Lead:
I often see some jokes on the Internet, which probably means that if the mainland is short of money, it will be good to print a few foreign coins, and the people who develop their brains must not understand how serious the consequences of doing this are.
If the mainland is short of money and wants to print some foreign currencies to use, what will be the serious consequences?
Back in 1993, the location was Indonesia.
As a result of the onset of the economic crisis, the monetary system of Indonesia and other Asian countries with fragile economies collapsed.
Currency crisis
The 1997-1998 Southeast Asian financial crisis erupted.
The price of a pound of rice noodles was more expensive than a 10,000 dong coin in 1997.
The Indonesian government announced the closure of all banks for tourists who were on holiday in Bali, and investors came with bank cards to withdraw money, but were directly chased away by police officers wearing masks and carrying torches.
Huangliang's dream came to naught.
At the exchange office at the airport, the Indonesian rupee fell to 18,200 rupiah per dollar.
After the currency crises of 1997 and 1998, Indonesia was in dire straits.
Strong inflation has completely unaffordable poor residents who were struggling to make ends meet.
The common people turned all the value of the currency into gold bars piece by piece, and then hid the gold bars in their homes.
This also led to a sharp increase in demand for gold, but the international gold price soared at that time, once rising to 3,000-4,000 US dollars an ounce.
The common people cried again, and some people converted gold bars into gold coins to exchange money in order to have a little energy and clean money, but the depreciation fee was too high, almost ten or twenty percent.
At this moment, Indonesia's gold counters became a hot black market, and finally the Indonesian government urgently issued temporary regulations prohibiting the buying and selling of gold between private individuals, and only bought and sold in state-specified shops.
Indonesia's currency crisis has spread very widely, and many Indonesian enterprises with movable property exports have closed down in an instant.
Because the central bank of Indonesia at that time attached great importance to foreign exchange reserves, foreign exchange reserves were seriously below the warning line, so an emergency meeting could only be allocated to convene the then governor of Indonesia's central bank, Sia Gao.
The IMF intervened
Indonesia's central bank governor at the time, Siahao, had planned to use the foreign exchange reserve law to prevent the depreciation of the currency, and also formulated a series of methods to prevent the depreciation.
But after trying, it turned out that the dollar is still rising by leaps and bounds, and the Indonesian rupah is also plummeting.
Indonesia's foreign exchange reserves are not much, although it also has more than 30 billion US dollars, but in the face of this "big crocodile" of capital scale, it is like Southeast Asian countries together are just a "little ant", and they have no ability to stop him from soaring.
At this time, Sia Gao realized that the way the global financial market played had undergone earth-shaking changes, and the global quantum fund had fished in troubled waters to disrupt the entire financial market.
At this time, Sia Gao also came to his senses, and it was difficult to help his parents escape the catastrophe if he wanted to save his parents' money, and in the end, Sia Gao did not spend a lot of money on the Bank of Indonesia and decided to depreciate the Indonesian rupiah.
At the end of October 1998, Indonesia's central bank admitted that the Indonesian rupiah had depreciated by 74% against the US dollar, the largest depreciation of the Indonesian rupiah since 1927.
In order to support Indonesia's economic system, the International Monetary Fund has formulated a series of rescue plans.
Supported by the IMF's continued positive news, the Indonesian rupah gradually stabilized its exchange rate, eventually staying at 8,700 rupiah per dollar.
The impact of this currency crisis on Indonesia is very large, and even affects the Indonesian education sector.
Due to the depreciation of the Indonesian currency, the low tuition fee of only $10 per school year has skyrocketed to $90, so many parents have no choice but to give up their education in order to pay for schooling, and go to work to earn money for their children's schooling.
Indonesia's currency crisis is arguably the worst in the last 100 years.
The degree of currency depreciation in Indonesia also has a previous history, the Indonesian rupee in a tin ore reserve reform in Indonesia because the mineral reserves do not meet expectations and depreciation due to overcapacity, the Indonesian rupee before the desperate situation of the depreciation is under the pressure of the United States with financial diplomacy, for the loss of the hair of the United States and the currencies of other countries in Southeast Asia fell together, the difference between the two maximum depreciation is 2:74.
Indonesia, which is also a Southeast Asian country, depreciated about three times more than the Philippines in one currency crisis.
The main reason why Indonesia's currency depreciation is so fierce is that this currency crisis is a very special currency crisis, it is not a passive devaluation, but an active currency depreciation for economic development.
Indonesia's steel industry has experienced a plunge in the face of China's abundant cheap steel.
Indonesia's steel industry is losing money, and Indonesia's state-owned enterprises are falling under the shoulders of economic giants.
The Indonesian government realizes that now Indonesia's steel industry has suffered serious losses, and Indonesia's state-owned enterprises are all products of the inflationary era, and the losses are doomed to collapse, so they can only be allowed to go bankrupt, after all, the country cannot save state-owned enterprises one by one.
However, in the same way, the collapse of state-owned enterprises also means that a large number of workers are laid off, so the Indonesian government bailed out state-owned enterprises before they collapsed.
This bailout is to allow SOEs to go bankrupt and go bankrupt, but they need to pay a huge amount of money for the SOEs to fail.
The government pays a certain amount of money to these state-owned enterprises that are about to collapse to pay their foreign debts.
This amount was also a very large amount of money for the Indonesian government at that time, totaling more than 3 billion US dollars.
The Indonesian government then used its foreign debt to pay huge sums of money to these state-owned enterprises.
And these huge sums of money are all paid by foreign loans, and the vice president of Indonesia said a sentence that makes people think that I will buy as much bank money as I have to pay off as much debt as I want.
It was the Indonesian government's "big spending" that caused Indonesia's external debt to rise to more than $20 billion.
In order to pay off its debts, the Indonesian government had to issue cash-for-cash bonds among major banks to boost the activity of the financial market.
However, when banks exchange bonds, the value of the bonds also keeps falling, and they quickly fall into the lower tier of assets.
In this cycle, the bank-to-bank assets have been repatriated into the country's capital flows, and the government has printed money to pay for the money to make up for the difference, and in the end, Indonesia's currency, the rupiah, has unfortunately lost 74% of its value.
Indonesia's depreciation is unprecedented, and it is also a classic case that if a country does not print money properly, it will not only fail to solve its economic problems, but will make the economy worse.
Indonesia's currency crisis is due to the free floating exchange rate, the second is that Indonesia has only tens of billions of foreign exchange, and the third is because of the well-known huge foreign debt.
Can you print money if you lack money?
The mainland's current foreign exchange reserves can be regarded as the largest in the world, and the mainland's foreign exchange reserves have been the world's largest for several consecutive years.
This scale is no longer something that the United States can stop, and the United States' foreign exchange reserves dare not be said to be the first, but they are also top-notch.
The mainland's foreign exchange reserves now reach $3.3 trillion, which is much larger than that of the United States.
This scale of funds cannot be stopped even by the United States, which also means that the mainland's economic strength should not be underestimated.
In the face of the mainland's huge foreign exchange reserves, foreign countries dare not touch them easily, and the scale of China's foreign exchange reserves is already in front of the International Monetary Fund.
As one of the founding countries of the International Monetary Fund, the United States led the formulation of this organization, and the United States' own foreign exchange reserves are not very large, but in those years, the United States relied on gold to control the economies of various countries around the world.
However, although the mainland's foreign exchange reserves are already very large, if the mainland wants to use the money from its foreign exchange reserves to buy US dollars and finally print the exchange rate, if the Indian exchange rate is not high, wouldn't it be even more able to increase the mainland's foreign exchange reserves.
The United States is not only pressed far by the mainland's huge foreign exchange reserves, but even if the mainland does not sell dollars to the United States, it will not take many years for the United States to take a car and sell it for a few hundred dollars to buy a truck to pull currency, just like Zimbabwe.
However, printing foreign currencies without selling dollars is not the solution.
As the leader of the International Monetary Fund, the United States will naturally not let the mainland print foreign currency exchange rates if the mainland prints foreign currency exchange rates.
It will only convene various countries and say that the mainland is a big godfather who kicks people, and we will all protect the big daddy who kicks people.
Then it is better for the mainland not to print foreign currency exchange rates, but even if it is to print foreign currency exchange rates, the monetary funds of various countries will not recognize the foreign currency exchange rates of the mainland.
Epilogue:
The mainland's foreign exchange reserves cannot be shaken by the IMF, and foreign countries are also looking forward to it.
The size of the mainland's foreign exchange reserves proves to all countries in the world that the mainland is an inviolable power.
It is very important to build up one's own foreign exchange reserves, and it is even more important to consolidate the position of the mainland as a strong country while ensuring that one's foreign exchange reserves will not be infringed upon.
Whether it is going back in time or the next currency crisis, the mainland's foreign exchange reserves are all in vain, but if the mainland wants to print foreign currency, the consequence will be to fall off the altar.