Ye Tan: The Collapse Of The Mississippi Bubble Is The Result Of Credit Monopoly And Government Cash.

Famous in capital market Mississippi Bubble It is the result of the government's intention to expand credit and arbitrage from credit, which is quite different from the folk character of Holland tulips bubble, and has more reference value to China's securities market.

The background of the emergence of the Mississippi bubble is the bankruptcy of the French Louis Dynasty in 1716. It is urgent to find a way to expand credit. It is a coincidence with John lo, the pioneer of the theory of credit money.

John Law's credit expansion Road, which used the craziness of the stock market, borrowed the popular concept of colonial dividends, borrowed all the wealth monopoly rights of the government, created the astonishing market dream rate in the late Middle Ages, and finally became a dream of yellow rice. The collapse of the French feudal dynasty was related to the thorough financial collapse after the collapse of the market dream rate.

John Law thought that banknotes had the incomparable flexibility of gold and silver coins. Because the credit expansion of paper money solved the financial difficulties of the French Dynasty at the beginning, the French government colluded with the French government, monopolized the bond issue, the mint right, the colonial monopoly enterprise, the taxation and the stock issue right, which led to the overall expansion of the stock price and bond credit and the rise of the price, forming the unprecedented. Banknote credit and Stock market Big bubble.

Concretely speaking, we first set up the issuing bank, exchange paper money for real gold and silver, then buy stocks with paper money, and raise the credit of paper currency and bonds with high priced stocks, so that people believe in paper money credit from the wealth effect.

In May 1716, John labor authorized the establishment of the issuing bank. The banknotes issued could be used to pay taxes, and eventually turned into Royal Bank in December 1717. He also monopolized the right to levy taxes and tobacco monopoly, set up Mississippi Company to monopolize the vast basin of the Mississippi River and the trade rights of Louisiana in the West Bank, and Mississippi Company's shares could be purchased with bonds issued by banks, which lifted the price of Mississippi shares and bonds.

During the rush hours, John Law issued shares through the renamed India company, which has been increased three times since September 1719, and its share price has risen from 500 leverall in April to 18000 leverall (a 1 pound silver), an increase of 36 times. French nationals began to frantically, buying bonds and Mississippi Company stocks with hard currencies such as gold and silver coins, waiting for excess dividends and soaring share prices.

The foundation of the credit bubble made by John Lau was the French Dynasty rulers. They were eager to solve the financial crisis and ignored the risk of issuing large amounts of paper money. They consciously encouraged the two big bubbles of bond and securities with monopoly income and government monopoly.

If France's tax revenue is enough to support the stock price, if Mississippi's wealth is enough to make high dividends, then the credit of notes and securities will be maintained, and the high price will continue. Just like Dutch East India Co has gained wealth in a long time, it has never been a East India Company bubble.

The reality is very cruel. The French finance is once again on the verge of bankruptcy when the sea is flourishing. The dream of the colonial market is a bubble. Gold is a false impression. The French competition is not between Britain and Holland. Whether Mississippi Company or India companies, wealth always exists in the imagination of French local buyers. The workers who recruited the Americas in France, day after day, passed through the streets of Paris and then came to the port, carrying a pickaxe and spade on their shoulders. 2/3 of them did not ship but dispersed to France. Less than three weeks later, half of them appeared in Paris.

High stock prices without real wealth support are bubbles. High fiscal revenue without real financial support is inflation.

No matter how severe the monopoly is, it will add up all the tax revenues, tobacco, trade and tobacco monopoly in France or fill the bottomless pit of the French fiscal deficit. In 1715, France had a huge debt of 2 billion 500 million miles. The annual revenue was only 145 million Li, and the government expenditure needed 140 million miles.

As a result, John labor's paper money rescue operation became an obvious Ponzi scheme. As long as there are hard sources to support bonds and stocks, Mississippi Company's stock price rises continuously, and then attracts more real gold and silver. The bottom is France's tax revenue and tobacco monopoly rights, until the point of the needle burst bubbles.

The craziness that lasts for a long time is also clear when it is usually ended in a dramatic way.

At the beginning of 1720, Prince Conti of France did not buy shares, and the money of a carriage asked Johnlau's Bank to cash it. Then aristocrats and investors began to cash in and smuggle gold and silver out of the country. In fact, during the issuance of banknotes, the French Dynasty gained the greatest benefit, supporting several years of finance.

The beginning of bubbles is different, and the ending of bubbles is always the same. Desperate John labor maintained credit by administrative means, fixed stock prices, prohibited people from storing and transporting precious metals, and encouraged whistleblowers.

However, the increasingly serious inflation has made the administrative means nominal. Since the winter of 1717 to December 1720, the nominal value of the gold Mint has been changed 28 times, and the value of the silver coin has changed 35 times. By May 1720, the stock price plan fell from seven to 9000 in the 5000 stages, and also reduced the face value of paper money.

A credit hero supporting paper money has become a notorious liar, and French finance has become one of the triggers of the French Revolution.

No monopoly power and imagination can sustain banknotes and negotiable securities bubbles without real financial effects. At present, the American paper money bubbles rely on the real wealth support of China and Japan, while China's stock market relies on the support of market wealth in the past thirty years. Once the pillar is lost, the outcome can be imagined.