Chapter 1: Take-off in Europe
Just after catching up on the travails of the Sacramento Kings in my local rag, the phone rang. Before answering I quickly put the paper away in my desk drawer. Teachers shouldn’t be seen slacking off on the state’s payroll. “Hello.”
“Mr. Barrie, thank you for taking my call. I am Lisa Mac Millan. I work in the business section of the Mall Street Journal in Sacramento. My Editor assigned me to write an article to accompany your Op-Ed that is scheduled to run tomorrow. I just want to ask a couple of background questions for this short article that will run next to your Op-Ed.”
“Sure. Nice to meet you, Lisa. Mr. Morris told me you would call. Ask away.”
“Before I get into my questions I must ask whether you are aware of the bomb threats we received after the announcement of your Op-Ed.”
“No, this is the first time. You’re kidding! Are you sure the threat was directed at my article? I am just an economics professor at a sleepy junior college in the Salinas Valley, and the only bomb I can think of around here, ever, was the movie East of Eden sixty years ago.”
“Understood, in that case, I think I will just put down, ‘no comment’. Here’s my first question, why did you submit an Op-Ed on the 2008 Financial Crisis at this time?”
“You don’t believe in small talk, do you? I always thought the Financial Crisis of 2008 did not receive the in depth scrutiny it deserved. The truth is I am going to an economics conference next week and I realized it was ten years ago the Great Recession occurred. It seemed like an appropriate moment to raise the topics that were not fully explored when the crisis occurred ten years ago. My intent was to remind people about the events of the crisis. And keep the topic in the front of people’s minds. It is a very important event. I love economics and assume other people do as well. I thought reviewing what happened in the worst financial crisis of our time would be interesting to your readership.”
“I am sure it will. Did you intend any malice against those economists who disagree with your viewpoint?”
“Wow, weird question. No, there is no point in that. I just wanted to advance economic thought and remind people about what we learned over the past decade.”
“Those sound like noble goals, but to reach them won’t you have to trample other schools of economic thought?
“I hope not. My goal is to convince those other schools to work with me to meld comprehensive solutions.”
“That is all I need. Thank you, Mr. Barrie.”
Thank you, Lisa. I look forward to reading your article.”
Mall Street Journal
By Peter Barrie
2008 Financial Crisis Lessons
Ten years ago the captains of finance sat around polished mahogany tables ten meters long and two meters wide at the top of the tallest building in the largest city of each G20 country Everyone was seated awaiting word from a similar room somewhere across the globe. Billions of dollars in new money would originate from these rooms, and the others like it to solve a financial crisis greater than any before.
The economists who made that decision were certified experts. But even so, they feared that such, artificial wealth creation would lead to rampant inflation. But, it did not. The opposite occurred. The price of food and fuel dropped by over 40%. At the end of 2008, the price of many commodities was down a third. Panic set in. World economies teetered on the rim of ruin.
Shaken, but not stirred, the Keynesian establishment watched the flow of new money into banks and government accounts ebb to a trickle. The solution imposed was to create massive sums of new currency and inject it into the banking system to protect the fragile lending community from losses in the real estate market. All the while creating mountains of debt throughout the world. Debt was their solution. A debt that now totals many trillions of dollars and severely constrains growth in many countries.
At the time there was talk of jailing the mortgage bankers responsible for creating precarious financial real estate positions, but not a single critical word was uttered about the central bankers responsible for funding their investment losses, or the politicians responsible for facilitating the immense new debt burden.
Did the real criminals pull off the perfect crime? While many people lost their jobs, the central bankers and politicians did not. For the next ten years the citizenry struggled and toiled to repay a debt destined to enter history as a government write-offs. Taxes were still collected and the machinery of government still hummed along.
The audacity of the Op-Ed author stunned the Australian economist reading the article in the corporate airport lounge in an annex adjacent to the main Heathrow Terminal while waiting for his colleague, the esteemed Keynesian economist, Dr. Lee Hooker.
Dr. Lee Hooker was right, this editorial would set the tone for next week’s International Monetary Fund conference in Victoria.
Dr. Hooker understood how the public’s perception of the Keynesians was the foundation of our authority. He knew appearances mattered. The stoles our colleagues wore at award ceremonies proclaimed our rank and expertise. The public’s opinion of us was a slight exaggeration. We didn’t owe our positions to superior intelligence. It was more to political maneuvering and trampling the weak, but the public didn’t need to know the details. Their opinions were shaped by media editorials and commentary, not the facts. Freedom of opinion reigned supreme in the land of the knave.
To us position was far more important than opinion. Speeches were given from the altar. We all knew our place. True, we coveted our positions, but we also knew how tenuous they were. There was only room for one person to stand behind the podium and for us that was Dr. Lee Hooker. Survival depended on his vision, and our loyalty to that vision. Our opinions didn’t really matter. Loyalty mattered.
A strong stride and the click of metal sole guards broke the silence in the room. Dr. Lee Hooker emerged from the elevator corridor walking briskly toward us.
“Mr. Barrie, certainly got up early to fire a shot at the ship of state. Are we going to begin the week with a mutiny? Anyone know this uppity Yank?”
We all shook our heads. ”No.”
“Well, I know him. He is another nationalistic Yankee scoundrel serving only his own interests. He will not push his way onto my stage. I will strangle him at first sight,” said the imposing Good Doctor as he brought his huge hulking frame to a stop in front of us.
Listening on the other side of the nearly empty Air Deck Lounge, Dr. Ferdinand Cecco, an equally imposing academic, poured himself another shot of Anise at the self-serve bar, then turned and walked toward the rest of us. His booming voice reverberated off the marble tiles of the cavernous public room, “My preference is to give him a splitting headache with a broad sword.”
“That would do the trick, but it is a bit crude,” the Australian commented.
“In that case, Dr. Cookson may I suggest using my Japanese Katana.” The Spaniard swung his arm removing Mr. Barrie’s imagined head.
Dr. Hooker unconsciously grabbed his hanging left arm and held it tight to his chest. The stainless steel and acrylic mechanism was cold and stiff. Lowering his focused gaze toward his approaching colleague Dr. Hooker replied, “We are not Yakuza, we’re educators. We need to discredit his ideas. Bury him in obscurity. The quickest way to do that is by making a public fool of him. He is, after all, a fool. There is no truth to his monetary theory. If we can destroy his creditability, our problems will disappear. He doesn’t have the credentials to support his theory. We must humiliate him. We should begin by making the enlightened media aware of his attack on us. He is not entitled to walk on our stage.”
“Make him scurry across the plank of public humiliation,” said the weapon-loving Spaniard making a gesture like he was making Peter walk the plank with a gentle fanny pat. The room fell silent.
Wishing to end the stuttering conversation Dr. Hooker responded, “Good thought. I think our best approach is to argue his ideas are just a fantasy like his person…Put your best ideas together and we will continue this discussion in Victoria. I need to get out to my plane.”
The first thing Dr. Hooker did upon taking his seat onboard his plane was to call his assistant at Cambridge. When Dr. Hooker connected to voicemail, he said, “Jordan, it is Professor Hooker. Collect all the information you can about an American economist named Peter Barrie from Neverland College in California. Any material you can send directly to my plane’s printer would be appreciated. Especially any economic articles, if he has written any. He has an economics’ textbook called “Rule of Money.” If you can acquire a copy have it sent directly to my room at the Empress Hotel in Victoria, BC. I am particularly keen to see any articles the media may have written about his economic theories. He has one theory that some fringe economists have commented on. His theory is a monetary idea about money creation. Any commentary on that outdated idea would be golden. Thank-you and enjoy your time off.”