1977: The beginning of the blind date with the daughter of the king

Chapter 716 A perfectly clear game of chess!

"As we all know, the essence of money today is credit. It is a measure issued to society based on the credit of the government itself. It is because of trust that people use it and allow it to be traded for any item."

"But this is internal, that is, for internal groups under the government's control, but it's different for external groups."

"People trust their own governments, but this trust is very fragile between countries and regions. It is impossible to promote a currency solely based on the credit of one party. At this time, an anchor is needed, just like the US dollar, which is universally accepted. Initially, it was pegged to gold, and all US dollars can be exchanged for gold."

"Later, when gold became scarce, the dollar was pegged to oil. Oil in the Middle East was settled in dollars. Conversely, if any country wanted to clear out its dollar holdings, it could simply exchange them for an equivalent amount of oil and then use the oil for transactions."

"However, not all currencies have such an anchor, and therefore, exchange rates have emerged, which are another form of anchoring."

"However, he anchors it to a currency, such as the US dollar or the British pound, to enhance its circulation in the international market."

“The current Hong Kong dollar is like this. It was initially pegged to the British pound, but now, although it has a free exchange rate, it is pegged to the US dollar, which has indirectly strengthened the value of the Hong Kong dollar.”

"For Hong Kong Island, having monetary sovereignty means that it can actively regulate the currency market, remotely control the exchange rate, control the metronome of its own regional economy, and better lead the local economic development of Hong Kong Island."

"In addition, if the Hong Kong dollar has value, it will naturally circulate in East Asia and Southeast Asia. For example, wealthy people in various countries will increase their Hong Kong dollar reserves, and fluctuations in the Hong Kong dollar interest rate can affect the funds in the surrounding areas, using the Hong Kong dollar to indirectly carry out economic expansion."

"For us, if we regain control of Hong Kong Island in the future, and Hong Kong Island retains monetary sovereignty, it means that we will have a currency that can naturally circulate internationally."

"For example, in foreign trade, if you don't accept our RMB, will you accept Hong Kong dollars?"

"Could we use the Hong Kong dollar as the currency for foreign trade, with us controlling the issuance and regulation, thus indirectly opening up the regional circulation of our currency?"

"So, according to you, what if we lose monetary sovereignty?"

At this moment, Director Lu asked seriously.

Li Changhe continued, "Given the current methods used by the British, I tend to think they will further depreciate the Hong Kong dollar. A depreciation of the Hong Kong dollar means a depreciation of all assets on Hong Kong Island."

"Given the nature of capital to seek profit and avoid loss, if assets in Hong Kong Island fall across the board, their funds will naturally flow to places where they can preserve their value. This means that the funds will be converted into US dollars, and then assets will flow out of the country."

“If the British were even more ruthless, they could have completely pegged the Hong Kong dollar to the US dollar, for example, by changing it to a fixed exchange rate.”

"Let me give you an example. If the Hong Kong government were to completely peg the Hong Kong dollar to the US dollar, fixing the exchange rate at the current 7 Hong Kong dollars to 1 US dollar, then the next thing the other side would do is for all banks to inject US dollars into the Exchange Fund of Hong Kong Island at a ratio of 7 Hong Kong dollars to 1 US dollar."

"In that case, the Hong Kong dollar no longer has its own monetary attributes; it has become a complete exchange voucher for the US dollar, because 7 Hong Kong dollars can be exchanged for 1 US dollar, which is a fixed rate."

"The resulting change is that the entire Hong Kong Island no longer has its own economic attributes; it has completely become a subordinate economic zone of the US dollar, and the economic model of the entire Hong Kong Island will be completely determined by the tide of the US dollar in the future."

"Just like Hong Kong stocks, it will completely become the Asian branch of US stocks. When US stocks rise, it will rise, and when US stocks fall, it will fall as well."

“The economic development of Hong Kong Island will basically depend on the economic fluctuations of the United States.”

“For Hong Kong Island locals, this is a kind of alternative economic colonization.”

"But for us, this is not entirely without its advantages."

"How to say?"

At this point, Elder Liao also asked the question.

Li Changhe took a sip of water and then continued, "First of all, once the Hong Kong dollar is fully pegged to the US dollar, then for Hong Kong Island, the assets of its entire economic zone will be completely denominated in US dollars."

“Just like its real estate now, a house is worth HK$700,000, which, according to the exchange rate I mentioned, is actually worth US$100,000.”

"As long as the Hong Kong government does not change this exchange rate, this asset is essentially a US dollar asset."

"For the entire Asian region, Hong Kong Island assets will become the most stable US dollar assets. For example, many wealthy people in Southeast Asia may not be able to live in the properties they buy in the United States, but they can live in the properties they buy in Hong Kong Island. Moreover, since they are both assets denominated in US dollars, there will be no difference between houses in Hong Kong Island and houses in the United States in essence."

"From the perspective of the nature of currency circulation, is it safer for these wealthy individuals to hold their own domestic currency or to hold US dollar assets?"

"There is no doubt that they will be more inclined to convert their domestic currency and assets into dollar assets."

"By then, Hong Kong Island may become a safe haven for funds across Asia and a center for the exchange of US dollars in Asia."

"So, according to you, this is actually a good thing? After all, it has attracted all the surrounding funds."

Director Lu continued to inquire.

Li Changhe smiled and said, "It's actually a good thing for us. With more funds in Hong Kong, we'll have more opportunities to connect with them."

"Conversely, since the Hong Kong dollar is pegged to the US dollar, we can indirectly use Hong Kong Island to conduct transactions directly in US dollars."

"Currently, our currency is exchanged for US dollars in accordance with national regulations, but in reality, the actual value of the two currencies is not equal."

"Therefore, if we use our own currency for settlement, overseas capital will not accept it because they do not recognize the exchange rate. But the Hong Kong dollar does not have this problem."

“After the Hong Kong dollar is pegged to the US dollar, we only need to adjust our exchange rate with the Hong Kong dollar, which is actually a disguised adjustment of our exchange rate with the US dollar. From this point of view, it is beneficial to us whether we are doing trade or investment.”

"Furthermore, from a national perspective, abolishing Hong Kong Island's monetary rights would also be a good thing for us."

"When feudal lords rebel, they rely on nothing more than military force and wealth. Although there is no possibility of an army on Hong Kong Island, Hong Kong Island with financial power and Hong Kong Island without financial power are two completely different forces to us."

Li Changhe then boldly continued.

Upon hearing this, Mr. Liao shook his head.

"It's best not to say anything that could affect the overall situation. Xiao Liang, cross out these few sentences and don't report it."

After listening, Liang Qun immediately nodded, then took a pen and gently crossed out a passage he had just written down.

"So, according to you, this is a good thing for us. What about the downsides?"

At this point, Mr. Liao asked more questions out of curiosity.

"The short-term downside is that the continuous depreciation of the Hong Kong dollar will cause public anxiety. In order to avoid risks, people will convert their currency into US dollars, which will lead to bank runs."

"In the end, it will evolve into a currency run on the entire Hong Kong Island, with people abandoning Hong Kong dollars and switching to US dollars. However, the Hong Kong Island Exchange Fund does not have enough US dollars to supply all Hong Kong citizens."

"The final result was the complete collapse of Hong Kong's economy, just like Shanghai forty years ago, where everyone abandoned the legal tender and frantically exchanged for US dollars and gold. I think Director Lu is well aware of the economic situation in Shanghai back then." After Li Changhe finished speaking, Director Lu nodded in agreement.

He had a trading company in Shanghai back then, so he naturally knew about the situation in Shanghai during those years. For ordinary people, it was a huge disaster. There was a frenzy of buying in the market, and the legal tender was being sold off in droves. The whole of Shanghai was in chaos.

"This is only a short-term downside. In the long run, once it becomes a safe haven for the US dollar in Asia, the massive influx of funds will push Hong Kong Island's property prices to an unimaginable level, and its prices will rise accordingly. Gradually, Hong Kong Island will become a financial city."

"Oh, right, if it can also handle trade with us, then it will become an Asian-style city that combines finance and trade."

"Back then, it was a paradise for the rich and a hell for the poor!"

"The British do not rule out using this method, and in doing so, the entire Hong Kong Island will become a city like New York, completely controlled by big capital, with capital completely controlling the city's discourse."

"Then they dumped this bomb on us again, since it's common knowledge that we value the grassroots more."

Li Changhe said softly.

When later generations talk about Hong Kong Island's real estate, there are various reasons, but in Li Changhe's view, a very important point, or the core driving force, is that the Hong Kong dollar is completely pegged to the US dollar.

The Hong Kong dollar's peg to the US dollar has turned the entire Hong Kong Island into a US dollar asset, attracting a large amount of safe-haven capital and driving up its property prices.

The British are essentially putting capital under control of Hong Kong and forcing us to make a choice.

Inside the room, Director Lu and Elder Liao couldn't help but sigh after listening to what was being said.

"His heart is worthy of death!"

After a long sigh, Liao Lao asked Li Changhe, "Changhe, since you've thought it through so clearly, what's the solution?"

"What do you think we should do?"

Li Changhe shook his head: "I don't have a long-term solution. It depends on the country's decision. Whether it's retaining Hong Kong's monetary sovereignty or giving it up, there are advantages and disadvantages to both. I've already said that."

"As for short-term solutions, here's what I'm thinking."

"The British have a good idea, but there is one weakness they have: British companies in Hong Kong."

"The assets of these British companies are all in Hong Kong Island, such as HSBC, Standard Chartered Bank, Swire Group, Wheelock and Company, as well as many other British companies."

"They can't completely withdraw; at most, they'll just cheer for Downing Street."

"An economic war is a tactic that would hurt the enemy a thousand while hurting eight hundred of their own. They might be able to withstand it in the short term, but they definitely won't be able to hold out in the long run."

"So if we drag this out, I think we'll definitely win, unless they want to smash the table and break things up completely, but given the nature of capital, those shareholders and behind-the-scenes families will never allow that."

"Secondly, we can't just wait; we have to take the initiative. At this time, there is also a need to win over the hearts and minds of the people. So I think, first of all, we have to declare that we will provide financial support to Hong Kong Island."

"Secondly, I plan to take advantage of the stock market crash to acquire shares of British companies."

"These British companies, with the help of the Governor's Office, expanded recklessly on Hong Kong Island and seized assets in previous years, but this also resulted in them owning very few shares."

"Just like how I snapped up land, it was because the British company had this weakness."

"Although they later began to consciously increase their shareholding, the current stock price crash presents a perfect opportunity for us."

"Without a doubt, as long as we make a move in the stock market and show that we want to take over the company, these British companies will definitely be anxious and they will have to fight back to take over the shares."

"In this way, capital will enter the market, and even if the stock market doesn't recover, it will definitely stop falling."

"Another issue is that British companies are selling off assets. I think at this time, we can definitely let our companies enter the market. If they dare to sell, we will take over!"

"Let our company join forces with some wealthy businessmen close to us in Hong Kong to take over those companies."

"As long as these businesses do not go bankrupt or cease operations, the people of Hong Kong Island will not completely lose confidence, and the situation can be brought under control."

"Anyway, both sides are putting on this show. The British won't completely ruin their economy, after all, their domestic economy is also in bad shape, and they are still hoping that Hong Kong will provide them with financial support."

"Conversely, we don't have the money, nor can we completely take over, but we can make this gesture and make a few targeted acquisitions to show the people of Hong Kong Island our attitude."

"In this way, the positions of the pieces are clearly defined, but the final moves depend entirely on the player making the move."

"What if the other party, as you said, is willing to fight to the death?"

At this moment, a smile appeared on Old Liao's face, but he still asked the question.

Li Changhe smiled confidently and said, "If that's really the case, I think it's a great thing. Let the media publicize it first, expose all their behavior in Hong Kong, and make them completely lose the support of the people."

"Afterwards, I formed a consortium in the United States and contacted Rockefeller, the California consortium, the Texas consortium, and others to raise funds to enter Hong Kong Island in a big way. The reason I did not use all of my assets in the United States was to guard against this move."

"Americans are really enjoying and having a great time seizing British assets."

“I believe that as long as we adopt this stance, Downing Street will definitely have to consider the gains and losses involved. After all, the United States has not clearly stated that it will only take advantage of Hong Kong. Whether or not they are willing to let American capital buy up assets at rock-bottom prices, they naturally have their own judgment.”

"I think even if you beat Margaret Thatcher to death, she wouldn't have the confidence to do that. If it really happened, she would probably have to step down as prime minister immediately!"

Upon hearing Li Changhe's words, Elder Liao and Director Lu couldn't help but clap their hands.

"Good lad, what you said has enlightened us. Sending you to Hong Kong Island has really allowed you to sort out this game perfectly."

"Alright, you can go back now. I'll have Xiao Liang sort out this conversation tonight and submit it tomorrow."

"If the deal goes through, I'll give you credit for it!"

Although Li Changhe's points were all reasonable and logical, the higher-ups would never listen to just one person's opinion, but would consider all aspects.

Li Changhe was also aware of this. All he needed to do was inform his superiors of the situation in advance.

Then, under the cover of night, Li Changhe quietly returned to his home.

(End of this chapter)