Stablecoin Series: Understanding the Underlying Logic of Global Finance Through the Essence of Money

Today is May 31, 2025, and we’re wrapping up the final installment of our stablecoin series. Unlike the first two episodes, which focused on the micro level, this episode shifts to the macro level to discuss fundamental issues related to money—no matter how many new digital currencies are issued or how many new financial instruments are created at the micro level, these most basic principles will remain unshaken.

Misconceptions About the Nature of Money

Many people find themselves in a state of self-contradiction when investing in cryptocurrencies or other virtual assets. The root cause lies in a cognitive bias regarding the nature of money: they simultaneously view money as a general equivalent and a symbol of wealth, while also believing that money can be printed out of thin air at no cost. These two concepts are inherently contradictory.

Those whose underlying logic is self-contradictory are easily led astray by trendy concepts. We must be clear: money is a general equivalent, and a general equivalent is a specific commodity. As a commodity, it requires general human labor to produce and cannot be created out of thin air.

In today’s era of fiat currency, money issuance relies on government credit, and general human labor is abstracted into national output or fiscal revenue. If printing money could create goods and wealth at absolutely zero cost, then you must be living in a virtual world rather than the real one—where illusions triumph over actual demand for goods, and all that’s needed is to stimulate the brain with electrical signals, much like the scenario depicted in the movie The Matrix.

Some might argue that Modern Monetary Theory (MMT) has already demonstrated that the economy can function simply by issuing and printing money. However, the role of taxation in MMT is irreplaceable and absolutely cannot be ignored.

The Underlying Logic of Fiat Money

If you agree that money is a general equivalent, then money is essentially a special commodity—and its “special” nature lies precisely in the word “general”: only commodities recognized by the majority, or those designated by the government, can serve as general equivalents; only general equivalents recognized by the majority, or those designated by the government, can function as accounting symbols and thus serve as money.

Theoretically, workers can only obtain a general equivalent—that is, money—by contributing general human labor. Due to the time lag between a worker’s income and consumption, they will hoard a portion of the general equivalent when it is not needed for consumption, and this is how wealth gradually accumulates.

In reality, some people acquire vast wealth without labor because of flaws in the distribution system, not because of any inherent flaw in money itself. To date, neither human productivity nor moral standards are sufficient to sustain a communist system; they can only support a system of private property. As long as private property exists, issues regarding the inheritance and distribution of wealth will inevitably arise.

The Development of Productivity and the Evolution of the Means of Production

Looking back at human history, from slavery to capitalism, humanity has continuously adjusted the methods of distributing the means of production and the fruits of labor:

• In the era of slavery, the most important means of production were slaves
• In the feudal era, the most important means of production were land
• In the era of traditional capitalism, the most important means of production were money, machinery, and technology
• In the era of information capitalism, in addition to money, machinery, and technology, the ability to control institutions and systems has been significantly strengthened

The Age of Discovery amassed gold—that is, currency—for the West; the Industrial Revolution provided the West with machinery; the Renaissance brought intellectual liberation, scientific and technological advancements, and freedom from theological control; and the collapse of the Soviet Union laid the foundation for the U.S. hegemonic system and the global order.

In the future, if China wishes to challenge U.S. hegemony, it must secure a certain degree of pricing power in areas such as talent, computing power, energy, minerals, and food.

The Fundamental Problem of the U.S. Economy

The fundamental problem of the U.S. economy has never been a monetary issue, but rather one of distribution. We will repeatedly explain this core logic in many future videos; the relevant key points have already been elaborated in detail in the two videos titled “America’s Path to Self-Rescue: Recognizing the Principal Contradiction” and “America’s Path to Self-Rescue: Addressing the Principal Contradiction.”

Please do not assume that the current problems in the U.S. economy stem from fiat currency. In fact, if fiat currency develops healthily, there is little room for currency speculation—and this is actually a normal and healthy phenomenon.

Let us review this chain of logic once more: Currency is a general equivalent, and a general equivalent is a commodity. As a commodity, it requires general human labor. In the era of fiat currency, general human labor is abstracted into national output and fiscal revenue. Therefore, as long as a country’s economy develops steadily, its currency should appreciate at a relatively stable rate and avoid sharp fluctuations over a long cycle—because, ultimately, currency reflects a nation’s capacity for production and tax revenue. A country does not experience drastic fluctuations in tax revenue or production within a single cycle; thus, if the currency is healthy, it should not provide room for speculation over a certain period.

Looking at the renminbi, it has been developing steadily for many years relative to many countries outside the United States. In contrast, the U.S. currency has been experiencing significant volatility in recent years, fluctuating wildly up and down—a situation that is, in itself, abnormal. Of course, theoretically speaking, competition over monetary systems or monetary hegemony in the real world can lead to such wild fluctuations. However, when analyzing the issue, we must focus on its essence: the United States should now address the problems within its distribution system rather than manipulating the currency.