The US Economy’s Military-Industrial Complex Is Alive and Well

We made an observation last week: The US empire and its credit bubble will probably come to an end at the same time.

Each depends on the other. If the US were not so big and powerful, it could not impose its money as the world’s reserve currency. Without its position as the issuer of the world’s reserve currency (dollars instead of gold), the US wouldn’t be able to flood the world with its cash.

Without the rest of the world’s need for US dollars, the credit bubble couldn’t continue growing. And without the credit growth there would be no way to pay the expense of maintaining a worldwide empire.

This does not explain the miracle of ‘growth without savings’ we discussed last week, but it gives us a hint as to what will happen when the trick no longer works.

All bubbles…and all empires…eventually blow up. An empire that depends on a credit bubble is doubly explosive. All it takes is a turn in the credit cycle, and the fuse is lit.

We wrote a book on the subject, along with co-author Addison Wiggin, in 2006. From the invasion of the Philippines to the Vietnam War…the US empire was financed by the rich, productive power of the US economy.

But as the war in Vietnam was winding down, the source of imperial finance changed from current output to future output. The US switched to a purely paper money system…and turned to borrowing to finance its military adventures. Today’s blockhead puffs out his chest and enjoys feeling like a big shot. He passes the bill on to tomorrow’s taxpayer.

The argument for heavy security spending collapsed between 1979 (when China took the capitalist road) and 1989 (when Russia abandoned communism).

But by then, the ‘military-industrial complex’ (or the military-industrial-congressional complex) President Eisenhower warned us about was already firmly in control of Washington. Presidents — Democrat and Republican — came and went. Nothing nor nobody could keep resources from the security industry.

One disastrous adventure led to another. Each provided a source of more funding…more status…more power…more generals…more security clearances…more clandestine, ‘off-budget’ operations…and more jackass parasites pretending to protect Americans from unknown enemies.

Read the rest of this article at The Daily Reckoning