The City? Walls???

I eagerly look forward to each new Haruki Murakami book, but in the last few years they've ceased to be day-one events for me. I have really fond memories of midnight release parties at Green Apple Books, mingling with other literature fans as we nibbled on Japanese sweets and played trivia games while waiting for the latest novel to officially go on sale. Part of that was disrupted by the pandemic, and I've also felt a bit underwhelmed by the last couple of books from him. I still like them, but it's hard to keep that magic going after so many years.

 

That said, "The City and Its Uncertain Walls" is my favorite Murakami book in a while, probably since 1Q84.

MINI SPOILERS

Which is kind of interesting. A recent gripe I had with "Men Without Women" was that after reading Murakami for long enough, the tropes get to be a bit too noticeable. Passive male protagonist: check. Missing persons and/or things: check. Cooking spaghetti: check. Earlobes: check. Wells: check. Moons: check. Inscrutable women: check. And so on. Things that seem especially magical and otherworldly the first time you read them start to feel cliche after a while.

The writing in TCaIUW felt especially engaging and compelling. Which is especially funny after my complaints about repeating tropes, since by the second chapter or so I was going "Wait a minute... haven't I read this book before?!" It was super-duper-familiar, and not just in a deja vu sort of way, but I was positive I'd read it before. The protagonist was in a town filled with unicorns, worked in a library reading dreams, there was a high wall around the town, he'd been separated from his shadow... I knew that I'd read all this before. It didn't take too long to click into place: this was one of the two alternating stories of "Hard-Boiled Wonderland and the End of the World", one of my favorite novels.

In Hard-Boiled, the novel alternated between two seemingly unconnected stories. The "noir" story had a great detective character, very sardonic and brash, whose investigations lead him literally underground, where he encounters the INKlings (Intra-Nocturnal Kappa). The "fantasy" story was the one I was reading now, with the town with the unicorns and a high wall and a shadow and stuff. It was very unclear how, or even if, the stories tied together: was the detective the man's shadow? Were the INKlings connected to the unicorns?

TCaIUW starts off with a similarly alternating structure, but this time, the linkage is very clear. The first story - let's call it the "real world" - is narrated from the first person to the second person. The narrator/protagonist is a nameless boy, 16 years old at the start, who has fallen in love with a 15 year old girl. We learn that these two teenagers, in their romantic but chaste relationship, came up with the city together: based on dreams from the girl and conversations between the two of them, they invent the many details of this otherworldly city. Much later, the girl gives a confession: the "real" her actually lives in that imaginary city, and the version of her on Earth is just her shadow. In this novel, the "fantasy" part occurs when the boy, now grown up, somehow manages to cross over into that city, seeking the great love of his life.

There's a lot of great fracturing over the course of the story. The division between the man and his shadow is really poignant. He is sort of able to reconnect with the girl from his youth, but this version of her has no memory of anything outside of the town, and definitely no feelings towards him. Near the end of the "fantasy" portion the main rejoins his shadow and they prepare to escape, but at the last moment the man decides to stay behind in the town while his shadow leaves. And yet, despite choosing to stay, he wakes up again back in the real world, reunited with his (now mute) shadow.

This leads into a really nice passage where the man quits his job working for a publishing company and moves to a small rural town to be a librarian. There are more odd characters here and mysteries that are gradually revealed, bringing more of a supernatural element into the real world. Some of the most startling moments in the book occur when something from the fantasy/dream world appears in the real world, like seeing that the old head librarian casts no shadow, and wears a watch without any hands, and receiving a highly detailed map of the walled city from an autistic boy.

MEGA SPOILERS

The fracturing continues. The boy M** disappears, crossing over into the fantasy world. The man is bitten in his ear during a dream, and subsequently the narrative shifts back into the fantasy world, where the man is once again, but without any memory of his time back on earth. He sees the same autistic boy, but does not recognize him at all. This leads me to wonder: maybe the man didn't return to Earth after all. Maybe it was only his shadow that did. But his shadow thought he was the real man.

This is a vaguely disquieting thought, which is why I particularly appreciated that Murakami addressed it. In one earlier conversation with Mr. Koyasu:

"Sometimes I just don't understand myself," I admitted honestly. "Maybe I've lost sight of me. I don't have a sense that I'm living this life as myself, as the real me. Sometimes I think I'm merely a shadow. When I feel that way, I get this restless feeling, like I'm simply tracing an outline of myself, cleverly pretending to be me."

"The real self and his shadow are essentially two sides of the same coin," Mr. Koyasu said in a quiet voice. "Depending on the circumstances, they can change roles. That's how people can overcome troubles and survive. And tracing something and pretending to be something are very important sometimes. It's nothing to be concerned about. Because the person here right now is indeed you."

There's so much to unpack here! I don't think Murakami really goes in for allegory, but my mind immediately goes towards trauma in the second paragraph here. When someone goes through a traumatic experience, they often need to dissociate, locking away their "real self" and inhabiting the body of a "shadow self" to survive a terrible experience. If the trauma is long-lasting, they may continue acting as the "shadow" for a long long time, to the point where it becomes unclear where the trauma self starts and the real self ends.

But the second half of that paragraph is really powerful as well. You are you: the things you are experiencing moment to moment, the decisions you make, those are your reality and all you need to focus on. It's easy to get lost in a dizzying haze of what-ifs and second-guesses, and we should instead focus on the present moment. We are who we are.

And, of course, that leads me to remembering Kurt Vonnegut's epigraph in Mother Night: "We are what we pretend to be, so we must be careful about what we pretend to be." Our shadow may not seem real, but actions we take as the shadow are our real actions: we can't hide behind the shadow as an excuse.

END SPOILERS

There's a lot more I'd like to write about but don't have much to say: some really great female characters in the second half of the book (an increasing strength of Murakami's over the years), terrific dreams, subdued humor.

I was surprised to have the novel end with an Afterword; as Murakami writes, he has never included an afterword before, but felt that this book deserved one. He lays out the timeline: he originally wrote "The City and Its Uncertain Walls" way back in 1980 as a novella, back when he was running a jazz bar in Tokyo and experimenting as a writer. It was really meaningful to him, but he felt there was something more to do with it. After the initial success of his first two books, he pulled out TCaIUW and built on it, with the idea of a "double feature" that plays two stories off each other before eventually merging, which eventually became Hard-Boiled Wonderland and the End of the World. Then, forty years later, he like most other people was quarantined at home during the COVID-19 pandemic. He had long wanted to revisit TCaIUW, and now as a mature author in his 70s he felt he could do it a justice that he couldn't in his 30s. So he went back to that story, crafting it again. He thought he was done after Part 1 but sat on it for a while, and realized that the story continued into Parts 2 and 3.

Knowing all that makes it even lovelier. I think of a jazz artist riffing on a familiar tune, of a classical composer varying a theme, of a master artist making the superior version of a painting. I want to re-read Hard-Boiled again and see just how similar they are - the main specific thing jumping out at me is that, at least in my memory, in the older book the dreams are contained in unicorn skulls, while in the newer book they are contained in eggs. I love the idea of the walled town as a sort of crossroads between multiple stories - it probably isn't that, but I like that idea! In any case, this has been a deeply satisfying book from one of the great masters.

Sammy Sosa

I wanted to give a (hopefully) very brief update on my continuing tentative forays into the world of Treasury inflation-protected bonds.

As noted in my previous post, my tentative plan going forward is to start participating in new auctions of 10-year TIPS to start building out a ladder. I haven't yet started the second part of my plan, but I also want to start buying 20-year-out TIPS on the secondary market. Over the next decade or so, I hope to be able to fund my eventual retirement through age 70, when I would start collecting Social Security. This is a modification to my previous plan of maintaining a mix of stock and bond index funds and selling those down in retirement. (I'm definitely not planning to exit stocks, but my current thinking is that stocks would be for "wants" expenses like vacations, new vehicles, etc., while TIPS would cover my "needs" expenses like housing, food, insurance and utilities.)

I've set myself a few recurring Google Calendar reminders to check for TIPS auctions. The exact schedule changes from year to year, but usually occurs within the same general timeframe. The most definitive source seems to be this PDF; this page is easier to scan but only lists auctions for the coming week or so. I'm looking specifically for TIPS, and have gotten better at quickly locating them as opposed to other types of bonds.

Once an auction is announced, there is a relatively short window of about a week to act. My go-to site for an auction preview is tipswatch.com. For me, this really isn't a go-vs-no-go decision, but is interesting to learn some more about what to expect.

For actually bidding on the auction, I log onto my brokerage and navigate through to the section for buying individual treasuries. Again, it takes a little searching to find the TIPS offerings. The brokerage site will clearly indicate when an auction is available for a given term.

I've been talking about "bidding", but for an individual investor like me, it isn't really a competitive bid. The way it works is, large institutional investors will submit "competitive bids" for how much interest they would demand in exchange for their money. Once all those bids are submitted, the Treasury sorts them from the lowest interest rate (what the Treasury would prefer to pay) to the highest interest rate (what investors would prefer to receive). They find the "clearing rate" at which they can sell all the bonds they want to with that rate or lower. Then all the competitive bidders who paid that amount or less, along with all the non-competitive bidders like me, can buy the TIPS (or other Treasury) at that clearing rate. It's kind of like a more benign version of The Prisoner's Dilemma. Each bidder is incentivized to put in the lowest bid possible, since they'll still get the higher rate that's agreed on and won't miss out. But if everyone bids low, then the Treasury is able to clear the auction for less, and investors end up earning less than they would if everyone bid higher.

As a non-competitive bidder, I indicate how many TIPS I want. If you buy them at the official Treasury Direct web site (don't do this!), you can request in increments of $100; for brokerages, the minimum is $1000. One thing that's a little confusing is that the actual amount you pay may end up being either higher or lower than $1000 per TIPS. For a new auction like the one that happened this month, there won't be much of a spread; for a reissue, there may be more of a premium or a discount.

As it turns out, this was a pretty good first original auction to participate in. It ended up with a real yield of 2.243%, the highest result in 16 years. TIPS are more about protecting value than growing wealth, but growth is always good!

This purchase works differently from the types of transactions I'm used to. Typically in the brokerage you'll need to have funds already available in your account, then you put in the order for the trade, then the funds are locked and the actual transaction happens within a day or two. With TIPS, you put in the bid but don't know the exact cost until after the auction ends, then you have over a week to make sure you have enough funds in your account for the settlement.

I think I'm all set on TIPS auctions for 2025 now. I may move ahead with looking for a 2045-maturity TIPS later this year. I definitely want to buy more I-Bonds, too. I've set up a series of Google Calendar reminders for those as well. I-Bonds will work a little differently for me: you can buy those directly from the Treasury at any time, unlike new issue TIPS that have very narrow windows. I-Bond fixed interest rates reset twice in the year, on May 1 and November 1. In April I'll start to monitor TipsWatch (and maybe a few other sources) to see if people think the fixed rates are likely heading up or down (based on recent TIPS auction results). If it seems like rates are heading down or steady, I'll buy in April; otherwise, I'll wait until October, and then decide whether to buy in October or November.

I do slightly regret not investing in I-Bonds before now. They really do seem like a perfect vehicle, flexible and tax-efficient and with a lot of great features, but you are limited in how many you can buy each year and I wish I'd started accumulating them before now. But in the years when I could have bought them they were yielding basically 0% fixed, so I probably wasn't alone in ignoring them.

So, overall I'm feeling pleased with how things are going: I have two whole rungs in my ladder now, yay! I do have to say that TIPS aren't feeling quite as rock-solid as they were when I began seriously considering them last year: as one specific example, there's a no-longer-implausible possibility that the new administration will try to cook the books by claiming that inflation is significantly lower than it actually is. TIPS probably still would do okay in that scenario. People with maturing TIPS could be hit by it, but would still keep accumulated adjustments from the years with valid data; and if, say, we get crooked inflation stats from 2025-2028, I would hope that the numbers would catch up in 2029 to the actual values. But who knows, we're in largely uncharted territory here. My current feeling is that TIPS are riskier now than they were before, but still the least risky option available to me other than the portfolio of canned food and ammunition. (Which historically has underperformed even a 100% bond portfolio by quite a lot!)

Buy the Sky and Sell the Sky

I recently picked up the somewhat-pretentiously-titled book "Investing in US Financial History". I think I heard about it from a Bogleheads conference video discussion between, hm, I think William Bernstein and someone else. The book came up in passing and each person was visibly delighted that the other had read it. Bernstein has recently become one of my favorite writers, both on finance and other topics, so that was all the recommendation I needed to grab it.

 

This book is, astonishingly, the first book to ever cover the financial history of the United States. There are lots of books on particular financial episodes, like the Great Depression or the Great Financial Crash, and lots of general books on history that include high-level summaries of financial events but don't dive deeply into underlying causes. "House of Morgan" felt kind of similar, but IiUSFH starts roughly 60 years earlier, carries us through the present day (so about 30 years past the end of HoM), and is broader, looking at other players in banking and how the system as a whole works. The closest equivalent may be "Goliath", and there's a lot of overlap between them, but IiUSFH feels more informative to me.

The author Mark Higgins presents the thesis that economic history tends to repeat itself - not exactly, and not always, but most things that have happened recently are extremely similar to things that also happened in the distant past. It's important for everyone to be familiar with history so they can be prepared for coming crises (and presumably future opportunities; the book also covers periods of high growth and prosperity, but the most vivid passages relate to turmoil and disaster). Higgins is a professional money manager, and claims to mostly be writing for the benefit of other money managers, but also to public servants and individual investors (that's me!). He makes his case pretty convincingly, highlighting episodes in the past that we don't talk about very often but were even more devastating than, say, the 2008 or 2020 downturns were.

While looking throughout history, he has noticed some trends (but not laws - like Piketty, he places a strong emphasis on human agency and notes how specific choices lead to specific outcomes). If a new crisis happens shortly after the previous one, the response tends to be quicker and more effective than if we've gone through a long time without problems. He describes being surprised at how swiftly the economy recovered after the 2020 COVID-19 crisis; but looking back, that makes sense, since the lessons of the 2008 crash were so recent and so the Federal Reserve and other institutions had a game plan ready to go. He also notices that when a crisis happens, the public and the media usually look for a scapegoat to blame; but the crisis is almost always caused by flaws in the system itself, such as bad rules or improper incentives. And the solution to a crisis is often counter-intuitive. Recessions in the 1800s were especially severe because leaders took common-sense solutions to them, like tightening credit after excessive credit causes a crisis. It's taken a lot of experience, empirical data, and learning the hard way what the actual solutions are to these problems. Finally, he's noticed that the response to one crisis often plants the seeds for the next crisis. For example, in the Great Depression it was mostly smaller community banks that failed while larger national banks weathered the storm rather well, so there was an implicit assumption that "bigger is better" and an encouragement for smaller banks to roll into bigger banks; but that paved the way for the "too big to fail" mega-banks that took down the economy in the Great Financial Crisis.

Stepping back a bit - as you may have noticed, I've been reading a lot of books related to finance and economics lately. I think I'm starting to approach being (gasp) widely-read. That's pretty cool! I'm increasingly finding slightly varied perspectives on familiar topics and events, and able to see where some details are being elided, or add more nuance to what I thought I knew. I feel like I've moved a bit beyond The Guy Who's Only Read Thomas Piketty and going "I get a real Piketty vibe out of this".

One of the (many!) striking things I remember from Capital in the 21st Century is Piketty's data-driven look at the returns of university endowments. He shows how the three largest endowments (Harvard, Yale and Princeton) have the highest rates of return; and then the performance steadily decreases in tandem with the size of the endowment. Piketty's point is that the elite institutions have access to investments that are unavailable to regular people, like venture capital, private equity, unlisted stocks, mineral exploration, and so on. These wealthy institutions and wealthy individuals also have access to highly-paid and talented money managers who can utilize those investments, thus consistently beating market averages. So it's interesting that Higgins, who is a professional institutional investor, looks deeply into the Yale endowment in particular and institutional investing in general. From Higgins' data, which extends a good decade past Cit21C, most institutions have under-performed the market. The only exception is Yale, but he thinks this is because Yale was unusually blessed by particularly talented money managers, who created a culture of academic curiosity and rigor built around a very-long-term outlook. The Yale investors have shared their process publicly, but also state that in most cases people should just use cheap index funds. Higgins thinks that other institutions have seen Yale's success and assumed that it's due to their access to exotic investments; but when you get off the beaten path, it is extremely hard to make good choices, and most people are not as good as Yale's managers.

So, anyways, I feel like I now have a bit of a conversation going on in my head between John Bogle, Thomas Piketty and Mark Higgins, and that's pretty cool! Some other ideas I'd toss in there are that we've had a monster 15-year run in the S&P 500, which considerably raises the baseline for what index investors have been getting; it would be interesting to revisit this topic after the next market crash. It's intriguing to think that Bogle may have been right all along, and even the wealthiest people are subject to the relentless rules of humble arithmetic.

If I were to place all the econ books I've read on a continuum with "least favorable regarding Pierpont Morgan" to the left and "most favorable regard Pierpont Morgan" to the right, this book would be on the far right end of the scale, even beyond "House of Morgan". IiUSFH has the most complimentary and heroic portrayal of the man I've read to date. He benefits by drawing a strong contrast with contemporaries like Fisk and Gould who dominated the stock market immediately before him. Higgins emphasizes how Morgan always behaved ethically and put his clients' needs first. Pierpont definitely made money, but only in the process of making others money, not solely in his own interest like the stock jobbers.

But, again in the theme of being widely read, I now know quite a few things Higgins doesn't mention here. One of the most germane is probably that Pierpont had almost nothing to do with the stock market. He was a towering figure on Wall Street, but only in the world of merchant banking, bonds and loans. Higgins mentions the market crisis of 1907, but not the terrific anecdote of Pierpont needing to ask at what time the exchange opened - neither he nor his firm did business there. So it wasn't so much that Pierpont was a more highly evolved form of Gould, they were swimming in different lakes. Which doesn't take away from the admiration at Pierpont's actions - if anything, it enhances it, since he wasn't directly impacted by the market crash, but he realized the threat to the broader economy and seemingly acted out of a sense of noblesse oblige.

I read IiUSFH immediately after reading "A People's History of American Empire", a sort of abridged, updated and illustrated version of "A People's History of the United States." I wasn't planning to write up that book, but I might. In the meantime, I'll note that Pierpont has only a brief but a fully devastating appearance there, surrounded by other Gilded Age plutocrats. And even details like the Pecora Hearings get shaded in many different ways. Stoller practically pumps his fist in the air and cheers on the little guys taking on the Money Trust, breaking up the self-dealing oligopoly. Chernow spends many pages on the hearings, covering the circus-like spectacle of the proceedings, shows how well Pierpont comported himself compared to others. And for Higgins the hearings are a tragic conclusion, as an ungrateful nation turned on the man who saved them from a far greater disaster.

While all of the various books I've read have had varying perspectives on Pierpont Morgan and the Morgan bank(s), it's funny that literally every single book I've read touching on financial history makes it clear that National City Bank (today's Citibank) has always been uniquely awful and dangerous, even by the low standards of national Wall Street retail banks.

Still more varying perspectives: everyone seems to agree that World War 2 was largely caused by economics, and ties in with the Great Depression immediately preceding it, but authors tend to stress their own preferred topics or hobby horses in identifying specific accelerants. Piketty looks largely at the social and political instability caused by extreme inequality, such as the massive suffering within Germany under hyperinflation, as well as the relative economic power of France versus Germany in the wake of the Treaty of Versailles. Stoller looks at monopolies: he sees large industrial cartels like IG Farben in Germany enabling the consolidation of political and economic power, bundling everything up so it can be wielded to the particular aims of a dictator. Stoller quotes FDR's views that American-style small businesses help protect democracy and inoculate against fascism, keeping things small-scale and local.

Higgins takes a comprehensive view of WW2. He looks at the Treaty of Versaille and makes a particular note of exactly why it caused hyperinflation: Germany had a massive debt denominated in a foreign currency, which led to an "inflationary depression", which is something we in the US have been fortunate to have never experienced. But he doesn't look at these sort of economic ideas in a vacuum. He also notes the humiliation of surrendering German territory and factories to France. He takes a surprisingly deep look into Hitler as well: Hitler was an ignorant oaf, who would have had evil ideas no matter what, but was able to seize power due to the disorder and discontent fed by the economic collapse. Higgins also looks straight at the evil of antisemitism and the Holocaust: he noes how a Jewish assassin murdered the German ambassador to France, and Hitler's Germany retaliated by holding all Jewish people responsible for this crime: burning synagogues, killing innocent Jewish people, destroying their homes and neighborhoods. Hitler led the drumbeat of hatred for a people that ultimately culminated in the Holocaust. Like Piketty, Higgins is mostly concerned about the extreme social consequences of bad economics. The worst case isn't some billionaire getting too much money, it's societal collapse and the emergence of something far darker and more dangerous.

Earlier in the book, Higgins also looks at the American Civil War. He prefaces this section by saying that of course slavery was immoral and the human dimension of suffering can't be expressed in economic statistics. That said, in his own review of contemporary writings, it seems that at the time the overwhelming cause of the Civil War was westward expansion of slavery, which in turn was largely economic. The Southern economy was built around slave-driven agriculture, while the Northern economy had transitioned to a proto-industrial one organized around liberates labor. Southerners "needed" to keep slaves for their plantations to be sufficiently profitable, and also much of their wealth was in human bodies.

This aligns with Piketty's "Capital & Ideology" comparison of emancipation in the UK and France compared to the US. In the former, the state reimbursed slaveholders for "taking" their "legal" property, while in the US, the value of that property was so high that reimbursement wasn't a feasible option.

This isn't the main point, but I am reminded of Chernow's description of George Washington's disenchantment with slavery, which also came down to largely economic terms. In Washington's experience, freedmen would work harder and more ingeniously in pursuit of higher pay, while slaves would work the bare minimum to escape the whip, so slaves were far less productive and also required much more oversight. But, a lot changed between the late 18th century in Washington's time and the mid-19th century in Lincoln's time. I'm not an expert in this, but my understanding is that the invention of the cotton gin reshaped the cotton-growing market to make slave labor much more lucrative, and that in turn may have helped harden the political opinions from the Revolutionary-era sense that slavery was a dying institution to the later extreme views on racial superiority.

Overall, I really love the moral dimension of Higgins' writing. He gets fairly deep into the weeds of the technical aspects of finance, and I think I tend to associate a financial focus with moral relativism, but Higgins is much more aligned with someone like John Bogle: they both have a strong sense of civic responsibility and a strong belief in service and professionalism over self-interest. I think both Bogle and Higgins have written admiringly of the early incarnation of Merrill Lynch, which was incredibly scrupulous in its dealings and rebuilt shattered trust in securities after the chaos of the 1920s and misery of the 1930s.

In some ways reading this book reminded me of my first experience reading William Bernstein's "The Birth of Plenty," where the first part of the book is a full-throated defense of capitalism and economic growth, and then the authors make it abundantly clear that unfettered capitalism leads to inequality and misery, and they promote more socialism as a way to improve social outcomes. Higgins definitely lands more to the right of Piketty, but maybe a bit to the left of Bernstein.

I did have some more criticisms nearing the end of the book, while generally agreeing or at least sympathizing with his point of view:

Some of the data presentation felt misleading. He shares a chart from the St. Louis Fed which argues that federal tax receipts as a share of GDP have actually remained pretty consistent over the last 80 years. This is immediately preceded by a graph showing the large rise in medicare and medicaid expenditures. But the spending graph is given in nominal dollars, while the income graph is given as a share of GDP, so they aren't directly comparable at all. Furthermore, if you zoom in on the federal tax receipts graph, I think it actually tells a pretty powerful story. In 2000, at the end of the Clinton administration, federal tax revenue was 20% of GDP; by the end of the Bush administration, it had steadily diminished to 15%. That's a drop of 25%, which feels really significant! And that's huge context for the political discussions about what we can afford (wars, tax cuts) and what we can't (health care, infrastructure).

The federal tax receipts graph also downplays the range by extending its Y axis from 0% to 25%, making the variations between 15% and 20% seem minor. Immediately to the right is a chart that's meant to show the significant rise in annual GDP growth over two periods. Just eyeballing it, it looks like in the 1980s growth was twice as much as in the 1970s. But again that's misleading, because here the Y axis extends from 3.05% to 3.35%. If this graph also went from 0% to say 4% like the last graph, we would think that the difference was insignificant.

 

Anyways - these are items that I just kind of poked at since they didn't match my prior convictions. There's likely plenty of other data that I just nodded at and accepted since they matched my beliefs.

Another thing I mulled over was the trade deficit, which was very much in the news while I was reading this book. As Higgins mentions, one unusual aspect of the recovery after the recessions of the early 1980s through today is that our trade deficits have continued to grow. Historically, the US typically had trade deficits during recessions and switched back to trade surpluses in recoveries. Higgins has some thoughts about why we've maintained trade deficits during growth periods: we are privileged to (currently) have the US dollar as the global reserve currency, so there's no limit to how many foreigners are willing to hold dollars (when they wouldn't want to indefinitely grow their holdings of, say, rubles). We've also shifted from an economy based around physical production of agricultural and industrial products into one based on technology and services.

This makes me think of the accounting shenanigans that have accompanied technology in recent decades. As one example, shortly before Google went public, they transferred their IP to a subsidiary located in Bermuda. As part of annual operations, Google in the US will "pay" their subsidiary in Bermuda for the rights to use Google IP. This results in Google showing little or no profit in the US, and a very large profit in Bermuda. Since Bermuda's corporate tax rate is 0%, Google ends up paying no tax. Now, I'm not totally sure how that situation will roll up into Higgins' chart, but I think that it would show up as a negative contributor to the US trade deficit, since Google is sending more dollars out of the US than are coming in. But the on-the-ground reality is that Google is employing engineers in the US, not in Bermuda; its operations are all based in the US; its stock trades on the US exchanges, and the profits realized by Google are mostly collected by US investors and not Bermuda investors. So... I dunno. I think that at least some (I don't know how much) of the trade deficit is the result of tax evasion which has been enabled by the liberalization of capital flows, more so than the actual reality of America as net producers vs. net consumers.

Anyways, as an aside I've really been enjoying Paul Krugman's writing on his recently revived substack. Many recent articles on the trade deficit, mocking the nonsense assertions that a trade deficit means subsidizing the exporting partner. One recent article looks at the trade deficit with China in particular. One of Krugman's arguments is that, when a country is doing well, it attracts more foreign investment, which by definition means a trade deficit. I'm not an expert in this field, but I've really been enjoying learning more about it, both fundamentals and the areas of policy disagreement.

I don't think Higgins should have gotten at any of this trade deficit stuff in the book - like with JP Morgan, he's giving an impressively broad view of history, there are a million rabbit holes he could go down, and I'm grateful to him for inspiring these thoughts, not disappointed in him not writing a 2000-page-long book.

The second-to-the-last section of the book covers the Great Financial Crash. This is probably the best explanation I've read of it yet, building on what I already knew and adding a lot more technical detail. This chapter reinforces several of Higgins' main theses. Bubbles are created when money is too freely available and investors become irrational, with roughly a 20-year expiration from the previous bubble. Bubbles are often caused by periods of transition when false ideas become widely accepted: for example, in the 2000s it was taken as gospel that there had never been a national decline in real estate values (even though that had been the primary cause of recessions in the 1820s and 1840s). It can be hard to see a bubble while it's forming because each player only sees their own immediate situation, which usually seems rational to them: it's only when you zoom out and see how the system as a whole is working where the bubble becomes obvious. In the case of the GFC, mortgage originators weren't concerned because they were immediately selling mortgages and didn't need to keep them on the books; mortgage resellers weren't concerned because they were slicing up and reselling mortgages; and investors weren't concerned because they trusted the rating agencies saying that the CDOs were high-grade low-risk investments.

In the aftermath of a crisis, we tend to focus on the actions of specific individuals or groups, but the crisis is usually the inevitable result of structural flaws in our system. If those underlying flaws aren't addressed, they'll recur in a future crisis; and often times the correction of one crisis will inadvertently plant seeds for the next crisis. One very obscure example: part of the banking reforms of the 1930s was a little-discussed "Section Q" that capped interest rates on bank accounts to something like 5-7%. The goal was to keep banks from aggressively acquiring additional deposits to expand the money supply. But for decades the market rate for interest was well below that so nobody noticed or cared. Once inflation hit in the 70s, money markets were created to dodge that regulation. But that ended up creating another "shadow banking system" similar to that which produced the Great Depression: MMFs looked and acted like bank savings accounts, but didn't have FDIC insurance, and thus were always vulnerable to bank runs. The real structural weakness behind the GFC was the shadow banking system; without it, the failure of subprime mortgages would have only impacted a part of the market and not threatened the whole economy.

This book is very contemporary, continuing through the COVID-19 pandemic and into the recovery. Kind of the last thing he touches on is inflation, which was spiking at the time of publication. Once again there's a strong overlap with Krugman here. The big economic debate of the last several years has been whether high inflation was "transitory," caused by supply chain disruptions, or "secular," caused by high wages. Those have very different policy prescriptions, since the former you can mostly just wait out, while the latter requires aggressive monetary tightening and higher unemployment. Higgins observes that there is active debate on the subject and we won't know for some time what the situation is, but he does observe that the post-COVID-19 inflation looks an awful lot like the post-Spanish-Flu inflation. In that case, World War I had ended and the influenza was abating, so there was a lot of pent-up demand for deferred services and goods; but the economy had been running on a war footing for some years and it took time to transition back to manufacturing civilian goods. Too many dollars chasing too few goods is what causes inflation. Likewise, with COVID-19, there was a lot of pent-up demand from the lockdown; people were then eager to spend, but less stuff was being produced due to illnesses and restrictions, and supply chains were jacked up (remember Ever Given?), leading to a spike in prices. So while Higgins doesn't definitively come down on the side of Team Transitory, he does see this scenario as being much more like 1919 than like the 1970s, when inflation became persistent and ingrained due to political bullying of the Federal Reserve.

And again, that's the main thesis of this book: history is important and has a lot to teach us! Almost nothing that happens is completely new. Looking to the past can help us understand the present and possible futures, both in preparing for risks and choosing the most effective solution for a given problem. And while things definitely aren't perfect, it does seem like as a country we've gradually come to learn our lessons, and can solve big problems before they turn into even worse problems. Alexander Hamilton, who Higgins reveres, was spectacularly effective, but downplayed his own genius, claiming that he just knew stuff because he read so much. I think that's what Higgins wants: people (especially leaders, but really all people) to read widely, understand all the different ways things can be, and be able to think critically about things.

Rushin' into Prussian

It may seem like I'm blogging a lot about EU4 lately. It has definitely been my go-to pasttime of the last several months. As much as I'm writing about it, I've been playing it way more, and by the time I remember to write a post I've already forgotten much of what happened since my last check-in. That said:

I think my last post ended around 1630 or so, after I had completed the Court & Country disaster and revoked the Privilegia. I'm now up to the mid 1660s or so. A lot has happened! The most obvious is yet another re-formation, completing my earliest vague goal of converting from Bohemia into Prussia with a detour through Saxony.

I'd been eligible to form Prussia for a while, as I was Protestant and had strong control over the northeast German coast. While double-checking requirements, though, I was dismayed to see that being Prussia would impose a harsh -50% penalty to my Governing Capacity. I'd been hovering near the top end of the cap for most of the game, and while being a little over it isn't too bad, remaining way over it for a long time would be brutal. So I soldiered on as Saxony for a while longer. During this time I doubled down on building Courthouses and State Houses: not just in my high-dev provinces, but literally everywhere. I ended up taking L'etat C'est Moi for a big +250 GC boost, paired that with some Estate Privileges for another +100, and pulled the trigger. That put me just a bit over capacity, and once I leveled up Admin Tech some more, I was back under the cap again. Phew!

So why Prussia? I haven't played as them before, but they seem to be the single most popular nation to play as in EU4, mostly due to their unique Militarization feature and unrivaled combat ability. The term "Prussian Space Marines" gets written a lot in the forums I frequent. They get big boosts to morale, damage and defense, but the rarest and most valuable perk is probably their high Discipline. Since converting, I've won multiple battles against equally advanced enemies with a 2:1 numerical advantage over me, simply because my guys just keep fighting and don't give up.

 

The reduced Governing Capacity makes a lot of sense for balance reasons, but seems very silly otherwise, since the whole purpose of Prussia (both historically and in the game) is to aggressively expand. I'm now very secure in Europe with nearly all minor nations under my suzerainty and the large nations not a threat. One of my first big goals was to expand into the New World: not by colonizing myself or conquering those lands, but by taking over the colonial powers. My first target was England. I had earlier gotten a foothold on the island while gunning for Global Trade, and subsequently expanded the Holy Roman Empire over all of Ireland and Cornwall. Scotland and England have fortunately been locked into a cycle of mutual destruction so Great Britain could never form.

As is always the case in EU4, it took multiple wars to accomplish my goals. In the first war I took most of England's Centers of Trade, all of its random islands and directly-owned New World territories, and broke any troublesome treaties. In the second war I took all of its coastal provinces, leaving them with York and several inland provinces around the midlands. I was a bit nervous that their North American holdings (Newfoundland, Louisiana, Cascadia, and Mexico) would break free, but fortunately they didn't: the relatively early year probably helped, as may have the much stronger and more threatening position of the Spanish colonies. In the third and final war I conquered all of their remaining provinces relatively quickly. Unfortunately, I couldn't actually end the war: there's a huge negative reason for accepting a treaty that would result in the complete annexation of a country. Their colonial powers weren't a threat, but still had most of their territory and armies, so the overall numbers weren't as favorable as they should have been. I was hoping that the ticking war score would put me over the limit, but I think that the "would result in complete annexation" value is dynamic and will always require 100-101% war score.

In this case, I had to fall back on the 5-year rule that I had relied on during World War Zero in my previous Portugal game: after a war has been going for 5 years, if one war leader is fully occupied and doesn't occupy any other territories (including provinces conquered by its vassals or allies), then it will capitulate and will accept any demand of up to 100% war score. In retrospect, I should have done what online strategists advise: in this scenario, it's best to declare on an ally of the colonizer, make the colonizer a co-belligerant, and eventually sign the peace with the war leader instead of separate-peacing. The war leader won't have the "complete annexation" malus, so it's much easier to get to this (assuming you can do well in the war against the alliance).

So far things have been relatively chill. As is usually the case, England owns most of the northern part of the New World, while Spain and Portugal have the central and lower bits. France didn't make it as a New World colonial power in this game (more on France later); Denmark and Scotland had some attempts of their own in the north but didn't get their colonies off the ground. Newfoundland is pretty large and came to me with something like 70-80% Liberty Desire, Louisiana is mid-sized and has around 60%, Cascadia and Mexico are tiny and loyal. I used some of my Subject Interactions like Support Loyalists and Send Officers to help improve our relations for a pittance in ducats, and have gradually been feeding them excess Prestige. But I also force-converted everyone to Protestant, so it will be a while until the whole setup is fully stable. Once I finally got some of them to be loyal I could start recruiting forces in their region. I'm planning to keep an army in the New World for any future conflicts. Nobody seems to have a Fort over level 1 so I can go light on the Artillery compared to my Old World armies. Unlike in my Portugal game I'm currently not getting very involved in my colonial nations' politics, leaving them to declare and fight their own wars without interference from me.

Hm, thinking about how to structure this post, I actually kind of liked my last post's clockwise spin, so I'll continue that structure here.

Moving from 10:00 to 12:00 - as I noted in my last post, after subjugating the HRE minors and forcing them to transfer trade power to me, one of the few remaining flies in my ointment was Denmark's presence in Lubeck. I finally had over 50% control, but they had most of the remainder, and as one of the final stops on the way to the English Channel that was a lot of money being diverted. This was an emotionally difficult war as Denmark had always been friendly to me, but militarily it wasn't too challenging. The main issue was the bottlenecks of getting past the forts into Denmark proper, dealing with islands in the straits, and handling the vast land in Finland and Sweden. The outcome was never in doubt, but the war dragged on longer than sheer numbers would have suggested because it took so long to siege down forts one by one.

 

 

I followed my normal practice of finishing the way by taking all Centers of Trade and any usable Great Projects. This resulted in quite a few non-contiguous territories for me; ordinarily I would balk at that, but as the provinces are all Protestant already I didn't need to worry about unrest like normal. The culture isn't ideal; in this game, my normal European strategy has been to take direct ownership of provinces in the Germanic culture group or other cultures I've accepted (the main ones being Greek, Francien and English). For other provinces, I'll try and give them to an HRE vassal of mine: even if they don't already accept the culture, they have plenty of unused culture slots. Ordinarily I would want to directly own Centers of Trade, but since I can take 100% of my vassals' trade power, I'll go ahead and give those to vassals too. The only things I want to keep for myself are Great Projects. What I really wanted to do here was to release Norway as an HRE Vassal, but I didn't have a way to do that without also giving up some Great Projects. I was able to give the peninsular provinces to HRE princes, but nobody could take land in Scandinavia proper. Definitely not the end of the world, I'm just spending some extra Governing Capacity on land that I can't use to its fullest potential.

 

 

One I had control of Lubeck, I was finally able to return to collecting trade in a single location. I moved my Trading Capital to the English Channel and switched everyone else to transfer trade, focusing on steering in nodes that could potentially branch into Venice or Genoa. This led to yet another skyrocketing of my trade income. This isn't entirely due to trade, but I'm now clearing between 1500-2000 ducats a month (without mothballing any forts or reducing army maintenance).

Continuing on to 3 o'clock: I've been fighting periodic wars against Muscovy for much of the game. They aren't a threat any more; they're still very large, with dev and even more with number of provinces, but much of their land is now non-contiguous and they only have trade influence in the very poor Girin node. Fighting them is no longer a big priority for me since I can reach beyond them and have the provinces I most care about. But there has been a common dynamic where I'll release some Orthodox nations from them, wait for the truce to expire, and then find that those nations have become allies or vassals of Muscovy, forcing me to fight yet another war to release them and another truce wait until I can force them into the HRE. This is all just kind of a background process so not a big deal. In my most recent fight, I allied, hm, I think Rustov or something, got our relations high, and then vassalized them. I hadn't realized that they were already at war against Muscovy who were trying to take them back for the second or third time. I immediately became the war leader. I wasn't prepared for this fight, but that's totally fine: the Vassal Swarm immediately sprang into action, and I could march some armies over from Central Europe before too long. We quickly got up to ~75% war score or so; going much higher than that against Muscovy is a huge pain because of how they retreat to the furthest reaches of Siberia, so I peaced out relatively early, releasing still more nascent Christian nations and taking a Gold province and a few other provinces of minor strategic interest.

The second-biggest war since my last post was a big war against the Mughals. They had been one of the bigger Great Powers and rivals with my allies the Mamluks so a confrontation was inevitable. One of the few Prussian missions I hadn't already completed required being the greatest trade power in Canton, and as I complained about previously reaching the Orient as a Germanic nation is daunting. I'd been eyeing Africa, where I'd need to take land from like five or six different nations to reach the Red Sea, and how was I going to even get CB on all those countries? But taking a fresh look at the map, I reasoned that it might be easier and faster to punch through Persia instead, connecting my Ukrainian land to Kazakhstan and on down to the Persian Gulf. This would require a greater total number of territories, but the Mughals had everything I needed, so I could potentially do it in one war.

I've been leaning heavily on the Mamluks during this stretch of time. I seem to always have 100 Favors banked with them and they're always down to join all the wars I care about. So far we haven't really come into any conflict, they're mostly focused on consolidating their power in the Middle-east and Africa. Lately I've been intentionally bringing them into wars even if I don't really need them, honestly to keep them in debt and with low manpower to keep them from growing too much. There have been a few times that they have called me to arms for an offensive war; my MO has been to accept, then completely ignore the war, then leave for a white peace (or sometimes even taking a province or two) after a year.

One challenge in the war against the Mamluks, like earlier wars against Muscovy, was the fog of war. I haven't taken Exploration ideas in this game, and have only very slowly gotten insight to coastal provinces and almost nothing in the interior of Asia. So while fighting a war, I'm also spending a lot of time scouting land to prepare for the following war.

At the end of the Mughal war, I was able to take the land bridge I wanted to connect Kazakhstan to the Persian Gulf. Thanks to my Absolutism, Administrative Efficiency and Protestant Justified Conflicts, I'm now able to take some pretty large chunks of land particularly when fighting heretics and heathens, which is pretty much everyone other than Denmark. So in addition to my land bridge, I was able to snake out and grab a lot of Centers of Trade as well as multiple Great Projects, including the excellent Bam Citadel.

As in my Portugal game, now that I'm expanding outside of Europe my normal approach is to core all provinces, then for Centers of Trade I'll prioritize converting to my state religion before adding to a Trade Company. This does mean dealing with higher Unrest for a while, since you don't get the immediate "Tolerance" benefit of being in a Trade Company; but over the long run it's better since you'll get the "Tolerance of the True Faith" instead. Since I took Humanist ideas instead of Religious in this game I haven't had to worry about rebellions nearly as often as I did in the Portugal game.

A pleasant surprise was just how long it took me to core everything. In previous wars against Muscovy I'd taken some deep tranches of territory, then had to core nearer provinces before I could start coring further ones, resulting in a 3x-4x longer period of being overextended. Because of that I'd shifted to only taking provinces that directly bordered me or a coast. With the Mughals I needed to take like 14 provinces in a row, though, so I wasn't gonna fight 14 wars for that. But I ended up being able to core them all at the same time after all, hooray! I'm now trying to remember why I had that problem with Muscovy earlier; it may have been due to me also granting provinces to Lithuania or other vassals of mine, you can core on the other side of a vassal but it may require you to have cores on the near side completed first.

Finally I had cores on the other side of Africa, hooray! Unfortunately I still didn't have the trading range to reach Canton, boo. I had done a similar mission in China earlier as Portugal and knew that the key would be to just get close enough to be able to place a merchant in the node, and then send enough Light Ships to Protect Trade; you don't actually need to conquer land in the node to beat the mission. But I would need to conquer land to get close enough to the node. Or would I?????

As it turns out, I could just buy my way to success. I don't think I've ever used this option before, but there's a diplomatic economic option called "Charter Company". You can use this on any nation located on a different continent from you that's at peace, and can straight-up buy a province from them. The costs scale up based on various factors: the bigger a share of their total dev the requested province is, the number of provinces you have nearby, etc. So in practice there's a soft cap that makes it hard to buy more than 1-2 provinces from a given nation, and they usually won't be willing to part with a province containing a Great Project at any price. But it's still insanely useful, as you can leapfrog forward to get range that could take decades of war to achieve. The cost is pricey - most of the provinces I buy cost around 4k-7k ducats - but again, at this stage in the game I'm netting over 1.5k ducats/month and this is one of the best money sinks I've found.

So I unrolled my bankroll and started buyin'. Ideally you'll Improve Relations with countries in advance as they're more likely to accept and the price will be cheaper, but if you're in a rush even countries that dislike you will make a sale for a premium. You can't buy provinces from nations that are at war, so don't wait around too long. I focused on buying provinces with Centers of Trade, ideally further east and decently far from any other provinces I had. In a matter of a week or so I had expanded from the Persian Gulf all the way around India to Indonesia and the Spice Islands, as well as the south coast of China! Fun fun fun. (Since these provinces are automatically added to your Trade Company you unfortunately can't easily convert their religion, but the unrest isn't anything to be concerned about, and hey, I'm not going to complain about a core that didn't cost me any Monarch Points!)

I did get to complete that Canton mission, which is part of a chain that also involves founding the Emden Company (which required me to annex East Frisia as it's a rare mission that requires directly owning a province without allowing a non-tributary subject), and also related to another one to construct the Kiel Canal. I think I've now finished just about all of the Prussian Missions, except for one that requires Enlightenment and another that requires having a Rival.

 

 

My single biggest war of this period has been the one against Spain, the #2 Great Power and my erstwhile ally. I had declared myself the Economic Hegemon after consolidating trade over Europe, which adds a big malus to every non-subject relationship. The Mamluks were willing to stick with me, but Spain was not. I spent several years fabricating claims on them while waiting for our truce to expire. Spain is huge in my game: besides Iberia they also have Sardinia, Sicily and the southern 2/3 of Italy. Oh, and they're the biggest colonizer in the New World and have numerous island colonies throughout the Atlantic and Indian Oceans.

 

 

This was a very fun fight, a smaller-scale version of World War Zero. Much of the action took place in North America, where my disloyal ex-English subjects were forced into defending their territory against the huge might of the Spanish colonies. My own force here was just around 22k or so, enough to win any single engagement but no match for the consolidated forces of the colonies - oh, and of Spain proper, since as usual Spain had most of its army on the other side of the planet. I ended up focusing around the Cascadia region, sieging down Pacifico del Norte and keeping the capitals of English Cascadia and English Mexico free. The Spanish armies focused on Newfoundland, which was fine.

The Mamluks were busy fighting QQ for the first part of the war and so didn't contribute much, but I couldn't blame them, since I'd bailed on the QQ war after a year. Somewhat like the Denmark war, there were major chokepoints along the Italian peninsula, so even though the HRE vassal swarm had a big numerical advantage our progress was relatively slow.

Fighting in Iberia was more fun. I'd accelerated the timeline for kicking off this war once I saw that Spain and Portugal were already fighting one another. Portugal was Defender of the Faith, and I wasn't sure if they would defend Spain, but definitely not if they were already fighting! I forget what the proximate reason for this war was, but I think it was a New World colonial conflict that had pulled in the overlords. The Spanish side was a lot larger, but Portugal was making big gains, including occupying much of western Iberia.

The rest of us poured in through Catalonia. Portugal won the race to siege down Madrid, but I think that's OK; there's a -5 penalty to peace acceptance from controlling your own capital, but I don't think it matters if the capital is held by an enemy in your particular war or any other war.

I was able to start getting ticking warscore early from a province in northern Italy, and left most of Naples for my vassals to sop up while I focused on taking Mediterranean islands and things. As with most of these wars against large powers, I didn't want to struggle all the way up to 100% warscore, so I peaced out once we had Iberia and Italy and the other easily-reachable lands under control, which I think was around 50% warscore. Once again I focused my demands on taking islands, which gave me an even more significant expansion of my range; thanks to my spending spree with trade companies, I was able to reach all the way to Nan Madoll. I was more cautious about taking land in Europe proper. I took a single province in Catalonia; my plan is to convert it to Protestantism, add it to the HRE once I can extend the HRE out there, and then release that as a vassal and subsequently feed most of the remainder of Spain proper to it. Likewise, I took the northernmost province of Naples, and plan to do the same strategy with that. I had claims on much of central Italy and around Avignon. I'm holding on to some of these for their Great Projects, others I'm giving to vassals in the area.

 

 

Spain is much more powerful than England ever was, and it would take a lot more wars to take them down, but it's still my long-term hope to get to take their New World colonies as well. And probably eventually Portugal's as well, but that's still a ways off.

The last country on the clock, at 8 o'clock, is France! I've been fighting them a lot over the centuries. I win every war and they keep getting a bit weaker and weaker, but they've held together better than my other punching bags. This one was a 1-2 combo of France and Venice. For once I wasn't attacking France for its own land: rather, I wanted the Ivory Coast, which they dominate, so I can steer more of that trade from Seville to the English Channel. While the remaining French lands in France don't interest me much, the global French empire is tempting.

Separately, my other erstwhile ally Venice has been significantly diminished, but remains a thorn in my side. I dearly want to push them into the HRE, and I also want to reclaim the eastern Mediterranean islands they hold. Venice no longer has their powerful alliances of the past, but they were guaranteed by France, so I would need to take them both down in the same fight. This go-round was a lot easier since my navy now outnumbered theirs. I blockaded their Italian provinces while my HRE vassals and my own armies sieged down their forts, then we sailed east. I had hoped to take their islands in the previous war, but had been thwarted since I hadn't conquered their fort in Rhodes. This time around they had all of their remaining troops, a healthy 34k, waiting on the island...... of Crete. I snickered, parked my heavy ships outside Crete and brought my cannons to Rhodes, thankful that I wouldn't need to worry about a naval assault.

The most important action of the war was happening a continent away, though. I had previously staged a sizeable stack of 40k troops in my lone province in Africa that I had previously taken from Denmark. France controlled the entire Gulf of Guinea coast from modern-day Liberia through Gabon. Their own army was just around 30k and no match for my well-drilled Prussians. This ended up being a bit more cat-and-mouse than I had expected: after ambushing them early on, they fled inland to Mali, but later came back and wiped out my small 2k stacks I'd left behind to siege the coast while my main force was sieging Benin. I left a token presence on the Benin fort and raced back to pummel them again, eventually driving them down to their war allies in Kilwa. A combined French/Kilwa assault might have managed to dislodge me, but they never joined up, and I was able to fully occupy all of the French African lands.

The fight in France proper was more of a joke. Their small army hid behind their remaining zones-of-control while we invaded them from three directions. They were able to get off a few successful snipes against smaller stacks, but ended up being utterly annihilated.

I had to be extra-careful in timing the end of this war. France was the war target and Venice the co-belligerant, and I definitely wanted to separate-peace Venice to get maximum territory and minimum truce time from them. But much of the land I was planning to take from Venice and France was earmarked for my HRE vassals to take over or for new subjects I planned to manually release. Since I was still coring land from Muscovy and the Mughals, Venice alone would put me well over 100% Overextension, but I wouldn't be able to transfer territory until I was at peace. So I had to wait until I was at a good stopping point for both wars early in a month, peace them out back-to-back, and immediately set about granting provinces.

This ended up being a kind of inverted mirror of my normal war-ending process, where I'm picking and choosing which provinces to take from a victor: now, I was picking and choosing which provinces to surrender to a vassal. As noted above, my general preference is to grant provinces whose culture I don't accept to a vassal. The range for this is pretty short, though: the vassal needs to share a land border or be within a single sea zone to take the province. I ended up needing to hold on to some provinces I was hoping to ditch, notably the poorer Mediterranean islands. As a result, I ended up also needing to grant a couple of wealthy Francien provinces to my vassals in order to bring my Overextension below 100%. Overextension events are nasty, there is a lot of stuff you can tank for a while in this game (inflation, governing capacity, loans, stability), but overextension is a strict no-go for me.

 

 

So, that's it for my wars!

Internally, the HRE remains at peace and continues growing. I'm now up to something like 105 Princes in the Empire. A nifty pseudo-exploit I read about online is that you can revoke the reform to revoke the Privilegia, and then take the reform again, which will re-vassalize any princes you've added (forced) into the empire since the original Revoke. I did that once, and it was great, but since then I haven't been able to re-revoke revoking the Privilegia. The tooltip says that an emperor can only revoke a single Reform in their lifetime, even though I'm on an entire new Emperor now, so that seems like a mild bug. But I have found that some of my new HRE princes are willing to accept diplomatic vassalization. I have huge diplomatic reputation from a wide variety of sources, and some additional bonuses from my Idea Groups like Espionage. The princes I can't diplo-vassalize are the ones whose cores I own, which gives an insurmountable -1000 to acceptance. But anyways, most princes are under my vassalage now, with a few random exceptions like Crimea and the Great Horde; I hope to eventually be able to revoke and retake the reform again, but in the meantime we're definitely continuing to grow stronger all the time.

For my next goals, I'm going to continue expanding. I do eventually want to take down Spain and take their colonies; their European lands of Spain, Italy and northern Africa don't feed into the English Channel and so aren't very valuable, but I do really want their colonies, and especially control over the Caribbean. There are also some very valuable Great Projects in Spain that I'd like to own. It will take many wars to take them down.

I'm also gradually making my way east. I have footholds pretty much everywhere now, and will probably follow the standard process of consolidating trade nodes.

Over the long term, I may eventually go to war against the Mamluks, but that's been a very low priority for me. If I do turn against them, I'll probably increase my friendly relations with Ethiopia into a full alliance.

I'm undecided on whether to remain as Prussia or not. They are the strongest military power in the game, but at my size I don't really need to have the strongest units, I can easily outspend and outlevy anyone else. I would like to form Germany, but it looks like I can't do that as the HRE Emperor, and being the HRE Emperor is just way too much fun. I could take the final reform and turn into the Holy Roman Empire, but that also seems way less fun than leading the Vassal Swarm. I'm vaguely mulling over forming the Roman Empire; that would definitely require me conquering the Mamluks, and also integrating most of my southern vassals, but could be really fun. If I'm still playing in 1820, I might do these things and also consolidate the HRE just for any achievements.

Jhereg

Just a quickie post here noting that I've finally started reading Steven Brust's Vlad Taltos series. It's been on my reading list for a while, but my library doesn't carry it and I only recently picked it up when I needed to fill out a minimum-shipping amount for an unrelated purchase. I ended up getting "The Book of Jhereg", which collects the first three novels in a single volume.

 

Before getting into the plot, some non-spoilery comments: one of the many things I'm enjoying about this series is that it is highly episodic. A big part of the reason I don't read fantasy any more is because  I'm frankly done with embarking on Volume One Of A Twelve-Part Series That Isn't Finished Yet. For these books, each is its own nicely self-contained arc that wraps up by the end. The main character continues between the books, and you gradually get to learn more about the world, but the actual story resets on each new volume. The closest analogy I can think of is something like Discworld or the Robert Asprin Myth books, although those are more satirical.

The books are also not written in chronological order. The first novel, Jhereg, chronologically occurs after the second Yendi and before the third Teckla. In his introduction, Brust says that he feels the least qualified of anyone to answer the question of what order to read the books in since he went to great efforts to make each book stand on its own; but he notes that most fans seem to recommend reading them in the publication order.

MINI SPOILERS

I found myself thinking of the character Silk from David Eddings' Belgariad while reading this book. Vlad is pretty amoral: an assassin by trade, now a minor crime boss who oversees illegal gambling, extortion, racketeering and other nefarious activities. But he does live by a certain code. In this world (if it has a name I've forgotten it), humans are also called "Easterners" and are a lower class. Society is dominated by Dragaerans, who live for thousands of years and have superior abilities. The Dragaerans are divided into a dozen or so clans/factions/races, each named after a (fantasy) animal and embodying a trait associated with that animal. Dragons are honorable, Teckla are cowardly, Dzur are fierce, and so on. Anyways, Vlad has been accepted into the house Jhereg, which is basically the Mafia of this world. He's in that in-between place where humans don't trust him because he's with the Dragaerans, the Jhereg don't respect him because he's a human, and other Dragaerans don't like him because he's with house Jhereg AND a human. Thanks to his cunning, resourcefulness, tenacity and a lot of luck, Vlad has managed to advance in this world and build up a little fiefdom for himself; but we learn that he's mainly motivated by a deeply-buried hatred of Dragaerans and a desire to improve the lots of humans. He refuses to ever "work" (i.e. assassinate) on humans, and so has a semi-sanctioned way to ply his trade on people he dislikes.

So far I'm enjoying the worldbuilding in this series. It's different enough to be interesting, but doesn't have the overwhelming drink-from-the-firehouse feel of a lot of modern fantasy. We've gotten to learn about a couple of gods, a couple of historical incidents, a few animals, and so on. There's more... hm, maybe close-up worldbuilding than far-away worldbuilding, if that makes sense. Vlad will make offhand comments about some previous adventure he went on, such as entering the Paths of the Dead and finding Spellbreaker, or getting to know Aliera. Some of those may be future books, or they might not be, but it adds to the texture of the character rather than the world, and further strengthens the episodic feel of the series.

The magic system is interesting, too. So far we've heard about two forms of magic. By far the biggest one is Sorcery. This draws on mystical power from The Orb, a magical artifact held by The Empress (or Emperor). Any Dragaeran in the empire can draw upon the power of The Orb, regardless of where they are or what they're doing. The greatest utility in sorcery seems to be teleportation, but it can also be used for telepathy and standard zapping and shield spells. Interestingly, if a human joins one of the houses of the Empire (as Vlad's dad did when buying a noble title in House Jhereg), they gain access to the Orb and can learn to become sorcerers as well; so far the book hasn't explained how or why this works. (Sorcery seems to actually be kind of a mix between what I normally think of as sorcery and arcane magic: you need access to the power by birth or granting, but also need study and practice to master it.)

Far less well-known is Witchcraft, an indigenous practice of the Easterners / Humans. This is a completely separate system and we haven't seen as much of it, but it seems to be based on living matter more than pure energy. A witch can collect pieces of a person's hair and use witchcraft to track them, for example. This is an occasional ace up Vlad's sleeves, as most Dragaerans don't even consider witchcraft when preparing their defenses.

MEGA SPOILERS

I really enjoyed the first two novels, Jhereg and Yendi, as being pretty light and fun reads. They're well-written and have nice twisty plotting, feeling more like a noir mystery (maybe something like The Glass Key) than a typical fantasy adventure. I mentally classified them along the same lines as something like Kage Baker's Company books or Charles Stross's Merchant Princes.

I was also a little surprised, since I think I had first heard of Brust in the context of leftist fantasy writers, and I really couldn't detect any traces of leftism in these books. My only previous experience with Brust had been the excellent historical fiction political thriller spy novel Freedom & Necessity that he co-wrote; that book had frickin' Engels in it and was largely about the Chartist movement, so the politics were easier to discern there. I wasn't upset to find the books apolitical, just curious.

That all abruptly changed with the third book Teckla, though. This was a hard book to get through - the writing is still really good and clear and nicely paced, but emotionally it's way more challenging. Like the earlier books the plot concerns an assassination, but this time the main problem is the slow-motion disintegration of Vlad's marriage with Cawti. We first met them in Jhereg as a happily-married couple, and in Yendi saw their whirlwind passionate romance, and it's extra-painful to watch things turn cold and brittle between them. There are arguments, loaded silences, effortful conversations, sitting or lying together with no affection. We only see Vlad's point of view, but it's filled with self-loathing, and as a reader I tended to sympathize with Cawti.

The germ of this turmoil is politics. Cawti has become involved with a group of Easterners who are seeking to improve their lot in life: challenging the Dragaeran-dominated system that keeps social and economic power in the hands of the elites, and condemns the Easterners to living in dangerous slums. Vlad seems outraged that Cawti got involved without letting him know, but his main self-proclaimed motivation is keeping her safe. A human named Franz associated with this group was assassinated after Vlad refused to take the job of killing him, and it seems likely that other members of the organization will be targeted as well. The personal conflict starts off with Cawti being upset that Vlad wants to control her actions and movements and Vlad is upset that Cawti is acting secretly and recklessly; but it gets significantly harder once they realize how far apart their values are. Cawti believes in the righteousness of the struggle to improve society, while Vlad believes that change is hopeless and meaningless, that the best one can do is see to their own security and that of those around them.

Cawti and Vlad are talking past each other for most of the book, arguing about different things. Similarly, we learn that the factions are talking past one another as well. Kelly and his clique, like Cawti, are working towards long-term social change; the Jhereg opposing them is primarily concerned about the immediate impact on his business concerns, particularly the decline of his prostitution revenue as the Easterners have driven his pimps out of the city. Kelly, Cawti and the others assume that they're being opposed by counter-revolutionary forces, but they aren't, at least not intentionally so. Likewise the Jhereg think that killing Franz will send a message to stop interfering with their business, but that message is not at all received, because the Easterners don't see what they're doing as impacting business.

The main reason I wanted to write this blog post is to note how much I love how politics are discussed in this book. Our main point of view, Vlad, is highly critical and skeptical of the politics espoused by Kelly, so we're not getting a direct authorial endorsement of them. While he's slightly more sympathetic towards them by the end of the novel, he still doesn't agree with them, so it also doesn't feel like a straw-man. We can see the flaws in Vlad's attitudes and thinking towards Cawti, which primes us to question his political positions.

I think the thing I like the most (well, "like" probably isn't the best word, more "appreciate") is the actual political arguments. This isn't some Socratic dialogue where ideas as fleshed out and thoroughly explored. It feels much more realistic, where Vlad will just kind of zone out when he starts hearing something he disagrees with, will start thinking about what he's going to say next, and just kind of mentally go "blah blah blah." The big triumph isn't that Vlad comes around to Kelly's way of thinking, it's that Vlad starts to actually pay attention to what he's saying at all. (Interestingly, it seems like the "hook" to start paying attention is when Kelly starts discussing a poet they both enjoy, which supports my general sense of art being particularly efficacious in reaching skeptics.)

In sum, this is pretty much the opposite of "The Iron Heel", which had a fantastic concept but the absolute worst political discussions in any book I've ever read this side of Ayn Rand. I'm very curious to see whether Vlad continues to engage with the social and economic issues Kelly and Cawti care about, or if this is a cul-de-sac in the evolution of his character.

END SPOILERS

This ended up being a slightly longer post than I expected! I'm already looking forward to reading more Vlad books, but again, due to the library situation it may be slower going than normal. I suspect this will be a series that I don't blog about with each entry, but we will see what happens!