© C Dawes
Like the case of Rome before it, the Empire is bankrupting America. The true fiscal cost is upwards of $1.0 trillion per year (counting $200 billion for veterans and debt service for wars), but there is no way to pay for it.
That's because the 78-million strong Baby Boom is in the driver's seat of American politics. It plainly will not permit the $3 trillion per year retirement and health care entitlements-driven Welfare State to be curtailed.
The Trumpite/GOP has already sealed that deal by refusing to reform Social Security and Medicare and by proving to be utterly incapable of laying a glove politically on Obamacare/Medicaid. At the same time, boomers keep voting for the GOP's anti-tax allergy, thereby refusing to tax themselves to close Washington's yawning deficits.
More importantly, the generation which marched on the Pentagon in 1968 against the insanity and barbarism of LBJ's Vietnam War has long since abandoned the cause of peace. So doing, boomers have acquiesced in the final ascendancy of the Warfare State, which grew like topsy once the US became the world's sole superpower after the Soviet Union slithered off the pages of history in 1991.
Yet there is a reason why the end of the 77-year world war which incepted with the "guns of August" in 1914 did not enable the world to resume the status quo ante of relative peace and prosperous global capitalism.
To wit, the hoary ideology of American exceptionalism and the Indispensable Nation was also, ironically, liberated from the shackles of cold war realism when the iron curtain came tumbling down.
Consequently, it burst into a quest for unadulterated global hegemony. In short order (under Bush the Elder and the Clintons) Washington morphed into the Imperial City, and became a beehive not only of militarism, but of an endless complex of think-tanks, NGOs, advisories and consultancies, "law firms", lobbies and racketeers.
The unspeakable prosperity of Washington flows from that Imperial beehive. And it is the Indispensable Nation meme that provides the political adhesive that binds the Imperial City to the work of Empire and to provisioning the massive fiscal appetites of the Warfare State.
Needless to say, Empire is a terrible thing because it is the health of the state and the profound enemy of capitalist prosperity and constitutional liberty.
It thrives and metastasizes by abandoning the republican verities of nonintervention abroad and peaceful commerce with all the nations of the world in favor of the self-appointed role of global policeman. Rather than homeland defense, the policy of Empire is that of international busybody, military hegemon and brutal enforcer of Washington's writs, sanctions, red lines and outlawed regimes.
There is nothing more emblematic of that betrayal of republican non-interventionism than the sundry hot spots which dog the Empire today. These include the Ukraine/Crimea confrontation with Russia, the regime change fiasco in Syria, the US sponsored genocide in Yemen, the failed, bloody 17-year occupation of Afghanistan, the meddling of the US Seventh Fleet in the South China Sea, and, most especially, the swiftly intensifying contretemps in Iran.
After all, Iran hasn't violated the nuke deal (JPAOC) by the lights of any credible authority - or by even less than credible ones like the CIA. Nor by the same consensus of authorities has it even had a research program for nuclear weaponization since 2003.
Likewise, its modest GDP of $430 billion is equal to just eight days of US output, thereby hardly constituting an industrial platform from which its theocratic rulers could plausibly menace America's homeland.
Nor could its tiny $14 billion defense budget - which amounts to just seven days worth of DOD outlays - inflict any military harm on American citizens.
In fact, Iran has no blue water navy that could effectively operate outside of the Persian Gulf; its longest range warplanes can barely get to Rome without refueling; and its array of mainly defensive medium and intermediate range missiles cannot strike most of NATO, to say nothing of the North American continent.
The answer to the Martian's question, of course, is that Iran is no threat whatsoever to the safety and security of the US homeland, but it has run badly afoul of the dictates of the American Empire.
That is to say, it has presumed to have an independent foreign policy involving Washington proscribed alliances with the sovereign state of Syria, the leading political party of Lebanon (Hezbollah), the ruling authorities (and US puppets) in Baghdad and the reining power in the Yemen capital of Sana'a (the Houthis).
These are all deemed by Washington to be sources of unsanctioned "regional instability" and Iran's alliances with them have been capriciously labeled as acts of state sponsored terrorism.
The same goes for Washington's demarche against Iran's modest array of short, medium and intermediate range ballistic missiles. These weapons are palpably instruments of self-defense, but Imperial Washington insists their purpose is aggression - unlike the case of practically every other nation which offers its custom to American arms merchants.
For example, Iran's arch-rival across the Persian Gulf, Saudi Arabia, has more advanced NATO supplied ballistic missiles with even greater range (2,600 km range). So does Israel, Pakistan, India and a half-dozen other nations, which are either Washington allies or have been given a hall-pass in order to bolster US arms exports.
In short, Washington's escalating war on Iran is an exercise in global hegemony, not territorial self-defense. What the proverbial Martian is really asking, therefore, is how did the Empire come about?
How did the historic notion of national defense morph into Washington's arrogant claim that it constitutes the "Indispensable Nation" which stands as mankind's bulwark against global disorder and chaos among nations?
© CSIS/ Al Jazera
Thus, Washington started the Ukrainian confrontation by sponsoring, funding and recognizing the February 2014 coup that overthrew a Russia-friendly government with one that is militantly nationalistic and bitterly antagonistic to Russia. It reopened deep wounds that date back to Stalin's brutal rein in Ukraine and Ukrainian collusion with Hitler's Wehrmacht on its way to Stalingrad and back.
So doing, it triggered the fear-driven outbreak of Russian-speaking separatism in the Donbass and the 96% referendum in Crimea to formally re-affiliate with mother Russia (which originally purchased it from the Ottomans in 1783).
Even a passing familiarity with Russian history and geography would remind that Ukraine and Crimea are Moscow's business, not Washington's.
Even more hideous is the rhetorical provocations and Seventh Fleet maneuvers ordered by Washington with respect to China's comical sand castle building in the South China Sea. Whatever they are doing on these man-made islets, it is not threatening to the security of America - nor is there any plausible reason to believe that it is a threat to global commerce, either.
Map of various national outposts in the Spratly Islands
Needless to say, none of these kinds of interventions were even imaginable in the sleepy town of Washington DC just 100-years ago. But it's baleful evolution from the capital of an economically focused Republic to seat of power in a globally mobilized Empire ultimately sprung from the Indispensable Nation heresy.
So we intend to delve into the historic roots of that conceit in a multi-part series because it not only guarantees unending calamities abroad, but also an eventual fiscal and financial horror show at home.
Indeed, so long as Imperial Washington is stretched about the planet in its sundry self-appointed missions of stabilization, "peacekeeping", punishment, attack and occupation, there is zero chance that America's collapsing fiscal accounts can be salvaged.
The Indispensable Nation folly thus hangs over the rotten edifice of Bubble Finance like, in fact, a modern day Sword of Damocles.
But Empire is a corrosive disease of governance. It eventually metastasizes into imperial arrogance, overreach and high-handedness. Ultimately, like at present, it falls prey to the rule of bellicose warmongers and thugs.
John Bolton and Mike Pompeo are living proof of that.
For the moment, however, make no mistake: Trump's withdrawing from the nuke deal and pending re-imposition of maximum sanctions is an act of war by any other name.
Yes, the feinschmeckers (gourmets) of the foreign policy establishment consider economic sanctions to be some kind of benign instrument of enlightened diplomacy - the carrot that preempts resort to the stick. But that is just sanctimonious prattle.
When you hound the deep water ports of the planet attempting to block Iran's oil sales, which are its principal and vital source of foreign exchange, or cut off access by its central bank to the global money clearance system known as SWIFT or pressure friend and foe alike to stop all investment and trade - that's an act of aggression every bit as menacing and damaging as a cruise missile attack.
© The New York Times
But Ike did so because he was old-fashioned enough to believe that even penetrating the air space of a foe without permission was an act of war - and that he did not intend, the CIA's surveillance program notwithstanding.
Today, by contrast, Washington invades the economic space of dozens of foreign nations with alacrity. In fact, the US Treasury Department's Office of Foreign Asset Control (OFAC) proudly lists 30 different sanctions programs including ones on Belarus, Burundi, Cuba, Congo, Libya, Somalia, Sudan, Venezuela, Yemen and Zimbabwe - along with the more visible programs against the alleged malefactors of Iran, Russia and North Korea.
These, too, are the footprints of Empire, not measures of a homeland defense befitting a peace-seeking Republic. That would cost around $250 billion per year, and would rely on an already built and paid for triad nuclear capacity for deterrence, and a modest Navy and Air Force for protection of the nation's shorelines and air space.
The $500 billion excess in today's Trump-bloated national security budget of $750 billion is the cost of Empire; it's the crushing fiscal burden that flows from the Indispensable Nation folly and its calamitously wrong assumption that the planet would descend into chaos without the good offices of the American Empire.
Needless to say, we do not believe that the planet is chaos-prone absent Washington's ministrations. After all, the historic record from Vietnam through Afghanistan, Iraq, Libya, Syria and Iran suggests exactly the opposite.
More pointedly, the Indispensable Nation meme originates not in the universal condition of mankind and the nation-states into which it has been partitioned, but in the one-time, flukish and historically aberrant circumstances of the 20th century that gave raise to giant totalitarian states in Hitler's Germany and Stalin's Russia, and the resulting mass murder and oppressions which resulted there from.
But as we will outline in greater detail in Part 2, Stalinist Russia and Nazi Germany were not coded into the DNA of humanity - a horror always waiting to happen.
To the contrary, they were effectively born and bred in April 1917 when the US entered what was then called the Great War. And it did so for absolutely no reason of homeland security or any principle consistent with the legitimate foreign policy of the American Republic.
So you can put the blame for this monumental error squarely on Thomas Woodrow Wilson - a megalomaniacal madman who was the very worst President in American history; and who took America into war for the worst possible reason - a vainglorious desire to have a big seat at the postwar peace table in order to remake the world as God had inspired him to redeem it.
The truth, however, was that the European war posed not an iota of threat to the safety and security of the citizens of Lincoln NE, or Worcester MA or Sacramento CA. In that respect, Wilson's putative defense of "freedom of the seas" and the rights of neutrals was an empty shibboleth; his call to make the world safe for democracy, a preposterous pipe dream.
Indeed, the shattered world after the bloodiest war in human history was a world about which Wilson was blatantly ignorant. And remaking it was a task for which he was temperamentally unsuited - even as his infamous 14 points were a chimera so abstractly devoid of substance as to constitute mental play dough.
President Wilsno and Colonel House
America thus plunged into Europe's carnage, and forevermore shed its century-long Republican tradition of anti-militarism and nonintervention in the quarrels of the Old World. From Wilson's historically erroneous turn - there arose at length the Indispensable Nation Folly, which we shall catalogue in the balance of this series.
For now, suffice it to say that there was absolutely nothing noble that came of Wilson's intervention.
It led to a peace of vengeful victors, triumphant nationalists and avaricious imperialists - when the war would have otherwise ended in a bedraggled peace of mutually exhausted bankrupts and discredited war parties on both sides.
By so altering the course of history, Wilson's war bankrupted Europe and midwifed 20th century totalitarianism in Russia and Germany.
These developments, in turn, eventually led to the Great Depression, the Welfare State and Keynesian economics, World War II, the holocaust, the Cold War, the permanent Warfare State and its military-industrial complex.
They also spawned Nixon's 1971 destruction of sound money, Reagan's failure to tame Big Government and Greenspan's destructive cult of monetary central planning.
So, too, flowed the Bush's wars of intervention and occupation, their fatal blow to the failed states in the lands of Islam foolishly created by the imperialist map-makers at Versailles and the resulting endless waves of blowback and terrorism now afflicting the world.
And not the least of the ills begotten in Wilson's war is the modern rogue regime of central bank money printing, and the Bernanke-Yellen-Powell plague of bubble economics which never stops showering the 1% with the monumental windfalls from central bank enabled speculation.
Part 2:
The rise of the murderous Nazi and Stalinist totalitarian regimes during the 1930s and the resulting conflagration of World War II is held to be, correctly, the defining event of the 20th century. But that truism only begs the real question.
To wit, were these nightmarish scourges always latent just below the surface of global civilization - waiting to erupt whenever good people and nations fell asleep at the switch, as per the standard critique of the British pacifism and US isolationism that flourished during the late 1930s?
Or were they the equivalent of the 1,000-year flood - a development so unlikely, aberrant and unrepeatable as to merely define a horrid but one-off chapter of history, not the ordinary and probable unfolding of affairs among the nations?
We contend that the answer depends upon whether you start with April 2, 1917, when America discarded its historic republican policy of nonintervention and joined the bloody fray on the old continent's Western Front, or December 7, 1941, when Japan's attack on Pearl Harbor allegedly awoke America from its isolationist slumber and called it to global leadership of the so-called American Century.
Needless to say, the Deep State's ideology of the Indispensable Nation and its projects of Empire are rooted in the Pearl Harbor narrative. That is, the claim that global affairs go to hell in a hand basket when virtuous nations let down their guard or acquiesce to even modest acts of regional aggression.
The now faded verities of republican nonintervention, by contrast, properly finger Woodrow Wilson's perfidious declaration of War on Germany as the event that changed the ordinary course of history, and paved the way for the 1,000-year aberration of Hitler and Stalin which ultimately ensued.
Not surprisingly, the official historical narratives of the Empire glorify America's rising to duty in World War II and after, but merely describe the events of 1917-1919 as some sort of preliminary coming of age.
As a consequence, the rich, history-defining essence of what happened during those eventful years has been lost in the fog of battles, the miserable casualty statistics of war, the tales of prolonged diplomatic wrangling at Versailles and the blame-game for the failed Senate ratification of Wilson's League of Nations thereafter.
In this connection, the defeat of the League of Nations is treated as a colossal error in the mainstream narrative. It is held to constitute a crucial default by the Indispensable Nation that hurried the rise of the totalitarian nightmares, and only compounded America's task of righting the world in the 1940s and after.
In fact, however, the defeat of Wilson's treaty was the last gasp of republicanism - an echo of the stand that had kept America true to its interests and noninterventionist traditions as the calamity of the Great War unfolded.
In effect, Henry Cabot Lodge and his so-called Midwestern isolationists (actually the original America Firsters) were trying to turn the clock back to April 1, 1917.
That was the day before Wilson summoned the Congress to war based on his own megalomania and the high-handed maneuvers of his State Department. After William Jennings Bryan's principled antiwar resignation in June 1915, the latter had been operating in complete cahoots with the Morgan interests (which had risked billions financing England and France) and had essentially maneuvered the messianic Wilson into war.
Consequently, the powerful truths of what actually preceded the 1919 defeat of the League have been lost to standard history. In what follows, we mean to revive these crucial developments and inflection points because they clearly do demonstrate that the 1,000 year flood of 20th century totalitarianism originated in the foolish decisions of Wilson and a few others, not the DNA of mankind nor a death urge of the nations.
Needless to say, that is not a matter of academic history; it makes all the difference in the world of here and now because virtually every maneuver of Imperial Washington, such as it current demented attacks on Iran, are predicated on the Hitler and Stalin syndrome. That is, the hoary belief that there is always another one lurking in the ordinary political, economic and cultural conflicts of the nations.
To the contrary, of course, if the world actually needs no Indispensable Nation the whole predicate for Empire is invalidated. The raison d'etre of the Imperial City and all its hegemonic projects of "leadership", meddling, intervention, and occupation, in fact, belong in the dustbin of history.
So herewith is a capsulized explanation of the 1,000 year flood. It explains why Stalin and Hitler should have never happened - and why the hot, cold and permanent wars that followed thereafter condemn the case for Empire, not make it.
As we indicated in Part 1, the Great War had been destined to end in 1917 by mutual exhaustion, bankruptcy and withdrawal from the utterly stalemated trenches of the Western Front. In the end, upwards of 3.3 million had been killed and 8.3 million wounded over four years for movement of bloody front-lines that could be measured in mere miles and yards.
Still, had America stayed on its side of the great Atlantic moat, the ultimate outcomes everywhere would have been far different. Foremostly, the infant democracy that came to power in February 1917 in Russia would not have been so easily smothered in its crib.
There surely would have been no disastrous summer offensive by the Kerensky government to rollback Germany on the eastern front where the czarist armies had been humiliated and dismembered.
In turn, an early end to the war in Russia would also have precluded the subsequent massive armed insurrection in Petrograd in November 1917, which enabled the flukish seizure of power by Lenin and his small band of Bolsheviks.
That is, the 20th century would not have been saddled with what inexorably morphed into the Stalinist nightmare. Nor would a garrisoned Soviet state have poisoned the peace of nations for 75 years, while causing the nuclear sword of Damocles to hang over the planet.
Likewise, there would have been no abomination known as the Versailles peace treaty because it was a toxic peace of victors. But without America's billions of aid and munitions and two million fresh doughboys there would have been no Allied victors, as we demonstrate below.
Without Versailles, in turn, there would have been no "stab in the back" legends owing to the Weimar government's forced signing of the "war guilt" clause; no continuance of England's brutal post-armistice blockade that delivered hundreds of thousands of Germany's women and children into starvation and death; and no demobilized 3-million man German army left humiliated, destitute, bitter and on a permanent political rampage of vengeance.
So, too, there would have been no acquiescence in the dismemberment of Germany at the Versailles "peace" table. As it happened nearly one-fifth of Germany's prewar territory and population was spread in parts and pieces to Poland (the Danzig Corridor and Upper Silesia), Czechoslovakia (the Sudetenland), Denmark (Schleswig), France (the Saar, Alsace-Lorraine and the neutralized Rhineland) and Belgium (Eupen and Malmedy).
Needless to say, God did not create the map of Europe on the 6th day of his labors. But it is absolutely the case that it was the vast German territories and peoples "stolen" at Versailles that provided the fuel for Hitler's revanchist agitation; and it was that campaign to regain the lost territories which nourished the Nazis with patriotic public support in the rump of the fatherland.
Likewise, the French-Belgium occupation of the Ruhr in 1923 would not have happened because the justification for that invasion of German lands was that the latter had not paid its war reparations - a staggering sum that would amount to more than $500 billion in today's purchasing power.
As it happened, it was the reparations crisis that led to Germany's insane printing press monetary spree and the destruction of the German middle class in the 1923 hyperinflation. And without that society-crushing development along with all of the above, the history books would have never recorded the Hitlerian ascent to power and all the evils that flowed thereupon.
Even John Maynard Keynes, who was a British Treasury official at Versailles, could see that the Carthaginian Peace of Versailles was only sowing the seeds of economic breakdown in Germany and throughout much of warn-torn Europe.
In his famous tract, The Economic Consequences of the Peace, Keynes rightly foresaw the disaster ahead:
The Treaty includes no provisions for the economic rehabilitation of Europe,- nothing to make the defeated Central Powers into good neighbors, nothing to stabilize the new states of Europe, nothing to reclaim Russia; nor does it promote in any way a compact of solidarity amongst the Allies themselves; no arrangement was reached at Paris for restoring the disordered finances of France and Italy, or to adjust the systems of the Old World and the New.As it happened, Adolf Hitler himself answered Keynes' question, writing in Mein Kampf that the unjust treaty of Versailles was the key to mobilizing the German nation:
The Council of Four paid no attention to these issues, being preoccupied with others,- Clemenceau to crush the economic life of his enemy, Lloyd George to do a deal and bring home something that would pass muster for a week, the President to do nothing that was not just and right. It is an extraordinary fact that the fundamental economic problems of a Europe starving and disintegrating before their eyes, was the one question in which it was impossible to arouse the interest of the Four. Reparation was their main excursion into the economic field, and they settled it as a problem of theology, of politics, of electoral chicane, from every point of view except that of the economic future of the States whose destiny they were handling.
........Economic privation proceeds by easy stages, and so long as men suffer it patiently the outside world cares very little. Physical efficiency and resistance to disease slowly diminish, but life proceeds somehow, until the limit of human endurance is reached at last and counsels of despair and madness stir the sufferers from the lethargy which precedes the crisis. The man shakes himself, and the bonds of custom are loosed. The power of ideas is sovereign, and he listens to whatever instruction of hope, illusion, or revenge is carried to them in the air. ...
What a use could be made of the Treaty of Versailles. ... How each one of the points of that treaty could be branded in the minds and hearts of the German people until sixty million men and women find their souls aflame with a feeling of rage and shame; and a torrent of fire bursts forth as from a furnace, and a will of steel is forged from it, with the common cry: "We will have arms again!"
So Woodrow Wilson has a lot to answer for because he is the father of the Carthaginian Peace that broke the world at Versailles. But the matter is far greater than just Wilson's Folly of leading the US into war in April 1917.
His reasons for doing so are all the more important. Wilson's 14 Points and his "make the world safe for democracy" slogans were essentially the original and incipient vision of the Indispensable Nation.
Ironically, therefore, the false idea that triggered the whole train of 20th century events, which then mid-wifed the American Empire, is now used to justify the continuing disorder and mayhem that it has unleashed upon the world.
Accordingly, Wilson's "war guilt" is a mighty stain, extending to most of the wars of the 20th century. It can be summarized in eight major propositions which explain why the 1,000 year flood of totalitarianism arose, and why the Indispensable Nation folly is falsely anchored upon it.
Proposition #1: It is essential to recall that the Great War was about nothing worth dying for and engaged no recognizable principle of human betterment. There were many blackish hats, but no white ones.
Instead, it was an avoidable calamity issuing from a cacophony of political incompetence, cowardice, avarice and tomfoolery.
In part, you can blame the bombastic and impetuous Kaiser Wilhelm for setting the stage with his foolish dismissal of Bismarck in 1890; failure to renew the Russian reinsurance treaty shortly thereafter (which forced the Czar to ally with France); and his quixotic buildup of the German Navy after the turn of the century (which turned much of English opinion against Germany).
Likewise, you can blame the French for lashing themselves to a war treaty that could be triggered by the intrigues of a decadent court in St. Petersburg where the Czar still claimed divine rights and the Czarina ruled behind the scenes on the hideous advice of Rasputin.
Similarly, you can censure Russia's foreign minister Sazonov for his delusions of greater Slavic grandeur that had encouraged Serbia's provocations after Sarajevo; and you can also castigate the doddering emperor Franz Joseph for hanging onto power into his 67th year on the throne and thereby leaving his crumbling empire vulnerable to the suicidal impulses of General Conrad's war party.
So too, you can indict the duplicitous German Chancellor, Bethmann-Hollweg, for allowing the Austrians to believe that the Kaiser endorsed their declaration of war on Serbia; and pillory Winston Churchill and London's war party for failing to recognize that the Schlieffen Plan's invasion through Belgium was no threat to England, but a unavoidable German defense against a two-front war.
But after all that - you most especially can't talk about the defense of democracy, the vindication of liberalism or the thwarting of Prussian autocracy and militarism.
The British War party led by the likes of Churchill and General Kitchener was all about the glory of empire, not the vindication of democracy.
So, too, France' principal war aim was the revanchist drive to recover Alsace-Lorrain. The latter was mainly a German speaking territory for 600 years until it was conquered by Louis XIV in the 17th century, and then forcibly reacquired by Germany after its humiliating defeat of the French in 1870.
In any event, German autocracy was already on its last leg as betokened by the arrival of universal social insurance and the election of a socialist-liberal majority in the Reichstag on the eve of the war; and the Austro-Hungarian, Balkan and Ottoman goulash of nationalities, respectively, would have erupted in interminable regional conflicts and nationalist fragmentation, regardless of who won the Great War.
In short, nothing of principle or higher morality was at stake in the outcome.
Proposition # 2: The war posed no national security threat whatsoever to the US. That presumes, of course, the danger was not the Entente powers - but Germany and its allies.
But there was no chance whatever from the very beginning that Germany and its bedraggled allies could threaten America - and that had become overwhelmingly true by April 1917 when Wilson launched America into war.
In fact, within a few weeks, after the Schlieffen Plan offensive failed on September 11, 1914, the German Army became incarcerated in a bloody, bankrupting, two-front land war. That ensured its inexorable demise and utter incapacity in terms of finances and manpower to even glance cross-eyed at America.
Likewise, after the battle of Jutland in May 1916, the great German surface fleet was bottled up in its homeports - an inert flotilla of steel that posed no threat to the American coast 4,000 miles away.
As for the rest of the central powers, the Ottoman and Hapsburg empires already had an appointment with the dustbin of history. Need we even bother with any putative threat from the fourth member - that is, Bulgaria?
Proposition #3: Wilson's pretexts for war on Germany - submarine warfare and the Zimmerman telegram - are not half what they are cracked-up to be by Warfare State historians.
As to the so-called freedom of the seas and neutral shipping rights, the story is blatantly simple.
In November 1914, England declared the North Sea to be a "war zone"; threatened neutral shipping with deadly sea mines; declared that anything which could conceivably be of use to the German army - directly or indirectly - to be contraband that would be seized or destroyed; and announced that the resulting blockade of German ports was designed to starve it into submission.
In retaliation a few months later, Germany announced its submarine warfare policy designed to the stem the flow of food, raw materials and armaments to England. It was the desperate antidote of a land power to England's crushing sea-borne blockade.
Accordingly, there existed a state of total warfare in the northern European waters - and the traditional "rights" of neutrals were irrelevant and disregarded by both sides.
Indeed, in arming merchantmen and stowing munitions on passenger liners, England was hypocritical and utterly cavalier about the resulting mortal danger to innocent civilians. That was tragically exemplified by the 4.3 million rifle cartridges and hundreds of tons of other munitions carried in the hull of the Lusitania, when it was sunk by a German submarine off the coast of Ireland in May 1915.
Likewise, German resort to so-called "unrestricted submarine warfare" in February 1917 was brutal and stupid, but came in response to massive domestic political pressure during what was known as the "turnip winter" in Germany. By then, the country was starving from the English blockade - literally.
© Library of CongressWilliam Jennings Bryan, 1913.
As to the Zimmerman telegram, it was never delivered to Mexico at all, but was sent from Berlin as an internal diplomatic communiqué to the German ambassador in Washington, who had labored mightily to keep his country out of war with the US.
As it happened, this draft communiqué was intercepted by British intelligence in February 1917, which sat on it for more than a month waiting for an opportune moment to incite America into war hysteria.
In fact, this so-called bombshell was actually just an internal foreign ministry rumination about a possible plan to approach the Mexican president regarding an alliance in the event that the US first went to war with Germany.
Why is this surprising or a casus belli?
Did not the Entente (England, France and Russia) bribe Italy into the war with promises of large chunks of Austria?
Did not the hapless Rumanians finally join the Entente when they were promised Transylvania?
Did not the Greeks bargain endlessly over the Turkish territories they were to be awarded for joining the allies?
Did not Lawrence of Arabia bribe the Sherif of Mecca with the promise of vast Arabian lands to be extracted from the Turks?
Why, then, would the Germans - if forced into war with the USA - not promise the return of Texas?
Proposition #4: Europe had expected a short war, and actually got one when the Schlieffen plan offensive bogged down 30 miles outside of Paris on the Marne River in mid-September 1914.
Within three months, the Western Front had formed and coagulated into blood and mud - a ghastly 400 mile corridor of senseless carnage, unspeakable slaughter and incessant military stupidity that stretched from the Flanders coast across Belgium and northern France to the Swiss frontier.
The next four years witnessed an undulating line of trenches, barbed wire entanglements, tunnels, artillery emplacements and shell-pocked scorched earth that rarely moved more than a few miles in either direction, and which ultimately claimed more than 7 million casualties on the Allied side and nearly 5 million on the German side.
If there was any doubt that Wilson's catastrophic intervention converted a war of attrition, stalemate and eventual mutual exhaustion into Pyrrhic victory for the allies, it was memorialized in four developments during 1916.
In the first, the Germans wagered everything on a massive offensive designed to overrun the fortresses of Verdun - the historic defensive battlements on France's northeast border that had stood since Roman times, and which had been massively reinforced after the France's humiliating defeat in Franco-Prussian War of 1870.
But notwithstanding the mobilization of 100 divisions, the greatest artillery bombardment campaign ever recorded until then, and repeated infantry offensives from February through November that resulted in upwards of 400,000 German casualties, the Verdun offensive failed.
The second event was its mirror image - the massive British and French offensive known as the second battle of the Somme, which commenced with equally destructive artillery barrages on July 1, 1916 and then for three month sent waves of infantry into the maws of German machine guns and artillery.
It too ended in colossal failure, but only after more than 600,000 English and French casualties including a quarter million dead.
In between these bloodbaths, the stalemate was reinforced by the naval showdown at Jutland that cost the British far more sunken ships and drowned sailors than the Germans, but also caused the Germans to retire their surface fleet to port and never again challenge the Royal Navy in open water combat.
Finally, by year-end 1916 the German generals who had destroyed the Russian armies in the East with only a tiny one-ninth fraction of the German army - Generals Hindenburg and Ludendorff - were given command of the Western Front.
Presently, they radically changed Germany's war strategy by recognizing that the growing allied superiority in manpower, owing to the British homeland draft of 1916 and mobilization of forces from throughout the Commonwealth, made a German offensive breakthrough will nigh impossible.
The result was the Hindenburg Line - a military marvel based on a checkerboard array of hardened pillbox machine gunners and maneuver forces rather than mass infantry on the front lines and also an intricate labyrinth of highly engineered tunnels, deep earth shelters, rail connections, heavy artillery and flexible reserves in the rear.
It was also augmented by the transfer of Germany's eastern armies to the western front - giving it 200 divisions and 4 million men on the Hindenburg Line.
This precluded any hope of Entente victory. By 1917 there were not enough able-bodied draft age men left in France and England to overcome the Hindenburg Line, which, in turn, was designed to bleed white the Entente armies led by butchers like Generals Haig and Joffre until their governments sued for peace.
Thus, with the Russian army's disintegration in the east and the stalemate frozen indefinitely in the west by early 1917, it was only a matter of months before mutinies among the French lines, demoralization in London, mass starvation and privation in Germany and bankruptcy all around would have led to a peace of exhaustion and a European-wide political revolt against the war makers.
Wilson's intervention thus did turn an impossible stalemate into an unwarranted victory for the Entente: it was only a matter of time before Washington's unprecedented mobilization of men and material during the balance of 1917 flooded into the battlefields of France and turned the tide of war.
So Wilson's crusade did not remake the world, but it did radically re-channel the contours of 20th century history by giving rise to the Entente victory and the 1,000 year flood of Nazi and Stalinist totalitarianism that flowed therefrom.
And that wasn't the half of it - there was a crucial economic and financial dimension, too.
As we will demonstrate in Part 3, Wilson's crusade also gave rise to the scourge of modern central banking; and it was the latter that made the modern Warfare State possible and the Indispensable Nation folly a mortal threat to peace and capitalist prosperity at home and abroad.
Part 3: War Finance Made Easy
In the ascendant: Hitler oversees a victory parade in Warsaw in 1939
It also opened the door to massive, cheap war finance. And that baleful innovation has sustained the Empire long after Hitler and Stalin met their maker and the case for the Indispensable Nation had become ragged and threadbare.
In the context of American democracy - special interest dominated as it is - the greatest deterrents to imperial adventurism and war are the draft and taxes. Both bring home to the middle class voting public the cost of war in blood and treasure (theirs), and force politicians to justify the same in terms of tangible and compelling benefits to homeland security.
We leave the draft for another day, but do note that when the draft expired in 1970 what ended was not imperial wars - only middle class protests against them.
In fact, the Empire has learned to make do, happily, with essentially mercenary forces recruited from the left behind precincts of the rust belt and southeast and the opportunity-deprived neighborhoods of urban America.
But even mercenaries, and the upkeep, infrastructure and weaponry of the expeditionary forces which they comprise, cost lots of money. And that would ordinarily be a giant problem for the Imperial City because the folks in the hinterlands have a deep and abiding allergy to high taxes.
As we explain below, however, Woodrow Wilson solved that problem, too, by drafting the printing press of the newly minted Federal Reserve for war finance duty.
So doing, he opened the Pandora's box of Federal debt monetization by permitting the Fed to own government debt - a step strictly forbidden by the stringent 1913 enabling statute drafted by the legendary maestro of sound money, Congressman Carter Glass.
Needless to say, as a political matter printing money is a lot easier than taxing the people. And that's especially true when the spending in question involves the machinations of Empire in distant lands spread about the planet at a time when citizens on the home front feel abused and over-taxed already.
To be sure, we happen to believe that the spending and tax burden on GDP could be far smaller than it is in the US today under a regime of true federalism, honest free markets and minimalist government intervention in social and economic life.
Still, compared to the rest of the developed world, the total US tax burden (Federal, state and local) is just 26% of GDP. That compares to an OECD average of 34% and upwards of 50% in many of the more "advanced" venues of European socialism (e.g. Belgium, France and Denmark).
© CFRB.orgOCED data tax at all levels of government 2014
The upcoming FY 2019 is a quintessential expression of that sentiment. Federal taxes will clock in at just 16.5% of GDP - virtually the lowest rate in the last 40 years outside of deep recessions.
At the same time, the full cost of Empire will nearly tag a record $1 trillion including $700 billion for defense, $200 billion for Veterans - as well as security assistance and international ($64 billion) and debt service on past wars ($36 billion).
© Federal Reserve Bank of St. Louis
Had Wilson not opened the door to printing press finance of the War Machine, the "draft-effect" would have throttled the Empire long ago.
That's is to say, the crowding out by Uncle Sam and the resulting soaring bond yields would have mobilized the natural antiwar constituencies. We are referring especially to the nation's 15 million small businesses and 75 million homeowners, who would have felt the painful sting of high interest rates in their pocketbooks.
For that reason we now turn to Wilson's second abomination after Versailles and all its progeny. We refer to the transformation of the Federal Reserve from a passive "banker's bank" to an interventionist central bank knee-deep in Wall Street, government finance and macroeconomic management.
This, too, was a crucial historical hinge point because Carter Glass' 1913 act forbade the new Reserve banks from owning even a single dollar's worth of government debt.
To the contrary, they were empowered only to passively discount for cash good commercial credits and receivables (called "real bills") brought to the Fed's rediscount windows by member banks.
Accordingly, the legislative authors contemplated no open market interventions in government bond markets; no interactions with Wall Street dealers and bond market speculators; and provided no remit at all with respect to GDP growth, jobs, inflation, housing or all the rest of modern day monetary central planning targets.
In fact, Carter Glass' "banker's bank" didn't care whether the growth rate was positive 4%, negative 4% or anything in-between.
Its modest job was to channel liquidity into the banking system in response to the ebb and flow of commerce and production based on the very collateral ("real bills") generated by that economic activity on the free market.
Accordingly, jobs, growth and prosperity were to remain the unplanned outcome of millions of producers, consumers, investors, savers, entrepreneurs and speculators operating on the free market, not the business of the state.
But Wilson's war increased the national debt by 27X.
That's right. As of 1914 the public debt was just $1 billion or $11 per capita and amounted to less than 2% of GDP - a level which had been maintained since the Battle of Gettysburg.
But by the end of 1919, the public debt had mushroomed to $27 billion, including upwards of $10 billion re-loaned to the allies to enable them to continue the war.
There is not a snowball's chance in the hot place, of course, that this massive and virtually overnight eruption of Federal borrowing could have been financed out of domestic savings in the private market.
So the Fed's charter was fatefully changed owing to the exigencies of war to permit it to own government debt and to discount private loans collateralized by Treasury paper.
Patriotic Americans borrowed money from their local banks to buy war bonds and then pledged them as security. These hometown banks, in turn, then re-pledged their customer's collateral in order to borrow a like amount of funds from their regional Federal Reserve Bank.
Finally, the Reserve banks created the billions they loaned to their member hometown banks out of thin air, thereby pegging interest rates ultra-low for the duration of the war.
Thus, when Wilson was done preparing the world for the 1,000 year flood of totalitarianism, America also had an interventionist central bank.
And it was one now schooled in the art of interest rate pegging and rampant expansion of fiat credit anchored in government debt, not the self-regulating "real bills" (pledges of receivables and fished goods inventory) of commerce and trade.
Thus was borne in 1917-1919 both the rationale for Empire and the state instrumentalities needed finance it easily and on the cheap. That is, massive Warfare State spending without the inconvenience of high taxes on the people or the crowding out of business investment by high interest rates on the private market for savings.
By prolonging the war and massively increasing the level of debt and money printing on all sides, Wilson's folly also prevented a proper postwar resumption of the classical gold standard at the prewar parities.
And that was of epic consequence, too.
That's because this failure of "resumption" and the restoration of prewar currency parities against their historic weight in gold, in turn, paved the way for the breakdown of monetary order and world trade during the late 1920s, culminating in the British default on the gold standard in 1931.
As we chronicled in The Great Deformation, this monetary breakdown turned a standard postwar economic cleansing into the Great Depression, and a decade of protectionism, beggar-thy-neighbor currency manipulation and ultimately rearmament and statist dirigisme throughout much of the world.
In essence, the English and French governments had raised billions from their citizens on the solemn promise that it would be repaid at the prewar parities; that the war bonds were money good in gold.
But the combatant governments had printed too much fiat currency and generated roaring inflation during the war, including a 200% increase in the price level in England, 300% in France and far more in Germany.
Moreover, through domestic regimentation, heavy taxation and unfathomable combat destruction of economic assets, the belligerent governments had drastically impaired their own private economies.
As a result, the restoration of sound money and healthy capitalist economies would have required years of austerity and reinvestment.
But under foolish leadership of Winston Churchill in 1925, England attempted to re-peg the pound sterling to gold at the old prewar parity (which had been in place since 1719).
Yet the British government had no political will or capacity to reduce bloated wartime wages, costs and prices in a commensurate manner, or to live with the austerity and shrunken living standards that honest liquidation of its war debts required.
At the same time, France did the opposite. It ended up betraying its war time lenders, and re-pegged the Franc two years later at a drastically depreciated level.
This resulted in a spurt of beggar-thy-neighbor prosperity and the accumulation of pound sterling claims that would eventually blow-up the London money market and the sterling based "gold exchange standard" that the Bank of England and British Treasury had peddled as a poor man's way back on gold.
Yet under this "gold lite" contraption, France, Holland, Sweden and other surplus countries had accumulated huge amounts of sterling liabilities in lieu of settling their accounts in gold bullion - that is, they loaned billions to the British.
They did this on the promise and the confidence that the pound sterling would remain at $4.87 per dollar come hell or high water - just as it had for 200 years of peacetime before.
But British politicians betrayed their promises and their central bank creditors in September 1931 by suspending redemption and floating the pound. That shattered the parities, generated massive losses among Bank of England creditors and caused the decade-long struggle for resumption of an honest gold standard to fail.
Depressionary contraction of world trade, capital flows and capitalist enterprise inherently followed.
And on the American side of the Atlantic, in turn, another part of Wilson's due bill was called in.
By turning America overnight into the granary, arsenal and banker of the Entente, the US economy had been distorted, bloated and deformed into a giant, but unstable and unsustainable global exporter and creditor.
During the war years, for example, US exports increased by 4X and GDP soared from $40 billion to $90 billion. Incomes and land prices soared in the farm belt, and steel, chemical, machinery, munitions and ship construction boomed like never before - in substantial part because Uncle Sam essentially provided vendor finance to the bankrupt allies in desperate need of both military and civilian goods.
Under classic rules, there should have been a nasty correction after the war - as the world got back to honest money and sound finance. But it didn't happen because the newly unleashed Fed fueled an incredible boom on Wall Street and a massive junk bond market in foreign loans.
In today economic scale, the latter amounted to upwards of $2 trillion and, in effect, kept the war boom in exports and capital spending going right up until 1929. Accordingly, the great collapse of 1929-1932 was not a mysterious failure of capitalism; it was the delayed liquidation of Wilson's war boom.
After the crash, exports and capital spending plunged by 80% when the foreign junk bond binge ended in the face of massive defaults abroad; and that, in turn, led to a traumatic liquidation of industrial inventories and a collapse of credit fueled purchases of consumer durables like refrigerators and autos.
The latter, for example, dropped from 5 million to 1.5 million units per year after 1929.
In short, the Great Depression was a unique historical event owing to the vast financial deformations of the Great War - deformations which were drastically exaggerated by its prolongation from Wilson's intervention and the massive credit expansion unleashed by the Fed and Bank of England during and after the war.
Stated differently, the trauma of the 1930s was not the result of the inherent flaws or purported cyclical instabilities of free market capitalism; it was, instead, the delayed legacy of the financial carnage of the Great War and the failed 1920s efforts to restore the liberal order of sound money, open trade and unimpeded money and capital flows.
But this trauma was thoroughly misunderstood, and therefore gave rise to the curse of Keynesian economics in most parts of the world.
That took the form of war mobilization and rearmament in Nazi Germany, labor welfarism in England and France and New Deal public works boongoogles in the US. And everywhere it did unleash the politicians to meddle in virtually all aspects of economic life, culminating in the statist and crony capitalist leviathans that have emerged in this century.
Indeed, Thomas Woodrow Wilson is the father of most of the last century's ills. His grand crusade gave the world the curse of Stalin and Hitler, which, in turn, fostered the fallacy of the Indispensable Nation and gave rise to Imperial Washington and its destructive projects of global Empire.
Worst of all, his perversion of Carter Glass' "bankers' bank" made it possible to finance the Empire on the cheap and to nullify the natural antiwar constituency of middle class taxpayers.
That was Woodrow Wilson's worst sin of all.
And at length and after all these decades it has led straight to the crisis of Bubble Finance and Empire that loom dead ahead, as we will amplify in Part 4.
David Stockman was a two-term Congressman from Michigan. He was also the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street. He's the author of three books, The Triumph of Politics: Why the Reagan Revolution Failed, The Great Deformation: The Corruption of Capitalism in America and TRUMPED! A Nation on the Brink of Ruin... And How to Bring It Back. He also is founder of David Stockman's Contra Corner and David Stockman's Bubble Finance Trader.
Reader Comments
why is it that some always point to spending on poor and middle class people as the problem, rather than the outrageous, out of control spending on the military-security police state, and very low taxes on the richest? There is 21 trillion missing from HUD and the Pentagon, exactly the amount of the national debt.
Of course, one war leads into the next... all empires are always at war... without them, what would they do? When 'peace' breaks out as the list of enemies end, so does their empire.... as corruption reigns supreme, as we see today. Empires never sleep until they reach this point of 'peace'... which is 'death' for them and their kin.... so it's always best to keep enemies around.. to not finish them off completely.. to keep them riled up etc... so the 'war to end all wars' can last forever.
This time is different, only because of the larger cycle of Mother Nature arriving soon for our commencement ceremonies... thus the end of the OWO.. no longer needed, nor any of its old puppets.. lobbyists, markets etc... the show won't go on... as all empires reach the end of their 'use by' date.