115 Episode 22 Mercurenomics Two Arrows Refration (1/2)

The current monetary system of the Lemurian Empire was established by a great emperor who put down a centuries-long civil war.

When the great emperor who built Nova Lemuria issued the Lemurian gold coin, the gold content of the coin was 95.8%.

This was no exaggeration to say that it was the highest purity in the world at the time.

The highest purity Lemurian gold coins issued by the Lemurian Empire, which was still a powerful, if declining, nation at the time, were quickly used around the world. ......

It became the reserve currency.

However, as time went on, ......

A problem arose.

A shortage of currency.

This was because as the economy of the Lemurian Empire grew, the demand for currency increased, but the supply of currency could not keep up.

As a matter of course, gold coins are made of gold.

The gold is mined from gold mines. ......

Gold mines are not so generous as to increase the amount of gold mined in line with economic development.

In fact, the amount of gold mined will diminish.

The gold mines of the Lemurian Empire can still be mined. ......

The amount of gold that can be mined is constant year after year, and it is obvious that it will run out at some point.

In addition, metal coins wear out little by little every time they are used.

Some people are clever enough to try to make a profit by scraping the edges.

Gold inevitably diminishes in value.

More at ......

The gold coins of the Lemurian Empire are too valuable.

Because of their credibility, they tend to flow out of the country.

In addition, the Lemurian Empire was originally an over-importing nation, and paid for many luxuries from the East in gold.

For a variety of reasons, the Lemurian Empire has a chronic shortage of gold coins.

So what happens when there is a shortage of currency, money, and gold coins? ......

Needless to say.

Deflation, falling prices, and economic recession will occur.

If deflation occurs, the economy will continue its vicious cycle and the size of the economy will shrink little by little.

No matter how much Hercule tries to protect industry and boost the economy, it will be a chilling effect.

There is one way to solve this problem.

The solution is to increase the amount of currency in circulation, that is, to increase the number of gold coins issued.

But you can't change the amount of gold mined.

The only way to do this is to change the number of coins that can be made from the same amount of ...... gold, that is, to reduce the amount of gold contained in gold coins.

To tell you the truth, I don't really want to do that.

Well, ...... I can understand how you feel.

Shylock chuckled at Hercule's words.

In the Lemurian Empire, only the Emperor has the right to issue gold coins.

A gold coin with Hercule's profile and name stamped on it is the very essence of his authority.

To degrade the dignity of these gold coins would be to diminish the authority of Hercule, the Emperor of Lemuria.

The fact that successive emperors have maintained the dignity of their gold coins is a sign of pride as the monarchs of superpowers.

In the Lemurian Empire, where business itself is considered to be a low value, reducing the gold content of money can be regarded as a fraud, and if the emperor himself led such a fraudulent act, he would not be able to avoid criticism.

In addition, reducing the quality of money and increasing the amount of money in circulation is likely to lead to a significant decrease in the value of money and rapid inflation.

Rapid inflation will hit the wallets of the lower classes of the Lemurian Empire, the bureaucrats who earn fixed wages, the soldiers ...... and the Lemurian nobility who receive stipends.

The economy is a complicated thing. I really don't want to mess with it too much.

There are as many theories as there are economists.

Although the structure is simpler than that of modern Japan, it is still complex.

We do not know how it will turn out.

But I can't stop myself from doing it. So, the ...... question is how much to lower it. I'm going to take a wait-and-see approach and set it at about 80 percent.

”So the rate of increase of money is 1.2 times. Isn't that a little weak? I think it's okay to lower the rate to 70%, but I think it needs to be lowered to ...... 1.35 times or even less to be effective.

”Ummm .......

After listening to Shylock's suggestion, Hercule pondered for a bit and then said, ......

I'll take a pause. Seventy-five percent, 1.27 times. Frankly, I don't want to get too adventurous, and ...... anything less than seventy percent gold is too degrading. It is a matter of national prestige.

If it's not enough, you can devalue it for a while.

Hercule persuaded Shylock to do so.

Even Hercule was reluctant to change the coinage.

The problem is that we don't know if the merchants and the Church will cooperate with the minting. ......

”Exactly, that's the problem. Bad money drives out good money.

It's a good thing that you're not the only one who has a problem with this.

The material itself guarantees the value of the coin.

If you ask someone to lend you some money to reduce the amount of money, few people will say, ”Yes, I see.

In addition, there is a good possibility that the highly valuable old coins will be stored away.