Warday

The other thing that happened was that records were thrown into chaos. Records that had survived, but only on magnetic media, might as well have been destroyed because they couldn’t be read.

The destruction of the computers was exactly like the failure of a nervous system in a body. All of a sudden there were no messages getting through. The body lost contact with itself. Storage companies such as the Iron Mountain Group preserved a great deal of data in underground facilities. Without the machines stored underground, as a matter of fact, there wouldn’t have been a single functional computer left in the United States after Warday. The wisdom of those storage and preservation programs is now obvious. Without them, for example, there couldn’t have been the gold distribution of ’90. Even so, most people had only about fourteen percent of the dollar value of their prewar cash holdings restored.

Between the cash lost in transit and the inaccessible records, we were out about three dollars in ten. The collapse of Social Security, Medicaid, and the whole federal entitlement system meant another two dollars gone when those checks stopped arriving from Washington. The loss of the rest of the federal budget was another dollar gone. In a few hours the cash economy of this country was more than cut in half.

And there was more to come, of course. This sudden loss of cash meant that thousands of banks and businesses were bankrupt. But they were also without the means to communicate, or the records to communicate about. So people didn’t get paid, or if they did, the banks couldn’t cash their checks, and the next thing we knew, most nonessential businesses were shutting down.

Add to that the complete anarchy that reigned in the stock market, with people frantic to escape New York City and the electronic records in mayhem and the sell orders roaring in—it meant the end of Wall Street, essentially.

The next thing was the calling in of loans by foreign banks. In the mad scramble to leave the dollar, the whole delicate Eurocurrency market trembled and then collapsed.

By this point the state of the world monetary system made the Great Depression look positively healthy.

It will take years to recover. It’s a funny thing that before the war the great economic bugaboo was inflation. God knows, deflation can be worse. Money’s so damned hard to get because there’s so little of it around. I’d rather work an hour for twenty inflated dollars than a day for fifty deflated cents! And in terms of buying power per hour worked, we Americans are operating at about a sixth of the prewar efficiency level, meaning it takes six times as long as it did before the war to earn the same amount of buying power.

You’d better believe that goes for economists, too!

I was vacationing on St. Bart’s on Warday. I’d been there for three days and planned to stay another eleven. A few days after the war, the police rounded up all the tourists and put us aboard a passing cruise ship, the Canberra. There was a great deal of trouble. The Canberra wasn’t prepared to take on over a thousand extra passengers. The first thing that happened that made this feel like a war was that a man refused to leave the police launch he was in. He said he had rights; he had prepaid his vacation. The police threw him into the water and sailed off.

That, more than anything, brought home to me the fact that the world had changed. We were not affected by EMP, so we still had radios. We were glued to them, listening mostly to the B B C There was this curious, terrifying silence across most of the dial. The United States was silent. Cuba was silent. The BBC reported massive fires in New York and Washington, and said that flights from England had been forced to return without landing because of unsettled conditions in other American cities.

My daughter was in school at Colgate. My wife was at our home in New York. At that time I was working for the Chase Econometric Institute, forecasting flow of money, which is my specialty. I had taken some time off to be alone and to think about the consequences of the massive IMF refunding that had been proposed the week before by the Saudis. This was critical to Chase because it affected the viability of our Nigerian loans, and thus our whole African exposure. Not only that, our failure to support the proposal could call into question our relationship with the Saudis.

But with free-market oil soft at twenty-two dollars, and the Mexican and Brazilian debt moratoriums creating cash-flow problems for the bank, we were concerned that we would not be able to sustain the additional loan demand the refunding would create.

So I was alone on an island with my computer and all the data I needed, quietly developing flow analyses and projections based on various cash/loan levels.