If I fail to overcome the tribulation, I can only return to the Ming Dynasty and become a prince.

Chapter 191 Deflation and Inflation
The problem of over-issuance of currency is an unavoidable problem even in later generations.

No matter which country, no matter what political system, even if it is a gold-based or silver-based currency system, there will still be the problem of over-issuance.

In particular, a country that later established a global currency system made the world pay for its economic problems through excessive issuance.

Therefore, the problem of overshooting is unavoidable. The key is how to control overshooting.

However, the problem of over-issuance of money orders mentioned by Zhu Gaochi is not serious in Zhu Zhancheng's opinion.

On the one hand, there is enough silver in the money bank. This level of over-issuance will not cause a currency run and bankrupt the credit of the money bank and bills of exchange.

On the other hand, what Zhu Gaochi said is that the face value of a money order of one tael of silver can be used as one tael of silver, which is not a good sign.

In later economics, this phenomenon is called deflation, which means that under current price conditions, due to the reduction in money supply, the supply of goods and services exceeds demand, so the market tightens and the velocity of money circulation slows down. The currency is overvalued and the price level falls.

To put it simply, the money circulating in the market is not enough to meet the people's money needs, so the money becomes more valuable, and the people are unwilling to use money, resulting in slower economic development.

This is the situation that bills of exchange are facing now. The actual circulation value of currency is higher than the currency value.

As for the opposite situation, it is the situation faced by Baoqiao. A large number of excessive issuances will cause the currency to depreciate and the money will become worthless, which will also severely hinder economic development.

And this situation is inflation.

In later generations, both inflation and deflation will be a bad thing for the economy. Governments and central banks established by various countries will appropriately increase or decrease the issuance of currency based on market conditions and the country's economic growth rate that year.

Of course, future generations will generally not manipulate currencies so directly, but will use banks to raise or lower interest rates to make appropriate adjustments.

As for some governments that have no integrity at all, they directly print money and take advantage of their country's economy to be highly tied to the world to make the world pay for their inflation. This does not fall within the scope of normal regulation.

But for today's Ming Dynasty, this kind of unethical gameplay is also feasible.

With the current influence of the Ming Dynasty on neighboring countries, the currency of the Ming Dynasty can be used directly in small neighboring countries without any exchange.

Just like the Japanese country, because the country lacked coinage technology, it has been using copper coins from the Ming Dynasty.

The same is true for countries such as North Korea and Siam. Although they have certain national currencies, they are still more willing to use the Ming Dynasty's currency when faced with the Ming Dynasty's beautifully minted copper coins with strong currency values.

It’s just that the Ming Dynasty has been using Baoqian, a kind of wiping paper that its own people are unwilling to use, which makes neighboring countries afraid to use Baoqian, so that the impact of Ming’s inflation is not grafted onto neighboring countries. superior.As for the current money orders, Zhu Zhanyu can say with certainty that Zhu Gaochi and Xia Yuanji printed too few.

Of course, this does not mean that money orders should be overissued.

In fact, the bills of exchange issued by the money bank are not currencies. They only assume part of the functions of currency under the special environment and needs of the Ming Dynasty.

In essence, bills of exchange are more similar to bank deposit certificates or bonds. Because the market is optimistic about them, their value has increased.

In this case, if the court only uses it as a certificate of deposit or bond, there is no need to increase its circulation, or even artificially increase its value if necessary.

But the purpose of the court's creation of new money banks and money orders was to solve the inflation problem caused by the excessive issuance of old banknotes by issuing new banknotes. Therefore, what the court should do at this time is to issue more money orders to expand their circulation. , thus gradually replacing the original treasure notes.

Of course, this kind of additional issuance and excessive issuance are completely different. Reasonable additional issuance will help currency circulation and economic development, while excessive issuance will still cause inflation.

Therefore, after comprehensively considering various factors, Zhu Zhanjuan's answer to Zhu Gaochi is self-evident.

"But according to what you said Zhanjuan, it is necessary to issue more bills of exchange as much as possible to make it circulate. But doesn't this still contradict what you originally told me that the circulation amount and the amount of silver deposits should be roughly equal?" Although Zhu Gaochi said He understood a lot of things Zhu Zhanqi said, but he still couldn't turn around.

Although Zhu Gaochi is one of the few people in this era who can have a comprehensive understanding of the economy, he can only understand this kind of thing by himself. No one can teach him. Confucian scholar-bureaucrats will not compile this knowledge into books and publish it. They will only publish it. He denounced it as a miraculous skill, and then said that a gentleman is ashamed of his words.

Therefore, it is easy to understand that Zhu Gaochi was unable to turn around for a while.

Fortunately, he has a son who can understand this set of things. Although Zhu Zhanquan is not an economist and can plunder a country without any blood, he at least understands and can explain what is going on. .

"I think you have misunderstood one thing, dad. That is the relationship between the amount of silver deposits and the amount of circulation that I told you before. It refers to the relationship between the national treasury and the country's legal currency. But what is before you now It is a bill of exchange issued by a bank and the bank, that is, the relationship between the bank deposit certificates." Zhu Zhanju pointed out the misunderstanding that Zhu Gaochi had entered, and then explained: "Dad, you and Xia Shangshu are now comparing Bills of exchange are used as a kind of currency, and the same is true among the people, but in essence it is not currency, but just a certificate of deposit of silver, which can be exchanged for silver from the treasury, and can also be used to pay taxes to the government.

If it is just a certificate of bank deposit, then it is wrong for you to write another one. The over-issuance of 80 taels of money order is enough to bankrupt the credit of the entire New Bank. It only takes a little run by someone with ulterior motives to destroy the entire New Bank. There was a run on the money bank.

But it is not just a certificate of deposit, but a new banknote that the court intends to use to circulate throughout the country. Behind it is the entire Ming Dynasty's finance!What’s a mere 80 taels?Even the 200 million taels of money orders currently issued by the New Treasury are not worth mentioning to the entire Ming Dynasty!
The imperial court's annual fiscal revenue is as high as more than 2000 million yuan, and these 200 million money orders are not even a tenth!Not to mention being on par with the wealth of the entire Ming Dynasty.

So dad, you don’t actually need to worry about over-issuance, because if you want to turn the money order into currency, you should look at how much money is in the account department, not how much money is in the new treasury. "

"I see, it makes sense to me when you say this. It means that with the Ministry of Accounts behind you, it's okay for the new bank to issue more money orders?" Zhu Gaochi nodded clearly, but then he shook his head. , as if to warn himself: "The new money bank has a backing from the Ministry of Accounts, but the Ministry of Accounts does not have a backing, so when the drafts issued by the new money bank become new banknotes issued by the Ministry of Accounts, they must not exceed Farewell, this should be written into national law!"

(End of this chapter)