“Right now, every major stock exchange in the world has halted trading. It’s relaxing. You should enjoy the respite. Because Quiet Time won’t last.”
Finally Carter plunked into the adjoining armchair, doubling his chin on his clavicle with a scowl. He should remember: for the time being, he and his father were on the same side. “Economics isn’t my bailiwick. I don’t understand this ‘bancor’ business. The American news coverage is so hostile that I can’t make heads or tails of it. Guests on CBS just start shouting.”
“I suspect it’s a good idea—if it was not a good idea for Putin to roll it out.”
“At least these days Mr. President for Life keeps his shirt on.”
“I’m intrigued by how a whole new international currency was ready to go. Not the sort of thing one works out on the back of an envelope.”
“Maybe I’d expect a financial putsch from Russia and China,” Carter said. “But this coup is by US allies, too. Okay, not Europe—and never mind them—but the Saudis, the Emirates, Korea—after the tens of billions we shifted to them after unification? Ingrates. Not to mention Brazil, India, South Africa. Even Taiwan! Everyone’s ganging up on us! What’s going on?”
“We should be grateful,” Douglas said. “You do realize that without the bancor lined up as a replacement reserve currency, the fall of the dollar would plunge the entire world economy into a Dark Ages? We’d be buying eggs with rocks.”
“But how can they simply announce that oil, and gas—the whole commodities market—is henceforth to be conducted in these goofball ‘bancors’? It’s our damn oil, too, and our damn corn.” A New York Democrat really shouldn’t be spouting this indignant, nationalistic bilge. Too much American twenty-four-hour news, all singing the same apoplectic tune. Besides, father and son had chosen parts at the start. Douglas had co-opted the voice of reasonableness and fairness, which left Carter to fume.
“A better question is how we’ve got away with shoving our currency down the rest of the world’s throat for so long,” Douglas observed. “It’s been a multipolar world for decades. After the refunding of Social Security, the US defense budget won’t buy a cap pistol. Why should commodities be traded internationally in dollars?”
“Big whoop, you call it a bancor instead of a dollar. Like this ‘New IMF’: semantics.”
“Not just semantics. New means administered by a consortium of countries that presently doesn’t include us.”
“What, is it just, presto!” Carter flailed. “And the dollar is worth zip?”
“Theoretically, the US could buy into the bancor along with everyone else. But only by ponying up real assets to back it. That’s the difference in a nutshell. To swap fiat currency for bancors, you have to fork over to the New IMF a strictly proportioned basket of real commodities—corn, soy, oil, natural gas, deed to agricultural land. Rare earths … copper … Oh, fresh water sources! And gold, of course.”
“No way is Fort Knox moving to Moscow.”
“I don’t expect Washington to play ball. It’s too humiliating. Though if it makes you feel any better? The likes of Indonesia and Pakistan may have leapt to embrace the bancor as an antidote to chaos, but this new regime is going to screw plenty of the very governments that are backing it to the hilt. There’s modest flexibility built in, to avoid another euro debacle. Countries who’ve merely pegged their currencies to the bancor can appeal for devaluation. But the NIMF is bound to be stringent on that point. Since the whole idea of the bancor is to restrict the money supply. From the 1970s, the G-30 have all been churning out Monopoly money as if drawing from a board game with the combined components of several sets. It’s going to ferociously mess with some heads that now you have to cover your expenses and pay your trading partners in a currency that has real value.”
“The whole thing stinks to high heaven. Maybe Putin and his new friends were passively waiting for an opportune moment to pounce. But it’s a hell of a lot more likely that they caused the crash of the dollar.”
“Oh, that’s certainly how the White House is playing it. Big conspiracy. Threat to national security. Nothing to do with a Congress that won’t rein in entitlements. Nothing to do with the deficit, or the national debt, or a monetary policy modeled on the population’s waistline. Only evil outside forces conniving to destroy the greatest country in the world.”
Carter raked his fingers through what remained of his hair; the gene for male pattern baldness being handed down from the mother was a formula for father-son resentment. “I don’t understand how this happened.”
“Carter. I will let you in on what isn’t a secret to any housewife who’s bought a cucumber. The American dollar is worthless now not because of the rate spike, and not because of crashing on the international currency exchange, and not because of the bancor. It is worthless now because it was worthless before.”
“That’s melodramatic.”
“Not melodramatic—dramatic. In the hundred years following the establishment of the Federal Reserve in 1913, the dollar lost 95 percent of its value—when one of the purposes of the Fed was to safeguard the integrity of the currency. Great job, boys! Ever wonder why no one talks about millionaires anymore—why no one but a billionaire rates as rich? Because a man who had about ten grand in 1913 would be a millionaire a century later. Hell, everyone’s a millionaire these days, every halfway solvent member of the middle class. And the majority of that currency decay is historically recent. Why, the dollar lost half its value in the mere four years between 1977 and 1981.”
Never a science-fiction fan, instead Douglas now immersed himself in the more recently minted genre of apocalyptic economics, rehearsing debt-to-GDP ratios as he had once memorized Saul Bellow. (When younger, Carter had never imagined he’d grow nostalgic for being quoted to death from Seize the Day.) If Pop couldn’t remember the age of his only son, the chances were poor that any of this pontificating tutorial was even ballpark accurate. What few scraps of his feverish reading that the old man did recall verbatim would be exaggerated for effect. Yet the last Loony-Tunes statistic was the limit.
“You might double-check that,” Carter chided gently, in preference to what a load of crap. “In 1981, I was a junior in college. Why wouldn’t I remember my own currency that steeply in freefall?”
“Because it’s boring, son. The American government counts on your being bored by it. Why, I barely remember the fallout from Nixon going off the gold standard myself. I buried my head in books. Perhaps the wrong books, looking back, but it’s too late now. The point is, when you’ve debased your currency that utterly, there’s not much further left for it to fall. Besides the sheer dullness of it all, the dollar sliding to the penny hasn’t been all that noticeable because every other government has been busy doing the same thing—running the printing press overtime on the justification that a junk currency advantages exports. The world is drowning in worthless paper. But America in particular has been getting away with murder—playing on the heartbreaking international belief in Treasury bonds as the ultimate ‘safe haven.’ Really, the blind trust bears all the irrational hallmarks of theology. What else, financially, is there to believe in besides the full faith and credit of the United States? So we’ve borrowed for basically nothing on the basis of a childlike credulity for thirty years. You know the Fed’s been steadily trying to monetize the debt—”
“Cut it out, Pop. You’re showing off.” In the agency days, Douglas Mandible held forth about anastrophe, metonymy, and onomatopoeia—and now it was all arbitrage, margin calls, and open market operations. Day trading had infected his father’s mind like a fungus.
“You try living to ninety-seven with a wife who can’t recognize a fork. You’d acquire new expertise out of desperation, too. And it’s not complicated. Why, I taught Willing about monetizing the debt the last time you brought Florence up here, and the kid got it right away. Though I have to say that