I forgot the specific principle name after graduation.

However, it can be explained that if country A wants to have the same amount of foreign exchange reserves (US dollars), it must be offset by the equivalent domestic currency, that is, currency issuance. Under the gold standard (you must know this, otherwise don't learn it), the issuance of money is based on the equivalent gold. For example, China has100t of gold, and only100t of gold can be issued. Every country's currency is equal to its own golden bag.

But for example, you only have 10 tons of gold, but there are many people who need money, so you issue 10 pieces 100 yuan, and no one can measure the money and do business. As a result, the government boldly issued 100 100 yuan banknotes, and the value represented by each banknote declined. If you want to buy an apple that used to be 1 yuan, you have to pay 10000 yuan to get it, because 100000 copies have been issued. This means that the price has gone up.

Under the paper money standard system (name forgotten), currency issuance depends on the credibility of the government. No matter how much gold you have at home, my country is strong, and I have the final say. A typical example is the United States-no one knows how much gold there is in the United States, but people dare to use their country's reputation to issue it because of their strong national strength (paper money is indeed better than gold). So how does the United States issue money? It relies on foreign debt-I rely on the credibility of my government to sell government bonds and other countries buy them. Their money has become an investment of the United States, which uses it to develop its own country and provide the value base of paper money for the expanding business.

What about those countries that bought American bonds? How do they buy American debt? As mentioned earlier, paper money depends on the credibility of the government. Therefore, because the exchange rate has been formed according to the loan interest difference (financial terms), the difference of economic aggregate (personal capital), the unfavorable import and export surplus (trade terms) and other reasons, people like the China administration have to issue RMB to buy American debt with the people's purchasing power as a guarantee. As I said before, a country's economic aggregate (or it can also be understood as gold content) is the basis for issuing money. However, if we buy an extra $6,543,800,000 in US debt out of thin air, the government will issue an extra $6,543,800,000 *6.3 (? ) equivalent to RMB. The total social value is there, but you suddenly issue more paper money, which can only depreciate. What you used to buy for 100 yuan can be bought in 200 yuan now, because you paid more.

I have graduated now. I used to study trade. I passed the postgraduate examination in finance, but I dropped out. Now he is engaged in trade and automobile industry.

I haven't read books for many years, and I may be confused, and many of them may be wrong. I hope I can help you.