"A Predictable, Avoidable Disaster"
Stolen Russian loot, forever foreign wars
and the Fed's funny money...
by Bill Bonner
“If it is easy for us to go anywhere and do anything,
we will always be going somewhere and doing something.”
~ U.S. Sen. Richard B. Russell,
then chairman of the Senate Armed Services Committee
Youghal, Ireland - "Sin on top of crime. Scam riding on a flimflam. Mistake hard on the heels of an error. And all of it part of a pattern.
We summarize last week’s cogitation… It is not that we know anything more than you do…but we aim to avoid the Big Loss, and here is where we think it may come from. That is, it will come from the world of megapolitics…the deeper, hidden forces behind the headlines.
Donald Trump has warned Europe that it better pay more for its own defense. But, defense against what? After three years of war, Russia has shown that it can barely capture an area, right on its flank, of Russian speakers who want to be part of the Russian federation, and used to call their country New Russia. The idea that Russia, with a GDP less than the value of Nvidia, poses a threat to Germany and France, with a GDP thrice as large, is a fantasy. Why then should Europeans waste money on more weapons?
Stolen Loot: In yesterday’s news, America’s Secretary of the Treasury suggests stealing money from Russia. Why? So the Ukraine can buy more weapons. AP is on the story: "Treasury Secretary Janet Yellen on Tuesday offered her strongest public support yet for the idea of liquidating roughly $300 billion in frozen Russian Central Bank assets and using them for Ukraine's long-term reconstruction. “It is necessary and urgent for our coalition to find a way to unlock the value of these immobilized assets to support Ukraine’s continued resistance and long-term reconstruction,” Yellen said in remarks in Sao Paulo, Brazil, where Group of 20 finance ministers and central bank governors are meeting this week.
The US is headed towards a predictable, avoidable disaster – a classic denouement for a great empire. It is spending too much money and trying to bully too many people in too many places; this will probably lead to the end of the empire. But that is still far into the future. More immediate…and inevitable…is a debt crisis. Defaults. Depression. Inflation. Whining…wailing…teeth grinding – the yoush.
Why then, do the deciders not do something about it…something so obvious and easy as cutting spending now? Why? Because this is megapolitical problem, not a political problem. The interests of the deciders – of both parties – and the interests of The People are at odds. Cutting back on US deficits would require cutbacks in the one and only area of discretionary spending that might actually make a difference. But it is also the area that cannot be controlled. The dogs of war have slipped their leash. The firepower industry – including the whole ‘empire budget’ of foreign aid, spooks, university and think tank grants, contracts to ‘defense’ suppliers, and overseas bases – is the biggest, richest, most powerful single business in the empire. It is so big and so rich that it can no longer be brought to heel. The federal government, academia, media, Wall Street – all have been captured.
The Firepower Industry - When Europeans spend more on ‘defense,’ they buy weapons from the US firepower industry. When the Ukraine gets more money, its corrupt leaders skim a portion; the rest buys supplies from America’s firepower industry…and lobbyists to argue for more. Is this ‘Russian propaganda?’ Maybe. More likely, it is the megapolitical reality of a late, degenerate empire.
The empire budget is the biggest ‘discretionary’ item of US federal spending. If the feds can’t cut there they can’t make meaningful cuts anywhere. And if they don’t make very substantial cuts, the US will continue to run deficits…bigger deficits…until the whole system blows up.
That is not a prediction. It is just math. Already, the interest on the federal debt is about $1 trillion. Much of the debt was contracted, however, at some of the lowest interest rates in history. As those bonds are rolled over, they will be refinanced at higher rates (barring a freakish return to ultra-low interest rates).
At the current pace, the debt will soon reach $40 trillion. At 5% interest, that would be annual payments not of $1 trillion but of $2 trillion. Tax receipts last year were about $4.5 trillion. Assume they rise to $5 trillion (with no recession). That will mean that 40% of all tax receipts must be earmarked for debt service.
Cometh the Gunslingers: How could the feds do that? Will they just stop sending out Social Security checks? Will they just stiff creditors and default on the debt? Will they turn out the lights in the Capitol…serve only cold sandwiches in the Senate dining room? What they won’t do is cut back on ‘military’ spending.
Typically, the armed forces are controlled by using the power of the purse. The firepower industry relies on civilian funding – either from private lenders (such as Nathan Rothschild, who funded Wellington in the Napoleonic wars) or from tax revenue. Such funding was always limited…thus keeping the gunslingers in check.
But now, the Military-Industrial complex controls the purse. The US invited its military to ‘cross the Rubicon’ when it fudged its money system. Post-1971 Congress could run deficits and appropriate more and more money for its enforcers without raising taxes. And they could use their billions to support think tanks that explain why we need to spend more money on ‘defense,’ and lobbyists who tell Members of Congress that they may face some stiff competition if they don’t vote for the next military appropriations bill, and ‘journalists’ to whoop for more war in the newspapers.
Stephen Walt in ‘Foreign Policy Magazine,” sums up the situation: "The United States Couldn’t Stop Being Stupid if It Wanted To." There’s too much money in being stupid. And now, with more money than ever before, it is the Military/Industrial Complex that calls the shots, not the elected government. And since what it wants more than anything else is more power and more money…spending on firepower cannot be cut, the budget can’t be balanced, and disaster can’t be avoided."
