Storm Front

“Yes, well…,” Click said, as if all the attention from the enormous world of quantitative economics embarrassed him. He fiddled with the keyboard, then brought up a screen filled with numbers. “Now, bear in mind, this is a computer model of the FX. It’s a re-creation of reality, but it’s one I’ve spent four years perfecting. It allows me to predict the impact of a trade within a ninety-nine percent confidence interval.”

“Okay, so what am I looking at here?” Storm asked.

Click jabbed a finger at the screen, to a column of numbers expressed to the fifth decimal place. “There’s the value of the U.S. dollar relative to a variety of currencies in current market conditions. There’s the euro, the Swissie, the Aussie, the loonie, etcetera. I’ve just put ten up there right now, but obviously I can show you any currency you’d like to see. Here’s what happens to the value of the U.S. dollar when you sell a yard of greenbacks for, say, British pounds.”

“A yard?”

“Sorry. That’s FX slang for a billion.”

“The trades are really that large?”

“Some of them, yes,” Click said. “You have to recall, a lot of these trades are only making money way out on the margins, and only in very small percentages. So you need to make very large trades in order for it to be worth your time. So, anyhow, here’s what happens when I sell a yard of dollars.”

Click touched a button. Storm kept his eyes on the numbers.

“But nothing changed,” he said.

“Exactly. Nor would we expect it to. With ten trillion in circulation, shifting a billion one direction or another is like trying to move a hurricane with a ceiling fan. Now, here’s two yards.”

Storm watched as the last number on the screen, the one five spaces over from the decimal point, changed from 7 to 6. “Okay, I see it,” Storm said.

“Right. Now here’s five yards.”

This time, both the last digit and the second-to-last digit moved.

“Got that? Good. Now, here’s five yards, executed as a double-back trade,” Click said. The third-to-last digit changed, as did the two next to it. “I just affected the value of the U.S. dollar by a tenth of a cent. Still not that big a deal, right? I mean, the value of the dollar can fluctuate more than that on a daily basis and life as we know it goes on just fine.”

“Yeah, this doesn’t exactly look like financial Armageddon,” Storm confirmed.

“Trust me, we’re getting closer to Armageddon. Okay. Watch this. Here’s ten yards double-backed.”

The dollar in Click’s model was suddenly worth two cents less. “Still not much, right? But that’s because the negative feedback loops haven’t swung into action. It takes a little to make that happen. But, in the case of the Korean in 2008, we were talking about a one-hundred-fifty-yard trade — a historically large trade, all in one direction. Nothing like that had ever happened before. And, voilà.”

Click pressed a button. The dollar immediately lost seven cents against the British pound. “Now, wait for it…” Click said. And, sure enough, Storm and Xi Bang watched a simulated economic disaster unfold: The drop surged to ten cents. Then fourteen cents. Twenty-two cents. Thirty-eight cents.

Click pressed another button and the free fall halted.

“I just hit pause. Bear in mind, because this server is so powerful, I’m able to speed up the action so it’s happening faster than it would in real life. You just watched about fifteen minutes of simulated action. Now watch what happens when I have my simulated Fed step in to regulate the monetary supply by selling its bonds like it did in 2008.”

Click tapped a button, typed a few commands, then stepped back. Sure enough, the dollar quickly regained its lost ground and was soon trading at what appeared to be the same level as before.

“So, basically, no harm, no foul, right?” Click said. “As long as we’ve got Papa Fed watching our backs, we’ll be fine. But watch this. I’m going to execute six trades similar to the Korean trade of 2008, and — this is vital — they’re going to happen simultaneously, in six different currencies, all double-backed.”

Click’s fingers danced across the keyboard for about thirty seconds. Then he said, “Ling, would you like to do the honors? Press this button right here.”

Xi Bang slid to the computer keyboard, brushing Storm as she did. He was so engrossed in the demonstration that he nearly — nearly — forgot just how interested he was in seeing to it that their own foreign exchange program continued.

“This one?” she said.

“Yep. Go ahead.”

Xi Bang depressed the button and the numbers on the screen jumped at once. The numbers in the column on the left side, representing the U.S. dollar, ticked steadily downward. The column on the right, representing the other currencies, climbed accordingly.

“Now, I’m going to have the Fed intervene, in the same way it did before,” Click said.

The numbers on the left side continued their slide. It had no effect. By the time the numbers on the screen finally begin to stabilize, the dollar was a quarter of what it had been.