Chapter 112: Schemes Within Schemes

As the second half of 1990 unfolded, Lu Kun could clearly sense that inflation within Angui Province had essentially stabilized. The chaos of the student movements from previous years was now a thing of the past, and people cherished the newfound order and stability in their lives all the more.

The social retail sector was rapidly improving, once again becoming vibrant and bustling. Lu Kun, looking over the latest financial reports, found it hard to contain his excitement. Without having personally lived through this era, it would be impossible to truly grasp such fervor.

A small campus supermarket belonging to Huakun’s group had, in just half a month, achieved a sales total of 270,000 yuan, with a net profit of 54,000 yuan. Lu Kun was left dumbfounded—was money really this easy to make? It was utterly insane. Hadn’t the buying frenzy ended long ago?

He questioned the statistics department about the details, and their answer left him at a loss for words. The main reason was simple: ordinary people had been burned badly by the inflation of the past few years. Now, any family with some savings had grown wise; instead of depositing money in the bank as before, they rushed to stock up on everyday necessities as soon as they received their salaries.

Grains, cooking oil, rice, flour, cabbage, sugar, laundry detergent—these had become Huakun’s hottest-selling products. The common folk had developed a practical wisdom of their own.

From 1990 through the second half of 1992, China’s inflation rate remained low, marking a rare few good years. Yet, good times never last. By 1993 and 1994, inflation soared to shocking heights, reminiscent of the property market booms in later years. The purchasing power of a hundred yuan might not even match what thirty yuan could buy in 1991.

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“Husband, do you think we should buy some government bonds? The annual interest is fifteen percent! You just have to hold them for five years to get the payout,” Liu Liping, picking up a newspaper that Lu Kun had just finished reading, tapped his shoulder with delight.

Many had heard of treasury bills, but few knew much about their “twin brother”—government bonds. Treasury bills were unregistered bonds, usually with terms of less than a year. Government bonds typically referred to those with terms longer than a year. This was why some people made money buying treasury bills, while nearly everyone who invested in government bonds ended up losing everything.

Lu Kun’s lips twitched in resignation. “If you want to support the country’s construction, then buy some. But if you’re hoping to make a profit off them, forget it. There’s no way to make money from that.”

“Why wouldn’t it be profitable?” Liu Liping was puzzled.

It seemed like free money—much better than putting it in the bank! Liu Liping had a tidy sum on hand, probably around a hundred thousand yuan—all given to her quietly by Lu Kun. Even though she hardly ever spent money and was often idle, Lu Kun still made sure she had enough. Money was meant to be used, after all, and what man would begrudge his wife spending it?

“Just think about who you’re lending your money to, and who’s printing the money. That’ll tell you all you need to know,” Lu Kun explained, leaving it at that.

The explosive inflation of 1993 and 1994 was partly due to the international situation China faced at the time, but Lu Kun suspected it was also closely tied to the redemption of those bonds. When bonds matured and the country didn’t have the cash to pay them back, but couldn’t default either, what could it do? The only solution was to keep the printing presses running, churning out money day and night.

This way, the state could pay back its debts and maintain its credit. But for those who bought bonds, it was a disaster. They had invested real money, but by the end, what they got back was little better than wastepaper.

The worst part was, there was nothing to complain about—the sum was correct, and not a cent was missing. But everything inevitably collapsed. Afterward, no matter how high the promised returns, few dared to believe in them again. Patriotism could not be so blind.

This idea was precisely why Lu Kun kept only enough emergency funds on Huakun’s accounts, rather than letting large sums sit idle. It was just too risky; who knew if one day they’d wake up to find their money worth nothing? He even dreamed about it at night—currency oversupply was becoming the new normal.

Lu Kun mused darkly whether, by the end of 1992, it might be smart to take out a large bank loan, quickly convert the borrowed money into real assets, and then repay the bank in 1994, when inflation exploded, letting the bank experience the same frustration. Infuriating, but it was only a passing thought. He wasn’t reckless enough for that. Taking advantage of the government was never so easy; whatever you swallowed, you’d end up coughing up to the last bone.

Whether domestic or foreign, when facing the government’s “iron fist,” it was always safest to back down. Those international giants who thought themselves invincible all met one of three fates: retreating in disgrace, being crushed, or being tamed into total obedience. In short, no one was allowed to be that powerful.

“Then we won’t buy them—we’re not in the business of losing money,” Liu Liping said, quickly grasping the crux of Lu Kun’s argument. She was a clever woman; only when she fell in love did she lose her head and follow Lu Kun so devotedly. Had she not become pregnant, Lu Kun would have wanted her to attend university. Of course, getting in through regular exams would have been difficult, but correspondence courses were all the rage, and with enough money, anyone could get a university degree—even from a top institution.

As for Lu Kun himself, he had no desire to go to university; he’d rather just buy a diploma. His heart was never in academics. He was like those students in later years who spent all their time chasing girls—how could anyone like that focus on real study?

Ahem. But back to the matter at hand.

“Hey, didn’t your mother say she was coming over today? How is it this late and she’s still not here?” Lu Kun glanced at the sky—it was already afternoon, and he’d been waiting for ages.

“Who knows?” Liu Liping replied with a hint of resignation. She and her mother seemed destined to clash; every meeting was a standoff of mutual irritation.

Lu Kun had no idea how his mother-in-law, Mrs. Lin, had caught wind of her daughter’s pregnancy, but the night before, she’d called using the village committee’s phone, insisting she had to come see for herself whether Liu Liping was carrying a boy or a girl. Lu Kun couldn’t dissuade her, so he agreed to let her visit.

He was chatting with Liu Liping when, all of a sudden, his mother-in-law appeared at the top of the staircase on the second floor, looking around the house in admiration. “This house is truly beautiful!”

“Hey, mother-in-law, aren’t you carrying a bit much?” Lu Kun’s jaw dropped and stayed open for quite some time.