Currency War Read online

  DEDICATION

  To the real-life Bernadette, who, like her fictional namesake, absorbed a lot of her father’s tradecraft from an early age.

  ACKNOWLEDGMENTS

  ALTHOUGH I HAVE WRITTEN FIVE nonfiction books and write almost daily on nonfiction topics, this is my first attempt at fiction. Currency War has been five years in the making, and that has meant countless numbers of people were asked for feedback as the book progressed. During those five years a book that began as pure fiction inched closer and closer to reality. So the nature of the people who were asked for their feedback changed from friends and family to individuals with a more professional bent. Some of these people are not acknowledged as a result of their profession, and any others I have omitted have my apologies.

  First and foremost, I want to thank Joe Clifford Faust for his outstanding editorial help. He was the go-to man to answer the question, “Does this work?” Of course, behind every good man is a good woman, and his wife, Connie, has read the book so many times that she probably has it memorized.

  Second, I want to thank all of the folks at Stansberry Research and Stansberry Asset Management for their help in the publication process, especially Mark Arnold, Fawn Gwynallen, Marco Ferri, and Brett Aitken, and Erez Kalir, formerly of Stansberry Asset Management. The folks at Forefront Books, particularly Jonathan Merkh and Lauren Ward, were indispensable.

  Third, I want to thank all of my friends and colleagues for their insights. Christine Frates and Theresa Perfetto, who read major sections of several drafts, went above and beyond the call of duty. Karolin Junnila, whose organizational talents make all things possible, did the same on this project. Barry Jackson, in addition to his kibbitzing, found me Joe Clifford Faust.

  Fourth, I want to thank my children. Tommy, my youngest, was a major inspiration for this book, though he did not know it at the time. Emily and Ashley provided terrific insight on some of the more sensitive parts of the book—the kind you don’t find in nonfiction works. All of them, especially Troy, had to put up with a grumpy and preoccupied dad quite a bit.

  But the book also would not have been possible without the real-world men and women who make our global political and financial systems operate. This is a work of fiction, and as such, any resemblance between those individuals and the characters in this book are purely coincidental. But the nature of their work is not fictional, even if it is gussied up a bit to omit the day-to-day activities that consume the lives of all of us. Though fictional, Currency War takes place in a world that is all too real.

  PART ONE

  THE MONEY GAME

  CHAPTER ONE

  “STOP THE CAR. Now.”

  It was the third time Ben Coleman said it to the man behind the wheel of the limousine, but his companion, Zhang Jin, told the driver in Mandarin to ignore him. She was a classic government worker drone with the requisite long black hair and piercing dark eyes, not even five-foot nothing and a hundred pounds—well, forty-five kilos—soaking wet.

  “Jin. I mean it. Stop the car.”

  She shook her head. “No. We have to get you to the airport.” She spoke in a vaguely British accent. Most Chinese learned English in Hong Kong, Australia, and even India. The sun still never set on the British empire.

  The desire to investigate the gathering crowds was gnawing at his gut. All the signs of what he was seeing were familiar to him, but he wanted to make sure.

  His trip to the airport started off strictly routine through the beginning of another workday in Beijing. The early morning crowds were slowly building, traffic starting to congeal with automobiles and bicycles competing for space on the asphalt.

  Then he started to notice the lines. Small crowds forming outside certain buildings, a few scattered here and there. As the trip went on, he could see the crowds growing. Passersby seeing the crowds quickly joined in. Fifteen minutes into the drive, the crowds were covering whole blocks.

  Then civility began to vanish. The crowds were turning into mobs. As people spilled into the street, traffic was slowed even further. Then it clicked. The central banker in Ben’s mind realized he was seeing in person what he had only read about.

  “I mean it. Stop the car.”

  “I cannot let you miss your flight.”

  “Look at these crowds. I’m going to miss my flight anyway.” Zhang Jin said nothing. Ben continued. “Look, we’re going so slowly I could get out of the car now.”

  Jin spoke to the driver, who barked back. They were both loud and animated.

  Ben was thinking, Damn, when do I get my chance?

  As if sensing Ben’s thinking, the driver slammed his foot down on the gas, laying on the horn, forcing workers to get out of the way or be run over.

  “If you’re not going to stop, at least tell me what’s going on.” Ben lurched sideways in his seat, away from Jin and toward the door as the driver made a hard left, horn blaring and tires squealing.

  “It appears,” Jin said, not looking at him, “that there has been a power failure and people are lining up to wait for it to come back on so the stores can open.”

  Ben rolled his eyes. The lines weren’t at every building, and the stores were clearly open, their colorful neon signs advertising they were ready for business.

  He said, “There’s no blackout. They’re only queuing at certain places, one every few blocks. But there’re so many people trying to get into them they’re spilling into the streets. They’re not stores, are they?”

  Casting a worried look at the driver, she said, “Do not do this, Ben Coleman. You don’t understand the trouble you would be making for yourself.”

  He looked at the worry in her eyes knew exactly what was going on. You don’t understand the trouble you are making for me by asking this.

  Then he started to shake his head in resignation, not wanting to put Zhang Jin in trouble with her superiors. He’d come to look on her as a friend during his many trips to China. Though she was officially his translator, he knew she was actually his minder. She was employed by Chinese internal security, but she treated him well, knew his preferences for food and drink, and knew how long it took him to sleep off jet lag. She loved to hear about his life in the United States. She inquired about his family, particularly his wife, and said she’d love to meet her in person one day.

  The driver slammed on the brakes. There was a bump and Ben caught himself on the rear of the front seat. When he looked up, he could see an old woman on the hood of the car, her bloodied head up against the windshield. Then another thump as she rolled off.

  “Shit! What the hell—”

  The driver stared back at the bloodstained spiderweb on the windshield. Jin picked herself up from the floor and gasped at the sight.

  The driver burst into more Mandarin, faster than Ben had ever heard it, his arms waving.

  Then the car started to sway.

  Ben’s stomach dropped.

  The crowd outside was no longer concerned about queuing. They turned their attention to the limo, covering the front with their hands and rocking it, pushing and pounding on the driver’s side window.

  “Don’t be afraid,” Zhang Jin said, looking right at Ben. “They don’t want you.”

  The driver looked back at them, fear in his eyes.

  There was a loud crack and the driver’s side window gave way, shattering into hundreds of tiny crystals. Hands poured in through the opening, grabbing the driver by the hair, neck, and left arm. He looped his free arm through the steering wheel to try to stop himself from getting pulled out, then threw himself across the front seat to get away from the grasping mass of arms. But they grabbed his legs and pulled him from the car.

  The crowd moved their attention away from the car. Ben seized his chance, threw open the do
or, and climbed out into the street. Zhang Jin had been right. They hadn’t been after him. They were taking turns punching and kicking and spitting on the driver, who had curled into a ball on the street.

  Jin jumped out Ben’s door. “We have to get out of here.”

  Ben, still staring at the bloody driver, said, “Jin. What the hell?”

  “This happens.” She looked over at the crumpled body in the street. “Somebody’s grandmother.”

  She put a death lock on Ben’s arm and pulled him away from the limo, backtracking down the street. The scene of retribution was quickly obscured by crowds of people mobbing around glass-framed doors. An even larger crowd was growing ominously in the direction they were headed.

  They stopped in their tracks.

  “They’re banks, aren’t they?” Ben asked. “This is a bank run. But it’s bigger. They’ve lined up on every bank I’ve seen. Is it all the banks, Jin?”

  She surveyed the growing chaos in the street and looked afraid for the first time.

  He looked at her and could feel his heart in his throat. “It doesn’t matter. You didn’t tell me. I figured it out. But that doesn’t matter now. We have to get the hell out of here.”

  Jin grabbed his arm and started leading him away from the growing crowd, more interested now in the bank than the limousine driver. But less than a block away was another crowd, another bank, another street blocked off. Then the mob surged toward the bank with an animal groan and its front windows gave way. People jumped up and into the building, and as Ben turned back to the street, he realized he was now caught up in the middle of the mob, streaming toward the broken windows.

  He felt himself go off balance, the crowd packed around him so tightly that he couldn’t move. Ben kicked to keep himself up, but it did no good.

  Zhang Jin shouted, “Lift your feet!”

  Ben picked his feet up and to his surprise, he did not fall. They were packed in so tightly that they flowed with the crowd, inching toward the breached bank.

  Then the crowd stopped. Ben felt himself start to sink as the mob around him loosened, and he realized the people packed around him were turning away from the bank. He shifted to see what had drawn their attention.

  A truck had pulled onto the street. It was military issue with blocky front ends, canvas-slung cargo beds, and now, troops pouring out of their backs.

  The crowd began to scatter and then momentarily stopped. Another truck pulled into the next intersection. Assessing the situation, Ben saw that all points of egress were being blocked. He and Jin were now in a no-man’s land, caught between the mob and the troops.

  Jin was facing the soldiers, a resigned look on her face. Her hand slid out of a pocket and she brought out a mobile phone and began to thumb the screen.

  Like dozens, no, hundreds of other members of the mob, holding their phones up, taking videos of the troops.

  “Jin, there’s no time—”

  Ben never finished the thought. As if it had a single brain, the crowd rolled toward the soldiers, their voices rising into a din. He couldn’t be sure if anything was being said, but the sentiment was there: The banks closed and took our money and now you bring out our own army to protect those bastards.

  Jin bending her arm, bringing up her cell phone.

  The line of troops was now obscured by the advancing crowd. Ben grabbed Jin’s hand as the phone reached her ear and pulled it away, then pulled her away from the scene and started to drag her back toward the limousine, now visible as the crowd dispersed in all directions.

  Then the noise from the crowd pitched upwards into a terrible cry of pain, so loud that it took Ben a moment to hear the gunshots causing it. The cry became louder, and the crackling sounds disappeared beneath it. Ben stood, stunned, not believing what was happening, hand still clamped to Jin’s arm.

  Then something angry buzzed past, mere inches from his ear.

  He started to run again, pulling Jin with him, scanning the streets looking for somewhere safe to go. There was nothing. People were piling up at the doors of open shops, fighting to get in. As they neared the limo Ben heard a wet smack and a young man in front of them spun around and fell to the ground, a fresh red blossom in the center of his chest.

  Ben changed direction again. He had been thinking the limo might be bulletproof like the one he rode in back home, but there was no safe place—

  Until he spotted the alleyway.

  People were running past it, a few had the presence of mind to turn and run down it, and there were bodies in the street between them and the entrance. Ben grabbed Jin’s arm and he ran for it, wishing she would drop that damn phone.

  Someone else was knocked down by the gunfire, and as Ben and Jin reached the entrance to the alley a bullet ricocheted off the brick of a building and Ben felt a sudden burning near his right shoulder blade. He led her deep into the alley, stopping when he realized that a crowd of people were blocking the way out. At the end of the alley, between the two of them and the sunlight he had seen, a truck pulled in to block the way.

  Behind him, people were streaming into the alley and behind them Ben could see an advancing line of troops, double-timing it, weapons aiming from their waists.

  He thought, I’ll be damned if I let things end this way. He began to scan the alley.

  As the next volley of shots rang out, he spotted a dumpster next to a stained and decrepit metal door. He wasn’t altogether certain that the thin metal sides would stop a round from an AK-47, but in the moment, it was all he had.

  By the time he dragged Jin over he had abandoned the idea of getting behind it. There was too much chaos around him. He flung one lid open, grabbed Jin around the waist, and flung her toward the top of the dumpster. She scrambled onto the top of the second lid. Ben reached up, took her by the shoulders, and shoved her through the opening down inside. Then he clambered up the side and jumped down in next to her, pulling the lid shut as he went.

  And when he stopped, he promptly threw up. The smell was overwhelming. He was sitting in a sludge of sour grease, rotting vegetable matter, bones, and entrails, and he was staring into the cloudy eyes of a large carp.

  Jin raised that damned phone to her lips again. He reached up to silence her, but the Mandarin started pouring out of her mouth, so fast that he only recognized some of the phrases.

  Chairman Ben Coleman.

  Federal Reserve Board.

  United States of America.

  Send help.

  A loud ping deafened him as a bullet slammed through the upper part of the metal. Jin dropped the phone and threw herself flat, curling into a fetal position. Ben thought that was smart and forced himself down, on his side to keep his burning shoulder out of the sludge. Jin scooted toward him, hands still cradling the phone. He put one arm around the ball she had wound herself into and could feel her trembling.

  Ben realized he was trembling as well. And to try and regain control of himself, to drown out the sounds of screaming and gunshots from the world outside, he began to hum a song to himself. An old one from a musical, that recent revival of The Music Man.

  * * *

  Lying in the dumpster amid fish scales and rotting food, only half of which were in garbage bags, Ben said to himself, How the living fuck did I get here?

  Barely an hour ago, he was meeting with Li Xue, the governor of the People’s Bank of China. While the United States and China were strategic competitors, their central bankers had no choice but to get along.

  China was vying to become the world’s only superpower. That goal had been formally adopted by Xi Jinping early in his term as president of China in a program called China 2049. He had ruthlessly consolidated power and China was now governed by a small group of men in the politburo.

  Li reported to them. This limited Li’s ability to speak completely freely, but central bankers have their own little language; a combination of a few well-placed technical phrases, accompanied by just the right body language, got the point across.

&
nbsp; The geopolitical battle had first taken an economic turn with a trade war during the Trump administration when Xi Jinping was in office. That war had been painful for both sides, but in the end, the pain was too much for the Chinese to take. They struck a deal. China capitulated. In the process, Xi Jinping, who had viewed himself as president for life, was now in “retirement” in a remote city in central China.

  Still, the humiliation stung. The new Politburo decided to follow a different tack. The U.S. had beaten them on the trade front, but they were going to follow an approach that had long worried many U.S. politicians. The trade surpluses that China had run up were used to buy U.S. Treasury bonds and China now owned one and a half trillion dollars of U.S. government debt. This was going to be their new weapon.

  Used intelligently, the Chinese yuan would become the world’s dominant currency, replacing the dollar. It would be a painful humiliation for America and reestablish China on its path to become the world’s only superpower.

  Li and Ben both knew this was the grand strategy. Li wanted to advance it. Ben wanted to fight it. But both men wanted the war to be conducted with as little collateral damage as possible. If something went wrong, both countries could be sucked into another Great Depression, pulling the entire global economy down with them.

  Ben told Li, “Look, if you dump your Treasuries on the market, you’re going to take a hit. You can’t move all your Treasuries on the first day. Your selling will drive the price down on the remaining U.S. bonds you hold, and you’ll end up with a loss. They’ll lose value, making China poorer.”

  Li responded, “Mr. Chairman, you are talking in the interest of the U.S. That is your job. My job is to look out for the best interest of the people of China.”

  Ben knew from the formality of the answer that Li had understood his point perfectly well.

  Then Ben asked Li, “Why have you been accumulating so much gold?”

  Li said, “Gold has always been a store of value and along with silver, something treasured by the Chinese people for thousands of years. Our gold holdings signal to the people that the yuan should be treasured as much as gold.” Li’s mouth turned into a tight-lipped smile.