Chapter 1074: 1073 Hyperinflation

After the battle was over, and the Japanese Armada was sunk, the Germans spent the next few hours rescuing as many men as possible from the Pacific ocean. Whether they be Japanese or German sailors, those onboard the vessels of the Kriegsmarine did everything they could to save the men whose ships had sunk.

Meanwhile, back in the city of Kufstein, Berengar's war room was lit with celebrations. Everyone was extremely happy with the results of the battle, all except for one. The Kaiser himself was lamenting the loss of not only his warships, but his sailors who had died during the battle. 

The casualties of this war were rapidly increasing by the day. Several thousand sailors had lost their lives in the Battle of the Marshall Islands, while even more were killed during the ground wars of Borneo and Korea. 

Between ten to twenty thousand Germans had died so far in this war, and Berengar was far from pleased with this result. Adelbrand noticed his gloomy expression and approached him with a stiff drink in his hand. 

"I know what you're thinking, but you should be celebrating. It is true we lost several warships, but it was less than we had expected to occur, and at the same time we wiped out two-thirds of the Imperial Japanese Navy during a single battle. 

The cruisers and destroyers that were sunk can instantly be replaced with the older Henrietta-class Battlecruisers and the Adela-class Destroyers which are already in the Pacific collecting dust as we speak. It turns out the wolf packs are far more effective at raiding Japanese shipping than we anticipated, thus those old warships are no longer needed for that role. 

It is clear from this engagement that the Japanese have vastly underestimated our Naval forces. I would recommend taking some time to replenish the losses that the 6th CSG has suffered. While sending the 8th and 10th Carrier Strike Groups to patrol the South China Sea to ensure that Japan can not reinforce and resupply their troops in Borneo.

My Kaiser, you should not fret over the casualties, instead you should worry about winning the war as quickly as possible. So that we may preserve as many of our people's lives as possible. So celebrate today's victory while you can, because tomorrow we will need you to command our forces once more."

Berengar silently listened to Adelbrand's speech of encouragement while drinking from the alcoholic beverage he had been handed. Though he felt a sense of loss at the shedding of so much of his people's blood. He knew that the casualties were an acceptable figure, judging by the fact that they were fighting a properly industrialized enemy. Thus, he silently nodded his head in agreement with Adelbrand's words and joined in with the celebrations.

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On the other side of the world, the news of the Japanese defeat at the Marshall Islands was not met with celebration, but rather with frustration and depression. Itami sat in a chair with a lifeless expression on her face. Ever since that last transmission, she had remained utterly silent. 

Even though she was lacking details about the botched operation, Itami knew in her heart that the Germans had dispatched at least three fleets to trap her armada and eliminate it in a single battle. If Germany could spare three fleets for the war in the Pacific, despite having an empire on the other side of the world, then it meant that she had overwhelmingly underestimated the might of the Reich.

Thinking about it now, the Germans have sent at most five armored divisions to Korea and Borneo, which she doubted was even half of their ground forces. If they could project such overwhelming force across the globe in such a short amount of time, then it was abundantly clear that she had been doomed from the start. 

Her generals, of course, demanded their losses be repaid tenfold, but the young empress could not think how such a thing was even possible. Still, all was not lost. The Imperial Japanese Army in Borneo and Korea continued to put up a fierce resistance, and if she could make the Germans bleed a little more, they might be willing to come to the negotiating table. 

However, with each passing second, Itami began to believe such a plan was utterly naïve. Still, she could not outright surrender, at least not now. Thus, after nearly an hour of silently sitting in her chair, she finally rose to her feet and gave a command to her nearest officer.

"I want a new fleet constructed as quickly as possible. Do whatever is necessary to ensure that this fleet has been constructed before the Germans attack our homeland. I don't care if you have to work our peasant class day and night until they drop dead from exhaustion. We must replenish our losses!"

While it was true that Japan was already in the process of manufacturing a fleet of warships that was close to being completed, their industry simply could not keep up with the demand of creating two new fleets at the same time.

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Thus, it was no surprise when an advisor quickly approached Itami with a grim expression on his face. He knew he was going to get chewed out by the Empress for telling her the truth, but if he concealed this fact, then his punishment would be far more severe. Thus, he sighed heavily before announcing the problems with this order.

"Tennoheika-Sama, such a thing will at the very least cost us six trillion yen..."

When Itami heard this, she thought that perhaps her hearing had suddenly become impaired. She gazed over at the Secretary who said this with her blood-red eyes and carefully questioned what she had heard.

"I'm sorry, I must be hearing things. Repeat that again!"

The man could not endure the woman's fiery gaze, and thus stared down at his feet as he meekly repeated the statistic.

"In order to construct a second fleet, it would cost us at least six trillion yen..." 

Itami was stunned into silence for several moments. She could only rub her temples in an attempt to decrease the monumental headache she was feeling at this moment. Six trillion yen? Since when did it cost six trillion yen to construct a new fleet? She was quick to inquire about this fact. 

"That's ten times our national budget! Explain to me exactly how we are going to get the funds to construct this new fleet, or should we just admit defeat here and now, and allow the Germans to enter our homeland without the slightest resistance?"

Nobody in the room wanted to help the Secretary after hearing the shrill voice of their Empress echo throughout the war room. Ultimately, the man found the strength to speak about the measures that the Japanese Treasury Department was taking at the moment.

"Tenno-heika sama... The treasury department is currently working overtime, printing enough cash to support the war effort. Give us two weeks and we will have the six trillion yen in hand!"

While Itami was not the most proficient in economics, she understood that by simply printing money; they were going to create a massive inflation problem. This would be disastrous for her already struggling economy, and she was forced to voice this concern.

"Your solution is to just print money, and pay for our military with worthless paper? Inflation is already up over one hundred percent in the last year! Do you want it to go up by one thousand percent, or perhaps even ten thousand percent?" 

Though Itami was already furious about her increasingly unstable economy, she was more concerned about the war she was waging at the moment, which was against a seemingly invincible power. In this moment, she began to wonder just how badly the German economy was suffering, if it even was at all.

If Itami were to know that the Reich's yearly spending was at a monumental surplus rather than a deficit, and their inflation was tightly controlled at a healthy two percent, she might just surrender then and there, and give Berengar a personal call where she would speak the words "annex me senpai" to him in the most shameless way possible. 

But Itami did not know this, and thus she could only sigh, and accept her lot in life, as she approved a measure which she knew was not only desperate, but would surely be catastrophic to the already struggling Japanese economy. After sinking back into her chair in a state of depression, she somehow managed to speak the words that she never thought she would say.

"Fine... Just do it... Tank our economy, if that's what it means to resist a German invasion." 

Thus, while Germany was enjoying a time of prosperity, even while at war, Japan would now enter the stage of hyperinflation that had been the ruin of so many great nations in human history. 

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