The McDonald’s on Spring Street has shut down. I had sold my first edition of Infinite Jest for $500,000 and figured I would treat myself to a Happy Meal. But when I got there, the manager was boarding up. “Can’t get potatoes, can’t get meat,” he told me. “It’s all the hoarding in the Farm Belt.” I can’t blame the farmers; why sell food for worthless dollars when you can make real money exporting to Mexico?

Di Tommasso’s down the block is still open, but I can’t afford $1 million for their linguini a la vongole. They have no problem getting supplies since the owner was savvy enough to shift his assets into Swiss francs early. The speculators and oligarchs who eat there pay in foreign currency.

As I’m walking by, glancing at the girls holding “Will Strip For Food” signs, I see one of my old students tucking into veal scaloppini. George has done well for himself, buying Detroit factories for a song then selling them for scrap to Brazilian steelmakers. I stand in his eye line, hoping he will recognize me and buy me lunch.

It’s my lucky day. He waves me over. “Professor, come, sit down. My friends and I were just discussing whether the destruction of the dollar was inevitable.” He turns to the table. “Let’s see what a real scholar has to say.” I am happy to sing for my supper.

Some of the faces at the table are familiar from RichPeople.com. George introduces the others. Ofra, a fashion designer—her expression bland as her Pucci dress is bright—has just opened a sweatshop in Long Island City. She does good business exporting high-end couture to East Asia. Jun used to be with the Korean central bank but is now buying up American companies. Bruce, fat and sloppy with spaghetti stains trailing down his striped shirt, is a currency and commodities trader who made his fortune early in the crisis, shorting T-bills and buying wheat futures. Fernando is a Sao Paulo industrialist—elegant suit, no tie. He is looking to move his factories out of high-wage Brazil into low-wage America. His watch cost more than my car. And then there’s Mindi, my neighbor’s daughter, a blonde pixie who dropped out of Princeton when her parents couldn’t afford the tuition. Now she is Bruce’s arm candy. I don’t think she is that fond of him.

“The dollar had been overpriced for generations,” Ofra pronounces. “As long as we were the world’s reserve currency, we got to consume more than we produced. That made us fat and lazy and we lost our competitive edge.” For Ofra, there is no greater offense than growing fat. She pauses to light a cigarette. “Everybody knew the dollar had to fail. And as soon as it started to go, no one wanted to be the last sucker holding greenbacks.”

George shakes his head. “No, it wasn’t inevitable, not at all. It wasn’t even economics, it was politics. If it hadn’t been an election year, if President Levi Johnston hadn’t tried to distract the press from his daughter’s pregnancy by making that speech defending Taiwan’s Declaration of Independence, we could have kept muddling along.”

Jun interjects that the Chinese weren’t the first to dump dollars: “The Chinese probably would have swallowed their pride and kept on buying. They needed your market as much as you needed their money. But when we in Korea, and the sovereign wealth funds of Brazil, Saudi Arabia, and Germany, began to worry that the Chinese were going to pull out, all of us had to get rid of dollars.”

I figure I should say something uncontroversial, just to earn my supper. “If the Fed had mastered the political courage to raise interest rates when it saw the dollar collapsing, that would have strengthened the currency and bankrupted the short sellers,” I venture. “Instead, it figured that higher rates would raise unemployment too much, so it kept rates close to zero. Naturally, private buyers then boycotted the auctions for T-bills and the Fed did the same thing the German Central bank did in 1922: they bought all the new debt themselves. That’s what turned the fall into a collapse.”

Jun agrees: “If we had seen the Fed defending the dollar by raising rates, we might have stopped selling. No one wanted to be locked out of the U.S. market. But when we realized that the American government was willing to let its currency collapse …” He shakes his head.

A bum with one leg stops by our table. He has a crutch under one arm and a bouquet of flowers in the other. “A rose for the pretty lady? Help an old soldier who has served his country.” I’ve seen this guy around the neighborhood. Somebody told me he was wounded in the invasion of Gaza.

Bruce inspects the flowers, selects the healthiest one, and picks a $200,000 bill out of his wallet. “Thank you, sir,” the veteran simpers. Mindi plops the rose down next to her plate.

George continues, “If workers hadn’t demanded wage increases to match the price hikes, the inflation might have been contained. But no democratic government could have resisted the pressure for indexation—the riots would have become even bloodier. Higher wages fed higher prices. Inflation became self-perpetuating.”

Fernando, the South American industrialist, puts down his wine glass. “You are all missing the point.” Five heads swivel toward him. “The collapse of the dollar was a choice—a way to avoid paying 40 years’ worth of borrowing from the rest of the world. Depreciating the dollar wiped out the entire federal debt.”

He leans back in his chair. “Look at it this way: in the ’80s, the Japanese bought long-term U.S. Treasuries. When it came time to pay them back, you just rolled over the debt, first to China, then to Saudi Arabia, Germany, and Brazil. But when that debt came due, you were no longer able to roll it over. No foreign lenders stepped in. You had to fork over the cash, and you didn’t have it.”

“In a way, you were in a similar position to Argentina during the Latin American Debt Crisis. Throughout the 1970s, Argentina received huge loans from the American banks. When interest payments came due, the banks just lent more to cover the interest. The banks were happy: rolling over debt meant huge paper profits. The Argentines were happy: free money let them live beyond their means. But in 1982, lending stopped. Suddenly Argentines had to earn more than they consumed and send the surplus back to Bank of America, Citibank, and their friends.

“People still debate why Argentina, Mexico, and Brazil didn’t just default. Other than invasion, which was pretty unpopular back then, there is no way to force a sovereign nation to pay its debts. But the U.S., because its debts were denominated in its own currency, could default the easy way, the legal way, just by letting the dollar fall.”

He waves for a second espresso. “America had two options. One: export more than you import. Sacrifice your standard of living for a decade or two in order to repay the debts you stacked up over several generations of high living. Or two: less admirable but more tempting, allow the collapse of the dollar to make your debt, in real terms, insignificant.”

Bruce, the currency trader who had been alternating between ogling the half-naked girls outside and devouring his veal parmigiana, chimes in, “He’s nailed my strategy. That is why I got out of dollars and into real assets.” He chuckles, wiping pasta sauce off his lips. “Hey, it worked out for me.”

A hullaballoo at the door distracts us. A black-clad Albanian security guard is tossing the crippled veteran onto the street. “And don’t come back,” he grunts in accented English.

Mindi, who had been sitting quietly, finally explodes: “Yep, the hyperinflation definitely worked out. Ofra gets to pay cheap wages, Jun buys companies for a song, George profits from the deindustrialization of the Midwest, and Bruce here gets to stuff his face.”

She turns to the handsome Brazilian. “Fernando, you’re right: the depreciation was a way to stick it to the foreigners who bankrolled our consumption binge. But remember, most debt wasn’t held by foreigners. It was held by Americans, by pension funds like my parents’. My Mom and Dad worked hard their entire lives. They didn’t pay attention to currency markets, they didn’t even read the business page. After 40 years, they were finally ready to retire, and in the space of six months, the $2 million that should have supported them for the rest of their lives wasn’t enough to fill a gas tank.” She looks around the table then says softly, “You guys did alright, but people who played by the rules got screwed.”

For a moment the table is quiet. Until now the discussion had been academic, abstract. Bruce breaks the silence with a chuckle. “Well, baby, I guess your parents should have loaded up on debt like the rest of us.” Mindi slaps him in the face and storms out. He shrugs and returns to his tiramisu. She’ll be back. How else is she is going to feed herself and her parents? And if she doesn’t, another smart, pretty girl will take her place.

I want to defend Mindi, but I want to eat even more. I glance at George. I hope the outburst won’t make him forget that he invited me to dine. My stomach is grumbling and my entire annual pension won’t buy a bottled water at this place. 
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Tom Streithorst lived through hyperinflation in Argentina and wrote this dystopian fantasy from Baghdad.

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