does perpetual inflation imply constant war?

[grapejelly]

The disadvantages of the dollar and any other major irredeemable currency (but I will speak of the dollar for clarity) today are:

• It is backed by debt (government bonds.)
• Debt leads to more debt. And interest must be paid on all currency issued.
• More debt leads to more depreciation of the currency.
• People who borrow and own assets get richer, while wage-earners, savers and pensioners lose.

If I were to put it into a nutshell, I’d say that the chief disadvantage of the dollar is that there is no limit on how many dollars can be issued, and there are all the reasons in the world why those in power will continually issue more and more dollars.

I will go so far as to say that this results in war. Inflations are the chief method of financing war.

Classically, historians who lack an understanding of inflation and economics say that governments create inflation in order to finance war.

The “Continental” was a fiat currency printed and inflated in order to fight the Revolutionary War.

In the Civil War, the North created the greenback to finance the war and suspended gold redemption for many years.

Inflation largely financed World War I, World War II, the Vietnam war and now the Iraqi war.

But perhaps, just to speculate, it is this ability to inflate that leads governments to war in the first place.



If the currency was fully redeemable and citizens had to pay higher taxes when the government wanted to fight a war, then it is doubtful if citizens would be willing to finance war, and most war would be avoided.

Also, government is usually administered by a monied elite. Supposedly that doesn't happen anymore with a democracy such as the US, but it may not be a coincidence that the business benficiaries of wartime have executives or former executives high up in the government...

The monied elite benefit from war as the inflation results in a lot of new wealth flowing into their pockets.

Finally, the leaders themselves can benefit politically through war


Since I was born, the US has been in a state of constant war for almost the entire time. There has also been raging inflation for the entire time. No coincidence.

And no coincidence that in past times when the US was on a gold standard, the redemption of paper to gold was always suspended during wartime.

So what do you think? If there were no inflation, would the US be at war anymore? Would other countries be fighting wars if their currency was sound?

End inflation. End most war. Agree or disagree?

[Tet]

Re: does perpetual inflation imply constant war?

If I were to put it into a nutshell, I’d say that the chief disadvantage of the dollar is that there is no limit on how many dollars can be issued, and there are all the reasons in the world why those in power will continually issue more and more dollars.

I will go so far as to say that this results in war. Inflations are the chief method of financing war.
End inflation. End most war. Agree or disagree?

I agree and kind of disagree. I disagree that the US has a fiat currency, the US has a usury, military and illegal drug backed currency. I do agree that wars are the biggest creator of more d0llars. I disagree however that the US is able to create more wars. Lebanon proved this summer how useless these military expenditures are. Lebanon had no air cover and no surface to air defenses yet a militia was able to defeat the most powerful military in the region, a military that had planned this confrontation for over a year before the invasion and was completely hummiliated. Today israel admits to planning this war several months in advance. http://news.yahoo.com/s/nm/20070308/...anon_olmert_dc
Israeli PM says Lebanon war was pre-planned: report

Keep in mind Hezbollah had some surface to surface missiles that hit three israeli naval ships, damaging one pretty badly. I would have to assume the targeting info for this came from the Russian navy that was parked in their Syrian port at the time. If the US navy can't work close to shore it loses a lot of it's effectiveness. It should be no surprise that surface to air missiles and military jets seem to be the biggest sellers for Russian military gear for the last couple of years. India has even developed a new Sunburn missile that can take out most of the US fleet. The US has never put our overpriced military jets up against SAM's and another airforce and I'm certain we're not about to do that. I don't see any country that fits the Iraq/Afghanistan criteria for invasion that has significant quantities of either illegal drugs or oil and absolutely no military deterence. Hell the israelis couldn't even bang their way into Lebanon.

The next invasion the US makes proves to the world what the world already knows and that is the US is nothing but a paper tiger. The US is certainly in no hurry to prove beyond a shadow of a doubt that the Emperor has no clothes. Billion d0llar assets can be taken out with million d0llar missiles and million d0llar assets can be taken out with thousand d0llar missiles. This is not a road the US is going to go down.

Is the US capable of invading Iran or Venezuela? China or Russia? India or South Korea? Brazil or South Africa? Maybe the US can have a show of force by invading Grenada once again but that's about the extent of it. Looks to me like war is about to become obsolete and even the Russians aren't going to play the Cold War game again. Russia says they are going to counter these latest missile defense shields with inventory they already have.

[Spartacus]

Re: does perpetual inflation imply constant war?

If you believe Paul Craig Roberts and Seymour Hersh, Cheney/Bush will order the US military to use nuclear weapons against Iran.

The next invasion the US makes proves to the world what the world already knows and that is the US is nothing but a paper tiger. The US is certainly in no hurry to prove beyond a shadow of a doubt that the Emperor has no clothes.

On the broader question, a standing army makes inflation, and is a tempting tool of misdirection and/or escape for politicians.

A standing army is an open invitation to various forms of abuse and mischief. The larger the army, the greater the temptation, the worse the consequences.

War just makes the inflation worse - it's the standing army that's the root cause.

EDIT - of course you can have inflation without having armies, and in a world with armies you get more and less inflation at times depending on other factors. I was just speaking to the scenario you raised - a country with an army will have more inflation than the same country without an army.

No US politician can challenge the US military because according to Chalmers Johnson, the US military has deliberately insinuated itself economically into every important geographic areas.

Any politician that votes against military interests and expenditures can be punished, or at the very least threatened, with job losses to their constituents.

[Tet]

Re: does perpetual inflation imply constant war?

If you believe Paul Craig Roberts and Seymour Hersh, Cheney/Bush will order the US military to use nuclear weapons against Iran.

Roberts and Hersh both try their best to keep the Anglo Empire alive, they talk about everything except the 800-pound gorilla in the livingroom, that being the d0llar hegemon itself.

On the broader question, a standing army makes inflation, and is a tempting tool of misdirection and/or escape for politicians.

A standing army is an open invitation to various forms of abuse and mischief. The larger the army, the greater the temptation, the worse the consequences.

War just makes the inflation worse - it's the standing army that's the root cause.

I couldn't agree more. With each passing day we find out more and more just how correct the Founding Fathers were. Maybe one day we'll be a Republic again. Having a republic does require an organized militia, I think the Swiss have shown that to be the case.

[grapejelly]

Re: does perpetual inflation imply constant war?

the major issue with an irredeemable currency is that the government can prosecute wars without raising taxes.

I read a great quote today that is in the essay I cited, by Goering of all people:

[O]f course, the people don't want war. Why would some poor slob on a farm want to risk his life in a war when the best that he can get out of it is to come back to his farm in one piece. Naturally, the common people don't want war; neither in Russia nor in England nor in America, nor for that matter in Germany. That is understood. But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy or a fascist dictatorship or a Parliament or a Communist dictatorship. . . . [V]oice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.

Amazing.

[Tet]

Re: does perpetual inflation imply constant war?

the major issue with an irredeemable currency is that the government can prosecute wars without raising taxes.

I read a great quote today that is in the essay I cited, by Goering of all people:



Amazing.
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Great quote, just make the lie big enough and repeat it often enough and you have no problem with having the people do anything you need them to. This is along the lines of what I remember from Goering as well. Not much has changed in the last seventy years, if anything they're better at it.

[Finster]

Re: does perpetual inflation imply constant war?

Does perpetual inflation imply constant war?

No. But it sure greases the skids. Inflation makes it easier for politicians to undertake any new spending program, because they don't have to attach to it a direct bill to the taxpayers.

[grapejelly]

Re: does perpetual inflation imply constant war?

Yes. Not war necessarily. But perhaps...

Irredeemable currencies require constant expansion and eventually expand parabolically (as Michael Hudson observed here).

So I can see how either 1) populist demands or 2) war would be required to justify the increased borrowing that this necessitates.

[Sapiens]

Re: does perpetual inflation imply constant war?

End inflation. End most war. Agree or disagree?

Grapejelly,

What causes war is the base and undisciplined desires of our human nature. We want power, we want to control, we want to be admired, and we want to be respected. Since we are born ignorant, most of us go through a discovery process on how to deal and coexist with each other. Those that are aggressive by nature usually overpower those that are not.

Inflation of the Money Stock is nothing more than a tool that enables those with a vicious nature, uncontrolled greed and thirst for power to achieve their ends.

Put check and balances on Monetary creation and you can control those that seek to corrupt it.

-Sapiens

[spunky]

Re: does perpetual inflation imply constant war?

Yes. Not war necessarily. But perhaps...

Irredeemable currencies require constant expansion and eventually expand parabolically (as Michael Hudson observed here).

So I can see how either 1) populist demands or 2) war would be required to justify the increased borrowing that this necessitates.

:confused:

Populist demands means what ?????

Look at the new job numbers, GOV sector was second behind whopper doodles, in new job creation

Asking for a a decent wage to raise ones family and decent benefits is populist ??? The middle class made this country what it was; that is before the american worker was sold out , starting with Dick Nixon :mad:

[grapejelly]

Re: does perpetual inflation imply constant war?

:confused:

Populist demands means what ?????

Look at the new job numbers, GOV sector was second behind whopper doodles, in new job creation

Asking for a a decent wage to raise ones family and decent benefits is populist ??? The middle class made this country what it was; that is before the american worker was sold out , starting with Dick Nixon :mad:

by populist demands I mean legislators' bowing to the ever rising demands of their constituents by increasing government spending in order to maximize the number of citizens dependent upon the government.

Can anyone deny that this is really the big story of the past 100 years or so? In the US, government as a percentage of GDP has grown to 45%. In other countries, it has been even faster.

The newly rich commodity countries are doing their populist part. Venezuela is working on rapidly going broke this way for instance...

[Tet]

Re: does perpetual inflation imply constant war?

Venezuela is working on rapidly going broke this way for instance...

Venezuela has the largest stash of foreign reserves in Latin America and a far higher percentage of their economy is foreign reserves than probably any country in the world. What would you do with this money, light it on fire or spend it?

The problem with Chavez is he is doing something that Wall Street and the Bank of England view as quite a threat, Chavez is going to nationalize the Central Bank of Venezuela. This summer South America forms their own IMF/World Bank/Paris Club with the creation of the Bank of the South. Imagine that, South America financing their own projects with their own money. This summer much of South America will no longer use the d0llar for their cross border trades. The parades, warm welcome and celebration that Bush is receiving in South America should be telling us that the South American train already left the station and it's not headed north. A united South America has a population greater than the EU and an economy that rivals that of Europe. This is what China and Russia refer to as a multi-polar world.

I wonder if Bush and Lula are talking about the fact that Brazil has been enriching their own uranium for over three years now. I wonder how many nuclear warheads you can make after you've enriched uranium for three years. Combine nuclear warheads with Brazil's space program and now you have a true deterence, one that even Bush isn't going to mess with. Argentina is making demands to get the Malvinas back from Britain as well.

Now how do you think South America going forward issues their money? Do you think it's borrowed for its creation or do you think elected governements issue it in the form of social credit? It promises to be a very interesting summer in South America.

[grapejelly]

Re: does perpetual inflation imply constant war?

I think it's money founded on debt and highly inflationary in any event. Money not backed by anything. And they will raise spending beyond their income level and go broke just like all the other governments do

[spunky]

Re: does perpetual inflation imply constant war?

Grapejelly,

What causes war is the base and undisciplined desires of our human nature. We want power, we want to control, we want to be admired, and we want to be respected. Since we are born ignorant, most of us go through a discovery process on how to deal and coexist with each other. Those that are aggressive by nature usually overpower those that are not.

Inflation of the Money Stock is nothing more than a tool that enables those with a vicious nature, uncontrolled greed and thirst for power to achieve their ends.

Put check and balances on Monetary creation and you can control those that seek to corrupt it.

-Sapiens

There used to be a check on it here in the USA, called the gold standard. Good for the Latin American countries.

[Tet]

Re: does perpetual inflation imply constant war?

I think it's money founded on debt and highly inflationary in any event. Money not backed by anything. And they will raise spending beyond their income level and go broke just like all the other governments do

Tally Sticks worked for over seven hundred years and were only backed by the states abilities to tax. I think this is probably the longest running monetary system, I don't believe there was any spending beyond the governments income level for the reason Tally Sticks went away. Chinese monetary systems involving paper also lasted for many hundreds of years as well. Colonial Script, Lincolns Greenbacks and French Assignats from what I've read always failed due to counterfeiting, not government overspending. Looks to me like much of the world is going the way of Social Credit or Chartalism instead of Central Banking. Maybe this time they figure out how to prevent counterfeiting.