Sengoku Komachi Kuroutan - Ch. 95 - A Moment's Breath

[KerNes]

Dude—the mangaka (and Shizuko) literally explained this very process you're speaking of for several panels.

It didn't, at least not in this chapter. It instead mentioned the common misconception that banks lend money they just magic out some money, instead of, as I said, the actual process, where they loan actual money that already actually exist and they actually have hold of (not necessarily theirs, but as someone's deposits);

It's eventually multiplies the money supply in the economy, because that money, once loaned out, is used and gets deposited back into the banks, who then can use that money to to lend out more money.

It is not "Just recording a number in a ledger and thus money gets created". That would just be fraud. Yes, fractional reserve banking can get annoyingly close to that, and if regulators and auditors aren't on point, a lot of financial institutions might try to just do said fraud anyway, but it's very much not how the system is supposed to work.

This is not to say the Mangaka is bad, or that the Manga is bad for getting this wrong, it's just a very common misconception about how fractional reserve banking that I try to correct when I see, futile as those attempts might often be.

 

[Shawn]

no idea if this is real or not but I'm a sucker for discussions on proxemics. it's unnoticed details like this that help me extract more mileage every time I reread stuff

The concept of ‘Face’ is as important in Japanese culture as it is in Chinese.
https://sengokudaimyo.com/etiquette

 

[Lilabun]

Where is that guy that's in love with shizuko? I like him. I wanna see him again 🤣

 

[sssr]

The Ming Dynasty in power AT THIS VERY TIME had already issued (in 1375) and abolished (in 1517) paper money, called 大明宝钞 (Da Ming Bao Chao - Great Ming Treasure Note) and this also circulated for a time into Japan, so not only were the Chinese (and Japanese) already very familiar with the idea of fiat currency, and specifically in the form of paper money itself, they had long become aware of its usual pitfalls by the time of Oda Nobunaga. After all, 大明宝钞 was abolished because the Ming government became unable to honor the scrip after the 1460s. Before that the Yuan Dynasty had exactly the same problem with their scrip (and the Song and Tang before them), although to be fair with the Yuan the biggest problem they actually had was their Ilkhanate cousins failing to understand the way fiat worked and simply flooding all of Asia with their scrip, devaluing every other fiat currency the Mongol successor states printed.

I find it really annoying that the author has to have Shizuko explain fiat currency to a Japanese ruler using Eurocentric ideas when it was actually a Chinese invention that said ruler would have been aware of because Japan's fiscal conservatism of this era partly came from their loathing of the idea of fiat due to its already having failed multiple times in their own shared history with China. They knew about paper money and there's a reason they had rejected it last century.

Yongle coins are coins minted under the Ming's Yongle Emperor, third in his line; the same one who sent out the naval expeditions of Grand Admiral Zheng He. Yongle's son was the one who closed off China from foreign trade, so Yongle coins were the last Ming coins to circulate officially outside China and became the basis for East and Southeast Asian international trade for the next few centuries. The Japanese court had been using Chinese coinage since their Heian era when the Tang Dynasty was still in power, so when exportation of Chinese coinage was banned, they had no choice but to continue using Yongle coins and some imitation coins minted in various places in Japan. The lack of new Chinese coinage exacerbated by the Ashikaga Shogunate's failure to control the circulation of imitation coins caused general inability in Japan to use coin for trade so rice became the main currency instead.

It should be noted that the TAKEDA during the time of Shingen had successfully minted and issued a gold coin from their mines that everyone very quickly adopted. This coin was actually the greatest prize obtained by the Oda when they defeated Takeda Katsuyori in 1582. The Takeda gold coin was so successful that it became the first official currency of the Tokugawa Shogunate.

 

[Phelix]

'In theory, you could infinitely print more-but there are countermeasures'

In practice, the one countermeasure that works is that economics wins in the end and the crash this system inevitably makes will be biblical. There are two flaws. One, it expects the bank to not evet be corrupted by self interested individuals. And two, it expects the same self interested individuals to accept when they've lost and not dig a deeper grave.

Creating a more established system of credit is important, helps capable entrepeneurs drag their produce in the future forward to the present. Cutting money off from physical assets like Gold, Silver, Copper, etc will ensure that you'll eventually be facing currency devaluation and hyperinflation. You can't rely on people to not print more-they'll find a way. So you tie it something that actually exist and say "You're broke, go cry about it and get your finances in order".

 

[Phelix]

I found it intriguing how both the East and the West came across the idea of paper money,.

But aside from the difference that the ancient Chinese court didn’t know jack about how money works and they went Zimbabwe at some point, I‘m not sure why it’s a failure there and a success in the West.

The west is simply centered around the current world power. It can ship out its debt to far more and delay the inevitable. Ancient China was just stuck to Asia and could get its ass kicked by anyone with enough spears, swords, and horses.

 

[sssr]

I found it intriguing how both the East and the West came across the idea of paper money,.

But aside from the difference that the ancient Chinese court didn’t know jack about how money works and they went Zimbabwe at some point, I‘m not sure why it’s a failure there and a success in the West.

I think there has been very bad misunderstanding about ancient Chinese dynasties' mismanagement of currency. The fact is that ancient Chinese courts always understood the problem with currency and especially with fiat (because they invented and had multiple runs of it). We actually have evidence of this in the correspondence between the Yuan Dynasty and the Ilkhanate where the former admonished the latter for literally printing money willy-nilly without understanding the way fiat worked. The Yuan Dynasty REALLY understood how fiat worked, having inherited the knowledge of the Song. They strictly controlled the amount of paper money in circulation, and they made sure to put standard safeguards like expiration dates and strict conversion rates on their paper money. The real main cause for Chinese currency mismanagement was that the imperial court (that fully understood how money worked) could never stop emperors (who often didn't or didn't care) from abusing the system. There are actually surviving petitions from the Ming Dynasty, especially from the reign of the horrifically profligate Zhengde Emperor, from court officials trying to educate the emperor on how money worked, and they sound very similar to our modern understanding.

When the court could convince the emperor not to be an idiot, we actually see them enact policies that are very similar to modern central banks. A good example of this is that the Chinese imperial bureaucracy was the first to understand that old money had to be DESTROYED, or in any case taken out of circulation, to prevent hyperinflation. They also developed a very efficient system for doing it. The problem was that the system by default made it extremely easy for unscrupulous emperors to debase the coinage.

What the modern Western (actually to be more exact, British) system did to make money work was to detach control of the financial system from the monarchy, which the Chinese could never do. Their problem basically boils down to a sophisticated and actually very modern financial system being unable to separate itself from the whims of often extremely ignorant absolute rulers.

 

[damadicius]

Their problem basically boils down to a sophisticated and actually very modern financial system being unable to separate itself from the whims of often extremely ignorant absolute rulers.

I couldn’t find the detailed information on the topic, but your comment aligns with my assumption that in Imperial China, paper money was enforced by the government, while in the West, it was adapted by the people first, then by the country later.

 

[Chizan]

Wonder if this stays on here now that emaqi licensed it? A bit ironic, Gold Scale uses AI assisted translation, and so do emaqi, except past experiences of official AI translation do not inspire hope...

 

[Beregorn]

It didn't, at least not in this chapter. It instead mentioned the common misconception that banks lend money they just magic out some money, instead of, as I said, the actual process, where they loan actual money that already actually exist and they actually have hold of (not necessarily theirs, but as someone's deposits);

It's eventually multiplies the money supply in the economy, because that money, once loaned out, is used and gets deposited back into the banks, who then can use that money to to lend out more money.

It is not "Just recording a number in a ledger and thus money gets created". That would just be fraud. Yes, fractional reserve banking can get annoyingly close to that, and if regulators and auditors aren't on point, a lot of financial institutions might try to just do said fraud anyway, but it's very much not how the system is supposed to work.

This is not to say the Mangaka is bad, or that the Manga is bad for getting this wrong, it's just a very common misconception about how fractional reserve banking that I try to correct when I see, futile as those attempts might often be.

Except that's EXACTLY what governments with fiat currency do: they conjure money out of thin air to pay for shit they want done and don't have the money to do. They call it "quantitative easing" but it's really just "money printer go BRRRRR".
In the past they did that by minting coins with a lower content of gold and silver; obtaining the exact same results, I might add...

At the end of the day, the world as a whole is still using the gold standard: "inflation" and "gold price rising" are just other ways to say your paper money isn't actually worth shit.

 

[KerNes]

I couldn’t find the detailed information on the topic, but your comment aligns with my assumption that in Imperial China, paper money was enforced by the government, while in the West, it was adapted by the people first, then by the country later.

Kinda? Fiat currency was still started by the government. Paper money was started by the people so to speak, but it wasn't quite money, but more like bearer bonds. It was a certificate "This paper can be exchanged for X amount of gold/silver with this bankimg organization/merchant guild/goldsmith organization*".

People then just traded the certificates, because precious metal is heavy, inconvenient, and much harder to keep safe, specially when traveling, not to mention often easier to sneakily debase or shave of pieces. That's also why notes are traditionally for larger denominations than coinage.

The process went, the government mostly took over, with the gold standard, and the US managed to be large enough and have it's central bang be trusted enough that everyone just used us dollars internationally instead of each trying their own gold reserves.

Then amidst economic crisis and other issues, the US basically decided that they weren't going to further accept trades of dollars for the gold it was supposed to be backed by, thus ending their gold standard. And the global economy was too dolarized for anyone to really just drop it as the international medium of trade, and thus actual fiat currency became the standard, specially as other countries also followed it's lead (or has abandoned it already due to major internal crisis pushing them to print more and more money, hyperinflation be damned).

* Successful large goldsmithing guilds, families, and other organizations already had the logistics and infrastructure to handle pretty large amounts of gold, theirs and other people's, so they had lot of synergy to get into banking too.

Fusion edit:

Except that's EXACTLY what governments with fiat currency do: they conjure money out of thin air to pay for shit they want done and don't have the money to do. They call it "quantitative easing" but it's really just "money printer go BRRRRR".
In the past they did that by minting coins with a lower content of gold and silver; obtaining the exact same results, I might add...

At the end of the day, the world as a whole is still using the gold standard: "inflation" and "gold price rising" are just other ways to say your paper money isn't actually worth shit.

Yes. That's a bit of an oversimplification, but yes, governments can in fact just print money out of whole cloth (in a fiat currency system).

Key word here is "governments", and that has nothing to do with the fractional banking system and simply about the governmental monopoly in the creation of new currency (again, in fiat currency systems).

Banks still don't lend out money out of thin air. They can only lend money that they either have or that it has been entrusted to them to lend out. Once it does get loaned out and used it will likely get deposited back into the banking system, yes, and that deposited also get part of it loaned out, and so forth, which is where the banks "multiply" money supply, but it's still existing money.

 

[KerNes]

Edit: Fused above, just seems I can't actually delete this post.

 

[jeezits]

Wonder if this stays on here now that emaqi licensed it? A bit ironic, Gold Scale uses AI assisted translation, and so do emaqi, except past experiences of official AI translation do not inspire hope...

Ironically, Emaqi has yet to send any DMCAs here, but if you want to actually support the original creator (with pennies given typical sales shares for digital "sales") there's at least an option now instead of only giving a literal MTL slop scammer money.

 

[Autismonaut]

I didn't notice how big Shizuko's nose was until now.