Exposure (28 page)

“Sure,” said Hank, “if we knew what files he was talking about, but it could be anything.”

“Well, we can narrow it down a bit,” said Helene, “because from what I’ve read, the roots of the present money crisis in America go all the way back to the Liberty Acts of the First World War and…”

“Uh-uh, honey,” said Hank, shaking his great shaggy head. “I think you can look a bit further back than that. Haven’t you ever heard of the 1907 Bankers’ Panic?”

Helene shook her head.

“That’s where the whole preoccupation with a Federal Reserve comes from.” Hank stared at her but it was all new territory to Helene and Charlie, still leaning against the door frame, looked equally blank.

“Well, it’s like this,” continued Hank. “Back in ’07 there was no US central bank. Nothing. Nada. When the New York stock market suddenly lost 50% of its value over night because of some unregulated side bets at bucket shops,
people lost confidence in the system
.”

Hank emphasised the words. Helene thought she was beginning to understand why…

“Yup, people lost confidence in the system and there was a run on the banks. Lots went bankrupt, businesses collapsed and people lost their entire life savings. It was after this that the government set up the Federal Reserve System. You get what I’m saying? It’s all about people having confidence in the system – because it’s all a racket. The system is just make-believe: it’s just a wish and a prayer. Just the slightest breeze and the whole deck of cards comes a-tumblin’ down.”

Helene nodded slowly but Charlie still looked lost.

“I don’t get it: how does this history lesson help us now?” he said.

“You go ahead, honey,” said Hank. “Explain to lover-boy. I’ll go fix us up a mess o’ beans for supper.”

Sometimes Hank really overdid the hillbilly act.

“The whole financial system across the world is based on confidence,” said Helene. She spoke slowly, trying to marshal her thoughts into order at the same time. “We put our money in banks and get a small amount of interest; they lend the money out at a higher rate of interest in the confidence that they’ll get paid back. If the banks lose confidence, they stop lending money: businesses don’t have the injection of cash that they need and can fold because their cash flow is buggered. But what happens if people lose confidence in the system?”

Charlie shrugged.

“Well, that’s where the gold standard comes in,” she finished lamely. “Something you can rely on.”

Hank’s voice floated in from the kitchen, “Follow the trail of breadcrumbs.”

A spark ignited in Helene’s brain: it was extraordinary – so bloody simple when she’d been making it so bloody complicated. All the evidence was there – hiding in plain view.

“I need to think,” she said, frowning at her fingernails. “Just let me check a few things: I feel like I’m starting to see…”

Charlie shrugged and wandered off to make some more detailed checks on Hank’s equipment while Helene pulled out her laptop from the grab bag and settled herself comfortably on Hank’s bed.

If she was right, this could be the break through they’d been waiting for. If she was right...

Helene felt that her brain activity must be off the scale: it certainly felt like it was going to explode. She started looking up websites and making notes, pages and pages of notes, her mind in a frenzy, thoughts whirling unchannelled.

A chair scraped loudly across the floor of the pod and she realised, to her surprise, that she was cold, goose pimples standing out on her arms. Not only that, but she was stiff as a board and had trouble moving out of the cross-legged position when Charlie came back in to sit next to her.

Without asking he leaned in to her and started massaging her neck, his strong hands easing the stiffness. He leaned closer, his warm breath sending sparks of electricity up and down her spine.

“Okay, thanks, that’s better,” she muttered, pulling away.

Charlie shrugged, his face guarded.

She called Hank in from his cooking duties. He raised an eyebrow when he saw Charlie sitting on the bed next to Helene but didn’t comment.

“Listen!” she said in a rush, “I think I’ve got something.”

Hank took one look at her bright, excited eyes.

“You really have, haven’t you?” he said. “Tell us.”

“Okay,” said Helene, brushing her hair out of her eyes. “Another quick history lesson, so bear with me. Hank’s already told us about the history of the Federal Reserve Bank. From there we go forwards to the First World War. France and Britain are in danger of losing against Germany and the US decides to enter the war. But first they have to finance it because guns, uniforms, soldiers’ pay – they all cost a lot of money. Well, the US government doesn’t have that sort of ready dough so in 1917 they push through the Emergency Loan Act which is a way to stump up $5 billion in cash from the general public. People are virtually bullied into buying these bonds to fund the war. A few months later the Second Liberty Bond Act goes through to raise even more cash, but this time there’s a little clause that few people notice. The government gives itself extra power to borrow and also sets a ceiling to the amount of public debt the country should have.”

She looked up and Hank nodded encouragingly. Charlie merely watched her face.

“Okay, I’m with you so far, honey,” Hank said, “but not quite seeing the relevance between a hundred year old war and today.”

“You will,” she said. “You will. Look at it this way: until very recently US government bonds – Treasuries – were generally considered the safest financial asset in the world. But by the summer of 2011, the US government loses its Triple A financial rating as a country. They nearly end up defaulting on paying their debts and that means teachers, soldiers and a whole host of civil servants from park rangers to meter maids are in danger of not getting paid. At the last minute, Obama works out a deal and raises the $14.3 trillion debt ceiling again.”

“Hang on,” said Charlie, “that’s quite a jump you just made. Where does the Wall Street Crash come in?”

“I’m trying to explain,” she said hastily, “It’s just that my brain is still reeling… the possible implications… okay, okay. The Wall Street Crash happens in 1929. It’s devastating, not just for the US but for the whole of the industrialised West and 12 years of Depression follow. It was said that anyone who bought stocks in mid-1929 and didn’t get rid of them, saw most of their adult life pass by before getting their investment back to square one. When the stock market crashes, investment dies, businesses die and government income takes a nosedive. How can a government pay what they owe on a reduced income from fewer taxes? Reparation money from Germany is slow coming in, so the government has no choice but to borrow – and raises the debt ceiling again.”

“Yah, I’m seeing a pattern here,” said Charlie.

Hank smiled.

“Right,” said Helene. “A bloomin’ great big pattern. But the question is: what is a US government bond? What is a Treasury?”

She waited.

“Sorry,” said Charlie, “I thought it was a rhetorical question.”

Helene frowned in concentration.

“Well, kind of: a Treasury is a promise to pay. That’s all: it’s a piece of paper that says the US government owes you money and that they’ll pay you back with interest. Just like a five pound note: you know, the bit where it says, ‘I promise to pay the bearer’…”

“So?” said Charlie, more than puzzled.

“So,” said Helene, “what’s their asset? If you borrow money on a mortgage, your asset is your house. So what is the US government’s asset? What have they borrowed against?”

Understanding dawned on his face.

“I see what you’re getting at,” he muttered. “It’s all a giant gamble: the US government has gambled that the economy will keep growing, so the debt becomes actually less valuable. But the asset: well, that’s a vault full of gold bullion in Fort Knox, isn’t it?”

Helene looked serious.

“It should be, shouldn’t it? Some there, and some in the 12 regional Federal Reserve Banks. Convenient, isn’t it, to spread the whole asset of the United States across 13 holding centres: there are no public audits so no-one knows who’s got what – probably not even the individual banks themselves. Well, that’s what the conspiracy theorists say…”

“And they’re wrong?” said Charlie, casting a glance at Hank who continued to sit mutely.

“Hmm,” said Helene. “Yes and no: audits are performed every year by authorised private accounting firms…”

“I hear a ‘but’,” said Charlie.

“You do indeed,” said Helene. “There’s one significant exemption from the audit.”

“Thrill me,” he said.

“I’ll quote you instead,” said Helene. “I found this on a public service website about the Federal Reserve audits: it says, ‘transactions for or with a foreign central bank, government of a foreign country, or non-private international financing organisation are excluded from the audits’.”

She paused.

“So?” said Charlie.

“What if the gold isn’t in the reserve banks?” she said in an excited voice. “What if it isn’t anywhere? What if it hasn’t been in the US for a very long time, because it’s already been sold to foreign countries? That wouldn’t show up on the audit and no-one knows if and when gold has left the country.”

“Meaning?” he pressed.

“Meaning,” she went on, “what if the US government had to sell off their gold to fund the First World War. What if they just couldn’t raise enough cash from bonds so they sold their entire gold reserves?”

Charlie breathed out in a low whistle and Hank leaned forward, his eyes never leaving her face.

“How much gold are we talking about?”

“Well,” she said, “the US doesn’t publish figures but they’re ‘widely thought’ to hold 9,300 tonnes of gold. Gold is selling for $1,500 an ounce – I make that about $2.4 trillion dollars.”

Charlie thought about it, then shook his head.

“Then what difference does that make?” he said. “The US debt is over $14 trillion dollars. You said so yourself.”

“True,” said Helene. “But what if you were, let’s say, the government of China. You hold maybe $1.5 trillion of US Treasury bonds. Wouldn’t you be just the tiniest bit nervous if you knew that the US couldn’t pay your debt if you called it in? I mean, what would that do to international trade if the US was known to be on the point of calling in the bailiffs. What are they going to do: sell Hawaii? Lease out California?”

“Oh shit,” said Charlie.

“I still don’t see why this is enough to get Wally disappeared,” said Hank.

“Well, think about it this way,” said Helene. “What would happen if the world found out that the US couldn’t pay its debts?”

He shrugged.

“The US government would have no choice: they’d have to reset the clock and revalue the dollar: $1,000 old dollars would equal $1 new dollar. That way they’d essentially wipe out their debts. Meantime, the world economy shudders to a halt, businesses are bankrupt all over the world, governments fall, countries go to war, millions die. Ultimate chaos: the fire sale of all time.”

There was a shocked silence.

“You think this is what Wally Manfred worked out?” said Charlie. “I don’t want to rain on your parade, Helene, but if you could work this out in a couple of hours, surely others could as well.”

“Of course,” said Helene crisply. “In fact you’ll find this sort of thinking on any number of conspiracy websites. I wouldn’t be surprised if some of the Gene Genies have had the same idea – which could explain how Wally stumbled on to it in the first place.”

“So,” said Charlie, “explain to me why this is the news that got Wally Manfred kidnapped – if it’s already in the public domain.”

“Because,” said Helene, “I think Wally Manfred didn’t just have all this as a theory: I think he had evidence – something so damning that not even the US government could get away with plausible denial...”

She hesitated for a second.

“Not only did Wally know the US government have sold all their gold,” she said. “He could prove it.”

Chapter 20

Charlie spoke first.

“If you’re right about all this – and I’m not saying that you are necessarily, because it’s just so far out there – then we have to get hold of any proof that Wally had – otherwise it’s just speculation and we’re just pissing in the wind. If you tried to publish with what you have now, you’ll be ridiculed as Loony Number One.”

Helene nodded slowly.

“I know.”

She rubbed her eyes tiredly. They felt hot and scratchy, her mind fuzzy and unfocused after all the new data she’d been trying to make sense of.

Hank looked uncertain. Helene felt irritated with the pair of them. She knew, she just knew that she’d finally found the trail of breadcrumbs that Wally and Barbara had left for her.

“Okay, honey,” said Hank gently. “I’m with you so far, but how do we prove it?”

“What we need to do,” said Helene, “is to get our hands on those private audits that the US government commissions…”

“I thought you said they were worthless,” said Charlie, “because of the exemptions of sales of gold to foreign governments.”

Helene eased herself off the bed and started to pace up and down.

“Yes!” said Helene, excitedly. “Yes, but there’s still a paper trail. Just because those gold sales aren’t listed in the audit, doesn’t mean that they don’t exist. What we need the Gene Genies to do is to find out exactly how much gold the US has sold on the QT in the last 100 years.”

“This could take months!” said Charlie. “The info you’re looking for will have the highest level of security on it.”

“Is that right?” said Helene to Hank. “Would it take the Gene Genies months?”

“Twenty-four hours,” said Hank, challenging Charlie with a stare. “Give us 24 hours – maybe less and you’ll have the information that you want. Actually it sounds like it’s gonna be kinda fun.”

Helene really had to question Hank’s idea of ‘fun’ but as it was going to help them…

“That’s marvellous, Hank!” she said.

Helene leaned over to give the man-mountain a hug and was almost swallowed among the swathes of material that smelled faintly of lily of the valley.