Chapter 324: 322 Counterasure_2
People in this world may not understand the workings of the economy as much as Colin, who knows just a smidgen, but they understand the importance of the minting rights.
Therefore, obtaining the minting rights from the royal family is not a simple matter.
The fact that Scholar Sunny’s New Agricultural-Pastoral System was rejected indicated that the royal family did not want to change the current monetary system.
In fact, even if he obtained the right to mint copper coins, Colin didn’t want to do it as it was, as Scholar Sunny had said, a thankless task that would only increase the burden on the St. Hilde family.
However, Colin has other ways to solve the problem of a shortage of currency.
Thanks to his past life, he had seen all sorts of cunning operations by rchants in a market economy.
So, he said with a smile, “We don’t necessarily need to mint copper coins.”
Scholar Sunny’s gaze sharpened, and he hurriedly asked, “Viscount, do you have a better solution?”
Colin nodded and said, “Yes, we can borrow from rchants!”
“Borrow?” Scholar Sunny was imdiately confused, he didn’t understand what borrowing had to do with increasing the money supply.
Colin confidently explained, “We can borrow food from major rchants in the North Territory in the na of the St. Hilde family.
I know that many rchants secretly stockpiled a lot of food during the famine in the North Territory, waiting to make a fortune when food prices rise. I was initially planning to deal with these people when I returned to the North Territory, who wanted to profit from the disaster.
But now it seems that we can adopt a more gentle approach, borrow food from these rchants, and extract a large amount of food from their hands.”
Unable to resist her confusion, Vera chid in, “Colin, how does this relate to our current conversation?”
“Of course, just listen to .” Colin said comforting her, “Once these rchants lend us the food, the St. Hilde family will issue a batch of bills with the family crest on it, yes, let’s call them bonds.
And you, as the Northern Duke, will declare in public that anyone who holds these bonds can exchange them for an equivalent amount of food at Lion Roar Castle after the debt maturity date.”
Vera was still puzzled, her lovely eyes blinked at Colin as though she didn’t know what to ask.
However, Scholar Sunny seed to realize sothing, and his eyes brightened.
Colin continued to explain with a smile, “In this way, these bonds will be considered equivalent to food, and with the St. Hilde family’s credit as a guarantee, they will have the characteristics of a general equivalent, and in simple terms, they can be used as currency.
Afterward, we will announce that from now on, taxes in the North Territory must be paid in currency, or equivalent bonds, and once a shortage of copper coins occurs, trust , people will definitely use these bonds as a dium of exchange.
In this way, even though we haven’t minted new coins, we have actually increased the money supply in the market.”
Scholar Sunny stood up excitedly, his face flushed as he exclaid, “Viscount, you are a genius!”
Having finished, he paced back and forth in the restaurant, probably carefully pondering the feasibility of this thod.
Vera twirled her hair on her fingers, seeming to sowhat understand Colin’s idea.
However, after pacing for a while, Scholar Sunny suddenly stopped and asked seriously, “Viscount, I think there might be a problem with your thod.”
“Tell .”
“The loans the St. Hilde family borrows from the rchants will eventually have to be paid off, right? And once they’re paid off, won’t these bonds exit the market?”
“Who says that the loans we borrow have to be paid off?” Colin said with undertones, “We can borrow new debt to pay off the old debt, maintaining the debt indefinitely.”
Scholar Sunny was stunned.
Vera was also hesitant because in this world, borrowing money is not a matter of honor, especially for the nobles. For them to owe money to those lowly rchants would be a disgrace.
It’s sowhat acceptable for the St. Hilde family to temporarily borrow so money due to the special circumstances in the North Territory. However, if the debt were to last indefinitely, it may be a great blow to the prestige of the St. Hilde family.
Seeing the changing expressions on their faces, Colin chuckled inwardly.
He knew of a particular country on Earth that had borrowed a heap of debts, but did anyone dare to underestimate it because of this?
“Trust , reasonable debt is not a burden, but a blessing!”
Colin quoted a famous saying from the first Secretary of the Treasury of the United States, Alexander Hamilton.
In fact, by issuing bonds in this way, Colin was bypassing the royal family’s minting rights, practically equivalent to privately issuing circulating currency.
He, of course, knew exactly how much profit and influence this could generate if he held the power to issue currency.
Why does the Federal Reserve like to buy U.S. debt during a financial crisis?
Isn’t it to inject a large amount of U.S. dollar liquidity into the market, increase the money supply, create inflation, and thus harvest the world?
And they have a fancy na for it – Quantitative Easing.
It’s actually just frenzied printing of banknotes.
But there’s nothing you can do, you can’t directly accuse them, after all, under this thod, the Federal Reserve is indeed repaying debts…
Colin’s inspiration cos from this. He issues equivalent bonds by borrowing food from the rchants. With the endorsent of the St. Hilde family’s reputation and the option to use them for tax deductions, these bonds take on the function of currency.
In this way, the St. Hilde family is essentially diluting and harvesting the wealth of the rchants of the North Territory, and even the entire empire’s nobility through this thod.
But given the noble’s crude understanding of finance in this world, they probably do not realize the true power of this thod.
Of course, this world is dominated by a natural economy, not a market economy, so the power to manipulate the issuance of currency cannot be fully utilized.
But as long as this thod can successfully be carried out, Colin is confident that he can help the North Territory recover quickly from famine and warfare, and even rapidly pull ahead of the other territories.
Looking at Colin’s confident face, Vera, although she hadn’t fully understood the true aning of this plan, didn’t let that stop her from supporting her husband wholeheartedly as always.
As for Scholar Sunny, he was eager to implent his New Agricultural-Pastoral System in the North Territory. Even if he had so doubts about Colin’s thod, he wouldn’t voice them at this point.
Seeing no objections from either of them, Colin confidently extended a formal invitation to Scholar Sunny:
“Scholar Sunny, would you consider going to the North Territory and accepting the position of Agricultural Advisor to the St. Hilde family?”
Scholar Sunny’s face beca solemn, and for the first ti, the look he gave Colin was filled with genuine respect and admiration as he said,
“I accept!”
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