America must cull the artificial bubble economy effects from our analysis and reassess the effect of American trade policy on our country’s wealth over the last thirty years. To ensure we correctly right size our military, we must account all costs and benefits of having achieved world military dominance.
Through our military support of world stability, did we better America’s future?
America’s military budget exceeds $600 billion. For the last 60 years, we have spent more than all other countries combined to export freedom, including the stabilizing effect of more than 700 overseas military bases. Some argue that the relative world peace our citizens have enjoyed is more than offset by the negative consequences of our military on our country’s historic debt.
However, our military has been paid for by the world. America controls much of the world’s reserve currency. Through currency manipulation, we have “taxed” the world for the peaceful trade benefits they have gained. With over $15 trillion reserve currency held by foreign governments, inflating dollars by just 4 percent each year pays our military budget. America’s waning percentage of world trade would have caused the U.S. dollar to cease as the world’s reserve currency decades ago were it not for the perception our military created that the dollar was the best alternative for wealth storage stability. So, at least for now, reserve currency benefits have been supported by and have paid for our military.
However, if other economic factors caused by our military dominance strategy are included, the net resulting benefit to America becomes less clear. Our military dominance reduced the risks of direct foreign investments, resulting in an explosion of MNC growth. Trade skeptics claim that MNCs are directly responsible for trade deficits of $800 billion and job losses of over 14 million, enough to re-employ all able Americans. Cumulative trade deficits, financed through government and private borrowing, have crowded out entitlements and infrastructure, and have diminished American standards of living. In addition, our military strategy has led American wealth to be reassured of safe returns off-shore, limiting access to capital and credit for domestic businesses. Investors transferred $6 trillion abroad to direct foreign investments, and an additional $10 trillion to offshore banks shielded from taxation.
Unfortunately, trade deficits have led the world to nearsightedly consider replacing the dollar with a world denominated reserve currency, threatening our ability to sustain our military. As we pull our military back from the world stage, the security gap will be filled from competing sources, creating military instability that will threaten the peace the world has enjoyed for the last 40 years. As a result, the MNC investments that precipitated these changes will be at risk of default and trillions of dollars of hard assets already invested in emerging countries, could be at risk of nationalization. As emerging nations continue to expand, commodity exporters may be unable meet world demand. Recognizing the threat to national security, with the world’s warring history as a guide, armed conflict could ensue. Ironically, MNCs gutted our country of essential, strategic, manufacturing capability to mount a credible and sustainable war for commodities.