It is all linked up – new US fighters in Afghanistan, the struggle at home over the debt ceiling, the budget deficit, as well as the exchange rates of the dollar and the franc.
In order to gain a long-term perspective, we will borrow one of his methods from the British historian Peter Heather. In his study, “The Fall of the Roman Empire,” he describes how Rome’s falling state revenues and rising deficits were only adequate to pay less and less troops of the empire. Money became scarcer, the more land and provinces were lost, the scarcer became the money, and with fewer and fewer troops, more provinces were lost to the enemies, a vicious circle of death.
Now let us convert this to the US, where Congress and President are struggling for a higher debt ceiling. The debt is already higher than a year’s production of this giant country. However, it has so far been financed with loans. Rome paid with more and more inferiour coins. Either way, this is where history applies its relentless leverage. The budget deficit is 680 billion dollars, the level of military spending is the same, and equally the same is the economic growth in dollars. The calculation is therefore simple – every surplus in production goes into military expenditure, and this is taken on credit. These current deficits use up all growth and all wage and price increases. As a result, debt is growing at a relatively faster pace than the national economy. It catches up mightily, year after year. Interest is owed for it, which drives the deficit further upwards.
But in contrast to ancient Rome, these military debts have, for the moment, been paid in the form of paper – with bonds issued by the state. Neta Crawford of the Watson Institute estimates the spending on all imperial anti-terrorist interventions in Iraq, Syria, Pakistan and Afghanistan since 2001 at 5,000 billion dollars. The central bank has bought up 4,000 billion dollars of government debt since then. A corresponding amount of newly printed money has been flowing into the stock boom, in profits of the financial sector, into the banks’ accounts with the central bank, but less into the national economy. Because of this purchase of debt securities, the government’s interest rates have fallen to 1.3% on average, or 266 billion a year. Now the bank of issue is no longer willing to buy state securities and wants interest rates to return to a normal level, which could raise the interest service of future years to 600 billion dollars or more. This means that past military spending is pushing the future deficit massively upwards, and the hour of truth is drawing nearer: then the US will have to start saving. As in ancient Rome, there will then be less money for whole legions every year. Since expenditure for domestic redistribution is largely tied up and it is politically impossible to fall back on it, money can only be saved – and that massively – in the military field. The only way out would be through the central bank, which would return to massive money creation. Then, however, the dollar would fall; and the worldwide recognition of the United States would in this way also be diminished. The rating agencies are already threatening to once more downgrade the creditworthiness of that empire. The franc would unfortunately be pushed upwards accordingly.
Wars also have a dramatic effect on human beings, and these also have an economic effect on the US. Today there are already 16 veterans at home for every one active soldier in the field. There are 21 million veterans, almost double the number of industrial workers left in the US. This amounts to a twofold cost, because on the one hand, the economic output of millions of young men is lacking, and on the other, the pensions and the diseases of the veterans are expensive. This also augments the high foreign trade deficit. The Americans’ quality of life is falling from lack of money for domestic ends. The massive Afghanistan deployment under President Obama, the model for today’s deployment, cost 100 billion a year – consistently. This is as much as President Trump wanted to spend on the wobbly infrastructure. Also already gone.
Are there alternatives? Because Iraq, Syria, Pakistan and Afghanistan have not all become “a better place”, as they say in the US.
Many see mineral resources as the motif for the worldwide expansive grip of the US. The Afghan minister of mines and petroleum advertised them this week at a calculated price of 3,000 billion dollars. But you also get your hands on these mines or on the oil in the Middle East if you press something into the only all too willing hands of the tribes and rulers there. This is much less expensive, and you get good behaviour as well, if you threaten to stop paying. The Roman Empire as well as the Hapsburg Empire both bought themselves almost 200 years of rest by means of paying tribute to barbarians or to the Ottomans. However, should the Western companies pay, they would go down under the indignation of ethicists and governance advocates. Lawsuits, court rulings and billions of fines would follow. But, have we heard these ethicists and advocates of governance cry out against the new war? No, stock company law, meticulously clean accounting and stolid political governance are more important than a slightly disreputable peace. War is preferred to the greasing of palms. Not only Trump has no morals, but also those of the West are totally askew. •
(Translation Current Concerns)
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