Key ideas: Published in 2016, The Mandibles is an economic dystopian novel. "In 2029, the United States is engaged in a bloodless world war that will wipe out the savings of millions of American families. Overnight, on the international currency exchange, the “almighty dollar” plummets in value, to be replaced by a new global currency, the “bancor.” In retaliation, the president declares that America will default on its loans. “Deadbeat Nation” being unable to borrow, the government prints money to cover its bills. What little remains to savers is rapidly eaten away by runaway inflation."
“Hey, remember the guy who moved in across the street last year?”...
“Yeah, dimly. Investment banker, you said.”
“I ran into him on the way to the bus stop this morning, and we had a pretty strange conversation. [...] So he told me that we should move ‘our investments’ out of the country—right away, today. We should transfer any cash into a foreign currency—like, what cash? I wish it weren’t so funny—and get out of any, quote, ‘dollar-denominated assets.’ [...] God, he was theatrical about it. Maybe that sort doesn’t get much drama coming their way. He touched my shoulder, and looked me straight in the eye, like this is totally fucking serious and I’m not joking...
“What do you think is going on that made the guy say that,” Esteban asked, “out of the blue?”
“I don’t know. I overheard on the news that some bank in Britain went bust a couple of days ago, but big deal. That has nothing to do with us. And yesterday, what, a something-something didn’t ‘roll over’ something …?,,,
“Oh, and talk about super weird,” she recalled, plating up, “Brendan asked if we were homeowners. When I said yes, though a tenant helped cover the mortgage, he said, ‘Ownership might prove auspicious. The tenant you may regret.’”
On the face of it, Avery didn’t need the money. In other words, because she’d made intelligent decisions and prospered as a consequence, she deserved to be punished? That was the lesson the quote-unquote progressive American tax system should have taught her long ago. Oh, and Florence-as-in-Nightingale surely deserved the money more, since in her most recent incarnation she was so good and kind and charitable.
In her [Florence's] practice, she urged all her patients to embrace a sensation of specialness—but that very strong sense of identity, of belonging, of proud laying claim to one’s own remarkable, particular heritage, was specifically denied the majority in this country, with a conspicuous host of achievements to be proud of. So maybe when white folks were a minority, too, they’d get their own university White Studies departments, which could unashamedly tout Herman Melville.
Her children would get cut extra slack in college admissions regardless of their test scores. They could all suddenly assert that being called “white” was insulting, so that now you had to say “Western-European American,” the whole mouthful. While to each other they’d cry, “What’s up, cracker?” with a pally, insider collusion, any nonwhites who employed such a bigoted term would get raked over the coals on CNN. Becoming a minority would open the door to getting roundly, festively offended at every opportunity, and the protocol for automated phone calls would get switched back.
Lowell looked like someone who thought he was young, and wasn’t....
“Notice how everything goes wrong at once?” Lowell despaired. “It’s what I was just explaining to that pea-brain Mark Vandermire. Same thing happens in economics. Little crap imploding all over the place at the same time makes it seem as if the failures are connected. But they aren’t necessarily. It’s just some sort of karmic … clumping.”...
“Money is emotional,” Lowell pronounced. “Because all value is subjective, money is worth what people feel it’s worth. They accept it in exchange for goods and services because they have faith in it. Economics is closer to religion than science. Without millions of individual citizens believing in a currency, money is colored paper. Likewise, creditors have to believe that if they extend a loan to the US government they’ll get their money back or they don’t make the loan in the first place. So confidence isn’t a side issue. It’s the only issue.”...
“You know, most of the other doom mongers like Vandermire are also gold bugs,” Lowell resumed. “Honestly, hanging on to a decorative metal as the answer to all our prayers, it’s medieval—”...
The gold standard was put to rest sixty years ago, and nobody’s missed it. It was clunky, it constrained the tools available to central banks to fine-tune the economy, and it artificially limited the monetary base. It’s antiquated, superstitious, and sentimental. What the gold bugs never concede? Now that the metal has almost no real utility in and of itself, it’s therefore just as artificial a store of value as fiat currencies, or cowrie shells.”
Avery studied her husband. [...] “You seem worried.”
“All right—a little.”
“But I know you. So here’s the question: are you worried about what’s actually happening? Because I think you’re more worried about being wrong.”...
[Next morning] He whipped the fleX from his pocket, stiffened it to palm-size, and went directly to kind-of-trustworthy Bloomberg.com:
DOLLAR CRASHES IN EUROPE
This was not the multiple choice for which Carter had made this journey: his father was (a) destitute; (b) rich and about to get a whole lot richer; (c) somewhere in-between. Thanks.
“They’ve put limits on withdrawals, you know,” Carter said sulkily. “I can’t get more than three hundred bucks from an ATM.”
“They’re afraid of more bank runs. By trying too hard to prevent them, more bank runs are exactly what they’ll get—should they ever be so imprudent as to let you at your own money again.”
“The Fed chief was emphatic. Krugman said the limits were for a few days, max.”
“Anyone in a position of authority telling you something unpalatable is ‘temporary’ is a red flag.
The quick fix of capital controls can seem so alluring: ‘We’ll simply make the rabble keep their money here. We’ll pass a law!’ The hard part is lifting capital controls, which becomes unthinkable the moment they’re instituted. Who wants to keep funds in a country that confuses a bank account with a bear trap?
So you can be sure that at least the freeze on making monetary transfers out of the US will stay in place for some time to come. Look at Cyprus. The capital controls levied in 2013 weren’t entirely rescinded until two years later. Know how long those controls were meant to stay in place at their inception? Four days.”
“But this is the United States. Here, they can’t—”
“They can. And will. There’s nothing the Fed can’t do.”...
But rampant purchasing of US securities meant the Fed was conjuring up yet more money out of thin air to buy the bonds. Which is why the dollar tanked in the first place....
“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 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... "Why should commodities be traded internationally in dollars?”
“Big whoop, you call it a bancor instead of a dollar. Like this ‘New IMF’: semantics.”
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.”...
“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—”
“I was going to ask you.” Carter’s tone was defeatist; he already knew the answer. “I have a 401(k), and a small pension from the Times. Is there anything I should do, to protect myself?”
“There’s nothing you can do, for as long as this asset freeze is in place—which is relaxing, too, isn’t it?” At last Douglas gentled his diatribe with a note of paternal tenderness. “As for when the SEC says, ‘Ready, set, go!’—I’d advise moving to gold, but that’s what millions of competing investors will be trying to do at the same time.
There’s simply not that much of the metal on the planet, which is one of the main reasons it’s been a staple store of value for five thousand years.
[...] Using the powers vested in your president by the International Emergency Economic Powers Act of 1977, I am calling in all gold reserves held in private hands. Gold-mining operations within our borders will be required to sell ore exclusively to the United States Treasury. Gold stocks, exchange-traded funds, and bullion will likewise be transferred to the Treasury. In contrast to Franklin Delano Roosevelt’s gold nationalization of 1933, when FDR made his bold bid to rescue our suffering nation from the Great Depression, there will be no exceptions for jewelers or jewelry. All such patriotic forfeitures will be compensated by weight, albeit at a rate that does not reflect the hysterical inflation of gold stocks in the lead-up to this emergency. Hoarding will not be tolerated. Punitive fines of up to $250,000 will be levied on those who fail to comply. Retaining gold in any form beyond the deadline of November 30, 2029, will thenceforth be considered a criminal offense, punishable by no less than ten years in prison. [...]
“Listen.” Abandoning the socks in the drum, Florence knelt more than need be with his height at last shooting up. “From what you’ve told me, we’ve nothing to worry about. You see any gold lying around that we have to give the government? Even if we had some, they’d pay us for it, that’s what you said.”
“If the government can make us give them anything they want, what else can they make us give them? If they said they need all the dogs, would I have to give them Milo?”
“But if people who surrender their gold get a roachbar price from the Treasury, like you said … And then the recalcitrant”—Goog gave the recent addition to his vocabulary an emphatic flourish—“not only get away with hiding their gold but can get a better price for it on the black market, or overseas …” Lowell was bursting with pride that his son had mastered the basics here without any help. “Doesn’t that mean that the people who follow the rules get punished?”
“As your father, I shouldn’t be letting you in on this rather ugly fact of life, but people who follow the rules are almost always punished.”
“I’ll grant you this much.” Tom was making an almighty effort to remain affable, for which Avery was grateful. “’Kay, for the last several years inflation has bounced between 3 and 4 percent. I realize that to experts like you folks, I’ll sound dumb as a coal shovel. But the figure I tripped across the other day came as a shock to me: with 3 percent inflation, the dollar halves in value every twenty-three years.
That’s from Fed money printing. So when I don’t control what ‘my’ money is worth, maybe it isn’t really mine in the first place. At best, it’s a loan. Which Krugman can zap into ashes while it’s still in my pocket, like a superhero.”
“Interest rates rise with inflation. Your mortgage payments will keep getting stiffer.”
“And why’s that, Mr. Expert—?”
“Nobody wants to lend good money and get paid back with crummy money.” Willing’s bored monotone implied this was obvious.
“But there’s always some inflation. Interest rates don’t always go up because of it. In fact, we need inflation. The alternative is supposed to be sort of terrible.”
“That’s what they want you to think.”...
“All right. What. Since I’ve heard we need regular inflation, like at least 2 or 3 percent, my whole life.”
“I know you have. You’ve been brainwashed.” He sounded so cheerful. “We could easily get along with a small, steady, predictable rate of deflation. Inflation is a tax. Money for the government. A tax that people don’t see as a tax. That’s the best kind, for politicians.
But inflation isn’t inevitable. Starting in 1300, the British pound pretty much maintained its value for six hundred years. And that was during the Empire, when English people practically ruled the world.
That’s part of the problem. Lots of government payouts, like salaries, pensions, and benefits, are pegged to inflation. Meaning they have to keep printing more and more money to meet the budget, because they keep printing more and more money. It’s what Great Grand Man calls a feedback loop. The whole thing snowballs, gets a life of its own. Nobody quite catches up. So your paychecks might not get bigger fast enough. I checked the cabbage, at Green Acre. It’s thirty-eight dollars now.”
“Nuts,” Florence said.
“Another thing,” Willing said, as if going down a list. “As your salary rises, you’re going to get hit by higher tax rates. They won’t move the brackets.”
“But that’s not fair! What a drag.”
“Fiscal drag,” Willing corrected mirthlessly. “See, people getting what’s really happening the wrong way around, like you have—it’s how governments get away with it. The ‘everything’s getting so expensive!’ thing—it makes the problem seem to be coming from the outside. Like they can’t control it. Meanwhile, they think they’re controlling it.
I think we’re in a driverless car. But with no onboard computer. Because the really big mistakes were made a long time ago. You can’t unmake them. You just have to pay for them. That’s what Alvarado got wrong. You can’t get out from under a debt by making a speech. You have to pay, one way or another.” Willing’s tone had grown dolorous. “I think we’ve started to pay.”
“Being robbed,” GGM said, “is an emotional experience. One much more intense than suddenly not being able to buy a boat. And we haven’t been robbed by marauding outsiders, but by our own government.
Willing shrugged. “All governments rob their people. It’s what they do. Kings and stuff. They did it, too. The president did it all at once this time. Maybe that’s better than little by little. At least you know where you stand.”
“In the gutter,” GGM said.
“But you explained to me before,” Willing told GGM. “The national debt got too big to pay back a long time ago. You said if it weren’t for foreign creditors demanding to be repaid in bancors, they’d have had to inflate the debt away. Which is the same thing, you said. It’s still welshing on the debt. It’s still a form of default. It’s still cheating. It makes you just as ‘feckless’ and just as dishonest.
The Renunciation was what was going to happen anyway, over sneaky years and years, except the scam was fast-forwarded overnight. Big deal. You predicted this. So I don’t see why you’re upset about it.”
“Simply because you see a train coming doesn’t mean it can’t broadside your car,” GGM said...
“I should have clarified,” GGM went on. “Alvarado has only stolen from the Americans who saved something, and that excludes over half the country. So, yes, I am bitter. I’m being punished for not spending the entire family fortune when I had the chance...."
GGM sounded frustrated. “The best definition of wealth I ever came across is ‘money is stored energy.’ In other words, since ’29 this whole country has been running the air con with the windows open.”...
“One of the primary responsibilities of government is to provide a functional currency,” GGM was declaring. Jayne and Carter’s averted gazes indicated they’d heard this more than once.
“Functionality entails meeting three criteria. It’s a means of account—for keeping track of who owes whom what. Cross that one off, since with today’s rates of inflation, people in hock up to their eyeballs can effectively pay off loans of a thousand dollars with ten cents.
Second, a currency is a medium of exchange, which the dollar remains barely—although only if you earn the money in the morning and spend it by the afternoon.
Because the third purpose of a currency is to act as a store of value. The dollar has not been a sound store of value in my lifetime.”
Chipping solved the problem of the hackable, stealable, long dysfunctional credit card. Chipped, you were a credit card.
Parental protest over the chipping of newborns died down altogether when states began depositing a generous 2,000 “baby bond” in every infant’s chip To the population at large, chipping was promoted as the ultimate convenience, and the ultimate in financial security.
No more having to carry a wallet or device that thieves could seize on the street. At self-checkout, the terminal simply scanned your head. No more PINs or unique twenty-five-digit passwords, with numbers and letters and signs. No more biometric verification—the fingerprints, facial recognition, and iris scans that hackers had learned to duplicate as fast as the novel authentications had been brought in, since anything digitized can be copied. Obviating the bank account, with its erosive fees, your chip had its own website, or chipsite, for arranging monetary transfers.
Ditch your wallet and move through checkout lanes and entry gates easier than ever. (Amazon One promo)Chipping a person will be much easier after he is used to scanning his palm.
Its calculation of GPS coordinates precise within a millimeter, your chip communed with your very DNA, thrummed to your very pulse. If anyone contacted your chipsite whose distinctive heartbeat didn’t synchronize perfectly with the pounding in your chip, your funds went into lockdown.
So no one could pretend to be you, and the account that went everywhere you went was safe from predators....
You were safe, of course, from all but one predator. For every transaction, it went without saying, was communicated to the Bureau for Social Contribution Assistance, the rebranded IRS...
The chipped all seemed thrilled to see the end of tax returns. Rendering unto Caesar was effortless. Though that meant there was no more cheating on their tax returns, either. No furtive rounding up or disguise of personal frippery as business expense. This also went down well politically. For decades, the public had been convinced that a remote elite living the life of Riley paid no taxes whatsoever. Oddly, Willing had never met one of these people. They must have lived somewhere else.
Much the same reasoning had led to the complete elimination of the cash dólar nuevo in 2042. Cash was an antiquated store of value. It created logistical hardship for Main Street small business. It leant itself to counterfeiting. It was the easiest form of wealth to steal. Criminals had long conducted business in banded stacks, in bulging briefcases, in whole suitcases stuffed with greenbacks, and now these cinematic clichés were obsolete. For cash was also one of the only forms of wealth that eluded jurisdiction...
Because cash is so hard to track, to trace, to tax, to control, Willing was astonished it took the government so long to get rid of it.
“I wonder …,” Willing mused, as if having only just thought of this, though he and Jarred had discussed the matter at length. “What do you make of the proposition that the definition of a truly free society is a place where you can still get away with something?”
“I’d say that’s a treacherous definition of freedom, Wilbur. The law is the law. You obey it, to the letter. Freedom is what’s left over. If the law doesn’t say you can’t do it, then you can.”
Willing put on a confounded expression. “I’m not sure freedom works for me as a remnant. Like the snippets of material left over when my mother made curtains. Isn’t freedom a sensation? After all, you don’t have to exercise a freedom to possess it. I don’t have to get up for a drink of water. But knowing that I could get up, it changes the way it feels to sit, even if I stay sitting.”
“You’re talking treasury, kid,” Goog said. “You were obviously claiming that in a ‘free’ society everybody gets to break the law and not face the consequences. So in your deviant little mind, liberty is just another word for rampant criminality.”
“Sometimes I cross the street against the light.” Willing could have let it go, but he didn’t feel like it. All the pleasantness had been exhausting. “When no traffic is coming. Correct me if I’m wrong, but I think that’s a misdemeanor. I haven’t hurt anyone, or violated anyone’s right of way. But I have broken the law. Being able to cross the street against the light is important to me.”
“Jesus, Wilbur,” Goog said. “That’s fucking sad.”
“If you take that away from me, and every other opportunity to not quite toe the line,” Willing said, “then however many amusing things I’m at liberty to do, I don’t feel free. If I don’t feel free, I’m not free.” I don’t feel free, Willing did not add, and I have not felt free since you and yours jammed this fleck of metal into my neck.
“This state is a riveting social experiment, and maybe the vote’s still out,” Jarred said with gusto. “All Western social democracies have traveled the same arc. They start out decent and quiet and kind of careless, but eventually they get puffed up with their own virtue. Infatuated by fairness. Of course, in a perfectly fair world we’d all have a big, malicious house and mounds of food. Unlimited access to state-of-the-art medicine, free childcare, biggin’ brutal education, and plumped pillows for the long-lived—”
“Fresh flowers every morning,” Nollie added. “A cup that infinitely runneth over with tequila.” She held up her glass for a refill.
“Exactly,” Jarred said, obliging with another shot. “All in exchange, it goes without saying, for doing dick. Socially? An easy sell. Economically? Bit tricky. So the state starts moving money around. A little fairness here, little more fairness there. But it’s like shuffling cargo in the hold, and you have to keep shoving trunks left and right, the boat always lurching in one direction or the other. Eventually, social democracies all arrive at the same tipping point: where half the country depends on the other half.
It becomes an essentially patrician funding system. It’s no longer contribute—” Jarred had had his share of tequila, and stumbled. “Contributory. Which is divisive. Everybody’s unhappy. The lower half don’t get flowers. The patricians feel robbed. And all that fairness, all that shifting cargo, the taking from Peter to pay Paul—”
“High transaction costs,” Willing donated.
“Right. So what started as a reasonable, straightforward arrangement, whereby everyone throws in a little something to cover their modest communal requirements, like roads and a cop on the corner—it’s morphed into one of those complex systems you’re always harping on about, Noll, the kind that courts ‘catastrophic collapse.’ Government becomes a pricey, clumsy, inefficient mechanism for transferring wealth from people who do something to people who don’t, and from the young to the old—which is the wrong direction. All that effort, and you’ve only managed a new unfairness.”