That evening, as everyone joyfully took home their swapped silver coins from the Baron, rumors began to emerge from somewhere.
"Did you know? The Baron is actually not a fool. The reason why he exchanged silver coins for gold coins in such a rate was completely for some secrets."
"Someone also said that he's a counterfeiter. His fake silver coins are nearly indistinguishable from the real thing."
"By exchanging, he's actually swapping his fake silver for others' real gold. Once he gathers enough, he'll vanish…"
Rumors of this sort spread through the town's streets, almost all people doubted the authenticity of the silver coins since they also felt that that was too easy for earnings.
No one knew where these rumors started, nor who first spoke them. It was as if an invisible hand was behind it all.
In such a small town, the rumors spread just as fast as cancerous cells, seeping into everyone's minds within a short time.
Fake coins?
For those holding the silver coins in high spirits, this news was a crushing blow. They plummeted from joy to suspicion, from mocking the Baron as a fool to doubting the silver they held, living in great fear.
No one wanted to admit their silver might be fake, for admitting this meant admitting their foolishness and that their coins had lost their value. Then the profit from the exchange and their own silver coins would vanish into the air.
In addition to exchanging their gold with the Baron, many had mortgaged or sold their assets to get more gold coins to trade for more silver coins.
Moreover, many of these individuals were convinced that, despite the high interest in loans, it was still imperative and beneficial to borrow as much money as possible as long as converting all their loan gold coins to silver coins. So they performed that with no hesitation but urgency.
Admitting their silver coins were worthless would also mean admitting to insurmountable debts pressing down on them, an inescapable shackle.
But while they wouldn't admit it, doubt gnawed at them. Was the Baron's claim—that he could only repay debts with gold—true? were there some conspiracies and reasons that they didn't know about?
Confusion and suspicion spread like a plague through the town.
Currency, indeed, has no actual value in itself.
Whether it's gold or silver coins, they're just tools for trade. Without use, or without recognition of their value, they're just useless paper or metal.
The next day, rumors grew wilder. People weren't fools—they checked the town's current exchange rate at the trading post: 1 gold to 6.527 silver.
The rate had risen by 0.323 from the day before, devaluing their silver coins. Though still profitable, the margin had shrunk.
Normally, this would be due to gold scarcity and hoarding in the market, and significantly increasing silver coins circulating, but rumors had fueled doubt and distrust, intensifying with the new exchange rate. As suspicion about the silver's validity grew, the hidden seed of collapse began to sprout.
"I want to buy this bag of flour."
"Sure, sir, that'll be ten gold coins."
"Here's 65 silver coins."
"Sorry, sir, I only take gold. Don't give me silver."
"Why? Doesn't everyone have silver now? No one but the Baron has gold."
"Go away, No gold, no sale! The flour's mine, and I choose the currency!"
This kind of conversation started happening everywhere. There were small disputes at first, but distrust in silver grew fast. Soon, a toxic fog rolled over the town: no one wanted silver coins, only gold for trade.
The poison fog's direct result was a rapid devaluation of the mistrusted silver coins in an abnormal state. Like a carriage falling off a cliff, it could not climb back up but kept falling.
Panic started to spread in the town. When a currency is distrusted, its value shrinks much more than usual. It doesn't stop because it has hit a low number; there is no "bottom".
Silver coins were increasingly suspected of being counterfeit. Value only exists in real currency. As doubts about counterfeiting rose, the value was gradually getting close to zero, turning into worthless things.
As rumors of fake coins devoured people's confidence, the ratio between gold and silver coins widened, with silver's value dropping faster. Like wild horses without reins, no one could hold them back.
"Hey! Are you mistaken?! Two hundred silver coins for a carrot?!"
"Are you joking? A pack of tissues is usually two or three silver coins, and now you want seventy-five?!"
"Inflation" began to take effect. It was not war, disease, or political strife – it was merely currency devaluation. Yet, this simple concept could destroy a town, a city, or even a nation.
After the initial shock, people remembered where their silver coins came from and rushed to the baron's mansion, wielding scythes and hoes, shouting loudly.
"Baron Fold! We want our gold coins back! Now! Give them back!"
"That's right! We're done playing! Return our gold!"
The baron's manor had a private army of soldiers and knights with nice spears and swords, resisting the nearly riotous crowd.
Meanwhile, the baron himself sat in the salon, surrounded by beauties, enjoying elegant piano music and savoring fine red wine.
" Only real fools would exchange now. This Lawnold is a genius. I didn't think of monopolizing the town's gold and collapsing silver's credit to speed up and increase my profit. Let him have a share; I might make more from him later. He must have also turned many of his silver coins into gold ones in this town, the cunning and smart fellow."
The baron laughed, raising his glass to the three town politicians before him, who also lifted their glasses, celebrating their joint harvest and victory.
"The current ratio is just 1:6.527. If I exchange now, wouldn't I lose a lot? Even if it reaches 1:7, I won't. Let those foolish commoners make a fuss; their urgency proves the continuous lower value of silver coins. Hahahaha"
The baron was indifferent, with his elite private troops and the three officials as his partners, that he wasn't afraid of the commoners at all. If they dared to break in, the baron wouldn't hesitate to kill to set an example.
"To us, cheers."
The glasses clinked together lightly, and all four faces showed satisfied smiles. Then, with the piano's melody echoing in the room, they laughed joyfully…
...
The anxiety of people stood out as a fleeting heat in winter. But their warmth couldn't stop the snowflakes from falling gently. Unnoticed in a dark corner, a pair of eyes as cold as the snow quietly watched everyone outside.
Idiot bit into the long loaf of bread in his hand. He had bought it for four coins before the baron had sent out his message the day before, and now the price of bread had multiplied.
The little baby sucked on a mix of bread paste and water from her bottle for food. They two squatted silently in the corner of the alley, waiting.
"Ha, greed blinds people to things they can see. Excessive behaviors can turn a good deed into a complete disaster,"
Blood Extinguisher widened a blood-red pupil, smirking in the dark alley near the towering baron's mansion.
"If Baron Fold were intelligent, he would convert some gold coins back into silver now. By releasing some gold back into the market, he could stabilize the value of silver coins and restore faith in them. It would cost him but save him from a dire fate later on."
Idiot gaze shifted, staring at Blood Extinguisher. He chewed his bread, watching coldly and cruelly…
"Oh, I almost forgot. Human greed is another part of your plan. If the baron did that, your plan would fail."
Idiot bit again into his bread, filling his stomach slightly, and then he slipped quietly into the darkness of the alley…
For the people of Kuwait Town, this day was a disaster. Baron Flod's refusal shattered the already fragile trust and value in silver coins.
Townspeople also couldn't get help from the police and the government. They were driven to desperation. The rich always conspired with government officials.
At six in the evening, the town's exchange rates began to change wildly: from 1:6.527 to 1:6.7; 1:7; 1:8.4; 1 to 11…
In just two hours, the rate had shifted over five points, and the pace was still accelerating, suffocating everyone.
By 8 p.m., the exchange rate between gold and silver coins had broken the 1:20 mark. What did this number mean? That a thousand silver coins now only bought 50 gold coins.
People's Wealth had shrunk to less than a third of its original value.
From this point on, silver coins were refused by all shops, and transactions became secretive without stated prices.
People began to declare bankruptcy, especially those who had borrowed at high risks and rates, hoping to profit from the exchange rates.
Most of those hadn't thought to repay their debts quickly to avoid high interest and couldn't imagine their assets shrinking within hours to less than a third of their value, unable to afford the gold coin loans from banks, forced to sell homes and wealth, becoming destitute and indebted.
Also, many were expelled from rented homes as they couldn't afford their rent, and homes bought on long-term loans were repossessed because they couldn't pay back the loans.
One after another, factories and companies declared bankruptcy due to the sudden change in their cash flow for businesses, and then many workers lost their jobs.
Stores went bankrupt, and goods hoarded could not be traded.
Many were kicked out and became homeless. Everywhere children were crying, adults cursing, and sighs of despair.
Finally… the nation felt it couldn't ignore the situation any longer.