are not the same as the traditional monetary theory of China.
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Author: Hong Jun