Tyrion Lannister
Tyrion Lannister was injured during a battle in the second season. Helen Sloan/HBO

There has been a good deal of buzz in the past few weeks about the premiere of the third season of HBO’s hit series “Game of Thrones.” But for those who have found the show to be too enthralling, never fear, the economists have arrived to ruin the entertainment by turning it into a learning experience.

As it turns out, though, economic lessons are more often found in George R.R. Martin’s original novels than in the recent adaptations, so we need not spoil the story. What we hope is to give viewers a glimpse beneath the surface of the events that occur in the series.

One of the inevitable problems of adapting the novels into a television series is that some of the richness is lost. In the series, the game of thrones is usually played with more obvious weapons like swords and other more … human assets, and the battlefield is more likely to be a boudoir than a bank. However, Martin’s epic is nothing if not a study in the logic of government and the tools it uses to extend its sphere of influence.

But in addition to incorporating conventional methods of politics, Martin’s books also pay close attention to the economic problems of ruling the Seven Kingdoms.

What makes these elements of the story so fascinating is that, despite the fantasy setting, they describe traits of government that are universal and relevant in the world today. And Martin’s view of his subject is far from random, being supported through detailed historical research that underlies his descriptions of the economic workings of government.

A deep understanding of history shines through particularly in the descriptions of public finance, one of the persistent difficulties in governing any kingdom, but especially one perpetually at war. It's conventional in economics to say government has three methods of finance: taxation, borrowing, and inflation. And each of these methods is tried by the Lannisters in their efforts to retain power.

The chief financial mischief is carried out by Lord Petyr Baelish, also known as “Littlefinger,” who serves as the king’s master of coin. In addition to persistently hatching his own schemes, Littlefinger also proves himself a shrewd financier in his efforts to provide the crown with the gold it needs to survive the war.

One of Littlefinger’s first fiscal policies is a tax on refugees from the war who wish to enter the capital city, thus taking advantage of their desperation to fleece them of all they own. Yet, once safely inside the city walls, there's little way for the refugees to generate additional income for the crown.

Later in the story, to avoid their own potential “fiscal cliff,” more effective taxes must be tried. In an attempt to pay for King Joffrey’s wedding, Tywin Lannister even taxes brothels, disguising the tax as a way to “improve the morals of the city.”

The next clear option is borrowing, and this Littlefinger’s treasury does in large amounts. Its primary source of loans are foreign banks (especially the Iron Bank of Braavos), but as the war drags on, the Lannisters find it increasingly difficult to always pay their debts. The master of coin becomes an artful dodger, and the lenders become aware that the terms of trade are not to their advantage.

Neither lending nor borrowing comes without a cost, and the balance of power is affected by both. While governments try to force the hand of their creditors, those who finance governments also seek to influence them in return. Sometimes, the bankers even threaten to finance other frontrunners in the competition for the crown.

Eventually, power accrues to those who make themselves indispensable sources of spending. The financiers become “political entrepreneurs,” pulling strings behind the scenes. This is exactly what Tywin Lannister does; even before he becomes the Hand of the King (technically, becomes Hand again) it's clear that his will governs the kingdom -- his will, and his purse strings.

Martin then adds a finishing touch on the debt problem by looking into the thoughts of Cersei Lannister. Frustrated by the crown’s obligation to repay its loans, Cersei concludes: “We need our own bank … the Golden Bank of Lannisport.”

This is another brilliant illustration of the logic of public finance. Rulers throughout history have realized that the key to financing the state isn't to simply prey on the wealth of citizens, or rely on the goodwill of lenders, but to directly control the money supply through a central bank.

This leads to the last and most devious method of finance: inflation. In the medieval world, inflation occurred through a simple form of currency debasement called “coin clipping.” Martin makes occasional reference to the practice, and implicates Littlefinger in a coin clipping scheme. Littlefinger’s chosen method of finance is described as minting gold from goldenrod, implying that he's diluting the metallic content to produce low-value coins that can be passed off at face value. This practice provides ample funds for the crown, but at the expense of the rest of society.

Is it necessary to point out the familiarity of this story -- a heavily taxed population, a massive public debt, and a government rapidly inflating the money supply to sustain itself and its chosen elites through an endless series of wars?

A constant theme in Martin’s books, and human history, is that the game of thrones does not change. But those who desire a different outcome should take note of one point Martin’s epic makes abundantly clear: It does not matter who sits the throne, the problem lies in the throne itself.

Matt McCaffrey is an Instructor of Economics at Auburn University, and editor of Libertarian Papers. Carmen Dorobăț is a PhD candidate in economics at the University of Angers, and Instructor at the Bucharest Academy of Economic Studies.