GBP Chapter 470: Nanyang Yuan is not a gold yuan
Chapter 470: Nanyang Yuan is not a gold yuan
(These two chapters briefly explain how the fiat currency collapsed, how the gold yuan was used to defraud people, and the drawbacks of the Bretton Woods system.)
The wheels rolled over the joints of the rails, making a regular and slightly dull "stroll, stroll" sound.
Outside the window, the Mandalay Plain in central Bago had long been swallowed up by the inky darkness, with only occasional scattered lights flashing by, which were fleeting.
Zhang Chi glanced out the window and couldn't help but sigh.
Before the time travel, whenever the university was on vacation, he would take the green sleeper bus home instead of the high-speed rail for the sake of saving money. When he was driving at night, the cities he passed by would naturally be brightly lit outside the window.
Even if you are just passing through the countryside, there are plenty of lights to illuminate it.
But in Bago, which is still an agricultural society, there is not enough electricity and there is only endless darkness outside the window.
The carriage was brightly lit and pleasantly cool.
This is the luxurious reception room carriage of the special train. This carriage was originally the mobile palace of the former colonial official John, and was later requisitioned by the Japanese general Kenji Doihara, and eventually became a trophy of the Anmin Army.
The interior decoration of the carriage is extremely luxurious, but with a slightly exaggerated taste of the colonists.
The deep red velvet curtains were thick and hung to the ground, the carved mahogany wall panels gleamed dimly, a luxurious crystal chandelier hung from the ceiling, and the floor was covered with thick Persian carpets, which Zhang Chi felt were soft when he stepped on them in his slippers.
In the corner, a simple-looking but powerful standing electric fan was swinging its huge head left and right, sending cool air evenly to every corner of the car, dispelling the stuffiness of the tropical night.
Zhang Chi had already taken off his military jacket and was only wearing a white shirt with one button casually undone on his collar. He was leaning comfortably on a large, down-filled sofa.
Sitting opposite him was Chen Zhenchuan.
The former managing director of OCBC Bank Sin Chew, now Zhang Chi's designated first president of Nanyang Central Bank, is currently holding a cup of steaming high-quality Ceylon black tea, with a focused expression, speaking a bunch of financial terms that sound confusing to Zhang Chi.
"...So, General," Chen Zhenchuan put down his teacup. "If we strictly follow the classical gold standard to issue new currency, that is, each Nanyang dollar is promised to be redeemable for a fixed weight of gold, then, according to the internationally accepted 'prudent principle,' we need to prepare a gold reserve equivalent to at least 30% of the total amount of currency issued as a 'ballast stone.'"
He picked up a memo filled with numbers and adjusted his gold-rimmed glasses:
"According to preliminary estimates, to meet the circulation needs of Southeast Asia (including Pegu, Siam, Malaya, Singapore, Chittagong) and possible future circulation needs, M1, or the money supply, must reach a minimum equivalent to $15 billion.
So, based on a 30% calculation, we would need to reserve $500 million worth of gold, which is... approximately 440 tons."
Chen Zhenchuan paused, looked at Zhang Chi, and said with a hint of helplessness:
"Looking at the world today, apart from the United States, which has a 20,000-ton gold reserve and is extremely wealthy, which other country could be so arrogant as to declare that its currency can only be redeemed for gold?
Even the United Kingdom, known as the 'Empire on which the Sun Never Sets', is now struggling, with its gold reserves estimated to be less than a thousand tons.
Zhang Chi picked up the teacup filled with scented tea, took a sip, and frowned slightly:
"440 tons... At best, we only have less than 100 tons now. We're still a long way off. Can't we not issue the new currency?"
Considering the exchange of the super bomb and the development of Nanhua Group of Companies, Zhang Chi is not planning to invest all the gold into the central bank.
Chen Zhenchuan naturally didn't know that there was still a large amount of gold stored in Zhang Chi's system.
"Don't worry, General." Chen Zhenchuan began his performance. "In fact, in order to support this world war, all the major participating countries are frantically printing money, and have long thrown the classical gold standard out of the window.
The gold pound, the pound, the mark, the lira... all are rapidly depreciating. "The most typical negative example," he said, a hint of undisguised sarcasm flashing across his lips, "is just to our north."
He leaned forward slightly, his tone carrying the calm analysis typical of a financial expert and a hint of sarcasm towards the absurd reality:
In 35, the Republic of China implemented the legal tender reform, abolishing the silver standard and issuing legal tender. The initial issuance was only 4.5 million legal tenders, equivalent to about 1.5 million US dollars at the time. The issuance reserve was quite 'decent', with about 2.5 million US dollars worth of forcibly expropriated silver and foreign exchange equivalent to 1.2 million US dollars obtained from loans from the United States.
"However, just before the outbreak of the full-scale war of resistance in 37, the amount of legal tender in circulation had already swelled to 14 billion yuan," Chen Zhenchuan said in a cold tone. "Once the war broke out, it was like a wild horse running wild."
"To fill the bottomless pit of military spending, that guy in Shancheng and his 'financial wizards' have been printing money day and night. As of now, the total amount of legal tender in circulation is estimated to have exceeded one trillion yuan. One trillion yuan! Even the Japs can't print counterfeit money faster than they can!"
He picked up a napkin and drew a steep upward curve on it with a pen:
"The result? Hyperinflation, prices rising three times a day. I heard that in the secondary capital, buying a box of matches required a large bundle of French currency. When ordinary people received their salaries, they had to run to the market. If they were a step late, their money would become nothing more than waste paper, too hard to even wipe their butts with."
Chen Zhenchuan put down his pen and said, "The irony is that while the total amount of legal tender has expanded thousands of times, the gold and foreign exchange reserves held by the Nationalist government, which can truly support the currency's credit, have shrunk significantly compared to pre-war levels.
This is a classic case of 'printing money to support the army', a temporary solution that only serves to quench thirst. The ultimate result will inevitably be a complete collapse of monetary credit and the disintegration of the economic system, with only the common people suffering."
His tone was full of contempt for the short-sightedness and incompetence of the mountain city authorities.
Zhang Chi listened and his expression became serious.
As a time traveler, he was of course aware of the miserable state of the French currency. He even knew that there was an even more outrageous gold yuan behind it, which claimed that 1 gold yuan was equal to 0.22217 grams of gold.
By relying on forced exchange, the man in Shancheng cheated the people of the Republic of China of the last bit of gold.
As a result, it still could not stop the impulse of printing money. The gold yuan coupons quickly depreciated by 3000000% in 9 months. At this time, the gold yuan coupons in the hands of the people naturally could no longer be exchanged for gold, and became completely waste paper.
The people returned to the era of barter, and big businessmen took the opportunity to hoard goods, and the two whites and one black (rice, cotton yarn, and coal) once again became hard currencies instead of currency.
But when you hear this professional, Chen Zhenchuan, speaking with cold data and a sarcastic tone, the impact is still huge.
Zhang Chi put down his teacup and said seriously, "President Chen, don't worry. We will never repeat the same mistakes. We must increase revenue and reduce expenditure, strictly control expenditure, and control currency issuance. This is an iron rule."
We must not use the printing press to fill the military budget hole; that would be digging our own graves."
He paused, decided to leave professional matters to professionals, and humbly asked:
"Since the classical gold standard is temporarily unworkable, then in your opinion, how should we anchor our Nanyang dollar? How can we establish its initial credibility?"