Never before has it been more critical for the American voter-taxpayer to sit down and determine their foreign policy and economic priorities than now. Despite the fact that it’s a notable tendency of those among the living to claim their time to be the most extraordinary, it cannot be denied that the United States is vigorously pursuing two national paths of monumental incompatibility.
As her national debt clears $28 trillion dollars, and as a fiscal year closes in which her deficit spending reached 130% of GDP, and as she must create $120 billion every month to finance the program for buying back treasury bills sold to other nations like China, who are throwing them out of their national portfolio faster than stock in GameStop, she prepares to undertake yet more militaristic endeavors abroad.
This includes expanding counter-terrorism and intelligence programs in North Africa and the Sahel, increased great power competition with Russia, and potentially renewed fighting in Afghanistan which the Biden Administration seems quite uninterested in avoiding.
Nevertheless, these expensive adventures are matched at home by widespread gift-giving of yet another federal stimulus/relief bill of $1.9 trillion, to be followed with the 2021 national defense budget that through wish-list spending will easily pass $1 trillion dollars. The frequency in use of the word trillion, should not escape readers’ attention.
If American voter-taxpayers feel that unilateral world hegemony in order to prevent any nation from doing anything that might disrupt our privileges in any way is worth it, as neoliberals and neoconservatives claim, they must get serious about taxes.
America as World Hegemon – if yes…
Suppose the large body of American voter-taxpayers desires America to fight Islamic fundamentalists with guns in every country they can be found, and every Shi’ite whose government ever answered a phone call from Iran in every country they can be found, and Arab-nationalist who sympathize with Palestinians in every country they can be found, then taxes must go up.
Suppose the large body of American voter-taxpayers desires America to establish a polka-dot network of air bases across the North and East African coasts and Sahara Desert to conduct drone and special operations assignments in 12 African countries,then taxes must go up.
Suppose the large body of American voter-taxpayers desires America to establish, over tens of thousands of miles, the necessary military deterrence to prevent China from projecting economic and political power into the African continent and East Asia, in addition to preventing Russia from projecting military and political power into Central Asia and Eastern Europe, then taxes must go up.
Taxes must go up because the cost of war, as well as the national debt, is high. At the level of debt, the interest rates must stay around 0%, and the higher the debt goes, the more sensitive the economy as a whole becomes to even the slightest changes in the levels of interest rates. This was neatly demonstrated some weeks ago when the yield on the 10-year Treasury note began to spike up, seemingly defying the Federal Reserve’s abilities of control.
Just a 0.4% rise in the yield was enough to cause tremors in the market, as the rise is generally thought to signal inflation.
The current incarnation of the United States is the only major industrialized nation that has ever tried to finance sustained international invasions without drastic increases in taxes, as history bears witness.
A funeral for a bell
In World War 1, the entire German society was mobilized for the war effort. The famous Austrian economist Ludwig Von Mises, often referenced the war in his book The Theory of Money and Credit, particularly in the chapters on inflation, a force which obliterated the value of the currency there.
From inflation of the currency, it spread, and in 1917 German society began a gradual process of cannibalization – as church bells, perhaps 170,000, were collected from towns and melted down to be made into artillery pieces and shells.
“They will speak a different language in the future,” Deacon Karl Munzinger said in his sermon on July 22, 1917 about the loss, according to military historians. “It goes against any feelings, that they [the bells], who like no other preach peace and should heal wounded hearts, should tear apart bodies in gruesome murders and open wounds that will never heal.”
In World War Two, America raised the income tax rate from 1.5% to 15.1%, while the number of family households paying taxes went from 3% to 30%. In Britain the inheritance tax went up to 85% during the war years, while a top nominal tax rate for those making £10,000 was 60% in 1938, it increased to more than 80% by 1943.
Britain’s borrowing for war spending was 200% of GDP, and of the loans she took out, she only finished paying them back in 2006.
Are we to believe that America shall dwarf the British and Roman empires in scope and influence with presidents believing they can pay down a $28 trillion debt, and finance 130% of GDP solely through meddling efforts like a tax on the richest Americans, increased domestic oil and gas extraction, or import tariffs?
If Biden hung every billionaire in the country up by their pant legs, netting every penny to fall out of their pockets, it may be enough to finance the military at its current size over the course of a single year.
No, if the American voter-taxpayer desires that she be the world hegemon, they must be prepared to give everything – to melt down church bells, extra cars, garage doors, and more into metal for reaper drones and hellfire missiles. They must be prepared to not only hang every billionaire up by their pant legs, but all the millionaires, and $500,000-aires too.
For what would happen to the empire if the U.S. dollar should lose so much value that people start using foreign notes as investment currency of choice?
For starters, US industry would depress, as firms would need to convert their less-valuable dollars at cost into other currencies in order to make transactions. The second would be that a principal source of outside investment in the empire, foreign lenders, wouldn’t buy US Treasury bonds, since the yield in dollars is so low, and the exchange rate of those dollars is equally low.
The military, like the COVID-19 stimulus bills, would no longer be financed by borrowed money, but printed money, which being of no use to the weapons manufacturers, the soldiers, or the contractors at its low price, would cause a collapse in supply-demand, and thus a collapse in the military.
America as World Hegemon – if no…
If, say, the American voter-taxpayer doesn’t feel like America should be the world hegemon, and that we can be a normal nation, trying to continually perfect our union and better our affairs in education, health insurance, and real estate, domains in which bubbles of debt are inflated so high as to have the power alone to bankrupt smaller nations entirely unconnected to the United States, than we must radically reduce the size of the American empire.
Instead of investing billions of tax dollars into hypersonic cruise missiles, invest hundreds of thousands in diplomatic efforts to make such weapons void of use.
Instead of expanding Pentagon spending during COVID-19, greatly reduce it like the Russian Federation did, understanding that they needed to allocate money elsewhere.
Instead of spending who-knows-billions on completely modernizing the United States’ nuclear weapons program, sign onto the United Nations treaty that made them illegal under international law.
Instead of facing incoming inflation and sovereign debt crises by inflating the money supply, contract the money supply, and put faith in our financial institutions back into world markets and our world creditors.
No economy on Earth can withstand the effects of both a sovereign debt and currency crisis, and the examples of those who’ve tried, Lebanon, Greece, Spain, Argentina, East Germany, Zimbabwe, litter even the recent history books.
The American voter-taxpayer must choose: either the taxes must go up substantially, or the empire must go. The debt demands it.
Andy Corbley is founder and editor of World at Large, an independent news outlet. He is a loyal listener of Antiwar radio and of the Scott Horton Show.