Witch Troupe and the Undead

The people of the kingdom asked curiously: Can you also petition your nobles?

The Imperials replied: No, I mean, we are ready to fight the noble councilors one-on-one at any time.

Chapter 121 Classical Economic Crisis

The young Thunderbird Knight crawled on the ground, struggling to reach the longsword half-embedded in the ground not far away, but was grabbed by the hair and dragged up by a flat, ginger-yellow hand. On the flat face, black, empty eyes stared at the knight, and behind him, the sky's mouth could be seen wide open, letting out a deafening roar: "Open your mouth!"

The knight kept his mouth shut and then received three slaps, one on each side, until blood flowed from his nostrils and ears. "Open your mouth!" the gingerbread man roared again, holding a piece of gingerbread that the knight had split open in his other hand.

Finally, after being relentlessly beaten, the Thunderbird Knight opened his mouth in humiliation, only to have it stuffed full of gingerbread, its mouth filled with the taste of cinnamon and ginger. The addition of cinnamon made it exceptionally sweet and milky, and the knight instinctively wanted to spit out this unknown substance.

Especially this thing, which he had personally chopped into pieces, yet the gingerbread man had his mouth tightly covered, forcing him to swallow the cookie.

"Ugh!" The knight lay on the ground, trying to vomit, but the gingerbread man stepped on his back and pressed him down until he could no longer vomit. Then, he dragged the knight by the foot and stuffed him, his companions, and the investigators who had also had their mouths stuffed with various snacks into an open space marked "Treatment Area".

Clearly, the little witch has learned from the lesson of her magic cookies, which most people seem unable to accept as a result of the inability to properly heal. Now, these snacks won't simply shout "Eat me!" anymore.

They would beat their target while forcing them to open their mouths, then stuff their own bodies inside to ensure that each "wounded" person—regardless of whether they created the wounded person—could consume enough magical snacks.

Once they recovered—oh, once they recovered—they were no longer "injured" but intruders of unknown origin, and so a new round of beatings began, like an endless cycle of torment.

The investigation team struggled to escape the clutches of these snacks, leaving with bruises all over their bodies and stomachs too sore to eat anything else.

Meanwhile, the little witch successfully crossed the slums and returned to the camp. For the magic extraction plan, she needed to purchase a lot of materials to make the "magic pump" and the "conduction crystals" along the way. Roach also needed to build a large device in the camp to consume the magic of the Great Sin.

“We need 12 light crystals, at least 5 kilograms of gold, and 35 various magic gems. Oh, the gems are not limited to any kind, but the quality must be uniform, with fluctuations not exceeding 5%.” Roach handed a scroll of materials to Leslie, who had nothing else to do.

"These are yours to handle. As for the other materials, we'll buy them from the caravans around the camp. But you'll have to figure out how to get them yourself. Oh, and for gold, you can consider melting down gold coins to get it."

"That's almost 2,000 gold coins!" Leslie retorted loudly. What does 2,000 gold coins mean? It's hard to say whether the Tallinn City Merchant Guild has that much cash flow. Don't be fooled by the fact that those relics from the ancient capital are worth hundreds or thousands of gold coins. You don't even need to look at their sales cycle. Finding a reliable buyer within a year is considered fast.

On the contrary, relics and equipment materials worth around tens to hundreds of gold coins are the fastest circulating and quickest to sell. Of course, if adventurers really dig up expensive relics, they tend to keep them rather than sell them, unless the team's funds are really tight or they are about to retire.

These items could be exchanged for land, manors, residences, or vouchers with the same effect through barter. The latter was essentially a form of credit currency, similar to the silver notes in ancient China—a complexly crafted voucher stamped with a secret mark, representing an amount of gold coins as assets.

The problem now is that Roach and his men need 5 kilograms of gold literally. They can come up with 2000 gold coins, but they may not be able to gather 2000 actual gold coins.

"Let me make this clear first, this pile of materials you have is almost ten thousand gold coins. It's impossible to buy it with money; you can only barter." This is also how magical equipment is traded in this world. Gold coins are often just something to make up the price difference. It's not that mages don't like money or don't need gold coins, but there really aren't that many physical precious metal currencies!

This has led to a significant disparity in the assets and income of mages, nobles, and alchemists in this world. A noble might earn only 200 to 300 gold coins, but their assets could amount to millions of gold coins.

But when it really comes time to need money, they can't even come up with a thousand gold coins. And if they sell this asset for cash, it might only fetch tens of thousands of gold coins, not exceeding 10—and who knows when they'll be able to sell it all.

The plight of these physical currencies also affected Princess Freya, who was far away in the capital.

The girl reclined on a very comfortable recliner, a gift from the Imperial Capital Chamber of Commerce, to stop expanding the influence of the Royal Chamber of Commerce. Due to the advantages of the Octagon Council system, the management, having failed to defeat the workers in the arena, vented all their anger on their competitors.

Workers demand wages, superiors demand profits, and commoner representatives demand prices. In that case, we can only feel sorry for our competitors. As for their lack of cooperation, such as refusing to lend land and estates or supply goods—it doesn't matter. Our Royal Merchant Guild may not have many assets, but we have many strong individuals trained in the Octagon.

The classic drama of "royal merchants" was directly staged—exploitation and plunder. The management also discovered the benefits of this, as losses within the walls could be compensated by gains outside. However, the awkward point was that doing so would cause other workers and farmers to go bankrupt or lose their jobs, and then these people in need of relief would be pulled into the Royal Merchant Guild.

Therefore, in order to persuade the princess to be lenient, these merchants in the capital sent her many gifts. In order to persuade the princess to increase her efforts, the royal merchants and many poor people in the capital also sent her many gifts.

Freya chose to accept all the gifts and ignore the matter. What? You have a conflict? Get out of the octagon. I've been lying down for too long and I'm bored. I'll get up and watch some bloodshed.

However, with such disorderly expansion continuing, in this era of physical currency, something was bound to happen.

"Your Highness, you must make a decision, otherwise our funding will be cut off." The advisor shouted almost hoarsely, but the "genius girl" on the recliner seemed completely uninterested in listening.

"I didn't understand. Could you say it again?"

"..." The consultant had to repeat what he had already said three times a fourth time, and then make one last simplification: "We can't recover our funds, we can't pay our staff's salaries, and we can't procure raw materials."

"What's the reason?" Freya was very curious, since the money in the accounts seemed normal, so why was this happening?

“I have already explained that several chambers of commerce we have contacted have had their operations severely disrupted and impacted because you allowed those managers to carry out arbitrary mergers and expansions, and they are unable to pay us enough money on time.”

Simply put, a unique kind of tangled account has emerged in this era: you owe me money, I owe him money, and he owes you money. Everyone operates based on ledgers and IOUs. The problem now is that the Royal Chamber of Commerce's disorderly expansion has broken this cycle.

This led to a memorable scene where he was both the creditor and the debtor. The Chamber of Commerce needed money to pay salaries, but the money had to come from the other party's payment for goods. And where was the other party's payment? The other party's payment was in the hands of a third party, and now that third party was in the hands of the Royal Chamber of Commerce, he had become someone who owed himself money.

They have enough funds in their accounts, but not enough gold coins to pay the guild members and suppliers. If they don't pay the suppliers, then the suppliers can't pay their suppliers either, and their suppliers... are the Royal Guild itself.

If it's just a vicious cycle of bad debts, it's not a big problem. It can be turned around by borrowing or using a third party. If all else fails, it can only be treated as a bad debt—this kind of thing is unavoidable in business.

The funny thing is, they've expanded their operations too much, almost monopolizing all basic necessities and over 8% of the goods supply in the capital. It's practically impossible to solve this problem within the capital itself.

However, the noble territories and merchant guilds supported by nobles in other regions were not so accommodating. They demanded cash, as those nobles also needed gold coins to pay their soldiers. Giving IOUs was not unacceptable, but they needed to be accompanied by physical goods. But that was the problem. The Royal Merchant Guild's production cycle was thus disrupted, and no physical goods could be provided.

"I still don't understand. You mean I have money in my accounts, but I don't actually have any?"

"Yes, we have enough gold coins in our accounts, but we don't have that many gold coins in our pockets."

If Roach were here, he would succinctly state that this is a business bubble about to burst.

As mentioned earlier, in order to avoid going to the octagon while still reaping sufficient profits, those managers chose to seize various fixed assets by any means possible, making their balance sheet look very good. However, when it came time to actually collect their money, they couldn't produce a single coin.

Because all the cash was used to acquire these farms, workshops, etc., and for these things to operate, farms need to operate on a quarterly basis, workshops need to spend money to purchase raw materials, and the products they manufacture need to be sold.

"How about we don't give them gold coins?"

“Then they’ll jump up and rebel, Your Highness. Oh, before that, they’ll put everyone in the octagon, but that won’t solve the problem.”

"What I mean is, should we just send them the products directly? They're paying for things anyway!"

"That's impossible! If you release your own products, wouldn't that directly eliminate purchasing power?!" That would only lead to a more severe deflation. "Besides, a significant portion of the products they need are ones that we have to pay for ourselves!"

“What I mean is…” Freya tried to squeeze the remaining computing power out of her logic engine, “what needs can we supply internally, and then issue them some kind of voucher so they can collect it themselves, and then issue gold coins for the rest that needs to be purchased externally, so that we can issue a lot less gold coins this way.”

Freya suddenly had an idea: "And those guys who owe us money, they only owe money. They also have goods, right? Let's take stock. Pay those who can be paid with vouchers, and for the rest, if we really can't pay, we'll issue gold coins to those who need to be purchased from other territories."

"Hmm, that does sound feasible."

Of course it's feasible, because it means that she is essentially issuing a new currency internally. The original gold coins become something like foreign exchange. Things that can be produced and supplied internally can be purchased with her new currency, while those places that cannot accept these IOUs, such as local nobles, can be purchased with gold coins.

This is tantamount to artificially separating domestic demand from foreign trade, roughly equivalent to a miniature state within a state. In such a situation, since the local currency is essentially a bunch of IOUs, and as long as the entire production chain can continue to provide supplies, then you could call these IOUs money—as long as they are not over-issued to a certain extent, they might actually be quite stable.

However, this approach alleviated her own problems but did not solve the problems of others. Instead, it made the problems of others even bigger. As a result of the chain reaction, the hellish deflation began to spread slowly and steadily from the capital to the entire empire.

In this situation, the value of physical currency increases, and merchants, nobles, and business guilds are more inclined to cash out their IOUs first—didn't you see the princess frantically cashing out these vouchers for real goods? A term that seems utterly foreign to the empire, and indeed to all the countries in the world: bank run, is slowly taking shape.

Furthermore, this landmine will rapidly spread from the empire to the whole world. The measures taken by the classical era, based on ledgers and vouchers, to deal with the shortage of metal currency will begin to collapse. Merchants with the means are trying their best to exchange these things for physical goods. However, under such circumstances, it will inevitably lead to an oversupply of physical goods in the market, resulting in a drop in prices.

With prices falling, people are even more eager to cash out their possessions as quickly as possible, resulting in less money and more goods in the market...

Of course, limited by the historical context and the limits of transportation capacity, this situation is currently only showing slight signs and is not yet sufficient to develop into a classical economic crisis.

The bad news is that, due to limitations in information transmission and logistics capabilities, the destructive power of such events is limited to a small area, but it still causes devastating damage to businesses in that small area.

Then, since the Royal Chamber of Commerce provided the basic necessities for the capital, and the Royal Chamber of Commerce's IOUs were directly redeemed for goods, which was roughly equivalent to issuing a new currency, the situation in the capital and the surrounding directly controlled territories was relatively good.

However, the nobles who bordered the capital, especially those from the grain-producing areas in the southwest, felt disgusted, as if they had eaten excrement. Even worse was the Hot Sands Province, which was mainly engaged in handicrafts and alchemy.

The nobles in the grain-producing areas were disgusted by the tangled ledgers shoved in their faces, demanding payment in kind. They could simply open the granaries, plunder the last grain of wheat from the farmers in their territories, and that would be the end of it.

However, the province of Hot Sands is really in a bind. They can indeed produce a large amount of goods to fulfill their promises, but what about the raw materials? Raw materials cost money! And a significant portion of these raw materials come from the capital and surrounding provinces, but now they refuse to use vouchers for transactions and insist that you produce gold.

"What!? A large-scale rebellion affecting three counties!?" The emperor thought he could take a break to nurture Princess Freya, but when he woke up, his attendant told him that, for some reason, a large-scale rebellion had broken out in three counties in the southwest and west.

The local nobles declared that they could no longer tolerate such cruel exploitation and oppression—of course, if they didn't rebel, they would really be ruined!—and thus launched a rebellion.

In order to cash out all these promissory notes, the princess deployed the imperial guards to force the nobles to empty their coffers to pay them off. So the nobles thought that since they were going to hang themselves anyway, they might as well rebel!

The more loyal nobles, after redeeming the vouchers, faced with empty warehouses and rebellious neighbors, chose to plunder the farmers' land, causing the farmers to rise up in resistance to taxes and rebellion.

In the end, it turned into a scene that even the old emperor couldn't understand. Under normal circumstances, a rebellion should have involved forming factions to protect themselves, building up an army, and then advancing towards the capital and surrounding areas. At the very least, a leader should have been chosen, with local loyalists fighting the rebels, and the empire calmly mobilizing its army to suppress the rebellion.

However, the current situation is that local nobles are fighting nobles, commoners are fighting landlords, landlords and powerful families are fighting nobles, and nobles are fighting commoners. In short, it's a chaotic mess.

The rebellious nobles were simultaneously demanding the overthrow of the royal family, clashing with the loyalists, and intensifying their internal exploitation to fund the rebellion. They also had to fight against the rebel armies and bandits below them, while the loyalists were in a similar predicament.

As for the rebels, they fought against both sides, including the armed forces of various merchant guilds. Mercenaries, adventurers, and bandit groups from all walks of life were also involved—the only thing they didn't advance towards the capital was that they didn't advance towards it. This left the old emperor somewhat puzzled as to what had happened.

[PS]

During the year-end summary, the Imperial Prime Minister shouted to the audience: "Those who made big mistakes in the past year, stand on the left; those who made significant and outstanding contributions, stand on the right."

At this moment, a voice came from the audience: What if I made a huge mistake by making a significant contribution?

The Prime Minister was immediately alarmed: Your Majesty, what are you doing down there? Come up here quickly!

Chapter 122 Is it me who is rebelling against me?!

The Imperial Hot Sands Province. Judging by the name alone, almost every foreigner who hasn't been here will insist that it should be a region dominated by desert and wasteland terrain, especially since it does indeed border the Hot Sands Desert in the central part of the continent.

However, the reality is that this long, slender promontory on the western edge of the empire is actually known for its lush greenery and climate, similar to that of Los Angeles, as it is a coastal province.

The region with the most developed handicrafts and commerce in the empire was also the area most severely damaged in the shock caused by the capital. Of course, the damage here was not as severe as the widespread lamentation of a financial crisis on Earth.

In fact, even the extent of the "disaster" suffered by cities close to the capital is considered a minor problem by global standards, and may not even be as harmful as the changes in currency and the introduction of inferior copper coins in ancient China.

Many urban residents don't even feel that their lives have changed much, let alone the farmers in the countryside.

However, it is indeed severe to say that the disaster was serious, because "receipts" are similar to ancient banknotes or acceptance tickets, which are generally not used by itinerant merchants or most stationary merchants, and private transactions were even proceeding smoothly and normally.

The only ones truly affected were the chambers of commerce engaged in large-scale trade. In the era of physical precious metal currency, let's not even talk about whether they had enough gold to represent such an enormous amount of trade. Even if they did—brother, are you really not afraid of dying while hauling hundreds of kilograms of gold through a world full of thieves, bandits, and intelligent monsters?

When the princess demanded all the vouchers she had in exchange for goods, it meant a bank run had occurred. The Royal Merchant Guild was the first to demand cash, which strained the cash reserves of several large merchant guilds in the prosperous trading region of Hot Sands Province. The remaining merchants opted to exchange their vouchers for goods.

Frankly speaking, this process is actually less damaging to the Chamber of Commerce, because it also means that the goods have been "sold". They just don't have cash, which doesn't mean that they, who own several trading ports in the Jerantut province, don't have enough goods from all over the country to pay for them.

However, this redemption also has its limits, because the production of goods requires manpower and resources. When the princess takes these goods and returns the vouchers they previously issued, it also means that they have fewer goods that they can sell for cash to pay salaries.

Of course, this was not a problem, because they could issue new acceptances and continue to purchase raw materials from suppliers. However, this process was interrupted by the Royal Merchant Guild, because the main assets of the guild now held by the princess were these farms, mines and other basic industries, and they also needed to pay wages, so they did not accept receipts and required cash transactions.

So these chambers of commerce either pulled out gold coins or borrowed from other countries and suppliers at higher prices. In the process, the princess had less cash on hand because the amount of raw materials and basic industrial products sold decreased, so she was forced to demand more vouchers.

At the same time, she also issued her own "vouchers" or similar "gift cards" internally. If it only went this far, then there was still hope, because there would always be people who would use the gift cards she issued to collect raw materials and basic products from her chamber of commerce, process them, and then sell them back to her in exchange for cash.

However, all of this is predicated on the assumption that the free market is balanced solely by the "invisible hand" of the "market itself," but the reality is...

Several additional impacts have emerged: First, there are small merchants and itinerant traders, most of whom hold cash, while a significant portion of their goods are purchased on credit.

Secondly, there are the nobles. It is almost impossible for nobles to support an army with land rent income. Therefore, they will inevitably participate in some commerce. Moreover, many nobles are heavily indebted and borrow real money from the merchants' association by pledging their land. Of course, conversely, these nobles also provide credit guarantees for the merchants' certificates.

Third, in this era when productivity was not yet developed, the residents of villages and towns who were almost outside the market through self-sufficiency accounted for more than 70% of the population or total consumption.

All three types of people had exactly the same approach during this period: hiding their money in cellars and refusing to pay off debts or buy more goods. However, they also had different ways of coping.

Those itinerant merchants and traveling traders would try to quickly sell off their goods and convert them into physical currency in a short period of time. There was no other way; their financial situation was the worst, and they were the least able to withstand such fluctuations.

These itinerant merchants of the classical era mostly possessed a keen sense of smell. They might not understand what economics or finance were, but they were definitely among the most sensitive to prices. In the era of securities, this group was the standard "leeks" who would chase rising prices and sell at a loss, but in the era of physical currency... chasing rising prices and selling at a loss really works!

After all, if you hide gold, it will still be gold once the storm has passed. But if you hide dollars or stocks, they might become worthless paper once the storm is over.

Farmers, on the other hand, are facing lower prices and are not getting good prices for their crops. Therefore, they are instinctively trying to save more money to pay taxes and will try to reduce their consumption as much as possible.

This will further exacerbate the panic among traveling merchants and lead to them dumping their goods. Once these traveling merchants have temporarily satisfied their consumers and are holding onto their money without intending to purchase more goods, it will be the turn of the large merchant guilds and stationary merchants to start going bald.

Yes, these people are still choosing to default on their debts at this critical juncture. What about goods bought on credit? Yes, I gave you an IOU, but I have no money—that's considered good. The worse ones are those merchants who simply abandon the remaining goods and run off with the money. [This kind of defaulting and running away is most common in the era of physical currency, because gold isn't registered to anyone, and information flow is too slow.]

Then came the main event and the core MVP of this rebellion: the nobles. The nobles' choice was similar to the merchants': to default on their debts.

Ah yes, yes, I did borrow a lot of gold from you, and now that gold and silver have become the pay and weapons for my army. It's impossible for me to repay you in advance. I will repay you in kind after my people pay their taxes.

What? You're saying that the taxes paid in kind by the people aren't enough to pay off debts in this era of plummeting prices? What a joke! Look at the swords in my army's armor, and think about what price levels we used to settle debts in kind?

As for the pledged land, it's even simpler. This land was granted to me by the emperor. I can give you the right to use it, but ownership is impossible. Moreover, you still have to pay me taxes. This is for enlightened nobles. As for the unenlightened ones—money borrowed based on their own abilities, why should they repay it!?

Of course, those who simply refused to repay were in the minority. After all, most nobles, even if they didn't care about their reputation, would still need to borrow money from these merchants in the future. So, they changed their approach, increasing commercial taxes and setting up more temporary checkpoints and border crossings.

I'm short of money, but I'll have money once I collect taxes. As for the issue of in-kind taxes, it's alright. I'll have my subordinates collect only gold coins. As for who to collect the taxes from, the nobles looked to the merchants—they knew perfectly well that farmers couldn't possibly have much cash on hand.

Then the Karazhan loop started: if you pay your taxes, I'll have money to pay you back; if you don't pay back, where am I supposed to find the gold to pay my taxes?! If you don't pay your taxes, where am I supposed to get the money to pay you back?!

Of course, the merchants' response was to resist these abnormally levied additional taxes, demand the abolition of these checkpoints, and protest and resist the taxes. The consequence of doing so was that they were plundered by nobles with their troops. However, while ordinary merchants were easy to deal with, the large merchant guilds and enlightened nobles who were already involved in industry and commerce were much more difficult to deal with.

"So..." the emperor stroked his chin, "there are at least five factions in the area, and they can't agree on anything?"

"Yes, first of all, there's the Chamber of Commerce alliance that's been making a fuss. They're demanding the abolition of unreasonable taxes imposed by local lords and the confiscation of the nobles' assets to pay off their debts."

"They didn't deny the Royal Chamber of Commerce's receipt?"

"No, because the credit of these receipts is also the basis of their wealth. If they default, their wealth, which exists in other merchants as receipts, will vanish." It's roughly equivalent to a collective credit default, turning them all into penniless paupers with a pile of worthless paper in their pockets.

"Then there is the alliance of nobles from the three provinces. Their demands are simple: increase commercial taxes and shut down these 'illegal merchants' who hoard goods and speculate. To put it bluntly, they are refusing to pay their debts. Moreover, this time they are in the right because the agreed loan period has not yet expired."

This is equivalent to a creditor demanding early redemption of a debt, which, even in the modern financial system, is an unreasonable action and even a breach of contract.

"Then came the jeering citizens, who believed that the struggle between these merchant guilds and nobles had led to their unemployment and sharp decline in income, and that wheat, milk and other things on the market were indirectly increasing in price."

What are their demands?

"They demanded that a local council be established, modeled after the Royal Chamber of Commerce, which was the policy of Princess Freya, with representatives from merchants, nobles, and citizens to set tax standards."