The Squid Game of Currency: Wealth Reset and Social Reboot Under Regime Change
Throughout human history, currency is far more than just a medium of exchange. It is the core embodiment of state power, a tool that can easily press the "reset key" when a regime changes or a nation faces an existential crisis. Through the manipulation of currency circulation, backed by force, whether legal or illegal, people's wealth can vanish overnight, achieving a staggering transfer of wealth from the populace to the government. This is not merely an economic catastrophe; it is a complete social reboot, and this game is often played by newly established governments or those in a new turn of power.
1. The Nature of Currency Manipulation: The Legal or Illegal Seizure of Intangible Wealth
When a nation is embroiled in war, internal strife, or a transfer of power, the most pressing issues for the government are often financial depletion and resource scarcity. At such times, direct taxation or issuing national debt becomes ineffective. Currency then becomes the most convenient and covert "ATM." Through the following methods, regimes can subtly absorb private wealth:
Hyperinflation: The most common and brutal method. Governments print money without restraint to cover colossal expenditures, leading to a drastic depreciation of currency's purchasing power. This causes people's savings, wages, and all cash assets to become worthless paper in a short period. This is not direct robbery, but a more thorough, "legal" plunder.
Forced Conversion and Currency Reform: New regimes, whether to stabilize public confidence or to clear old accounts, will forcibly convert old currencies to new ones. However, the exchange rate between the old and new currencies is often extremely low. For those holding the old currency, this amounts to a massive evaporation of wealth. In some cases, the government even compels the public to surrender hard assets like gold, silver, and foreign exchange in exchange for newly issued paper money, which is a more direct concentration of wealth.
Forced Circulation under Military Occupation: During wartime, occupying powers issue military currency, forcing its use on the people in occupied territories and prohibiting the circulation of old currencies. This is a blatant act of plundering by force. The value of military currency is entirely dependent on the occupier's military might; once they are defeated, the military currency becomes worthless, and all its holders instantly lose their wealth.
The common thread among these methods is their reliance on the state's monopoly over currency issuance and its ability to deploy state machinery or military force when necessary to enforce these changes. This power is not merely enshrined in law but also in absolute control over the economic order.
2. Examples of Currency "Resets" in Modern Chinese History
China's modern history is a living textbook of monetary turmoil and wealth resets, clearly demonstrating how this "reset key" operates:
The "Destructive Reset" of Fabi (法幣) and Gold Yuan (金圓券) (1935-1949)
The Republic of China issued Fabi in 1935, initially aiming to unify the currency and delink from the silver standard, which was meant to bring stability. However, with the full outbreak of the Sino-Japanese War, massive military expenditures forced the Nationalist government to print an unlimited amount of Fabi, leading to hyperinflation. Fabi acted like a slow poison, steadily and persistently eroding people's wealth. By 1948, Fabi's credibility had completely collapsed, becoming worthless paper, marking the first enormous "reset."
Subsequently, to salvage the situation, the Nationalist government implemented the "Gold Yuan Reform" in August 1948, forcibly converting all private holdings of gold, silver, foreign exchange, and the already worthless Fabi. While seemingly a grand economic rescue, this was, in essence, the last large-scale seizure of the public's hard currency. However, due to unfavorable war conditions and continued government over-issuance, the Gold Yuan plummeted into an even deeper abyss of hyperinflation than Fabi within just ten months. Its denominations soared to astronomical figures, eventually turning into a pile of useless paper, utterly destroying the accumulated wealth of China's middle class and common people at the time. This was the second, and most devastating, round of "wealth zeroing" under the same regime, impoverishing countless families overnight. This currency game completely drained the public's remaining liquid wealth, laying the final economic brick for the regime's collapse.
The "Aggressive Reset" of Military Currency (軍票) (1930s-1945)
During the Sino-Japanese War, Japanese invaders forcibly issued military currency in occupied Chinese territories. This was a classic example of illegal currency manipulation backed by force. The value of military currency rested solely on the occupier's bayonets, allowing the Japanese military to acquire Chinese resources and labor at virtually no cost. With Japan's defeat and surrender, all military currency enforced by force instantly became worthless. For the Chinese people who were forced to accept military currency, this was a blatant act of wealth plunder and a forced economic "reset," leaving them not only with devastated homes but also with dire economic straits after the war.
The "Cut-Loss Reset" of the New Taiwan Dollar (新臺幣) (1949-Present)
After the Nationalist government relocated to Taiwan in 1949, to thoroughly shake off the shadow of the mainland's Gold Yuan hyperinflation, the Taiwan Provincial Government decisively implemented the New Taiwan Dollar currency reform. A drastic exchange rate of 40,000 old Taiwan Dollars to 1 New Taiwan Dollar was set, and issuance was strictly controlled. This reform, for the people holding the old currency, was undoubtedly a massive "cession" of wealth; the value of the old currency was almost entirely erased. However, this was a necessary "arm-cutting for survival" measure under extreme circumstances. Through this radical "reset," Taiwan successfully curbed hyperinflation and stabilized its economy, laying the foundation for its subsequent economic boom. This was a painful but successful "monetary reshuffle" that prevented greater economic destruction, and can be seen as a "forced reset" necessary for future development.
The "Unification and Adjustment Reset" of the Renminbi (人民幣) (1948-Present)
The Chinese Communist Party issued the Renminbi in the later stages of the Chinese Civil War, aiming to unify the currency and establish a new economic order. In the early days of the People's Republic of China, the Renminbi played a crucial role in stabilizing prices and unifying fiscal policy. Notably, the 1955 Renminbi currency reform exchanged 10,000 old Renminbi for 1 new Renminbi. This was also a large-scale currency "reset." This reset, though not accompanied by hyperinflation, was a precise operation by the new government to re-establish monetary authority, simplify accounting, and effectively manage the national economy. It symbolized the new regime's complete control over the economic order and a gentle but firm "reset" of old wealth concepts. Since then, although the Renminbi has undergone several redesigns and some inflationary pressures, it has not experienced the kind of devastating "wealth zeroing" seen during the Nationalist government's era.
3. The Rules of the "Reset Key" Game and its Societal Cost
Monetary history tells us that when governments face an existential crisis or aspire to establish a new order, the "reset key" may be activated. The rules of this game are:
Backed by State Force: The success of currency reforms ultimately depends on whether the regime possesses sufficient coercive power to enforce new monetary laws, whether through legislation, the military, or ideology.
Vertical Transfer of Wealth: The outcome of inflation or forced conversion is the concentration of real assets, means of production, and other true wealth from the general populace to the government or specific groups closely aligned with power. The savings and purchasing power of ordinary people's wages are wiped out.
Reshaping of Social Structure: The erasure of wealth leads to dramatic shifts in social strata. Once-middle-class individuals can become impoverished overnight, and the social contract is broken. After such a "reshuffle," everyone must start over, competing for resources again. The new government, through the new monetary system, can redraw the economic blueprint and establish new modes of distribution.
Erosion of Trust: The collapse of currency and the loss of wealth severely undermine public trust in the government and the financial system. Rebuilding this trust often requires decades, if not centuries.
In summary, currency is not only the pulse of the economy but also an extension of political power. In every regime change or major transition, currency manipulation acts like an invisible "reset key," supported by both military might and legal authority, achieving a redistribution of wealth. This cruel game of currency has repeatedly played out, profoundly etching the struggles and costs of humanity in the power-wealth dynamic.