Everything fell apart deep in the first year of his Administration. Economic and social chaos led, naturally, to a somber meeting between President Merkin Muffley, the Cabinet heads, the Chairman of the Federal Reserve, the chief officers of the Congress, and a few key outside figures who had become the nation’s primary sources of news, Jay Leno, David Letterman, Jon Stewart, and Stephen Colbert.
Countless candidates had turned down the job of Fed Chairman, but a fresh spokesman for the monetary and banking side of things had just been hired. The new Chairman was a surprisingly articulate man named Ziggy who had been recruited from a homeless shelter near Landover MD. He made the opening remarks:
“Mr. President, The stock market blew to smithereens again three months ago, and now the banking system is dead, the currency having preceded it. There’s no such thing as trade, no such animal as lending, and no meaning to the word ‘consumer’ any more. Our bailouts are routs.
“The money that’s still being accepted is gold, silver, or silver and gold coins, and these aren’t changing hands. The stuff is being hoarded in some parts of the country and not accepted other places where the people strictly barter goods and services and suspect that all money isn’t any good, especially U.S. money, along with all our Federal promises, safety nets, stimulus money, and ‘insurance policies.’”
The President then asked for an update from the Treasury and the Office of Management and Budget and heard some unwelcome numbers.
The Federal Budget deficit, after rounds of fruitless bailouts, was $38 trillion, and the interest on that debt, was growing at more than $3.04 trillion per year.
There was another $226 trillion in what was officially being called Unincorporated Debt, representing the direct and implied obligations of the Government, as well as loan guarantees, stand-by loan guarantees, moral obligations, immoral obligations, and large phone and Visa bills, much of which was accruing interest and all of which had come home to roost in the over-extended nest of the American eagle.
Despite massive government layoffs and the loss of priceless bureaucratic skills, despite the Constitutionally-controversial suspension of all transfer payments (such as Universal Healthcare, Social Security, the G. I. Bill, and large payments to those who attended para-modeling and para-bartending schools that they had discovered through the beneficence of matchbook advertising), it was still costing many billions per day, to run the Government.
Unfortunately, total tax receipts for the year were projected to be $49.95, and there were no takers for the Government bonds that must be sold to fund what was being termed “The Recalcitrant Shortfall.”
When the President suggested selling off all of the Government’s assets, he was disappointed to learn that, even were there interested buyers, at current, depressed valuations those holdings wouldn’t have covered more than a first pass at the Government’s debts.
Putting his feet up on the table and striking a Mephistophelean-pose, the President snorted, “Let’s make the bastards take our assets—at whatever price we want to put on them.”
“Mr. President,” the Senate Majority Leader interrupted, “We’ve learned the hard way that those bastards are our constituents, and they’re starting to form a national ‘Shoot Your Senator’ organization, as it is.
“If I have to tell my people I’m going to give them chunks of Montana instead of the jars of chunky peanut butter they’re screaming for, then I’m in a jam.”
Just as consternation seemed about to prevail, Fed Chairman Ziggy said, “Mr. President, we all know that this country is a very sick patient, a very battered puppy at the moment.
“As a central banker,” Ziggy said, “I’m supposed to be the last resort.
“Well the patient isn’t going to convalesce at a resort,” said the Chairman.
“Events have conspired to guarantee that the patient will be metaphorically hauled out of extensive care and tossed out the third floor window of the hospital.
“Mr. President,” he said, “You and I and all the king’s men can’t keep that very sick patient from hitting the pavement three floors down.
“The question is, if the patient lives, can we do something to help?”
“What’s that supposed to mean?” a chorus of voices asked.
“It means this,” Ziggy continued, “I can’t do the job I was put here to do, to save the banking system and the currency, but maybe I and the rest of us can turn that failure into something positive.
“If our sick patient survives the fall – a giant if – then that patient is still going to be saddled with a hospital bill that 500 million healthy patients working twenty lifetimes could never pay off.
“Suppose we wipe out that bill and give ourselves and the patient a fresh start.
“Suppose we wipe out all debt.
“If the government alone defaults or cancels its obligations, then our sick-but-gun-toting citizens are still on the hook for their houses, cars, boats, stereos, phone sex bills, and extended payment Franklin Mint bills for objets d’art.
“Even if we officially abolished or canceled all debts, public and private, then we’d face legal challenges and Constitutional problems that just won’t go away. You know what the Supreme Court did to FDR. We could get reversed.
“And, if that didn’t happen, our debt cancellation would never be accepted abroad. They wouldn’t let us back into the game until we’d paid up. We’d have judgments against us, like the Russians being saddled with the debt of the Czars. No fun.
“But, if we hyperinflate, everybody would be able to pay off their home mortgages and every other debt. We’ll all get multi-billion dollar emergency handouts, and the average Joe can use some of that money to pay off his $500,000 mortgage or buy a $500,000 package of Jujubes.
“So, naturally, we hyperinflate,” said the Chairman. “It’s a sneaky thing to do, but it’s the only thing to do. It’s like flatulence, a stink that’s seldom pinned on anybody. It’s as close as a government can come to perpetrating an Act of God.
“Hyperinflation, “the Chairman added, “will appear to be an unintended consequence, an unfortunate by-product of a noble government effort to …”
“Get this country moving again,” a suddenly-enthusiastic President interrupted. “Let’s print $100 trillion this afternoon, and $100 trillion a day until we get the job done.”
“You should set up a funding vehicle first,” Ziggy counseled. “A new bureau or agency, maybe, one with unlimited borrowing and handout power to meet the emergency.”
“How about ‘The Massive Action Now Agency’ or ‘MANA’?” suggested the President.
“Didn’t Charles de Gaulle say, ‘Serious countries don’t hyperinflate,’ Mr. President?” Asked a worried congressman who was actually known to read books.
“Charles de Gaulle was a foreigner,” replied the President.
Next came a brief round of dissenting voices.
“They’ll seize our overseas businesses and bank accounts.”
“We’ll be shut out of the credit markets.”
“What about our obligations to our trading partners?”
“And our treaty commitments?”
“Interest rates will go sky high.”
After listening to a few minutes of this, Chairman Ziggy said, “I can address your concerns about the domestic and international financial consequences of all this: there aren’t any. We’re road kill. We’ve already been flattened. We’ve got nothing to lose?”
“And I’ll be delighted to state my position on the military and diplomatic side of the picture,” said the President. “We have a new policy in this country: ‘No entangling alliances.’ It’s catchy, and I like the stern ring to it.”
And it came to pass that President Merkin Muffley put a sound bite into the formula for dealing with the nation’s financial woes by borrowing a phrase that a predecessor, George W. Bush, of all people, had enunciated way back in 2000. At the time, Bush was still just a presidential candidate giving a speech in which he explained that a nation worried that there weren’t enough slices of opportunity pie to go around needed only to “make the pie higher.”
Merkin Muffley’s own “High Pie Solution” prompted a friend or, perhaps, a foe to craft an arrogant little limerick that perfectly captures the tenor of the American economy during the brave new world that had begun with the Bush presidency:
A nation of debt mountaineers
lives higher and higher each year.
From the heights you and I
can eat pie in the sky
and dump any mess in arrears.