Just on Friday, the British Prime Minister British Prime Minister The British government, led by Tras, announced its largest tax cut plan in the past 50 years in order to stimulate the British economy:
0 canceled the plan to raise corporate tax to 25%, maintaining it at 19%, the lowest level among G20 countries;
0 1 canceled the national insurance tax increase of 1.25%;
0 1 reduced the basic tax rate of income tax from 20% to 19%;
0 1 canceled the maximum tax rate of 45% for employees with annual income exceeding 150,000 pounds, and set it at 40%.
significantly cut stamp duty. It is said that the decision will reduce the burden on 200,000 home buyers every year;
set up a new "investment zone" to relax supervision of entrepreneurs;
takes measures to reduce land use planning restrictions;
releases a tourist tax refund plan;
cancels the alcohol tax increase plan;
cancels the upper limit of bankers' bonuses and imposes an 8% tax on bank profits.
…
This is also the "big move" that Tras deliberately learned from the Thatcher of that year.
Not only that, on September 22, Bank of England announced that rate hikes 250 basis points, raising the interest rate of pound to 2.25%.
It’s a pity that the market does not buy it.
Feder raised interest rates by 75 basis points on Thursday, which is more than the UK's dot chart, and dot chart shows that it has increased more. Therefore, after the British government's tax cut plan was released, the three major financial markets of British stocks, bonds and foreign exchange plummeted:
In the stock market, the UK's FTSE 100 index plummeted by 141 points, a drop of nearly 2%;
5-year UK Treasury bond yields rose by 60 basis points a day, setting the largest increase in history. The benchmark 10-year UK Treasury bond yield in the financial market increased by more than 30 basis points in the day, also setting the largest single-day increase in history.
pound pound against the US dollar, hitting a new low in 1985 for the third consecutive day, falling by more than 3% intraday, the largest decline in two and a half years.
Originally, the UK had high debt and severe inflation. As a result, you didn’t say that you didn’t raise interest rates enough, and you tried hard to reduce taxes. Do you want to go to heaven?
(I) The picture of the three-kill picture of British stocks, bonds and foreign exchanges
First look at the British stock market, the Financial Times 100 Index, after yesterday's plunge, basically returned to the level at the end of 1999. It can be said that it has worked hard for decades, and once returned to before liberation.
You should know that The British Empire stock market once served as the burden of the global core stock market for many years. At that time, almost all important global companies had to go to the London Exchange to list...
In the era of credit currency , when currency depreciation for decades, the British stock market price returned to more than 20 years ago. How could it be?
Let’s look at the UK Treasury bonds again.
Looking at the straight up line, it was the result of the plunge in the past month. After yesterday's plunge, the yield on the UK's five-year Treasury bonds has exceeded 4%, which has surpassed the 2008 financial crisis.
Let’s look at the pound exchange rate .
A year ago, the exchange rate of the British pound against the US dollar was as high as 1.39, and now it is 1.085. In the following year, it depreciated by 22%, and the exchange rate of the pound-US dollar hit a new low.
According to the exchange rate of pound-to-US pound, the huge depreciation this time is not just a new low in the past few years. In fact, broadly speaking, except for the individual days in early 1985, the British pound has not been so miserable in the past 200 years!
(two) The lace story of the pound
Many people may wonder, why is the currency unit of pound pound (Pound) completely the same as the weight unit pound (Pound)?
This is because they are the same thing.
The original meaning of pound is one pound of silver used as weight standard, so do you think they should be the same word?
What many people don’t know is that almost all metal currency in the world were weight units at the beginning.
For example, China's earliest round square hole copper coins came from Qin , which was directly called " Qin halve liang ", because the weight of this kind of copper coins was " half liang ", and in the period of Emperor Wu of Han, standard copper coins were recast, called Wuzhu coins - "zhu" is still a unit of weight. In the Qin and Han dynasties, 24 zhu = 1 liang.
Those who are familiar with the pound should also know that the abbreviation of the pound is L in Latin (£), why not P?
This is because, the first letter of the Romans is L, written by Libra.
In fact, before the era of Napoleon , the currency used by the French was not called franc , but Livre (Livre ), which is also the French way of writing Libra.
and today's Turkish currency is called lira (Lira), while the currency before Italy joined the euro zone, also called lira (Lira), are all written in different languages.
Before Germany joined the euro zone, its currency was called mark (Mark), which is what the Central Europeans call 1 pound of silver, just like the British used Pound to call Rome's Libra.
One pound of silver is not only a currency, but also a standard of weight. Other weights are weighed using this.
So, the word Libra also has the meaning of balance and fairness. Those boys and girls who like zodiac signs should also know that Libra means " Libra ".
By 2019, even Zuckerberg from Facebook came to take advantage of the hot topics and insisted on calling the blockchain stablecoin he designed, Libra, and wanted to replace fiat currency online, but it was stopped by the US Congress.
History, the British have used silver as currency. The standard one-pound silver is a unit of weight and the highest value currency. However, there is no currency in the world called "GBP".
489, The pioneer of the Tudor dynasty (Tudor dynasty), in order to demonstrate the royal power, he ordered the minting of "King Power Gold Coins (Sovereign )". He stipulated that the value of the gold coin = 1 pound of silver, and since then there was a special pound currency, specifically referring to this royal gold coin.
From then on, the British began to use gold as their currency more and more.
1694, the Bank of England, which owns the royal franchise, was established and began to issue government-approved bank notes (Bank Note). The Bank of England gradually fixed the face value of the issuance of bank notes, with a minimum of 20 pounds, and the other face value accumulated and increased by 10 pounds, with a maximum of 90 pounds. This is the origin of the pound note.
717 On September 21, Newton ( pair, the great scientist Newton ), who was the director of the British Empire Mint, submitted a currency report to British Parliament .
Great scientists analyzed the gold-silver price comparison between countries in mainland Europe, China, Japan and India, and then believed that the UK has an extremely serious shortage of silver, and gold is very abundant. Since this is the case, the UK might as well determine the value of the British currency on gold.
Yes, Newton not only discovered Newton's three laws, but also laid the foundation for gold standard . Later, the gold standard appeared under his suggestion. The British gradually transitioned from a silver-based monetary system to a gold-based one.
This process has been carried out for 100 years.
In 1816, the British Parliament officially passed a bill, the full name is the "Silver Coin Recasting and Management Kingdom Gold Coins and Silver Coins Act", which formally established the gold standard (Gold Standard), and the value of the pound is entirely determined by gold, and the silver coins that used to act as the main means of payment in life became auxiliary coins.
In 1819, the British Parliament once again promulgated regulations, requiring the Bank of England to be exchanged for gold bar in 1821 and gold coins in 1823, and the restrictions on the melting of gold coins and the input and output of gold bars were lifted.
UK has since entered the era of real gold coin standard.
(III) The pound exchange rate for 200 years
Starting from 1821, the pound became the standard British currency unit, and every pound contained 7.32238 grams of pure gold, which was the hardest-friendly currency in the world at that time and even in the next 100 years.
If any place, any institution or individual holds pound notes, you can unconditionally contact the Bank of England to exchange it into gold at any time.
Bank of England can achieve absolute gold coins exchange, and other banks can only give in to their consent. In 1826, the British Parliament allowed the Bank of England to set up branches in various places, expanding the issuance of paper currency from London to major cities across the country, and the Bank of England vouchers went from London to the whole country.
In the process of the UK's gradual adoption of the gold standard, the industrial revolution took place, and large-scale machine production began to replace manual production. Since then, human beings have entered the era of machine industry. The significant increase in industrial product output means that the vast overseas market is digested and more production raw materials are needed to supply.
Therefore, further foreign colonization and expansion became a natural interest demand for Britain. The economic strength increased, which in turn provided great wealth support for Britain's foreign military colonial actions. Britain entered a period of rising national strength cycle.
By the mid-19th century, Britain established multiple industrial sectors such as metal products, cotton textiles, iron smelting, shipbuilding, railway construction, etc., becoming the leading benchmark for the global economy. The British quickly became the richest people in the world, as proud as the Americans today.
1 In July 1844, the British Parliament passed the Bank of England, and the Bank of England basically monopolized the issuance of paper money across the country. With the spread of British colonial activities around the world, coupled with the British Empire's navy invincible battles, the British pound banknotes went all over the world and became the first world banknote for mankind.
In contrast, the US dollar, the king of paper money in the world, only adopted the gold standard in 1900 ( Note that the Federal Reserve has not yet established ), which is 79 years later than the British pound, and 1 US dollar is 1.505 grams of gold. In this way, the international exchange rate of pound against the US dollar is 4.89, and This has always been the pound-US exchange rate before World War I.
World War I hit Britain hard, but in order to maintain its financial position, Britain after the war has been trying to re-establish the gold standard and ensure that the pound does not depreciate.
Nominally, the British did restore the gold standard, but they could not exchange gold alone, but you must have a large sum of money to exchange for a large piece of gold. This is called the "gold nugget standard".
The nugget standard has been persistent for 3 years. The British economy is in a depression. What is waiting for is not dawn, but even darker, because the Great Depression of the United States broke out and soon evolved into the Great Depression of the world.
1 On September 21, 2031, Britain, whose face was swollen and no longer decent, was forced to give up the gold standard, and the pound-to-US exchange rate fell all the way.
1934, the US Roosevelt administration directly devalued the US dollar by 41%. One US dollar could be exchanged for 1.505 grams of gold, but it directly turned into 0.88867 grams, and the pound got a chance to breathe.
With the outbreak of World War II , Britain began to implement strict foreign exchange controls. Although the British Empire had been devastated by the war, the British pound still supported its proud head and fixed the pound-US exchange rate at the level of 4.03 US dollars.
945, the establishment of the Bretton Woods system under the US dollar, and the hope of the pound and the US dollar becoming the world currency was shattered, but on December 18, 1946, the British official still stipulated that the gold content of 1 pound was 3.58134 grams.
In July 11947, in order to stabilize the domestic financial order, the UK restored the free exchange of pounds from IMF after a large amount of loans. As a result, the British were not patriotic at all, and they all used pounds to exchange US dollars and gold. In less than a month and a half, Britain's gold and US dollar reserves decreased by 1 billion US dollars.
The pound that cannot be held back has been put down and no longer fat. Instead, the pound-to-US exchange rate has been directly adjusted to 2.8, which means that the gold content of 1 pound has been reduced to 2.488 grams of gold.
The next exchange rate of pound to the US dollar was basically stabilized at 2.8. The UK then became the center of the entire Euro dollar until the end of 1967.
France took the lead in creating the anti-Bretton Woods system, saying that you, Britain and the United States, are too fucking the world's advantage. You are holding worthless waste paper and exchanging our blood and sweat all over the world. Are you pretending to be a master? Come on, exchange all our French dollar and pounds for gold...
As the shadow currency of the US dollar financial system, the pound plummeted, compared to the US dollar, the exchange rate of pound and the US dollar fell to 2.4.
In a blink of an eye, the US dollar could not hold on anymore. The United States announced the closing of the gold exchange window. The US dollar plummeted. The British pound quickly took the opportunity to show off its "appreciation". The US dollar exchange rate once rose to 2.6.
973, the Bretton Woods system completely collapsed, the era of free floating exchange rate came, the pound and the US dollar depreciated greatly, and no one said that - hey, don't say that at the beginning of the drastic change in the dollar value, the exchange rates of the two really did not change much, and they depreciated greatly together.
However, as time goes by, the British pound in the era of free floating exchange rate has fully demonstrated its "weakness". The US exchange rate of pound and US fell all the way, and by October 1976, it had fallen to around 1.5.
With the arrival of great stagflation in the United States, the British pound took the opportunity to show off its appreciation. The US exchange rate of pound and the US rose to 2.4 at one point, which was equivalent to an appreciation of 60%.
Then, it fell all the way, especially when Mrs. Thatcher came to power, the inflation of the UK has been rising all the way, and the value of the British pound also fell. The lowest time occurred in the early 1985. In less than a month, the US pound exchange rate had reached below 1.1 US dollars, which is also the lowest level of the US pound exchange rate in 200 years.
Data source: Oriental Fortune choice.
With the success of Mrs. Thatcher's inflation governance, the exchange rate of the pound began to gradually appreciate. In the past 30 years, the exchange rate of the pound and US dollar has basically fluctuated between 1.5-2. Even when Soros attacked the pound and the US exchange rate of the pound and the US fell to less than 1.5 in the short term, and then rebounded to the range of 1.5-2 again.
In the financial crisis in 2008, the UK once again became a hard-hit area. The exchange rate of the pound and the US dollar was directly hit from around 2.1 to around 1.4, and directly depreciated by 1/3 - this financial crisis had a profound impact on the pound and the US dollar exchange rate of the pound and the US dollar has not broken through 2 again, but has been fluctuating around 1.5.
until " Brexit referendum " in 2016 - at that time, due to the success of public opinion "unexpected Brexit", the exchange rate of pound-US exchange rate fell sharply, from around 1.4 to around 1.2, but then gradually appreciated around 1.4. After Brexit, the volatility range of pound-US exchange rate was further lowered to around 1.3.
Then, in March 2020, the COVID-19 outbreak globally, and the US exchange rate of pound and US fell sharply again, falling below 1.2 in the short term, and then gradually rebounded to 1.4.
This time, The Federal Reserve raises interest rates +Tras government tax cuts , worked together to finally suppress the value of the pound to the lowest in 200 years.
Finally, I will assign you a primary school homework question:
According to the value of gold, how much has the pound depreciated in the past 100 years?
According to the gold content, how much has the US dollar depreciated in these 100 years?
