Chapter 429: Only I Control the Law Chapter 429: A New Era Arrives (3)

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Protagonist:

Chen Yi

If the aides were marveling at Chen Yi's boldness, Chen Zhongguo was instead rediscovering his own grandson, like an eagle just woken up inspecting its fledgling's spoils.

"Currency" was like a ten-meter-long python, or a rabbit weighing three hundred jin, leaving the whole eagle family astonished.

Zhou Lao adjusted his glasses and said doubtfully: "Issue bonds? Corporate bonds?"

"You could say they're corporate bonds, but I want them to have liquidity."

"Bearer securities? That's a big difference from currency." Zhou Lao laughed heartily, relieved.

"I want these bonds to circulate in the market. So the face value should be small, for example 100 yuan or 50 yuan, though there will also be larger denominations. At the same time, they are bearer bonds, easy to carry—in short, they should have certain currency attributes to be suitable for exchange." Chen Yi repeated once more, explaining in greater detail. Of course, this made everyone even more surprised.

All four listened intently, and rather than being surprised by what Chen Yi said, they were surprised by Chen Yi himself.

Zhou Lao was an expert in economic matters, but he didn't know Chen Yi possessed resources from beyond Earth, so he opposed as best he could: "The value and interest rate of bonds fluctuate, while currency should maintain as stable a value as possible. So although securities can be made to resemble currency, they are ultimately not currency."

Saying this, Zhou Lao became animated, sat up straight, and said: "During the American Civil War, securities like Lincoln Greenbacks were indeed issued as currency. But it must be noted that this was wartime, with soaring prices and rampant currency inflation; as long as there is no war, we won't encounter such a situation..."

"The government's over-issuance of currency is almost inevitable. Why should we let them collect seigniorage when we can't?" Chen Yi turned his gaze to his grandfather: "Lincoln Greenbacks are a currency Americans are nostalgic for. If we provide an honest currency that doesn't depreciate, preventing the government from over-issuing, that would be the greatest contribution to everyone, and we would also enjoy the benefits of controlling currency."

The benefits of controlling currency!

These benefits were naturally enormous.

But the greater the benefits, the more one should keep a clear head.

Zhou Lao's life experiences made him disbelieve such a massive plan, so he insisted: "The era of Lincoln Greenbacks is over. Moreover, you don't have enough precious metals to serve as reserve currency, and I absolutely will not agree to you using national reserves for this experiment."

He turned to Chen Lao: "If we do this, foreign governments and domestic merchants will without hesitation exchange them for precious metals and ship them back home. This is..."

"If I have enough gold and platinum as collateral, could we re-establish the gold standard in Jiangning? By the way, Zhou Lao, you've lumped foreign governments and domestic merchants together."

Zhou Lao was stunned: "Even if they circulate in Jiangning, do you know how much gold and platinum you'd need?"

"I've prepared 100 tons! And I can add another 20 tons every month." Chen Yi said lightly.

Not only Zhou Lao, but all four smiling old men present froze up.

At the current value of over 200 RMB per gram, one ton of gold would be 200 million RMB, and 100 tons would be 20 billion, and it's cash, real cash, the hardest currency wherever you go.

And adding 20 tons every month—heaven knows where he got 20 tons.

Not to mention 4 billion RMB, there must also be mines.

Everyone first thought of Wuxin County in Jiangning City, where gold production was not small, and few people knew the exact output. It is now under Chen Yi's control.

Chen Zhongguo looked at his fledgling eagle with an indescribably strange expression, wanting to ask several times but never managing to. Finally, he chose not to know the details, and instead asked: "Is your purpose in moving He Fuhan to issue currency?"

"I want to use Jiangning Bank to issue gold bonds on my behalf. Each 100-yuan bond contains 0.4 grams of gold, redeemable at any time. The first issue will be 100 tons of bonds, circulating in Jiangning City, recognized by the government, and usable for tax payment. I will deposit the gold in Jiangning Bank as collateral or reserves, all of which requires the approval of the Jiangning Mayor and Jiangning High Officials."

The old men exchanged glances.

This was truly issuing currency! A currency with extremely low interest rates but almost no inflation—it sounded almost too good to be true.

However, if the amount of gold bonds was too small, they would become mere gold vouchers and fail to produce the value of currency; but if the amount was too large... even 100 tons of reserves would not be considered a large amount in the eyes of Senior Management.

Unless it were like discovering a new continent, with another South Africa in the world, then given current currency issuance levels, the small amount of gold and platinum Chen Yi put into the market would soon be swallowed clean, just as people's wealth is swallowed by the state or any powerful institution through interest rates and currency inflation.

On the other hand, if there were truly sufficient supplies of gold, platinum, and silver in the world, then currency issued based on precious metals could ultimately still collect seigniorage—in the first, second, third, and many subsequent issues, Chen Yi could forgo seigniorage, issuing as much currency as there was precious metal collateral, to ensure bonds circulated in the market while building confidence—one can imagine that in the early stages of bond issuance, people would certainly frequently redeem gold rather than hold bonds, but as time passed, as long as redemption could be maintained, people's confidence would gradually accumulate.

Confidence is the greatest wealth of a currency.

The only obstacle is—how can a non-state organization or institution issue currency?

Chen Zhongguo looked at his three aides, all unsure what to say. Chen Yi's proposal was bold to the point of being unorthodox, but for these four people who had experienced wars and movements and were familiar with high-level state decision-making, it instead held a strange temptation.

Because they all knew that the state was a beast-like wolf; it wouldn't stop eating sheep just because the sheep on the pasture had grown thin. It would eat until it was fatter and fatter, until it could no longer stop itself, until all the sheep on the pasture were eaten, or until a new, stronger beast-wolf replaced it.

For a beast-like state, granting it the power to issue currency, granting it the power to set interest rates, is granting it the power to exploit.

Humanity left the gold standard world only 30 years ago, and the United States couldn't wait to use the method of devaluing its own currency to pay international debts. Heaven knows when China will enter an era of government deficits—but one day, the government's endless tax revenue will no longer be enough to pay for ever-growing expenditures, and on that not-so-distant day, devalued currency will be a delicious pastry they cannot tolerate.

Not a single state beast has self-restraint; the only thing that can chain it is an iron chain.

Honest currency redeemable for gold is the iron chain; so-called national credit is just frozen meat for consumption. Once the beast finishes it, it will naturally go eat the sheep.

The state and the people are opposing forces; even Chen Zhongguo, a high-ranking state official, must admit this. Returning to precious-metal currency is a correct path, but not realistic enough.

After hesitating for a moment, Chen Zhongguo said softly: "If you want to solve economic problems, you've chosen the wrong method. Economic problems have no simple solution!"

Economic problems cannot be solved by a single simple method!

Although aesthetically speaking, humans tend to use simple and clear methods to solve problems, ultimately, economic problems are complex problems that spawn countless other problems, and cannot be solved by one method alone.

Chen Yi thought: The method I'm using isn't simple.

Developing the West Continent was such a vast project that Chen Yi himself dared not personally take the helm; if he hadn't always been increasing his strength, he could never have managed such a complex situation.

Being able to obtain large quantities of precious metals—this is not a simple method!

"No matter what the future holds, if I insist on replacing He Fuhan and simultaneously promoting small-denomination bearer bonds, is that feasible?" Chen Yi asked Li Lao this way, but his tone was clearly firm.

If it weren't for Chen Yi, Li Lao wouldn't have bothered answering such a question, but in the end, he only said lightly: "There are enormous political risks."

"I only ask to take the first step."

All decision-making power rests in Chen Zhongguo's hands.

He didn't think for too long; in fact, he thought more about Chen Yi than about the proposal itself.

Chen Zhongguo rarely—more accurately, never—saw Chen Yi impassioned and fervent; this might be the only time, and probably never again...

If he could use one political risk in exchange for a tremendous improvement in the next generation of the family taking the helm.

He was willing.

Considering this, Chen Zhongguo finally gave a preventive warning, saying: "Chen Yi, if I agree to your request. Then, no matter the circumstances, if I ask you to stop, you must stop."

"What circumstances?"

"The Central's strong demand? Under any circumstances."

Jiangning lacked the capital to oppose the Central; after Chen Yi agreed, he said, "You can only make one demand. If I make a comeback, then you lose this condition."

"Make a comeback!" Chen Zhongguo hehe laughed, nodding and saying "Good."

Fo Lao inclined toward policy advising, and immediately said, "Mobilizing He Fuhan isn't hard; the hard part is what price to pay. Chen Yi, tell us your proposal."

"Need a bank's senior official to cooperate, and also need to control the National Reserve Bureau." Seeing they all said nothing, Chen Yi continued, "The He Family borrowed not a small amount of money; some from overseas, some from domestic banks. I need that senior official, for any reason, to get hold of the He Family's debt situation and cash situation. If they want to borrow domestically, they'll have to reveal some, more or less."

Zhou Lao, accustomed to being an Aide, habitually forgot the dispute just now, and agreed, "If the bank official persists, we can get a great deal of information; we organize again, we can get specific figures, and then?"

"Then lend as much money as possible to the He Family, let them buy copper futures at high prices. Finally use the National Reserve Bureau's copper to threaten him."

Chen Yi wasn't very confident; after finishing, he quietly awaited criticism.

Unexpectedly, the three Aides thought for a while, and Fo Lao actually gave a "not bad" comment.

"You aren't afraid I'll really sell the National Reserve copper?"

The three Aides exchanged a smile. To them, even if the National Reserve copper was really sold, that would still count as a bearable political cost.

……(Unfinished. If you like this work, welcome to Qidian (qidian. com) to push Recommendation Tickets, Monthly Tickets; your support is my greatest motivation.)