Da Tang: Father, can I resign?

Chapter 188 Li Ming: My dear ministers, please stand up

Paper money is good to use, so it is not a difficult problem to imagine.

There is no need to travel through time. "As long as" a few hundred years pass and the commodity economy develops for a while, paper money will naturally appear during the Song and Yuan dynasties.

But why did China later abandon its low-cost, easy-to-carry paper currency and embrace the silver standard again?
Is it because you don't like it?
“Because credit is the most important part of paper money.

“If credit goes bankrupt, these colorful papers will be no different from waste paper.”

Li Ming instilled this idea into the three feudal brothers again and again.

As the party that spends money, the government always has the urge to issue banknotes indiscriminately.

After all, starting the printing press can "buy" the fruits of people's labor. How cool is this inflation tax?

The result was that the long-term deflation of the classical metal currency period was resolved.

It directly led to hyperinflation.

The credit of the currency, as well as the credit of the imperial court, were all wiped out.

"To get the people to accept paper money, it is not something that can be achieved simply by the imperial court issuing a notice or the government forcing them to do so."

Otherwise, Hayek’s big hand will slap you in the face... Li Ming muttered in his heart.

“So, food must be distributed. It is not possible not to distribute it.

“But it is not distributed directly to the people, but the people have to exchange it with the paper money in their hands.

"If we can get them into the habit of exchanging paper for rice and subconsciously associate these pieces of paper with food, we'll be halfway to success."

Li Ming paused to give the three people who were listening time to think about it.

Up to this point, paper money cannot be strictly considered as "money" but can only be called "food coupons."

After all, this is the world's first paper currency. We must proceed step by step and not be too radical like Li Er.

Student Changsun Wuji actively asked questions:

"Where do the banknotes in people's hands come from?"

"The court gave it to them." Li Ming said without hesitation:
"Anyway, we were going to open the warehouses and release grain as free relief.

“Why not take this opportunity to promote the use of paper money?
"This will alleviate the famine of the citizens and promote the use of paper money. It's a win-win situation. Why not do it?"

The three people present at the meeting nodded one after another, thinking that this method of killing two birds with one stone was very much like Li Ming.

"So, paper money is equivalent to food, equivalent to money, and how to distribute it is very particular..."

Fang Xuanling stroked his beard and quickly realized the key problems that might be encountered in actual implementation.

After all, no one has a mobile phone now, so it is impossible to send consumption coupons to every account.

Just distribute it like releasing grain from a warehouse. There will definitely be few people coming to take it at the beginning, but then everyone will scramble for it, and the resources will be unbalanced no matter how they are distributed.

"That's why I invited you two here."

Li Ming looked at the two pillars under his seat:
"In Liaodong, we usually knock on doors one by one according to the household registration to ensure that the food coupons are put into the hands of every household.

"If a barren land can achieve this, it shouldn't be difficult for the capital, the best capital in the world, right?"

The corners of Changsun Wuji's mouth twitched, and he felt overwhelmed at the thought of the piles of work.

Fang Xuanling also had a lot of experience, so this was not surprising at all.

Li Ming continued:

"Let the people go to the official granary with tickets to collect food and line up to collect it. This will take up their time and leave them with no time or energy to cause trouble in the city."

The three of them twitched their lips at the same time.

When it comes to coming up with bad ideas, no one can match this kid...

"At this stage, paper money has already initially acquired certain financial attributes, and the public will use it for limited transactions.

"But the value of the relief grain issued by the government is limited, so the total value of the paper money released is also limited accordingly, and it still cannot support the needs of daily transactions."

Li Ming continued to deduce:
"In the next step, the salaries of officials, yamen runners, and servants will all be paid in paper money, and more paper money will be put into the market."

Ancient society was troubled, and the financial industry was almost nonexistent.

There is no channel to issue banknotes indiscriminately, and they have to find ways to get them into the hands of the people through various channels.

It’s not like now, where we just take it to the bank and be done with it.

Zhang Sun Wuji almost immediately jumped up to object:
"Be careful!"

Once his own interests are involved, he demands "caution".

Because he is also one of the officials, he also has to receive a paper salary.

What if this plan fails and the banknotes become waste paper? Doesn’t that mean that all my months of work have been in vain?

It is more reassuring to hold real money and rice and cloth...

"If you don't set an example, how can you convince the people?" Li Ming rebuked mercilessly:

"If this crisis cannot be resolved, uncle, you should stop receiving your salary and retire to enjoy your old age."

Changsun Wuji was scolded so much that his face turned red, and he looked at the emperor sitting on the throne with grievance.

His Majesty the Emperor also glared at his brother-in-law with eyes wide open:

"The capable ones will be promoted, the incapable ones will be demoted. If you don't do it, there are plenty of people who will."

Solving the money shortage is now the court’s top priority, and everything else must give way to greater plans.

Changsun Wuji completely realized that he could no longer defeat Li Ming, and he shut up in dismay.

Fang Xuanling heard another question from Li Ming's answer:
"Then how should the amount, specifications, and issuance scale of banknotes be determined?"

Li Ming replied:
“Referring to the scale of copper coin casting in previous years, we will first match it with the approximate total amount of Kaiyuan Tongbao coins circulating in Chang’an City, and then make fine adjustments based on market feedback.

"Too much is bad money, and the people will not accept it. Too little will cause a money shortage.

"Different denominations can be printed on paper, from one coin, two coin to one guan, two guan, to facilitate large and small trades."

Li Shimin listened very attentively and finally asked the most crucial question:
"If the people still don't recognize paper money and the merchants still prefer copper coins, what should we do?"

In this regard, Li Ming's answer is also very simple:
"Then let them use it."

The three of them looked at each other, somewhat confused as to what Li Ming was thinking.

“Not only should the people be allowed to use copper coins, the court should also set up special money houses to allow them to exchange paper money for physical copper coins, one-to-one.

"The raw material for the copper coins is the copper that Li Shiji brought from Jiangzhou."

Li Ming explained:
"That is why I wish to temporarily delay the payment of the army's wages."

The three of them still didn't fully understand.

Li Shimin directly pointed out the core problem:

"Since paper money has replaced copper coins, why should we allow the people to exchange paper for copper in the hands of the court?"

"Because allowing free exchange is the most important step for the court to establish the credit of paper money." Li Ming explained carefully:

“The court can only gain the trust of the people if it is willing to pay real money.

"From the perspective of ordinary people, they only realize that they can always have a way out. If the paper money really cannot be exchanged for goods, they can always exchange it for copper coins.

"Only then can they feel free to collect, spend and store paper money, and paper money can circulate in the market, which can truly reduce the market demand for copper coins."

Monetary credit is a long chain. It is only truly valuable if every participant in the market believes that it is valuable.

Therefore, no link can be faulty, and market participants must have full confidence in paper currency, no less than metal currency.

Even the slightest bit of distrust may cause a chain reaction, resulting in the banknotes being unrecognized and completely becoming waste paper.

Therefore, in the early days of paper money, it was very important for the official use of precious metal endorsement.

When Jiaozi was first invented in the Song Dynasty, the free exchange of paper money and copper coins was allowed, so the issuance process was very smooth.

Later, the imperial court refused to exchange Jiaozi back into copper coins, and the value of Jiaozi instantly dropped to zero.

"Moving a tree to establish trust is the same principle."

Li Shimin nodded in approval.

Although the paper currency looks like a new thing, its core is still a token that corresponds one-to-one to the copper coins circulating in the market.

So this wise ruler was able to understand the trick quickly.

"Is that so..."

Changsun Wuji always felt that there was something wrong here, but he couldn't put his finger on it, and his face looked constipated.

Fang Xuanling glanced calmly at this colleague who had been competing with him for many years, sighed, and asked the question for him:
“Your Highness proposed that the copper mines in Jiangzhou be used as capital and opened to the people for free exchange.

“But the quantity of that batch of copper is limited. It may be enough to cover the army’s salary for one month, but it is definitely not enough to cover the daily transactions in Chang’an City.

"That is to say, our copper coins are not enough for the people to exchange for paper."

"Yes, yes, yes! I have the same question." Lao Fang said what he wanted to say, and Changsun Wuji immediately felt clear-headed.

After thinking about it, Li Shimin agreed with this statement and felt that he had not thought it through enough.

He felt that he had been led into a ditch by Li Ming's magic:
“Ultimately, the cause of this crisis is insufficient copper and iron.

“You first used paper to replace copper coins, and then used copper coins to exchange for the paper in the hands of the people. Isn’t this just like taking off your pants to fart? It’s a waste of time.

"The money on the market is essentially the little copper in Jiangzhou, and it's still not enough."

Li Ming did not comment on this:

“Under special circumstances, when everyone goes to cash out copper coins, this is what will happen.

"But under normal circumstances, this is unlikely to happen and there will always be people who keep some of the banknotes.

"Some people use banknotes for transactions, because paper money is convenient and not easily stolen. Others simply forget about it.

"This part of paper money is the currency we created out of thin air using the copper in Jiangzhou as a reserve."

What what what…

How can money be created “out of thin air”?

Then, the three of them listened to Li Ming chattering on about "money multiplier", "fractional reserve system", "credit currency" and so on, enjoying the feeling of knowledge sliding through their cerebral cortex without leaving a trace.

"It's like this, like this, like this, do you understand?" Teacher Li Ming knocked on the blackboard.

The three of them nodded: "I understand."

Looking at the three wise faces, Li Ming couldn't help but twitch his mouth.

What the hell, you guys know nothing! Even I don’t know what I’m talking about…

He decided to rephrase it:
"Mr. Xuanling, do you know why we want to set up a bank?" Fang Xuanling hesitated:

"To exchange for copper coins?"

Li Ming: "No, it's to make people think they can exchange for copper coins."

Fang Xuanling: "Let the court appoint an official?"

Li Ming: "Let the people and officials know that we cannot exchange so much money."

Changsun Wuji, who was listening to the whole process, was once again filled with awe.

Good fellow, it is really an injustice to describe you, the Fourteenth Party, as a traitorous party.

Among the three, Li Er has the strongest comprehension.

He suddenly got it:

"That is to say, as long as we can fool the people successfully, they won't have to spend a penny. Then, the people will accept as much paper money as we want to print."

After all, he was the one in charge of both making money and spending money, and he grasped the key immediately.

"It's not a scam, it's about credibility. And if you print money without restraint, credibility will be gone and paper money will be worthless.

"But in theory, it is possible to not spend a single copper penny."

Li Ming replied.

Li Shimin thought it was amazing:

"Can paper really solve these problems? Food, copper and iron..."

"Food is already plentiful. As long as we use other forms of 'money' to replace its trading function and food returns to its original purpose as a consumer good, it will still be plentiful."

Li Ming said:

“As for copper and iron, the same principle applies.

“Although someone has artificially created a shortage, no matter how capable he is, he cannot monopolize the country’s minerals.

“Copper and iron are not actually in short supply, or they are not as scarce as they appear.

"It was because of that person's manipulation that the price of copper and iron rose in a short period of time, causing everyone to hold on to their goods and be reluctant to sell them. This vicious cycle led to the current shortage of copper and iron and the cash crunch."

It made sense, and the three of them nodded.

"In other words, as long as paper is used to replace copper, the price of copper will be stabilized, and those unscrupulous merchants and citizens who hoard copper and copper coins will sell off their goods..." Changsun Wuji understood a little.

Li Ming nodded and said:
"In this way, copper, iron, and other metals will re-enter the market and prices will gradually return to normal.

"The copper and iron crisis can be solved in this way, and copper coins can be used normally again."

For a moment, the study was silent.

They could never have imagined that they could solve their pressing problems simply by printing some paper.

If someone had made such a promise to them before today, they would have thought that person was crazy.

But after Li Ming's deduction, they felt that they were crazy.

They were actually convinced, and they actually thought that this would work!

More importantly, Li Ming explained to them in detail the essence of this so-called "economic crisis".

This indescribable and unrecognizable strange crisis was completely exposed.

All fear comes from the unknown.

After recognizing its true face, they regained the courage to fight it.

“So, this crisis that came out of nowhere, without basis, without reason, and out of thin air, was actually caused by people’s caution, panic, and greed?

"And these illusory emotions will be placed on an equally illusory piece of paper, thus resolving this crisis out of thin air?"

Li Shimin couldn't help but feel deeply moved.

Uncover the superficial and half-understood "economics" concepts.

In essence, it is still human nature.

Human nature is so complicated.

Under the coincidence of cause and effect, all parties, based on their own rational standpoints, strived for the greatest benefits, but jointly gave rise to this irrational crisis that harmed the interests of everyone.

This is the situation that the rulers fear the most, which has twisted society into a tangled ball of wool that cannot be untied.

But Li Ming could see through it all.

He also came up with such an unconventional solution, taking advantage of the weaknesses of human nature and stopping the downward spiral caused by a series of chain reactions!

Without a deep understanding of human nature, it is absolutely impossible to do it...

"How did you come up with this idea?" Li Shimin couldn't help asking.

Because paper money is almost obsolete in my era, even old ladies don't use this antique to buy groceries... Li Ming resisted the urge to complain, looked into his father's eyes, and said sincerely:

"I figured it out myself."

Li Er was shocked.

"I have been fighting against this kind of guy all along..." Changsun Wuji felt a sense of unreality.

Li Ming could come up with solutions to political problems that he himself couldn't understand at a glance.

Before solving the problem, Li Ming even predicted the occurrence of this crisis!

But I was just like other mediocre officials, thinking that everything was calm and peaceful. It was just the ravings of a child!

"No wonder, no wonder..."

No wonder in just one year, the Fourteenth Prince was able to transform from the most unpopular, the most naughty, and the one with the most embarrassing background to “that” prince.

His Highness has become the most sought-after candidate for the crown prince, on par with His Majesty, and he has become the power center that straddles Liaodong and Chang'an...

He is really capable and can really govern the country!

"Discovered you were on the wrong ship?"

Fang Xuanling looked straight ahead and spoke in a low voice to his old rival.

Changsun Wuji pretended not to hear.

"It's too late." Fang Xuanling's lips curled up into a slight smile.

Changsun Wuji's face turned pale.

…………

Before they knew it, the four of them were discussing late into the night.

"Huh..." Li Shimin let out a long sigh.

With a plan and some method, he immediately felt more confident.

He regained his majestic state and glanced over it confidently:
"My dear ministers, is there anything else you would like to add?"

"And more." Li Ming said:
“Don’t forget the root cause of this disturbance—the sudden shortage of copper and iron.

“In the later period, it was because everyone followed suit that such a large-scale shortage occurred.

"But the initial gust of wind was obviously caused by someone."

Zhang Sun Wuji stroked his chin:

“I don’t know whether it’s unscrupulous merchants hoarding goods or smuggling ironware abroad.”

Although foreign trade was well developed during the Tang Dynasty, the flow of ironware into the grassland countries was still strictly prohibited.

Well, except for Liaodong's dumping of ironware to Goguryeo.

Fang Xuanling answered immediately:
“I will immediately instruct all states to monitor markets, city defenses, and border defenses, investigate illegal transactions such as hoarding, and strictly prevent the outflow of ironware.

"At the same time, we have ordered more government-run mines and strict inspections of all links including mining, smelting and forging to ensure that they do not fall into the hands of criminals."

Li Shimin was relieved:
“By treating both the symptoms and the root causes, the crisis can be resolved.

"The policy has been decided. A grand court meeting will be held tomorrow to assign tasks and order all localities and levels to implement them.

“As for who will take the lead in this matter and coordinate all the departments.”

Li Shimin paused.

The shortage of money is the top priority of the current court.

There is no doubt that the person who can coordinate this matter can definitely be regarded as having great power in the government and the country.

But, for some reason, Changsun Wuji simply didn't have the energy to fight.

When the answer is obvious, struggling in vain will only make you look like a clown.

"Li Ming, I'll leave this matter to you."

Li Shimin said with ease.

Li Ming immediately became polite:
"I accept your offer. It is my duty to serve the country and the people. I only wish to do my best and do not ask for any prestigious title from you, my father."

He sincerely declined the fame and honor, just like he declined the red envelopes during the Spring Festival.

"..."Faced with this brat's hypocritical behavior, Li Shimin's mouth twitched.

If there were no outsiders present, he would have wanted to give this greedy brat a blow to the head.

…………

The next day, there will be a meeting.

After experiencing 007 for several days in a row, all the ministers had sunken eyes and staggered to the court.

The imperial physician was on standby outside the Taiji Hall in case any old minister could not hold on.

As soon as they entered the hall, everyone noticed a special arrangement.

Next to your Majesty's dragon couch, there is another small dragon couch, almost side by side.

According to etiquette, that should be the position of the crown prince.

And today, sitting on that little dragon couch, there was a figure that surprised everyone.

Li Ming leaned leisurely on the armrest of the small dragon couch and gave a calm smile to the stunned ministers:

"Everyone who loves you, please be free of any courtesy."

(End of this chapter)