I'm the Dauphin in France

Chapter 1077 The Great Inflation
The Chancellor of the Exchequer continued to shake his head: "Mr. Pitt, I have taken out a loan of more than £40 from the bank to raise funds for reinforcements to the Cape of Good Hope and intervention in the Caribbean over the next few months."

"Currently, the interest rate has been pushed up to 9.5%."

"If you want to get a loan of £50, the interest rate will definitely rise to over 12%!"

The UK government primarily finances itself through private banks—including the "quasi-central bank," the Bank of England, which is also private—and the greater the government's financing needs, the higher these capitalists will charge interest rates, much like France before its financial reforms.

Of course, the British government's debt ratio is not too high at present, so the interest rate has not yet reached the level of 20% that France did back then.

Petty then looked at Grenville: "Your Excellency Prime Minister, we may need to take out a lot of loans before we can solve the sugar problem, and it is not advisable to push interest rates too high at the moment."

Grenville frowned and nodded. Britain's finances had been strained for the past two years due to sugar subsidies and competition from France in industrial goods, making £50 a serious consideration.

He turned to Pete and said, "Perhaps we should raise the personal income tax a little more."

He then sighed: "The pressure from the parliament will definitely be immense."

When Britain introduced personal income tax, it sparked widespread public discontent. This was partly the reason for Pitt's resignation. Grenville's plan to raise personal income tax will also face significant risks.

Pete Jr., however, seemed very relaxed: "Your Excellency, we don't need to raise taxes at all."

He then looked at Petty: "There's no need for large-scale loans."

The people inside the room looked at him with a puzzled expression.

Peter Jr. smiled and said, "Have you all forgotten? The pound can no longer be directly exchanged for gold. We only need to issue an additional 50 pounds to easily save Bolton-Watt."

“Absolutely not!” Petit shook his head, interrupting him. “Mr. David Hume clearly pointed out that excessive money printing will lead to inflation, which in turn will cause the price system to collapse. We must avoid the painful lesson of the Spanish.”

David Hume, author of *On Money*, proposed the theory of inflation in the mid-18th century. After Spain discovered the New World, it acquired vast amounts of gold and silver, which triggered massive inflation in Europe—prices soared four to seven times in a few decades, leading to the bankruptcy of many people in the lower classes.

Little Pete seemed to have anticipated his response and immediately said, "It's only £50, less than 1.6% of last year's fiscal revenue. It won't have much impact on prices."

"And once our financial situation improves, we can gradually withdraw the newly issued banknotes, and everything will be as if it never happened."

General Jarvis, standing nearby, nodded excitedly: "You're right! That's how it works..."

As he spoke, he looked at Petty with some uncertainty: "That's right, isn't it?"

The latter nodded hesitantly. If it were only an additional £50, it seemed unlikely to have any significant impact.

Seeing that the Chancellor of the Exchequer did not object, Glenville breathed a sigh of relief: "Then, Mr. Petty, please submit a share issuance plan to me as soon as possible."

"Yes, Your Excellency the Prime Minister."

Petty responded, then suddenly remembered the "Cape of Good Hope grant" and "Persian loan agreement" that had been giving him a major headache lately, and his eyes lit up.

If an additional £100 million is issued, it would only amount to 3.2% of fiscal revenue, and the resulting inflation would be perfectly acceptable.

This is so much better than paying those unscrupulous bankers 9.5% interest.

He quickly said to Grenville, "Actually, I think we could issue more, say a million pounds. That would save the treasury tens of thousands of pounds in interest." The latter exchanged a glance with Peter Jr. and nodded, saying, "That's something we can consider."

British cabinet members immediately began discussing the "making money out of thin air" operation with great enthusiasm.

They were completely unaware that printing money is more addictive than gambling.

Pete Jr.'s statement that "it won't have any impact" is based on the premise of firmly controlling the scale of currency issuance, but once this kind of thing starts, it's impossible to stop.

Especially after a new finance minister takes office, when faced with financial problems, people will think of the precedent of how the predecessor easily overcame difficulties, and then think, "Why can only he do it, but I have to suffer here?"

Then he is destined to choose the approach that makes him most comfortable.

Furthermore, financial theory of the time was far from complete. David Hume had not even studied the difference between issuing more gold and silver coins and issuing more paper money.

The former is a valuable currency; even if there is an increase in its issuance, a portion will be hoarded and withdrawn from circulation. Paper money, on the other hand, can only be used for circulation. Once people receive it, they will try every means to spend it, causing inflation that is far more severe than that caused by gold and silver coins.

According to later inflation theories, rapid money circulation leads to a longer cost transmission chain, self-fulfilling inflation expectations, and the creation of asset bubbles. Therefore, the inflation caused by an over-issuance of 3.2% of the money supply could be far more than 3.2%.

Moreover, there will be a foreigner with modern financial knowledge and a large amount of capital who will actively contribute to the inflation in Britain.

Two hours later, as Henry Petty left 10 Downing Street, he was still regretting not having suggested to the Prime Minister sooner that more paper money be printed.

In that case, Britain wouldn't have been unable to act due to financial constraints when France declared war on Algiers a month ago.

……

Algiers.

In a valley in the middle of the Atlas Mountains, Ney looked at the location marked on the map by his strategist and was wondering whether to camp in the valley that night or walk all the way to Arsenis further west. Just then, his guards came quickly with a messenger.

The messenger, clearly a Berber, dismounted and bowed to Ney, raising his hat in salute. He then said in slightly broken French, “It is an honor to meet you, Colonel. I saw you once from afar when I was in Susa.”

Ney was one of the two commanders who, despite being outnumbered, repelled the invasion of the Algiers-Moroccan coalition. He was very famous in Tunisia.

The staff officer next to him coughed lightly, and the messenger quickly got back to the main topic, handing a letter to Ney: "Colonel Jemill asked me to give this to you."

"Four days ago at noon, our army captured Mittija. You can enter the city at any time."

Ney was taken aback.

According to the plan, Jemil was supposed to hold off Kuroglu's troops in the east, so why did he go to Mittja?

The messenger continued excitedly, "Colonel Jemille left Lieutenant Colonel Damat to lead 2500 men to continue the siege of Kuroglu, while he led 1500 soldiers and captured Mittija."

Indeed, the Algiers Guard had exhausted its elite forces a few years ago, and its 13,000 troops were completely surrounded by 2500 French Tunisian troops.

　The author has been in a very bad state lately, resulting in inconsistent updates. Please forgive me. (Twice I finished writing but wasn't satisfied, so I deleted and rewrote it...)
　　I'll definitely resume normal updates starting tomorrow! Mwah!

　　
　
(End of this chapter)