by Joe Nobody
The sounds of clicking heels and scuffing shoe leather echoed from the polished marble floor as Reed ambled toward his office. He had just been through one of the most confusing meetings of his budding political career and was trying to analyze what just happened.
The real power in the House of Representatives was measured by which sub-committees a congressman was assigned. The entire process was like a professional sports league trying to put together a multi-player deal. Draft picks, order of selection, free agents and future considerations all contributed to a system of political bartering that made Reed question the sanity of the entire process. Personal qualifications, experience, or desire had little, if anything, to do with it.
Despite this feeding frenzy for leverage and constant maneuvering for power, the freshman had managed to achieve his goal. He was now the newest member of the House Subcommittee on Domestic Monetary Policy and Technology - the sweet spot for dealing with the Federal Reserve.
Reed had sacrificed every other potential position to acquire this appointment. He had risked exposing his agenda, with one senior member of his party questioning why he was bypassing other politically powerful opportunities. Some quick thinking seemed to satisfy the curious politician, but just barely. “I believe future economic events will make this committee more influential than it is today,” the junior congressman explained. The party’s leadership hadn’t posed any further questions.
He was running a game within a game. He had made no secret of his dislike of the Federal Reserve System during his campaign. Carefully crafting his speeches to make it a secondary issue, Reed didn’t want to appear overzealous to the electorate or to elicit unwanted attention of party powerbrokers. He judiciously manufactured the image of a man compelled to reform the Fed, hoping to provide a good cover for his true intention – discovering what really happened to his father.
Reed strode through the heavy, wooden door that separated his office from the hall of the capitol building. Brenda glanced up and smiled, handing him the stack of messages from the corner of her desk. Before he could even say hello or thank her for the notes, the phone rang.
“Congressman Wallace’s office,” she answered professionally. “No, I’m sorry; the congressman isn’t in at the moment.” Reed winked at her and proceeded through the reception area toward his office, flipping through the messages as he passed. Brenda covered the phone with her hand and cleared her throat to attract his attention. When he established eye contact, she motioned with her head to one of the visitor’s chairs in the corner. There, a smallish man sat with a briefcase on his lap. Wallace studied his watch and realized his appointment had arrived considerably early, but that was just fine with him. He had been looking forward to visiting with this man for a long time.
Reed nodded a silent thank you to Brenda and stepped over to address his visitor. He offered his hand, bowing slightly at the waist. “Dr. Martin?”
Peering over the rims of his coke bottle-thick glasses, the older gentleman managed more of a grimace than a smile. He nodded and weakly shook the Texan’s hand. Reed made a motion with his arm, inviting the visitor to his office while saying, “Please, Doctor, won’t you come right in?”
“I’m a little early,” protested his guest. “The taxi driver drove much too fast despite my objections. I kept telling the maniac that I wasn’t in any hurry.”
“It’s not a problem, sir. Can I get you anything?”
The man considered the query for a moment before shaking his head. “No, thank you; I’m fine.”
Reed followed Dr. Martin in, motioning for his guest to settle in one of two burgundy leather visitors’ chairs. After the doctor was seated, Reed chose the other chair, rather than sitting behind his desk. He wanted his visitor to feel comfortable and interact with him as an equal.
The congressman began, “So, Dr. Martin, how long have you been the head of George Washington University’s History Department?”
“Almost twelve years now. I enjoy the research part of the position more than the teaching these days. The administrative role has never been a favorite of mine. Necessary evil, I suppose.”
Reed nodded his understanding. “Do you find my request unusual, sir?”
The man reflected on his response for a little longer than Reed believed necessary. When the professor finally spoke, the pause was understandable. “No. No, not really. My department receives the occasional request from various branches of the government. I normally assign such tasks to one of our post-graduate students. Your inquiry, however, had already been made some years ago by one of your congressional predecessors. I handled his project originally, so it only made sense for me to handle this request personally.”
Reed was curious. “A predecessor of mine?”
The doctor nodded, “Yes, congressman Ron Paul asked my department for a nearly identical study some years ago. I’ve always had a streak of libertarianism myself, and have a lot of respect for Ron. I rolled up my sleeves and dove right into the project.”
Reed nodded and watched Dr. Martin unzip his briefcase, pulling out a small pad-computer. The professor continued. “Congressman, before we begin, I need to tell you something. I do this only so as not to waste valuable time. I can provide a synopsis of the information you’ve requested right now. I don’t think it’s the answer you’re looking for, but it would save both of us a lot of effort.”
Reed was a little surprised by the statement, but recovered quickly. “Why sure, professor. I suppose that makes sense. Please continue.”
The historian nodded, “I’ll get right to the point, congressman. It’s no secret that you are the next in a long line of anti-Federal Reserve officials who’ve managed to get elected. I’ve reviewed your campaign speeches, scrutinized your website, and consulted with senior members of your party.”
The professor paused for a moment, letting his statement sink in before continuing. “I’ll be blunt, Mr. Wallace. If your intent is to replace or modify the Fed, it simply won’t work. You’ll be wasting your time. The Federal Reserve System is entrenched, powerful, and well-protected.”
That’s what I want everyone to think I’m doing, thought the congressman. I want them all to be distracted by thinking I’m out to change the system. The expression on Reed’s face relayed a mock surprise at the academic’s words. He started to protest, but the professor cut him off.
“Representative Wallace, I’m not a big fan of the Fed. I understand its imperfections more than most. The Federal Reserve should be thought of like Churchill viewed democracy, ‘Democracy is the worst form of government, except for all the others that have been tried from time to time.’ Well, sir, the Fed is the worst form of central banking I’ve ever seen, with the exception of all the other methods that have been tried throughout history.”
Reed feigned cynicism, now convinced he had contacted the perfect person for his purposes. “You’re going to have to expand on that, professor. I’m a little shocked by the direction this conversation is heading.”
The professor smirked knowingly, believing he was one step ahead of the younger man sitting next to him. “Throughout the history of organized government, there have been two methods of monetary policy. Either the government or a powerful private entity has controlled the money. Both methods have always led to economic disaster. In some fashion, one can attribute the downfall of history’s greatest empires to this very policy. British, Roman and Ottoman empires all failed due in some part to the management of their currency. As you know, these downfalls resulted in enormous suffering by the people of the realm. This has been the case regardless of the form of rule, be it socialism, democracy or republic. There are no historical exceptions.”
Reed’s gaze drifted for a moment while the professor’s words rolled around in his mind. After a brief pause, he nodded for the man to continue.
“Even here in the United States, we experimented with both methods for over 150 years. The Continental Congress controlled the money supply to fund the R
evolutionary War. The British overwhelmed the system with counterfeit bills. An independent central bank was then established, only to be ruined by corruption. Lincoln reversed that system, generating Greenbacks. Again, government control eventually failed. The US has bounced back and forth between the two methods since the beginning. The establishment of the Federal Reserve System in the 1920s stabilized the economy and engendered long-term growth. The Fed is a hybrid of the two methods, and it works better than anything else human society has implemented.”
The Texas representative crossed his legs, leaning back in his chair. “It doesn’t sound like anyone wanting to disrupt the status quo would have your support either, professor.”
Dr. Martin immediately dismissed the concept. “I couldn’t offer any voice about what’s going on today. I don’t have the unabridged facts to study and analyze.” The older man’s face became very serious, “Young man, it takes a while for time to erode all of the inaccuracies and propaganda put in place by powerful men. And believe you me; history is full of influential people who were experts at this sort of deception. Slowly, over many decades, the smoke and mirrors dissipated, and truth surfaced. To the historian, time is often like a knife - peeling away the deceptive skin covering the fruit of truth. That’s why I’m a historian.”
Reed did an admirable acting job, his expression displaying disappointment. “I’m sorry you feel that way, professor. Still, I would like to contract the study, if you please. At minimum I need the history lesson.”
The professor sighed, “Who prints the money, or more accurately, who controls the money supply, is one of the most misunderstood facts about our government. Today, our government doesn’t print its own money to spend – that is done by the Fed. The people who run the Fed, and thus make monetary policy, are appointed by the government. It’s a shared power, with neither side having full control.”
The older man gazed at his watch, standing abruptly. “My apologies, Congressman, but I’ve another appointment. I’ll be in touch when I’ve finished your study.”
After shaking hands and showing his guest to the door, Reed returned to his window and peered out into the gray Potomac sky. I don’t care about the Fed or the money supply or any of it. I want to find out who killed my father and why.
February 15, 2017
Washington, D.C.
The secretary of the Department of the Treasury glared at the phone with an expression that betrayed her complete annoyance. She was only halfway through the latest status report on anti-counterfeit operations, and this call was the fourth one since she began. Reaching for the ultra-modern speakerphone, she couldn’t help but notice the nine-inch high stack of additional paperwork that required her attention today. Hitting the intercom button, her voice relayed frustration. “Yes, Ginger, what is it?”
“I’m sorry to interrupt, Secretary Palmer, but there are two gentlemen here from the IRS. They maintain it’s an urgent matter.”
Rubbing her temples, Wanda Palmer whispered under her breath, “What now?”
Ginger evidently recognized the exasperation in the utterance, expanding, “They are rather insistent, ma’am.”
SOT Palmer, as she was known throughout the organization, curtly responded, “Show them in please, Ginger.”
A few moments later, the door to the secretary’s office opened, and two men Wanda didn’t recognize were shown in. Quick introductions were exchanged, but Wanda was so tired she couldn’t remember their names. She almost let out an audible chortle when she recognized a resemblance between the two IRS agents facing her and the vaudeville characters, Abbot and Costello. While the two men confirmed with Ginger that they didn’t need anything to drink, Secretary Palmer was trying to remember which was taller, Abbot or Costello. The taller man interrupted her memory search, speaking with urgency in his voice. “Madam Secretary, as you know, Under-Secretary Withers is on vacation at the moment. We felt this matter was important enough to bring to your attention immediately.”
Something in his tone caught Wanda’s ear. “Go ahead; you’ve got my attention.”
The shorter IRS agent opened a small attaché case while his partner continued. “A few hours ago, it became evident that something was terribly wrong with the IRS’s tax processing system. We believe there is a strong possibility that we are experiencing some sort of cyber-attack.”
Secretary Palmer’s first thought was, “So, why are you troubling me with this?” Rather than ask why they hadn’t immediately contacted the FBI, she decided to hear them out. “Go ahead.”
It was Abbot’s turn to talk, “Ma’am, this report indicates that tax returns generating over 210 billion dollars’ worth of refunds have been submitted electronically to our system in the last eight days. That is over 100 times the average for this time of year.”
Marsha let out a very un-cabinet-level whistle. “Did you say billion – like with a ‘b’?”
“Yes, ma’am, I did.”
Secretary Palmer reached for the report and quickly scanned the numbers. A minute later, she glanced up and tersely inquired, “Has anyone notified the FBI?”
Abbot and Costello first looked at each other, and then Costello spoke. “No, Madam Secretary, we didn’t. There is evidence that the source of the attack is offshore, and we don’t have the authority to report an act of international terrorism…perhaps an act of war.”
“What?”
Abbot continued, “We noticed the abnormality three days ago and sent out our own investigators at that time. It finally became clear this morning that a very disturbing trend is in play here.” Abbot looked at his co-worker, who nodded that the other agent should continue.
“Ma’am, we believe the Chinese government may be the source of this attack.”
SOT Palmer’s spine bristled, and her gaze became piercing. “You’d better be able to back up that type of statement…and do a very fine job of it.”
Secretary Palmer listened as the two men explained their logic. Agents had been sent to three different addresses that had received refund checks. All were postal service stores with hundreds of mailboxes, and all were owned by Chinese individuals or corporations. When the business owners’ names were finally tracked down, the FBI’s counter-intelligence desk had flagged one of the people as a potential MOSS agent.
The two IRS agents continued with the results of the investigation for a few more minutes when the secretary held up her hand and stopped them. “I assume someone has stopped payment on all of those checks?”
Abbot and Costello’s reaction justified their new nicknames. The two men hesitated and stammered for a few moments before Abbot finally blurted out, “No, Madam Secretary, we haven’t done that because we can’t. There is no way to discern legitimate returns from bogus ones, and even if we could, the government can’t stop processing on individual checks. We don’t have that capability in the system. There’s never been a need. We would have to stop processing on all treasury checks, including social security, unemployment and pensions. Even the military’s paychecks would have to be stopped.”
Secretary Palmer made her decision in less than a second. She reached for her phone and pressed a button.
“Yes, ma’am.”
“Ginger, get me the chief of staff at the White House right away. Tell him it’s extremely important.”
The White House
The gathered staff sat in shock as Secretary Palmer and her early morning guests explained the situation to the president and his immediate staff. A hastily prepared presentation served as the primary focus of the meeting, with the attendees flipping pages as their eyes widened and narrowed during Palmer’s narrative.
“Mr. President, in summary, each year the Internal Revenue Service processes approximately 153 million tax returns. Normally, about 80% of those receive refunds. The annual government collections from individual income tax are $1.8 trillion. Normally, we refund about $400 billion of that amount, resulting in a final net number of $1.4 trillion in revenue. This sit
uation could reduce that amount by over 20%, sir.”
Everyone in the room knew that China was to blame, but no one wanted to say it. The world was teetering on several different edges as it were; a war was something no one wanted to add to the mix. The president fully understood that’s what this meant – an act of war. Subterfuge was often as damaging as an overt attack.
After the known facts had been disclosed, the obvious next step was to determine a course of action. This stage of the meeting was the exact opposite of the presentation, as several discussions lead to debates that escalated to arguments. As a variety of solutions rolled around the conference room, it was determined that the Federal Reserve Board must be brought into the conversation. Twenty minutes later, Chairman Gordon was on the speakerphone and being briefed. When Secretary Palmer finished her presentation, Gordon whistled loudly.
“Mr. President, I can see only two options here. Either we honor the checks that have been written or we don’t. As I’m sure you’ve already been told, we don’t have the capability to pick and choose which payments are honored versus rejected. People will take the checks to local financial institutions, and our clearinghouses will process the Treasury’s account numbers, crediting the banks. It’s an all or nothing proposition because Treasury doesn’t differentiate the accounts for social security stipends, Medicare reimbursements, or tax refunds. It all comes out of the same bucket.”
The chief executive replied, “Chairman Gordon, what will be the impact if we honor the bogus returns? And by that, I mean what will be the consequences of $180 billion withdrawn from the government’s operational cash accounts?”
There was a longer than normal pause on the other end of the speaker. Finally, the nation’s top banker responded. “Mr. President, that amount of money is significant in the grand scheme of our country’s financial position. In reality, sir, the final impact to the nation will be about twice that. The government is going to get double-dipped because anticipated revenue will be converted to expenditure. The final number could be as large as $360 billion, sir. That is a significant sum.”