enur72 on Nostr: Who's pockets should the next war be paid from? A long time ago wars were financed by ...
Who's pockets should the next war be paid from?
A long time ago wars were financed by the ruling class. Conscription was rare, as the wars were mainly fought by professional armies.
Their capacity for waging war would be limited by investors' willingness to let the kings and emperors borrow money. Looting the enemy was posted as collateral. In this way the war could partly be financed by the people living in the country that lost.
This system could made it profitable for the super wealthy to profit from financing both sides of a war. The downside was that it caused a high frequency of conflicts. The upside was that the impact on the rulers' subjects were relatively limited.
This gameplay changed significantly when Sweden established the world's first central bank in 1668. As I show in the #Fraudcoinbook, central banking and governments' deficit spending made it possible for the kings and emperors to force their costs upon their own people by inflating the country's currency. This sparked a wave of bloody and seemingly endless wars.
The combination of central bank-coordinated lending to the governments and use of paper money meant that the rulers could use inflation to direct the general public's production capacity towards the waging of war. The money-printing became a super-efficient wealth and extraction device, that turned the citizens into batteries that made the kings' war machines run non-stop for years and years.
The nation states' ability to wage war would in practice only be limited by the rate of the depreciation of the warring countries' currencies. If the country borrowed to heavily with the support of a central bank monetizing the debt, the currency would plummet, with runaway domestic price inflation and a swift breakdown of the country's economy. And that would soon force a state into making peace with its enemies.
A period of almost 150 years of inflation-fuelled wars culminated with Napoleon's fall in 1813. The following 101 years would be a time of relative peace, when governments temporarily allowed themselves to be restrained by a hard currency regime such as the gold standard.
This period of low monetary inflation and a significant economic prosperity came to an end in 1914. When World War I broke out the governments denied people their right to redeem gold for paper bills. Five years of the bloodiest inflation-financed war that had ever been faught until then followed. Soon after the same thing happened in the second world war.
It's no coincidence that the US were on the winning side of WW I and II. The rising economic power managed to finance its participation in these wars with limited borrowing and without crushing its dollar.
After WWII the dollar's reserve currency status helped the superpower to fight a seemingly endless number of wars using inflation of its money supply as means of finance. Having the ability to export its inflation instead of causing domestic prices to run amok was an asset of immense value for its growing military-industrial complex. This made it possible to shift at least some of the economic burden of money-printing from its countrymen and over to people in other countries.
When the Soviet Union collapsed in 1991, the US made a deal with China: Accept our dollars as payment for goods that you produce, buy our treasuries (US public debt) and let's shove Russia out in the cold. China happily obliged, and this love affair continued up until the COVID-19 pandemic years of 2020-2022.
However, this period of romance between east and west has now effectively ended. Today US neocons refer to China as its enemy number one, and the conflict about Taiwan has been identified as a potential cathalyst for a new large war.
In parallell the neocons who are most influential in the Biden administration also dream about overthrowing Putin and installing a puppet leader in Russia. The war in Ukraine can potentially function as a springboard for a war between Russia and a US-led NATO and EU alliance.
The obstacle to the neocons' dreams of big wars is partly financial. Runaway federal deficits, a record-high public debt and decreasing opportunities to export newly printed dollars imply that an attempt to finance war with inflation can crash the USD, potentially triggering hyperinflation for the American people and a destruction of the US economy.
Limited financial capacity from a domestic perspective doesn't seem to put any breaks on the neocons' ambitions. They probably hope to dip their hands into other countries' pockets. However, the number of friends of the American empire is dwindling fast, forcing them to talking their old and new allies in Europe to chip in.
The EU is no obvious candidate. Large public deficits, economic stagnation for 15 years and a Germany which finds itself in an economic depression, cannot fight from a position of strength. The UK is in no better condition. High and lasting price inflation all over Europe doesn't improve the situation.
Rampant deindustrialization of the West combined with the fact that the NATO countries have admitted that they were running out of conventional ammunition and had to send clusterbombs instead to Ukraine make the dreaming of new wars look downright silly.
In this age of hubris I only find it natural if the plate-licking aggressors in Washington have set their eyes on the Norwegian people's saving account. The oilproducing country has been a US vasall state since WWII and its government has amassed a 1.4 trillion USD sovereign wealth fund. The fund is supposed to cover the states' future pension obligations.
In the current political climate it can instead become a liability. If the US wants to wage wars in the near future, I believe the superpower will pull every string necessary to make the Norwegian government pay "its fair share". Either the neocons will force it to empty its pockets, or to make Norwegian politicians to wring more kroner out of the taxpayers' pockets.
The neocons will probably turn a blind eye to the fact that Norwegian households have more debt than they have in any others countries, and that raising taxes will trigger a wave of defaults.
Summary and conclusion:
The neocons in Washington want to use wars to continue the US hegemony. They cannot finance these wars with inflation, and has a limited number of rich "friends".
The Americans might be tempted to loot the Norwegian pension fund. The only problem is that more money helps very little when you have deindustrialized your country by turning it into an exporter of money.
The US is in no position to wage large wars. It cannot finance them and it doesn't have the production capacity to turn money-printing or loot into guns and ammunitions.
But the neocons will try, that's for sure. Because it's the only game they know.
A long time ago wars were financed by the ruling class. Conscription was rare, as the wars were mainly fought by professional armies.
Their capacity for waging war would be limited by investors' willingness to let the kings and emperors borrow money. Looting the enemy was posted as collateral. In this way the war could partly be financed by the people living in the country that lost.
This system could made it profitable for the super wealthy to profit from financing both sides of a war. The downside was that it caused a high frequency of conflicts. The upside was that the impact on the rulers' subjects were relatively limited.
This gameplay changed significantly when Sweden established the world's first central bank in 1668. As I show in the #Fraudcoinbook, central banking and governments' deficit spending made it possible for the kings and emperors to force their costs upon their own people by inflating the country's currency. This sparked a wave of bloody and seemingly endless wars.
The combination of central bank-coordinated lending to the governments and use of paper money meant that the rulers could use inflation to direct the general public's production capacity towards the waging of war. The money-printing became a super-efficient wealth and extraction device, that turned the citizens into batteries that made the kings' war machines run non-stop for years and years.
The nation states' ability to wage war would in practice only be limited by the rate of the depreciation of the warring countries' currencies. If the country borrowed to heavily with the support of a central bank monetizing the debt, the currency would plummet, with runaway domestic price inflation and a swift breakdown of the country's economy. And that would soon force a state into making peace with its enemies.
A period of almost 150 years of inflation-fuelled wars culminated with Napoleon's fall in 1813. The following 101 years would be a time of relative peace, when governments temporarily allowed themselves to be restrained by a hard currency regime such as the gold standard.
This period of low monetary inflation and a significant economic prosperity came to an end in 1914. When World War I broke out the governments denied people their right to redeem gold for paper bills. Five years of the bloodiest inflation-financed war that had ever been faught until then followed. Soon after the same thing happened in the second world war.
It's no coincidence that the US were on the winning side of WW I and II. The rising economic power managed to finance its participation in these wars with limited borrowing and without crushing its dollar.
After WWII the dollar's reserve currency status helped the superpower to fight a seemingly endless number of wars using inflation of its money supply as means of finance. Having the ability to export its inflation instead of causing domestic prices to run amok was an asset of immense value for its growing military-industrial complex. This made it possible to shift at least some of the economic burden of money-printing from its countrymen and over to people in other countries.
When the Soviet Union collapsed in 1991, the US made a deal with China: Accept our dollars as payment for goods that you produce, buy our treasuries (US public debt) and let's shove Russia out in the cold. China happily obliged, and this love affair continued up until the COVID-19 pandemic years of 2020-2022.
However, this period of romance between east and west has now effectively ended. Today US neocons refer to China as its enemy number one, and the conflict about Taiwan has been identified as a potential cathalyst for a new large war.
In parallell the neocons who are most influential in the Biden administration also dream about overthrowing Putin and installing a puppet leader in Russia. The war in Ukraine can potentially function as a springboard for a war between Russia and a US-led NATO and EU alliance.
The obstacle to the neocons' dreams of big wars is partly financial. Runaway federal deficits, a record-high public debt and decreasing opportunities to export newly printed dollars imply that an attempt to finance war with inflation can crash the USD, potentially triggering hyperinflation for the American people and a destruction of the US economy.
Limited financial capacity from a domestic perspective doesn't seem to put any breaks on the neocons' ambitions. They probably hope to dip their hands into other countries' pockets. However, the number of friends of the American empire is dwindling fast, forcing them to talking their old and new allies in Europe to chip in.
The EU is no obvious candidate. Large public deficits, economic stagnation for 15 years and a Germany which finds itself in an economic depression, cannot fight from a position of strength. The UK is in no better condition. High and lasting price inflation all over Europe doesn't improve the situation.
Rampant deindustrialization of the West combined with the fact that the NATO countries have admitted that they were running out of conventional ammunition and had to send clusterbombs instead to Ukraine make the dreaming of new wars look downright silly.
In this age of hubris I only find it natural if the plate-licking aggressors in Washington have set their eyes on the Norwegian people's saving account. The oilproducing country has been a US vasall state since WWII and its government has amassed a 1.4 trillion USD sovereign wealth fund. The fund is supposed to cover the states' future pension obligations.
In the current political climate it can instead become a liability. If the US wants to wage wars in the near future, I believe the superpower will pull every string necessary to make the Norwegian government pay "its fair share". Either the neocons will force it to empty its pockets, or to make Norwegian politicians to wring more kroner out of the taxpayers' pockets.
The neocons will probably turn a blind eye to the fact that Norwegian households have more debt than they have in any others countries, and that raising taxes will trigger a wave of defaults.
Summary and conclusion:
The neocons in Washington want to use wars to continue the US hegemony. They cannot finance these wars with inflation, and has a limited number of rich "friends".
The Americans might be tempted to loot the Norwegian pension fund. The only problem is that more money helps very little when you have deindustrialized your country by turning it into an exporter of money.
The US is in no position to wage large wars. It cannot finance them and it doesn't have the production capacity to turn money-printing or loot into guns and ammunitions.
But the neocons will try, that's for sure. Because it's the only game they know.