The Sikorsky touched down on the White House south lawn around three, and a flight crewman hustled to open the hatch and lower the boarding stairs.
“Watch your step, sir,” he said politely.
Nast just glared at him, wondering why he always had to be surrounded by complete idiots.
One of Sam Kolberg’s interns, a kid with the remnants of acne, was waiting for him. “How was your flight, sir?” he asked, extending his hand.
Nast brushed past him. “Smoother than your complexion,” he said, and he headed across the lawn, the intern trailing behind.
He had been thinking about Farmer’s direct order to cut off all contact with Reid, which was as surprising as it was disturbing to him. Reid was one of the largest contributors to the president’s war chest, but there had to have been some sort of a rift recently.
But then, as the saying went: If you want a friend in Washington, get a dog.
The president was in the Oval Office, his feet up on the Resolute desk, which had been crafted from the wood of a nineteenth-century arctic exploration ship, when Nast walked in. The ornate desk had been a gift from Queen Victoria to Rutherford B. Hayes, and had been a fixture in the Oval Office since.
Kolberg sat in one of the two chairs across from him.
Nast’s proposal lay open on the desk, and Farmer tapped a finger on it.
“You’ve got balls of steel, Spence,” the president said, chuckling. “Using Federal Reserve money to pay for your financial rescue plan.”
Nast took a seat. “That’s the beauty of it, sir. The precedent has already been set for us. After the ’08 crisis, the Fed pumped money into the economy by buying T-bonds and mortgage-backed bonds. It has the power to create money. That’s the key to its existence.”
“But that creates inflation, something nobody wants to see happen,” Kolberg said. “Prices going through the roof like in the seventies and eighties.”
“In the first place double-digit inflation is no longer the problem,” Nast shot back. This was his territory. Kolberg was clueless. “The world has changed since then. Technology has made most businesses faster and more efficient. And that alone tends to keep prices down.
“So does the surge in international commerce. High-paying union jobs have disappeared because they’ve been transferred to Mexico and Vietnam and China, where labor is cheap. Which means that our labor costs have plummeted, which tends to keep inflation in check.”
“A lot of good-paying jobs have gone up in smoke,” Farmer said with a bite. He was back in his populist, friend-of-the-average-working-stiff mode. “And that’s a damn shame. The American worker has been fucked more times than a tied-up goat.”
“But this gives us a lot of leeway, Mr. President,” Nast said, pressing his argument. “In the wake of the ’08 problem, Congress voted seven hundred billion to bail out the banks and another eight hundred billion to stimulate the economy, using tax credits for businesses and consumers, plus spending on public works like roads and bridges.
“That money came from the taxpayers themselves, plus borrowing from the bond investors who buy Treasuries. And on top of that was the three trillion plus the Fed created to buy those bonds.”
“Why can’t we do the same thing now?” Kolberg asked.
“Do you mean more borrowing?”
“Yes.”
“Even you should know the answer to that one, Sam,” Nast said, loving it. “The failure of today’s Treasury auction would simply be repeated.”
“Not if we paid higher interest.”
“Pay all the interest you want, we still wouldn’t be able to overcome the widespread perception that we can’t afford to pay even a small interest rate because of the gargantuan debt load we’re carrying. And that would be especially true if China decided to dump the two trillion in our bonds that they hold.
“Hua would get far less than the two trillion, of course, because he’d have to sell at a discount. But if he gets desperate enough, with the PBOC turning its back on him and the commercial banks falling like dominoes, he’ll do it. For us, the bottom line would be a disaster. We’d never be able to raise the money.”
Farmer took his feet off the desk and sat forward. “What you’re asking is that Congress create a new stimulus program plus a bank bailout if it comes to that. And a big chunk of that would be used to send half the American public a check for twenty grand. All courtesy of the Federal Reserve.”
Nast nodded. “Yes, Mr. President, that’s exactly right.”
“Well, I see two problems right off the bat. First, we gotta get Congress to go along with this. Holland and I have had our differences, so that’s a definite hard sell. And to convince that hard-assed Miller to have the Fed create abracadabra big bucks—trillions of dollars—won’t be easy either.”
Farmer exchanged a glance with his chief of staff.
“The Fed is independent of me. I can’t tell Miller what to do. Which means we’ve got ourselves a briar patch to hack through.”
“That’s why Miller and Nichols are on the Hill at this moment,” Kolberg said. “We’d be facing a lot of legal barriers to what you’re proposing.”
“Christ, Sam, can’t you get it through your thick head that what is about to hit us will change all the rules?” Nast practically shouted. “The bolder our strategy, the better. If Joe Miller and the Speaker of the House put the brakes on our rescue program, they’d become the most hated people in the country. And you could use your bully pulpit, Mr. President, to stick it to them big-time.”
Farmer turned a wistful glance out the window toward the Rose Garden for a long moment. “You’ve got a point, Spence. If things do go straight into the toilet, like they’re looking to do, then we need to offer leadership that can save our economy and our nation.”
“Thank you, Mr. President,” Nast said, holding back a smirk for Kolberg.
“Sam?” Farmer asked.
“You’re the president.”
Nast almost laughed out loud. What the idiots didn’t realize was that whatever the government ended up doing would probably not work. But right now he was playing the role of the savior of the nation, who was trying to keep the ship from sinking.
“What if your idea doesn’t work?” Farmer asked.
“Years of depression, maybe,” Nast said. “Farmervilles.”
“The big boys didn’t starve in the thirties, and they won’t this time if the shit hits the fan,” Farmer said, not taking Nast’s bait about Farmervilles. “And from what I know about Reid Treadwell’s fancy footwork, I have a hunch that he and his Burnham Pike pals will be eating caviar and drinking champagne no matter what.”
Nast felt a sudden chill. “They’re in my past, sir. As you’ve instructed, I will have no further contact with Reid or his people.”
“That best be true, because this time, unlike after ’08, I will see some of those Wall Street butt wipes who game the system end up on the guillotine.” He smiled. “Do you get my drift, Spencer?”
“Yes, Mr. President, I do.”