08 Jan 2011

Maybe the Fed is Right in Opting for Inflation

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Mark Steyn is lamenting the Untergang of das Abendslands at the New Criterion, arguing that Big Government inevitably results in Global Retreat, but this time he believes that the Anglo-American tradition of liberty will be retreating with us.

Decline starts with the money. It always does. … Today the people who have America’s bonds are not the people one would wish to have one’s soul. As Madhav Nalapat has suggested, Beijing believes a half-millennium Western interregnum is about to come to an end, and the world will return to Chinese dominance. I think they’re wrong on the latter, but right on the former. Within a decade, the United States will be spending more of the federal budget on its interest payments than on its military.

According to the cbo’s 2010 long-term budget outlook, by 2020 the U.S. government will be paying between 15 and 20 percent of its revenues in debt interest—whereas defense spending will be down to between 14 and 16 percent. America will be spending more on debt interest than China, Britain, France, Russia, Japan, Germany, Saudi Arabia, India, Italy, South Korea, Brazil, Canada, Australia, Spain, Turkey, and Israel spend on their militaries combined. The superpower will have advanced from a nation of aircraft carriers to a nation of debt carriers.

What does that mean? In 2009, the United States spent about $665 billion on its military, the Chinese about $99 billion. If Beijing continues to buy American debt at the rate it has in recent years, then within a half-decade or so U.S. interest payments on that debt will be covering the entire cost of the Chinese military. This year, the Pentagon issued an alarming report to Congress on Beijing’s massive military build-up, including new missiles, upgraded bombers, and an aircraft-carrier R&D program intended to challenge American dominance in the Pacific. What the report didn’t mention is who’s paying for it. Answer: Mr. and Mrs. America.

Within the next five years, the People’s Liberation Army, which is the largest employer on the planet, bigger even than the U.S. Department of Community-Organizer Grant Applications, will be entirely funded by U.S. taxpayers. When they take Taiwan, suburban families in Connecticut and small businesses in Idaho will have paid for it.

I think he’s right about the financial implications of where the left’s politics are taking us, but I think financial collapse is just another epiphenomenon of the cultural dégringolade.

We are accustomed to condescending to the past, but I happened to recall yesterday (in the course of arguing with my classmate) that in the 11th century, the leadership of the Christian West was able to respond so promptly and effectively to Muslim attacks and outrages against Christian pilgrims to the Holy Land that, in a mere three years, 1096-1099, they were able to organize an army, march overland to Constantinople; invade the Middle East; capture Nicea, Antioch, Edessa, and Tripoli; liberate Jerusalem and erect a new Christian kingdom, principality, and a pair of counties. How do we look by comparison? Today’s leadership cannot even rebuild two skyscrapers in the course of a decade, let alone effectively rebuke Muslim violence and insolence.

I’d take Pope Urban II, Raymond of Toulouse, and Godfrey of Bouillon over George W. Bush, Michael Bloomberg, and Barack Obama any day.

Hat tip to Bird Dog.

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