Japan, My Eternal Headache #2
Regardless of whether Sino-Korean-Japanese trade would follow someone's words into the "One Belt, One Road" or the "Solid Road," Japan had always been my headache. I stared at that headache.
"Ito Gong."
"Won't you call me Hirobumi like you used to?"
Did he have to flaunt that I was once a Japan expert? Was that important right now?
"Congratulations once again on receiving the title of Duke."
"Thank you."
"Ah, and I received the gift you sent."
Gift? Ah, right... he meant the reparations issue.
Honestly, Korea's rise had drastically altered East Asian history. No Imo Incident, no Gapsin Coup—what more could I ask for in this Joseon timeline? So after the Boxer Rebellion, I'd completely abandoned any thoughts of squeezing honey from my meager historical knowledge.
But yeah. At least I had known since I was ten—no, even younger—that the Ito in front of me was a truly dangerous figure even in the original history. And that hadn't changed now that history had diverged.
"I'm glad you liked it."
"How could our long connection bring only good fortunes? We differ in thoughts, clash at times, but even so, I've come in person to maintain that bond."
"Is that so? I wish for the same. Is there anything I can do to help with that?"
The conversation between two brazen men went nowhere. We knew everything there was to know about each other. I, the former Japan hand, and Ito, suddenly thrust into becoming a Korea expert—we both knew how much of a pain the other was.
Unfortunately, the one regretting it wasn't us; it was them. Ito had extended the hand first and come to grasp it.
At the crossroads of empty talk and more empty talk, Ito spoke first.
"Ah, the Anglo-French sent another 'final ultimatum' today."
Join the gold standard.
P.S.: We really can't wait any longer.
"Those damn final ultimatums—they sure send a lot of them."
"Didn't they send one to Joseon—no, Korea too?"
"They did. I said we have no gold, and they told us to borrow it if we have to."
"They said that to Korea too... What absurd bastards."
"We've wanted to adopt the gold standard for a while now, but as I've repeated, we have no gold."
The massive gold from the Qing? The gold we've mined? It's all already pledged as collateral. You can't double-pledge collateral, can you?
"Is that so..."
"But you didn't come just to talk about that, did you?"
"Heh heh, correct. Japan needs gold right now. We can't forgive even a single penny of the reparations from China."
"I understand. We've forgiven ours. So, can I take it that you're telling us not to stir up Korean public opinion asking why Japan won't do the same?"
"Hm... slightly off, but that's fine too. If possible, we'd appreciate it if you could do the same in China. And..."
I waited quietly for his next words.
"Whether we have gold or not, Japan will join the gold standard—even if we have to borrow it."
Hm? I thought Japan lacked gold and couldn't do it? They're really going to borrow?
Handing over the leash themselves? That's a bigger bomb than I expected.
"Above all, they promised to open sea lanes if we join the gold standard."
Aha! That's a big one. No matter how pro-British Japan is, opening sea lanes means something else entirely. In the Asian market, Japan was a clear competitor to Britain. And they're not even allies yet.
Before Bretton Woods, sea lanes were the exclusive domain of the great powers. And they're offering to open them?
With open sea lanes, Japan could sell goods to China, Southeast Asia. India might be tough, but still. The "Anglo-Japanese Alliance" might pop up faster than I thought.
"Congratulations."
"But, well. To be frank, Japan lacks gold. At this rate, we'll have to borrow to join."
"That would be unfortunate. Korea will help Japan."
"That's why—how about Korea and Japan join the gold standard together?"
Use the yen as the international currency, you mean? What a fancy way to put it.
"Thank you for the introduction, but we have no gold? Unless Japan provides guarantees..."
Ito ignored my nonsense and continued.
"Yes, the Korean Empire probably has no gold. But do the Koreans—no, the Bank of Korea—really have no gold?"
Hm...
"All those assets are pledged as collateral."
"Does it have to be gold?"
Hm... He's getting serious. They must be desperate.
In fact, for non-overseas settlements, real estate could serve as collateral. And while we can't print money freely—no, as a nation, we could just print it outright. The gold standard forbids it, sure, but propping up fictional gold on the books? That's happened plenty in history.
Ito was telling me exactly that. Retrieve all the gold we'd pledged as collateral. Push forward on credit alone. Pool that gold together, join the gold standard, and build "Greater East Asia Co-Prosperity" with the yen.
Apparently, they couldn't sustain the gold standard on their own. In terms of weight class... well, not a bad deal. Using the yen isn't bad value-wise either.
The problem? Korea has no real navy, so we'd depend on Japan for all maritime protection. Just like America under Bretton Woods.
Above all— I was already getting explosive growth rates without any "Greater East Asia Co-Prosperity"? Just sucking China dry properly like now—and in the future—would more than sustain this country.
We're already linking Busan to Gangnam by rail, after all...
Seeing I clearly wasn't thrilled, Ito changed tack.
"Korea has more gold than I thought."
"Advances in prospecting tech, explosives, and the capitalism driving it... We're living a bit luxuriously."
"But you've stuck all that gold in banks—local banks, even."
"Yes, pretty much."
"Yet hilariously, people in the Korean Empire barely use gold."
"Right, that's true too. We gave it to them to use, after all."
"Nothing but paper scraps rolling around—makes you wonder if the gold's even really in the banks."
"From your perspective, if that gold really exists, gathering it back to the center wouldn't cause any big issues, right?"
"That's true."
"But as you say, this is all a feast built on debt. Gold is the foundation. If it were just national bonds, we couldn't have piled it this high."
"Retrieving that gold now... it'd be a house of cards."
"Ugh..."
My point had merit; Ito just groaned without retort. What could he do? The gold really existed, and he had no proof it wasn't just pledged fiction. I didn't need to counterfeit gold—I knew how to counterfeit credit.
I locked eyes with Ito, who was yelling about non-existent evidence.
Sorry, Ito. No matter how smart you are, I'm from the 21st century.
I knew gold shouldn't just sit in the national treasury, even without the gold standard. And that it eliminates the need to dangerously counterfeit under one.
The moment I got gold, I set up central and local banks first. Then deposited the central bank's gold in local ones. Creating so-called "base credit."
Next, I had those local banks borrow from the central bank using the deposited gold as collateral. And lend that borrowed money to local cooperatives—big corporations.
Thus, debt—not light, but debt—was born. In this parched capitalist land, bonds began to be created. Or rather, spawned naturally.
I couldn't help but chuckle. This is the gold standard era. I knew too well that printing currency here gets you crushed by the powers.
So what choice did I have? This was the way. My lukewarm attitude had reasons.
At this point where currency multiplies itself, joining the gold standard or not—Korea could afford to be lukewarm.
I waited for Ito to speak. But his mouth stayed shut.
Hm, time to bait him once.
"Fine, let's do the gold standard."
"Are you serious?"
"But we won't go with the yen. As you said, this country has plenty of gold."
This was beyond unwelcome—no, utterly unanticipated. Ito clamped his mouth shut.
"As I understand it, going with the yen opens export routes. Right?"
"Yes, correct."
"But Korea isn't in a hurry right now. We can afford fewer exports. Just selling to the neighbor covers our needs."
So...
"We don't need the yen. Even under the gold standard."
The issue was...
"What intrigues me is, Japan knows this, yet proposing the yen as international currency now means you're willing to concede something."
Something like that?
"Can I see it that way?"
Ito, who had been saying open markets, join gold standard, use yen, let's go together—that it's good for you too—seemed dumbfounded but couldn't rebut. Unlike stagnating Japan, Korea really was growing that much.
That's what happens when you run a market economy under the gold standard. Eventually, it leads to war.
Not that I was in a position to talk. This country was flooring the booster pedal nonstop.
Is a Raider different from other Raiders? This is a Raider.
Right now, Korea was indirectly issuing bills galore through corporations. Mefo bills, arrived a bit early to this world.
I planned to run this expansionary fiscal policy at least until the Great Depression—no, World War.
When war breaks out? Line up right, collect, and repay. Problem solved. Call them "bonds with set maturities."
I smiled at the piggy bank—no, the opponent—I'd collect from and repay.
No choice. In a place with no domestic market, to build one, you throw an invisible debt party, collect, and repay.
That's the world. At least heavy industry development feeds into agriculture and fishing, plus we have China's backend market, so it's a tightrope walk so far.
Rail, ports, roads. These three infrastructures and their high growth rates alone sustained this national pension-level grand scam.
If you make it, it sells—why not print bonds? Especially when co-op members pack the boards in this country?
Frankly, issuers seemed fine with it. With bank guarantees, they were double-printing beyond my orders and flooding the market.
Ridiculous, but whatever... I'll let it slide. At least they're more symbiotic than the gold standard.
So what I wanted was something else.
Export routes? We can do without. Country runs fine regardless. Repayment plan's set.
But even debt-party startups always crave one thing. Separate from original plans.
If the Japanese really pushed for sincerity, I'd prepared to allow up to here. This was it.
To pry open Ito's sealed lips, I spoke.
"If Japan makes a huge concession, we could skip the hassle of yen internationalization and just go straight to 'yen single currency.'"
"This is our proposal."
At that absurd statement, Ito finally spoke.
"Can you just say that without Diet approval here? Or have you already gotten it?"
"Hm... yes."
No Diet approval, but I can. This is that kind of country. I'm the Diet.