The power of the people in this room was so stunning that even they rarely thought about it. By a simple decision, the people around the table had just made everything in America cost more. Every adjustable-rate mortgage for every home, every auto loan, every credit card revolving line, would become more expensive every month. Because of that decision, every business and household in America would have less disposable income to spend on employee benefits or Christmas toys. What began as a press release would reach into every wallet in the nation. Prices would increase on every consumer item from home computers to bubble gum, thus reducing further still everyone's real buying power.

And this was good, the Fed thought. All the statistical indicators said the economy was running a little too hot. There was a real danger of increasing inflation. In fact, there was always inflation to one degree or another, but the interest raise would limit it to tolerable levels. Prices would still go up somewhat, and the increase in the discount rate would make them go up further still.

It was an example of fighting fire with fire. Raising interest rates meant that, at the margin, people would borrow less, which would actually reduce the amount of money in circulation, which would lessen the buying pressure, which would cause prices to stabilize, more or less, and prevent something that all knew to be more harmful than a momentary blip in interest rates. Like ripples expanding from a stone tossed into a lake, there would be other effects still. The interest on Treasury bills would increase. These were debt instruments of the government itself. People—actually institutions for the most part, like banks and pension funds and investment firms that had to park their clients' money somewhere while waiting for a good opportunity on the stock market—would give money, electronically, to the government for a term varying from three months to thirty years, and in return for the use of that money, the government itself had to pay interest (much of it recouped in taxes, of course). The marginal increase in the Federal-funds rate would raise the interest rate the government had to pay—determined at an auction. Thus the cost of the federal deficit would also increase, forcing the government to pull in more of the domestic money supply, reducing the pool of money available to personal and business loans and further increasing interest rates for the public through market forces over and above what the Fed enforced itself. Finally, the mere fact that bank and T-Bill rates would increase made the stock market less attractive to investors because the government-guaranteed return was "safer" than the more speculative rate of return anticipated by a company whose products and/or services had to compete in the marketplace.

On Wall Street, individual investors and professional managers who monitored economic indicators took the evening news (increases in the Fed rate were usually timed for release after the close of the markets) phlegmatically and made the proper notes to "go short on" (sell) their positions in some issues. This would reduce the posted values of numerous stocks, causing the Dow Jones Industrial Average to sink. Actually, it was not an average at all, but the sum of the current market value of thirty blue-chip stocks, with Allied Signal on one end of the alphabet, Woolworth's on the other, and Merck in the middle. It was an indicator whose utility today was mainly that of giving the news media something to report to the public, which for the most part didn't know what it represented anyway. The dip in "the Dow" would make some people nervous, causing more selling, and more decline in the market until others saw opportunity in stock issues that had been depressed farther than they deserved to be. Sensing that the true value of those issues was higher than the market price indicated, they would buy in measured quantities, allowing the Dow (and other market indicators) to increase again until a point of equilibrium was reached, and confidence restored. And all these multifaceted changes were imposed on everyone's individual lives by a handful of people in an ornate boardroom in Washington, D.C., whose names few investment professionals even knew, much less the general public.

The remarkable thing was that everyone accepted the entire process, seemingly as normal as physical laws of nature, despite the fact that it was really as ethereal as a rainbow. The money did not physically exist. Even "real" money was only specially made paper printed with black ink on the front and green on the back. What backed the money was not gold or something of intrinsic value, but rather the collective belief that money had value because it had to have such value. Thus it was that the monetary system of the United States and every other country in the world was entirely an exercise in psychology, a thing of the mind, and as a result, so was every other aspect of the American economy. If money was simply a matter of communal faith, then so was everything else. What the Federal Reserve had done that afternoon was a measured exercise in first shaking that faith and then allowing it to reestablish itself of its own accord through the minds of those who held it. Holders of that faith included the governors of the Fed, because they truly understood it all-or thought that they did. Individually they might joke that nobody really understood how it all worked, any more than any of them could explain the nature of God, but like theologians constantly trying to determine and communicate the nature of a deity, it was their job to keep things moving, to make the belief-structure real and tangible, never quite acknowledging that it all rested on nothing even as real as the paper currency they carried with them for the times when the use of a plastic credit card was inconvenient.

They were trusted, in the distant way that people trusted their clergy, to maintain the structure on which worldly faith always depended, proclaiming the reality of something that could not be seen, an edifice whose physical manifestations were found only in buildings of stone and the sober looks of those who worked there. And, they told themselves, it all worked. Didn't it? In many ways Wall Street was the one part of America in which Japanese citizens, especially those from Tokyo itself, felt most at home. The buildings were so tall as to deny one a look at the sky, the streets so packed that a visitor from another planet might think that yellow cabs and black limousines were the primary form of life here. People moved along the crowded, dirty sidewalks in bustling anonymity, eyes rigidly fixed forward both to show purpose and to avoid even visual contact with others who might be competitors or, more likely, were just in the way. The whole city of New York had taken its demeanor from this place, brusque, rapid, impersonal, tough in form, but not in substance. Its inhabitants told themselves that they were where the action was, and were so fixed on their individual and collective goals that they resented all the others who felt precisely the same way.

In that sense it was a perfect world. Everyone felt exactly the same. Nobody gave much of a damn about anyone else. At least, that's the way it appeared. In truth, the people who worked here had spouses and children, interests and hobbies, desires and dreams, just like anybody else, but between the hours of eight in the morning and six in the evening all that was subordinated to the rules of their business. The business, of course, was money, a class of product that knew no place or loyalty. And so it was that on the fifty-eighth floor of Six Columbus Lane, the new headquarters building of the Columbus Group, a changeover was taking place.

The room was breathtaking in every possible aspect. The walls were solid walnut, not veneer, and lovingly maintained by a well-paid team of craftsmen. Two of the walls were polished glass that ran from the carpet to the Celotex ceiling panels, and offered a view of New York Harbor and beyond. The carpet was thick enough to swallow up shoes—and to deliver a nasty static shock, which the people here had learned to tolerate. The conference table was forty feet of red granite, and the chairs around it priced out at nearly two thousand dollars each.