December 27, 2024 – Just last week, former President Trump floated the idea of eliminating the debt ceiling. Back in 2016, he also suggested that the U.S. could never default on its debt because it could simply print more money. But what if these ideas were actually put into practice over the next four or eight years? Interestingly, a book released years back explores a scenario where the U.S. faces a very similar situation by 2029. The book is called The Mandibles: A Family, 2029–2047. We interviewed the author, Lionel Shriver, when the book was first released in 2016. And based on listener feedback, we are going to re-air this interview as her fictional depiction of America's economic and societal situation feels increasingly relevant today.
Transcript
Jim Puplava:
In 2029, the United States is engaged in a bloodless world war. Overnight, on the international currency exchange, the almighty dollar plummets in value, to be replaced by a new global currency, the bancor. In retaliation, the President declares that America will default on its loans. The government prints money to cover its bills. What little real currency remains for savers is rapidly eaten away by runaway inflation. And that's the theme and premise of a new book called The Mandibles, by author Lionel Shriver. And Lionel joins me now.
Lionel, just out of curiosity, I was reading a bunch of books about central banking, about this unusual monetary policy that the world has been going through in the last seven or eight years. What was the inspiration for this book? Because you're taking a look forward—going out maybe 15 years from now, less than 15—to the ultimate conclusion if we keep going along this path of debt. George W. Bush doubled the national debt in his presidency. President Obama has doubled the debt in his presidency. So we're close to $20 trillion. What was the inspiration for this?
Lionel Shriver:
Well, to begin with, of course, what happened in 2008. But my impression, once the dust settled on that one, was that we had brushed up against a kind of international collapse that we ultimately escaped. My worry was that we didn't actually escape it but simply delayed it. We, as the British are very fond of saying, kicked the can down the road. And we're more indebted as a world economy than we've ever been—and that includes the lead-up to 2008. So the situation just gets worse.
On a nonfiction level, once I started turning to the issue in earnest, I became concerned that since we have moved from a banking crisis to a sovereign debt crisis—which continues to get worse—and we're also looking at a demographic future that puts huge burdens on government to provide escalating entitlements for my own generation... I mean, at what point are we going to start paying down the principal? I'm not sure that we're ever planning to pay down the principal, which just gets bigger and bigger. If that's the case, that means that what look like assets on balance sheets now are actually debts. Any debt that is never going to be repaid is not real money.
So if we're not going to ever pay this back, we have based an entire international monetary system on a fraudulence. It means that money itself becomes a pyramid scheme. And at a certain point, all pyramid schemes collapse.
Jim Puplava:
You know, it's amazing because I think voters, citizens around the globe, have no concept of the unusual circumstances we find ourselves in today. I mean, I'm looking at a Bloomberg screen of the bond market, and as I look at the bond market, we have negative yields, which is surreal.
Lionel Shriver:
You know, I have a hard time wrapping my head around negative interest rates. But I think that this whole zero-interest-rate environment means that capitalism is not functional. The trouble is that zero interest suits government and a lot of individuals down to the ground. And that's why there's no end in sight. But it doesn't work because if you can infinitely create money and infinitely borrow money for no cost effectively, it means there is no incentive to constrain the money supply. And there's no reason not to just borrow infinitely. I mean, why earn any money? Why not just borrow it? Just on a capitalistic level, on a systemic level, that is unsustainable.
Jim Puplava:
Well, that's where we find ourselves today—with the Bank of England actually paying its banks money to loan money. I think you and I would all like to be in that kind of business. I mean, imagine that. And, you know, Lionel, one of the things that we've also seen recently is not just sovereigns. We are now seeing large corporations in Europe that are now issuing bonds with negative interest rates. Because people are looking—institutions, pensions—are looking for a place to park large amounts of capital. Corporations are sitting on over $2 trillion in cash. Where are you going to put that money? So you have to put it in something semi-safe, so they put it in sovereigns or, who knows, the negative interest rates of large corporations.
As you develop this story, you're going out to the year 2029. At that point, there's an international crisis. And in response to that crisis, the dollar begins to plunge on a daily basis. This kind of reminds me, Lionel, of what we saw in the late '70s with the dollar, where we were seeing 14% inflation rates, we were seeing interest rates approach 15%, until Paul Volcker came in and started to tighten the reins on inflation.
But in your story, I guess the debt keeps accumulating, and now we're having a trust issue with the dollar. And international entities are proposing a Bancor. Now, for our listeners who may not have heard of that, the Bancor is sort of this quasi-currency right now that the IMF is using.
Lionel Shriver:
In some ways. I also got the idea from John Maynard Keynes. That's actually his expression, the Bancor. So I just lifted that from him. And it was conceptually going back to a kind of currency that is based on something. So instead of being based on gold, it's based on a basket of commodities like corn, wheat, and oil. But it is a non-fiat currency.
Jim Puplava:
So when this story develops, you have a President of the United States that overnight devalues the currency, in effect, and basically defaults on all its debt. And, you know, we rarely see that with major countries. We've seen it in Argentina, we've seen...
Lionel Shriver:
...it in Russia, and it's happening in Greece. I mean, all that business of calling it restructuring or whatever—that's default. And Greece is systematically defaulting on its debt. I don't expect Greece to ever pay back its debt. But you're right—it’s not commonplace for countries to actually announce that that's what they're doing.
What they more frequently do is simply print money and erode the debt by inflation. But the fact is that eroding the debt by inflation is a form of default. So that you are paying back money you borrowed—the money that you borrowed was worth something—you pay it back with money that's hugely depreciated. It's still cheating; it's still not keeping the contract.
Lionel Shriver:
And if I was going to criticize my plot, I would say that going the inflation route is more likely in the United States than an absolute renunciation. That said, even Donald Trump has mooted the idea of so-called renegotiating the national debt, which means defaulting on at least part of it. But either way, you know, we are now sitting at $19 trillion and rising, and I just don’t see the U.S. paying it back.
Jim Puplava:
Well, you know, it’s rather interesting. I follow the national debt and the government’s balance sheet each year, and here we are—at least in 2015, the fiscal year we’re soon to end, 2016, here at the end of this month—but in 2015, Lionel, the government had almost $8.6 trillion more in debt, and yet it was paying $50 billion less in interest. So the government has benefited from these zero and negative interest rates, unlike savers who have been harmed. But at what point do you think—or will it take an event where—the market wakes up and demands a higher rate of return on invested capital? Because right now, the governments are benefiting from it, and the markets seem to like it. But as we have seen in this presidential campaign, and as you make reference to the debt and also in your book as well, there’s no candidate—whether it’s Hillary Clinton or Donald Trump—that is talking about balancing the budget. In fact, they’re all talking about spending vast sums of new money. One party wants to lower taxes, spend money on infrastructure and the military. The other candidate wants to start new social programs, when I don’t think the public is aware that, last year, to save the disability fund, they had to make cuts indirectly to Social Security and move funds over to make it solvent for one year.
Lionel Shriver:
Well, there’s not really much in it for presidential candidates to talk about the national debt. I mean, I’m afraid that what’s happened is—so far—we’ve got away with it. So it means we’re spending money we don’t have. But that’s fun, you know? That’s like, “Oh, great, we don’t have to raise taxes, and we can have big government, and so far there’s no penalty to pay, and we can keep borrowing huge amounts of money. We’re not going to pay it back, and we don’t have to pay anything to borrow that money.” You know, it’s a kind of fantasy land.
And the trouble is, with large, complex systems that may be growing inherently unstable, they can still perk along for quite some time until some little thing trips the catastrophe. And I think that since we haven’t had that catastrophe—not on the scale that I’m talking about and that you’re talking about—then the ordinary citizen is like, “Okay, I guess that’s not a problem.” And it’s only when it’s up in your face and too late that it seems like a problem.
The other trouble is, it doesn’t actually matter how informed you are. I mean, you and I read this stuff for entertainment, if nothing else. But it doesn’t mean that we have any control. No, I mean, these things are bigger than we are. And even if you got the whole country up in arms about the national debt, what are they going to do about it? Because the only answer is to cut back entitlements that people have become accustomed to believe are a human right, like Medicare and Social Security, so that’s not popular. And I don’t know what the answer is. That’s actually been one of the frustrations of publishing this novel, which has a cautionary element to it, obviously. But, you know, I was asked at an event not long ago, “So what am I suggesting we do? You know, what should ordinary people do?” And I honestly had no answer. I have no idea what ordinary people can do.
And as you point out, you know, one of the only things we can do is vote. But for whom can we vote in this presidential election that does anything about this? You’re right. Neither candidate is offering to do anything about the deficit, much less the debt itself.
Jim Puplava:
Well, the one thing that we have learned in history is that bubbles can take place and last much longer than most people believe. And this is something, in my opinion, that we’re seeing now in sovereign debt markets. Just when the markets thought interest rates were going up, they actually went lower and then went negative universally.
In your book, the new President of the United States is Hispanic. The country is primarily Hispanic as the majority population at that time. By 2029, actually, they’re more like a...
Lionel Shriver:
...third, which is what we’re on track to achieve. But electorally, that still gives them a lock on the White House because they’re the swing vote. We’re seeing that already. So that’s why I thought that electing a Latino president by 2029 was credible.
Jim Puplava:
In your story, as you develop, the President defaults on debt, and the “Great Renunciation,” as it’s called in your novel, does a number of things. Not only, you know, when Nixon went off the gold standard, Americans applauded it: “Gosh, those greedy foreigners that wanted our gold.” But in effect, when a government like the United States—or any government, for that matter—defaults on its debt, Lionel, it hurts not only foreigners that hold the debt, but also U.S. citizens. Because you have citizens that have 401(k)s, they’re invested in government bond funds. There are a lot of government bond funds out there, a lot of debt that is held by the American public. There are pension plans, there are insurance companies. And this really devastates Americans in so many ways. It’s not just the fact that with devaluation and the collapse of the dollar, money has no purchasing value, but at the same time, the investments.
Because in this novel of yours, there is this family, The Mandibles. And the senior Mandible has a considerable fortune, and many of his siblings are kind of relying on—or thinking that, you know, someday down the future, when the old man dies because he’s in his 90s—they will inherit a considerable fortune. But in this case, he loses a lot. And talk about, too, something that Roosevelt did in ’33: he confiscated American gold at $20 an ounce, revalued it at $35. When the President in your novel renounces debt, he also confiscates gold. And unlike the past, that also includes jewelry, and military personnel go house to house with metal detectors looking for it.
Lionel Shriver:
One of the things that I learned in doing the research for this book was about the confiscation of gold held in private hands by FDR in 1933. And I have to say, as an American citizen who fancied herself reasonably well-educated, I was shocked at myself that this was news to me. I’d never read about it before. And furthermore, the legislation to allow the President to commandeer all of our gold is still on the books. It’s one of the things that people who invest in gold tend to be unaware of.
And actually, in my novel, just as FDR did, the gold is purchased at undervalue. So it’s also a money-making scheme. Although you find out later in the novel that one of the reasons they want the gold is to pay off China and to keep China from basically declaring war on the country.
Jim Puplava:
So as you look at all these strains that are put on the public, what was amazing is that one of the members of this family is kind of a little bit out there to the rest of the family. He gets into organic farming, kind of a survivalist. But even though, in the beginning, he does well, the government, in the middle of the 2030s, as your novel progresses, comes in and basically nationalizes all the farms and takes over agriculture because of starving cities.
Lionel Shriver:
I thought that was credible too. I mean, one of the things that we underappreciate—especially in this country because we’re always talking about freedom—is the fact that government can do anything it wants. And when you consider that, it’s terrifying.
What I am especially focusing on is that we have already given to governments, with the advent of income tax, the ability to take up to 100% of our money. And when the government completely controls your money, I don’t think we’re free. I don’t think that’s a liberty worth having.
Especially toward the end of the book, with very, very high tax rates and a little chip in the back of everyone’s head that subtracts your money at source, you become this walking credit card from which the government can subtract your assets at will. I’m looking specifically at the nature of financial tyranny.
There have been a couple of reviews that mischaracterized the latter part of the novel as the U.S. becoming a police state. And that’s not the idea. The idea is that it has become tyrannical specifically in relation to your financial assets. But that is tyranny. When you do not control your finances, if the government controls your money, the government also controls your ability to survive. And that makes you a slave.
Jim Puplava:
As this novel starts to unfold, eventually it gets a little bit better for the family. But there is a movement within the country, and you chose the state of Nevada, where the people in Nevada said, “We’ve had enough,” and they go independent and secede from the nation.
It’s amazing that you mention that because there has been some talk in various states around the country—Texas being one of them—of that very thought.
Lionel Shriver:
I thought that if you were going to have any state secede from the nation, Nevada was the most likely candidate. They have the right attitude. It’s a state full of renegades, and I say that affectionately.
Jim Puplava:
So as this novel unfolds, toward the end, the family sort of comes together, and the family is saved by the holdings of one of the older sisters who lived abroad. She was an author, and she had gold holdings—gold bars—that she was able to get into the country. So in the end, gold... I can’t imagine what the value of gold is under these chaotic situations, but apparently, it was enough to save the family and give it a new start.
Lionel Shriver:
Well, now no one needs to read the book because we’ve just spoiled the entire plot!
I mean, I’m not that much of a gold bug. There’s nothing rational about the idea that gold maintains its value while fiat currencies don’t. Yes, it’s limited in quantity, but it’s also of limited utility. So I don’t quite understand why the gold standard works, but it did seem to work better than what we’ve got now.
As I have a character say near the end of the book, in explaining how the United States of Nevada works, they use the gold standard, conceding that it’s stupid and arbitrary, but because it has worked in the past, why not go with it? After all, Nevada has more gold reserves than, I think, any other state in the nation.
Jim Puplava:
Well, that’s where most of the mining of gold occurs in this country.
Lionel Shriver:
And it was convenient for my plot to have a portable substance that ends up being worth a lot of money. I mean, that would have to be gold. The whole thing with gold—I don’t get it. I don’t get what it’s worth. I don’t get why it continues to be such a reliable store of value in times of crisis. It is still an arbitrary store of value, and you can’t do that much with it but make pretty things.
So I see why rare earths would be important because they’re vital in the construction of our precious devices. So long as we’re dependent on fossil fuels, it makes sense to treasure oil. But I don’t see privileging gold. I don’t get it. But somehow, because it has been a store of value for 5,000 years, it seems to be what people retreat to in times of crisis, which is why it’s used conventionally now as a hedge in most portfolios.
Jim Puplava:
One of the most hated government agencies in this country is the IRS. Its intrusion into people’s lives, sometimes its high-handedness... In your book, the IRS morphs into a new bureau called the Bureau for Social Contribution Assistance. I loved that.
Lionel Shriver:
And everyone calls it, instead, the Social Contribution Assistance Bureau. And the acronym is SCAB. And the people who work for the newly rebranded IRS are called “scabbies.” Not nice.
But I thought the one point that one of the characters makes about the new IRS is that it was a little mysterious how underfunded the IRS used to be. And when it morphs into the biggest part of government, it makes perfect sense. I mean, why isn’t the IRS one of the biggest agencies in government? It is out there to steal your money. So it’s in the government’s interest for that entity to be extremely well-funded.
And I find it interesting the way things are currently constructed that the IRS is strapped for funds.
Jim Puplava:
So as you look at this, and we have the Bureau of Contribution Assistance, also because of the way things develop, we also go to a cashless society. So now, in essence, the government has control over everything you do, including the chip that everybody must take that’s embedded in the back of their skull.
Lionel Shriver:
That was another one of those little technological changes that again draws on what is virtually possible already. And the chip is embedded at the back of your neck in order to make it difficult to dig it out, because there’s a very high likelihood that even if you get a surgeon to do it, you will end up a paraplegic. That’s why it’s put right up against the spinal column.
I thought it was worth drawing people’s attention to the fact that this cashless society that we’re rapidly advancing toward—I mean, I do encounter articles that think that cash is going to be completely defunct within the next 20 years—it’s worth considering that that means there’s a paper trail for absolutely everything you spend and everything you earn.
Cash is the only form of money that eludes jurisdiction. And if we do move to the point where there is no such thing as a physical dollar, that means that you live in a universe where the government can potentially see everything you do in relation to money.
Jim Puplava:
So as this continues, and of course this story progresses—as you have in your book jacket—from 2029 to 2047, what I thought was interesting geopolitically is that the U.S. is weakened militarily. So one of the reasons it confiscates gold is that China owns so much of the country. It was to pay China in gold to avoid a war. And then, I think, at some point in your book, Russia—basically, as they’ve been invading, as we’ve seen in Ukraine and in the Balkans—they annex Alaska, which they sold to us in the 19th century.
Lionel Shriver:
That’s right. And I have China annexing Japan and Indonesia annexing Australia. Now, some of this stuff is just kind of fun, but I am making a serious point, which is that the U.S. quite justly resents paying for all this military adventuring abroad. And, of course, foreigners often resent our butting our noses into their business.
But on the other side, the very presence of the U.S.—with the size of its military and its at least idea of itself as a virtuous entity—acts as a check on other countries’ more malign intentions. And if the U.S. no longer had the financial wherewithal to project itself militarily into the rest of the world, and no other halfway responsible country took our place, we’d live in a much more dangerous world.
So as much as I am skeptical of many of the military interventions during my lifetime, I have a sense that there are a lot of other things that just haven’t happened because countries know that they would suffer the consequences from the U.S. So I’m saying that as much as other countries often resent us, they would miss us if we cleared off.
Jim Puplava:
You know, one thing I’d love to ask you: when you begin a story like this, obviously it starts somewhere—a formulation in your mind about this story. Take me, if you would, through how this developed and how it eventually became a novel. In other words, did you start thinking of this idea? Did you start writing down notes and formulating it? Take us behind the scenes a little bit—what it’s like to be an author and develop a novel and story like yours.
Lionel Shriver:
I tend to plan my novels out in advance—not in extreme detail because making up the little stuff along the way is a lot of the fun. But I have a general sense of where the novel is going. I usually know the ending ahead of time. People often find that disappointing. I’m not one of those writers who thinks that the characters have a life of their own and do whatever they independently decide to do. My characters do what they’re told.
But I don’t start a book until I can kind of hold it in my head almost like a sculpture. I think what I reserve for the writing process is refining what I’m trying to say. And that becomes a lot of the project. It’s not just getting the story to take over—and that’s vital—and the characters fully developed and reasonably consistent in their behavior, but also deciding, “What is the thrust here?”
So this book allowed me to go on any number of reflections, often through the characters, of course, about money, about people’s relationship to it. What is it? What does it mean to us? What does it mean to different characters? Why do we want it?
For example, I have my doppelgänger, who is exactly my age, and by 2047 is 90 years old. At that point, she ends up having to accept that basically everything that she wants, money can’t buy. You know, that by that age, what you most want is security. And the entire novel is an illustration of the fact that money is insecure.
So money itself is insecure. Therefore, it cannot buy security. But it also can’t buy her a longer life. It can’t buy her out of illness and infirmity. It can’t restore her youth. It can’t give her more inspiration for her novels. And I think that’s worth thinking about.
I mean, that’s kind of the counterargument to the novel. It’s a book very absorbed with money, but at the same time, it’s worth taking a look at the limits of money. It’s actually astonishing how little money can actually purchase. And it’s also worth considering that money itself has no value—that it is only worth something when it is converted to something else.
But its very potential, its very amorphousness, means that we project onto it all the things that we want, in spite of the fact that, for the most part, most of those things—like love or respect—money is incapable of providing us.
Jim Puplava:
You’ve written other books that have done well—Big Brother, The Post-Birthday World. Were they similar in theme to what you developed in The Mandibles, or was this really one that stood out as separate, based on just how you see the world and studying money and what’s going on now? Because we really do live in extraordinary times.
Lionel Shriver:
All of my novels have different agendas. So, you know, I haven’t been writing about economic matters obsessively. My fifth novel, A Perfectly Good Family, is about an inheritance dispute between three grown siblings. And so that has an economic element. And my ninth novel, So Much for That, is about another couple caught up in the throes of the American healthcare system. And, of course, that has a whole lot to do with money, alas.
So it is a theme that has cropped up before in my work because I’m very interested in people’s relationship to finance and also the way in which money can interfere between people.
That relationship between father and son in The Mandibles, where the son has been waiting all his life to finally inherit the fortune, is profoundly corrupted because the son is never quite sure whether he dotes on his father and goes to his assisted living facility over and over again because he loves his father and values his father’s company, or he’s actually just protecting his interests and making sure that his father doesn’t have some late-life conversion to giving the entire fortune to endow a chair at Yale.
You know, it’s only when the money goes away that that relationship becomes pure, and he realizes that he loves his father. But he also stops treating the guy with kid gloves. And they have a much realer relationship.
So I’m interested in that. And I think that kind of corruption between parent and child is quite commonplace. I expect people to recognize it. So it’s a great theme, and I probably will return to it before my career is over.
And I think that novelists of my generation have neglected the financial in their work. I often get frustrated when I’m reading other people’s novels, and they don’t quite add up economically. You know, they’re a schoolteacher, and they have an apartment in the West Village. Excuse me.
So I’m always conscious when I’m writing a novel that making the financial aspect of my characters’ lives scan is important. And I think it’s only recently that novelists like me have turned to larger economics. I mean, actually, someone like Dickens wrote about economics all the time. You know, the workhouses, debtors’ prisons—he was very concerned with what we would call today “income inequality.”
So I think there’s plenty of precedent for literature engaging with these issues.
Jim Puplava:
So, Lionel, as you look at this story as it unfolds, and especially given what we’ve seen—and, by the way, as unrealistic as it may seem to people in the present that something like this could happen—all you have to do presently is take a look at what’s going on in Venezuela today, or what happened to Argentina in the last decade. But is there anything that would happen that would ever change your outlook—that something like this could indeed unfold? For example, we get a new presidential candidate somewhere down the road—maybe not this election, because they're both about spending money and expanding entitlements—but maybe we get into a short-term crisis, and all of a sudden there’s a candidate that can wake the country up. Is there anything like that that could happen that would change your outlook?
Lionel Shriver:
You mean someone got elected who was taking the national debt seriously and had a completely different idea of how to run the country? I mean, I suppose that’s possible, but as we were discussing earlier, it would have to be after a crisis.
Jim Puplava:
I agree.
Lionel Shriver:
It would have to make the way things are organized now seem obviously unsustainable and impossible, and everything’s going to collapse. It’s like 2008 concentrated minds on regulation of the banking industry, although I’m not sure that it was very effective. But at least for a time, it seemed as if it was crucial that something change because things were falling apart.
My worry is that things are now capable of falling apart on such a level that there’s no remedy. You know, you can’t just elect another president and he’ll fix it. I think this is bigger than a single government. I think this is bigger than government.
I return to the powerlessness that I was expressing earlier in this interview, which I feel profoundly. And I guess, on a personal level, if I’m honest, I’m less consumed with campaigning for a remedy to this situation—because I’m not sure there is one—than I am just crossing my fingers that the collapse that I anticipate either happens later than I’m worried it will or I die sooner. I don’t want to live through it.
Jim Puplava:
Well, it is certainly an ominous outlook when you take a look at this. As I imagine and see it right now, I mean, all you have to do is watch some of the film clips and stories of what’s going on in Venezuela today with hyperinflation.
Lionel Shriver:
I follow that story very closely because, partly, it’s like reading my novel unfold somewhere else. But I should emphasize, I hope I’m wrong. It’s always fun to be right—or usually. But this time I would love to be wrong.
And one of the nice things about both writing and reading a book that is apocalyptic about the future is that it is a safe space, if you will, to explore your fears without their coming to pass. So you can curl up with this book and think about these issues and explore an imaginary future in which things fall apart. But then you can put the book down and pour yourself a glass of wine, turn on the latest episode of Girls, and put your feet up and open the chips.
I guess part of the message of my novel is, okay, I’m not sure the center is going to hold in the future, but so long as things are still pretty orderly, why don’t we enjoy the fruits of civilization while we still have them?
Jim Puplava:
Well, I’ll tell you, it was a fascinating novel. It was one of five books I read during my August recess. The other four were about central banking and also financial crises. And it was sort of a nice way to end—with a novel. It was very well done. And, Lionel, I’d love to compliment you on it.
Lionel Shriver:
Well, thank you. And you just did, and I really appreciate it. I’m glad that I perked up your August.
Jim Puplava:
You certainly did. As I mentioned, it was recommended by a friend of mine, and I dearly enjoyed reading it. The name of the book is called The Mandibles: A Family, 2029–2047, written by Lionel Shriver, who has been my guest.
Lionel, thanks for joining me on the Financial Sense Newshour, and all the best with this book. I highly recommend reading it.
Lionel Shriver:
Thank you so much. I really enjoyed talking to you.
