When Fiction Becomes Prediction

Everybody wants to know the future.

Quite a few have written about it…

At the far-out level, there’s science fiction like Star Trek, with spaceships zipping across the galaxy faster than the speed of light.

Closer to our era, there are futuristic 20th century novels like Brave New World or 1984, which lay out a dystopian, totalitarian future.

There are many others, of course… Library shelves bend under the weight of such books.

Some fictional futures hinge on fantastic events, like aliens visiting Earth or a disease that creates zombies, such as what happens in The Walking Dead.

Others don’t address how the world gets to where it is, leaving the chain of events to the readers’ imagination.

But every so often, you’ll find a work of fiction that offers an all-too-plausible view of where we could be heading.

There’s no need for exotic physics… just connect the dots and extrapolate current trends and events.

When done well, the message will stick with you long after you’ve finished reading it.

And such is the case of a book I read recently — a novel published in May 2016.

While it’s just over four years old, I was both amused and stunned at the author’s prescience…

Someone seems to have had a better crystal ball than most.

Let’s dig in…

The Mandibles: A Family, 2029–2047, by Lionel Shriver, is about an upper middle-class family descended from a substantial manufacturing fortune.[1]

The grand patriarch is in his 90s, comfortably living out his remaining days in an elegant nursing facility. He drinks fine wine, reads leather-bound books and dabbles in the stock market, counting his capital gains.

There’s also a crazy second wife, a son-in-law who teaches economics at Georgetown University a trust fund daughter who works in social services, and more. Other characters include boyfriends, tenants and precocious grandchildren who are growing up in private school bubbles.

Everyone is enjoying their lives. It’s an idyllic existence of country clubs, nice vacations, Ivy League destinies… While all eagerly await the inevitable passing of grandpa and the distribution of his substantial estate.

But all is not well in rest of the world. The U.S. federal deficit has continued to grow to a massive size, and the national debt is nothing short of astronomical.

Then one morning in 2029, everyone awakens to news that Russia (still led by a now-elderly Vladimir Putin) has combined with China and other nations to form a new international currency called the “bancor.”

This new currency is based on hard assets: a basket of gold, oil, agricultural products and even rare earths.

If a country cannot pony up the necessary goods to the “New International Monetary Fund” (NIMF), it’s essentially locked out of the global trade system.

There’s a good chance some of this may sound familiar to you.

It’s a clever use of history here. In the early 1940s, British economist John Maynard Keyes proposed creating the bancor as an alternative to the British pound after World War II.

Instead, we got the Bretton Woods Agreement, which put the U.S. dollar on a pedestal backed by U.S. gold and military power. (I’ve discussed both topics here and here.) Fast forwarding to the present, if not 2029, the idea of other world powers conspiring against the U.S. dollar has long been a fear of my Agora Financial colleague Jim Rickards.

Indeed, the book’s author, Ms. Shriver, is a fan of Jim. The opening page of her novel even cites his 2011 book Currency Wars: The Making of the Next Global Crisis as an inspiration.[2]

In that book, Jim discussed his CIA days, when he staged “war games” using money in lieu of attack submarines and nuclear missiles. Jim actually laid out one scenario involving Russia and China combining their state gold reserves to issue a new currency that competes with the dollar.

In The Mandibles, Shriver took that idea a bit further by adding more commodities to the basket.

Whatever backstops the bancor, however, the move is obviously intended to recalibrate an unfair, imbalanced system of global trade that is nothing if not entirely lopsided towards U.S. consumption.

And not surprisingly, the bancor impacts the United States like an economic asteroid. It’s a wipeout…

Within days of the bancor hitting global markets, the value of the dollar has crashed.

Prices for foreign imports soar. Stock markets crash.

Businesses close, tens of millions of people lose their jobs. Inflation and scarcity hit the store shelves. Precious metal prices soar.

In short, economic life as Americans had known it since World War II comes to a screeching halt.

Indeed, things begin to look like the days of Weimar Germany in the 1920s.

For example, when you order a meal at a restaurant, you pay when the food is ordered because by the end of the meal the price has moved up again.

At first, the U.S. president resists the bancor. It’s illegal for Americans to deal with this devilish currency. And the U.S. government “fights back” with — you guessed it — massive issuance of new dollars, courtesy of the Fed. That, and zero interest rates.

The effect is that, sans bancors, the U.S. remains shut out of global trade. All those shelves in all those big box stores no longer carry goods manufactured somewhere else. (A real economy makes real things, remember?)

Eventually, the president announces, FDR-like, that all U.S. federal debt is summarily cancelled. It will never be repaid, especially to those no-good, dirty, rotten overseas creditors. Meanwhile, he demands that all U.S. citizens turn in their gold, down to the fillings in their teeth.

Soon federal agents begin house-to-house searches, looking for contraband precious metal. No candlestick or wedding ring is safe in this new economic milieu.

The Mandibles, of course, are not immune.

The elderly Mandible patriarch sees his entire portfolio disappear to government default and gold confiscation. Eventually, he’s turned out of the old folks’ home to the surly ministrations of his now-impoverished family.

We become witness to a societal train wreck.

Suddenly it’s a struggle to find food of decent quality at the supermarket, where armed guards roam the aisles. While at the checkout counter, people pay through the nose for whatever they find.

The precocious Mandible grandchildren lose their private education. They now attend local, inner-city public schools, where rigorous academic preparation for the masses is not high on the agenda (much like today).

At home, the cost of even basic water service and natural gas becomes truly burdensome. People flush toilets once a day. Thermostats are hard-set in the 40s (Fahrenheit), and that only to keep the pipes from freezing in winter.

Electric power becomes frightfully expensive as well, at least when it’s available. City life becomes an exercise in dealing with brownouts and rolling blackouts.

States and cities are essentially broke and insolvent. Police and fire protection are luxuries, such that only the truly wealthy — yes, a few remain — can afford private security.

Meanwhile, the Second Amendment has been “reinterpreted” by the Supreme Court. Per a new crop of justices, that quaint, “well regulated militia” of Constitution-fame now pertains only to the government. Only law enforcement personnel and national guard can carry guns. Mere citizens can no longer possess firearms. (Well, not legally.)

Across the plains of the Republic, cities and countryside transform into squalid places where the proverbial law of the jungle prevails.

What’s left of America’s vaunted “freedom” is only one’s ability to conduct some semblance of impoverished life while navigating an endless list of restrictive laws and regulations issued by petty bureaucrats who control everything.

In other words, in this new, much poorer America, only that which is not prohibited is allowed.

But the American economy adapts, of course.

Under this new arrangement, foreign visitors are wealthy like Croesus. They come to the U.S. and buy blocks of houses, tracts of farmland, such factories as remain and even former U.S. national parks.

Desperate, unemployed city people move to the countryside to find jobs in basic, agricultural labor; “doing jobs that foreigners won’t do.” Still, most of the best food products are reserved for export.

Many former immigrants return home, including millions of Mexicans to Mexico, where the economy is booming. In fact, Mexico erects a high, sturdy wall from the Pacific Ocean to the Gulf of Mexico, to stop hordes of fleeing Anglos from el Norte. (And yes, this book really was published in 2016, pre-Trump!)

An American passport becomes worthless. No other country wants Americans for anything, except occasionally as low-wage workers for the most menial of tasks — although some Americans are decent musicians.

Meanwhile, when Russia re-annexes Alaska, the Washington political class don’t particularly care. “It’s too far away,” says one leading light of the nation.

Much of the rest of the U.S. economy becomes a mélange of low-wage employment categories in one form or another of so-called “health care,” such as it is. In reality, most workers tend to the demographic bulge of elderly, broken-down, Baby Boomers who are housed in squalid tenements.

Of course, American medicine has become quite basic. too. Most Americans can scarcely afford simple antibiotics, which are all manufactured elsewhere in any event. (Sound familiar?)

Cities become danger zones, in which you don’t merely risk being mugged while walking down the street or robbed at home. No, there are countless instances of people evicted from their homes at gunpoint by other desperate people. So much for guns being “illegal,” eh?

The one hope for some Americans is a place called the Free State of… Nevada.

But if anyone from the other “47 states” goes to Nevada, everything they leave behind will be confiscated by a spiteful, grasping federal government. Indeed, one risks being shot just going near the Nevada wire; or so goes the tale that compliant corporate news media tell the vast population of ill-educated, gullible, sheep-like citizenry.

And so it goes… The Mandibles is one biting vignette after another; one acidic scenario after another. It’s sharp and unceasing. Amusing, yet entirely scary.

In short, The Mandibles depicts a post-capitalist, post-Constitutional America in economic free-fall and social meltdown. Everything bad that could happen has happened, short of a nuclear war.

Then again, why nuke America when a wealthy foreigner can just fly in and scarf-up whatever suits the fancy?

Ms. Shriver is wittily merciless in her disdain towards the U.S. governing class that has set the nation on such a path to downfall. For example, one of her characters muses “How could a country that was once so rich have blown it all, to become so poor?”

How indeed…  Do you read the news?

Another member of the Mandible cast, a reliable player named Esteban, is of Mexican heritage, yet “a true American patriot.” By contrast however, and in what Shriver calls “the northeastern liberal tradition,” a different character “routinely said mean things about America, as if hating it here made (her) better.”

This book is fiction, yes. Then again, good fiction is often rooted in fundamental truths. It’s about setting a plot in the future to describe what one fears in the present.

And today, four years post-publication, what are some of those fears?

A crashing dollar, exploding federal debts, massive unemployment, empty store shelves, deindustrialization, old and sick people confined to home, inability to travel, declining standards of living, dangerous streets, declining national power, rolling power outages…

Any of this seem familiar? Yes… Exactly.

The book is entitled The Mandibles. Published in 2016.

And Lionel Shriver told us so…

On that note, I rest my case.

That’s all for now… Thank you for subscribing and reading.

Best wishes…

Byron W. King

Byron W. King
Managing Editor, Whiskey & Gunpowder
WhiskeyAndGunpowderFeedback@StPaulResearch.com

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[1]The Mandibles: A Family, 2029-2047, Lionel Shriver

[2] Currency Wars: The Making of the Next Global Crisis, Jim Rickards

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