Mephistopheles appears at the Emperor's court in the guise of a jester. Various officials report to their sovereign about the government's financial crisis and related problems. The new jester suggests that the Emperor make use of the kingdom's hidden resources by mining the gold buried beneath the land, and also makes vague hints that the issuance of paper money would ease the situation. The court officials are confused by these suggestions and distrust Mephisto, but everyone admits that he seems to be competent and worldly. The Emperor ends the meeting and announces a great carnival to celebrate Ash Wednesday, the beginning of Lent.
This scene has been shown by some critics to be an inversion of the "Prologue in Heaven" of Part One; the Emperor represents the Lord, the court officials the archangels, although they complain instead of offer praise, and Mephisto continues to play the role of an outsider, although here he supports the established order rather than condemns it. In this scene the devil continues to exemplify the spirit of mundane and physical things, as is implied in the advice he offers the Emperor. The reaction of the Emperor and his courtiers to Mephisto's suggestion shows the basic frivolity and emptiness of those concerned only with things of this world. This impression will be strengthened in the next few scenes.
The portrayal of the weak, self-indulgent Emperor and his flighty court has been thought by some scholars to be a picture of the corruption of the Holy Roman Empire immediately before its collapse. Whether or not this is so, the scene is certainly a vivid picture of incompetent governments in general.