Many people in China are very anxious about the dollar crash. Especially after COVID-19, the United States released a large amount of money indiscriminately in order to alleviate the economic pressure it faced, which was equivalent to cutting off a wave of leeks on a global scale. This feeling of expecting the dollar to collapse is even more urgent.

Not only do we think that the dollar is about to collapse, but many people in the United States also think that the dollar is about to collapse. This voice of the dollar even existed decades ago, but until now, the dollar is still the only global currency, and this uniqueness has become more intense. In fact, if you think about it, you will know that the strength of the dollar is not suddenly strong. It also went through a long development process before it gradually became the world currency. This accumulation is unlikely because.

To find out whether the dollar will collapse, we must first know how strong the dollar is.

The great development of American economy began after the Civil War. By 1894, the total industrial output value of the United States had surpassed that of Britain, but at this time, the US dollar had no international status.

Because the dollar is still a very unreliable currency, the United States does not even have a central bank at this time. The Federal Reserve, which can influence the world economy now, was established only in 19 13. Now we see that the US dollar is a unified currency form, but before the establishment of the Federal Reserve, the US dollar can be said to be varied, because as long as it is a bank, it is very simple to open a bank, as long as it is registered with the state government.

At one time, there were many small banks in America. These small banks are also called "wildcat banks". You will know that these banks are unreliable by this name. In fact, the dollars issued by these small banks are not guaranteed. If the bank goes bankrupt, your money will become a pile of waste paper, which often happens in America in the19th century.

From 1862 to 19 14, financial crisis occurred almost every ten years, and bank runs also occurred four or five times. Hundreds of banks may fail in a crisis, and many people's life savings will be gone in an instant.

Why did the United States delay the establishment of a central bank? This has a lot to do with the founding of the United States.

The United States has been a loose federal organization since its founding. At first, the federal government had little power. The founding generation of the United States did not want to turn the United States into a centralized country. So there was no constitution when the People's Republic was founded. Even after the constitution was formulated, more emphasis was placed on democracy and freedom. The state government is also very concerned about the excessive management of the federal government. After all, they got rid of British colonial rule, and the states didn't want to fall into the rule of another centralized government.

Therefore, the establishment of a central bank is bound to arouse the vigilance of States and wonder whether you want to expand the power of the federal government in this way.

Before the Federal Reserve was established, there were two central banks in the United States. The first time was in 179 1 year, which was put forward by Hamilton, the father of the country, and was called the first bank of the United States. The purpose is to help States issue bonds and then repay the debts of the War of Independence. At that time, Congress only allowed the First Bank of America to operate for 20 years. As a result, it really only existed for 20 years. The second central bank was in 650.

It was not until the establishment of the Federal Reserve in 19 14 that the dollar was truly unified. It is precisely because of its unreliability that it is unlikely to become an international currency. After all, no country wants to hold a pile of money that may turn into waste paper at any time. Moreover, the world leader at that time was Britain, and the trade volume of Britain in the world was far greater than that of the United States. The pound was the global currency at that time.

The real rise of the dollar is that it has experienced two world wars.

2、

Before World War I, western countries basically implemented the gold standard, that is, their currencies were all linked to gold. Simply put, they can exchange paper money for gold with the government at a certain exchange rate.

An obvious advantage of the gold standard is currency stability, because you can print as much money as you have gold, and gold has always been hard currency. People all over the world believe in the value of this thing, but the gold standard also has disadvantages, that is, the amount and quantity of gold are limited, and you can't print money at full capacity when the country is in urgent need of money.

In peacetime, countries usually don't need much money, but in wartime, that's another story. After the outbreak of World War I, all countries needed a lot of military spending. In order to print money at full capacity, most countries that participated in World War I abandoned the gold standard, and their currencies were decoupled from gold.

European countries were involved in World War I, and the United States declared its neutrality early, so it began to do business on both sides. With its strong industrial capacity, the United States has sent a lot of materials to the belligerents. Of course, these materials are not free. You have to buy gold, so a lot of gold reserves from various countries flow into the pocket of the United States. After World War I, the amount of gold reserves in the United States became the largest in the world.

Then the world economy recovered briefly for a while, and then 1929 came the familiar Great Depression. During the Great Depression, in order to stimulate consumption, the government must issue more money. As we said before, under the gold standard, printed paper money must match the gold reserve. At that time, in order to reserve more gold, the American government ordered private individuals to hand in gold coins and bars. The Federal Reserve bought gold at a price of $20.67 per ounce, and then passed a law making it illegal for private owners to own gold. Finally, it was set at $35 per ounce of gold. If you don't sell, the government can punish you. You see, the American government is in a hurry and its own people are robbing it.

After the outbreak of World War II, the United States did not suffer any damage. When other countries were in full swing, the United States began its old job again, that is, selling arms and materials everywhere. No matter which country, as long as you have gold in your hand, the United States is willing to do business.

Have you noticed that from the beginning of World War I, the United States basically only did one thing, that is, to do business and engage in gold, so by the end of World War II, the United States' gold reserves had accounted for more than half of the world, which was not only a huge increase in gold reserves, but also a huge progress in American science, technology and military strength during World War II. If before World War I, the United States only achieved industrial catch-up, then by the end of World War II, the United States had achieved comprehensive catch-up and truly became the leading brother in the new world.

Since it is a new world, there must be a new order, and this new order is the establishment of the Bretton Woods system.

1In July 1944, hundreds of politicians, scholars and economists from more than 40 countries around the world held a meeting in Bretton Woods, USA, mainly discussing the establishment of the post-war international financial order. At this meeting, the United States proposed that the dollar be linked to gold and other currencies be linked to the United States. The anchor price of USD and gold is USD 35 per ounce of gold, so countries should use USD for international trade and settlement. After this operation,

The establishment of the Bretton Woods system can only be said to be the first step of dollar hegemony, because the issuance of dollars at this time is still limited by the amount of gold, otherwise other countries will not be able to exchange dollars for gold, and they will lose their credit.

After the war, with the economic recovery of various countries, the United States kept borrowing from other countries, and more and more dollars flowed out of the United States. Other countries had to exchange dollars for gold. After all, gold is an eternal hard currency, and America's gold reserves will soon be insufficient. Faced with this situation, the US government is certainly unwilling. What shall we do? Change the rules immediately. I can't guarantee that you can change gold into dollars now, that is, the dollar is decoupled from gold, which means that the Bretton Woods system has officially failed.

Will other countries be willing? Of course, I was unwilling at first, but what can I do if I am unwilling? At that time, 80% of foreign exchange reserves of all countries were in dollars. If all countries give up the dollar, these reserves will really become waste paper, and the United States is actively trying to save its credit. Later, the United States and Saudi Arabia reached an agreement that the United States provided protection for Saudi Arabia, but Saudi Arabia's oil must be settled in dollars, thus opening the oil-dollar era.

As the largest energy source, oil is necessary for the development of all countries. If the oil of the largest oil producer is settled in US dollars, then the US dollar can continue to guarantee its dominance. All countries have to find ways to reserve dollars, but the status of the dollar has been strengthened. Not only that, because the dollar is completely decoupled from gold, its circulation is not restricted by gold reserves. In theory, the United States can print as many as it wants.

In the past, the dollar represented gold, but now the dollar only represents the credit of the United States, which means that the United States guarantees what you can get with dollars, and other countries also believe what you can get with dollars. Don't underestimate this change. It is precisely because of this change that the United States can now increase or decrease the circulation of dollars according to its own needs, so as to achieve the purpose of affecting other countries' economies, and the hegemonic position of harvesting global wealth with dollars can be truly realized.

3、

Before talking about how the United States harvests the world with dollars, let's talk about why it needs dollars.

In fact, human beings had no money at the beginning of exchange activities. Zhang San needs food and Li Si needs skins, so Zhang San can directly exchange skins with Li Si for food. Of course, there is also a measurement problem, that is, how much skin can be changed for how much food. This period is a period of barter. There is a defect in barter, that is, Zhang San's demand may not be consistent with that of Li Si, and Zhang San may need another animal skin.

For the convenience of exchange, people began to look for a recognized medium. With this medium, you can go to the market to exchange what you want. This medium is money. Humans use many things as money. Anything whose value is widely recognized can be used as money in theory. For example, during the War of Liberation, opium was used as currency on the black market because the currency issued by the Kuomintang depreciated rapidly.

As far as modern society is concerned, every country has its own currency, which is recognized by everyone within the country. However, buying things in domestic currency in international trade may not be recognized by other countries. At this time, you need to find an intermediary, and the US dollar is this intermediary.

You should understand why everyone needs dollars now, because you can do business with other countries only if you have dollars in your hand.

At present, the international settlement of bulk commodities is mostly settled in US dollars. In the early days of reform and opening up, our primary task was to earn foreign exchange through exports. All those who can earn dollars are sold out, because only by earning dollars first can we introduce equipment and technology with dollars. Without these two things, we cannot develop independently.

It is precisely because people all over the world need dollars that the United States can use this hegemony for basic harvest.

This basic gain is said every day on the Internet. American consumption, the world pays.

There is a common sense that only the United States can print dollars. If other countries want to get dollars, they must get them from the United States, which is impossible.

If you want to get dollars, you must change them. Americans like to drive Japanese cars, so Japan can sell them to Americans. Americans like to wear clothes made in China, so China can sell them to Americans.

Commodities from other countries continue to flow into the United States, and dollars continue to flow to countries around the world.

On the surface, it is fair that other countries paid for the goods and the United States paid for the dollars. But don't forget, the dollar is just a piece of paper after all. Now that it has fully entered the informationization, the US dollar may just be a string of numbers in the account. This paper is entirely supported by the credit of the United States, while other countries have paid real resources.

Since World War II, American manufacturing has gradually moved out. The United States no longer produces its own daily necessities because it only needs to print money. Naturally, other countries sell these things to the United States, and no matter how much money the United States prints, it can control inflation within an acceptable range, because its money can circulate all over the world, which is equivalent to helping the United States transfer domestic inflation with people all over the world.

It is this logic that the United States dared to print money desperately during the epidemic. It is also this logic that the American people can enjoy a high-quality life without production.

4、

If Americans just go shopping around the world with dollars, even if they buy hard in buy buy, the impact will not be too great. In fact, because of the strength of the dollar, the United States can use the dollar to complete a higher level of harvest and even drag down a country. There is also a special word for this operation, called dollar tide.

In other words, the dollar is like the ebb and flow of the sea. Wherever it flows, there will be prosperity, but once it recedes, there will be a crisis in that place. Between this rise and fall, the United States cut a wave of wool.

The baton to control the flow of dollars is that the Federal Reserve raises interest rates and cuts interest rates.

Many people may not know what it means to raise interest rates and cut interest rates. Let me explain a little here.

When we go out to borrow money, in addition to the principal, we usually have to pay interest according to a certain proportion, so it is the same to borrow money from a bank. At maturity, in addition to the principal, we have to pay interest to the bank.

If banks cut interest rates, people's willingness to go to banks for loans will be enhanced, because the interest paid to banks will be reduced after maturity, which is equivalent to reducing the cost of loans. On the contrary, if the bank raises interest rates, your loan cost will increase.

The Fed cuts interest rates and raises interest rates almost the same, except that it is not ordinary people who borrow from the Fed, but the US government or various commercial banks, and ordinary people finally go to commercial banks for loans.

After understanding this truth, let's look at how the United States operates.

First, the Fed releases water by cutting interest rates. At this time, it can easily borrow dollars. You see, during the epidemic, the Federal Reserve directly lowered the interest rate to zero and began to print money desperately.

These dollars can't stay in the bank all the time after lending, because it's not cost-effective to put them in the bank with interest. The wisest thing to do is to go out and invest in developing countries and buy high-quality assets from developing countries. Capital usually doesn't invest money in industry, because industry makes money slowly, and the best place to go is the stock market and the property market.

When more and more capital enters these markets, you will find that the prices of these assets will be higher and higher, and the industry will be prosperous. If interest rates are kept low, hot money will keep pouring in, asset prices will keep rising, and employees in related industries will follow suit to make money. It seems that there are only advantages and no disadvantages.

But when asset prices rise to a certain high level, the Fed will start to raise interest rates in the name of curbing inflation. As long as the dollar raises interest rates, those dollars that flow out will return to the United States one after another.

Because the interest to be repaid has increased now, the most sensible way for capital is to cash out at a high level and return the cashed money to American banks as soon as possible. If you don't pay back, the income you earn from your investment may not be enough to pay back the interest. As a result, those previously released dollars have returned to the United States with several times of appreciation. The United States is equivalent to doing nothing and earning a wave of price difference in vain.

It may be a disaster for these countries whose assets have been pushed up by the dollar before. Because of the sudden withdrawal of funds, many projects that have already started may suddenly have no follow-up funds and have to stop. If you don't take over the property market, it may collapse directly. The original prosperity may fall to the bottom in an instant.

When your assets plummet to the bottom, the dollar will return to the market and start the next tidal cycle.

In the 1970s, Latin American countries were brought down by the United States. At that time, Latin American countries had just started industrialization and needed capital and technology. To put it bluntly, they have to earn dollars first. At this time, the United States began to give various opinions.

For example, let Latin American countries sell resources first, and then they will have dollars. Then they will attract foreign investment, and they can also borrow from the World Bank. Anyway, the interest rate was very low at that time and it was easy to pay back.

Latin American countries have also done this according to the suggestion of the United States, and the initial effect is very good. When the oil ore is sold, the original funds will be available, and the money borrowed from the World Bank can also be used to develop industrialization. After the domestic market is completely opened, people can also buy cheap foreign goods because of low tariffs, and will soon step into the ranks of developed countries.

By the end of 1970s, the Federal Reserve suddenly raised interest rates, which suddenly rose to a horrible 19%, and the dollar continued to appreciate. Since most Latin American countries have developed through borrowing, the debts that these countries need to repay have also increased greatly. At this time, Latin American countries sold almost all their resources. A large number of newly developed industrial enterprises have to go bankrupt because they are unable to pay their debts, and even the country has to use electricity and railways to pay their debts.

Later, the United States used similar means to create the Asian financial turmoil and harvested another wave of newly developed Southeast Asia.

Why our country has always maintained a cautious attitude towards foreign investment is because there are too many lessons, and the country cannot give up the financial bottom line for development.

5、

Since the dollar is so overbearing, can we not use it? As I said before, of course not. You can't do international transactions without dollars. Then can we find a new currency as an international currency? Isn't the international currency status of the pound replaced by the dollar? This method is possible in theory, but it can't be realized in the short term.

Let's look back at the history of the pound being replaced. The industrial economy of the United States surpassed that of Britain in 1894, but it was after World War II that the dollar really replaced the pound. More importantly, the reason why the dollar can replace the pound is not only that the United States has become stronger, but more importantly, Britain has completely declined. After two world wars, Britain's national strength has been exhausted, and the value of its currency cannot be guaranteed, making the dollar take advantage of it.

The fundamental reason for the strength of the dollar is the strength of the United States itself. The United States is still the world's number one economy, and this number one is not that kind of narrow victory. As the second largest country, China's GDP is only 70% of that of the United States, so as long as the United States does not collapse, the dollar will not collapse.

As we said before, the dollar has completely become a credit currency since it was decoupled from gold, that is to say, it has no meaning, just American credit. American credit means that as long as you hold dollars, you can exchange things in the United States. As long as everyone always believes in this promise of the United States, the status of the dollar will not change much.

When we say credit, we don't mean that it is more difficult than anyone's gun. At that time, the Kuomintang was so dictatorial that no one believed that the paper money it issued could last for a long time. It is also related to the soft power of the country's economy and education, and among these soft powers, the United States is also the first in the world.

Maybe you don't understand the power of credit. Let's give an example.

In 2008, the subprime mortgage crisis broke out in the United States. As a result, the crisis quickly evolved into a global financial storm. It stands to reason that the dollar as the eye of the storm should continue to depreciate and eventually collapse completely, but the actual situation is just the opposite. A large amount of money poured into the United States, and the dollar not only did not depreciate, but appreciated.

In addition to the return of American companies' own funds, a large part of these funds come from other countries. These funds are used to buy US Treasury bonds, which is equivalent to the government's debt. If the government has no money, it can raise funds by issuing government bonds.

Why do countries buy US Treasury bonds when the global economy is so turbulent? This is equivalent to lending money to America for development. The reason is that everyone believes in the credit of the US government.

The concept involved here is capital hedging. When the financial market is improving, capital will prefer some risky assets, such as stocks and real estate. After all, high risk and high return, and the market is prosperous, the probability of making money is still relatively high. However, once the global economy is in turmoil, capital will definitely withdraw money from high-risk assets. This is because they will choose safe assets to hedge their funds, which means it doesn't matter whether they make money now.

Go to the global financial market to find out what assets are safest. Just dollar assets, buy us treasury bonds. After all, America is the world's number one. Don't take money to buy U.S. treasury bonds, and don't buy the treasury bonds of Southeast Asian countries? America can't collapse first.

It is because everyone has this confidence in the United States that the worse the American economy is, the more people are willing to lend money to the United States. Even during the financial crisis, the interest rate of US Treasury bonds is negative, which means that if you lend money to the United States, you will not only get no interest, but also pay back the money, and you can't stop people from buying US Treasury bonds.

You see, sometimes the market is really unreasonable.

At the peak of our country's foreign exchange reserves, there were 4 trillion US dollars, and now we hold more than 654.38+0 trillion US Treasury bonds. Many people don't understand why we buy so many American debts. If we sell all our American debts, America will collapse. I feel very relieved.

In fact, we are riding a tiger now. When we first developed, we tried our best to earn foreign exchange in order to introduce advanced technology. When foreign exchange increases, we always have to find a place for money. It is definitely impossible for you to invest in high-risk assets such as real estate and stock market. If you lose money in foreign exchange, you will be in big trouble. You can only buy American debt. After all, American debt is safe, and gradually you will buy more and more American debt.

If we suddenly sell off American debt in a big way now, it will definitely cause global panic. If everyone follows suit, the dollar will surely plummet. So many dollars in our hands will also suffer. The country will definitely not do this, we can only keep it. Not only our country, but also most countries in the world are facing this dilemma.

However, judging from the current trend, China is slowly reducing its US dollar reserves and US debt, and it may be less in the future.

In the long run, the influence of the dollar will definitely decrease gradually, because its crazy harvest of the global economy is also constantly overdrawing the credit of the United States. Once bankrupt, it is difficult to establish credit again, but this speed will certainly not be as fast as everyone expected.

Many people think that the epidemic situation in the United States is so bad that the country is about to collapse, which is too ignorant of the United States. The epidemic is far from shaking the fundamental strength of the United States, and in the long run, it may be a good thing for the United States, because the epidemic mainly hurts those who are already at the bottom of the United States, and those who maintain the powerful upper elite of the United States have little impact, and now they don't have to bother to solve the welfare of the bottom.