by D. R. Bell
Oleg picked up on James’s excitement. “Then how are fiat currencies backed, if not by gold?”
James fetched up his Lagavulin, sipped, and replied, “Just the government’s promise. At the bottom line it’s backed by the strength of the country’s economy. As long as the government’s promises are commensurate with the economic resources, fiat currency remains sound. It’s when the obligations exceed the ability to repay that problems arise. Despite all the creative justifications by Nobel prize-winning economists of governments piling up ever greater debts, the truth is as simple as your parents told you and as Adam Smith described it over two hundred years ago: just like households, countries that borrow beyond their means get ruined.”
“But that money was needed for a good reason, to help people, right?” David said.
“Of course. Do governments ever spend money for bad reasons?” James sounded sarcastic, and then he corrected himself. “Sorry, I shouldn’t be so facetious. Look, there are always great reasons for a government to spend money. If you go to the market and use a credit card to buy food for your family, you have a very good reason. But you take on debt, and if you keep taking on more and more, eventually the bank will come after you. You can’t keep on making promises; eventually you have to pay.”
“So how much debt is too much?” asked David.
“It’s hard to draw a precise line. It depends not only on the size of the debt relative to the economy, but also on how fast the economy grows. Generally, you don’t want your debt to exceed your annual gross domestic product or to grow faster than your economy. In 2008 the US Federal debt stood at $10 trillion, less than 70% of the GDP. By 2013 it was at $17 trillion and 105% of the GDP. The debt continued to grow at about $1 trillion a year while the GDP only by one third as much. In 2019 the debt stood at $24 trillion and 125% of the GDP. And then there were literally hundreds of trillions of unfunded promises to the American population for social security and healthcare. It was becoming clear that the US government was not going to be able to meet its obligations.”
“And that’s when the Chinese stepped in?” David was leaning forward.
“The Chinese, the Russians, the Brazilians, and others. The genius of what they did was in recognizing that none of them was capable of displacing the dollar’s reserve status alone, but together—and by throwing gold’s convertibility into the mix—they were able to do so. Margarita, help out your old professor—why did the Chinese do this?”
Maggie hesitated, surprised at being put on the spot, but she quickly recovered. “By that time the Chinese had largely reoriented their economy from export to internal consumption. Their overall GDP was approaching ours and their domestic consumption grew to over 50% of the economy. It’s a typical progression for developing countries. And when your economy becomes more dependent on domestic market, it creates a reason to strengthen your currency. So in a sense, everyone got what they wanted: the Chinese got the strong currency benefiting their population, and the US instantly brought its debts to a more manageable level while increasing international competitiveness of its products. The losers were the American population, especially its savers.”
She leaned slightly forward as she spoke and David caught himself looking at the opening of her blouse and then looked away, still smarting over the “sheep” comment, but attracted to her confident attitude. And nice legs. “But why did the dollar drop so much?”
“Global demand for dollars was largely driven by its reserve currency status. I think that in a sense some of the countries with large dollar reserves were keeping the dollar artificially high to give themselves time to quietly diversify into other currencies, real estate, natural resources. Once they were finished diversifying, they withdrew their support.”
James stretched and stepped back to the table to refill his glass. “Thank you, Margarita. The Chinese currency went full circle: it was strong in the early ‘80s when their economy was internally oriented; they devalued it and kept it low for thirty years to support their export manufacturing; and now it’s back to being strong. Actually, the Chinese were gradually building the international position of their currency for years. What happened in 2019 was not a surprise. But the manner and the timing were surprising. Obviously someone who knew the plan was in a very advantageous position. I hope you all enjoyed this small lecture. Now, tell me … why are you interested in Jonathan Schulmann?”
David attempted an awkward dodge. “Well, we can’t go into the details …”
“Look,” James said, “it’s the second time I asked this. You want me to introduce you to someone who knew him. What I told you so far is public knowledge, with some of my commentary. If you want to dig deeper, you have to tell me why.”
David felt the pressure of three sets of eyes trained on him. “I’m not trying to hide things from you. It’s just that someone was killed yesterday because I phoned him. And I don’t know why. I don’t want to put you in danger.”
James pursed his lips and sat down. “I appreciate that, but I am sixty-eight, my wife passed away two years ago, we had no children—I’m not afraid to ask or answer any questions. If you want my cooperation, you have to tell me what’s going on.”
David looked at Maggie, trying to ask telepathically, What should I do? He’s your friend.
Maggie slowly nodded.
David went ahead and recounted an abbreviated version of what took place in the past two days. James listened attentively, head slightly tilted to one side.
When David finished, James said, “Thank you. I will try to help you. I’ll contact Margarita when I have something. Be careful.” He got up, signaling an end to the evening.
Saturday, 4/23/2022, 10:11 p.m. PDT
Oleg and David waited by the car as Maggie hugged James good-bye.
Oleg winked at David. “I see that you’re looking at Maggie. You’d like to try your luck with her, eh?”
David mumbled something incoherent.
“She is not an easy one. Andrei may have had something going with her way back, but he likes his women simple.”
Maggie came back to the car, cutting off the discussion.
“There’s something I don’t get,” Oleg said as he accelerated onto the 405 Freeway.
David adjusted his seat belt. “What is that?”
“According to the old guy, Americans have gotten worse off and the Chinese and the Russians should have gotten better off. Now, I came here in 2020, so I don’t know what it was like before that, but I can see that for many people things are tight. Yet I also know that in Russia things have not gotten better. Some are doing well, but not the ordinary people. I send money home to my mom so that she doesn’t have to work two jobs anymore. For most people there, it’s still hard.”
“A few are doing well here, too,” Maggie said. “I guess the well-connected ones benefited regardless of the country.”
When they got back to Andrei’s house, David went straight to the computer to check his e-mail. There was a message from Jeff with a bunch of attachments. David glanced through them. Most were marked “Confidential.” One was a document from Julia Bishow describing an improved design of the phased array antenna to be installed on airplanes that would improve signal-to-noise ratio by six decibels and increase the throughput four times. David figured maybe that was what the kidnappers were interested in and they just confused names between Julius and Julia. Or they might have assumed an antenna engineer would be a man. Or this was all a giant mistake.
He went through the documents and created edited versions, with key portions removed or changed. When Maggie joined him, David explained about the documents and his thoughts about the name confusion. They decided it was time to text the kidnappers.
David set up a new e-mail address and sent a “have files, need contact e-mail” text to his own phone number. A knot formed in his stomach as he realized that events would start unfolding now—and he had no idea where they would lead. He tried to hide his anxiety, when he sensed Maggi
e observing him.
“So where are you from?” she asked.
“I grew up in Mansfield, Massachusetts. Near Boston.”
“Large family?”
“Not really. Two parents and an older brother.”
“What does your family do?”
“Both my parents are physicians, my father a cardiologist, my mother an oncologist. My brother also went into medicine. He’s an orthopedic surgeon. They all went to Harvard Medical School.”
“But you didn’t go into medicine?”
“No, I studied engineering at Purdue for five years; got my master’s degree there. My parents never seemed to forgive me for not following them into the medical field, the only field they considered worthwhile.” David was happy to tell her more. He was uneasy among the strangers at Andrei’s and having a personal conversation gave him a bit of comfort.
Maggie ran a hand through her hair. “How did you end up in LA?”
“The usual story: got a job offer while at school, came here for an interview, fell in love with wide beaches and golden sunsets.”
“So, what do you do when you don’t work?”
“Hike, read, watch movies.”
“By yourself?”
“Usually. Sometimes with friends.” David did not mention that usually it was one particular friend—Jim. And Jim was gone.
“What’s your favorite book?”
“Well, it changes. I read Skeletons at the Feast by Chris Bohjalian not too long ago. Really liked it.”
“Oh, yes, I know that book. It takes place at the end of World War II. I liked it, too.”
“What’s your favorite book?” David asked.
She yawned and smiled. “It’s really late. I’ll tell you tomorrow.”
Maggie left, and David couldn’t help feeling disappointed. Interest from a pretty woman was flattering. In almost two years since his marriage breakup, David had not had a single serious relationship. It wasn’t due to lack of opportunity. If anything, hard times made it easier for people to hook up. David was available, employed, and still relatively young—but he didn’t want a relationship. He went out on a few dates with single women, had sex, and usually found some excuse to not spend the night. Afterwards, he would go driving through empty streets with music turned up high. There was rarely a second date. The only women he brought to his place were married ones (Maggie did hit this nail on the head, he thought), because he knew they couldn’t stay.
Maggie didn’t ask him about his job beyond what he’d told her in the coffee shop, and he did not volunteer answers. Judy’s ambition had been contagious; around her he’d been ambitious as well. He’d gotten one promotion, was in line for another, but the 2019 crisis changed everything.
It was hard to push for a promotion when every couple of months more people were being RIF’d, and there were tons of people desperate for a job. And without Judy to push him, he just did not have the drive. Intellectually, he recognized that he was struggling with depression. He didn’t go to a shrink, preferring instead to hit pillows and practice deep breathing. He’d also developed a daily routine to follow; this made his days go faster. He’d been in his job too long, and with his background he probably had some options even in this market, but he just did not have the guts to make a move.
Exhausted, David returned to the cold bedroom he’d been in yesterday and managed to sleep without Ambien that night.
Sunday, 4/24/2022, 7:25 a.m. PDT
In the morning David woke up at least knowing where he was. He dreamt again last night, but this time Jim Plasche was not there. It was his more typical dream, the kind he’d had at least weekly over the past two plus years. He was in a castle surrounded by hordes of creatures he could not see. There were no other defenders; he was all alone. The massive gate was being pounded from the outside. It was slowly giving way after each blow. As the gate was about to be breached, he would invariably wake up, never seeing the attackers.
He got out of bed thinking that this was also the last night he was going to spend in Andrei’s house, although he had no idea where he’d spend the next one. David took a quick shower and proceeded straight to the study, anxious to check his e-mails. His newly set up e-mail had a message: “send file to [email protected].” His personal e-mail had a note from Megrano to get in touch ASAP. Both were sent this morning.
David went to the “Grand Central,” as he started thinking of the kitchen. Everyone except for Tamara was there. Maggie, in shorts and sports bra, her face and shoulders glistening with sweat, looked like she just came back from a run.
Andrei greeted him with, “What’s new?”
David shrugged his shoulders. “Nothing.” He added that he was going to take his car and get some clothes. As much as he appreciated what Andrei offered, he needed something more in his size. Andrei nodded. He didn’t offer any assistance, David thought. He clearly wants me out and soon.
David had a cup of coffee with a bagel, went back to the study, and replied to Megrano, saying he had an e-mail address from the kidnappers. He then sent an edited copy of Julia Bishow’s file to “acegik” with the message: “Here’s Julia’s file. I have more if interested.”
Megrano’s response came immediately, saying he’d be in the office by eleven.
As David was heading toward the door, Maggie intercepted him. “So where are you going?”
He repeated that he was about to do a bit of clothes shopping, adding that he was planning to leave Andrei’s place today. Maggie asked him not to rush, saying she’d talk to Andrei. She wanted to do a bit more research into Jonathan Schulmann and the dollar crisis of 2019, also check with James Bowen about the introduction he promised. David thought with a certain admiration that she hounded people until she got what she needed. He felt guilty about not mentioning the e-mail exchanges, but he’d subjected Maggie to enough danger already, and Megrano must have thought it was not necessary to involve her. Even yesterday he didn’t want her to come to the station.
David went to a shopping mall and got himself a pair of jeans, a couple of shirts, T-shirts, underwear. He changed in the dressing room, and put Andrei’s clothes he’d been wearing in a bag. He felt better wearing his own things. He thought of buying a computer but decided to hold off. Perhaps he’d get back his work computer soon. Plus he had an old one at home. It was time to see Megrano. The trunk on his Accord would close but not lock. He decided he’d take his chances and put his shopping bags there anyway.
Sunday, 4/24/2022, 10:35 a.m. PDT
“One mark of a great soldier is that he fights on his
own terms or fights not at all.”
— Sun Tzu, The Art of War
Colonel Fai Hsu was looking at the computer screen. Ferguson’s e-mail came in more than two hours ago, but Fai continued analyzing the scenarios. He was still jet-lagged from the trip, so he had to take a bit of extra time to plan.
He was thinking of the situation in dispassionate facts. He had no respect for the shoot-them-up computer games that young people were crazy over. He played Go and chess. Before you start shooting, you’d better take your time to figure out who to shoot at and how. As Sun Tzu said: “Ponder and deliberate before you make a move.” And Fai believed in planning five moves ahead.
He organized his thoughts:
Negatives
- People killed in Seattle and LA, police are investigating,
- Julius’s accomplice in Seattle is in a hospital under police supervision, impossible to get to
- The green folder was found in Ferguson’s carry-on, but Ferguson retrieved the file from it and hid it somewhere
- Ferguson has a network in LA and they are helping and protecting him
- Last night’s search of Ferguson’s house was fruitless
Positives
- They do have access to both LAPD and Seattle PD systems and getting information from them
- They know where Ferguson and his accomplice are hiding, source of information is unknown, but according
to MSS it is reliable
- Eight properly trained agents at his disposal and two safe houses, one in Malibu and one in Hidden Hills
Fai tried to get into Ferguson’s mind but couldn’t; the evidence allowed for different and incompatible possibilities. The e-mail was confusing. Either Ferguson did not know what was going on or he was masterfully manipulating them by pretending that he did not know what was going on. After all, the art of war was the art of deception. Fai added things up and leaned towards the latter. Ferguson had accomplices, he’d fooled them with the green manila folder (why keep it and hide the file elsewhere?), and he’d escaped their agents twice.
The second escape showed signs of training. The agent had seen Ferguson and his female accomplice run into the parking structure, and he’d waited by the gate, but they’d never shown up. Two other agents arrived and combed that parking garage—nothing. Ferguson must have had another car waiting nearby. Fai wondered why Ferguson had gone to SMPD. Perhaps he knew that MSS did not have any visibility there and wanted to present him with yet another adversary.
Fai pondered the next move on the chessboard and figured he did not have many options. He had no way of contacting Julius directly. He couldn’t reach Julius’s accomplice at University of Washington’s Medical Center. In any case, Seattle was too “hot” after four deaths, and the MSS’s network there was vulnerable at the moment. This left Ferguson. Fai had to get and question him. Fai’s advantage was that Ferguson thought he was well hidden, when in reality he was not. Time was of the essence, so Fai formulated his plan.