Pay attention to the “science” of economics, author warns
An early US indignity in Lionel Shriver’s The Mandibles: a Family, 2029-2047 is China’s successful claim to +1 as its international calling prefix. That ain’t nothing.
There is no pandemic in this book, which was published in 2016; but there was “the stonage”, a period in 2024 when a Chinese hack brought the Internet and the economy to a standstill. A huge huge stimulus package was enacted; the Internet was resuscitated. The Dow was soon setting new records (sound familiar?). The economy came back to life but more dependent on stimulus and Federal Reserve monetization of US debt than ever. The world kept buying US bonds. Economists explain that a reserve currency can essentially be printed without limits. The world kept buying US bonds… until the day in 2029 when the Treasury bond auction failed.
But that can’t happen to the world’s reserve currency. True. Turns out Russia and China and our friends in the Middle East have secretly prepared the bancor, a new international reserve currency which the rest of the world quickly adopts. The dollar plummets against the bancor, which Americans are not allowed to use. Whoops, there goes the economy. This time the Dow doesn’t come back. A lot of people aren’t rich anymore and a lot of pension funds are worthless.
The official line is that the bancor is a plot against the security of the US like 9/11 (which it sort of is). “Oh, that’s certainly how the White House is playing it”, says one about to be impoverished character. “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,”
Since the US cannot roll over its debt, it repudiates it. “All Treasury bills, notes, and bonds are forthwith declared null and void,” the President says. Moreover, the government seizes all gold including jewelry in private hands at a price in dollars which is confiscatory since the dollars are now so depreciated. Not only are most fortunes lost – “Hooray,” say those who are against inequality; but the middle class is now officially broke as well. Dollar savings are decimated by inflation. Only those with government jobs can struggle by because their salaries are pegged to inflation and paid with newly minted dollars. But tax rates aren’t indexed to inflation so even government workers are losing purchasing power.
Real estate should be a store of value; but, as public order disintegrates, those with weapons simply seize property from those who are less well-armed. An apathetic and underpaid police force either can’t or won’t stop the chaos. Mexico closes its border to stop an influx of desperate “Ameritrash”.
Depressed yet? I am but it’s hard to stop reading because this is also an excellent novel with interesting characters.
We are often told what will happen to us if we don’t listen to “the science”. Economists aren’t really scientists and scientists aren’t even unanimous about anything. But what if we should be listening to the classic economic lesson – for which there is much historic evidence – that countries which print money for short-term political reasons (and to alleviate suffering), eventually fall into dystopian chaos? What emerges from the chaos is usually ugly.
BTW, my harping on the dangers of debt is non-partisan. Republicans – and especially Trump – rarely spare the public purse when favor can be bought. And many Democrats have convinced themselves that the lesson of the Obama stimulus is that debt never has to be repaid (so far they’ve been right and they will be until they aren’t). There is no right economic vote in this election.
The New York Times Book Review says “Shriver has always seemed to be few steps ahead of the rest of us, but her new novel establishes her firmly as the Cassandra of American letters.”
If we’re not going to listen to “the science”, perhaps we should listen to Cassandra.
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