Today, I’m picking up where my predecessor here at Moneybox left off and returning to Westeros. The last couple Game of Thrones episodes have given us an entire banking subplot, as well as evidence that while Tywin Lannister might be a masterful political strategist, he’s probably the last guy you’d want managing a national economy—kind of like a Westerosi Vladimir Putin.*
A quick disclaimer here for hardcore GoT fans: I watch the show but have not read the novels. I apologize in advance if I end up missing any fun nuances of Westerosi finance as a result, but my take will be based on the universe presented by Benioff and Weiss.
The Lannisters became one of the most powerful families in the Seven Kingdoms thanks to the vast wealth produced by their gold mines in the Westerlands. But in episode five, Lord Tywin reveals to Cersei that those pits haven’t yielded a single nugget in three years. In order to pay for their war against the Starks, the throne has had to borrow prodigiously from the dreaded Iron Bank of Braavos, which has a history of funding rival regimes if they think an old customer is about to stiff them.
And what do you know—in Episode Six we learn that Tywin already has one hell of a bond vigilante coming his way. After a bit of cajoling from Ser Davos Seaworth, the Iron Bank decides to stake Stannis Baratheon’s campaign to retake the Iron Throne, because it’s no longer crystal-clear that the Lannisters will always pay their debts.
Which brings us back to the Tywin-Putin comparison. The Lannisters and the Kremlin derive their political strength from natural resources. Much as Putin has used his country’s oil and gas profits to press forward with an aggressive geopolitical agenda at the expense of the nation’s overall economic health, Tywin has used his gold mostly to consolidate control over the Iron Throne, rather than stoke any sort of advanced domestic industry in the Westerlands. Early on, he acted a bit like a banker, providing money to cover Robert Baratheon’s excessive spending on feasts and tournaments. Those loans, it’s safe to say, are now nonperforming. Later, he spent big battling Rob Stark. So whereas Putin still has plenty of oil to spare, Tywin’s resources have run dry.
Here, Tywin’s predicament has a different historical analog: the Byzantine Empire. As Peter Bernstein recounted in The Power of Gold: The History of an Obsession, the Byzantine Empire established itself politically and economically thanks to its own immense gold stocks, which came largely from mines in Nubia. Its golden coin, the bezant, has been called “the dollar of the Middle Ages,” because it acted as a sort of global reserve currency. But with the Muslim conquest of Egypt during the seventh century, the Byzantines lost their mines, forcing them to turn to trade. By selling luxury items such as silk textiles to Europeans, Constantinople was able to create a steady trade surplus that ensured a steady flow of gold into the state’s coffers, and sustained the reputation of the bezant as the world’s most sound medium of exchange until around the 13th century.
This is more or less what the Lannisters should have been up to all along. While gold mines are finite, a healthy trade empire can last centuries. But whereas the Byzantines woke up to the virtues of global commerce with the loss of Nubia, Tywin appears to be hoping for another political solution to his fiscal woes. By marrying off young King Tommen to Margaery Tyrell, he believes her family will use its vast agricultural wealth to pay off the throne’s debts. Given the fickle nature of alliances in the Seven Kingdoms, he’d probably be better off with a merchant fleet.