"Aha? Your Highness Roland, are you worried about a run? ”

John Lauer thought he saw through Roland's concerns and confidently explained:

"First of all, I need to add that according to the practice of the international market, the industrial magic crystal is delivered in the smallest unit of 'ounce', and less than 1 ounce cannot be delivered in kind, and we will also implement this principle in the exchange of paper money and magic crystal, limiting 1 ounce of magic crystal to be equal to 625 imperial gold duga, and people must at least scrape together enough 625 gold duga to come to the central bank to ask for the exchange of magic crystals. 625 gold duga is not a small amount, ordinary families can't take out such a large amount of assets, which limits the possibility of the vast majority of people running on the magic crystal, as for those who are wealthy, they hold enough paper money, it stands to reason that they can exchange it for the magic crystal at any time, but the paper money can buy all the goods they need, what can they be used for when they exchange it for magic crystal? It's like if you issue silver money in the Far East instead of silver in circulation, nominally stipulating that the silver money can be exchanged for gold coins at any time at the bank, but how many people actually exchange gold coins? If there were a lot of them, the Far East's silver money reform would have gone bankrupt long ago, and you wouldn't have been asked by His Highness Frank to help with advice. ”

John Lauer's tone was a little annoying, but Roland had to admit that he had a point. The Far East is a living example, silver banknotes were issued with the promise of convertibility for gold coins, and there was a run on them at first, but with the circulation of paper money, it gradually became recognized by the public, and few people exchanged paper money for cumbersome gold coins.

John Lauer's "Magic Crystal Standard" is a step further on the "silver-gold coin composite system" founded by Roland, limiting the minimum exchange unit between paper money and magic crystal to 1 ounce of magic crystal (625 gold Dugar banknotes), which is actually closer to the so-called "gold bar standard" that was once popular on the earth for a short time. Forcibly raising the threshold for exchanging paper money for physical magic crystals, it also reduces the possibility of a run in disguise, and at first glance it seems that the risk is smaller than that of Far Eastern silver banknotes.

But is that really the case?

Unfortunately, Roland doesn't think so.

"Your Highness Frank, I admire Mr. Raul's imagination, but I cannot approve of his approach for three main reasons."

Roland's face was grim, even if Frank used the magic technique of "recognizing lies" on him at this moment, he only saw a piece of sincerity, and every word came from the bottom of his heart.

"I oppose Mr. Raul's plan to issue banknotes, first of all, for the sake of the people of the Empire, most of whom have less than 625 gold dugas in liquid assets, and they are forced by the government to exchange their hard-earned gold and silver coins into banknotes of various denominations, but they cannot exchange even 1 ounce of magic crystals with this pitiful banknote, which will undoubtedly seriously weaken the trust of the people at the bottom of the society in paper money."

"Secondly, although the Imperial Jotunheim Company is a large state-owned enterprise with strong capital, it is still a 'limited liability company' in the legal sense, and the banknotes issued with the magic crystal produced by the company as collateral are actually a kind of 'corporate bonds'. Forgive me, if the Jotunheim Company fails to do well, loses a lot of money, or is even on the verge of bankruptcy, it is likely that it will not have enough capital to pay off the corporate debts, and then the debt certificate in the hands of the people - the banknote - will become a waste of paper. ”

"Finally, I must point out that although the 'magic crystal' is a rare mineral with gold and silver, it is fundamentally different from gold and silver, and is not suitable as a value scale.

Roland's harsh criticism made John Lauer's forehead break out, and anger seemed to burn in his eyes.

Frank was also shocked, raised his hand to stop John Lauer, who was eager to refute, and asked Roland with a sincere face: "I can understand your first two objections, but the last one ...... You accuse the magic crystal system of being unrealistic, can you elaborate on the reason? ”

"Your Royal Highness Frank, you are a graduate of the School of Political Science and Economics, of course you understand whether a certain substance can be used as currency, first of all, it depends on whether its value can be stable for a long time, and only if you meet this condition can it be used as a value scale." Roland made a very vivid analogy, "For example, if we use a ruler to measure the height of a seat, if the length of the ruler itself cannot be fixed, and the time is unpredictable, then how can the data measured with it be trusted?" ”

"You mean the value of the magic crystal fluctuates too much in the long run to be a general equivalent?" Frank realized.

Roland smiled slightly, and replied unhurriedly: "This question should be considered under different social conditions, for example, in the traditional feudal agricultural society, the magic crystal is of little use to ordinary people, just a beautiful one." Gemstones', similar to precious metals such as gold and silver, have remained stable for a long time and are suitable as a measure of value, but as the entire world of Vares gradually moves towards an industrial society, magic crystals have increasingly become the most important industrial energy and industrial materials, and with the advancement of the industrialization process of various countries, the demand for magic crystals is increasing, and magic crystals are in short supply in the long run. ”

"As we all know, the magic crystal deposits in the world of Vares are very scarce, and unless a few more extra-large magic crystal mines are discovered, the price curve of the magic crystal will rise all the way in the long run. I have conducted a quantitative analysis of the price data of the spot of the magic crystal in the international market in the past ten years, and the results have proved my judgment - the price of the magic crystal has increased by nearly 30% in the past ten years, and the growth rate has shown an increasing trend year by year! Since the Shard itself will become more and more valuable, much more in value than gold and silver, this means that it is no longer suitable as a general equivalent. ”

Roland first analyzes the general trend or "fundamentals" of the appreciation of the magic crystal at the macro level, and then analyzes how this trend will affect the economic activities of individuals at the micro level.

"According to Mr. Raul's proposal, the government will issue paper money at the same time as the legislation to limit the face value of 1 pound of magic crystal constant equal to 625 gold dugga banknotes, then when the magic crystal appreciates relative to gold and silver, the paper money in people's hands - magic crystal mortgage bonds - will also appreciate year-on-year, in order to obtain future income, people are likely to store a large amount of paper money and are reluctant to use it, which will not change the current deflationary predicament of the empire, but may make it worse!"

"On the other hand, in order to meet people's strong speculative demand for paper money, the government will naturally choose to start the money printing machine and over-issue paper money, so that the number of paper money in circulation will expand rapidly, and a huge speculative bubble will appear, once the bubble bursts...... Your Highness Frank, I don't need to say how terrible this will be. ”