"Let me tell you a secret. Don't spread it around... although it doesn't matter if you do anymore." Tyrion walked under the long row of blank notice boards and stopped for a moment to rest. "In the war against the Free Cities Alliance, we had two alternative plans."
"The first plan was this: if the Westerlands Fleet led by Aegor failed in its surprise attack on Lys and Volantis, or did not fully achieve the expected goals, then Daenerys would give up on declaring war and choose to negotiate peace with the Slave Lords' Alliance. She would use the slight advantage gained after a great defensive victory as leverage, make a compromise by promising 'not to interfere in the internal affairs of the Free Cities,' and offer some commercial cooperation as benefits, trying to reach a peace agreement and end the war gracefully." He shrugged. "Winning great battles is glorious, but knowing when to stop is also a kind of wisdom. The economy and public opinion of the Seven Kingdoms can no longer support continuing the fight. What we need next is to hold our ground, rely on Westeros's advantages in size and population to bide our time and plan for the future, rather than continuing a bloody, drawn-out struggle with the enemy where the outcome cannot be determined quickly."
"The second plan was this: the Westerlands Fleet successfully takes both the inner and outer cities of Volantis, intimidates the towns under its jurisdiction, and completely decapitates the Slave Lords' Alliance. Thus, Daenerys adds and officially uses the title 'Empress of the Valyrian Empire,' claiming all the Free Cities as 'territory belonging to the Empire since ancient times.' Then, using the wealth gained from conquering Volantis, she supports the second half of the war, gritting her teeth and completing a great feat unprecedented and unmatched."
"Wow."
Nina slightly opened her mouth, and although she felt her scalp tingle and her hairs stand on end, she still lowered the volume of her exclamation, trying hard to appear calm and collected.
News of Aegor's great victory in Volantis had already arrived from across the Narrow Sea. Coupled with Tyrion's unintentional slip of "it doesn't matter if you do anymore"... she could roughly guess that Daenerys's upgrade from a Kingdom to an Empire, and even the official declaration of war on all the Free Cities, was likely something to be officially announced within the next couple of days.
She had not experienced the ups and downs of a life like Myrcella's, and naturally had not been beaten into having the little princess's strong yearning for power, nor that strange constitution of feeling excitement and pleasure when witnessing and participating in major historical events. But standing at the turning point of an era, it would certainly be false to say she felt no impact or shock at all.
"So, what can I do for Lord Aegor and you, Master?"
"Both of these plans actually have very detailed follow-up content, but since the war situation is clear, the first plan can naturally be thrown into the fire." Tyrion said this with a smug smile. He was indeed in a good mood, because he found that the promise Aegor had made him about achieving historical fame seemed very likely to come true. "Let's talk about the subsequent development of the second plan. The Free Cities have always had two giants, Volantis and Braavos. Among them, the former has vast territory, a large population, and abundant resources, while the latter has a strategic location, amazing organizational capability, and developed trade. As the world's financial center, Braavos, which can make easy money, has rarely participated in wars in recent years. But this time, realizing the ambition and threat of the nascent Targaryen dynasty, it absolutely will not sit idly by and watch the Slave Lords' Alliance scatter and collapse after losing its leader."
"Therefore, Aegor and I agreed that after we take Volantis, Braavos is likely to enter the fray personally, officially join the Anti-Dragon Mother Alliance, and replace Volantis's leadership to continue presiding over this war. The Royal Fleet must organize another cross-sea expedition and repeat the decapitation operation. First, it must defeat the Braavosi navy, which is said to be the strongest in the known world, and then take this 'Secret City' that has never been attacked. Only then can the remaining Free Cities be forced to surrender and this war be completely ended. And this battle cannot simply copy the surprise attack on Volantis. It will likely be a tough fight." Tyrion paused, then asked his beloved disciple, "Do you still remember what promise we used to support and anchor the value of the Targaryen Bonds?"
One moment he was talking about a tough battle, so how had he jumped to bonds the next?
Nina was a little confused, but she quickly answered the question. "Five percent annual interest, and the agreement that the purchase of hot weapons only accepts bond payments."
"That's right, but now, in order to deal with the tough battle about to be launched against Braavos, we must break the latter promise. The cannons that will be produced from the Industrial Park arsenal next month, which were originally advertised as the first batch to be publicly sold, will be directly designated for purchase and equipment by the Royal Fleet."
"Isn't that bad?" So the connection between the tough battle and the bonds was here. Nina immediately frowned. "Targaryen Bonds are already just IOUs. If you go back on the promises on this piece of paper, it will seriously damage Daenerys's reputation and the credibility of the bonds themselves."
"Indeed, so we need to put on a show to minimize this damage." Tyrion lowered his voice with a mysterious expression. "Daenerys has divided the Kingdom's armed forces system into the Ministry of War and the Ministry of the Navy. These two departments are the core actors. In addition, Aegor wrote to me saying that Prince Doran will also help out... but we had better not expect too much from the guest appearances. The script is like this: for fairness, Daenerys will allocate funds separately to the Ministries of War and the Navy. The allocation will be in cash, but buying cannons requires paying with bonds. In order to compete fairly with other lords and nobles eligible to purchase hot weapons, and to secure the cannons produced by the arsenal through bidding and purchase priority, the two major military departments will need to find a way to obtain Targaryen Bonds."
"The purpose of these transaction notice boards is to publicize the intentions and bids of the Ministry of War and the Ministry of the Navy to buy bonds from holders of the national debt on the market, attracting people holding IOUs to transfer their IOUs for cash."
"Cash? Daenerys plans to use the remaining cash in the treasury to buy back the IOUs issued before?" Nina was even more confused. Although she had been in charge of Night's Watch Bonds for a long time, this move completely contradicted her experience and common sense. "Didn't Daenerys issue IOUs precisely to keep the cash temporarily for major matters? Why is she willing to take it out now? If she knew this, wouldn't it have been better to just use gold and silver to reward military merits at the time?"
"Buy them back at a price below face value." Tyrion blocked Nina's doubts with just this one sentence. "That is why I said this is a show. The Ministry of War and the Ministry of the Navy will play the role of competitors in this show. They will first announce that they are willing to buy back bonds at five to six tenths of the bond's face value. Starting with a low price is to avoid a run that would lead to financial disorder. But if there are fools... holders willing to transfer them at such a low price, the two departments will buy as much as they can. It is like paying off debt at half price. With the spoils brought back from Volantis and my Westerlands not cashing in bonds early as support, the royal government can easily buy up all the bonds on the market, instantly reducing the fiscal deficit to a low level that can be easily borne."
"But if no fool sells bonds cheaply, the Ministry of War and the Ministry of the Navy will constantly raise the price by bidding against each other, with the attitude of 'vowing to suppress the other side,' until someone is willing to transfer first. Of course, since they have communicated beforehand, the Ministry of the Navy will ultimately win this bidding."
Nina's faint eyebrows furrowed deeply, as if she had been enlightened, yet also seemed even more confused.
"I can't guarantee it, but I am willing to make a bold prediction here. The first successful transaction price of Targaryen Bonds should be between seven and eight tenths of the face value. If Prince Doran of Dorne also helps out, it might stabilize at around nine tenths, until it fully recovers to an ideal level slightly higher than the face value after the war is won." Tyrion spoke with confidence. "Doing this will have at least two major benefits."
"First, among the forces that actively or passively support Daenerys, there are certainly those who are struggling internally and desperately need cash to pay military salaries, rewards, or pensions to their lower-level lords, followers, and soldiers... such as some nobles in the North and the Riverlands. Daenerys using Targaryen Bonds as military merit rewards is not only disheartening, but even a bit life-threatening. Originally, we would have used other methods to save the situation and alleviate this problem, but now that we have money in our pockets, we can directly use the simplest, most direct, and most effective method: open up bond trading and actively buy them back."
"Second, Targaryen Bonds have the infamous reputation of being 'Daenerys's IOU' among the public. As theoretically the most important and reliable financial product of a country, this reputation is very damaging. But what if trading is opened and someone takes over? Bonds guaranteed by Daenerys's credit cannot even sell for their original face value. This is certainly very shameful, but no matter how shameful it is, this IOU now has a definite value that can be immediately cashed in. This move will instantly eliminate the public opinion that 'bonds are worthless' and turn the 'IOU' into 'cash.'"
Aegor had already retold the story Tyrion told him to Nina, so there was no need to explain what the new word "cash" meant here. The dwarf stood with his hands on his hips and his head held high. "You see, opening up the trading of national debt not only conceals the unreasonable operation of directly giving cannons to the navy, but also stabilizes the economic situation of the nascent Empire and improves public opinion... This is what you call killing three birds with one stone!"
"At the cost of throwing money away," Nina mumbled softly.
"Your merchant's mindset hasn't changed yet. While 'at the cost of throwing money away' is not wrong, you are now serving an Empire, not an industry. The operation of Targaryen national debt and Night's Watch Bonds seems similar, but one is issued by a profit-seeking organization, while the other is issued by a governing body. Unlike a company, where money that enters the pocket usually should not be actively sent out, for an Empire, there are too many things more important than the cash in the treasury." The smug look on Tyrion's face disappeared, becoming serious. "I gave you this task because of your and your team's experience and proficiency in operating the Night's Watch Bonds, but absolutely do not bring the smell of money and commercial habits from your previous position into it. Honestly complete the work I assign you, and do not change the script on your own!"
Nina understood that this matter was of great importance and put away her doubts and thoughts. "Understood. You can rest assured."
"Hmm." Tyrion nodded. Anyway, he himself was in King's Landing controlling the situation the whole time, so there was still time to salvage things if something went wrong. "The specific operation method is this: occupy two notice boards, one displaying the bids or required shares of buyers willing to take over the national debt from high to low, and the other listing the asking prices and quantities held by holders willing to sell the national debt from low to high. When the two match successfully, a transaction is completed. Of course, you must have noticed that this street is full of similar notice boards, and national debt trading definitely won't use this many... The rest can be rented out as trading places for other bulk commodities, futures, or bonds. In time, this street will definitely become the financial center of Westeros, and even the entire world. Honestly, I'm thinking about what to name this street... When you're done and have free time, you can also help me come up with some ideas."
(To be continued.)
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