As this is written, gold is trading at about $924 and silver $16.60, posting decades-high prices. Meanwhile, the dollar is suffering on the FOREX markets. Much of the blame for the dollar’s woes, and the reason for the metals’ climbs, is laid at the feet of the subprime lenders, the subprime mess having been spread worldwide and affecting financial institutions across the globe. The Fed slashing its discount rate three quarters of a point Tuesday showed just how bad the world’s financial and economic “experts” think things are. Still, the subprime mess is not the sole cause of the dollar’s woes; lewrockwell.com has posted a commentary as to why.
How to Sink America combines Tom Engelhard’s and Chalmers Johnson’s analyses as to the stress put on America by the U.S. military. Now, I’m well aware that any suggestion that military spending be cut is a sensitive subject with many people. However, all the military spending is not desired by the Pentagon.
For example, Engelhard notes that the Pentagon wanted to cancel an order for Boeing’s C-17 cargo plane. But, canceling a project is not that simple because contracts and subcontracts for weapons systems are passed out to as many states as possible, which means jobs. So, Congress balked at the Pentagon’s plans to cancel its order for C-17s. The result of such politics is that the Pentagon ends up with material it does not want.
Chalmers Johnson’s part of the analysis is titled Going Bankrupt: Why the Debt Crisis Is Now the Greatest Threat to the American Republic. The title alone should cause one to want to read it, especially anyone interested in investing in silver and gold. Here are a few excerpts from Johnson’s analysis:
It is virtually impossible to overstate the profligacy of what our government spends on the military. The Department of Defense’s planned expenditures for fiscal year 2008 are larger than all other nations’ military budgets combined. The supplementary budget to pay for the current wars in Iraq and Afghanistan, not part of the official defense budget, is itself larger than the combined military budgets of Russia and China. Defense-related spending for fiscal 2008 will exceed $1 trillion for the first time in history.
Leaving out of account President Bush’s two on-going wars, defense spending has doubled since the mid-1990s. The defense budget for fiscal 2008 is the largest since World War II.
In an attempt to disguise the true size of the American military empire, the government has long hidden major military-related expenditures in departments other than Defense. For example, $23.4 billion for the Department of Energy goes toward developing and maintaining nuclear warheads; and $25.3 billion in the Department of State budget is spent on foreign military assistance (primarily for Israel, Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, the United Arab Republic, Egypt, and Pakistan). Another $1.03 billion outside the official Department of Defense budget is now needed for recruitment and reenlistment incentives for the overstretched U.S. military itself, up from a mere $174 million in 2003, the year the war in Iraq began. The Department of Veterans Affairs currently gets at least $75.7 billion, 50% of which goes for the long-term care of the grievously injured among the at least 28,870 soldiers so far wounded in Iraq and another 1,708 in Afghanistan. The amount is universally derided as inadequate. Another $46.4 billion goes to the Department of Homeland Security.
In short, there simply is not enough money to sustain the U.S. military and the rest of the federal government’s spending. Raising taxes is not a solution because it usually results in politicians being voted out of office. Besides, presently Congress and the White House are compromising on a plan to send “tax rebates” in an effort to stimulate the economy. Deficit spending is on the horizon for as far as the eye can see. These are the times to invest in gold and silver.