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1 China's Decline: Currency
After a less-then-successful KBhHIST201ChinasDeclineWRTReopening reopening after KBhHIST201ZhengHeSeafaring Zheng He's expeditions, there was a run on currency that cause hyper in- and de- flation due to incapable leadership and faulty systems. This caused a reliance on silver, which brings with it KBhHIST201ProblemsWithSilver silver problems.
1.1 A little history lesson…
KBhHIST201MannMing (C. Mann's) 1500s Ming
- Originally started as bronze coins
- Became inefficient and so started printing paper money
- Bronze production could not match paper money
- Paper money became fiat money— had purchasing power but no backing
- But! Fiat money is usually good for government
- Not influenced by metal prices
- Could be decoupled and printed at will
- Which…. Resulted in the Yuan overdoing it and inventing hyperinflation
1.2 Ming vs. Hyperinflation
KBhHIST201MannMing (C. Mann's) 1500s Ming
- China tried to counter inflation by not printing money
- Caused economic hardship
- Deflation to the point where merchants are starting to accept counterfeits
- One emperor came up with the brilliant idea of counterfit-proof currency, but that only helped adoption for about a year
- Emperors kept banning and failing to ban currencies
- Used the strategy of "your money is not worth it anymore" to prevent hyperinflation
- Unfortunately, caused problems surrounding the fact that currency as a whole became untrustworthy
Government policies were often accidental by-products of ministerial intrigues
This widespread distrust of currencies caused the Ming to leverage…
1.3 Silver!
KBhHIST201MannMing (C. Mann's) 1500s Ming
- People resorted to carrying around silver, which was… better, but it
is quite inefficient as well => coins ultimately made up 1/10ths of
transactions
- Government gave in, started asking for taxes in silver too
- Creating unhealthy feedback loop leading to
KBhHIST201ProblemsWithSilver
Problems with Silver
- People sold silk and porcelain to side silver merchants
- Used silver to pay taxes
- Taxes fund operations against silver merchants
- "Ming government was at war with its own money supply"
- Eventually, government gave in and allowed people to trade overseas with, sigh…, silver, ushering in KBhHIST201ProblemsWithSilver Problems with Silver