First of all, the value of money is determined by its purchasing power. Why is there a difference between the exchange rate of ten yuan and ten dollars? Because they can buy different things, the unit of money can be decided by the central bank itself, and the central bank can move the zero of cents up to RMB, similar to Japanese yen and Korean won; You can also move down, similar to RMB and USD, as long as it is convenient for you.

Second, according to Friedman's unit price theory. The prices of similar commodities in the world should converge. If not, some businessmen will speculate and make them converge through trade. But the problem is that when we consume, we not only buy goods but also provide services, such as haircuts and pedicures. Many goods are difficult to trade for various reasons, so the actual purchasing power of money is underestimated and overestimated. Usually developing countries underestimate and developed countries overestimate, which is purchasing power parity. If we extend it, we can know the theoretical exchange rate and the actual exchange rate of the currency.

Third, a country's annual currency circulation should be equal to its productivity growth. To put it simply, ten cars were produced in China last year, and the market currency was 10 yuan. If ten cars are produced this year, ten yuan should be paid. Paying less and not paying, because paying less and not paying means that the money holders (capitalists) have nothing to do, and the money in their hands has changed from one car to two cars, losing money to those who have no money. This is actually the difference between Marx and Keynes. Marx assumed that money was certain, and workers who did not hold money were bound to be under pressure. Keynes felt that this problem could be solved by issuing more money. The fundamental reason for this is that the hard currency supporting currency issuance is changing. It is barely possible to use precious metals as hard currency in the era of natural economy, because the production of raw materials is low in science and technology, and the earth's land has a total amount, but how can the exploitation of hard currency keep up with the speed of scientific and technological innovation in the era of commodity economy?

Fourth, it is prone to inflation. But in fact, China will still issue more money. Why? Because banks can create money through loans, the principle of creation is simple. If you borrow one hundred dollars from the bank, there is no shortage of one hundred dollars in the bank's books. In fact, if you add another hundred, one hundred will become two hundred. This is to create money, but because of the existence of the reserve system, the money created by banks is not infinite, but ten times. However, the problem is that banks need to create money through loans. The premise of the loan is that the lender feels profitable. If lenders feel risky and have no enthusiasm for loans, then money cannot be created. In order to make up for this ten-fold gap, the central bank may choose quantitative easing and issue more money, which is what China called a prudent and loose monetary policy.

Fifth, at this time, we will understand that the issuance of money can only be based on two places. The first is to issue the corresponding equivalent currency according to the improvement of productivity, and the second is a loose monetary policy, which can make up for the creation of banks through additional issuance, but it cannot be created. No matter how much, it really won't work.

Sixth, when we go to the United States to buy things, we need to use dollars. If we want to exchange dollars, we have to exchange them from foreign exchange reserves. Some of China's foreign exchange reserves are our own money, but a considerable part is not. They are the money of foreign investors. When foreign investors come to China to invest and build factories, they need to settle foreign exchange, that is, their dollars are temporarily deposited in the Central Bank of China, and we give them corresponding RMB, but foreign capital can flow in or out. Suppose we take all our foreign exchange reserves to the United States to buy things. At this time, foreign investors want to withdraw their funds. What should we do and what should we give to others? The only way is to throw RMB to buy dollars. If there is more RMB and less USD, the RMB will depreciate. This is the balance of payments (current account, capital finance account). This also explains why we have to buy American debt on a large scale. At the same time, it also explains why the RMB does not dare to appreciate significantly, because when foreign capital flows in, 100 dollars is exchanged for 600 RMB. If the RMB rises to 3: 1, you have to use 200 yuan to fill the hole where people walk. Where can you find money?

Finally, RMB stock = USD stock = commodity stock can be understood as an equation. If the stock of US dollars and commodities remains unchanged, the issuance of RMB will only change the exchange rate or currency symbol, but will not change the actual purchasing power, because there are too many things.