Chapter 48: The Game of Money (Part 2)
"Precisely, should my shop face further issues, I'll return to you for another loan," Aeg said with a sly grin. "As long as those who earn my one hundred thousand gold dragons eventually deposit them back into the Iron Bank, this game can continue indefinitely."
"With one hundred thousand gold dragons, it's entirely feasible to achieve what would normally require two hundred, three hundred, or even four hundred thousand. The only scenario that could disrupt this cycle is if too much money is lost in circulation or ends up outside Braavos without returning in time. Now, do you understand the Iron Bank's urgency in collecting debts from King Robert?"
"Because the money Robert spent wouldn't flow back to the Iron Bank; instead, it would be hoarded by Westerosi," Tyrion exclaimed, nearly slapping his thigh in epiphany. "That's what they call. what was it again, 'breaking the chain of capital'!"
"Exactly," Aeg said, impressed by Tyrion's swift understanding. "The Iron Bank's outstanding loans far exceed its vaulted wealth or even the entirety of Braavos. Repaying the principal is neither considered nor feasible. Can you call the Iron Bank's actions a scam?"
Tyrion remained skeptical. "But you're just a commoner, not a noble or a wealthy merchant."
"I'm the quartermaster for the Night's Watch, recruiter for King's Landing and the Crownlands, overseer of dragonglass mining, and an ambassador for our image. I possess a letter of appointment, which you helped me secure, remember? Not to mention the certificate issued by the Hand of the King. If I borrow in the Night's Watch's name, Lord Mormont can't deny it." Aeg's pride swelled. "What constitutes a scam? If I borrowed and fled with the money across the Narrow Sea, that would be a scam. If I failed and couldn't repay, that could also be called a scam. But if everything goes smoothly, and all who lent to me can withdraw their principal and interest as needed, can this still be labeled a scam?"
"Isn't it? At best, it's a clever scam, no?"
"Imagine a Westerosi wanting to open such a shop," Aeg said. "They'd need two hundred thousand gold dragons that truly exist and are theirs. Without a shop, I couldn't possibly earn that much, and without that much, I couldn't open a shop. This chain of dilemmas has kept Westeros underdeveloped for millennia."
"If this is also a scam, then the society I hail from. " He almost misspoke, quickly correcting himself, "the entire continent I come from, the entire society, is built on a scam. Yet, it's this society, built on a scam, that has advanced politically, economically, culturally, and technologically far beyond Westeros. What are your thoughts on this?"
"This. "
"Moreover, where I'm from, the game of money is played at a higher level than in Braavos," Aeg continued, dropping more revelations. "The Iron Bank lends in real gold and silver, so after a few cycles, it must slow down to prevent accidents when the returned gold isn't sufficient. For every gold dragon in its vault, it can only create two or three nonexistent ones for investment or lending. But Caina's banks differ. They don't lend real gold or silver; they issue paper certificates, what we call paper money or 'banknotes'. They declare, in the name of the Caina Bank, that the holder of this paper owns one hundred thousand gold dragons in the vault. Incredibly, the holder can use this certificate directly as one hundred thousand gold dragons. For every gold dragon in Caina Bank's vault, it dares to fabricate over a dozen nonexistent ones, injecting this fabricated money into the market to build the nation. It's clear which is more efficient. Braavos is powerful, but Caina is thousands of times stronger. Were it not for the vast Sunset Sea, Caina's army could conquer Westeros, Essos, and even all of Sothoryos, the only question being how long the march would take."
"A piece of paper representing one hundred thousand gold dragons?"
"It's not that exaggerated; it's just an example."
"How is this possible? According to your explanation, Caina's banks are playing such a grand game that if even a tenth of the people took the mentioned paper to the bank to exchange for money, the scam would be exposed!"
"Not even a tenth; in fact, no one would go to withdraw gold coins. To Cainans, paper money and gold coins are one and the same," Aeg explained, finding the concept challenging to articulate. After a moment of thought, he spoke cautiously: "The game of money yields a magical outcome. though the 'chickens' we fabricate are illusory, the 'eggs' they produce are real. We've prospered society with nonexistent gold coins, igniting people's enthusiasm, boosting productivity, and constructing homes, armies, and producing endless food, clothes, toys. Ultimately, the value of goods owned by Cainans far surpasses the value of gold and silver in banks or even the entire continent of Caina. At this juncture, using precious metal currency for transactions is impractical. Cainans have wholly abandoned ancient currency, viewing paper money as the true currency."
"Using paper as money?"
"Yes, this is the final stage of the money game. Here, what you deem a 'scam' becomes one of the operational frameworks and rules of society, never to collapse." Aeg omitted the truth that, in the true final stage, money would be mere numbers on a ledger, rendering even paper money obsolete.
***
"The chicken is fake, but the eggs it lays are real. The chicken is fake, but the eggs it lays are real."
Over the past two months, Aeg had seized every opportunity to regale Tyrion with tales of his homeland, Caina. These stories were essentially modern Chinese technology, disguised and relocated, nine parts truth to one part fiction, nearly flawless. As a result, the dwarf no longer doubted the existence and prosperity of "Caina." Thus, the sharpest Lannister was ensnared in Aeg's narratives, mumbling his words like a simpleton, utterly devoid of his usual sharp wit.
"The stage of fabricating 'chickens' to lay eggs is still distant. What I'm preparing to do now is simply borrow chickens to lay eggs," Aeg concluded his story, ready to see the fruits of his labor. "If fabricating ten times the amount of gold coins can be a positive force for social development, then borrowing money in the Night's Watch's name, using it for the Watch, and ensuring timely repayment of principal and interest, how can this be considered a vile and unforgivable act?"
"Let me think; this is perplexing."
"Take your time. I've yet to report back." Aeg rose. "I have other matters to attend to today. We'll discuss fundraising upon my return. Tyrion, you saved my life in peril, a debt I can never repay. I swear by the new gods, the old gods, and all the gods that I will never deceive you. But have you ever pondered when, as a dwarf, simply reading books and cultivating yourself, you'll have the chance to contribute to your family, and when you'll have the opportunity to prove yourself to Lord Tywin?"
This struck a sensitive chord, and if their relationship weren't close enough, it could be seen as overstepping. But Aeg exploited Tyrion's gentlemanly nature. A gentleman, even when offended, wouldn't fly into a rage or harbor a grudge, touching Tyrion's deepest desires.
"My suggestion is to attempt opening the first bank in Westeros. As a member of the Night's Watch, I can't achieve this, but with the Lannister family's robust financial foundation and reputation for always paying debts, if you're interested, you're the most likely to succeed. If you deem it infeasible after consideration, then let's drop the matter. You can lend me eighty to a hundred gold dragons as interest for the first round of loans, and all future operations and risks will be mine to bear. But if you decide to try after contemplation, not only can you participate in this fundraising, but when you decide to formally establish a bank in the future, I will certainly offer my utmost help and advice. How does that sound?"
"Alright, I'll ponder it and give you an answer."
"Excellent, now I'm off to the Red Keep." Their conversation had consumed some time, and morning had passed. Aeg headed for the door, suddenly recalling something: "I nearly forgot. The game of money we discussed has a specific name in Caina. Since there's no equivalent term in Westeros, I've decided to combine 'gold' and 'flow' to create a new word to describe it. 'finance'."
*****
If you can't wait for the updates, feel free to read advanced chapters on Patreon.
patreon.com/BoredIdler