The gold standard uses gold as its anchor, for instance, specifying how many grams of gold a unit of currency can be exchanged for. It still requires institutional credit as a guarantee; for example, banks collect gold from the market and issue notes (banknotes) to depositors, which then circulate in place of physical gold or silver. The credit aspect is that you can exchange these notes for gold if needed. If there's an advantage to be mentioned, it's that the limited supply of gold limits the amount of paper currency that can be issued, reducing the risk of inflation for the public.
However, the disadvantages are clear. The Industrial Revolution brought about significant progress in productivity, increasing per capita output and the volume of goods produced. With gold as the anchor, the total amount of money is restricted, making the gold standard currency scarce relative to goods, leading to deflation.
In other words, the later you buy, the cheaper things get; what costs 100 today might cost only 50 tomorrow. While ordinary people might prefer this, if everyone delays consumption, today's costs could exceed tomorrow's production value, discouraging investment in new businesses. Holding onto money while others build factories becomes the optimal strategy, leading to severe economic depression and stagnation with all consumption postponed. Except for necessities, people wait for even lower prices in the future, halting consumption and employment. If you're not willing to spend money on your own products, how can you expect others to buy them and pay salaries? The economy would stagnate, leading to societal collapse.
Therefore, modern currencies are generally based on a credit system.
Under a credit-based system, a country's money supply isn't determined by its metal reserves but by the government's monetary policy in response to economic development or other factors. In this system, money creation is straightforward, with minimal cost and subject to varying degrees of government control.
"Within 10 to 20 years, the euro's position should be completely solidified, maybe even sooner; then we'll transition to a credit-based system."
Laval expressed his confusion. "But we don't have that much gold."
Wilhelm smiled. "Prime Minister Laval must be joking; isn't your gold stored in the United States?" At the end of the French campaign, France secretly transferred 2,226 tons of gold to the United States, with Germany intercepting over 400 tons, leaving 1,800 tons in the U.S.
Laval's face looked troubled as he said sullenly, "Those damn Americans refuse to return it."
"Once it's in their mouth, they don't want to spit it out? Or are they still hoping de Gaulle can turn things around?"
In the original timeline, after de Gaulle escaped to Britain, he made a broadcast from the BBC titled "Appeal to the French People," announcing the establishment of the "Free French National Committee," or "Free France."
However, only Britain recognized the legitimacy of "Free France." Meanwhile, Germany supported the "Vichy France" puppet regime. De Gaulle then allied with some French colonial states, fighting against the Germans in North Africa, but these states wanted to cooperate with the U.S. military, which believed they could handle the Germans alone, leading to independent operations.
In August 1940, de Gaulle's "Franco-British Combined Force" clashed with German forces and lost. De Gaulle established a combat base in Africa, crossing the Mediterranean to fight Italy from North Africa. Overseas French forces numbered around 70,000, mostly concentrated in Africa; additionally, there were numerous French resistance fighters in German-occupied France, and some who made their way through Spain to London participated in the "Normandy landings." By the end of WWII, the number of armed French forces within France reached 500,000.
At that time, not many responded to de Gaulle's call, and with his small group, he lived like a fugitive, reportedly escaping to North America recently.
Wilhelm said nonchalantly, "Don't worry, there will be ways to make the Americans cough up the gold. Italy should be able to contribute 1,000 tons of gold, or more; Spain, after having its gold stolen by the Soviets, can only offer up to 200 tons at most. With war reparations from Britain, plus the 2,000 tons of gold we can provide, along with contributions from other countries, gathering 5,000 to 6,000 tons should be achievable.
Let's continue discussing the European Union. Our German technology is far superior, and soon we'll control the world's largest oil-producing area."
Laval was shocked. "Are you planning to attack the American mainland?"
Before and after WWII, the U.S. was the leading oil-producing nation. In 1930, U.S. oil production was 123.1 million tons (while the Soviet Union produced 18.5 million), reaching 205.9 million tons by 1940, and 192.4 million tons in 1941, making it the world leader. In contrast, the Middle East, although producing oil, wasn't a major oil region then, accounting for just 5% of global production, only becoming a significant oil area in the 1950s.
Wilhelm shook his head. "Of course not, my stance on the U.S. is that they won't attack us, and we won't attack them."
Hearing this, Laval looked shocked. "Your Highness has found another oil region?" And the world's largest at that?!
Wilhelm just smiled and after discussing for a while, Laval finally asked the question he cared about most. "Your Highness Wilhelm, what position will we hold in this European Union?"
Even though Vichy France was left with only half its territory, its strength was not weak. Economically, France was still one of the world's leading powers. Vichy France paid 400 million francs daily to Germany as occupation costs, indicating its economic might.
Although France lost its northern industrial areas, it still maintained a relatively complete industrial system and strength, capable of producing modern weapons like aircraft, tanks, and warships.
In the original timeline, the SO.6000 jet project, secretly developed by the Southern French Aircraft Company in Vichy in 1943, showcased France's industrial and technological prowess, with the aircraft successfully test-flown in 1946, positioning France among the world's leading jet powers. Besides jet aircraft, Vichy France developed an electric car with a top speed of 30 km/h and continued tank development.
Even with half its territory lost, Germany dared not push France too far. If they did, it might lead to a mutual destruction scenario where Germany would lose some teeth. Vichy France, though leaning towards Germany to some extent, preserved its strength, which was a significant reason for France's rapid rise post-WWII.
Wilhelm smiled. "Naturally, your country would be second in rank."
Laval seemed to breathe a sigh of relief and then asked, "What about Britain?"
"Britain would rank fifth or sixth." What would Britain have left after this war? Millions of starving civilians, countless ruined cities, and colonies on the brink of disintegration?
"That's quite satisfactory." Laval looked content and brought up another matter. "Your Highness, have you heard? King George VI has fallen ill."
Wilhelm had heard this news; George VI had been bedridden recently, but there were no further details.
Laval sighed. "If George VI dies, his eldest daughter will succeed to the throne, won't she? How old is that little girl?"
"That's for sure." Before Queen Elizabeth returned, he had suggested the children stay in Germany, but she took them back, perhaps knowing George VI's days were numbered.