Ahrmahk Plan & Siddarmark

Spoiler alert!!



A question for those with an interest in economics how mauch investment would be needed to keep Siddarmark afloat?

Should Charis help Siddarmark to buy up the surplus farms at a better rate?

what sort of stimulus package should they do?

Alistair wrote:Spoiler alert!!



A question for those with an interest in economics how mauch investment would be needed to keep Siddarmark afloat?

Should Charis help Siddarmark to buy up the surplus farms at a better rate?

what sort of stimulus package should they do?

The calculus of economic assistance depends on how well the tech advances are adopted. The more efficient the economy becomes, the less capital infusion will be needed. That means Owain Qwentyn's activities in juicing the adoption of technology in the Siddermarkian economy will have an impact in how much Infusion the Bank of Siddermark may require.

Charis shouldn't help Siddermark buy farms, Charis should provide funds to help the Bank of Siddermark buy the loans backed by those farms. Whoever is in those farms currently either works the farm to repay the loan or defaults on the loan. From Siddermark's perspective repayment is less important than having the farms generating economic activity. For Cayleb, making money is less important than having/creating more buyers for Charisian goods and services. Sending some small or even not so small portion of the Moyra Load output to Siddermark is a negligible price to pay to employ his people's industrial output. Because Charisian Marks are most efficient in buying Charisian goods and services.

So, the BoS buys loans backed by the farms. The carpetbaggers unwilling to work those farms may well face regulatory impediments to their success. The most effective is to have their loans called by the BoS. Those carpetbaggers that bought paper backed by farms may have difficulty having magistrates honor their claims. The long and short of it is everything gets way better and way easier once the economy is chugging along.

PeterZ wrote:The calculus of economic assistance depends on how well the tech advances are adopted. The more efficient the economy becomes, the less capital infusion will be needed. That means Owain Qwentyn's activities in juicing the adoption of technology in the Siddermarkian economy will have an impact in how much Infusion the Bank of Siddermark may require.

Charis shouldn't help Siddermark buy farms, Charis should provide funds to help the Bank of Siddermark buy the loans backed by those farms. Whoever is in those farms currently either works the farm to repay the loan or defaults on the loan. From Siddermark's perspective repayment is less important than having the farms generating economic activity. For Cayleb, making money is less important than having/creating more buyers for Charisian goods and services. Sending some small or even not so small portion of the Moyra Load output to Siddermark is a negligible price to pay to employ his people's industrial output. Because Charisian Marks are most efficient in buying Charisian goods and services.

So, the BoS buys loans backed by the farms. The carpetbaggers unwilling to work those farms may well face regulatory impediments to their success. The most effective is to have their loans called by the BoS. Those carpetbaggers that bought paper backed by farms may have difficulty having magistrates honor their claims. The long and short of it is everything gets way better and way easier once the economy is chugging along.

I won't claim to have PeterZ's grasp of economics or history, but there's a few issues regarding Charis backing either the BoS or the House of Qwentyn - which WAS in effect, the BoS during the war.

First, are the "Levelers" or people like them still around? I'd have thought that all the humanitarian aid that Charis provided right after the SoS would have eased those tensions - after all, it's sort of hard to hate someone who basically saved your life, and those of your family as well!

Still, there's those sticking points of Charisian traders and the feelings some Siddarmarkans have that "They took our jawbs!" Since a whole LOT of jobs were created (at higher wages!) as Charis helped Siddarmark industrialize for the war effort, I'd guess that there aren't a whole lot of people who feel that way. (Except the guilds, but they always complain when industrialization takes away their obsolete monopoly.) Toss in the fact that Siddarmark came within a canal raid's breath of complete defeat, and there ought to be quite a bit of good will towards Charis these days.

Nonetheless, there's no reason for Charis to fan any residual flames of resentment by openly investing in Siddarmark if there's a front man to do it for them. Owain Qwentyn's family emigrated to Charis when the the House of Qwentyn collapsed after his vindictive cousin refused to accept the backing of Delthak, which would have saved the bank and Siddarmark by extension.

At this point there still is a lending house called "The House of Qwentyn." It's a skeleton of its former self, and a dozen cousins are fighting over what's left, which isn't much. Probably the remaining portfolio, which is trading at well below par.

So send Owain Qwentyn back to Siddarmark with full (but unknown) backing of the EoC and Cayleb's personal fortune, and buy out his cousins and anyone else who has an legal claim on part of the House of Qwentyn, and set up shop again. It already had the premier reputation of all Siddarmarkan banks, so having it back in business would be the easiest approach to infusing the Siddarmakan economy with some much needed capital. In addition, it can serve as the de facto BoS, which it formerly did.

It should buy up all that loose paper out there issued by who knows who, and probably could at pennies on the dollar. At least that paper would have some value since it's backed by the Charisian mark, although people don't need to know that. Those actions would stabilize the Siddarmarkan mark, get rid of the carpetbaggers, and eventually provide a very nice return on Cayleb's (or Delthak's) investment.

The alternative is to set up an actual BoS, buy up all the loose paper with Charisian backing, and pay it off somewhere close to par if the underlying investment has actual value. The carpetbaggers and holders of junk paper would have to settle for what they could get.

I'm not a fan of central banks at all, being an Austrian economist, but Safehold has an actual gold standard, so with sufficient Charisian backing, the Siddarmakan mark would be every bit as sound as the Charisian mark, and rather unexpectedly, the CoGA's mark. Since a good percentage of the notes paid off would return a profit, after a few years the House of Qwentyn or BoS would be able to stand on their own without Charisian backing.

Who knew the CoGA would have the resources to avoid bankruptcy and repay its war debt? Considering how close the CoGA was to going under financially, it's unfortunate that the war didn't last another few months, since the the dominos would have fallen, its supply chain would have collapsed, and there would have been a surrender rather than a cease fire. Duchairn really screwed things up for Merlin!

So there are at least two interested foreign backers for a bank of the sort Siddarmark needs to get its economy back on its feet. Siddarmark simply has to be willing to accept their help.

"I'm not a fan of central banks at all, being an Austrian economist,"
What's an Austrian economist doing in the American Rockies? OR Does the term "Austrian economist" place you as a member of a particular economic school of thought? If so, please point us to a reliable source of information on said school so this Geography/Urban studies major has some context for your economic meanderings.
Thanks

The Austrian School of economics believes that sustainable growth come from savings rather than expansionary monetary policy. Central banks are not the only sources of monetary expansion. Antebellum America had private banks that issued currency with no central bank. The economy of the day had recessions and depressions. Central banks are not the cause of all economics ills.

Owain Qwentyn isn't going to run a central bank. He is going to invest in local businesses using Charisian savings backed by Duke Delthak's wealth. Emperor Cayleb owns a bunch of gold he is willing to use to buy Siddermarkian paper. That gold allows Siddermark to issue more currency than they could otherwise. Siddermark's situation of uncertainty encourages hoarding gold to preserve wealth. Cayleb's investment allows the BoS to keep their gold in vaults and issue paper currency backed by Charisian gold. It is a given that paper currency is a less reliable vehicle to store wealth than to transfer wealth. That means Charisian gold backed paper are more attractive to use in transactions than actual gold.

Cayleb's investment then allows currency to enter Siddermark's economy that encourages Siddermarkians to USE that currency within the economy rather than hoard it in these times of trouble. Siddermarkian paper currency will circulate most qyuickly, Charisian paper will circulate more slowly and gold coins will be hoarded until confidence returns. As Siddermarkian currency is redeemed consistently, the BoS can replace the Charisian paper in circulation with its own paper currency without fear.

Owain's value to Duke Delthak is his knowledge of the trading houses in Siddermark. Owain's ability to know who are the solid businessmen and who are the amoral poseurs. The Duke will act as a financial backer to his local business partners. Owain Qwentyn will act as an agent of assurance/intermediary between the two sides. His job is to create opportunities for increasing economic activity not to implement monetary policy.

ps. Here's a modern explanation

Beyond the central bank issue, Austrian Economics also stresses minimal government intervention in economic matters - especially monetary policy. As one major example, Austrian Economics has experienced renewed study since the recession of 2008 because Austrian Economists and politicians who subscribe to the theories (Ron Paul was a supporter, for example) had long predicted that manipulation of interest rates and government policy pushing home buying would sustain a real estate bubble long past the point when it normally would pop, causing a vastly worse recession/depression when it finally occurred.

One (overly simplified) way to think about the basic thought would be to compare the economy to the average human body: A normal person will periodically get sick (the flu or other short term maladies) that are annoying and painful, but easily gotten over most of the time - just like a well functioning economy naturally experiences periodic resets/mini-recessions as over-investment/bad-investment leads to frequent downturns in one sector or another. This can be compared to a central bank/government intervention which seeks to avoid any painful downturn recession because people get hurt - think of the germaphobe who wears a surgeons mask and latex gloves all the time and never experiences those periodic minor illnesses: Eventually there is no immune system and what should have been a two days of an upset stomach turns into a month in the hospital at death's door.

http://lexicon.ft.com/Term?term=Austrian-economics has a basic explanation as well.

Some great reply's it will be interesting to see what DW does with all the Gold and Silver that is in Silverlode.

How he will help Siddarmark, this I know though the inner circle will not allow Siddarmark to economically collapse if they can help it.

Thanks for the explanations. The one problem I have with any explanation of economics is the propounder of whatever theory being propounded often leaves out the venality of the real world. E.g. the real estate collapse - there was a problem with banks not not following the rules about doing valid credit checks. In the body example, the credit checking problem might correspond to your stomach pain coming from a rich banker shoving a stick into your middle.
Another issue the theorists ignore is the impact of industrialization on society. A vast majority of persons in the industrialized world have little or no control over their situation. My dad was a machinist. The company moved the plant to South Carolina. He started over as electrical wireman at an electronics firm. When my younger daughter was first married, she and her husband had to drive 30 miles to shop at a Walmart because they couldn't afford the local stores.

You're right, EdThomas, and what's happening in Siddermark illustrates your point. Heirs are making ownership claims to vacated property, often multiple claims are made on one property. Speculators are lending money against property at discounts commensurate with the likelihood of wining a claim. Some carpetbaggers are actually buying the property based on those claims and discounting the price even more heavily. There are folks fought in the middle getting more and more pissed of that everything is falling apart because those TL ijuts collaborated with a corrupt CoGA. Others lament that if not for the Reformers, everything would still be peachy and the AoG wouldn't destroyed anything.

The impact of all these creates uncertainty, which increases economic risk, which makes people hoard their wealth. All the economic theories being bandied about try to explain what happens next. Whatever happens, uncertainty must be reduced as well as ways to store wealth AND transfer wealth must both be made easier. How is that best accomplished?