Is the US military-industrial complex a ponzi?
Is the US military-industrial complex a ponzi?
Military expenditure, John Keynes and NATO. World Domination 101.
“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.”
— Dwight D. Eisenhower
During the Cold War, and fuelled by WW2 sentiment, there was within the US a spirit of military development and global supremacy.
At the time, public debt to GDP was steadily below 40% and the economy was in the early stages of a boom that’s still going after >60 years.
A booming economy means increasing tax revenues and that makes it easy for the treasury to balance the budget — but since the early 1980s public debt to GDP has been on a steady uptrend (i.e. they spent more than they made).
Last year I wrote an essay discussing US history through the angle of the global monetary system and the supremacy of the US Dollar. In the piece I argue that US global hegemony has ended — and I associate it with the decline of the US Dollar as the reserve currency of the world and the decline in the US share of global GDP.
In this essay I will focus on the US military industry and its reliance on the federal government’s ability to continue borrowing (and at subsidised rates).
As I wrote in Peak American Empire:
“For now, the Fed could intervene whenever required to calm markets in times of crisis, keep the rates down and make it easy for the US treasury to continue borrowing cheaply. But can that go on forever? Not really.”