Chapter 45

45

Mary flew to San Francisco, where the US Federal Reserve was hosting a meeting of some of the other big central banks. There was an annual meeting in Basel of all the central banks, convened by the Bank for International Settlements, but those were pro forma things; the real discussions usually happened elsewhere, and when the US Federal Reserve called for a consultation, the other central banks usually showed up. This meeting was one of those, and the head of the Fed had welcomed Mary nd given her a slot on the program. So it was time to talk things over with them in person, make the pitch for a carbon coin.

Before that meeting began, she dropped in on the annual gathering of California Forward, having been invited to it by a young woman who had ce interned for her. So a morning came when Mary walked with Esther through San Francisco's urban hills to the Moscone Convention Center. It was a brisk morning, the air almost as cool as in Zurich, but oceanic and windy. This and something intangible, maybe the hills, or the light, gave the city a wild, open feel, very unlike staid old Zurich. Mary was very nd of Zurich, but this city overlooking its bay struck her in a different way as rather superb, basking under the windy Pacific sun and giving her, with each block they walked new views in all directions.

The California Forward meeting was an annual summit gathering for several score organizations. California, if it had been a nation, would now constitute the fifth biggest economy on Earth, and yet it also ran at carbon neutrality, having established strong policies early on. They were intent on continuing that process, and obviously the people at the meeting felt what they were doing was a model other people could learn from. Mary was happy to be taught.

Esther introduced her to people from the State Water Board, the California Native Plant Society, the University of California's clean energy group, also its water group; also the head of the Department of Fish and Wildlife, the state's biodiversity leader, and so on. Together a group of them walked her to a cable car terminus, and they all got on an open-sided cable car and rode it north to Fisherman's Wharf. Mary was surprised, thinking these quaint cars, canting up and down steep hills like Swiss cable cars attached to slots in the streets, were for tourists only, but her hosts assured her that they were as fast as any other transport across the city, and the cleanest as well. Up and down, up and down, squealing and clanking in the open air, and again she got the sense of a place enjoying its own sublimity. In some ways it was the topological reverse of Zurich. The California Forward crowd, enthusiastic enough already, were now all bright-eyed and red-cheeked, as if on holiday.

From Fisherman's Wharf they took a small water taxi to Sausalito, where a van drove them to a big warehouse. Inside this building the US Army Corps of Engineers had created a giant model of the California Bay Area and delta, a 3-D map with active water flows sloshing around on it. Here they could walk over the model landscape on low catwalks to see features better, and as they did that, the Californians told her and showed her how the northern half of the state was now functioning.

The state's Mediterranean climate, they told her, meant warm dry summers and cool wet winters, nurturing an immense area of fertile farmland, both on the coastal plains and in the state's great central valley. This central valley was really big, bigger than Ireland, bigger than the Netherlands. One of the chief breadbaskets of the world: but dry. Water had always been the weak link, and now climate change was making it worse. The entire state was now plumbed for water, they moved it around as needed1 but when droughts came, there was not much to move. And droughts were coming more and more frequently. Also occasional deluges. Either too little or too much was the new pattern, alternating without warning, with droughts predominating. The upshot would be more forest fires, then more flash floods, and always the threat of the entire state going as dry as the Mojave Desert.

Hydrologists pointed at the model below as they explained to Mary the water situation. Typically, the Sierra snowpack held about fifteen million acre-feet of water every spring, releasing it to reservoirs in a slow melt through the long dry summers. The dammed reservoirs in the foothills could hold about forty million acre-feet when full. Then the groundwater basin underneath the central valley could hold around a thousand million acre-feet; and that immense capacity might prove their salvation. In droughts they could pump up groundwater and put it to use; then during flood years they needed to replenish that underground reservoir, by capturing water on the land and not allowing it all to spew out the Golden

Gate.

To help accomplish all this they had passed a law, the Sustainable Groundwater Management Act, which they called "Sigma." In effect it had created a new commons, which was water itself, owned by all and managed together. Records were kept, prices were set, allotments were dispensed; parts of the state had been taken out of agricultural production. In drought years they pumped up groundwater, keeping close track, conserving all they could; in flood years they caught water in the valley and

helped it to sink into the basin.

How they did this last part was a particular point of pride for them, as they had discovered that the central valley's floor was variably permeable. Much of it was as hard as a parquet floor, as one of them put it, but they had located several "incised canyons," created when powerful flows of melted ice had poured off the Sierra ice cap at the end of the last two or three ice ages. These canyons had subsequently filled with Sierra boulders and been slowly covered with dirt, so that they now looked just like the rest of the valley floor; but in fact, if water was trapped over them, they could serve as "gigantic French drains," allowing water to sink into and rough them, thus recharging the groundwater basin much faster than the areas would allow. So California's state government had bought or otherwise claimed the land over these French drain areas, and built dams, "kes, levees, baffles, and channels to and fro, until now the entire valley as plumbed to direct heavy rainfall floods onto these old incised canals, holding water there long enough for a lot of it to percolate down there than run out to sea. Of course there were limits to how much they could retain, but now pretty good flood control was combined with a built-in recharge capacity, so they could stock up in wet years and then pump again in the drought years that were sure to follow.

Good in itself; great, in fact. And not only that, this necessity to replumb the great valley for recharge had forced them to return a hefty percentage of the land to the kind of place it had been before Europeans arrived. The industrial agriculture of yesteryear had turned the valley

into a giant factory floor, bereft of anything but products grown for sale; unsustainable, ugly, devastated, inhuman, and this in a place that had been called "the Serengeti of North America," alive with millions of animals including megafauna like tule elk and grizzly bear and mountain lion and wolves. All those animals had been exterminated along with their habitat, in the first settlers' frenzied quest to use the valley purely for food production, a kind of secondary gold rush. Now the necessity of dealing with droughts and floods meant that big areas of the valley were restored, and the animals brought back, in a system of wilderness parks or habitat corridors, all running up into the foothills that ringed the central valley on all sides. These hills had always been wilder than the flat valley floor, and now they were being returned to native oak forests, which provided more shelter for wild creatures. Salmon runs had been reestablished, tule marshes filled the old dry lake beds; orchards were now grown that could live through periods of flooded land; rice terracing was also built to retain floodwater, and they had been planted with genetically engineered rice strains that could stay flooded longer than previous strains.

All these changes were part of an integrated system, including major urban and suburban retrofits. California's first infrastructure had been very shoddy and stupid, they told Mary; cars and suburbs, plywood and profit-another secondary gold rush, which had repeated the ugliness of the first one. Recovering from that crazy rush, redesigning, restoring, rebuilding-all that was going to take another century at least. But they were already a carbon-neutral society of forty million people, headed to carbon negative; this was a work in progress, of course, and they were still grappling with equity issues, being tied to the rest of the world. But those too were being worked on, until it would finally be the Golden State at last.

All this they told Mary while looking down on the pretty model of the landscape filling the warehouse, as if from a small airplane or satellite. Like a three-dimensional quilt, it seemed to her, the Lilliputian valley floor a vivid patchwork of greens, bordered and criss-crossed by what looked like hedgerows but were actually miles-wide habitat corridors, reserved for wild animals. The surrounding foothills were pale blond, dotted densely with dark green forest copses.

"It looks great," Mary said. "I hope we can do this everywhere."

"Models always look good," Esther said cheerfully. But she was proud of it-not just the model, but the state.

Back in San Francisco, she met the chair of the US Federal Reserve on the top floor of the Big Tower, still the tallest skyscraper in the city. This meeting room gave them a view that made it seem as if they were almost as high as the peak of Mount Tamalpais, looming there to the north of Sausalito. It reminded Mary of the day before, looking down on the model California, but this time it was real, and vast. Alcatraz was a gray button in the blue plate of the bay, the bay's far shores were green and hilly. Out there to the west, the Farallon Islands spiked out of the ocean like a sea serpent's black back. Little bridges crossed the bay here and there. The city itself was rumpled and urban, the white buildings and grid of streets interrupted by a few parks. It was a grand view, and as the meeting began Mary found herself distracted by it. But quickly enough, what was happening in the room focused her attention.

The Fed chair, Jane Yablonski, had held her job for nine years, with dire more to go. She had the patient look of someone who had heard a Jot of exciting proposals in her time and had come to distrust all of them; a little too patient for Mary's liking. About Mary's age, black-haired, attractive in a silvery gray suit. Surrounded by assistants and some other Federal Reserve board members. She had been appointed by the previous president, and it was said that the current one was looking forward to replacing her.

Joining the Americans were several other central bank representatives, including China, the European Union, the Bank of England, and the

Bundesbank in Germany. Just the people Mary wanted to talk to.

All central banks were curious hybrids, and the US Federal Reserve was no exception. It was a federal agency, therefore a public bank, but it was funded by private banks, at the same time that it oversaw them. It created money, being along with the Treasury the seigniorage function of the United States, and between that and setting interest rates it was thus responsible for the state of the US dollar, the strongest currency in the world, the currency every other currency was pegged to-the one everyone ran to whenever there was a currency scare of any kind. The money of last resort, so to speak. In this sense, a very crucial sense, the American empire was alive and well.

After some preliminary business, it was Mary's turn to make her pitch. She explained to them Janus Athena's idea for a carbon coin, wishing that she had J-A there, or Dick, to help her with the explanation. But she needed to be able to describe it herself, if it was going to make any headway. And the general ideas were clear to her.

Yablonski and the others had already heard of carbon quantitative easing, it turned out, and they were even familiar with the Chen paper and the associated discussions of it. Yablonski did not look impressed.

"I don't see how we can get into the business of backing a currency that isn't the US dollar," she said when Mary was done. "The Federal Reserve exists to protect and stabilize the dollar, nothing else. That means stabilizing prices more generally, which means we pay attention to unemployment levels too, and try to help there as we can. So this idea is not really in our purview, and if we tried this new alternative currency and it somehow destabilized or harmed the status of the dollar, we would be worse than derelict in our duty." Mary nodded. "I understand. But you can't just quantitatively ease your way to a rapid transition out of the carbon economy. It costs too much and it isn't profitable, and if you tried to simply QE your way to paying for it, that would undercut the dollar even more than our plan. And yet something's got to be done. It's the vital work of our time. If we don't fund a rapid carbon drawdown, if we don't take the immense amount of capital that flows around the world looking for the highest rate of return and redirect it into decarbonizing work, civilization could crash. Then the dollar will be weak indeed."

Yablonski nodded, grimly amused. "If the world ends, the dollar is in trouble. But aside from that contingency, we're here to defend it in the ways we've been given. That's what we're tasked with. Monetary policy, not fiscal policy. And the carbon tax proposals are gaining momentum, we feel."

Mary said, "But you need a carrot to go with the stick. The modeling shows that, not to mention common sense."

"Not our purview," Yablonski said. The Europeans nodded in agreement; the Chinese official, an elderly man, looked on more sympathetically.

"But maybe it should be," Mary said.

Now Yablonski looked displeased. This was her meeting, after all. Mary as there as a guest, making a pitch. And even though the global situation was urgent, and the new tool promising, Yablonski wasn't going to expose herself and her institution to that kind of heat without being ordered to do it by Congress. This was expressed very clearly just by the look on her face. It was the same with the Europeans. China might be different, but they didn't think China would lead on this issue. It needed everyone on board for it to work; all the central banks would have to agree to both the problem and the solution. If they decided not to back this plan, no one could coerce them to change their minds; they were de-linked from their legislatures precisely to be able to avoid political pressure of any kind.

Mary regarded them, thinking it through. Because money ruled the world, these people ruled the world. They were the world's rulers, in some very real sense. Bankers. Non-democratic, answerable to no one. The technocratic elite at its most elite: financiers. Mary thought of her group back in Zurich. It was composed of experts in the various fields involved the matter, people with all kinds of expertise, many of them scientists, with extensive field experience of one sort or another. Here, she was looking at a banker, a banker, a banker, a banker, and a banker. Even if they understood an idea, even if they liked an idea, they wouldn't necessarily act on it. One principle for bankers in perilous times was to avoid doing anything too radical and untried. And so they were all going to go down.

Looking out over San Francisco and its bay, at Mount Tamalpais and the broad stretch of the Pacific, Mary heaved a sigh. This was not just a meeting of two women and three men, but of five teams, five institutions, five nation-states at the heart of the global nation-state system. The Paris Agreement's Ministry for the Future was small and impoverished; these central banks were big and rich. Just because the need was urgent and her sense was good, that didn't mean anything would change. You couldn't change things with just an idea, no matter how good it was. Was that right? It felt right. Power was entrenched-but that phrase caught just a hint of the situation- actually, the trenches were foundations that went right to the center of the earth. They could not be changed.

The meeting dragged to a close. Time to get a drink. Nothing had happened.