CNBC’s Catherine Boyleoffered a decidedly non-fantastic,nuts and bolts readingof HBO’sGame of ThronesFriday morning, giving her own economic analysis of the political gamesmanship and war-faring inGeorge R.R. Martin‘s wildly popular world of ice and fire.
“While Martin’s tales of White Walkers, direwolves, and dwarves may seem as far from the mundane world of modern-day finance and politics as possible,” she writes, “many have spotted the economic lessons some of the characters should have learned before they embarked on their quest for power.”
Here are her takeaways:
The Iron Bank is GOT‘s IMF and World Bank in One — Too Big to Fail and Bankrolling Everyone
The Seven Kingdoms of Westeros is a feudal economy, which generates little income of its own, which forces it to turn to the more mercantile nearby Free Cities nearby for loans to fund its campaigns. The Iron Bank, in the city state Braavos, is the biggest and most powerful, operating as GOT’s de facto IMF and World Bank in one. Boyle describes the Iron Bank as a classic case of a “too big to fail” lender — “if one king or another doesn’t start paying its debts, there could be trouble ahead. This is an example of ‘sovereign debt.'” She also points out that Cersei Lannister’s hold on the throne truly goes soft only once she stops paying the Iron Bank. And by then, the Bank views the throne as sub-prime and transfers allegiance to her rival Stannis Baratheon.
Littlefinger, Master of Coin, Is Also a Master of Quantitative Easing
Boyle notes that much like the Federal Reserve, Littlefinger, has been undertaking a pseudo-quantitative easing on the show, “by injecting more gold dragons into the economy (although in a rather less sophisticated way, by clipping coins to create more money).” Meanwhile his duplicity knows no bounds: He weakens the royal family’s economic status by drawing heavy loans from the Iron Bank, while raising taxes — and in the backdrop he establishes a booming prostitution business by granting himself loans from the throne, from the very same funds he had it borrow from the Iron Bank. Wolf of Westeros indeed.
Cersei’s Financial Mismanagement of the Throne Might Prove to Be Her Undoing
As Boyle writes: “Her family has lent much of its vast wealth to the crown, which is likely to prove about as good an investment as mortgage-backed securities in 2007.” She raised taxes to the point where the commoners are restless and meanwhile, winter is coming and her wars have destroyed the kingdom’s agricultural economy.
“Cersei may want to set up a Bank of Lannisport,” writes Boyle, “but it looks like that’s come too late.”
The Iron Bank Is Probably the True King Afterall
As Boyle points out, the only enduringly viable industry in Westeros is defence, as ships and and mercenaries are increasingly sought-after to protect against piracy and regional conflict. But it’s again the Iron Bank that backs most of these military procurements.
“The Iron Bank is always glad to be of service,” Tycho Nestoris tells throne contender Stannis after he signs for his debts in blood, in the next book, Winds of Winter.
“But ultimately, the players in this game may all, unbeknown to them, be serving the Bank,” Boyle observes.
Game of Thrones Season 4 returns to HBO on April 17.