"What else are they supposed to do? Turn the diagram upside down? That's not spontaneous either. This is a development that has been going on for ages. When you announced the even tougher restrictions on open market transactions back then, I knew how it would all turn out and it was also one of the reasons why I eventually had to leave your union. You should lift the restrictions or at least ease them to allow individual countries to increase their spending."

"As you said yourself, we currently have inflation of 8% in the extended currency area of the Fee. If the world's banks were to buy more government bonds, that would only boost inflation further. So it's a nice fantasy, but nothing that makes economic sense in the current situation."

"How is buying bonds supposed to increase inflation? The money is already in circulation. The purchase of government bonds by a world bank has no relevant influence on inflation. The bond has the same value. The holder can also simply sell the bond. The holder can also simply deposit the bond as collateral for a loan. Nothing is safer than a government bond. Both options will work immediately. It is also not so important how much central bank money the private banks have. If they can grant a loan, they will always do it. After all, it's not as if they won't get one themselves."

"I have to completely disagree with you. The purchase of bonds by a world bank does have a relevant influence on inflation. The amount of central bank money does have an influence on the amount of book money. When a world bank buys bonds through open market operations, the demand for the bonds increases, which lowers their profitability, which makes the bonds of companies more attractive and increases their value, which makes it easier for the companies to get loans. If the private banks have too much central bank money, then it will reduce the effectiveness of the prime rate and also make lending easier. It is also not the case that private banks will always get a loan. If a private bank really can no longer exchange collateral, then it will be dropped by its world bank and us."

"What about a government bond in this case? Isn't that a sufficient security? I'm almost repeating myself, but private banks will always lend if they can. Their lending is limited by the demand for credit. What you're talking about has a minimal impact, which only materializes after a long delay. It is also not a relevant influence. For the companies that are affected, the rise in the share price does not mean that they suddenly get a loan that they would not have gotten before, nor does it mean that they need a loan. You don't measure inflation by financial products, but by goods of the real economy. If you really cared about that, you could raise taxes on the rich, but so far neither you nor any of your member states have ever been able to bring themselves to do that."

"Lending is limited by the demand for credit, but the demand for credit is limited by the cost of money, that is by the interest rate. The interest rate at a private bank is lower if this private bank has a lot of central bank money and therefore does not need a loan at the prime rate for a longer period of time."

"In addition to the prime rate and other factors, the interest rate of a private bank is not only based on the amount of central bank money, but rather on the total assets of the private bank. If for some reason a private bank needs central bank money directly, then they can simply sell off its bonds. We're going in circles." Marah took a sip of tea. "I'll let you in on an open secret. The prime rate is a toy. That's all it is. If I don't see any growth, why should I get a loan just because the interest rate is low? If I need raw materials, why shouldn't I get a loan just because the interest rate is high? Should I close down? The private banks further weaken the effect because they only pass on their prime rate with varying mark-ups. Everything they do is at best barely helpful, but often also harmful."

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"The prime rate is by no means a toy, but an effective tool. It's certainly not the only tool you need, but it's one you shouldn't do without. I know that your state bank doesn't charge a prime rate, but I also know that they still don't grant large loans without a mark-up. Besides, you're forgetting one important thing all the time and that is that if the world banks were theoretically allowed to buy all the bonds themselves, then the states would no longer have any reason to reduce their debts or limit their spending and then we would be where you are, namely with a currency that is doomed to fail in the long run."

"I don't know whether to laugh or cry at this point. Charging an interest rate on loans can of course make sense, but an interest rate that applies to everyone is a toy. I might sit on a high horse, but yours is a rocking horse. The state bank can set interest rates individually for anything and everything. You have one lever. We have thousands. Just because we raise interest rates for construction companies doesn't mean that interest rates on a construction loan will automatically go up. Interest rates help with the distribution of wealth, so that it sometimes goes down and not always just up, as is the case with you. It is also not true that we do not grant large loans without interest. For example, we often grant loans for science and research without interest and we can still do this if we raise other interest rates. All money creation for the state is of course also interest-free. Let me explain how we do it. About half of the citizens of our country are members of the farenes religion, so I would say that half of all government spending is for followers of the farenes religion. When we create money for the state, we therefore have an extra balance sheet called Akua, and everything goes on it."

"Is that a joke?"

"You don't believe me? You can go to any branch of the state bank and you'll always find a god shrine there. If you have too much money, you can throw it in there. The employees may claim that Akua is using this donation to pay off his debts, but in reality they are secretly buying coffee with it. We don't make debt." Marah clutched her chest thoughtfully. "God bears the sins of everyone. And no one is more creditworthy than God. Or do you doubt his liquidity? Well, I can guarantee you with absolute certainty that God will pay off his cap before any of your member states ever does."

Marah's statement was partly incorrect and deliberately created a false impression in other parts. The god shrine was usually not located directly in the state bank, but only in the same building, as it was not uncommon for the civic offices to be located in the same building as well. The farenes religion was the state religion of Baele. In the case of Baele, state religion means that the values of the state of Baele coincided with the values of the farenes religion and that the state of Baele therefore preferred this religion for its citizens.

44% of all citizens were members of the farenes religion, but no more than that. Membership was not compulsory for citizens. The constitution guaranteed every citizen of this country freedom of religion and belief. This was, of course, restricted. This meant that some radical institutions or interpretations of certain beliefs that were not compatible with the values of the constitution were prohibited. Due to the large number of members and its position as the state religion, the farenes religion had some power and special rights in Baele. One of these special rights was the collection of donations in the citizens' offices. Thus, the state did not collect donations for the farenes religion itself. The state did not even collect membership fees for the farenes religion. In financial terms, the two were separate. There was merely a donation pot in many public institutions. Recently there had been a case where it had come to light that employees of a citizens' office had repeatedly helped themselves to the donations. Marah made fun of this with her statement.

By the way, Marah's own religious affiliation was not known. The majority of the population did not belong to the farenes religion. In order to honor the constitution and set an example for religious freedom, Marah kept her membership to herself - or was not a member at all. The answer you got depended on who you asked. For negotiations alone, Marah had to visit farenes religious facilities regularly, so there were arguments for both sides. Reyji had an idea which side was right.

.../ End Part