Ralph Peters wrote an article that deals broadly with two
subjects: defense and economics, both having money as common denominator. The
title of the article is: “No 'Trump Doctrine' yet – and wisely so,” published
on March 1, 2017 in the New York Post.
Before tackling the points that Peters is making, we need to
highlight the distinction that exists between 'wealth' and 'money.' If we
ignore the arbitrary values that were assigned to silver and gold, we can say
that real wealth predominated the commercial transactions that were done before
the advent of printed money (also referred to as fiat money).
That's because real wealth consisted of the goods and
services that an individual produced, some of which he kept for his own
consumption, and bartering the surplus against goods and services he needed but
did not himself produce. The better that an individual became at what he was
producing and the harder he worked; the wealthier he became and the higher was
his standing in the society where he lived.
As to the jurisdictions – cities, states and nations – they
could determine how much wealth was produced in the territory by the inventory
of the goods that were produced, and the services that were rendered in a given
time frame. But when the mechanized mass production of goods made it necessary
to start transacting with banknotes (money), people began to think of money as
wealth. Were they correct?
They were correct in one sense because they could “barter”
the banknotes they held against the goods or services they needed. However,
they were mistaken in another sense because they could no longer fashion their
own standing in society by the quantity or quality of the work they did. This
determination was transferred to the people who were in control of the presses
that printed the money.
The one thing that existed in the era of pre-fiat money, and
was retained in the post-fiat era, is that someone had to determine how much of
what's produced should be allocated for consumption, and how much was saved to
be reinvested. A wheat farmer in the pre-fiat era, for example, would save a
quarter of the yearly production to use as seed for planting next year's crop.
A shoemaker would set aside enough time to produce the leather products
specifically requested by the toolmaker supplying him with the tools he used in
the production of shoes.
As to the post-fiat era, the modern farmer may still operate
the way that his ancestors did, but not the shoemaker or any industrialist, for
that matter. What the modern people do is set aside enough money to do
maintenance, expand the operation or modernize it … or they do something else.
They borrow money to implement the plan they have in mind, and pay the money
back with interest over a period of time.
In fact, borrowing has become a big business because the
practice is used to do maintenance, to invest and to consume. The reality is
that if everyone that needed a big ticket item had to save before he could buy
it, business would slowdown to a crawl, and the economy would look differently
from what we see today.
The principle of borrowing money for any reason, and pay it
back later is never a cause for soul searching when done by the same person or
the same enterprise. But when it comes to a nation, the purpose for which the
money is borrowed can become a big issue because the sums are so large; the
payments are made by the generations that follow. The worst case is that of a
generation borrowing to consume, and letting future generations pay the debt.
This brings us to the Ralph Peters article. What follows is
a montage of the passages that dwell on economics:
“The president repeated his determination to renew our
military. All good … But it matters little if we're safe abroad if our fellow citizens
must fear a walk to the corner store; don't know if their children will return
or cannot educate the young to rise from poverty … Tax cuts, massive
infrastructure spending, more social benefits and a higher defense budget would
add to our national debt. A sound economy and sustainable debt are fundamental
to national security. We have to learn to live within our means”.
What we have here is lamentation concerning a neglect that
has reached a critical level. When the writer speaks of citizens who fear
walking to the corner stone, and don't know if their children – who may or may
not be educated – will return home, he says that America has been misallocating its
resources for too long.
He avoided being specific, but President Donald Trump was
not shy telling that America blew six trillion dollars killing people in the
Middle East, and turning what used to be the Garden of Eden into a hell hole
that shall remain a stain on America's conscience for centuries to come.