Keenan called his own patrician on his cell phone. “Larry. I just talked to Dr. Everest about the next step in the Crash.”
“That’s the crypto-economist who invented SmartCoin, right? Did she say anything useful?”
“She saved us from a very bad plan. Larry, we need her.”
Larry concurred easily enough. “So offer her a job. You know I’m always eager for hot new employees.” He paused. “Though as you know, I always have misgivings about people who are supposed to be brilliant but haven’t managed to make a pile of money with it.”
Keenan frowned. “I’ll make the offer, but Larry, I don’t know if she’s the type to take a job just because it has a whopping bonus plan.”
Larry sighed. “Not this again.”
Keenan spoke forcefully. “Larry, I’ve talked with the BrainTrust University people. They’d be delighted if we went through with the proposal I made to you earlier.”
Larry took a long time to answer. “But how do we write it off? It’s not a salary. It’s not a cost of goods. It’s not even a good marketing ploy.”
Keenan looked helplessly at Socrates. How to get the patrician on board? Keenan knew he didn’t have the skill to lead Larry via a series of questions.
Or did he? “Larry, how much do you think she’d cost us as an employee?”
Larry named a reasonable number, neither optimistic nor pessimistic.
Keenan continued, “Now, do you remember how much my proposal would cost?”
Larry paused for a very long time this time. “Deal. If she won’t come on board as a new hire, get her any way you can.”
The President for the Duration scrutinized the numbers on the immense screen in the Oval Office. He loved working with numbers. When he doubled a number in a spreadsheet, he knew that in so doing he had modified the entirety of reality to match the new results.
The Fed Chair watched him with pleasure. “The Chief Advisor couldn’t look at a screen of numbers without getting a headache. He used to turn away when I showed the minimum necessary dataset to understand what was going on.”
The President nodded. “Well, I must confess, I’m not immediately understanding this screenful of data.”
The chairman flicked his finger at the screen, highlighting a few of the interesting items. “As you can see, the number of bankruptcies is still climbing at an alarming rate. Worse, it’s started to spread to state governments and municipalities.” His voice turned sour. “The only kinds of bonds people are buying any more are ones denominated in SmartCoin.”
The President waved it away. “It seems to me there’s an obvious answer.”
The chairman looked at him, puzzled.
“We just print enough money to pay off everybody’s debts.”
The Fed Chair’s face took on an expression of anguish. “You can’t do that. Our inflation rate is already grossly excessive. In constant dollars, the new minimum wage is already worth less than the old minimum wage.”
The President stared at him. “You’re kidding me!”
The chairman scrolled around the spreadsheets on the wallscreen and highlighted the relevant numbers.
The President made a brief phone call to get an emergency decree out to hike the minimum wage again by enough to make it inflation-proof. After a moment, he added to the decree that henceforth, the minimum wage would also be indexed to inflation. He took a few minutes while the Fed Chair sat quietly watching to modify his own spreadsheets with the inflation adjustments. As he played with different inflation rates, he felt a great tranquility suffuse him when he saw how robustly the new system defended the nation from economic turbulence.
Eventually, the President glanced at the chairman. “As I was saying, we can just pay off everybody’s debts.” He waved at his spreadsheet. “With these changes, we can handle anything.”
The Fed Chair continued to object. “But the amount of money we’d be printing would be…I don’t even know how much money that would be.”
The President took it in stride. “Well, figure it out, since that’s how much we’ll be making.” He offered a compromise. “Look, we don’t have to do it all at once. Just a hundred billion a week or so.” His eyes lit up. “And I know just the state whose debts we’ll pay off first. Let’s do this immediately.”
Keenan Stull was once again awakened at an unreasonable hour of the morning, but this time it was by the member of his team running the East Coast shift.
His wife rolled over with a muttered, “Your assistant manager, right? Warn him that I’ll now have to kill him.”
Keenan once again rolled out of bed and took the call into the living room. “So, what disaster is unfolding as we speak?” He tried to think through the fog, to identify something terrible that could have gone wrong. It would be hard to beat the destruction of the entire global economy for badness, which had already happened. A nuclear war would, from a GS perspective, be a minor hiccup in comparison.
There was a long pause on the line. “It might actually be good news, but it’s the kind of good news I thought you might need to hear about immediately.”
How interesting. Good news was not generally that urgent. “Great. What good thing has happened?”
“The President for the Duration just gave the state of California enough money to make a full call on all our bonds.”
Keenan struggled to speak. “So, all that worthless paper we were holding just paid off?”
“Was I right to call you?”
“Oh, yes. Thank you. Now I have to make another call.”
He hung up and alerted the guy who really needed to know about it. “Larry, have you heard the news? The President for the Duration just bailed out California. All our bonds got called.”
Larry took a moment to digest that. “How many billions did we make?”
“I’ll know more when I get into the office, but the answer is ‘a lot.’” Keenan said apologetically, “All those customers who bought ‘against’ positions are going to be really upset.”
Larry chuckled. “Hey, they wanted a non-correlating risk, they by God got a non-correlating risk.”
Keenan couldn’t argue with that. Who in their right minds would have predicted that California would successfully pay off its debts in the middle of a crash? “Still, Larry, you’ve got a problem here. We made an obscene amount of money off this.”
Larry sighed happily. “Yeah, I know. A great problem to have, but a problem nonetheless. Somehow we want to persuade our customers that we made this immense profit because we were savvy, while at the same time persuading the government that it was strictly accidental, and we’re very sorry.”
His voice soured. “Usually, of course, we wind up with the exact opposite—our customers think we lucked into it, while the government will trumpet a conspiracy theory about how we stole all that money from unsuspecting little old ladies who lost their last dime to our chicanery.” He didn’t have to mention how absurd that was. Keenan knew as well as he did that the only people who got burned in a play like this were people who thought they were Masters of the Universe.
Larry moved on to the next item. “We have to hide this revenue as well as we can. You have anything new we can put this money to work with?”
Keenan sighed with relief. “Dr. Everest helped me figure out what to do if the White House went full-tilt boogie and hyperinflated. I’ll verify at the office, but it looks like that prediction just came true. I can put those profits directly to work, securitizing American assets as the dollar descends into its own private grave.”
When the new enhanced minimum wage was announced, large numbers of businesses simply shuttered their doors. Others went informal; they tried to do what Jonathan Kuffman had done—namely, pay people in cash under the table.
This led to a wave of arrests of business owners. Since forty-nine percent of non-government employment was supplied by small businesses and ninety percent of all businesses were small, it turned out to be fortunate that the legalization
of marijuana had left forty-seven percent of federal prison cells available for new recruits. The President for the Duration was able to quickly hire more prison guards to oversee the rapidly growing inventory of inmates. According to his spreadsheet, next month he would have the opportunity to create lots of new construction jobs, building a whole new set of penitentiaries for businessmen.
Meanwhile, a delightful side effect came into play, correctly predicted by his spreadsheet in all its wonder. As inflation accelerated and the minimum wage rose in step with daily increases, soon the minimum wage was larger than the previous wages of just about everyone who worked for a living. So almost everyone was making the same income, an extraordinary victory against inequality.
Moreover, unemployment had fallen to historic lows. It seemed like an unparalleled triumph in every way.
Except, peculiarly enough, government revenues were falling at an alarming clip. And with each fall in revenue, the national debt exploded again, which required more manufacturing of currency, which led to more inflation.
How could revenues fall? With everyone making much higher wages, income taxes should be soaring.
Time to ask an expert. He called the chairman of the Fed into the Oval Office once more.
The Fed Chair looked frazzled. His tie hung cockeyed, his collar was wilted, and a haggard expression had come over his face. “I’ve been trying to figure out what’s going wrong as well. It looks good in all the leading statistics, yet it’s become obvious that we’re missing something.”
He made an unsuccessful attempt to straighten his tie, then brought up a sheet of numbers on the main screen. “These are some secondary statistics that we track since sometimes they’re helpful in understanding the nuances of reality. In these numbers, I believe we have identified a problem of some severity.”
For a moment, the President felt a cold chill, but he shrugged it off. His spreadsheet, after all, was still good.
The chairman highlighted a string of numbers that were falling. “While our unemployment rate is at record lows, those numbers are calculated based on the number of people in the workforce, i.e., the number of people who either have work or are looking for work. However, the number of people in the workforce is falling at a startling clip.”
He licked his lips. “As you can see, the workforce to population ratio was almost sixty percent when you took office, about where it has been for decades.” He shook his head. “At this point, it has fallen to thirty percent and is still falling.”
The President gasped. “So these missing people don’t want jobs and aren’t looking for them?”
“Apparently.” The chairman attempted a quip. “Nor is there any evidence that they all suddenly became independently wealthy, either.”
When the President sat in stunned silence, waiting for more, the chairman continued, “I believe the missing thirty percent is related to another odd statistic.” He pointed to a series of numbers that rose rapidly, then fell away. “This is the rate of arrest of business owners. As you’d expect, it took off right after the minimum wage started accelerating and the owners tried to dodge the law.”
The President felt the beginning of a burning rage. Business owners! Scum!
The chairman continued, “But then it fell off almost as quickly.”
The President’s heartburn turned to warm satisfaction. “So, they learned their lesson and are paying up.”
The chairman shook his head. “No, they’re shutting down their businesses.”
The President looked mystified. “Then what are they doing for a living? Them and the thirty percent of people who left the workforce?”
The chairman sought out a chair. He brushed sweat from his forehead. “We don’t know. We have a suspicion, but we have no data to tell for sure.”
“No data? That’s impossible! We have data on everything!”
The chairman replied gravely, “We do not have data on things that no one will tell us about.” He gave an example. “The size of the illegal drug industry has always been, as you’d expect, a matter of guesswork. It has probably always been larger than we’ve been able to ascertain, since, well, illegal drug revenues are underreported.”
The President threw up his hands in exasperation. “Okay, all right, what does that have to do with this?”
“We believe, although we cannot be sure, that after the first wave of business owner imprisonment and the subsequent dissolution of their businesses, the employees of other businesses saw just how badly it worked out when they reported the owners. We believe they have all entered into informal agreements to work outside the law. They have all moved off-book, so to speak, and are working without contracts for cash.”
It took the President a moment to form words. “But…that’s insane. It’s a throwback to the days of barbarism.” He zeroed in on a possible flaw in the reasoning. “Even if they were off book, we’d still see the movement of money through the system, right?”
The chairman looked away. “We thought so too at first, which was why we were hesitant to draw that conclusion. But we have been able, with some difficulty, to track what has happened.” He closed his eyes and spoke very softly. “It would seem that these informal people no longer buy and sell using dollars for the medium of exchange. Even people who have jobs that pay dollars go directly to a currency exchange and convert. They’ve all moved to SmartCoin.” He continued wryly, “Yesterday GM announced they were now offering both sales and loans denominated in SmartCoin.”
The President threw his tablet with its beautiful but now useless spreadsheet across the room. “SmartCoin! The BrainTrust! They’re tearing our nation apart!”
He leaned forward. “This SmartCoin stuff needs to be fixed! Peg it to the dollar! Let’s round up the people in charge and make them fix it!”
The chairman looked puzzled. “The people in charge?”
The President threw his hands in the air. “Of course! Start with that woman…what’s her name?”
“Dr. Erika Everest?”
The President brought his hand down decisively. “Arrest her and keep her in Guantanamo until she fixes it!”
The Fed Chairman put his head in his hands. For a moment, it looked like he would start weeping. “SmartCoin is managed by the blockchain with millions of compute servers distributed throughout the world spanning all nations and jurisdictions. No human being controls it. Dr. Everest has no more power over SmartCoin than you or I do.”
The President thumped back down in his chair. He found it incredible that no one controlled it, but he didn’t know how to argue the point with the Fed chairman, who presumably was expert on these matters. He turned to a different part of the problem. “Can’t we at least make it illegal to convert dollars into SmartCoin?”
The chairman shrugged. “Capital controls? We’ve been pursuing such controls unofficially ever since the crisis began. The banks, over whom we have lots of leverage, have dropped out of the conversion business. And there was a company building machines like ATMs that you could put dollars into and get SmartCoin out. Lots of businesses were installing those, but we scoured OSHA regulations until we finally found a clause we could charge them with violating, so they’re out of business.”
The President cried out, “Then how do they convert?”
The chairman slumped. “We suspect they’re going to drug dealers. The dealers look at the recommended exchange rate published by GS on the BrainTrust and offer a percentage of that. The drug dealers turn around and sell the dollars to someone who has a dollar-denominated debt. Everybody still pays taxes in dollars, of course.”
The President’s eyes bulged. “Drug dealers! Shut ‘em down!”
“The DEA has been trying to shut down drug dealers for generations with little success. It’s worse now since the illegal trade in Rubola vaccines made the dealers look heroic in the eyes of many people.” The chairman shrugged yet again. “We can go after them, but honestly, capital controls have been tried by every government in crisi
s for the last hundred years. People always find a way around them.”
After a moment, the President tried one last tack. “What about disputes? Surely, with millions of people in these informal arrangements, disagreements abound. Why don’t we get them in the courts?”
The chairman winced. “Well, if they took arguments to the courts, the jig would be up, so they can’t really do that. Once again, we have no data, but we do have a suspicion about what’s happening.” He paused.
Apparently, the answer was painful for the chairman: The President saw his guest needed prompting. “And your suspicion is?”
“They go to the mediators on the BrainTrust to settle complaints.”
The President for the Duration pounded the desk. “No!” He thumped the desk again. “The BrainTrust! We have to destroy them!”
11
The Business of War
The BrainTrust Virtues:
- Seek challenging truths
- Bring your A-game
- Celebrate diverse perspectives
- Persevere and Grow
—Careen, #23 of Gen 2 of Ciara’s Kids, Passages by Colin
Sheldon Collins sighed when his phone played Jimmy Buffett’s Fins. He’d been dreading this call. “Mr. President, how may I help you?”
The President answered with barely contained fury, “I need some voter behavior correction. Specifically, I need people to stop praising the blasted BrainTrust and understand that those people are destroying our country!”
Braintrust- Requiem Page 18
