jdhmnovel Chapter 476
Chapter 476
But when it came to Wei Wu, he was accused of using waste paper to rob money from the people. How could he tolerate this?
Just when Zhu Yuanzhang was about to lose control of his anger, Wei Wu spoke up to calm him down.
"Uncle Zhu, I know you will be very angry when you hear these words, but you might as well listen to me first."
"Okay, let's listen to you. We want to see how we can rob money from the people!"
Wei Wu knew that Zhu Yuanzhang was angry, but as the saying goes, rotten flesh must be cut off before new flesh can grow.
So even though he knew Zhu Yuanzhang was not happy to hear it, Wei Wu still brought the issue to the surface.
"To explain this clearly, we must understand the nature of money. Mr. Zhu, is there anything in this world that can appear out of thin air?"
Zhu Yuanzhang pondered for a moment, shook his head and said:
"No, nothing can be conjured out of thin air."
"If that's the case, then why can money appear out of thin air?"
Hearing this, Zhu Yuanzhang frowned and was about to speak, but Wei Wu spoke first:
"For the past seven years, whenever you were short of money, you would issue large amounts of treasure notes, but the difficulties were only shifted, not resolved."
"Your reckless overprinting of banknotes will ultimately result in more and more banknotes, but their value will become less and less."
"Just as water flows downwards, so too does money. These treasure notes will eventually circulate into the hands of ordinary people, but they are no longer valuable."
"People hold precious notes in their hands, but they can't buy things of equal value. Will the people ultimately pay for this bad consequence?"
Upon hearing this, Zhu Yuanzhang suddenly widened his eyes and asked:
"Can money become worthless?"
"Of course money will become worthless!"
"We printed one guan of money, so this treasure note can naturally buy things worth one guan of money. Why is it worthless?"
After Zhu Yuanzhang finished speaking, Wei Wu sighed helplessly, then shook his head and said:
"Mr. Zhu, you overlooked a very important issue when you increased the issuance of treasure notes."
"what is the problem?"
“In the absence of a sufficiently valuable anchor, excessive printing of a large amount of currency will cause the currency to depreciate.”
After saying that, Wei Wu took out a crumpled one-yuan banknote from his pocket and placed it on the table, then continued:
"Baochao isn't money at all! After all, it's just a piece of paper with various patterns printed on it, isn't it?"
"It itself is a low-value piece of paper with no purchasing power. It can only be used because the anchor is valuable."
"But you don't have any gold or silver reserves to match that. Doesn't that mean this money just appeared out of thin air?"
After hearing Wei Wu's words, Zhu Yuanzhang retorted again.
"But the people don't know how much money is in the treasury. If we tell them we have enough gold and silver, they will definitely believe us."
"Yes, you are right. That's why I said that the anchor of the treasure notes is the credibility of the imperial court! But this is not enough."
While speaking, Wei Wu took out a silver ingot weighing one or two taels from his arms and placed it next to the treasure note.
"Because you don't actually have enough gold and silver, you ordered that the exchange of treasure notes for gold and silver is prohibited, which has damaged your credibility."
"Why is it that even though you've promoted the use of treasure notes, most people at the bottom of society still prefer to use silver and copper coins? That's the problem."
After saying that, Wei Wu took another teacup from the side and placed it next to the silver and banknotes.
"If this teacup is worth one guan of banknotes, and one guan of banknotes can be exchanged for one liang of silver, then their values are equal."
"But now the treasure notes can't be exchanged for even a tael of silver, because they are anchored by the court's credibility. So their value is no more than a teacup."
"Because teacups can be exchanged for one ounce of silver, but banknotes cannot, under such circumstances, people naturally lack trust in banknotes."
After hearing Wei Wu's words, Zhu Yuanzhang fell silent, because he understood, and it was because he understood that he remained silent.
While he was silent, Wei Wu did not stop, but continued:
"Now let's talk about the issue of currency devaluation. The people already lacked trust in the banknotes, and you've over-issued them."
"The ultimate result is currency devaluation, and currency devaluation plus overprinting will lead to an even more dire consequence: inflation!"
Hearing this completely unfamiliar word, Zhu Yuanzhang and Zhu Biao asked questions at the same time.
"inflation?"
"inflation?"
Wei Wu also knew that they would definitely not understand, so he gave them a very vivid example.
"Yes, it's inflation. In fact, this happened even in my time."
"In my time, there was a country that, like you, recklessly issued excessive currency and ultimately suffered the consequences."
Having said that, Wei Wu stretched out his hand and pushed the teacup in front of Zhu Yuanzhang.
"Take this teacup for example. Using my country's currency, it would cost about ten yuan to buy it."
"In my time, the numbers were ones, tens, hundreds, thousands, tens of thousands, hundreds of thousands, millions, tens of millions, hundreds of millions, billions, and so on."
"But in that country with inflation, even if they spent a trillion dollars, they still couldn't buy this teacup."
"Even the paper used to print money is worth more than their money. This is the inflation caused by currency devaluation."
After Wei Wu finished speaking, Zhu Yuanzhang and Zhu Biao both took a deep breath!
One trillion yuan can't even buy a teacup. If the currency is devalued to this extent, doesn't printing money mean losing money?
Just as the two were shocked, Wei Wu spoke again:
“Currency depreciation occurs when there is not enough anchor for the currency, and inflation occurs when the amount of currency exceeds the actual demand.”
Having said that, Wei Wu shook the teacup in his hand again.
"Let me use this cup as an example. Let's say there are only 10,000 cups like this in the world, and 10,000 taels of silver."
"The value of this cup is only one ounce of silver each, but if there were ten thousand of these cups, the value of silver would be one million ounces."
"Then the cup is now worth not one ounce of silver, but one hundred ounces. Do you understand?"
In fact, Wei Wu didn’t understand the concept of monetary economics, he just had a general understanding of some basic things.
The example he gave cannot be said to be correct, but it was enough to give Zhu Yuanzhang the most intuitive answer.
Zhu Yuanzhang did hear something from these words, and he felt a little scared.
At this moment, Wei Wu brought up the matter that had hurt Zhu Yuanzhang's heart.
"Uncle Zhu, I remember that taxes in the Ming Dynasty can be paid with treasure notes, right?"
"That's right!"
"That's one of the reasons why I say you're using waste paper to steal money from the people."
Upon hearing this, Zhu Yuanzhang's expression, which had just gotten better, darkened again.