Black Friday (2)
There is a term called a self-fulfilling prophecy. If you believe in a certain outcome with absolute certainty, it soon becomes reality. Is this just some cheap, self-help nonsense you'd find in a poorly written cover letter, claiming that if you work hard enough, the universe will conspire to help you? In truth, such occurrences are remarkably common, both in history and in everyday life.
Take a look at a few examples. The Soviet Union was absolutely convinced that the capitalist nations were plotting to overthrow them. Consequently, they engaged in all manner of paranoid obstructionism across the globe, which eventually drove the capitalist nations to actively work toward dismantling the Soviet Union. Thus, the Soviet prophecy became reality. Of course, this was not unique to the Soviets. The United States, driven by its own paranoid delusion that the Soviets were trying to conquer Vietnam, ended up driving Vietnam straight into the arms of communism.
Once again, Shtal's self-fulfilling prophecy regarding the Great Depression was about to shine. The moment France collapsed and a minor "market correction" rippled through the financial world, Shtal thought, Finally, my prediction is coming true! and rushed to find Hjalmar Schacht. He had a brilliant, devilish idea.
"Come to think of it, I completely forgot the easiest way to prepare for the Great Depression."
"Our Clearing Bank holds exclusive trading rights over the member states," Schacht replied smoothly. "You have nothing to worry about."
"No, even this might not be enough."
"Pardon me, Director Shtal... I hesitate to ask, but... will a true depression actually occur? Looking at the recent fallout in France, it seems the American stock market might be far healthier than we initially believed."
Schacht's assessment was not entirely wrong. Financial bubbles do not burst as easily as one might think. While there was still no shortage of foolish economists who blindly worshiped the absolute authority of the "invisible hand," the staggering success of the Prague Treaty Organization had opened the eyes of a surprisingly large number of scholars.
"With this French crisis, the United States must have realized that a crisis in the real economy is entirely possible," Schacht argued. "If our Prague Treaty Organization steps in... we might not just 'prepare' for a Great Depression, but prevent it entirely!"
As long as the real economy functioned properly, a bursting bubble would not spell absolute doom. If the United States, the world's largest economy, joined forces with the Prague Treaty Organization, the runner-up, they could easily absorb a bubble of this scale. Intentionally popping the financial bubble within a controllable margin was not called a "depression"—it was called a "soft landing." It was a solution that neither Shtal nor Keynes had considered, yet Schacht, who monitored the pulse of global trade in real-time, had grasped it.
Shtal stared blankly, looking momentarily stunned... but he quickly completed his mental gymnastics.
"Ah, President Schacht. You clearly do not understand just how terrifying the Great Depression truly is."
"Which is precisely why I am suggesting we try to prevent it."
"The Great Depression is coming. It is absolutely inevitable!"
A man who has read only one book is far more dangerous than a man who has read none. Naturally, a self-proclaimed expert is infinitely more terrifying than a genuine professional. Having undergone intensive study with Keynes and witnessed the monumental success of the Prague Treaty Organization, Shtal's confidence had soared past the heavens. Moreover, armed with knowledge of future history, he couldn't help but view everyone else in the world as a fool.
"What is meant to happen will happen. Look at how hard I fought to prevent war, and yet, a totalitarian regime has risen in France once again!"
Perhaps the comforting words of his close associates—Ferdinand, Hitler, and Stalin—had failed to fully heal Shtal's wounded pride after the French coup. He had dared to hope that a Second World War might not occur in this timeline. Yet, here they were, on the precipice of another global conflict. And if a Second World War was bound to happen, wouldn't the Great Depression have to occur first to set the stage? Following this chain of logic, Shtal's mind effortlessly discarded the perfectly rational alternative of cooperating with the United States to avert the crisis.
"I understand your point, Vice Chairman. As you say, the economy moves in cycles of booms and busts, much like a trigonometric wave. Is it not our duty to keep those downturns within a controllable range?"
"Exactly. And that is why I have a proposal. We are going to short the market."
Schacht slapped his forehead.
"What is that look for? If we short the market, we will ascend to the heavens while everyone else plummets into the abyss."
"W-well, that is true, but..."
Shtal found it genuinely baffling. Marxists spent every waking hour chanting that capitalism was doomed to collapse, so why on earth did they never short the market? Especially on the eve of the Great Depression, when their ominous prophecies reached a fever pitch of madness. Revolutions required cold, hard cash. To fund their grand uprising, wouldn't it make perfect sense to short the market and rake in the profits?
Schacht explained patiently.
"Yes, short selling. Fine. If a true depression is indeed coming, it is an excellent strategy. However... if we short the market on the scale of the Treaty Organization, it ceases to be mere short selling. It becomes an outright attack. It will cause the depression."
"But a depression is going to happen anyway, isn't it?"
"N-no, that is not what I meant..."
Having built a stellar career as both an economist and a banker, Schacht believed his financial expertise was second to none. Yet, the common sense inside his brain was being violently rewritten. Countless financial experts across various empires had already had their minds thoroughly broken by Shtal's unbroken streak of successes, to the point where they forgot basic economic principles. Schacht was now walking down that exact same path. Only someone of Keynes's caliber could withstand Shtal's psychological manipulation.
Wait... even if he had Keynes's assistance, no one can deny Shtal's economic achievements. I might understand theoretical economics, but in terms of practical application, I could never match this man even in a hundred lifetimes.
Mulling over Shtal's absurd logic, Schacht soon arrived at a single conclusion.
Shtal... is a genius. He must have seen something that completely eluded me!
Brainwashing complete! A financial expert sitting at the pinnacle of the global economy could not afford to look only at numbers. They had to recognize that seemingly unrelated factors could exert a massive influence on the markets. This very realization became the trap that ensnared Schacht. A man at the absolute peak of global finance had been utterly hypnotized by Shtal, whose actual economic knowledge was barely that of a college sophomore!
"You are... correct, Vice Chairman Shtal. We shall prepare the short positions. However, there are a few practical hurdles."
"Practical hurdles?"
"The biggest issue is... if we short the market on the scale of the Treaty Organization, what will the other nations say?"
"Hmm... that is indeed a significant concern, but it shouldn't be too difficult to bypass."
Shtal had already studied this field thoroughly, ironically learning from the historical Schacht of his original timeline. He fondly recalled his past endeavors with Emperor Ferdinand. Back when they first synthesized Penicillin and established the research institute, they had gleefully embezzled imperial funds using shell companies. By now, Shtal was an absolute master of such financial chicanery.
"First, we establish shell corporations. Well, they don't even have to be completely fake... we have plenty of existing entities we can utilize. These corporations will jointly invest in hedge funds under the guise of asset management. The entity actually shorting the market won't be us, but the hedge funds."
"A single hedge fund won't yield the kind of massive returns we need, Vice Chairman."
"Of course we won't stop at just one. How about... twelve? We can use them to launch coordinated attacks on different stocks, at different times, and in different locations."
In 1997, a massive currency attack struck Southeast Asia. To this day, the true masterminds behind it remain shrouded in mystery. The attack was wildly successful; the Thai baht collapsed, triggering a domino effect that directly led to the IMF financial crisis in South Korea. With a bit of organic coordination, the identity of the attacker could easily be concealed.
"Even so... when the Great Depression hits and that astronomical wealth flows back into the Treaty Organization, won't everyone suspect us, even if they lack concrete proof?"
"Do not worry too much. If an individual attacks exchange rates and stock prices, it is deemed a hostile provocation. But if a central bank does it, isn't it simply called 'monetary policy'? We are merely performing surgical intervention on a decaying capitalist system."
"Hmm..."
"Of course, we must take precautions to ensure our tracks are covered. Please devise a way to mask our involvement. Stalin will assist you."
First, secure a massive amount of strong dollars through currency swaps, and when the dollar collapses, repay the swap debt entirely in depreciated dollars. Use contracts for difference (CFDs) to settle only the price differences based on exchange rates without physical delivery, turning the market into a literal casino. Take short positions by buying put options and selling call options... With just a bit of financial engineering, the identity of the attacker could be effortlessly masked. Would actual sovereign nations engage in such behavior? Absolutely. Instead of using crude terms like "short selling" or "market attack," they simply hide behind the sophisticated, elegant term of "hedging." Central banks manipulating their own currencies to keep them weak or strong at their whim is a daily staple of financial news. The only difference was that Shtal's assault would not stop at currency manipulation; it would intervene extensively in the real economy, stock markets, and bond markets alike.
Of course, one final mountain remained.
"Pardon me, Vice Chairman Shtal. We have established these massive short positions, but what if the American stock market continues to rise?"
"Oh, come now. I told you, that won't happen."
"But on the off chance that it does..."
"Didn't you say yourself, President Schacht, that launching an attack of this scale would inevitably trigger a depression? Then we simply keep doing it until it does."
Only then did Shtal's true intentions lay bare. Despite living in an era devoid of dental scaling or teeth whitening, he flashed a brilliant, pearly-white grin, a testament to his meticulous brushing habits. The Americans were still living far too comfortably, and the British pound remained stubbornly strong. Even the French were "relatively" stable. If even those lunatics who ranted about exterminating Jews could manage an economy with some semblance of resolve, there was no guarantee that other nations wouldn't eventually stabilize. The Great Depression had to happen. Or rather, it must happen. Whether the chicken came first or the egg, what did it matter?
Thus, a year of preparation passed as they amassed capital and organized their shell corporations. Another year slipped by, bringing them to November 15, 1925. Small sums of money simultaneously flowed into approximately five hundred shell companies secretly established across the globe by the Austrian Agricultural Cooperative's Audit Team. When combined, these seemingly minor sums amounted to a fortune capable of shaking an entire nation to its core. This capital was then funneled into roughly twenty hedge funds, which began moving stealthily and simultaneously through the banking networks of Geneva, Amsterdam, London, and New York.
Certain conspiracy theorists in his past life had claimed that the Rothschild family orchestrated such maneuvers to instigate the Second World War. Watching the capital flow, Shtal realized that such wild theories might actually hold a grain of truth.
"Our primary target is the dollar, followed by the pound."
"To trigger a comprehensive market crash... we must not forget the stock and futures markets."
"President Schacht, let us use the correct terminology. We are not causing a market crash; we are merely betting on one."
"Yes, yes. Of course..."
There had been a massive stock market crash triggered by the coup in France, later dubbed the "French Shock." However, it had ultimately concluded as a healthy market correction. Financial experts, gradually waking up to the dangers of speculative bubbles, had begun meticulously regulating the markets. Economists influenced by Shtal-Keynesian theory were particularly active. Perhaps... the Great Depression might have been averted entirely in this timeline, vanishing into history much like the defeat of the German Empire.
Of course, whether the Great Depression would have truly faded into the annals of unwritten history was something they would never know. Because now, the Great Depression had officially become something that must happen.