Tag Archives: us deficit

Occupy Wall Street, Banking, War: A Silly Question

War and banking seem to be two big concerns these days. I have a silly question to ask meant to get people thinking about connections between the two, and perhaps provide more direction to the “generally dissatisfied movement” of today (I think it’s more than Occupy Wall Street).

I’ll offer a personal opinion on war, a personal opinion on economics, then bring it together.

war

I might be going out on a limb on this one, but I think it’s fishy that we always have a reason to go to war. I say this because we, as a country (USA), in our two-hundred and thirty-five or so year history, have never had a period of peace. We have been at war since our inception. This might refresh your memory: Timeline of United States Military Operations (Wikipedia, will open in a new window). Again, we have always been at war. We are always at war. We are never at peace.

Not surprisingly, the Pentagon spends a lot of money. In fact, the Pentagon spends more on war than all fifty states spend on health, education, welfare, and safety combined (Business Insider, “15 Facts About Military Spending that will Blow your Mind,” interesting, will open in new window). We spent about $700 billion in 2010 alone. To give you an idea of how we stack up against our neighbors here on this planet:

The Biggest 'n Baddest Countries--All money spent on war: who spends what % of it?

To make sure you get that right, the USA spends 43% of the world’s military expenditures, and its next biggest competitor is China, who spends 7.3% of the total world military expenditures. We, at #1, spend about $700 billion, they, at #2, spend about $115 billion. Big difference.

Okay–so we’re always at war and we spend a lot on it. Something, somewhere is wrong. Well, I suppose one could say that we are the police of the world and we are doing good but there are a lot of problems with that, more than I’m equipped to speak on. If you’ve never heard of the USA having conflicts abroad, the World Policy Institute published this report (will open in a new window) that presents data on how the USA seems to continuously sell arms to political regimes and in many cases profit off of the war by selling arms to both sides of the same conflict. Consider that the USA used to have great relations with both Hussein and Bin Laden before we launched wars to capture them so that we could end what is continuing.

My guess is that what is going on with this USA-monster-military-always-everywhere thing is what has gone on since the beginning of civilizations, and is purposeful: the attempt of a group to gain power. I know, it sounds crazy. But this is a personal view of mine on war. For war to be what it is to the USA, someone, somewhere must be gaining power and making money.

Next I’ll share with you a person view of mine on economics. First, I must give a little background. Let’s start by asking “where do we get all that money from?”

Money and Banking

Our war is funded by debt. No? You must have not heard about our little spending problem. It looks like after we add up the income and expenses we miss the mark by about one and a half trillion dollars…every year. We owe fourteen trillion dollars, so no, we do not have money for war. It is financed by debt.

This is not strange. Throughout our history, we have taken on more debt in times of war–the citizens of the country won’t squabble over debt when it’s debt used to go to war.

Why can we take on so much debt? We need to have a little background on how banking in our country works. It’s actually surprising how many well-educated people I know in this country who don’t know how the Federal Reserve works or what it does. It is important to understand it before we get to my main point.

The Federal Reserve was created in 1913 to help prevent market crashes. They decided the best way to do this was to give the Federal Reserve the power to control the value of the US Dollar. They also decided that the Federal Reserve should loan our money to us and be a private entity that cannot be audited–that is right: we cannot perform a financial audit on the private organization that lends the US people their own currency. They gave the Federal Reserve the power to control the value of the US dollar by allowing it to control the supply of the dollars in the world market by adjusting the interest rates at which it would loan these dollars to banks and by setting the required amount of capital a bank must have to cover its debts. If this is all confusing, perhaps I could try to give a better description in another post, but for now, all you need to know is that a private bank lends dollars to the US people and it controls the value of those dollars.

Next, the US Dollar is the reserve currency at the World Bank. That means the US dollar is the most official currency on Earth, holla. But why is a piece of paper the most official thing on the planet?

We arrive at my simple point, sorta. It’s regarding the gold standard. US bills used to look like this:

Notice it says "payable in gold coins"

The problem with this is we wanted to create more money, and we didn’t have enough gold to back it, so we had to just make the paper itself the instrument of value. We can print a lot more paper than we can create gold. Alchemy isn’t a popular major these days.

If you’re lost, it’s okay, I jumped around. Start from here: We used to have our dollars backed by gold. In fact, in Article I Section 10 of the original constitution, those founding father guys required us to never “make any Thing but gold and silver Coin a Tender in Payment of Debts.” Why could they have wanted this? Well, let’s look at today. If our dollar has replaced gold, and we give a private institution (the Federal Reserve) the freedom to print it, that means we’ve given someone the freedom to print gold.

Our ability to print gold is closely linked to our ability to keep taking on debt. Credit card companies won’t loan you money past a certain point, but if you had a gold machine and could churn gold out of thin air, you would certainly get your credit limit raised.

I personally we believe that our dollar should be backed up by some naturally occurring resource so that the government cannot create money out of thin air to spend on things (such as war). That is a personal view of mine on economics.

okay, so what?

So all of that for a stupid, simple little question designed just to make people think:

Do you think we would drop as many bombs as we drop, fire as many bullets as we fire, and fly as many drones as we fly if they all had big chunks of gold in them?

I say “no,” and the more purposeful part of the post, a thought to all Occupy Wall Street people, and people generally dissatisfied with the state of things:

I suggest looking towards our mysterious Federal Reserve and it’s ability to create money out of thin air. We get caught up with GOP vs. Democrats, liberal vs. conservative, Fox vs. MSNBC, but this deserves our unity and attention. We could not go to war without debt, and the Federal Reserve profits off our debt as they loan us our US dollars at interest. Does that strike you? It strikes me. That is a pretty big conflict of interest. We can’t even audit the Federal Reserve–it is a private institution!!

Think about how large of a role debt has played in everything: the subprime mortgage crises happened because people could not repay their debt. The average American is in $8,000 in credit card debt. Our nation is in $14 trillion of debt. Every dollar represents the dollar plus interest owed to the Federal Reserve. All of that debt carries interest, and we might at least ask to whom is it owed. Unfortunately we have no idea who is behind the Federal Reserve.

I don’t have answers regarding how everything is played out down to Wall Street, political agendas, etc., but it seems to me this Federal Reserve and the mechanism used to create “money” out of thin air is a much more massive problem than anything we normally consider. Unfunded liabilities of over $100 trillion dollars? What does that even mean (US Debt Clock , will open in new window)?! There is something wrong with the system. I salute the dissatisfaction and movements generated by them.

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I may be one of very few who believe that Tea Party-ers and Occupiers of Wall Street actually are mad about the same thing. I might go as far as believing that they are intentionally set against each other because they certainly spend more energy hating and trying to disprove the other than they do trying to be realistic about the root of the problems they agree upon. Same spirit, different news channel. Does anyone have interest or suggestions regarding unifying all of the dissatisfied parties of the country?

 

Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes … known instruments for bringing the many under the domination of the few.… No nation could preserve its freedom in the midst of continual warfare.

James Madison, Political Observations, 1795

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