Jiawu
In the blink of an eye, 1894 had reached its end. After running deficits for so long, the Vienna Government finally shook off its fiscal deficit that year.
Embarrassingly, the main reason the Vienna Government escaped its fiscal deficit was not economic growth and increased tax revenue, but rather excessive currency issuance.
Backed jointly by the Continental Alliance, the Vienna Government had overissued 1.2 billion Divine Shields, which were now slowly flowing into the market.
Although this money had to be shared with everyone, the Vienna Government still took the largest slice. Initial estimates showed that, after deducting printing costs and everyone's share of the spoils, the Vienna Government's seigniorage income still reached as high as 780 million.
That was more than its annual fiscal revenue in normal times. If it still could not turn losses into profits, there would truly be no excuse.
The Alliance's backing merely stabilized the value of the Divine Shield, but the harmful effects brought by overissuing currency still remained.
According to Vienna Government statistics, domestic inflation would reach as high as 3 percent this year. That was only because not all the excess currency had flowed out yet; otherwise, inflation would have been even worse.
In the later era of fiat currency, a 3 percent inflation rate would not have been considered much at all. Inflation of 7 or 8 percent was commonplace.
The entire world experienced inflation; no inflation would have been the real news. Some countries even maintained double-digit inflation rates year after year.
But things were different now. In the age of the gold standard, inflation rates were negligible. Apart from the wave of inflation in the sixteenth and seventeenth centuries, when vast quantities of gold and silver poured in, major inflation had rarely appeared after the Industrial Age began.