Your Revolution Is A Silly Idea, Yeah

I'm approaching the end of Europa Universalis IV! In particular, I have entered the final of the four ages, the Age of Revolutions. It's pretty fun!

I think I left off in the late 1600s, shortly before Enlightenment. Once again I was able to spawn it in my borders. In this game I've avoided taking technologies early, which means I have a good surplus of Monarch Points, so I've been plowing those into development. For the previous century I'd built Universities everywhere and was progressively Dev'ing provinces up to 30 to make them eligible for Enlightenment.

 

For previous Institutions, I used Edicts to encourage their spread but waited as late as possible before Embracing them to minimize the cost. For this one, I went ahead and Embraced pretty early, once it had spread to 10% of my country.  I'm at the hard 1-million-Ducat money cap, so money is completely meaningless now, and I welcome any chance to spend it.

 

Let's start at 9 o'clock and continue clockwise:

 

I was able to finish eating Spain. As one of the only Catholic countries left besides the Papal States they didn't have any significant allies, and over successive wars I'd gradually taken away their coastal provinces. Again, the key to fully annexing a large country with subjects is to declare on an ally (in this case, the Papal States) and co-belligerant them, which will let you fully annex them without getting the huge acceptance malus from a nation annexing itself. By this final war my New World holdings included the former English and Portuguese colonial nations, which were each smaller than Spain's American colonies but combined could hold their own. The hardest part of this war was actually taking a level-8 fort in the Andes that Spain directly owned; I think they ran out of real estate before they got enough provinces to make a Peruvian colony. South America was Spain's strongest presence so this ended up being slightly tricky: I did some dancing with large armies of theirs while my English and Portuguese subjects came through the American isthmus, started siegeing once I had some breathing room, and ultimately ordered some artillery barrages to break through the walls. 

 

Once Spain fell, I was de-facto the sole independent power in Europe. Decades later Sweden ate the one province Denmark, the Papal States still exist as an OPM, and I eventually forced Muscovy into the HRE.

As I expand outside of Europe, I try to use those HRE vassals when possible to spread around Overextension and make better use of Accepted Culture slots. Perm was a relatively late addition to my family, but in terms of square mileage it's one of the biggest nations on the map now, snaking out to Vladivostock and holding big chunks of Mongolia and even China. Astrakhan and Circassia are similarly making inroads into Asia.

I'm mostly focusing on the other Great Powers, especially the highest-dev ones, which end up needing multiple wars to take down. The Mughals were geographically the largest empire for much of the game. Their territory is shredded now, and they have less than half of their largest extent, but even with all that they still are large.

 

I was curious about where and how the Center of the Revolution would break out, and what to do about it. From reading online, some people will intentionally try to spawn the Revolution inside their territory, so they can crush it and remove it immediately. Much like with Absolutism, though, that requires tanking a lot of things I would ordinarily want to do well: having low Stability, lots of loans, low prestige, etc. I think that in my Portugal game the Revolution spawned in France, which led to a fun and exciting war against my one-time ally. Here, though, I had so dominated Europe that almost no free nations remained, let alone any other Great Powers.

So I was a bit surprised, though I shouldn't have been, to see the Revolution spawn in Korea. Korea has been a very strong and boring nation for as long as I've been aware of it: they're basically at their historical borders, have some strong alliances to deter aggression, have highly developed provinces and can keep up in institutions. 

 

Even though the Center of the Revolution spawned in Korea, they have not yet become revolutionary. This has been a bit of a pain. The Revolution has spread to many of my provinces in Asia, including in China, Indochina and the East Indies. So it's the first time in the game that I've had to deal with serious and sustained rebels, as the +20 unrest from my high Absolutism outweighs the many benefits I get from things like Humanism. Fortunately I haven't been getting actual Revolutionary rebels, but still some separatists and other annoying types. I'm falling back on my Portugal-era strategy of spreading around Fortresses to minimize the hit when rebels spawn into an undefended area.

The first nation to flip revolutionary was Wu. I wasn't around for the Mingsplosion, but it looks like Wu and Yue emerged as the biggest heirs, along with Liang and a few smaller nations. I had previously pounded Wu shortly after they took the first Celestial Reform and tanked their Mandate. When a nation becomes a Revolutionary Republic, they dissolve any pre-existing alliances they had, so if you declare quickly you can get a nice clean war in. 

 

"Crush the Revolution" is a really nice casus belli. It reduces War Score Cost, but more importantly for me, it seems to also eliminate Unjustified Demands, meaning you can take all provinces for 0 DIP.

One slightly annoying quirk I encountered in this playthrough: if you are a monarchy and you border the Revolution Target, you get a "Counter-Revolution" malus that increases Unrest in all your provinces (and I think has a few other negative effects). If you declare war on the Revolution Target, this should be replaced with a "Reaction" modifier that instead gives a net reduction to your Unrest. However, "Reaction" is only applied if your capital is on the same continent as the revolution target's capital. So for me, as a European with substantial Asian holdings, I had only downsides and no upsides.

But anyways, I defeated Wu a second time, taking much more territory from them. I try to be strategic about timing my wars, more specifically the end of them. At this phase of the game, part of me wants to always be at war, spinning up my next conquest as the previous one is winding down, especially since I have armies all over the world and big enemies with Level 8 forts can take longer to crack than their provinces take to core. But if a war ends and I have a few days or more of peace, I can grant provinces to my vassals, which lets me take over 100 Overextension worth of territory in a peace deal without actually having to keep it on my books. I can also release new vassals, which I almost never do these days but situationally can be very helpful (more on that later). So anyways, at the start of a war I'm already thinking about how long the war will take, how much overextension I expect to have (with that war, any other current wars and any provinces being cored that may not finish), what other wars I want to start, and based on all that whether I should have a rolling ladder of wars or fight this one to the finish and take a breather.

The revolution target had been crushed, but the actual revolution still lived on, as Korea's Center of Revolution continued its propaganda, bringing more disorder and chaos to my Asian holdings. Only a year or so after the Wu monarchy was restored, Japan was the next nation to turn Revolutionary. I'd been concerned about taking on Japan, as they had unified the islands and did not have any footholds available for naval insertion. But, again, a nice advantage is that all their existing treaties were canceled. Also, at the start of the Revolution several large "rebel" armies are spawned, and in this game those armies were similar in size to the regular armed forces. Thanks to my naval presence in the area, I could see that Japan's armies were all fully in the south of the country fighting off the rebels, so I quickly declared war and landed a ~40k stack on Hokkaido. Naval landings can be nail-biting experiences since they last over a month and quickly turn ugly if your enemy can move defenders into position prior to you touching soil. But they landed and took the province, so I could swiftly follow with the remainder of my invasion force.

This ended up being... I don't want to say necessarily an "easier" war than Wu, but maybe "cleaner": thanks to the constrained geography of Japan, I could steadily march south, siege forts one by one, and decisively crush their army outside Nagasaki, instead of chasing remnants all over the Asian Steppes and Siberia. Because of the -50 malus revolutionary targets get to accept a peace deal, you kind of need to fully occupy all their territory to push from 99 warscore up to the decisive 100; but once you do reach 100, you can take advantage of the reduced cost of warscore and diplo and take enormous swaths of land. In a single war I was able to take more than half of Japan, including all of its centers of trade, Great Projects, and straits, all in a contiguous line across the islands. I'll need to return and finish the job at some point in the future, but Japan's status as a Great Power has come to a permanent end.

After the first Wu war, they got separately declared on by both Yue and Manchu to claim the Mandate of Heaven. Yue was quite a big larger and more powerful than Manchu, but I think Manchu got a head start, and in any case Manchu was able to finish its war and seize the Mandate before Yue. But, Manchu doesn't have Beijing, Canton or Nanking. Oddly enough their Mandate has ticked up a bit over time even though their monthly rate is shown as negative; I've never played in China so I'm not super-familiar with the mechanics, I assume they're getting some Events that grant Mandate or maybe there's a Government transaction or something available to them. Part of me wants them to get the Mandate high enough so they'll take a Reform and then I can quickly declare on them while their forces are weak; but as it is I'm happy just waiting while it stagnates and eventually decays.

I did get to fight against Yue, though, when they became the third and (so far) last nation to turn Revolutionary. This was a bit more like the Wu war, except I had a much bigger footprint in China and so had a lot more room to position and maneuver my troops. Perm and Astrakhan were actually decently helpful in blocking out the north of the country while I focused on fighting and sieging in the south. As with Japan I was able to take a ton of land, but this time I could also give a lot of it away to Perm.

Somewhere along the way, I had forgotten one rule for optimal play. I had gotten used to giving my Holy Roman Empire vassals the Centers of Trade in Europe - since I use "Divert Trade" on all of them I end up with all the Trade Power anyways, and this way those centers can have an accepted culture and maybe some additional development. But I kept automatically doing that in land grants in Africa and Asia as well. I really should have kept those for myself, so I could turn them into Trade Companies, and just given the rest of the provinces to my vassal. Not a huge deal, just something I should remember for the future.

 

 

The East Indies has been a surprisingly slow point of expansion for this game. Brunei had an absolutely massive navy, and I was shocked when their swarms of galleys torpedoed my large fleets of heavy ships. I was able to declare later when Brunei and the Mamluks went to war against each other; in this game it looks like the Mamluks became colonizers, settling around Ternate, Tidore and other islands. By keeping a careful eye on the larger Brunei fleets and opportunistically attacking, I was able to take down some smaller groups of ships and land troops on some islands. I didn't bother to get this war close to 100%, but took forts on enough islands to be able to cherry-pick strategic positions and Centers of Trade. Later on Banjar and some other regional powers piled up on Brunei and I think they've been completely removed now.

 I've now fought a few wars in India, mostly against Vijayanagar but also Bengal. As usual the first one is challenging, subsequent ones are far easier. Most of the Monuments in India are tied to specific religions and so aren't very useful for me, but it is a very rich subcontinent. I don't really care much about production income since I've maxed out my treasury, but it is satisfying to tie up those trade nodes and get free merchants so I can siphon still more ducats away from potential rivals. Oh, and I've completely controlled the coast for a while now... actually, I'm away from my computer but I think I have everything from the Persian Gulf through Malaysia directly under my control.

Africa has been pretty quiet lately. I did finally succeed in a war against Mali, who were briefly a Great Power but have now been reduced to about six dispersed provinces. I grabbed a few provinces from Air and Yao as non-co-belligerants. I need to fight another war against Zimbabwe at some point as they still have some Centers of Trade. One of the more interesting wars was against Kilwa, which is the one place on Earth still under Terra Incognita. Interestingly, you can take provinces in a peace deal even if you can't see them on the map, so I prioritized taking those invisible provinces (which of course are instantly revealed once you own them). I can take the visible ones later.

The most interesting thing in Africa, though, has been Ethiopia. I think I mentioned this in a previous post, but a long-term ambition of mine has been to form a Personal Union with Ethiopia, a Christian nation that I can feed land to in Africa. I've had a Royal Marriage with them for ages; I never entered into an Alliance with them since I knew that would complicate an eventual succession war, but I did Guarantee their Independence as the Mamluks were nibbling away at their territory. Most importantly, I kept one Diplomat constantly Currying Favors with them. It took a long time for this to tick up since I didn't have an Alliance, but it did progress; once it reached 100, I would trade some in for Trust and continue growing.

 

Their leader was really, really old, but just wouldn't die. But his heir was aging, too. I think that at one point the ruler was in his 80s and the heir in his 50s. Finally I got the notification that they did not have an heir - perhaps a hunting accident? I immediately Traded Favors for Heir and got a Chotek in the line of succession. I nervously monitored the dynasty. Younger heirs are less likely to die, but still can die. And heirs that accede to the throne often come with their own consort and heir: not a huge problem as it makes the line secure, but I was running low on time to get the heirless gap I needed to make a play for the throne.

Still more time passed, and finally the old man croaked and my Chotek acceded to the throne. Without an heir - hooray! I claimed the throne - I now had my Casus Belli, but had to wait a month to make a move. After that month, I tried to declare the war - but of course I couldn't declare on a nation whose independence I had guaranteed. Fine, cancel the guarantee. Wait another month. Ethiopia's rival Aljuraan declared a conquest war against them. The new king was probably working overtime to try and sire an heir of his own. The month was up. Declaring the war would mean breaking a truce, for a painful -3 Stability... but I didn't care. The dream was coming true.

I'd positioned my Afrika Korps outside the southern border of Ethiopia. They had a lot of Level 8 forts, which of course are a pain. I was also in a bit of a race against Aljuraan: I would need a lot more war score to enforce the personal union than they would need to take some territory, and only one of us could siege each fort or province. I plopped a big stack down on the nearest fort, then sent another big one on a long detour through Mamluk land towards the Level 9 capital fort. Aljuraan was making good progress, but fortunately seemed content to take regular provinces while they chased Ethiopia's army, for the time being leaving forts in my control. Unlike them, I preferred not to fight any Ethiopian armies if I could avoid it, as they would shortly become my own allied armies.

It all went pretty well. Shortly before the end of the war the Europeans from the Holy Roman Empire showed up and managed to contribute some valuable artillery to a few sieges. I took the Personal Union the moment I could, and was pleased to see that I was correct and that I could now join in the Ethiopia/Aljuraan war as the new war leader. (I think something similar had happened previously when I Revoked the Privilegia and abruptly became the defender against Muscovy's invasion of Rostov.) Ethiopia, Prussia and the Holy Roman Empire all now had huge armies right outside Aljuraan, and we steamrolled them. I think it was like a month-long war in total. I had been thinking of just taking a chunk of them, but we were able to fully annex them. And then I could turn around and give a lot of that territory back to Ethiopia - see, aren't you glad to be in union with me?

 

 

By far the biggest development recently has been the war between Prussia and the Mamluks. They had been my most valuable and powerful ally for much of the game, and they are still the #2 great power even after losing two decisive wars against me. I don't have any good justification for turning on them, it's just a pure power struggle. I think I cleared my alliance by declaring on another ally of theirs, or possibly another Sunni nation. (In the past I had navigated those situations by first calling the Mamluks in as an ally in another war, in which case they are not eligible to receive a call to arms against me.) Once the alliance was over and the truce cleared, we began duking it out.

They have a lot of development, so even after getting a really high warscore and taking their capital I can just take a fraction of their empire each time. I'm trying to remember the timing... let's see. I think that, prior to the first or second war, I released the Ottomans as a one-province minor vassal in Byzantium. Since the province was in the HRE they popped out as an HRE Prince. The province was Protestant, but the overall Ottoman cores were Sunni, so it came out as Protestant; in the past nations I've released as Catholic or Orthodox will convert on their own to Protestant if all of their provinces are already Protestant, but I think that only works for other denominations in the same religion. I was hoping that I could use the "Force Religion" Emperor Action in Diplomacy to convert them.... and it worked! I am very amused to have my Protestant Holy Roman Ottomans as my vassal princes.

 

The Ottomans haven't been a contender for centuries since I drove them out of the Balkans and Greece and the Mamluks ate them from the rear, but they did still have cores on all of Anatolia, so I was able to very cheaply get back that huge chunk of real estate from the Mamluks.

In the more recent war, which I just finished, I finally did what I should have originally done and taken all of their islands: they had the Spice Islands and various other East Indies spots. I also grabbed Crete after sieging down a level 2 Fort. Thanks to Ethiopia being on my side, we could take their claims and cores as well. And I had a lot of other odds and ends that I granted to my Black Sea princes. I did snag a lot of provinces with tempting Great Projects. Unlike India, most (not all) of the Great Projects in the Middle-east don't have religion requirements, either being free to everyone or requiring an accepted culture. It will be a while until I can core and convert all of them, but when I do, I'm looking forward to blazing through those projects. I'm probably most excited for the bonus Missionary from Jerusalem. Oh! And I also took the provinces required to start construction on the Suez Canal, which is the third and final canal I have remaining to build.

At this point, I'm feeling like I'll probably make it to 1821 after all, as there's less than a century to go. I'm less certain how hard I'll work towards getting a World Conquest. Right now I'm just taking on a rotating slate of Great Powers and working my way down the list, but there are a lot of minor nations out there. I'm sure that I militarily could take them, but dealing with super-high overextension and rebels does not sound very fun, and I don't know if I have enough time to properly digest and integrate the whole world. I also could try doing more stuff with non-HRE vassals; I've been avoiding them since my understanding is that they will take the strength of HRE vassals into account when calculating liberty desire, but I did end up with a western African vassal and their Liberty Desire is pretty manageable, so now I'm wondering if that could be viable after all.

 

Anyways! I'm continuing to love the game, and will most likely have one final post in the future before I put this campaign to bed for good!

Before Enlightenment

I'm continuing to love my current Europa Universalis IV game, continuing as Prussia into the late 1600s. It's had a very different rhythm from my Portugal game, with much more warfare and a stronger European focus. As I head into the endgame they are growing more similar, as I'm now leading (conquered) subjects in the New World and fighting various wars in Africa and India to control trade. It remains to be seen if I'll see this game all the way through, but so far I'm having a blast.

As I expand, the "clockface" organization from my previous posts doesn't make as much sense, but I'll try doing something similar. Let's start off with Persia and India. For a while my influence extended to the shores of the Black Sea, as the edge of Europe and as far as the HRE can expand. My last post ended around the time of my first war against the Mughals, who are mutual foes with my allies the Mamluks. The Mughals at one time had the (geographical) largest empire in the world, stretching across a vast territory; but it seems like they were badly overextended, and there would be times I would check on their status and see that they're defending against five separate wars.

Part of my motivation was to soft-block the Mamluks from extending into Persia and India, and that's kind of worked. We thrashed the Mughals and I had a ton of war-score to spend, but they also had an enormous empire, and I ended up taking a very snaky chain of provinces rather than clean borders, prioritizing Centers of Trade and Great Projects, and secondarily coastal provinces and strategic chokepoints. After this kind of evisceration it's nearly impossible for an AI power to recover, and I'm sure that's contributed to their ongoing woes.

Dealing with the conquered lands was slightly more tricky than usual due to the sheer distances involved. If a revolt broke out, it could take a year to march troops over from Prague to deal with it. I think this is the first part in this campaign where I've started to maintain permanent standing armies in distant territories. I know they'll eventually be used in future wars, and in the meantime they can drill and put down revolts.

In general I've been having an easier time with unrest in this game than in the Portugal game, thanks to taking Humanist ideas, so it's pretty rare for me to worry about revolts, but when they do happen (so far only once or twice since Absolutism) they can erupt all over and be a pain. I think I ran into trouble when I had high Overextension plus lots of Separatism (both from big conquering sprees) along with unusually low Legitimacy, which in turn decreased Tolerance. Now that my Legitimacy is high again I haven't run into problems, even when actively converting recently-conquered provinces.

Apologies for the tangent / stream-of-consciousness, but while I'm talking about Legitimacy: One thing that initially annoyed me after Revoking the Privilegia was the endless stream of Royal Marriage proposals I received from my new vassals. At the start of each new play session I would dismiss or decline literally dozens of them. After a while, though, I started to wonder: why not? Why shouldn't I be loved?

When you accept (or initiate, more on that later) a RM proposal, there's an immediate hit to your Legitimacy, either -2 or -5 depending on the partner's own Legitimacy and Prestige. But then there's an ongoing monthly benefit for as long as the ruler lives: a big but not usually important boost to New Heir Change, a mildly important boost to Improve Relations, and a tiny but very helpful boost to Legitimacy. So after some time the marriage will "pay for itself" in Legitimacy, either about 2 or 4 years, and after that you'll get surplus Legitimacy.

Legitimacy is kind of interesting, in that there's a hard cap at 100 and any surplus value is wasted. It usually isn't terribly hard to get it to 100 and keep it at 100, so I'd been loathe to marry down from it. But if you get a lot of Royal Marriages (which usually isn't an option, except for the Emperor of a Revoked HRE, who doesn't use Diplomatic Relationship slots for vassal relations), then you can get pretty significant ticking monthly Legitimacy, so when it does drop (due to an event or a bad Heir or something), it will bounce back pretty quickly. Keeping Legitimacy high helps a lot with Unrest, and also gives Max Absolutism and a few other things.

The higher Improve Relations is nice. It isn't communicated very clearly in-game, but Aggressive Expansion's decay is largely driven by your passive Improve Relations modifier, so keeping that high will cause AE to melt away before coalitions can form.

Finally, while you don't often need the New Heir Chance, it did embolden me to disinherit a thoroughly average heir. The very next day I got a new heir, a better heir! Let's hear it for my harem of concubines!

So being in this situation of tons of Royal Marriages (I currently have over 80) is nice, but getting there was rough. Legitimacy has a hard cap of 100 and also a hard floor of 0, so once you get down there, there's no penalty to entering into additional marriages. So I went through a long stretch of accepting literally every proposal from my vassals. In less than a year I was all married up and started ticking up in my Legitimacy. I had planned this around the time that my Empress-Regent was about to step down and the new Emperor Heir would take the throne; but as I learned to my chagrin, you can't Abdicate while you have low Legitimacy, which I would think would be the whole point! I think I ended up burning some Military Mana on Strengthen Government just so I could get back over 50 Legitimacy and switch over. Abdicating gives a -20 Legitimacy hit, so my heir took the throne at 80 instead of 100; but again, thanks to all the active Marriages, I was able to get back up 100 before too long.

 

 

Oh, and finally a note on timing: you can either send or receive marriage proposals. The marriage lasts for as long as the person who sends the proposal. So, from the player's perspective, and marriages you initiated will end when your monarch dies, and marriages you accepted will end when the other monarch dies. So, if you want to keep your marriages high, you definitely want to receive and not initiate. This lets you maintain Legitimacy at nearly 100 indefinitely: periodically other rulers will die, then you'll receive an invitation, your Legitimacy will drop to 98 or 95 but will be back up at 100 before long. Going in the other direction,  you'd need to re-marry all 80+ rulers when your ruler dies, which means wading back through the Low Legitimacy morass again.

Final (phew!) observation: at least in my game, I don't seem to ever receive royal marriage proposals from my vassals while we're at war. I do receive marriage proposals from other nations, both in the HRE and outside it, whether at war or not. So lately, after wrapping up a war, I'll usually go for at least a month or so of peace to catch up on any pending proposals before kicking off my next war.

I can't believe I wrote all that in the middle of writing about war against the Mughals!

After the Mughals, I hit Gujarat next. I was now moving into Sunni territory, which is tricky: the Mamluks are my very good friends, and they're also allied to many large Sunni nations, and they're often the Defender of the Sunni Faith, so I definitely don't want to break that alliance (at least, not yet!). But fortunately this is usually pretty easy to work around: I can just declare any other war I want, invite the Mamluks in as war allies with my stock of 100 Favors, and then declare on the original target. A red "X" will appear in the war interface showing that the Mamluks won't honor the call to arms since they're already fighting on my side in another war. Humorously, sometimes I can even call them into that war on my side - I haven't thoroughly tested this, I think it works if they received the Call to Arms from their Defender of the Faith role, but not if they are allied to the war target.

Gujarat was an easier war than the Mughals; they were also large and powerful, but not nearly as vast and sprawling, so we could do a few more focused wars without chasing them all over the globe. I think that it's a bad sign when my HRE minions have time to get all the war to a war in Asia and meaningfully contribute.

As with the Mughals, I prioritized trade provinces and Great Projects, but also strategic positioning of borders: in particular, I wanted to get good borders on my next target, Vijayanagar, so I could Fabricate Claims on them. Having taken Espionage and Aristocratic Idea Groups, I can take claims on multiple large areas of provinces in a very short amount of time. I've been leaning heavily on the Conquest Casus Belli for most of my recent wars: I think the new Imperialism CB may technically be better since the War Score Cost is low, but what's great about Conquest is that you pay 0 Diplomatic mana for any province you have a claim on. This is especially great against wealthy European powers like Spain, but is handy everywhere.

Once my rebellions were under control, I declared on Vijayanagar. They had managed to consolidate pretty much the entire Indian subcontinent, which was pretty impressive; in my previous Portugal game there was much more of a partition. I was pretty shocked at how much territory I could take from them in a single war: I ended up taking the entire Indian coast, as well as most inland provinces with Centers of Trade and some other "pathways" through the north under the Himalayas. I now could walk from Lisbon to Bengal.

In my last post I'd mentioned making use of the Charter Trade Company diplomatic option to buy provinces for expansion. That was really helpful for these Gujarat and Vijayanagar wars, as I could fabricate claims around those provinces to help me maximize my future wars. So far I haven't operated in East Asia; I do periodically Fabricate there as well so I have claims ready to go, but I'm not ready for military action there yet.

My next big target will be Bengal, but right now that's looking like a really tricky war. They're allied with Wu, who are the current Emperors of China and have been doing surprisingly well. They're also allied with Malacca, which is allied with the Mamluks; Malacca is the most powerful regional player in the East Indies, we've butted heads a few times there around my Trade Company provinces. Overall this game is lagging far behind Portugal in my East Indies approach, by this point I had totally dominated that area and monopolized production of Cloves, but currently I just have a couple of tenuous footholds and am blocked from easy expansions by powerful webs of alliances. Which isn't a huge deal just yet, just something I may eventually deal with.

Phew! Moving along the clock dial:

I've been getting more active in Africa. The most important action took place nearly a century ago when I took control of the Ivory Coast from France and Denmark, letting me drive most of the world's trade to the English Channel and away from Spain, Portugal and France. Since then I've made a few attempts at breaking into Mali (who are allied with Denmark) but have not yet succeeded. Mali has a huge army, is up to date on tech, have high-level forts, and most of their territory is Terra Incognita so movement in there would be incredibly slow. They also have strong local alliances, so making them a co-belligerant will pull in Air, Yao and others. I usually C-B them intending to take territory, but end up fighting defensively on the Ivory Coast, eventually defeating their armies but unable to take land from them. Maybe next time!

Spain colonized most of South Africa, and I was able to take that from them - more on that later. This is one of the more satisfying parts of the game, as whoever owns the Cape of Good Hope province automatically dominates that Trade Node and will get a free Merchant, which they can use elsewhere since trade from here only flows to the Ivory Coast.

Between Mali and the Cape, I fought a war against Kongo. I already dominated the Ivory Coast but they did have a few Centers of Trade that I wanted for completeness sake, plus they have a nice Monument in Mambuka. This was a relatively straightforward war, with the mildly interesting wrinkle that Kongo was the one Catholic nation in Africa. I focused on taking their provinces, but in the future I may try and turn them Protestant.

The war I just won before starting this post was primarily against Zimbabwe, but pulled in Mombasa and Mahafaly as co-belligerents and Aljuraan as a non-co-belligerent. This war was all about trade. I already have a pretty good route to move trade from India through Astrakhan to Crimea to Kiev and on into my totally-dominated European funnel to the English Channel. Most siphoning happens in Aden, Aleppo and Basra, where the Mamluks dominate. This war for the east cost of Africa should give me very strong control of the Zanzibar trade node, which may help in drawing some other trade away from the Aden path to Alexandria. Once trade hits the Cape of Good Hope I have a straight shot through Ivory Coast to the Channel. Unlike in my Portugal game I'm not routing everything through this, it will mostly be local trade.

Moving on from Africa back to Europe: My main focus lately has been conquering the colonizers. Spain is the biggest priority as a long-term #2 power and the biggest colonial overlord, but Portugal is a lot smaller, and very shortly before my Zimbabwe war I managed to conquer Portugal. I think this only took two wars, thanks to my Administrative Efficiency and multiple nice war score cost reductions.

During my first war against Portugal, I was reminded that there's a huge malus to accept a treaty that would result in the war leader's complete annexation. This is especially painful against colonizers, since even if the mother country is fully occupied, you'd need to siege down like two whole continents to make them accept. The "trick" is to declare on one of their allies and make the colonizer a co-belligerent, since the ally won't have the malus for sacrificing their friend.

But I'd been too successful in isolating Portugal and they didn't have any allies left after Spain annexed Guanmar in a previous war. Fortunately, Portugal was the Defender of the Faith. Unfortunately, I'd also been too effective in stamping out Catholicism in Europe. The only independent Catholic states left were the Papal States, who I had a truce with, and Spain, who I also had a truce with and who Portugal hated and wouldn't defend. I ended up getting around this by declaring on the remnants of France, who had fallen into a Personal Union under Brittany, a landlocked OPM in the HRE. I couldn't declare on Brittany itself due to Perpetual Peace in the HRE, but somehow declaring on their junior subject worked.

 

 

Once I was finally able to get into the war, it ended pretty quickly, as Portugal was already exhausted from its previous Spanish war. I took their few remaining inland Maghreb provinces and the rest of Portugal proper, and a single token province from France, but the real prizes were the beefy colonies of Brazil, Rio de la Plata, Mexico and California, which now joined by former English colonies.

 

Now that Town Halls are available I don't really need to worry about Governing Capacity any more, but I've been giving provinces to my HRE vassals when it makes sense. My general priority is:

1. I'll keep provinces with a culture I already accept.
2. I'll keep provinces with Great Projects that I can use (either immediately or after accepting a culture).
3. I'll keep non-European provinces with a Center of Trade or an Estuary. I'll convert these to Protestantism and then give them to Trade Companies.
4. European provinces with a culture I don't accept will go to an adjacent vassal Prince.
5. Provinces that are outside Europe but adjacent to a Prince will get fed to them. I've now "snaked" states like Perm and Astrakhan far east to Siberia, and others like Provence and Catalonia across the Mediterranean to North Africa.
6. Provinces that are outside Europe and far from any HRE princes are kept by me as regular (non-Trade Company) territories. Once I build a Town Hall they're basically free to govern.

One little administrative trick: after winning a war, I'll often get a big chunk of territory, and I might want to keep one or two provinces inside it while giving the rest away. You can start to Core all the territories as long as you own everything that's in range and contiguous to your borders. But, once you give away border provinces, those interior ones won't be considered "adjacent" and you'll need to wait for your vassals to finish coring before you can start to core yours. So you should click the "Core" button for everything you want to keep before transferring provinces you want to get rid of.

I've also been fighting Spain, and those wars have been going well. Spain is stronger than Portugal, both in Europe and the New World, but the Vassal Swarm is incredibly strong, and the Mamluks have been happy to help me out too. In the first war I took all their islands other than a couple like Galapagos that I didn't have range for. Over successive wars I've taken their remaining Pacific holdings, the North African coast, and so on. This has been another great phase of expanding the HRE. In one war, I'll take a single province from Spain that has a core for, say, Leon, and another single province with a core for Catalonia, and so on. I'll core those provinces, convert them to Protestantism, add to the HRE, and then release them as a OPM vassal. They automatically join the HRE as a vassal prince. The UI will say that they release with the Catholic religion, because most of their cores are still in Catholic land; but in my experience they'll almost immediately convert to Protestantism, probably because their one owned province is Protestant. In the next war, I'll fight a Reconquest war, and will be able to take all of the remaining Leonese, Aragonese, Catalonian, etc. provinces. This leaves extra War Score, and my Spy Network will have given me a ton of claims to use to take more lands. Even the ones I take for myself I'll end up giving away as described above; this is a lot cheaper, since I have much more Admin Efficiency and stuff, so I'm better off taking the province and giving it than transferring the occupation and giving directly in the peace deal.

 

 

I think I have one more big war to fight against Spain before finally defeating them and taking their New World colonies, which will put me firmly in control of four continents. I think I'll be able to do that before worrying about their colonies revolting.

 

 

I fought a bit more against Denmark, they're very diminished now and I'll probably be able to add them to the HRE before long. I missed the opportunity to release Norway as a vassal since Norway has a core on a Great Project I already took for myself and want to keep, so instead Friesberg, Mecklenberg and other states have gotten to rule much of Scandinavia.

Muscovy is also a shell of its former self, and as noted above I've granted most of their lands to my far-east-European vassals. I kind of messed up after the last war and their capital ended up in Asia, so I just fought a war to take those Asian provinces and force Muscovy back into Europe. They'll eventually become part of the HRE.

I'm at the point now where money is meaningless. I'll hit 1 million Ducats in the bank before long. I still focus on trade when planning my strategy, which is largely from habit but also helps starve potential enemies and hopefully make future conquests easier. I'm also getting near 1 million maximum Manpower as well. For well over a century I've been throwing bodies into Great Projects to speed their completion. I haven't built anywhere near my Force Limit yet and haven't felt the need until now because the Vassal Swarm can crush anything near Europe and my main armies can handle the stuff outside. However, if I do start a war in China I'll probably need to raise some more serious armies for that... probably still nowhere near my Force Limit, but more than I've had to date.

Let's see, I think that's it! I'm coming up on Enlightenment, and will finally be able to start making use of all the Coal provinces I've been acquiring. I need to refresh my memory on the Revolution mechanic. In my Portugal game I hadn't gotten very involved in European expansion outside of Iberia, until the Revolution started in... I think France? I remember that being an exciting war but the details are fuzzy for me. Anyways, I don't think there are any European powers in my game who could become the Revolution Target. It would be interesting if it happened to the Mamluks or Wu or something. I think there might be some benefit to spawning the Revolution in my own borders so I can more easily crush it, but I'm not sure yet if I want to go down that path.

 

 

I'm also not sure exactly what I'm doing in this game. Earlier I had vaguely thought of forming Rome, which would probably still be doable, but very expensive to annex all the necessary vassals and would require many wars against my faithful allies the Mamluks. Trying for a World Conquest also sounds tempting, but I imagine that could get really tedious. As before, I'll keep playing this game until it isn't fun any more. Fortunately, so far it's still really fun!

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.