President Walters’ grave countenance twisted with surprise. Then he shrugged. “Why not?”
Hooper sat back down and crossed his legs. His off-the-rack gray suit, obviously cheap, reflected his no-nonsense attitude.
Ben grabbed hold of a chair and dragged it a few inches away from Hooper. Then he sat down, placed the briefcase on his lap, and stretched his arms over it. He’d chosen a dark blue suit, 100 percent silk, for the meeting.
The president leaned forward, his fingers drumming a rhythmic beat upon the desk. “So, what was so important it couldn’t wait until tomorrow?”
Ben cast a sideways glance at Hooper. “No offense intended but are you sure you wouldn’t rather have this conversation alone, sir?”
“Don’t worry.” The president smiled. “Ed knows how to keep a secret.”
He was speaking from experience. For well over a year, Hooper had served the president as an off-the-books investigator.
“Of course, sir.” Ben’s face morphed, taking on a serious tone. “I wanted to talk to you about economic matters. Specifically, what’s driving the slowdown and all this civil unrest.”
“And it can’t wait until morning?”
“No, Mr. President, it can’t.”
President Walters eased himself into his leather chair. “I saw footage from the Manhattan riot earlier this evening. Those Berserkers were like all the others, chanting about jobs, food, college prices.”
“Obviously, the economy is slow and unemployment is high, which means we’re in the midst of stagnation. That alone is enough to drive people into the streets.”
“Alone?” Hooper arched an eyebrow. “There’s more?”
“I’m afraid so.” Ben took a deep breath. “I believe we’re on the verge of a rare economic phenomena known as hyperinflation.”
Hyperinflation. The very mention of this unstoppable force of economic nature sent chills shooting down Hooper’s spine. He was familiar with the concept, familiar with what it could do to a nation and its people. Simply put, hyperinflation was characterized by rapidly increasing prices. One day, a loaf of bread set you back three bucks.
The next day, it cost thirty dollars.
“Hyperinflation?” The president’s brow furrowed. “You mean that thing Zimbabwe faced back in the 2000s?”
“The very same, sir,” Ben replied. “Zimbabwe is an extreme example. But at its peak, prices were growing some 89.7 sextillion percent, on a year-over-year basis.”
President Walters stared at him.
“In mathematical terms, a sextillion equals ten to the twenty-first power,” Ben added helpfully.
President Walters recoiled in horror. “Jesus Christ.”
“Don’t you think you’re blowing this a little out of proportion?” Hooper asked. “The last PCE report said prices were up just a little over 6 percent. That’s high, but I wouldn’t call it hyperinflation.”
“Unfortunately, the PCE index is flawed,” Ben replied. “It only measures what’s in a shopper’s basket. It doesn’t account for changing consumption habits.”
“Like when people buy hamburger meat because steak is too expensive?”
“Exactly.”
The president frowned. “Why haven’t I heard about this before now?”
“The information is new,” Ben said. “The Board of Governors recently commissioned a top-secret pricing study. It’s still in-progress, but early data suggests consumer prices are up some 28 percent since last year. And from all appearances, that growth is now accelerating.”
“28 percent?” The president’s horrified look turned skeptical. “That can’t be right. If it were, the media would be all over it.”
“Remember, we’re still in the early days of this.” Ben took off his spectacles and cleaned them with meticulous attention to detail. “Plus, companies use lots of tricks to hide price hikes. For example, shrinking product packages. One week, you’re buying a sixteen-ounce can of beans. The next week, it’s fifteen and a half ounces.”
“I guess there’s a bright side to this.” The president, still drumming his fingers against the desk, offered a feeble smile. “If it keeps up, we just might solve the obesity crisis.”
Ben didn’t smile, didn’t even grin at the president’s joke. “Perhaps you don’t see the gravity of the situation, sir. If this keeps up, people won’t be able to meet their basic needs. Companies will start to exit the U.S. marketplace. Economic collapse will follow.”
The president’s fingers froze in mid-drum.
As Hooper listened to Ben, he found himself more than a little shocked by the information discrepancy. Ben was like an economic god, spouting knowledge from his perch high up in the sky. The president and Hooper, on the other hand, were just regular folks. They had little, if any, understanding of the overall economy. Now that disaster had struck, all they could do was pray to Ben for deliverance.
But Hooper refused to be a mere subject to an all-powerful god. Thinking quickly, he considered everything he knew about the economy, about the Federal Reserve, and about inflation.
At its core, hyperinflation wasn’t about rising prices. It was about the declining value of money. And that happened when the money supply grew much faster than the economy as a whole. But money didn’t just appear randomly. The U.S. supply was strictly controlled by a single entity.
“Correct me if I’m wrong,” Hooper said. “But isn’t hyperinflation caused by too much money? And isn’t the Federal Reserve—your Federal Reserve — in charge of that?”
“No, you’re right.” Ben shifted his arms, unruffled by Hooper’s veiled accusation. “On both counts.”
President Walters frowned. “If that’s true, why don’t you just reverse it?”
“Unfortunately, it’s not that simple, sir. As I mentioned, the U.S. economy is in a state of stagnation. And when you combine stagnation with hyperinflation, you get—”
“Stagflation.” Hooper’s eyes bulged. “Good lord.”
“What’s stagflation?” the president asked.
“Hell,” Hooper said. “Economic hell.”
“Unfortunately, Mr. Hooper is right,” Ben told the president. “Stagflation is a two-headed dragon that can only be fought one head at a time. And such a fight is extremely costly. If we try to rev up the economy, we’ll send prices through the roof. But if we try to reduce prices, we’ll drive America into a depression.”
A still silence spread across the room.
“The U.S. faced stagflation during the late 1970s and early 1980s,” Ben continued. “One of my predecessors, Paul Volcker, managed to beat back the inflation side by essentially cutting money supply growth. It worked, but it also drove the U.S. economy into a deep recession and caused high unemployment to linger for years.”
“God, I hate this job.” President Walters leaned back in his chair and kneaded his forehead. “So, what do you propose? Juice the economy? Or attack hyperinflation?”
Ben looked distinctly uncomfortable. “A depression is bad, but hyperinflation is much worse. Unfortunately, conventional tools won’t stop it this time.”
“Don’t mess with me, Ben,” the president warned. “I’m not in the mood.”
“Volcker’s strategy worked because the federal deficit was at a much more manageable level, sir. Unfortunately, times have changed. The deficit is so high, tax dollars can’t even begin to cover the interest payments. That’s why we created all this new money in the first place. To keep the U.S. government from defaulting on its debts.”
“Damn it.” The president exhaled. “You should’ve warned me this was coming.”
“My apologies, Mr. President, but I did warn you. Over and over again, in fact. I’ve spent my entire time in office telling you, Congress, and anyone else who would listen that the U.S. economy couldn’t continue on its debt-fueled path.”