Theme: Subsidy

YES THE USA EXPORTS COSTS (TAXES) TO THE REST OF THE WORLD. BUT ARE YOU REALLY SURE YOU DON”T WANT TO PAY THEM?

QUESTION:

—“How much of a connection, ultimately, is there between American military might and the global reserve status of the US Dollar? With global reserve status, the Federal Reserve (the Fed) has license to print currency almost indiscriminately, because that liquidity injection can be off-shored (often into sovereign wealth funds, that are used in oil trade). “—Davin.

ANSWER:

Yes, this is how America taxes the world for policing of the air, sea, land, trade and financing system.

(The use of the euro for oil purchases is another means of tax evasion so that europeans do not have to pay for nato defense. A fact that is not lost on Americans.)

But without this method of taxing the rest of the world, we would have to export the cost of military defense to the rest of the world, which is terribly expensive, inefficient and provides opportunity and stimulus for warfare.

Military overhead is high. Military duplication is terribly expensive. Individual states paying for their own militaries is actually comparatively impossible.

I have been advocating the export of military and military costs to the rest of the world, **OR** the transfer of the US government to NATO, and the fragmentation of the USA into separate nations for the better part of two decades for this reason.

So while I agree with your description of the seemingly unjust mechanics of exporting inflation I disagree with the presumption that the USA is imposing costs. It is instead, providing the most expensive service a nation can undertake at a fraction of the necessary equivalent. A tremendous discount, without which the liberal order of the west is not possible.

So I am perfectly happy to unwind the Nixon-era world-defense-tax, but the anglo-germanic-catholic western world should be very well aware that by doing so, they will sacrifice the vast discount and be forced for some period, to spend upwards of 10% of gdp to construct a military equivalent of the American forces.

For all intents and purposes nato is a lie. America pays for the defense of the western world after the fall of the British empire that did the same.

We paid for it by means of asymmetric production ability through about 1970. After 1970 we paid for it by indirect taxes on oil. Going forward, we will not be able to pay for it.

This is why the next world war will occur, as the western world attempts to preserve unearned privileges of redistribution and social programs, while US power diminishes, and competitors with less liberal (less libertarian, less meritocratic, less individualist and less global) incentives (competitive needs) seek to capture control of trade, finance, political, and rent opportunities.

And once that set of events becomes visible (which it will with the ascent of iran and russia if not china) then the arms race will accelerate as smaller weaker governments seek to preserve sovereignty in the face of expansionary state capitalism, and expansionary islam.

So my advice is just the opposite. Make sure either the USA gets its taxes, or make sure that each western country goes through a radical reallocation of resources to economic, territorial and political defense.

Curt Doolittle

The Propertarian Institute

Kiev, Ukraine (Tallinn, Estonia)