The Annals of the Flame kingdom (LN) Chapter 18

“… Now then, Kota . What are you going to do?”

Grin

Carlos keeps looking at Kota interestingly while he finally changed his expression .

“… You d.a.m.n snake . ”

Fundamentally, Kota was a gentle person . After all, he was ‘good natured’ enough to not get angry immediately when he was being summoned .

“… Did the mask finally come off? Good, that face is what I wanted to see…”

Kota revealed his emotions and feeling stared at Carlos . Due to Kota’s gaze that was likely to kill a person if it could, caused Carlos who didn’t really know the ‘normal’ Kota feel his spine trembling for a moment .

Sorbania’s deposit certificate .

Some exception exists, but most country only have one currency . The United States of America had their Dollars, j.a.pan had their Yen, European Economic Union had their Euro . –

That bill was what called as ‘Legal Currency,’ and it was money that one used to pay taxes or conduct trade in specific country . One cannot pay using Dollars in j.a.pan, and the reverse also the same .

“Sorbania certificate cannot be distributed within Terra . ”

“Why not?”

“Because Terra prohibits the distribution of Sorbania deposit certificate . ”

“Hah… Do you really want to test it? Shall I distribute it for real and see whether merchants in Terra would leave?”

Currently, Terra had been trading in both white gold coins and the deposit certificate . It was true that the certificate was a ‘legal currency,’ but that didn’t mean they only used that alone to trade . The certificate was used simply because it was convenient, with no legal basis there . It was just a paper of proof having ‘deposit . ’ At most, they could only ask people to use it . After all, it was akin to a private sector puts on circulation freely . That was why, if Sorbania distributed their deposit certificate, as long the merchants agree to use it, then Terra won’t have the power to stop it . It was Terra who would be in trouble if they confront the merchants .

“What are you going to do? Didn’t you say it yourself? Terra is a poor territory . Can such territory stop a world renown economic power such as Sorbania distributing its own deposits certificate?”

“But, Terra has its own charm too…”

“Oh please . Should I also steal those ‘charm’ as well?”

“—khu! That is…”

“Relax, I’m just joking? Do you think I was serious just now?”

When one thinks about it properly, there was no merit for him to do that indeed .

“…”

When looking at it, there seems only a little bit of demerit in letting Sorbania distributed their deposit certificate . Sorbania white gold coins and Flame white gold coins were issued at the same rate, and the two white gold coins had the same value . If one thinks about the ‘distribution’ alone, it was only different in design, whether using Terra certificate or Sorbania certificate the value was the same .

“… But still, you cannot…”

Kota bites his lips .

A currency with the same value circulated, we call them standard system . There were a lot of standard systems, such as the Gold Standard or Silver Standard, but it was basically a system where everyone agrees with the value of each currency .

“If we allow Sorbania deposit certificate to be distributed within Terra, Sorbania certificate would be dominating . ”

The key here was the issue of convenience .

“When that happens, the value of Tera’s certificate would be weak . Because, of course, they would prefer using Sorbania certificate where it could be used in more places, than only using Tera certificate where it could only be used in Tera . ”

“I guess you’re right . ”

In the standard system, one cannot issue ‘banknotes’ more than the deposited collateral… Or rather, it should not be done . In the end, by appearance, the certificate distributed by Tera did not exceed the number of white gold coins deposited in Tera . But if people want to exchange all the deposit certificate into white golds coins, Tera won’t be able to repay them .

“… Tera is still developing . After all, it is a ‘poor territory’…”

There was never a huge amount of white gold coins stored in Tera . After all, it was a ‘poor territory’… – But that was fine, ironically, in Terra which was a poor economic territory, it still can meet the demand of the distributed certificate by itself .

“… So, what are you getting at?”

‘a.s.sa.s.sination’… That word floated inside Kota’s mind .

“… Tera needs to continue developing in the future . To do that… Making the distribution of the certificate mandatory is essential . But if Sorbania certificate is around, Tera certificate would ended up losing its value . ”

In that situation, what would happen to deposited white gold coins? Or to be more precise, would people still choose Tera to deposit their white gold coins, or using Sorbania certificate and deposit their white gold coins in Sorbania .

“… That is why I cannot let you distribute the certificate . ”

Something that cost one white gold certificate would end up cost two white gold certificate overnight . That was called inflation . It happens when the value of things goes up, and the value of money goes down . The opposite of that was deflation, the value of things fell, and the value of money rises .

Inflation and deflation were mostly dependent on people’s demand . If someone sold something for 1 white gold coin because someone will buy it with that price, but it will also become 2 white gold coin if there was someone who would buy it even if they had to pay more . That indicates people ‘had more money to spend . ’ With such leftover money they possess, they would buy more land, and building being made . The landlord who sold the land, carpenters who built the building then makes profits . In Tera, where people pay taxes depending on how much profit they made, it caused the economy to turn around . And it was no exaggeration to say that Tera economy was supported by inflation . It would be great for them if stable inflation continues to accelerate .

“… However, because of that, Tera cannot be overrun by foreign currency . ”

The central bank of each country would try to adjust how much currency being distributed, in the name of the monetary policy . When there was a surplus in distribution, they would absorb the money, and when there was not enough money in the market, they would do the reverse . By doing so, they would stabilize the price and avoid confusion in the economy . That was what called as currency sovereignty . If Sorbania currency ended up circulating, that meant Tera currency sovereignty had been deprived, and the economics of Tera would be dragged along with Sorbania’s economy . And Tera would have no control over it .

As a side note, the branch expansion program and taxes cut were booming in Tera, which had become ‘fiscal policy, . ’ Whether what they did could be called the government control central bank job, or the central bank manages the government job was open for delicate debate but in Tera… Erika, Kota, and Emily were doing both of them . There was no independent central bank .

“You’re too naive, Kota . No matter what you say and do Kota, Sorbania deposit certificate will be distributed in Tera . There is no way for you to avoid it . ”

‘Now, how about starting lower your head, and beg?’, That was what Carlos said…

“… Alright then . ”

I wonder how long it had been…

“… I will allow the distribution of the Sorbania deposit certificate . ”

Saying so, Kota bows his head .

“… What’s this? Aren’t you quite understanding person . I thought you would bow and say ‘Please don’t distribute Sorbania certificate in Terra . '”

“Would you actually do it if I asked it?”

“I wonder…”

“…This has ended into stalemate you know? How troubling…”

Whether or not Kota lowered his head, the Sorbania certificate would be still distributed . Which mean, it was already hopeless . If that was the case, then he should bow his head quickly . Lowering one’s head is free after all .

“… However, Tera will also equally being allowed to be distributed here as well . Also, we will take the measure of recommending transaction using Tera certificate, is that fine with you?”

“Sure, do as you like . ”

“Furthermore, since we accepted Sorbania certificate, Tera Certificate would have the same value, is that right?”

“Of course . Isn’t that obvious? After all, Sorbania white gold coin and Flame white gold coin had the same value, no?”

“Indeed, you’re right . Then we will regard those as our agreement . ”

“… What? What are you plotting?”

“No, nothing…”

“…”

“…”

“… There you go, wearing the mask again…”

“… Now there, what are you talking about, I wonder?”

Probing each other . One would wonder how many times they did that today .

“… Fine then… If you want to play it that way . ”

Carlos said that while sighing . And lean his back to his chair .

“… Is that so? If that the case then, we close the agreement– . ”

“Oh my? How interesting discussion you both have…”

Suddenly a voice echoes from Kota’s back .

(The Snake, The Demon Lord and The Young Bride)

“Sonia?! Didn’t you see I have a guest right now? Don’t come in however you like!”

“I’m very sorry . But, I was lured by the interesting discussion you both have, so I unintentionally…”

“Are you eavesdropping since the beginning?”

“No way . I just happen to pa.s.s by…”

Not ‘forceful’ but ‘Strong-Minded . ’

When she turned her gaze at Kota, she had impressive eyes . Sharp high nose and small lips . Her facial proportion was very ideal, stretched to her shoulder her wavy loose blonde hair, just like her ‘eyes’, her ‘fiery’ red dress looked great on her .

“… This person is?”

“… Sonia . You should introduce yourself first . ”

“Please pardon my rudeness, Kota Matsus.h.i.+ro-sama . My name is Sonia, the eleventh child of the King of Sorbania, Carlos the First . Pleased to meet you . ”

She quietly picked the red dress and bowed gracefully . Seeing that figure, Kota instinctively replied…

“… I’m sorry for the late greeting . I’m a merchant from Yameto, now a residence in Rondo de Tera, my name is Kota Matsus.h.i.+ro . ”

“Yes, I know . The rumored ‘The Demon Lord’ is it not?”

“That reputation is overestimating me too much, I’m not that bad… After all, I’m just an ordinary person . ”

“Oh my! To call yourself an ordinary person… Aren’t you the one who led my father by the nose?”

“… Far from it, I was the one who is bullied, no?”

Then Kota glanced at Carlos .

“… Sorry, Kota . She’s a bit of a tomboy you see… Always like to meddle with men’s talk . Oi, Sonia! We have an important talk right now . Hurry up and leave the room!”

Seeing Carlos having a bitter expression, Kota relaxed his expression a little . Somehow, there was not much power behind his scolding, one can guess even the ‘snake’ was weak against his daughter .

“Oh my? I also want to join the talk…”

“Are you idiot? Listen here, this is a talk that a woman or a child should not join . ”

“Mou! Father is mean! I won’t hear you~!”

“You…!”

Seeing Sonia puffed her cheek, Kota almost breaks into a smile .

“After all… It is rare to see father being led by the nose like right now!”

Kota expression remains hardened .

“… What do you mean?”

“Nee~, Kotsama?”

“… What is it?”

She was looking at Kota, smiling, as if admiring .

“Tera deposit certificate is backed by the Flame white gold coin . Sorbania deposit certificate is backed by Sorbania white gold coin . Am I right?”

“… That’s right . ”

“I like Flame white gold coin . It has a dignified design of a founding emperor Alex, looking at scenery, like in the Hero poem . ”

“… Is that so?”

“But you know, I like Sorbania white gold coin more than that… Sorbania is a maritime empire . With that, the design is a s.h.i.+p floating on a great sea, isn’t that great?”

“… What do you want to say?”

“Ah, please pardon me . What I mean is… I’m worried that my beloved Sorbania white gold coin might spill over to other places . ”

After saying that she showed a beautiful smile . And evil, yet innocent smile .

“Surely, temporarily, wealth would gather in Sorbania . But that wealth is a restricted wealth that cannot be redistributed…”

Standard system was based on collateral held by each country . If it was a gold standard, then the guarantee was gold, if it were a white gold coin, then the collateral would be a white gold coin . What happens if all white gold coins gather in a single country, Sorbania? Then Tera won’t be able to issue any certificate . In other words, because the demands of the certificate did not being met, it would plung the economy into deflation . That would be a significant negative for Tera economy which relies on inflation .

“Am I right, Kotsama?”

Then what about Sorbania? Sorbania who forced Tera to deflate would have inflation and need to continue making a certificate in accordance with the number of white gold coins being deposited . Otherwise, the white gold coin standard cannot be maintained .

“If we cannot maintain our standard, then we need to stop . Still, Sorbania should be able to cover it . After all, it is the peerless Sorbania Kingdom . ”

‘But… What about Tera?’, she asked .

“It is impossible for Tera, no? The certificate that cannot be traded with ‘white gold coin . ’ Then that means, Tera certificate has to turn into a sc.r.a.p of paper, yes?”

‘How is that?’, Sonia gazes at Kota as if asking for an answer .

“… You beat me…”

Kota exhales a big sigh while looking at Sonia .

“… It is amazing you discern that . ”

Previously, they had agreed on the certificate being linked with the same value . In the worst case scenario, if Tera stop trades its certificate with white gold coins, Sorbania who had its own certificate bound with Tera’s certificate would need to become the insurance . When that time comes, whether or not Sorbania could swallow that was another matter .

“Oh my, am I right?”

“Indeed you are… I’m impressed with your insight . ”

“… Now then, Kota . What are you going to do?”.

Grin.

Carlos keeps looking at Kota interestingly while he finally changed his expression

“… You d.a.m.n snake . ”.

Fundamentally, Kota was a gentle person . After all, he was ‘good natured’ enough to not get angry immediately when he was being summoned

“… Did the mask finally come off? Good, that face is what I wanted to see…”.

Kota revealed his emotions and feeling stared at Carlos . Due to Kota’s gaze that was likely to kill a person if it could, caused Carlos who didn’t really know the ‘normal’ Kota feel his spine trembling for a moment

Sorbania’s deposit certificate

Some exception exists, but most country only have one currency . The United States of America had their Dollars, j.a.pan had their Yen, European Economic Union had their Euro . –.

That bill was what called as ‘Legal Currency,’ and it was money that one used to pay taxes or conduct trade in specific country . One cannot pay using Dollars in j.a.pan, and the reverse also the same

“Sorbania certificate cannot be distributed within Terra . ”.

“Why not?”.

“Because Terra prohibits the distribution of Sorbania deposit certificate . ”.

“Hah… Do you really want to test it? Shall I distribute it for real and see whether merchants in Terra would leave?”.

Currently, Terra had been trading in both white gold coins and the deposit certificate . It was true that the certificate was a ‘legal currency,’ but that didn’t mean they only used that alone to trade . The certificate was used simply because it was convenient, with no legal basis there . It was just a paper of proof having ‘deposit . ’ At most, they could only ask people to use it . After all, it was akin to a private sector puts on circulation freely . That was why, if Sorbania distributed their deposit certificate, as long the merchants agree to use it, then Terra won’t have the power to stop it . It was Terra who would be in trouble if they confront the merchants

“What are you going to do? Didn’t you say it yourself? Terra is a poor territory . Can such territory stop a world renown economic power such as Sorbania distributing its own deposits certificate?”.

“But, Terra has its own charm too…”.

“Oh please . Should I also steal those ‘charm’ as well?”.

“—khu! That is…”.

“Relax, I’m just joking? Do you think I was serious just now?”.

When one thinks about it properly, there was no merit for him to do that indeed

“…”.

When looking at it, there seems only a little bit of demerit in letting Sorbania distributed their deposit certificate . Sorbania white gold coins and Flame white gold coins were issued at the same rate, and the two white gold coins had the same value . If one thinks about the ‘distribution’ alone, it was only different in design, whether using Terra certificate or Sorbania certificate the value was the same

“… But still, you cannot…”.

Kota bites his lips

A currency with the same value circulated, we call them standard system . There were a lot of standard systems, such as the Gold Standard or Silver Standard, but it was basically a system where everyone agrees with the value of each currency

“If we allow Sorbania deposit certificate to be distributed within Terra, Sorbania certificate would be dominating . ”.

The key here was the issue of convenience

“When that happens, the value of Tera’s certificate would be weak . Because, of course, they would prefer using Sorbania certificate where it could be used in more places, than only using Tera certificate where it could only be used in Tera . ”.

“I guess you’re right . ”.

In the standard system, one cannot issue ‘banknotes’ more than the deposited collateral… Or rather, it should not be done . In the end, by appearance, the certificate distributed by Tera did not exceed the number of white gold coins deposited in Tera . But if people want to exchange all the deposit certificate into white golds coins, Tera won’t be able to repay them

“… Tera is still developing . After all, it is a ‘poor territory’…”.

There was never a huge amount of white gold coins stored in Tera . After all, it was a ‘poor territory’… – But that was fine, ironically, in Terra which was a poor economic territory, it still can meet the demand of the distributed certificate by itself

“… So, what are you getting at?”.

‘a.s.sa.s.sination’… That word floated inside Kota’s mind

“… Tera needs to continue developing in the future . To do that… Making the distribution of the certificate mandatory is essential . But if Sorbania certificate is around, Tera certificate would ended up losing its value . ”.

In that situation, what would happen to deposited white gold coins? Or to be more precise, would people still choose Tera to deposit their white gold coins, or using Sorbania certificate and deposit their white gold coins in Sorbania

“… That is why I cannot let you distribute the certificate . ”.

Something that cost one white gold certificate would end up cost two white gold certificate overnight . That was called inflation . It happens when the value of things goes up, and the value of money goes down . The opposite of that was deflation, the value of things fell, and the value of money rises

Inflation and deflation were mostly dependent on people’s demand . If someone sold something for 1 white gold coin because someone will buy it with that price, but it will also become 2 white gold coin if there was someone who would buy it even if they had to pay more . That indicates people ‘had more money to spend . ’ With such leftover money they possess, they would buy more land, and building being made . The landlord who sold the land, carpenters who built the building then makes profits . In Tera, where people pay taxes depending on how much profit they made, it caused the economy to turn around . And it was no exaggeration to say that Tera economy was supported by inflation . It would be great for them if stable inflation continues to accelerate

“… However, because of that, Tera cannot be overrun by foreign currency . ”.

The central bank of each country would try to adjust how much currency being distributed, in the name of the monetary policy . When there was a surplus in distribution, they would absorb the money, and when there was not enough money in the market, they would do the reverse . By doing so, they would stabilize the price and avoid confusion in the economy . That was what called as currency sovereignty . If Sorbania currency ended up circulating, that meant Tera currency sovereignty had been deprived, and the economics of Tera would be dragged along with Sorbania’s economy . And Tera would have no control over it

As a side note, the branch expansion program and taxes cut were booming in Tera, which had become ‘fiscal policy, . ’ Whether what they did could be called the government control central bank job, or the central bank manages the government job was open for delicate debate but in Tera… Erika, Kota, and Emily were doing both of them . There was no independent central bank

“You’re too naive, Kota . No matter what you say and do Kota, Sorbania deposit certificate will be distributed in Tera . There is no way for you to avoid it . ”.

‘Now, how about starting lower your head, and beg?’, That was what Carlos said….

“… Alright then . ”.

I wonder how long it had been….

“… I will allow the distribution of the Sorbania deposit certificate . ”.

Saying so, Kota bows his head

“… What’s this? Aren’t you quite understanding person . I thought you would bow and say ‘Please don’t distribute Sorbania certificate in Terra . '”.

“Would you actually do it if I asked it?”.

“I wonder…”.

“…This has ended into stalemate you know? How troubling…”.

Whether or not Kota lowered his head, the Sorbania certificate would be still distributed . Which mean, it was already hopeless . If that was the case, then he should bow his head quickly . Lowering one’s head is free after all

“… However, Tera will also equally being allowed to be distributed here as well . Also, we will take the measure of recommending transaction using Tera certificate, is that fine with you?”.

“Sure, do as you like . ”.

“Furthermore, since we accepted Sorbania certificate, Tera Certificate would have the same value, is that right?”.

“Of course . Isn’t that obvious? After all, Sorbania white gold coin and Flame white gold coin had the same value, no?”.

“Indeed, you’re right . Then we will regard those as our agreement . ”.

“… What? What are you plotting?”.

“No, nothing…”.

“…”.

“…”.

“… There you go, wearing the mask again…”.

“… Now there, what are you talking about, I wonder?”.

Probing each other . One would wonder how many times they did that today

“… Fine then… If you want to play it that way . ”.

Carlos said that while sighing . And lean his back to his chair

“… Is that so? If that the case then, we close the agreement– . ”.

“Oh my? How interesting discussion you both have…”.

Suddenly a voice echoes from Kota’s back

(The Snake, The Demon Lord and The Young Bride).

 .

“Sonia?! Didn’t you see I have a guest right now? Don’t come in however you like!”.

“I’m very sorry . But, I was lured by the interesting discussion you both have, so I unintentionally…”.

“Are you eavesdropping since the beginning?”.

“No way . I just happen to pa.s.s by…”.

Not ‘forceful’ but ‘Strong-Minded . ’.

When she turned her gaze at Kota, she had impressive eyes . Sharp high nose and small lips . Her facial proportion was very ideal, stretched to her shoulder her wavy loose blonde hair, just like her ‘eyes’, her ‘fiery’ red dress looked great on her

“… This person is?”.

“… Sonia . You should introduce yourself first . ”.

“Please pardon my rudeness, Kota Matsus.h.i.+ro-sama . My name is Sonia, the eleventh child of the King of Sorbania, Carlos the First . Pleased to meet you . ”.

She quietly picked the red dress and bowed gracefully . Seeing that figure, Kota instinctively replied….

“… I’m sorry for the late greeting . I’m a merchant from Yameto, now a residence in Rondo de Tera, my name is Kota Matsus.h.i.+ro . ”.

“Yes, I know . The rumored ‘The Demon Lord’ is it not?”.

“That reputation is overestimating me too much, I’m not that bad… After all, I’m just an ordinary person . ”.

“Oh my! To call yourself an ordinary person… Aren’t you the one who led my father by the nose?”.

“… Far from it, I was the one who is bullied, no?”.

Then Kota glanced at Carlos

“… Sorry, Kota . She’s a bit of a tomboy you see… Always like to meddle with men’s talk . Oi, Sonia! We have an important talk right now . Hurry up and leave the room!”.

Seeing Carlos having a bitter expression, Kota relaxed his expression a little . Somehow, there was not much power behind his scolding, one can guess even the ‘snake’ was weak against his daughter

“Oh my? I also want to join the talk…”.

“Are you idiot? Listen here, this is a talk that a woman or a child should not join . ”.

“Mou! Father is mean! I won’t hear you~!”.

“You…!”.

Seeing Sonia puffed her cheek, Kota almost breaks into a smile

“After all… It is rare to see father being led by the nose like right now!”.

Kota expression remains hardened

“… What do you mean?”.

“Nee~, Kotsama?”.

“… What is it?”.

She was looking at Kota, smiling, as if admiring

“Tera deposit certificate is backed by the Flame white gold coin . Sorbania deposit certificate is backed by Sorbania white gold coin . Am I right?”.

“… That’s right . ”.

“I like Flame white gold coin . It has a dignified design of a founding emperor Alex, looking at scenery, like in the Hero poem . ”.

“… Is that so?”.

“But you know, I like Sorbania white gold coin more than that… Sorbania is a maritime empire . With that, the design is a s.h.i.+p floating on a great sea, isn’t that great?”.

“… What do you want to say?”.

“Ah, please pardon me . What I mean is… I’m worried that my beloved Sorbania white gold coin might spill over to other places . ”.

After saying that she showed a beautiful smile . And evil, yet innocent smile

“Surely, temporarily, wealth would gather in Sorbania . But that wealth is a restricted wealth that cannot be redistributed…”.

Standard system was based on collateral held by each country . If it was a gold standard, then the guarantee was gold, if it were a white gold coin, then the collateral would be a white gold coin . What happens if all white gold coins gather in a single country, Sorbania? Then Tera won’t be able to issue any certificate . In other words, because the demands of the certificate did not being met, it would plung the economy into deflation . That would be a significant negative for Tera economy which relies on inflation

“Am I right, Kotsama?”.

Then what about Sorbania? Sorbania who forced Tera to deflate would have inflation and need to continue making a certificate in accordance with the number of white gold coins being deposited . Otherwise, the white gold coin standard cannot be maintained

“If we cannot maintain our standard, then we need to stop . Still, Sorbania should be able to cover it . After all, it is the peerless Sorbania Kingdom . ”.

‘But… What about Tera?’, she asked

“It is impossible for Tera, no? The certificate that cannot be traded with ‘white gold coin . ’ Then that means, Tera certificate has to turn into a sc.r.a.p of paper, yes?”.

‘How is that?’, Sonia gazes at Kota as if asking for an answer

“… You beat me…”.

Kota exhales a big sigh while looking at Sonia

“… It is amazing you discern that . ”.

Previously, they had agreed on the certificate being linked with the same value . In the worst case scenario, if Tera stop trades its certificate with white gold coins, Sorbania who had its own certificate bound with Tera’s certificate would need to become the insurance . When that time comes, whether or not Sorbania could swallow that was another matter

“Oh my, am I right?”.

“Indeed you are… I’m impressed with your insight . ”.