Empire of Debt

Attempts to explain the folly of the American Empire funded as it is by debt. Authors claim that hubris and the desire to tell others how to live, lead to imperialist designs which inevitably lead to war while the public is brought along with a big story about important issues worth fighting for like "freedom" and liberating a nation. This excites people and fills them with self-importance, but US can't very well make those they liberate pay to service the empire as the Romans did, so the US borrows from them instead. Large loans are needed to fund wars.

Authors argue that democracy is a faulty form of government because it just makes it that much easier to rile people up to go to war, given that democracy gets them to identify with the state and its importance to the world thus justifying war in terms of big issues like "freedom". An interesting premise that bears more thought than given here. A quick summation of ancient empires offer insight and comparison to this one.

Some monetary history explained. Individual States' income tax used to be much more than Federal tax and the State appointed senators thus giving more power to the priorities of the State. Once citizens were allowed to vote for senators power was defused by petty politics and delusion of grandeur. Woodrow Wilson is blamed for turning US into an empire by getting us into WWI using that whole bit about manifest destiny.

Detailed look at McNamara and what he was thinking regarding the Vietnam War illuminates the hubris of smart people who don't do their homework on the ground. Debunks domino theory. Tells how Nixon took the currency off the gold standard because the debts of the Vietnam War got out of hand. Also the money that Japan created threw into the mix 35 Trillion Yen which only increased empire building on all fronts.

Authors are very intent on the real estate bubble and how it was created by Greenspan lowering interest rates to avoid a recession after the dot com boom (and get W elected). What was just a stock market bubble that should have undergone the usual correction became a real time, real economy bubble. Since this book came out in '05, they were right on the money about what's happening now and they predict a deflation/credit crunch situation much like Japan had ten years before us. Authors think that inflation would be the way to go for US to pay less of its debt, since we are lucky enough to be the reserve currency meaning that the world trades in dollars and our loans are paid back in dollars. This does not mean that our loans don't matter because we are just owing it to ourselves. We still have to pay interest. Authors recommend investing in gold for its staying power to hedge against said inflation.

The history covered is worth knowing, but the too clever writing obscures the clarity of the message, while the attitude expressed is too libertarian, anti-tax, anti-humanist to offer much insight for my tastes and is further weakened by gross general statements like this. "Every great public movement begins in deceit, develops into farce and ends in disaster."

The book makes the connection between loans allowing a nation to create more than it needs. And the luxury of wars moving into an economy of empire which then leads to more wars to pay off debt. This is the most worthwhile observation of the entire book which is mostly a platform for authors to make fun of empire building which is not as satisfying as it sounds because they then lump together imperialists and do-gooders as being cut of the same cloth since both want to improve the world. It's true there are parallels, but I feel slighted. Meanwhile making one's own self wealthier is considered worthwhile because you're just minding your own business.

They call Thomas Friedman their favorite imperialist columnist and five pages are devoted to tearing him apart. This is satisfying in itself, but in the end make these two look not a whole lot better for being slightly more clued in. Both writers are involved with writing a financial blog called Daily Reckonning. The book itself was recommended at the Chris Martenson site which is a lot more useful for being able to explain the reality of too much inflation. See his crash course. Not too many books written about the financial side of collapse so this is it so far, but the crash course is clearer about the money part.