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Monday, August 21, 2017

deflated war


DEFLATED WAR

Every time I hear someone worry about going to war to boost the economy I must choke back bloody bile, and every once in awhile when I hear that deflation will beset the economy I must wonder what in the Hades these people are smoking and if it is in one of the states it is now legal.  Let’s, once again, try to dispel the myth we are once again going to war to counter this depression.  To begin with, we’ve been at war since 1939.  Well, that’s not necessarily true, you might make a case that we started war in 1914.  But since that was a bankers war and not the military industrialists war it really doesn’t count for our purposes here.  True, before Pearl Harbor it was also a bit of a bankers war with Lend-Lease programs but this time rather than simply making money we were setting the table for empire acquisition.  We loaned Britain out of its empire, trading ships for islands and bases.  We gave enough equipment to the Soviets so they could bleed Germany for us.  This time we had the oil and the idle factory capacity and most of the gold.

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Don’t forget all that idle hydroelectric in the wilds of Idaho, either.  Supposedly built for irrigation, in an area almost no one farmed, somehow it just happened to be a public works project that conveniently was available for mass aluminum smelting to construct tens of thousands of aircraft.  And the draft started way before Poland was invaded, another supposed make work program that had nothing to do with preparing for war.  And OF COURSE that elite ivy league puke FDR that stole all the gold and devalued the dollar 40% overnight within days of his inauguration was ONLY trying to help out his little poor buddies and NEVER saw the Japanese attack coming and would NEVER have involved us in a European war unless it was for, you know, democracy and stuff ( in my more fevered moments I even wonder if Germany had declared war on us in the first place.  Many signs point to our chomping at the bit to get into war far before it began, Peal Harbor was encouraged with our embargos and China was the excuse-at the time we made no effort to hide our distain for Ornamentals and it defies logic that we actually cared about the rice eaters except as it suited our purposes ).  

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Now, let’s assume the war was THE original Oil War and we won, all the oil used to win the war more than compensated for by the agreement with the Saudi’s.  And eventually our oil companies taking colonial British and French production as well.  Let’s assume that the war bringing us out of the economic Depression was a secondary goal.  Not necessarily to help the poor eat, although that forestalling revolution was a factor, but mainly by getting money flowing to the corporations again.  And let’s assume that nuclear weapons or no, we could never hope to fight the Soviets, despite what Patton thought ( we both fought just as the War Of Northern Colonization was fought, cannon fodder backed by factories.  They had much more than we did and didn’t have to ship it overseas.  We would have eventually lost-and remember Patton believed in reincarnation so he was pretty much coo-coo for coco puffs anyway ), so we ceded half the globe to them, mostly keeping the good parts.  The lesson in all that?  We were the globes premium oil producer, and probably its steel producer, and we still needed the Russians to win the war.  Compare that to today.

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We are the worlds biggest oil IMPORTER.  Our Peak Iron Ore was in the 1950’s.  We have no gold ( if you think we have anything in Fort Knox, I have a central African country I want to sell you.  The Kingdom Of PrettyPony.  Honest, it’s a thing ).  We have, in short, NO capacity whatsoever of waging the kind of war that provides full employment or that stimulates the economy.  What we have had since WWII was continuous spending of borrowed money to keep our military built up.  During the real Cold War, which we lost along with Vietnam ( after that it was all War On The Cheap ), all that military spending gave us a huge nuclear arsenal and a true global garrisoning force ( as well as a War In Space ).  We could easily have fought another true world war then, as demonstrated by the Vietnam War.  Look at the helicopter war we manufactured for, as compared to the leased semi trucks we use today for logistics.  Anyway, since then we have been living off of the pre-Vietnam arsenal, literally.  We still build new crap, as witnessed by our defense industry turn out, but all we are buying is high tech crap that doesn’t really work.  We throw a lot of debt dollars at the industry, but all that has been for some time is financialization.  Drones are one of the few success stories, and those replace a LOT of planes and pilots and bombs, which just proves the point of a build-down.

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Even our nuclear arsenal is nothing but cannibalizing down in numbers.  We still rely on the old arsenal delivery vehicles for them ( not to argue that less nukes are a bad thing, just pointing out how we are “stripping the copper wires from the old towns to build a few new buildings” ).  Vietnam was the last large industrial war we could actually manufacture for and fight.  Since the 1990’s our military industrial complex has been shrinking, the last war fought with money instead of machines ( money to recruit indigenous forces, money to bride warlords, money for Intelligence Services and lots of money for mercenaries ) to a very large extent.  We can create money like nobodies business, but certainly not a large military force.  We can’t even get enough quality fighters, the feminization of the military for the last thirty years taking a bit of a toll, unintended consequences of Woman’s Lib and Political Correctness.  Does anyone remember the huge cut in defense spending in the early Nineties, right after the Gulf War, that sent the California economy into a tail spin?  The Gulf War was financed by everyone else, not by us!  And we still had to cut money on defense.  This has been an ongoing process.

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All that money and high tech and we can’t win in Syria, nor can our equipped and trained Saudi buddies win in a little Podunk craphole called Yemen.  Granted, this has more to do with other factors such as the exponential drop in quality across our entire economy as corporations do one thing and one thing only and I’ll give you three guesses and build anything is the wrong one.  They are doing little more than just buying back their own stock with earnings, pumping up short term profits at the expense of mid term survival.  Innovation?  Retaining trained personnel?  Ah, most honorable, you are velly funny boy, velly!  The military is fighting with the latest Windows version ( the one that is made for Homeland Security ) in its computers, in effect.  I would wager this is the last stock bubble, not because the burst will hold values low for decades, but because there will be little need for stocks when we don’t have any companies.  You are still thinking in terms of an oil and industrial economy, even as you witness its implosion.  We are all K-Mart now ( watch the YouTube video by “Company Man“ on that chain ).

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Now, as far as deflation, that meme is no where near as widespread or prevalent.  It is a niche view, but you can’t help but keep running across it.  ( speaking of YouTube ) “Revolting Man” was just mumbling about deflation by demographics.  Now, I like the guy.  He seems to have his head out of his ass, even if he is an AR molester.  I’m not sure how far his understanding of economics, or especially energy, outpaces his weapons and homesteading knowledge.  He was going on about how when our parents have less children the assets shrink down to fewer people and hence land is going to get much cheaper because there will be less people to will land to.  To a point I agree.  Over supply leads to lower prices so that would make sense.  In a vacuum.  What about all those immigrants coming in to replace White babies?  Granted, most live in the urban Section Eight and Food Stamp universe, our elites trading long term Civil War for a few bits of extra Corporate Welfare now, and I understand the guy is living in Lily White rural Ozarks, but you’ll also see White Flight out to these lands from the city so there will still be upwards price pressure. 

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George (?) Ure down in rural Texas is a big fan of deflation but he subscribes to those bizarre economic historical models which REALLY ignore outside forces.  And all those who read The Forth Turning, again, ignore our energy and empire situation.  Historical trends of energy growth do NOT see our future of energy contraction.  It really is as simple as that.  And another simple concept-you must have surplus goods and services to see decreasing prices.  Do you see the price of homes going down, given all the foreclosures, over building for Flippers and vacancies?  Of course not, the bankers are keeping so much off the market rentals have predominated and prices are up.  Nobody can buy them, but rentals make the banks more money.  You see falling prices for books, as every swinging dingus believes they can write, and they can at least publish since no editor is telling them they can’t.  Computers are built by everyone and the price falls.  Food would increase more but we are still in the phase of surplus calories being cut back, rather than base calories being endangered as it is in a lot of other places.

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Nobody can afford the old level of oil use, retail wise, and on the industrial side lack of income leads to lack of manufacture, so oil is down.  This is all supply and demand.  So why do these folks forget about currency?  Our currency is debt.  For forty years fuzzy foreigners bought our debt to have Treasuries to buy oil.  Not now, at least no where on the same scale.  More countries are NOT buying our debt because they aren’t buying as much oil denominated in dollars.  Saudi Arabia agreed to start and enforce the dollar standard, and now not only are they and their OPEC buddies producing half the oil they used to, dropping the demand for dollars, many other countries such as China no longer buy oil with dollars themselves.  So, less debt is bought by others.  Yet every year we get into more debt, some years seeing half the budget borrowed.  If foreigners aren’t buying that debt, it becomes domestically inflationary.  So, what deflation?  Commodity deflation isn’t the same as monetary inflation.  And even commodity deflation is only deflation currently because of wage deflation. 

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Don’t be fooled with temporary product and service deflation, brought about by dips in the trend.  Now, those folks that say we will see deflation and then hyperinflation, they are correct.  How can they not be?  We are already seeing deflation in some areas.  Not medical, as the ObamaCare forced everyone into the market so that the industry inflation ( fed by demographic forces as Baby Boomers retired, the Boomers on medical welfare ) kept going strong until now they are on par with the defense industry.  Not rentals or homes as just described.  Not even automobiles.  Sure, the loan bubble on them popped, but car ownership in general has surpassed a lot of folks falling income.  The overall ownership costs will remain high.  Any deflation you see is temporary, by definition, since it is commodity based rather than monetary.  Yet, even if purchase prices fall, ownership costs do not.  Auto insurance increases, as does property tax.  Road taxes increase as fewer folks drive, and the evictions paralleling the Great Depression will now be, as before, mortgage based, but now also tax based.  How quickly we forgot the 2009 city and county drops in service as taxes doubled.  Count on inflation in prices, overall, not deflation.

END ( today's related link http://amzn.to/2hD0CO9 )
 
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4 comments:

  1. Supply and demand fails when the economy is centered on government induced monopolies. Come to think of it the Feds low interest has added to the monopolies by financing take overs and buy backs.

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    Replies
    1. I guess in the end all economic analysis is flawed due to the controlling interests and money channeling.

      Delete
  2. Military technology is just the war mongers way to suck more taxpayer money using less physical resources.

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    Replies
    1. Ha! I like that one-didn't even think of it like that.

      Delete

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