Recently, the financial market has once again been up and down in the central bank's every move. As soon as the central bank's decision to purchase government bonds was leaked, it was like a boulder smashing into a calm lake, stirring up layers of waves. People have questioned one after another, is this the legendary quantitative easing, is it really about to start a new glorious era of the renminbi?
This move seems to announce that the renminbi will no longer follow the baton of the big brother of the United States, but will use government bonds as a new beacon, and the value of the renminbi will be decoupled from the US dollar and slowly move towards the voyage of independence and independence.
In a sense, that's a big step forward. Compared with the previous renminbi issuance, which relied too much on the stock and increment of foreign exchange reserves, the use of treasury bonds as the cornerstone of issuance has undoubtedly led the renminbi from the wilderness to a warm home.
It seems that the speed of printing the renminbi keeps up with the fluctuations of foreign exchange, but in fact, digging deeper, the amount and increase and decrease of foreign exchange are just the shadow of the dancing of the US dollar exchange rate. In the course of the dollar's repeated interest rate hikes and interest rate cuts, the course of the renminbi is, in the final analysis, anchored by the dollar.
However, if we move the anchor of the renminbi from the US dollar to the treasury bonds, this will undoubtedly enable the mainland's monetary policy to move towards a new world of greater independence. This road is what we will eventually embark on, and we must firmly embark on a good journey.
It would be short-sighted to see the renminbi's move to tie up government bonds as a precursor to the beginning of a new era of currency.
When a currency anchors its course to the waves of debt, it will inevitably face such a dilemma one day in the future: the greater the amount of money issued, the deeper the abyss of debt, the snowballing of borrowing, and eventually the collapse of debt, and those paper money will also be wiped out.
Some people may question whether the US dollar, which has been unscrupulous in the stock market, has long been anchored to US bonds, but the economic market has not collapsed, and the value of the dollar is not illusory, and they are still freely swinging on the global financial stage, raising interest rates aggressively.
However, the story of the US dollar is very different from that of the renminbi. The dollar's rise did not start with a reliance on U.S. debt, but its rise to the top of the world's currency was largely backed by the solid gold support it had at the beginning, as well as the unrivaled production power of the United States.
And this is precisely the lifeblood of the United States to forge a brilliant monetary legend. Tracing the glorious journey of the dollar, the first chapter is undoubtedly the Bretton Woods event in 1944.
It was not only a battle between Britain and the United States for the economic scepter of the post-war world, but also a historical miracle written together to create the Bretton Woods system, the economic architecture that once shook the world.
At that turning point in history, the Bretton Woods system was like a glittering door, slowly opening the door to the exchange of dollars and gold. In the years when the dollar dominated the world, a light green banknote, as long as you have three or five pieces, can be safely exchanged for a shining ounce of gold, the dollar at that time, as heavy as gold, as close as twin brothers, inseparable.
And the Bretton Woods system, this picturesque prologue, with its unparalleled magic, awakened the devastated global economy after World War II, and reinvigorated the sleeping giant. The U.S. dollar, like a wild horse, galloped on the global currency grassland, climbed step by step to the unique currency hegemony, and wrote a unique legend.
In the chess game of currency competition, the United States has grasped the weight of the US dollar and climbed to the top of the global economy step by step, leading the way. During the turbulent years of World War II, the industrial strength of the United States was like a towering tree, with lush branches and leaves, and its output value accounted for a quarter of the world's total. In other words, as long as you hold the green dollar in your hand, it is as if you have an arrow to command the world.
The productivity of the United States is unstoppable, pushing the dollar to the throne of the international currency. No matter where you are, as long as you have green dollars in your hand, everything in the world seems to be at your fingertips. Whether it's a Ford sedan galloping through the rivers and lakes, or a bubbling Coca-Cola in a bottle, whether it's a big machine computer that controls the world, or the humble Spam luncheon meat, as long as you have a thought in your heart and a currency in your hand, you can take it into your arms.
And the US dollar can dominate in this currency Jianghu, and it is naturally inseparable from the mysterious anchor that stabilizes the country for it. It was a silent but powerful support, so that the merchants and vendors around the world have bowed down to this small piece of paper.
In those days, the marriage between the dollar and gold was as solid as a rock, the value of the currency was as stable as an old dog, and the United States, which accounted for a quarter of the world's industrial output, could magically conjure up almost everything we needed to produce and live. It is precisely because of this that countries have reluctantly embraced the dollar, pushed it to the throne of global currencies, and jointly held up the hegemony of the dollar.
With the passage of time, the United States, which holds the lifeblood of the world economy, began to be somewhat unscrupulous. In the face of huge war expenses, the United States had no choice but to continue printing national bonds and issuing excessive amounts of currency again and again, so as to barely maintain the increasingly tight economic chain at home.
This time, however, the American game is finally getting out of hand. The issuance of U.S. bonds and the unlimited over-issuance of currencies have led to the breakdown of the close connection between the U.S. dollar and gold, and the U.S. credit crisis is everywhere, and the value of the U.S. dollar has shrunk sharply and depreciated sharply. This chain reaction triggered countries around the world to sell dollars in panic, and the scene can be described as a heat wave, and the turmoil in the world financial market is no different for a while.
The once-glorious global monetary architecture has not escaped its collapse. In August 1971, U.S. President Richard Nixon ordered the U.S. dollar to be cut off from gold, and the Bretton Woods system fell to the ground, bringing to an end the system that had activated the pulse of the post-war world economy.
It is worth mentioning that at a time when the US economy suffered a heavy setback, Europe saw the weakness of the dollar, so the European Economic Community and the euro system came into being. In the face of a possible secondary catastrophe brought about by the dollar, the European countries know that unity is strength, and they hold hands to tide over the difficulties in case they are once again shackled by the dollar.
Gold's halo is gone, and the dollar has had to look elsewhere and turn its anchor to oil. The United States, which has the pricing power of the Middle East's oil powers, has allowed the shaky value of the dollar to breathe and gradually quell the economic storm caused by the devaluation.
At this time, the United States ushered in the storm of the IT Internet revolution, and with the help of this shareholder wind, the dollar slowly consolidated its hegemony in the international currency.
With the booming information technology industry in the United States and the rock-solid value of the dollar, that big country seems to be standing up again, ready to turn the clouds on the world stage again.
After the smoke of World War II, the United States seems to have tasted the sweetness of power from the afterglow of victory, and its old ambitions have been rekindled, and it is like a fisherman, keen to reap ill-gotten gains through the flames of war.
And the rounds of the national debt frenzy, the flood of money, have piled up the tower of American debt higher and higher until it stands on the edge of a precipice that can never be repaid.
In the current predicament, the value of the dollar is like a kite with a broken string, fluttering, and the value of those currencies that were once as stable as Mount Tai is also like a fallen leaf in a torrent, undulating. The dollar, which has fallen again and again, is no longer buying the abundance of the past, but the shrinking purchasing power, just like the copper plate in the pocket, which is getting lighter and less valuable.
The dollar foreign exchange held by various countries has become a hot potato that cannot be taken off. Looking at the financial world, there seems to be no other way than to embrace U.S. bonds and U.S. stocks. In this way, the dollar and U.S. bonds were firmly bound, and U.S. bonds became the new darling of the dollar, and after gold and oil, another life-saving straw to support the status of the dollar.
However, even if the U.S. stock market is turbulent at the moment, it can no longer call for the help of the shareholders, after all, even the manufacturing industry, which they have always been proud of, has entered a downward trajectory.
In this country where the manufacturing industry is declining, the vitality of scientific and technological innovation is also gradually declining. The Fed continues to print money not only to redeem itself, but also to inject a shot in the arm to the stock market, playing a trick to prove to the world that it is still an unshakable hegemon.
The United States, which was originally rich and wealthy, now has to borrow money to get by, with the result that the productive forces, which should be the main force in economic development, cannot be nourished. In desperation, they had to rely on rounds of interest rate hikes and over-issuance of currency to maintain their crumbling hegemony and maintain that face.
At this juncture, the bond between the US dollar and US bonds is getting closer and closer, like an inseparable blood link, as solid as a rock, and it is difficult for any wind and grass to shake their binding relationship.
However, it is precisely the close connection between the US dollar and US debt that has caused the decline of the US manufacturing and technology industries, like an old cow trailer, struggling. In this economic wasteland, how can the dollar shine alone? As the production line in the United States becomes more and more silent, the brilliance of the dollar is also dimming. All this, in the final analysis, is inseparable from the inseparable bond between the dollar and U.S. bonds.
Now, someone has dug up this unhealthy binding relationship, taken it out of context, and put the crown of the US dollar as the global currency hegemon, and put it on the head of the US debt.
It is true that the relationship between the dollar and US bonds is an undeniable ironclad fact. However, the dollar's strength does not depend on the pegging of US bonds. On the other hand, behind the gradual decline of the US economy and the shrinking value of the US dollar, US bonds can be called "indispensable".
The United States is like a vivid and dazzling picture in front of our eyes, and the real power can always reveal the essence succinctly - the debt-ridden currency game is a dead end after all, and it is destined to enter a desperate situation.
Therefore, it is a bit comical to assert that the renminbi will follow in the footsteps of the treasury bonds and imitate the past glory of the dollar on the basis of the central bank's statement of buying government bonds. The boldness of boasting about Haikou without careful consideration in this way also teaches people to admire their fearless spirit.
The ancients said: Blessings and misfortunes lurk, and misfortunes and blessings rely on. The binding of the renminbi to government bonds has indeed given the mainland's monetary policy wings of independence, however, just like the two sides of the copper plate, we must also face up to the uncertainties and risks hidden behind the binding.
Those dreamers who look forward to the fact that the renminbi-bound treasury bonds will bring about a golden currency era may wish to be sober, although the dream is beautiful, it will eventually be in vain. On the ground of reality, it is the battlefield where we are down-to-earth and step by step.