# Haha, money printer go boom.



## Stormcat (Feb 23, 2022)

In a capitalist society, there's an extra special schadenfreude that comes with seeing your enemies ruined financially. Which I what I plan on doing to the bad guys in my WIP!

But in order to do that, I need to first build up the economy of the story. It's very much like ours, with too-big-to-fail banks and functional stock exchange (even though they still use ticker tape). Similar to the 1920s, but just like what happened in the fall of 1929, it's all about to come crashing down...

Since our villains have oodles of money tied up in the stock market and various banks of this world (Not to mention the federal reserve, since they are also the ruling party of the realm), I would imagine that a crash like the one in1929 would set them back significantly, if not outright ruin them. This crash would also drive many of the common folk into poverty, quite possibly making them angry enough to take to the streets and rally against the villains who've had their boots on the people's necks for years now. 

But how exactly do you get the stock market to crash? Is it a combination of external factors? banks not checking people's credit? One billionaire getting a nosebleed?

Also, it looks like I need some help with the banks too for this story. I've only ever dealt with banking transactions in the thousands of dollars, so what happens to a banking transaction in the millions, or possibly billions of dollars? What exactly is a Ponzi scheme or a pyramid scheme?

Any/all lessons in financial literacy would be appreciated. Not just for my WIP, but for my personal financial life too.


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## RGS (Feb 23, 2022)

Supposedly, the crash of '29 began when one individual ran into his bank, withdrew all of his money, and it set off a panic. 

You could maybe have it so that a major commodity, like oil, corn, etc... suddenly takes a nosedive and it sets off a chain reaction.


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## PrairieHostage (Feb 23, 2022)

Stormcat said:


> But how exactly do you get the stock market to crash? Is it a combination of external factors? banks not checking people's credit? One billionaire getting a nosebleed?
> 
> Also, it looks like I need some help with the banks too for this story. I've only ever dealt with banking transactions in the thousands of dollars, so what happens to a banking transaction in the millions, or possibly billions of dollars? What exactly is a Ponzi scheme or a pyramid scheme?
> 
> Any/all lessons in financial literacy would be appreciated. Not just for my WIP, but for my personal financial life too


Google is your friend. Search 'what is a Ponzi scheme' and 'what is a pyramid scheme' and 'what could cause a stock market crash in 2022'

You really need to read a fair bit to get your head around finance to write a book that includes the subject. Join a reddit sub group on finance and ask there.

For personal finance, start with the Wealthy Barber by David Chilton and go from there.


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## CyberWar (Feb 25, 2022)

A Ponzi scheme involves attracting investors with promises of very generous payouts, and paying them with the money invested by more recent investors. The scheme works while the investors believe it to be a sustainable business and do not demand full repayment. At this point, the fraudsters take off with the remaining investments. However, Ponzi schemes can crash prematurely if the number of new investors slows down, or if the global economy enters a recession.

A single financial scheme collapsing is unlikely to completely crash a national economy, though. Well-developed modern economies are simply too diversified and vast for even a massive scheme to make a major dent in them.

Crashing an enemy nation's economy can better be accomplished by an arms race, Reagan's policy against the USSR being a textbook example. Simply put, it requires increasing military spending - or any spending not contributing to economic growth, really - beyond the enemy nation's capacity to sustain it. The opponent will face the dilemma of increasing their own spending to remain on par with the enemy, or risk being militarily eclipsed and lose credibility with their allies and domestic population. However, Reagan's strategy was successful largely because of the huge economic disparity between the US and the USSR. Where the United States spent roughly 5% of their GDP on the military, over 60% of USSR annual budget was tied to military expenditure. With such disparity, all it took for the US to win the Cold War was doubling their existing defense budget at no great loss to their overall national economy. This is unlikely to be possible if the feuding nations are of roughly similar economic power, the runaway arms race more likely to end up in a full-scale war (WWI being a good example of this scenario).


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## ErikFite (Mar 1, 2022)

Tom Clancy did a pretty good job of describing it in Debt of Honor.


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## Taylor (Mar 1, 2022)

Not sure how I missed this post earlier, it's my favourite topic.   Your question is pretty broad though, so I'll just focus on one area, the banking system and what can go wrong there.

As you know, banks are regulated.  And in the US, they fall under two jurisdictional regulations, federal and state.  I worked as a banking regulator in the Canadian federal system, but the rules are similar in other countries, that is because, rules are implemented in alignment with an international regulatory framework called the Basel Accord, and you guessed it, formed by the Basel Committee on Banking Supervision in Switzerland.

There are two major concerns of banking regulators/banks.  Capital and Liquidity.  When banks take deposits, that becomes capital.  They can then issue loans against it.   They have rules about the lending ratio.  Because they also have liquidity regulations.  They must have a minimum level of cash that can be withdrawn at any time.  You've heard of bank runs.  This happens when people fear banks will not have enough liquidity, and they will not be able to get their money out.  And banks help each other out.  Why? Because banks going under can cause mass panic and even greater bank runs.  So banks lend each other money in times of need.  I recall a funny story where people were pulling cash out of one bank and depositing it to another bank down the street and that bank was sending the money back to the original bank to keep it afloat.

Banks also have rules around deposits, for example, anything over 10,000, they must "know where the money came from," i.e. not the proceeds of crime.  And of course, they have rules around loans, for example, they cannot lend money unless they meet the test for a borrower's "ability to pay."

And banks are required to do stress tests on all of the above to see what would happen under changing conditions.

I'm currently writing a novel that centers around the banking crisis of 2008.  In some ways, it was a mass Ponzi scheme that even the government fueled. And the principles mentioned were ignored.  But, that situation was a whole can of worms that I won't even attempt to explain here.

I love your concept of the "schadenfreude that comes with seeing your enemies ruined financially."   Can you give a bit more background to your story, like the time period it happened and what significant industries these enemies/government were in?   I'd love to brainstorm (no pun intended) with you on some ideas of how to take them down.


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## Stormcat (Mar 1, 2022)

Taylor said:


> I love your concept of the "schadenfreude that comes with seeing your enemies ruined financially."   Can you give a bit more background to your story, like the time period it happened and what business these enemies were in?   I'd love to brainstorm (no pun intended) with you on some ideas of how to take them down.



To tell you the truth, financial ruin is only one way the bad guys are decimated. This just takes out a chunk of their power, and makes it easier to track down the members of the cabal one by one and end their individual holds over the nation. (I've already planned a gruesome end for one of these men, but the others... their fates haven't been chosen yet.)

So, The Setting itself is set in the current time, but it's an alternate version of earth where no Fossil fuels exist and the two world wars never happened. They don't have internet, but they do have a whole host of other useful technologies that we don't even have yet like self-driving cars (called Auto-carriages) and android housekeepers (called Mechano-maids). Also, because the two world wars never happened, people still keep the styles of the Victorian era, as there was no real reason to ever change them. Basically a Steampunk Paradise... or it would be if not for my Antagonists...

Enter the Exceptionalists. A hyper-nationalistic "Church" that prays to "Zwebog" (Literally means "Mad God" in Polish) and worships the very ground the Emperor walks on because he is too stupid and too egotistical to realize that he's being used for the Church's own benefit. The Exceptionalists are so-called that because they "Take Exception" to whatever legal rules do not benefit them. Things like Tax laws and civil rights advancements. They took over the Parliament of the nation by saturating the parliament with their faithful and eventually casting a vote that declared the Emperor the Dictator of the realm. (Much like how Hitler was Elected legally but saturated the Reichstag with his goons so they could vote to his benefit). 

The Leader of the Exceptionalists is Caiaphas Kaiser. He is the so-called "Prophet" of the church and basically anything that he says is to be taken as Gospel truth. If he says the sky is red, but you know it's blue, you're a heathen and must be punished for this transgression. He's really good at buttering up the emperor because he knows that all of the church's power lies in the rulings the Emperor throws at the church like candy.

The Emperor is literally brain-damaged and has the mind of a petulant toddler. Whenever he wants something, be it food, sex, or to see his favorite color, he'd better get it right then and now. His skull was crushed and his frontal lobe was almost completely destroyed. The Exceptionalists surround him 24/7 to try and coax him to do the things they want to be done. The Emporer has a son without brain damage who is actually one of the heroes for our story, but we're talking about the baddies here.

The other big baddies for the story are all members of the Emperor's cabinet. They are almost all businessmen, and they are all ludicrously wealthy because of the lax tax laws and lax government regulation laws they helped pass. They adhere to the Exceptionalist theology in varying degrees, but unfortunately, I have only made one of these men for the story so far. A real estate mogul by the name of Steve-Earl Ruark serves as the "Minister of families". I could use a few more names and big businesses these cabinet members could be a part of.


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## Taylor (Mar 3, 2022)

Fantastic plot and character development!    Your Exceptionalists are well-developed antagonists and you have a lot to work with there.  These things stand out to me as links to a financial plotline:



> The Exceptionalists are so-called that because they "Take Exception" to whatever legal rules do not benefit them. Things like Tax laws and civil rights advancements.





> The other big baddies for the story are all members of the Emperor's cabinet. They are almost all businessmen, and they are all ludicrously wealthy because of the lax tax laws and lax government regulation laws they helped pass. They adhere to the Exceptionalist theology in varying degrees, but unfortunately, I have only made one of these men for the story so far. A real estate mogul by the name of Steve-Earl Ruark serves as the "Minister of families".





> The Emporer has a son without brain damage who is actually one of the heroes for our story, but we're talking about the baddies here.



I imagine the son becoming a crusader for the poor and civil rights.   You're looking for a way for this movement to take down the government by causing financial ruin.  I'd look at the current government repealing a tax act that was originally put in place to protect the economy, like _Glass-Steagall Act_.  The repealment in 1999, made way for banks to traunch up toxic mortgages, and then unload them onto the government causing the mortgage crisis.  Unfortunately, in real life, few of the rich people got hurt, because of the "too big to fail" philosophy, but a whole lot of middle class and poor people went down.  It would be great to see the opposite happen in a fictional story.

Can you dream up some sort of tax legislation that when repealed causes short-term gain for the baddies, but ultimately causes the government to be sitting on a mass of uncollectible debt?     For example, the government buys up bad debt from rich businessmen so they can continue to give loans.   Then the son comes into power, somehow, and rather than bailing out all the banks...he lets them fail.

I'm not that good at fantasy worlds, so I'm sure you have much better ideas.  But hopefully, that gave you some food for thought.


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## Stormcat (Mar 3, 2022)

Taylor said:


> Can you dream up some sort of tax legislation that when repealed causes short-term gain for the baddies, but ultimately causes the government to be sitting on a mass of uncollectible debt?     For example, the government buys up bad debt from rich businessmen so they can continue to give loans.   Then the son comes into power, somehow, and rather than bailing out all the banks...he lets them fail.


The son doesn't come into power until after all the baddies are defeated. However, I imagine that he doesn't have to be in power, we just need to have the brain-damaged emperor refuse to sign off on the law that would buy up the bad debt.


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## Taylor (Mar 3, 2022)

Stormcat said:


> The son doesn't come into power until after all the baddies are defeated. However, I imagine that he doesn't have to be in power, we just need to have the brain-damaged emperor refuse to sign off on the law that would buy up the bad debt.


Yes...that works!  Perhaps the son influences him in some way.   Or maybe taking advantage of his disability to trick him.


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