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United States Joint Forces Command Warns that Huge U.S. Debt Might Lead to Military Impotence, Default or Revolution
As I have repeatedly pointed out, the American military and intelligence leaders say that debt is the main national security threat to the U.S.
As I noted in February 2009 and again last December,
a number of high-level officials and experts are warning of financial
crisis-induced violence ... even in developed countries such as the
U.S.
And as I pointed out in February of this year, the U.S. runs the risk of going the way of the Habsburg, British or French empires:
Leading economic historian Niall Ferguson recently wrote in Newsweek:
Call
the United States what you like—superpower, hegemon, or empire—but its
ability to manage its finances is closely tied to its ability to
remain the predominant global military power...This is how
empires decline. It begins with a debt explosion. It ends with an
inexorable reduction in the resources available for the Army, Navy, and
Air Force...If the United States doesn't come up soon with a
credible plan to restore the federal budget to balance over the next
five to 10 years, the danger is very real that a debt crisis could lead
to a major weakening of American power.
The precedents are
certainly there. Habsburg Spain defaulted on all or part of its debt 14
times between 1557 and 1696 and also succumbed to inflation due to a
surfeit of New World silver. Prerevolutionary France
was spending 62 percent of royal revenue on debt service by 1788. The
Ottoman Empire went the same way: interest payments and amortization
rose from 15 percent of the budget in 1860 to 50 percent in 1875. And
don't forget the last great English-speaking empire. By the interwar
years, interest payments were
consuming 44 percent of the British budget, making it intensely
difficult to rearm in the face of a new German threat.
Call it the fatal arithmetic of imperial decline. Without radical fiscal reform, it could apply to America next.
And William R. Hawkins (formerly an economics
professor at Appalachian State University, the University of North
Carolina-Asheville, and Radford University) fills in some details on the fall of the Hapsburg empire:
Spain
was the first global Superpower...With Spain as its political base,
and gold and silver flowing in from its American colonies, the Hapsburg
dynasty became the dominant power in Europe. It controlled rich parts
of Italy through Naples and Milan, and Central Europe from the
Netherlands through the Holy Roman Empire to Austria. In the 16th
century it added the far distant Philippine islands to its empire. The
Hapsburgs held off the Ottoman Turks, whose resurgent wave of Islamic
conquest in the 16th century swept across the Balkans and nearly
captured Vienna.The Hapsburgs went into decline in the 17th
century, and while any such momentous event has many causes, for our
purposes the focus will be on the economic collapse of Spain, which not
only sapped the empire of strength but served to build up the power of
its rivals.The demands of empire required a strong and growing
economy, but Spain did not keep up with the economic expansion that
was taking place in other parts of Europe. Madrid’s financial base fell
out from under its empire. Spain could continue to consume in the
short term because of the flow of precious metals from American mines,
but it could not produce the goods it needed at home, which in the
long-run proved fatal to its standing as a Great Power and as an
advanced society.Spanish imports were double exports and the
precious metals became scarce within weeks of the arrival of the
American treasure fleets as the money flowed to Spain's many creditors.
What industry there was, along with banking and shipping, was in the
hands of foreign owners. As a modern historian, Jaime Vicens Vives, has
concluded, “This was one of the fundamental causes of the Spanish
economy's profound decline in the seventeenth century, maritime trade
had fallen into the hands of foreigners.” This, plus the “opening of
the internal market to foreign goods,” produced a “fatal result.”
Spain's exports were at the same time under heavy pressure by
competitors in third country markets. A nation that cannot control its
domestic market will seldom be able to sustain itself in foreign
markets, which are inherently less accessible and more unstable.Yet,
Spanish leaders were deluded by a sense of false prosperity. This is
testified by the statement of a prominent official, Alfonso Nunez de
Castro in 1675: “Let London manufacture those fine fabrics of hers to
her heart's content; let Holland her chambrays; Florence her cloth; the
Indies their beaver and vicuna; Milan her brocade, Italy and Flanders
their linens...so long as our capital can enjoy them; the only thing it
proves is that all nations train their journeymen for Madrid, and that
Madrid is the queen of Parliaments, for all the world serves her and
she serves nobody.” A few years later, the Madrid government was
bankrupt. The Spanish nobleman had foolishly elevated consumption, a
use for wealth, above production, the creation of wealth.Historians
have traced the flow of Spanish gold and silver across the markets of
Europe. Those who “served” Spain by establishing industries to
manufacture goods for the Spanish market gained the money. Spain’s
rivals, France, Holland (which started a successful revolt in 1568) and
England, prospered by their trade surpluses, and reinvested the money
to expand their own capabilities. Another modern expert on Hapsburg
history, Henry Kamen, has cited contemporary sources who referred to
17th century Spain as “the Indies for the foreigner.” The military
empire of the Hapsburgs became the economic colony of other powers, or,
to use a current phrase, Spain was the “engine of growth” for the rest
of the continent.Where there were jobs and prosperity, there
was also rapid population growth, and rising tax revenue. Rival powers
were able to field and finance military forces that could defeat the
once superior Spanish forces both on land and at sea. The irony of this
is that Spain was ruled by a warrior aristocracy tempered by centuries
of constant warfare against Islamic hordes and Christian heretics.
These nobles looked down on merchants and manufacturers and disparaged
their mundane professions only to find that without a strong domestic
business class they could not afford the fleets and armies that guarded
the empire they had built.Today,
the American “empire” is also trying to consume more than it produces.
The U.S. trade deficit is nearing Spain’s nadir of imports being
double exports. Both government spending and private consumption are
financed heavily by debt. Washington is printing money, the modern
equivalent of digging gold out of the ground, rather than earning the
means to pay its bills. And the political and military elites are
apparently indifferent to the fate of domestic business and industry. Americans must learn ... from the Spanish experience ... and take corrective action while they still can.
The United States Joint Forces Command - which oversees
military operations in the North Atlantic geographic area and supports
the other commanders-in-chief in their geographic regions around the
world - is now echoing all of these themes.
As World Net Daily reported Thursday:
The Joint Operating Environment 2010 report,
or JOE 2010, released March 15 by the United States Joint Forces
Command, or USJFCOM, warned that "even the most optimistic economic
projections suggest that the U.S. will add $9 trillion to the [national]
debt over the next decade, outstripping even the most optimistic
predictions for economic growth upon which the federal government relies
for increased tax revenue."
The USJFCOM expressed concerns that the burgeoning U.S. national debt represented a threat to U.S. national security.
"Rising
debt and deficit financing of government operations will require
ever-larger portions of government outlays for interest payments to
service the debt," the JOE 2010 cautioned. "Indeed, if current trends
continue, the U.S. will be transferring approximately 7 percent of its
total economic output abroad simply to service its foreign debt."
To underscore its concern, the USJFCOM cited an alarming litany of historic examples, including the following:
- Habsburg
Spain defaulted on its debt 14 times in 150 years and was staggered by
high inflation until its overseas empire collapsed;- Bourbon
France became so beset by debt due to its many wars and extravagances
that by 1788 the contributing social stresses resulted in its overthrow
by revolution;- Interest ate up 44 percent of the British
government budget during the interwar years 1919-1930, inhibiting its
ability to rearm against Germany."Unless current trends
are reversed, the U.S. will face similar challenges, anticipating an
ever-growing percentage of the U.S. government budget going to pay
interest on the money borrowed to finance our deficit spending," the
JOE 2010 concluded.
Of course, debt is not the only threat to empire ... or the only indicator of a nation's economic malaise. In that regard, the crash in Italy in the 1340s and the hyperinflation in Hungary in 1946 are instructive.
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Let's take the JFC's warning another step. I was recently flying with a guy who is president of a national defense contracting company. I used to be in the military (long ago) and was chatting about the military and today's weapons systems. We started talking about supply side components, specifically where these components are manufactured. As you might have guessed, like the rest of our economy, our military's shift to off the shelf components also means a shift of manufacturing to the same countries we are competing with at a global level. For those that believe we would encourage a war with a real national power, I find that doubtful. We would be starved for items like fuel, computer chips used in complex weapons systems, etc. You name it, and we depend on another country to actually manufacture our war machine. If extended conflict or hyperinflation were to take hold, our military would quickly loose its strengths as our spare part and fuel dependencies would quickly put us at a disadvantage.
Wow ....money does not grow on trees after all...although made from trees....
..............................
It is too bad that the current Princeton Harvard Yale Club is not smart enough to realize where the monetary wealth REALLY comes from....
.......................................
Two items of importance that would do the most good for the US....
1) Remove the individual/corporate income taxes....
2) Mandate that the govt. cannot exceed 10% of the economy starting now....
3) Invoke the smallest broadest based tax possible...ie a small basis point charge on cash balances....
..............................
4) Revamp the stock exchange to really serve RETAIL...Banks should only service and not game RETAIL...
5) No account minimums... fees for all...ie 20 cents per 100 units
6) No short sale rules...limited by shares outstanding
7) Eliminate derivatives
8) Complete exchange defragmentation
9) Utilize the BATS model
10) Electronic govt. surveillance...eliminate the corrupted, captured SEC....
$Trillions lost and no one accountable....ENOUGH SAID...
11) No crossover from govt. to corporate allowed with respect to securities regulation
12) Securities information wiki based format...
........................................................
Anything short of the above is a sure loser....
Too bad the Princeton Harvard Yale Club does not have the brains.....
.......................
Yes I trade for a living and have over 30 years experience in the securities markets....and no I am not kidding about the above....
Get rid of the "JOKERS" in government....
How ironic that the JFC has been ordered to stand down, close shop and go home. Perhaps it will be replaced by the Gay and Lesbian Command.
Wow ....money does not grow on trees after all...although made from trees....
..............................
It is too bad that the current Princeton Harvard Yale Club is not smart enough to realize where the monetary wealth REALLY comes from....
.......................................
Two items of importance that would do the most good for the US....
1) Remove the individual/corporate income taxes....
2) Manadate that the govt. cannot exceed 10% of the economy starting now....
3) Invoke the smallest broadest based tax possible...ie a small basis point charge on cash balances....
..............................
4) Revamp the stock exchange to really serve RETAIL...Banks should only service and not game RETAIL...
5) No account minimums... fees for all...ie 20 cents per 100 units
6) No short sale rules...limited by shares outstanding
7) Eliminate derivatives
8) Complete exchange defragmentation
9) Utilize the BATS model
10) Electronic govt. surveillance...eliminate the corrupted, captured SEC....
$Trillions lost and no one accountable....ENOUGH SAID...
11) No crossover from govt. to corporate allowed with respect to securities regulation
12) Securities information wiki based format...
........................................................
Anything short of the above is a sure loser....
Too bad the Princeton Harvard Yale Club does not have the brains.....
.......................
Yes I trade for a living and have over 30 years experience in the securities markets....and no I am not kidding about the above....
Get rid of the "JOKERS" in government....
I wouldn't argue with a single suggestion..
All GREAT ideas MarketFox.. we need to implement them N O W! PRONTO!!
Only thing I would add is that Futures markets ARE derivatives.. wouldn't eliminated the regulated Futures markets.. only unregulated..
Great Post.. will the SEC read it SERIOUSLY!? One can only hope..
Mh
PS. My goal already is to vote EVERY single politicial OUT of office.. de facto term limits = government SERVICE.. so I am in complete agreement w DollarBill..
How about if they raise taxes we CUT their salaries to zero!
Some interesting ideas.
And in November, vote EVERY SINGLE INCUMBENT OUT OF OFFICE. Every Single One ...
For every election, repeat.
De facto term limits.
would it not be a good kick if we found out that much of the wealth created in the last 100yrs was quietly transferred back into the hands of the ex-monarchs and the old aristocracy? With no small help from their hofjuden in banking, of course? And suddenly the NWO becomes the old, pre-renaissance, world order (OWO) when monarchy and church ruled? That's what I want to know.
The bloodlines are from the [very] old monarchies, but intermarriage has brought some new [17th-19th Century] mercantile additions to the ranks of the oligarchs.
The church is no longer a necessary part of the plan, because most of the world no longer believes in stone age "invisible friends" ... though the oligarchs do have their own superstitious belief system (which, together with their inbreeding, demonstrates that they're not that smart).
i-dog, the oligarchs may not be that smart, perhaps due to inbreeding or some other environmental factors, but they were still smart enough to entrust this task to their hofjuden. And their hofjuden are smart. That is in plain view. Half the world is being fleeced by them in plain sight. We don’t need to go too far to observe their shtadlan, Reb Shalom Bernookystein, collecting tax (via inflation and debasement) in his kehilla we call UsofA. Once all the tax is extracted by the hofjuden and shtadlans, do we finally get to see who was the puppeteer and the great puppet master in this puppet show? That’s what I want to know.
Does Europe's debt also lead to military impotence (hard to believe it could get worse), default, or revolution too?
Does Russia's debt also?
Bear in mind GW, as much as you cheerlead for the downfall of the United States, it is still all relative, and Her enemies aren't in great shape either. The depression is global.
"Cheerlead for the downfall of the United States"? No, I was born in the U.S.A., raised here, and love this country. I cheerlead for 1) talking real facts and 2) taking policy action based on said real facts which actually help the country, as opposed to a handful of Oligarchs ... I wouldn't have spilled so much ink over the last couple of years writing about economics if I didn't hold out hope that the country could be saved ...
"Her enemies" are not hiding in mosques or planning to attack from caves. "Her enemies" are those oligarchs who are orchestrating the current destruction of the whole financial system with the full cooperation of the US government.
An indebted population forced into indentured servitude to pay off their debts (mortgages, student loans, business losses, unpaid onerous new taxes, etc) is the objective, not an "unintended consequence".
I truly believe you are on to something. If only more would see, they would act.
I have been reading Zero Hedge for a few years now. While I believe the articles posted are well written and make sense the reality of Zero Hedge is that they have been wrong in terms of the short and long term forecaast they profer.
The item that really made me focus in on the varicity of Zero hedge was the series of articles that they ran on the BP situation. All of the articles were wrong; fear raising; tabloid journalism and misguided.
I now question much of what Zero Hedge has to say and you should atleast read Zero Hedge with a concern and question in mind about the nature of their articles. It seems to me that much of it is written for a purpose that is other than being factual,
You be the judge
Funny, most of what was written has turned out to be true. Go troll somewhere else, as you obviously don't like it here. Anyway, who cares what you think about the veracity of zerohedge articles?
But I'm too lazy to be a critical thinker. What do you suggest for me?
Spill recon:
Slide 3 vs slide 4.
http://oilspill.uga.edu/wp-content/uploads/GA-Sea-Grant-Oil-Spill-Update...
It's depressing to see that so many million gallons of toxic dispersant was dumped into the gulf to only treat 3-4% of the total amount. Why bother comes to mind as a first thought...
SeaGrant estimates that 70% - 79% of the spill is still lurking on the surface and below.
Thx GW.
The US people won't understand of believe this untill it's to late. A lot of people don't have the insight to look ahead of the next 5 years. If it doesn't happen tomorrow, it will never happen... or so they think.
In Europe we've seen many world powers, with a lot more influence then the Americans now have. They used to be totalitarian, and even that couldn't save them. Big, Bigger, Biggest. And in that way they always over expand. Creating multiple fronts has always been a very successful way to bring down a empire. I don't even think there is a front left where the Americans aren't present.
Europe for now isn't involved in many wars. Just because they are all still paying down for the reconstruction of the 50's.
The next superpowers will be azian, and we can only hope they mean wel. Untill they also run out of money.
A war is won not by numbers, but by the amount of gold and silver in the treasury.
The US needs to cut down the armed forced by 75% and keep them domestic. In that way it will remain a superpower for decades to come.
Also history shows us that a empire only lasts on average for about 100 years before the decline sets in. The US has only been a superpower for 70 years now. Let's hope they don't break it down to early themselves...
Where's Geopol on this?
I hope the Pentagon will rush the White House at 3 am some
night and " Take Over Operations " They will cut costs and not
just talk about it....
That is one of the slight problems with a professional Army. The general becomes the real boss and the Commander-in-Chief becomes little more than a noisy terrier chained to a White House column.
Congress being reduced to little more than a WWF Smackdown (or whatever they call those events).
It really is starting to remind me of the Rome in antiquity.
I think the 'rush' will be directed by the White House and pointed toward the FED, major media outlets, and AIPAC hq. High fucking treason.
Maybe thats why Pentagon budget has been growing 2x inflation for the past 10 years to keep them fat and happy
the author seems to have left out one scenario:
The last time US Govt debt was at the level it is now was exactly at the end of 1941, at the eve of Pearl Harbour
Then it went on to grow by another 50% of GDP during the rest of WWII, offset by private debt which went down by 50% of GDP while half of US businesses were producing for the US Govt, the US won the war while half of Europe and Japan were destroyed. Destruction which created an economic boom in the US as it was the only one with spare capacity to produce what was needed in the early years of the reconstruction effort.
On the other hand, this was only rendered possible by the fact that in the 8 years preceding Pearl Harbour, households and businesses had already delevered substantially, ie by more than 100% of GDP during the deflationary depression. That process has only barely started now, with the morons in charge of our economic policies trying to stop a necessary private deleveraging by attempting to reflate asset prices. But this won't hold for much longer, as they are literally building dikes of sandbags thinking they are going to be capable of holding off a $30 trillion private debt tsunami which is about to come down.
Also, "default" is not the right word, I'd rather say, "military and police state enforced restructuring, a.k.a Tyranny"
So the 4 scenarios are:
1. military impotence and loss of dominant power
2. debt restructuring and Tyranny
3. WWIII
4. social chaos followed by revolution or civil war
Looking at the four options, it seems 1. is the most preferable one. Unfortunately, it doesn't look as if it's the scenario we are heading for. In view of what has been going on so far, I'd say either 3. or a mixture of 2. and 4. are the most probable scenarios. My question for scenario 3. is, who are going to be the candidates for destruction/reconstruction this time around?
I've got another scenario:
debt default, followed by depression and social dislocation, then quiet revolution as the majority of the country defies the government and refuses to pay taxes or recognize federal authority. Unable to police the population, the federal government will attempt to use police power to hold onto as many urban areas as possible and some productive economic engines.
As police power is frustrated by gangs, black markets and citizen revolt; the loss of the cities will devolve and people will move out into the country. Met by strong community organizations, they will have the opportunity to join providing they can add necessary skills or be forced to move on.
At this juncture, there will be those that will attempt to organize groups for the purpose of reinstating a more pervasive ruling structure. At this point, people will have to choose between liberty or a new slavery.
The scenario you describe is quite possible (with or without default btw) but I wouldn't call that a "quiet" revolution.
Don't forget the external shocks:
5. famine and plagues
60. Complete thermonuclear destruction (not necessarily a WWIII).
+1 Megaton
Good on them. When the SHTF, I think the military will remember its oath to "defend the Constitution against all enemies, foreign AND DOMESTIC".
It might not even be all that violent. Best case is that a dollar collapse will allow Ron Paul to beat Sarah Palin in the primaries, and then the NWO will have no choice but to steal the election for Obama. Texas will be the first state to secede, and most other states will follow until the kleptocracy only holds NY, DC and maybe a few socialist rump states like Massachusetts. The military wouldn't have to do much besides sit back and laugh while hordes of heavily armed veterans and teabaggers descend on the cities that have destroyed America.
Guillotines, bitches!
texas (savings and loan 1990 audition for 2008 main stage event, enron, support for endless war/enormous standing army/weapons systems, nafta, war on drugs, blind support for israel, etc.) has as much guilt in this as boston. it elected ron paul but it also elected w.
Everyone has stink on them from this mess we are in, but Texas smells alot better than most of our fellow states.
Texas used to look out for its own but that has changed now. Since the 70's, the massive influx of job seekers from the north, east and west have forever changed its character.
Just look how Austin has lost its role as the quaint city that seemed to embody that certain thing that made Texas unique. More like some small California city now.
I just hope we can hold their liberal, socialist agenda at bay until America wakes up!
I see your outline as a feasible set of happenings, but I junked you for stupidity. Calling people who align themselves with the TEA Party, "teabaggers", aside from being annoyingly juvenile, makes zero fucking sense. If you want to use that sentiment as an insult, the proper term would be, "teabagee". I'm not sure who started that nonsense, but perhaps he or she had a set of nuts so far into their mouth, their muffled attempt at saying teabagee was obscured and erroneously picked up by the HuffPo legions?
"Washington is printing money, the modern equivalent of digging gold out of the ground."
I think not.
Right. Mining gold would be a productive activity, but I think the EPA has banned it.
it is until it isn't.
Are you seriously saying that digging gold out of the ground is the same as printing paper money?
No one who has taken economics 101 would say that.
Printing money is the modern equivalent of debasing silver coinage, mixing in a cheap alloy, I think all of us here on ZH realize this.
Of course it is the same. Anyone who has taken economics 101 could tell you that.
Digging up more PMs at an accelerated rate is exactly the same as printing more notes ... it debases the value of the existing coins/notes/nuggets in circulation.
Um, I believe the quote was:
"Washington is printing money, the modern equivalent of digging gold out of the ground, rather than earning the means to pay its bills."
Digging PM's out of the ground at an accelerated rate would of course have this effect, THAT wasn't the quote and THAT isn't happening. Gold production has been declining since 2000 and has only reversed in the last two years due to China's mad frenzy to dig it out, of which the USGS says is unsustainable and will result in them exhausting most of their reserves in six short years. South Africa, the leader in gold production for the last century has been on the decline for a while now. Silver production is basically flat, increases in some base metal by-product production (copper) are balanced out by decreases of silver by-product in other base metal production (lead).
So please pay attention and the next time you attempt to refute my point at least get the original quote correct.
The quote is true in the sense that digging gold out of the ground (or stealing it from the Incas, as the case may be), in and of itself, doesn't create a productive economy - as the information in the article about Spain makes clear. They are very similar activities when you look at the results. Concentrating on digging up gold would produce a short term boost in the economy, just like printing money, but doesn't provide a long term basis for prosperity, i.e., the capability to produce the food and goods needed by society.
Actually, in past economies, digging gold or silver out of the ground was extremely beneficial for the economies as it provided the perfect medium of exchange, so people didn't have to trade something arbitrary that was just localized like seashells or stones with holes in them. In most times the additional precious metals that added into the economy approximately matched population increases so as not to create inflation.
The problem with Spain had nothing to do with gold or silver, even if they hadn't found gold or silver they still would have slaughtered the native populations, they were just a rapacious bunch of imperialists that considered the natives less than human.
Whats up with Qwest , almost 600,000 call options? Usually around 56,000. Got this from theintelhub. 46 puts Also hearing about anxious buyers of silver stepping in front of the line at AgAuPM.com
Good luck folks, i have a feeling about monday and it aint good.
I've been following AgAuPM's blog recently as well, he has done a good job of pulling the different pieces together. As a silver bug, I hope to see a silver squeeze as well, but silver bugs have been hoping for this for so long. AgAuPM's blog indicates that it could happen this month with so many longs still standing for delivery. I looked at an article of Ted Butler's recently, that said this was imminent, and the date was 2001. We had hoped for this in the spring but it seems the SLV was raided for about 18Moz to cover Comex deliveries of about 22Moz. It will happen, its just a matter of time.
Even though I hold physical silver, I think the most money is to be made in some of the struggling smaller producers, like Revett, Genco, or US Silver, they will benefit the most from a sustained higher silver price.
Been seeing a lot of this talk reported on in the lamestream lately. Conditioning perhaps? The time nears.
The conditioning started with the TSA 'safety' checkpoints at the airports.
These checkpoints will eventually propagate out of the airports to all transportation networks and points of migration or movement where you will be encouraged to report all suspicious behavior, it's for your own good. Beware the boogieman.
It's for your own good.The boogieman incites various subversive behaviors, such as hopelessly inappropriate dancing...and any Real American just knows that's bad!
The highway safety checks are good for you too!Just remember that when the officer says "papers!Your papers please!OOPS! I meant to say "your license and registration please"!
Of course, there is no difference.Absolutely none.Our descent into fascist dictatorship continues.
It's about goddamn time.