This is the fifth — of a hopefully fictitious scenario — of what the global financial system could find itself as a result of the oncoming economic depression.
As the gavel came down to start the Tuesday session of the global rescue summit, the Chinese delegation put a motion forth that said the only way out of this chaos was to blow up the whole system and start anew.
Not only on a monetary side, but the meeting needed to recreate the United Nations with a change to the membership of the security council, recreating the representation on both the World Bank and the International Monetary Fund.
“We neither have the resources nor the time to consider these measures,” said Treasury chief Lew told the congregation. “There are millions of people dying on the streets of the world due to the problem we are charged to fix,” he continued.
The Chinese financial minister countered, “Mr. Lew, there is no one being murdered in our country because of the actions of the west.”
The Chinese pointed to heartache being a result of capitalism run amok, with excess debt entrapping people.
“Mr. Lew, a vast majority of the globe, in Asia and the Islamic countries have no idea, why we are trying to fix a system that enslaves human in economic bind.”
“As many members of this meeting will attest capitalism has brought about the greatest quality of life enhancements the world has ever seen, and it will continue to move mankind forward to greater heights. Sirs, with tremendous upside so to comes a downside, if you’re not allowed to takes risks you can’t move forward,” Lew protested.
“Mr. Lew, it is that same downside that has brought us together, with western markets on their knees begging for relief. I assume you have a capitalistic solution to your problem?” a junior member of the Chinese delegation said.
“My solution is not based on an economic theory, but based on my faith, I propose we speak — as the Bible did — of a debt jubilee, Lew countered. “One based on the term in the Book of Leviticus, which states every 50 years slaves are freed and debt is forgiven.”
“Surely, we can’t speak to Leviticus, we have our own tradition, which does not involve usury,” Young Zhoo, the junior member interjected.
“Mr. Lew, that is the main reason, we are here today. Your Jewish western tradition relies on debt, not only to fund markets, but to live your lives. How many Americans live beyond their means? How many western countries live beyond their means?”
“One of the knocks on the Chinese markets is that we do not have a robust bond market. Mr Lew you quote Leviticus, I will quote Confucius, who de-emphasize short-term gratification in favor of investment for your future and your family’s future. “Chinese people take the long view of money, so even working-class people save money so that they have it later to invest,” says Zhoo. “Asians hang on to their cash and live within their means rather than taking on debt.”
“That’s all well and good Mr. Zhoo,” said Fed chairwoman Janet Yellen, “but your skyscrapers and quality of life of millions of Chinese in Shanghai and Hong Kong were created by these same western principles and your country is better for it.”
“I believe the British told us the same thing — while you were fighting a war on slavery — about the opium trade. How did that work out, Madam Chair?” The Chinese minster said.
“I believe, to use the western vernacular, we need to blow it up and start anew.”
“We neither have the time nor the inclination to ‘blow it up’ as you say,” Lew countered. “We need to move quickly before more lives and property is lost.”
“You mean our property, since you owe us trillions, I do hope you are protecting your greatest assets to pay off your debt. There be no jubilee on your government debt.” the minister said.
“You expect to live like the Whore of Babylon (to quote your bible) and then when the empire teeters you want help, well there will be no help coming from this quarter,” he added.
“I suggest we take a break here to allow all sides to think through what is at stake,” said Christine Lagarde the IMF chief.
During the intervening hour the Western alliance of US, the EU and England hammered out the particulars of the debt jubilee. Looking to a 50% hair cut on sovereign debt with a reset on all currencies being set a par.
The currency move was a backdoor ploy in order to give the ailing banks a trading opportunity to make some quick cash for their balance sheets as the weaker currencies would trade off from the artificial highs
After the gavel fell to reconvene the meeting, Lew presented the plan to his Asian cohorts, saying, “We will give you overnight to go over the plan and then discuss it tomorrow.”