After reading the latest news regarding the Northern Campaign of the Spanish Civil War, He Rui didn't even have the interest to make a sarcastic retort. In the descriptions of the online wits, the Italian army was terrible, but this was prejudice. If judged by the standard of their equipment, the Italian performance was worthy of their gear. To compare the Italian level with the People's Liberation Army was to commit the error of thinking, "If the Rabbit can do it, so can I." Moreover, in terms of the choice of strategic direction, there was no problem with the Italian strategic judgment.

He Rui's attention was now focused on the interest rate hike plan implemented by U.S. President Roosevelt. This excitement brought his mood back to the year 2020 in another timeline, when he watched with his own eyes as the U.S. stock market triggered circuit breakers every few days.

There was a joke at that time where the American investment guru Buffett said:

"I've lived more than 80 years and only seen a circuit breaker once."

"I've lived more than 80 years and only seen a circuit breaker twice."

"I've lived more than 80 years and only seen a circuit breaker three times."

"I... am still too young."

The feeling now was similar to that time. On June 1, 1937—twenty days ago—Roosevelt announced that the Federal Reserve would raise interest rates and shrink its balance sheet (reduce the deficit). For the first few days, American newspapers publicized this heavily, all supporting Roosevelt's decision. News reporters and experts stated that over the past three years, the U.S. economy had recovered under state stimulation. Now it was time to let the U.S. economy recover on its own, and the government's stimulus role should come to an end.

The logic was certainly correct, so for the first few days, the U.S. stock market remained relatively stable, even rising a point or so. But by the sixth day, the market took a sharp turn for the worse. Although the current U.S. stock indices were far below the Great Crash of 1929, the decline had that familiar flavor. It was a straight dive.

Over the following week, U.S. stocks dove again. Except for Rockefeller companies, which had extensive cooperation with China and only fell by 8%, other stocks generally fell by 30%. Now the crash was over, and a slow decline had begun. Most famous American speculators had already jumped off buildings in 1929; otherwise, one could wonder what new jokes would have emerged.

Li Runshi did not share He Rui's mood at this moment. His office was filled with the heavy smell of tobacco smoke, and large numbers of reports were spread across the walls and tables. Since the start of Roosevelt's second term, the He Rui administration had secretly begun preparations. Li Runshi could understand the reasons for these preparations. When the U.S. stock market crashed in 1929, the U.S. had significant investments in Germany. To save the market, the U.S. not only withdrew the funds planned for Germany but also began divesting from Germany to repatriate capital for the bailout. This directly detonated Germany's economic crisis.

In 1929, no matter how eagerly the United States wanted to conduct comprehensive trade and investment with China, the He Rui administration had coolly blocked it, only engaging in targeted cooperation with a few major companies led by Rockefeller. It was not until mid-1932 that Sino-U.S. economic and trade exchanges, especially capital flows, began on a large scale.

Over the past five years, China had become a destination for U.S. investment. Coupled with the $1 billion interest-free government loan borrowed from the U.S., China was faintly poised to become the largest destination for U.S. investment. During this U.S. stock market disaster, American companies scrambled to withdraw capital from China to save the market back home. In a very short time, this triggered intense turbulence in China's financial markets.

According to China's regulations on finance and investment management, American merchants investing in China brought U.S. dollars to exchange for Chinese yuan, then used the yuan for investment within China. The U.S. dollar was not a payment currency within China and could only be used through specific channels. The reverse was also true; the Chinese yuan was not a circulating currency in the U.S. and had to be exchanged through foreign exchange channels before use. The exploding demand for exchange caused the U.S. dollars in China's foreign exchange reserves to be rapidly depleted.

In recent years, most enterprises investing in the U.S. had made some money. Now that domestic interest rates in the U.S. had risen, borrowing costs also surged. Many American companies sold off their Chinese assets or other assets, preparing to convert them into dollars to return to the U.S. This also caused a wave of selling in the Shanghai stock market. The stock market had always been a place where people bought on the rise and sold on the fall; once the market dropped, many people followed suit and sold their stocks indiscriminately. This irrational attitude made Li Runshi shake his head involuntarily.

The theory explaining the current situation was not complex; Li Runshi had studied it and truly understood it. But witnessing it with his own eyes, he still felt quite shocked. This was the instability of the industrial age that He Rui spoke of. Compared to agricultural society, information in the industrial age flowed freely; any disturbance could trigger tremors in the financial markets, and these tremors would immediately trigger further actions.

Holding the exchange rate chart of the dollar against the yuan, Li Runshi sighed inwardly. By his intuition, the U.S. economy had problems while the Chinese economy was doing well, so the dollar should fall and the yuan should rise. But from a market perspective, it wasn't like that; the market often only cared about demand, not fundamentals. Because a large number of Americans were selling yuan to buy dollars, the dollar skyrocketed.

The He Rui government had assessed and prepared for this event in advance. The Central Bank had already performed estimation simulations based on data, listing figures for various scenarios. With the Chinese yuan falling to its current extent, it wasn't just people withdrawing funds; some were beginning to use this crash to short the yuan. According to pre-established warning lines, the Central Bank began selling the dollars reserved for this possibility and buying yuan, hedging against those fellows who were shorting the currency.

Analyzing the use of these financial instruments, Li Runshi wasn't sure how much capital the group shorting the yuan possessed. But China's economic fundamentals were very stable, and with the French banking industry also cooperating with China, it shouldn't be a particularly big problem. However, this incident gave Li Runshi a very bad feeling about the financial industry. in the West, early finance was also considered the devil's trade. Li Runshi felt this evaluation was extremely precise...

"Premier Li, there's a meeting at 2:00 PM," the secretary pushed open the door to remind him. It was already 1:45 PM; if Li Runshi waited any longer, he would be late.

Li Runshi picked up his prepared briefcase, swept his gaze once more over the charts and figures, and left the office without looking back.

In another office, Wu Youping, along with the Central Bank Governor, the Minister of Finance, and the Minister of Industry, were all smiling, completely unaffected by the pressure Li Runshi felt. Seeing Li Runshi enter, Wu Youping smiled. "Everyone is here. Let's begin. Governor Ding, please introduce the situation first."

Governor Ding Song was entirely relaxed. "At the same time the economic crisis broke out in the United States, an economic crisis also erupted in Britain. According to the joint analysis materials from the Central Bank and the Ministry of Finance, the countries currently falling into economic crisis are mainly the United States and the Sterling Bloc countries. These countries share a common characteristic: none of them have used investment in heavy industry to drive their economies. The East Asian Economic Cooperation Organization has recently invested heavily in heavy industry. The Soviet Union, from 1928 to the present, has made massive investments in heavy industry. The two fascist countries, Germany and Italy, have both invested in military industry, especially Germany, which has invested heavily in infrastructure, electricity, steel, highways, railways, and military industry. These fields are either heavy industry sectors or closely related to heavy industry..."

Hearing this, Li Runshi suddenly felt a sense of enlightenment. The driving role of heavy industry was manifesting in a time when consumption power was generally insufficient across countries, especially in the military industry sector.

After introducing the situation of the economic crisis, Central Bank Governor Ding Song began to report on the task he had received. "Premier, the Central Bank was ordered to analyze the United States. If the U.S. wants to continue in the direction of the New Deal at present, it must first abolish the gold standard for the dollar. As long as the gold standard is enforced, the issuance of dollars cannot break through its limits. Since the essence of the American New Deal is to forcibly pull the economy through national deficits, they shouldn't consider so-called upper limits anymore. In the current context of massive currency issuance, lowering dollar interest rates to the lowest possible level and assuming government deficits through national bonds is the only way to support the continued execution of the New Deal."

Li Runshi couldn't hold back and asked, "U.S. national bonds eventually have to be repaid. How do they plan to repay the debt?"

Ding Song laughed. "The U.S. borrows dollars and repays dollars. What's difficult about that? If Premier Li is asking about the U.S. economic problem, ask Minister Song."

Li Runshi looked at Finance Minister Song Jiangqi. Song Jiangqi looked at Premier Wu Youping, then turned to Li Runshi and said, "Premier Li, the United States has very high resource endowments, and during the Great Depression of '29, it frantically liquidated foreign investments in the U.S. I wonder if Premier Li has seen the documents regarding that part?"

"I have seen them." Li Runshi nodded. As the former Minister of Propaganda, he had the qualification to see minister-level documents immediately. Even when he was the Party Secretary in Shaanxi, this qualification had not been revoked. After 1929, the U.S. financial industry once reached a state where almost all banks suspended operations.

This situation was caused not only by bank bankruptcies. According to information collected by China, the persons in charge of at least 100,000 domestic American banks with close ties to foreign investment disappeared inexplicably. At least 30,000 such bankers suddenly evaporated after Roosevelt was elected President and the New Deal was promulgated.

In Roosevelt's New Deal, the first thing to be restored was the multitude of American banks. And among the restored American banks, the figures of those banks controlled by European capital were gone.

Serious political analysis cannot rely on conspiracy theories. Looking at the impact of the Great Depression on the U.S. from a factual perspective, foreign banks disappeared in the storm of the U.S. Great Depression. The persons in charge, funds, and accounts of those banks vanished without a trace. The most important thing for a bank is its accounts. Bank accounts record not just depositor content; recording only basic depositor information is the level of the lowest grassroots bank branches, like small bank outlets in Chinese rural towns. True bank accounts record the flow of various funds within the bank and various transactions with other banks.

The accounts of banks participating in international banking business involve a huge network of bank transactions. Even domestic banks are involved in capital flows within the country.

Only after learning this part of knowledge did Li Runshi discover that modern banks are truly the blood vessels of a nation. Funds connect the organism of the state through these arteries, veins, large vessels, and capillaries. Through currency, this medium of equivalent exchange, resources are provided to every organ and every cell.

The disappearance of so many accounts meant the disappearance of the whereabouts of massive amounts of foreign capital in the United States. But the meat rots in the pot; since this money disappeared within the United States, it ultimately became American resources.

Seeing that Li Runshi knew about the American banks, Song Jiangqi continued, "The United States has a population of 130 million and a territory of over 9 million square kilometers. The per capita land and resources are very high. With its own endowments and the investment it has received, the baseline standard of living in the U.S. is high. As long as the current industrial ratio in the U.S. is tweaked to increase the small peasant economy component domestically, the U.S. can be completely self-sufficient. If the U.S. wants to maintain its status as the world's largest industrial nation, it can only expand the world markets the U.S. controls to sustain its manufacturing industry."

"Does Minister Song believe the U.S. will expand its military?" Li Runshi heard the implication Song Jiangqi hadn't spoken aloud.

"At least they will first drive U.S. demand through heavy industry orders," Song Jiangqi gave a very cunning answer.

Wu Youping felt that what needed to be said had been said, so he asked, "How are the preparations for the task Premier Li received?"

Li Runshi answered immediately, "That part of the institutional regulations has been completed and handed over to the Ministry of Justice for analysis and discussion of the legal issues involved. The Ministry of Justice has not replied yet."

The work Li Runshi received was to formulate domestic regulatory systems, especially providing a standard for judging collusion between officials and merchants. Both the central and local governments managed the economy; for those low-level cases of abusing power for personal gain, the judicial departments could investigate and arrest.

But merchants and capitalists were not stupid. As the Civilization Party's management in these areas became stricter, merchants and capitalists naturally changed their methods of co-opting and corrupting officials. Many methods had begun to exploit legal loopholes. Even though the Civilization Party had implemented a property declaration system, as long as there was money to be made, people would still engage in capital offenses.

Wu Youping felt that He Rui had given Li Runshi a very difficult job and even sympathized with him somewhat. Wu Youping himself came from a merchant family and had been Premier for so long; he had seen too many things. He raised some different views. "Mobilizing wicked merchants to fight wicked merchants sounds reasonable. But Secretary Li, wicked merchants are very worried about retaliation from officials. after all, after they expose these things, will they face malice from other officials? Although many officials are not corrupt themselves, they might very well feel an impulse to eliminate such merchants quickly."

Li Runshi was not only the Vice Premier but also a Secretary of the Civilization Party's Central Secretariat. The Central Secretariat was equivalent to the Soviet Politburo. Wu Youping addressing Li Runshi as Secretary Li was also a well-intentioned reminder to pay attention to political impact. If merchants possessed the power to bring down officials, how could officials feel at ease?

Li Runshi explained, "Such problems will certainly arise in the early stages. At the current stage, we precisely want to form a relationship of mistrust between corrupt officials and wicked merchants. Therefore, this requires more complete management methods and judicial research on potential loopholes. With economic development, a large number of young people with higher education will graduate and enter the workforce. This will improve the overall level of the civil service team. The most critical thing is how to define collusion between officials and merchants, and to determine sunset clauses. Merchants corrupt officials for greater economic benefits; how to create an environment where one can do business well without corrupting officials is the core of anti-corruption. Our job is to try to make the current phase pass quickly, not to enact an eternal law for anti-corruption. Sing the song that fits the mountain you are on."

Wu Youping didn't quite understand, but he could sense that Li Runshi's method had a possibility of success. Because the failed cases he had encountered often shared a commonality: they wanted to solve the entire problem, not the problem at hand. If Li Runshi had proposed a plan to completely eliminate corruption, it could basically be considered unreliable.

Having finished discussing these matters, Wu Youping asked Finance Minister Song Jiangqi again, "In the plans simulated by the Ministry of Finance, what is the possibility that would have the greatest impact on our country?"

Song Jiangqi was thinking about the anti-corruption issue and was stunned for a moment when Wu Youping asked. A moment later, he returned to the mindset of a Finance Minister rather than an official. "It is possible that the United States will restore high tariffs. Roosevelt's New Deal relied on the U.S. federal government providing jobs to drive the economy, creating massive deficits. This is also why Roosevelt had to rashly interrupt the deficit economy just as his second term began.

"In his recent policies, Roosevelt tightened finances, raised corporate tax rates, and compressed government spending to balance the fiscal deficit. At the same time, he significantly raised the reserve requirement ratio, tightening the money supply. The U.S. economic recovery originally relied on government promotion; the private sector, which is the foundation of the U.S. economy, lacks confidence in the economy. Now that the power provided by the government through deficits has disappeared, the U.S. economy naturally returned to the appearance of the Great Depression era.

"So Roosevelt is very likely to restart the deficit economy, and at the same time raise tariffs to ensure domestic employment. The Ministry of Finance strongly agrees with the landmark event proposed by the Central Bank as a wind vane: the U.S. is likely to abolish the gold standard. Once the gold standard is abolished, the U.S. will engage in high tariffs."

Li Runshi felt that this judgment was again slightly different from his view of the economy, but he immediately thought of an explanation. Although abolishing the gold standard would lead to a weak dollar and enhance the international competitiveness of U.S. goods, international trade was currently terrible, and all industrial countries were suffering from overcapacity. The reason China had become the largest trading partner of major countries in the world was that international trade had shrunk severely. The Great Powers' trade with China was entirely because they had to open part of their markets to China in order to enter the Chinese market.

The United States had no colonies and similarly could not enter the colonies of other countries. Although the most important emerging market in the world today was China, the competitiveness of U.S. goods in China was not high, so high tariffs would have a limited impact on the U.S. economy. But doing so would have a huge impact on the Roosevelt administration. The American people were already used to suffering; what they couldn't tolerate most now was foreign goods coming to the U.S. market to destroy the jobs of American workers.

The complexity and simplicity, the effectiveness and uselessness of the economy, all made Li Runshi feel the instability of industrial society once again.