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By R.Z. Sheppard

So the world's economy did not collapse as Paul Erdman envisioned ten years ago in his geopolitical thriller The Crash of '79. And where is the return of runaway inflation that he hypothesized for the mid-'80s in The Last Days of America (1981)? Both scenarios have, for the moment, been upstaged by the selective prosperity of Reaganomics. But like many well-known experts, Erdman continues to prosper by being wrong. His writing career was in fact launched by an international banking blunder. That was in 1970, when he was vice chairman of the United California Bank in Basel, where officials participated in some ruinous commodity trades. The Swiss government concluded that he had transgressed the country's financial code and threw him in jail for ten months.

Erdman, who has a degree from the Georgetown University School of Foreign Service and a Ph.D. in economics from the University of Basel, did what many other gifted men have done when confronted with enforced leisure. He wrote a novel. The Billion Dollar Sure Thing (1973) involved the President of the U.S. and his Secretary of the Treasury in a frantic effort to save the international monetary system. It was short on narrative technique but long on expertise. There was no panting sex, and the sharks wore three-piece suits. Yet Erdman, like Bernie Cornfeld, another tarnished golden boy of the period, had a sheaf of raffish publicity behind him, and the novel became a best seller.

The Erdman formula for economic disaster is not foolproof. Despite their Rent-a-Wreck plots and Who's Who characters, his books about high finance require more concentration than is usually applied to mass-market fiction. Mixing dollars and sensibility is the problem with fiscal novels in general, and Erdman's The Panic of '89 in particular:

" 'We got the preliminary flash estimates on fourth-quarter GNP and unemployment late Friday afternoon,' Reston replied. 'I'm afraid ((it's)) about to hit the fan, Paul.'

" 'How much is unemployment up?'

" 'A full percentage point. That's the biggest jump I can remember. And GNP for the first quarter 1989 is probably going to be down two percentage points. Which guarantees that we are sinking, and sinking very rapidly, into recession.' "

Aside from the virile platitude about the waste product in the air- turbulence apparatus, the exchange seems rather stilted for a chairman of the Federal Reserve Board and a distinguished authority on international finance. But then, much needs to be explained if the reader is to share in the panic. Why are two unappealing Venezuelan brothers plotting to wreck the U.S. economy? What fearsome weapon does the Third World wield? How much do Swiss banks and European money houses have to gain at America's expense?

Erdman's plot might have been pieced together from the pages of the financial press during the past five years. The essential element is the shaky loans that U.S. banks have made to underdeveloped nations. As long as the prices for their exports -- minerals, agricultural products and, in particular, oil -- remained high, these countries could pay back the principal and interest. But the value of commodities has dropped sharply in the '80s, leaving the borrowers without the hard currency they need to repay their loans. In addition, Erdman points out, "American farmers collectively owe the banks more than Brazil and Mexico and Argentina combined, and collectively they are not any more solvent."

The sight of the U.S. banking system choking to death on its bad debts would be especially appealing to people like the brothers Martinez, / Venezuelans who are no longer feared and respected as once powerful members of OPEC. Chain-reaction failures of U.S. financial institutions would again humble the arrogant Yankee. His stock market and dollar would plummet, and the Martinez boys and their Swiss co-conspirators would prosper.

Erdman plants his time bomb in the last months of the Reagan Administration. To ensure an even flashier explosion, he adds a terrorist plot to kill the top planners of U.S. economic policy. There are guest appearances by Abu Nidal, charged with planning the Rome and Vienna airport massacres of 1985, and Ilyich Ramirez-Sanchez, better known as Carlos the Jackal, now a little gray in the muzzle but remembered as the most dreaded terrorist of the '70s.

The novel's hero is fictional: Paul Mayer, a rich, cosmopolitan fiscal authority who has stepped back from the day-to-day action to teach "International Finance: Problems and Potential Solutions" at Georgetown. It is Mayer, as a well-connected but unofficial consultant to his friends at the Federal Reserve Board, who thwarts the Venezuelans' plot. Fussy readers should put their aesthetics on hold and allow Erdman to teach them a thing or two about how the world runs. Economists may admire his analysis and resolution: the U.S. and its friends support $20-per-bbl. oil, thereby keeping the banks solvent and allowing the West to continue the relatively benign struggle between its haves and have-mores.