We have before us an excellent example that higher oil prices do not cause inflation. But a disruption of supply of an essential commodity, like oil, will causes a recession. It is estimated that twenty percent of crude oil passes through the Strait of Hormuz and the Bab-el-Mandeb Strait. This supply source has been almost completely disrupted.

Economics 101 teaches us the “supply/demand relationship”. It is intuitive that a reduction in the supply of a good must mean that the market clearing price will rise. Otherwise there will be shortages. Equally intuitive is the understanding that paying more for an essential commodity means less money for less essential commodities. All economics is micro; i.e., if I have to spend more on gasoline, I have less money for other purchases, at least in the short run. Over the long run, I may buy a more fuel-efficient car or move my residence to where travel by car is less necessary, such as moving from the countryside to suburbia. But this is not cost free. Notice that my satisfaction is lower. I do not want a smaller, more fuel-efficient car and I do not want to live in suburbia, but I must adjust somehow. In the short run, something has to give. For example, I may cut back on dining out as often, or I may postpone a trip. The less affluent may have stark choices; i.e., heat or food. My point is that the overall price level need not change, but the mix of goods and services will change and for the worse. Adjusting to a supply disruption does not mean that all is well. Our standard of living drops. One gets fewer goods for the same amount of spending.

Money Expansion Does Not Solve the Main Problem

Pumping more money into the economy does not fix anything, because money is just the means of indirect exchange. We do not want more money per se; we want more of what money will buy. The citizens of the USSR had plenty of money but nothing to buy; thus, the long lines for essentials that were in extremely short supply, which I saw for myself in both Moscow and Leningrad in the early 1970’s. Instead of goods being rationed, so to speak, by their price, goods were rationed to those who could stand in line the longest. The fiction was that essentials were cheap. The reality was that essentials were in drastic short supply.

Printing money does not solve this fundamental problem and will delay necessary adjustments. Better to recognize that the real problem is a supply disruption of huge proportions and let the market adjust as best it can. But let there will be no doubt that supply disruptions of essential commodities like oil will cause a drop in our standard of living.

The Battle for Britain 1940

After the “Miracle of Dunkirk” followed quickly by the fall of France to Nazi Germany, Britain stood alone. Germany offered Britain a choice: give Germany a free hand on the continent and Germany would not disturb Britain’s oversees empire. Or, Germany would invade Britain with its apparently unstoppable military power. Some within the British political elite wanted to take the deal. After all, it was assumed that once a bridgehead had been established somewhere on the English coast, the British Army would be no match for the blitzkrieg tactics of the powerful Wehrmacht. Only one force stood in Germany’s way—the English Channel protected by the Royal Navy.

But the Royal Navy itself would be hampered greatly by the Luftwaffe and dare not enter the Channel as long as Germany had control of the skies. Thus developed one of the key battles of the war—the Battle for Britain—which pitted the Luftwaffe against the Royal Air Force. We all know how that famous battle turned out. The Luftwaffe could not defeat the RAF, which meant that any invasion barges from France would be sitting ducks for attack by the RAF from the air and the Royal Navy by sea.

But that did not end Germany’s attempt to defeat Britain. Next, Germany tried to terrorize Britain into surrender by attacking population centers, primarily London. Today the world knows this second wave of attacks as The Blitz. Still the English did not surrender and, in fact, English resolve increased as the ordinary English citizen became the key to winning this phase of the war. The implications of this battle would be far reaching, because without Britain, it is probable that there would not have been a D-Day invasion from America.

The Attack on Iran

At the end of February 2026 the US and Israel attacked Iran without warning. In fact, the US had presented Iran with an attractive offer to ensure that it would not produce nuclear material that could be used for a bomb. Iranian leadership gathered to study the offer and draft their response when Israeli fighter/bombers destroyed the building and killed all inhabitants including women and children. The US/Israel leadership expected that the people would rise up and form a new government that would make Iran a vassal state to the US/Israel. It didn’t happen. There were reports that the Revolutionary Guards put down tens of thousands of demonstrators, even perhaps killing that many. We may never know. But there was no new vassal government.

Then the US and Israel attacked military and nuclear sites throughout the vast country, all to no avail. Iran did not capitulate. But it closed the Strait of Hormuz, through which around one fifth of the world’s crude oil passed. It used inexpensive drones in the hundreds to chase away tankers. Furthermore, it used drones and missiles to severely damage US military facilities and assets in some Gulf Coast Countries (GCCs). Later the Yemeni Houthis closed the passage through which Saudi oil flowed to the Red Sea and damaged some Saudi military facilities used by the US. All this is well documented by now. Furthermore, Iran warned the Gulf Coast Countries that supported US forces that it would completely destroy their oil infrastructure if the bases were used in further attacks by the US. It is a very credible threat.

The US has tried to reopen the Strait of Hormuz, but its warships have been damaged by drones which forced the US to withdraw attempts. The US ruled the skies but not sufficiently to prevent further drone and missile attacks that threaten GCCs.

The Main Similarity: Reverting to Terrorism (AKA war crimes)

To break this stalemate the US has threatened to attack Iranian civilian infrastructure, such as power plants, water treatment plants, bridges, roads, etc. In other words, the US threatened a modern Blitz to break civilian morale. So far, it hasn’t worked any better against Iran than it worked against England in 1940.

Re: Carney Takes Risky Stand With Trump, by Matina Stevis-Gridneff and Ana Swanson

Dear Sirs:

Your reporters covering the tit-for-tat trade negotiations between Canada and the US got one thing right; i.e., that Canadian Prime Minister Mark Carney courageously “...instructed his negotiators to walk away.” Mr. Carney should instruct all his trade negotiators to do the same; i.e., simply walk away from trade negotiations everywhere and adopt unilateral free trade. Why hobble Canadian industry and consumers with higher prices just because President Trump ignorantly hobbles American industry and consumers with higher prices? Sure, certain Canadian exporters will suffer reduced sales to America, but they can find equal and possibly better and more reliable markets elsewhere. But these same Canadian exporters will not benefit at all from a reciprocal Canadian tariff and may be even worse off. I know that defense of the free market will earn me ridicule from nine hundred and ninety-nine out of a thousand, but that does not make it wrong nevertheless. Both Americans and Canadians will suffer from the economic ignorance of their respective leaders.

Patrick Barron

20 McMullan Farm Lane

West Chester, PA 19382

610-793-3605

In his famous book Road to Serfdom, Friedrich Hayek addressed a similar but not quite identical question. In chapter four Hayek explained “Why the Worst Get on Top”. Notice the slight difference in topic. Hayek explained why the worst attained positions of power; whereas, I asked why people vote them into office. If I can explain Hayek simply, it is because only the worst are willing to seek absolute and ruthless control over others. My question takes this one step further and asks why, even though we know that some people running for office are criminals and seek only to reward themselves and lord over the rest of us in unscrupulous ways, why in the world do they win elections?

I have come to the conclusion that voters actually want these criminals in office, because they know that these unscrupulous people will do legally what many voters cannot legally do personally, which mainly is take from some and give to others…in other words steal the property of others and legally transfer that property to the voters. Notice how the voters’ conscience remains unsullied. Why, it’s all legal! Sure, I cannot steal from my neighbor, but government can. My neighbor must pay for all manner of “entitlements” for the “less advantaged”. All very humanitarian, isn’t it? No one ever asks why, if so many agree with this sentiment, one just couldn’t contribute to a private charity as much or as little as he sees fit. It’s no good to claim that voluntary contributions would not raise enough money, because there is no objective way to determine the proper amount of the charitable fund.

Therefore, I seem to be left with the sad conclusion that the voters do not want an honest and honorable person in office, who probably would not stoop to pure theft through taxation. No, the voters actually want a criminal in office who has no scruples for exercising the heady power to take from some and give to others, and receive accolades from “the others” for doing so.

Maybe someone else has a better insight than I.

History rarely repeats itself precisely. Nations, leaders, cultures, and circumstances differ too greatly for exact repetition. Yet history often presents recognizable patterns. Decisions made in different capitals, by leaders with different ideologies and national interests, can nevertheless arise from remarkably similar structures of power, habits of thought, and failures of judgment.

Iran may become Donald Trump’s Ukraine—not because the two wars are identical, but because the political and psychological processes that produced them appear increasingly similar. In each case, authority became highly personalized, loyalty moved toward fealty, institutional restraints weakened, dissenting voices became less influential, and previous successes encouraged confidence that military and political objectives could be achieved quickly and at acceptable cost.

The mirror does not show two identical wars. It shows two leaders and two governments becoming vulnerable to the same forms of overconfidence and strategic miscalculation.

When Loyalty Becomes Fealty

Every president requires a degree of loyalty from those appointed to carry out an administration’s policies. Loyalty, however, is not the same as fealty.

Loyalty can coexist with independent judgment, constitutional duty, and the willingness to offer unwelcome advice. Fealty demands personal submission. It places allegiance to the leader above allegiance to institutions, law, or country.

Under Vladimir Putin, independent media, regional political autonomy, and judicial independence gradually weakened as authority became increasingly concentrated in the presidency, distilling political power into personal fealty. Political survival came to depend less upon institutional responsibility and more upon loyalty to Putin and the system surrounding him.

The process did not occur all at once. Nor did Russia suddenly cease to possess ministries, courts, legislative bodies, military commands, or intelligence agencies. The institutions remained, but their independence diminished. They increasingly functioned as extensions of the leader’s authority rather than as restraints upon it.

A similar danger arises whenever political appointments, access, influence, and survival depend primarily upon personal loyalty. Advisers soon learn that challenging the leader may end their careers, while confirming his instincts may advance them. Even when dissent is not formally prohibited, it can become professionally dangerous.

This is how institutions are hollowed out. Their names and outward forms remain, but their capacity to correct error steadily disappears.

The Loss of Corrective Information

An authoritarian or highly personalized political system can develop something analogous to the Dunning–Kruger effect. The issue is not necessarily intelligence. Intelligent people remain capable of extraordinary misjudgments. Intelligence does not confer immunity from poor judgment, nor do power and military might provide immunity from disaster.

The deeper problem is information.

As independent voices disappear and dissent is discouraged or punished, leaders lose the corrective feedback necessary to identify errors in their assumptions. A political system that suppresses criticism gradually loses the capacity to recognize what it does not know. Confidence rises even as understanding diminishes.

Subordinates begin reporting what the leader wants to hear. Intelligence is filtered through political expectations. Military estimates become optimistic. Economic consequences are minimized. Contrary evidence is dismissed as disloyalty, weakness, or defeatism.

The leader may therefore appear increasingly confident, not because the available information supports that confidence, but because the political system has eliminated much of the information that might challenge it.

This is one of the great paradoxes of personalized power: the more completely a leader dominates the machinery of government, the less accurately that machinery may describe reality to him.

Putin’s Road to Ukraine

Putin’s invasion of Ukraine did not emerge from a history of uninterrupted failure. It followed a series of actions that appeared, from Moscow’s perspective, to have succeeded.

Russia’s intervention in Georgia in 2008 achieved limited objectives without provoking a decisive Western response. The seizure of Crimea in 2014 was accomplished rapidly, and Russia retained the territory despite sanctions and international condemnation. Russian intervention in Syria helped preserve the government of Bashar al-Assad and demonstrated Moscow’s renewed ability to project military power beyond its immediate borders.

Each success may have reinforced the belief that Putin possessed a superior understanding of both Russia’s capabilities and the West’s willingness to resist him.

Success often plants the seeds of later miscalculation.

By the time Russia launched its full-scale invasion of Ukraine in 2022, the Kremlin apparently expected the Ukrainian government to collapse rapidly, Russian forces to enter Kyiv, and Western governments to respond with protest and sanctions but not with sustained military assistance capable of transforming the war.

Those expectations proved disastrously wrong.

Ukraine resisted. Russia’s military revealed serious logistical and organizational weaknesses. NATO became more unified rather than less. Finland and Sweden abandoned longstanding policies of military nonalignment and joined the alliance. Russia suffered enormous human and material losses, while the war imposed lasting economic, demographic, and diplomatic costs.

The question is not whether Putin is intelligent. He clearly is. The question is how an intelligent leader, commanding one of the world’s largest military establishments and extensive intelligence services, could so badly misunderstand the country he intended to conquer and the international reaction his invasion would produce.

The answer may lie partly in the system of power he created. When authority becomes personal and dissent becomes dangerous, the state gradually loses its ability to correct the leader before his assumptions become national policy.

The Seduction of Success

The United States has its own history of allowing success to obscure earlier warnings.

A perceived success in Venezuela may have encouraged the belief that determined pressure, economic coercion, military threats, or limited force could remove or transform governments that resisted American demands. What appeared manageable in one country could then be assumed to be transferable to another.

But Iran is not Venezuela.

Iran is a large country with a substantial population, difficult terrain, significant military capabilities, deeply rooted national identity, regional allies, and the ability to threaten energy supplies and commercial shipping through the Strait of Hormuz. Its government has survived war, sanctions, internal unrest, assassinations, covert operations, and decades of external pressure.

Yet recent success can edit historical memory. A favorable outcome becomes the lens through which future decisions are viewed, while contrary lessons recede into the background.

Vietnam demonstrated that overwhelming firepower does not necessarily produce political victory. Korea demonstrated that a limited war can expand when another major power believes its strategic interests are threatened. Iraq demonstrated that destroying a government is far easier than constructing a stable political order in its place. Afghanistan demonstrated that military superiority cannot ensure the permanent transformation of a society that rejects the political structure imposed upon it.

These lessons have not disappeared. They have merely become inconvenient.

Success can become history’s greatest deceiver. It encourages leaders to believe that favorable outcomes resulted primarily from their own judgment rather than from a particular combination of circumstances that may never be repeated. Confidence becomes overconfidence, and overconfidence begins to reinterpret prudence as weakness.

Iran as Trump’s Ukraine

The stated purposes of the war with Iran included preventing Iran from obtaining a nuclear weapon and, either explicitly or implicitly, weakening or replacing the Iranian government. Yet the conflict appears not to have achieved those goals decisively.

There was no sustained popular uprising capable of overthrowing the regime—or, if one began, the Iranian government suppressed it. Iran’s nuclear knowledge and technical capacity could not simply be bombed out of existence. Military strikes may damage facilities, delay programs, or kill scientists, but knowledge survives physical destruction.

Meanwhile, the attack reportedly occurred while Iran was considering or responding to American proposals intended to limit its nuclear activities. If other governments conclude that negotiations can serve as a prelude to attack rather than as an alternative to it, the consequences will extend far beyond Iran.

A nation’s credibility is a strategic asset. Once damaged, it cannot be restored merely by issuing assurances.

The lesson other governments may draw is not that negotiation produces security, but that only military strength—and perhaps possession of a nuclear deterrent—can protect them from externally imposed regime change. An attack intended to prevent nuclear proliferation could therefore strengthen the perceived case for acquiring nuclear weapons.

The war also exposed the vulnerability of global commerce to disruption in the Strait of Hormuz. Even a temporary closure or threat to shipping can affect oil prices, transportation costs, inflation, insurance rates, and economic confidence around the world.

Like Putin in Ukraine, Trump may have expected that decisive military pressure would produce rapid political results. Yet the use of overwhelming force does not ensure the political surrender of a nation, particularly when foreign attack strengthens nationalism and allows an unpopular government to present itself as the defender of the homeland.

This is the image in the mirror: a powerful leader, confident in his instincts and military superiority, acting upon expectations shaped by previous successes and protected from sufficient institutional challenge.

The Economic Cost of Strategic Overreach

Military power can conceal economic weakness for a time, but it cannot eliminate it.

Russia entered the Ukraine war with substantial natural resources, a large military establishment, nuclear weapons, and significant foreign reserves. Yet war, sanctions, capital flight, population decline, military casualties, and the diversion of resources into armaments have placed enormous pressure on its long-term prospects.

The United States faces different but serious structural problems. Federal debt continues to grow, interest obligations consume an increasing share of public resources, and repeated overseas commitments impose costs that are often concealed by borrowing rather than paid through current taxation.

No nation, however wealthy, possesses unlimited resources.

It is particularly dangerous to assume that future technological advances—whether artificial intelligence, automation, new energy systems, or some other innovation—will rescue a country from the consequences of fiscal irresponsibility and strategic overextension. Technology may increase productivity, but it cannot repeal arithmetic, restore squandered credibility, or reverse the effects of consistently poor judgment.

Nations, like individuals, can mistake strength for invulnerability. When confidence replaces careful analysis, even the most powerful countries can place themselves on a trajectory of economic decline and strategic overreach.

Congress and the Failure of Constitutional Courage

The Constitution anticipated ambition, rivalry, faction, and the human desire for power. Its framers did not assume that presidents would always exercise restraint. They divided governmental power precisely because they understood that concentrated authority is dangerous.

Congress was therefore not designed to serve as an audience for presidential decisions. It was given the authority to legislate, appropriate money, regulate commerce, oversee the executive branch, raise and support armies, and decide whether the nation should enter war.

Yet constitutional authority has little meaning when those entrusted with it are unwilling to exercise it.

One could argue that a majority of our political leaders have effectively relinquished part of their constitutional authority—and their responsibility to govern—not through formal surrender, but through a combination of personal fealty and political fear. Unlike the Founding Fathers, who knowingly risked their lives, their fortunes, and their sacred honor in defense of principle, many of today’s leaders appear unwilling to accept even significant political risk in defense of the constitutional responsibilities they swore to uphold.

If that assessment is correct, the Republic faces not a failure of its Constitution, but a failure of the courage and character required to preserve it.

The Warning in the Mirror

The comparison between Putin’s Ukraine and Trump’s Iran is not a claim that the two leaders, countries, or wars are identical. Historical analogies are never exact.

The comparison concerns the process by which leaders and nations become vulnerable to catastrophic mistakes.

Political power becomes personalized. Loyalty becomes fealty. Institutions retain their outward appearance while losing their independence. Dissent becomes dangerous. Previous successes are treated as proof of superior judgment. Contrary lessons are forgotten. Confidence grows as reliable information diminishes. Military strength is mistaken for political control, and national power is mistaken for immunity from disaster.

The ancient Greeks called this hubris: the arrogance that leads powerful men to believe that the limitations governing others do not apply to them.

Hubris is rarely born from failure. It is usually born from success.

The danger is therefore not merely that leaders may make mistakes. All leaders do. The danger arises when a political system loses the ability to recognize, challenge, and correct those mistakes before they become national disasters.

That is why the mirror matters. It does not predict that Iran and Ukraine will end in precisely the same way. It reveals the deeper pattern that placed both countries in the path of war.

The final question is not whether the United States possesses sufficient intelligence, wealth, or military power. It is whether its institutions still possess the independence to speak truth, and whether those entrusted with constitutional authority possess the courage and character to act upon it.

Our first stop of the day after arriving in the area was to tour Olana State Historic Site, home of the beautifully restored mansion of nineteenth century Hudson River painter Frederic Church. Church was very, very popular in the nineteenth century and became fabulously rich by selling his paintings for what in today’s money would be hundreds of thousands of dollars each. He also took his paintings on tours of the major population centers in the US. He would rent a gallery and charge twenty-five cents, a very substantial fee in those days, for thousands of art lovers to view his works. He and his wife traveled widely, and he painted striking landscapes of what he saw. So Americans got a glimpse of the natural wonders of the world in vivid color on huge canvasses.

Church died around the turn of the nineteenth to twentieth century. Eventually his direct descendents died out and his large property along the Hudson fell into ruins. At the height of his fame Church purchased a several hundred acre property along the Hudson River with a very high hill where he built a mansion. His vistas from his hilltop mansion appealed to the artist and he created “view sheds” on his property, paths between the trees that guided the eye up and down the Hudson. We visitors first learned of the term at the Visitors’ Center, where it was suggested that we watch a fifteen minute video. The views from the hilltop home are striking even today. There’s a reason for this. The modern owners of Olana have waged an unrelenting campaign to prevent any sign of industry for miles and miles of Olana in all directions. The video expects us all to be very proud of the efforts of the non-profit’s influence over such a very vast area in stopping industrial development in the bud.

There are two major accomplishments, if one may call them that. The first so-called success was stopping construction of a nuclear power plant at least ten miles south of Olana on the other side of the Hudson River. Construction of the plant was perfectly legal, but…it violated Olana’s all-important “view shed”. In other words, from the top of the hill upon which the mansion sat, one would be able to see the cooling towers on a clear day. Can’t have that! Olana successfully got the nuclear power plant moved much further south, out of Olana’s view shed. One may say that the plant was eventually built, so what’s the big deal? My point is that even if the plant was built somewhere else, undoubtedly the company had spent many millions of dollars planning its construction and getting all the permits, land acquisition, etc for the site that was eventually abandoned. This is a dead loss to the company and to its customers that can never be recovered. It’s as if you had spent time and money lining up an architect and contractors to build an addition on your home. All the permits were obtained at great time and probably great expense only to have your neighbors brow beat you into abandoning the project. Instead of a larger home for your family on its present location, you had to move.

A much later so-called accomplishment was stopping a cement company from upgrading and restarting a cement plant on the outskirts of Hudson, NY at least five miles away from Olana as the crow flies. The plant had been shuttered for a time, but the market for its high quality cement rebounded. The owners planned a substantial upgrade and expansion. But…the plant would have some tall structures that would “spoil” Olana’s “view shed”. Forget the needs of the nation that this plant would meet and the increase in employment that the rather depressed area sorely needed. The spoliation of the nineteenth century view would offend the people who now run Olana, by the way, with a very substantial monetary input each year from the burdened taxpayers of New York. Our very nice guide for our two-hour tour of the house and properties burst with pride of how Olana stopped this terrible thing from happening.

Now, remember, Olana actually owns only a few hundred acres around its prominent hill with the mansion atop. Yet it dynes to claim moral authority over all it can see; i.e., its “view shed”. Obviously the business owners who never were plus the employees who never were had no say in Olana’s conception of a better world, which just might include such plebian values as a decent paying job, a home of one’s own, and a future for one’s offspring.

I highly recommend that you subscribe to Alasdair’s Substack. The cost is about equal to a Starbuck’s latte once a month.

MacleodFinance Substack

Dedicated to explaining why gold is money and the rest is credit. Dedicated to explaining economics relevant to the preservation of wealth. And dedicated to explaining geopolitical developments relevant to investors.

By Alasdair Macleod

Sound Money Begets Spending Discipline

The siren song of unlimited money is manna from Heaven for politicians who chafe at the limits on spending required for a sound money (precious metals) standard. It may take them and their constituents awhile to realize the power they have to play God (note that I said “play” not “be” God), but eventually they succumb to the temporary adulation of the recipients of new money printed out of thin air. In short order everyone in society is a recipient of the government’s largess and it becomes impossible not only to stop but even to slow down the money printing presses.

Unleashing Unlimited Warfare and Welfare

The bulk of the new phony money is lavished on two main categories—war and welfare. In a sound money system neither is sustainable for long by itself much less both at the same time. Wars are expensive and consumers of a nation’s output, which pathetically includes young men. Welfare, once initiated, is irreversible short of total destruction of the monetary system. Like addictive drugs the recipients want more and more stimulus to achieve what appears to be a new “high”. But the monetary “high” like the drug “high” requires more and more resources to achieve what appears to be a favorable result. Like the drug “high” the monetary “high” is self destructive. The host demands and gets more and more until its entire existence is consumed in a fog of irrelevancy.

Neither war nor welfare can be “limited” as advocates for both nostrum claim. War begets reprisals and more war. Welfare demands and gets more of a nation’s real production. Not only is there is no logical place to draw the line, the productive side of the economy shrinks and shrinks. Eventually the public and international holders of a country’s debt run out of funding and the government relies on the printing press. In other words, it simply prints as much money as it needs…and its needs are insatiable. The madness ends in a Misesian “crack up boom”, a frenzy of spending on any and all vendible goods in order to shed oneself of the increasingly worthless money.

It All Started with LBJ

In America this process began in the 1960’s when President Lyndon Johnson pursued both war and welfare under his “Great Society” spending initiatives. In his memoirs Johnson admitted that he wanted to end the Vietnam War but did not know how to do so “honorably”. Thereafter mostly Republican presidents shut down the hot wars in favor of winning the Cold War, in which they succeeded. But rather than abolish NATO as “mission accomplished” after the fall of the Berlin Wall, defense spending continued to expand and new enemies were found almost everywhere. Eventually America turned its back on Russia itself rather than welcome it back into a peaceful world economy.

Welfare Corrupts All

The expansion of the welfare state became self-justifying. For example, the largess showered on “single family households” merely begot more “single family households. Today the majority of children are born into such “households”. I wonder why that is? (Yes, a rhetorical question, folks.) Did you know that one in four Americans is disabled? It’s true. One in four Americans receives some form of government disability payment. To my sorrow I have acquaintances who openly admit to applying for a stipend from one of the many programs. They readily admit not being disabled, but they justify their actions as getting some of one’s own money back, everyone is doing it, etc.

These constituents of government largess create a powerful lobby to not only continue such payments but to expand them. Those who remain outside the money circle eventually find a way to justify a new program for which they can qualify.

Macroeconomics Sounds So Scientific

Of course this entire largess is not funded out of taxes or honest borrowing. Keynesian economists have developed a new “economic science” called macroeconomics. Sounds very impressive, doesn’t it? It’s all hogwash of course, but any excuse is a good excuse for politicians to keep and win votes with money created out of thin air. It will not continue much longer, which actually is a good thing.

The “East” to the Rescue

Fortunately, the “East” never succumbed to macroeconomic science. It is poised and ready to take the lead in a new direction, which actually is a return to the tried and true old direction. It will be a hard pill to swallow, but at least there is an alternative to save most of the world’s economy.

Although I suppose it is possible that the Nord Stream Pipelines were sabotaged by Ukrainians as claimed in Bojan Pancevski book “The Nord Stream Conspiracy”, it is hard to take seriously. In any event, this was an act of war against both Russia, who built and owned the pipelines, and Germany, who has suffered incalculable damage to its industrial competitiveness. It was NOT a blessing in disguise, as Pancevski claims many German officials themselves privately concede.

Patrick Barron

First—Some Background

It was the early 1970’s and US President Richard Nixon and Soviet Premier Leonid Brezhnev had reached an agreement to de-escalate the Cold War in a set of policies called Detente. Visits to one another’s country was loosened and encouraged. I was a young Air Force officer based in England at one of the key bases of US nuclear deterrence. Frankly nothing changed from a force posture standpoint, but word came down that we all were encouraged to go to the Soviet Union on leave. First the higher ups went and reported back that it was OK and that our eyes would be opened. So my wife and I booked a tour through an English tour company. We were joined by another Air Force officer and his wife. The tour would take us to the two so-called “jewels” of the Soviet Union: Moscow and Leningrad, as St Petersburg had been renamed after the Revolution of 1917. The total trip would take about two weeks, which included flying first to Leningrad for a few days, then taking the Red Arrow express train to Moscow, and finally flying back to London.

We four were briefed by the Judge Advocate General’s office on base before departing. The briefing was simple. Just assume that our rooms were bugged, so don’t talk about our jobs. Don’t trade currency on the black market. (The Ruble was greatly over valued on the official exchange). Don’t accept any packages or letters from Russian citizens. Follow any other rules the guides imparted. Simple enough.

First impressions

The guided tour, although booked through an English company, was conducted entirely by an Intourist guide, in our case a delightful young lady who spoke fluent English. The rules were simple. We could walk anywhere in either city at any time of day or night, although we were asked to refrain from taking pictures in train stations and a couple of other big government buildings. That was surprising at first but not in hindsight, for there was little to see other than the beautiful subway stations, for which the Russians were very proud and rightly so.

Next, let’s get this out of the way quickly. What we saw in Leningrad and Moscow was probably the most depressing experience of our lives. Nothing before or since ever matched the dreariness of the country, from arriving at the airport in Leningrad until our return to London from Moscow. There were hardly any cars anywhere, nor people on the streets. Remember these are the two great populace cities of the entire country. There were no lights of any kind other than street lights. There were very few shops and the few we visited were depressing and hardly worth a visit. We all wanted to buy something as a souvenir, but even in Gum, billed as the world’s largest department store and located along Red Square in Moscow, we could find nothing worthy. The goods on sale there would not be offered at a flea market in the West, which stands to reason because at one time Western flea market items were in high demand but had gone out of fashion or were supplanted by superior goods, which is part of the market process that we in the West take for granted.

Foreign Passport Required for Entry

Our young Intourist guide directed us to a stand-alone building where one needed a foreign passport to enter. It was a Beryoska shop. Ordinary Russians could not shop there even if they had foreign currency. So much for the “classless society”! Inside one found a small collection of nice souvenirs, such as scarves and the ubiquitous tokens with Lenin’s profile at the inexpensive end to fur hats and musical instruments at the high end. My wife bought a nice lacquered jewelry box and a set of traditional Russian nesting dolls.

Tourist Attractions

There were two types of attractions, all conducted by our Intourist guide. One category was pre-Soviet revolution sights, such as the Hermitage in Leningrad and the Kremlin in Moscow. Buildings such as these and their housed treasures can be found in every capital city in Europe. The other category featured the few government-built structures, such as the Bolshoi in Moscow. Missing was the joy of walking around a great city and seeing gardens, bookstores, restaurants, coffee bars, and thousands of gaily decorated small shops selling every kind of good imaginable. Think of London, Paris, Rome, or any town of any decent size anywhere in the world. There was none of this anywhere. What we did see were ugly, shoddily constructed buildings with huge cracks and solemn people. All in all Moscow and Leningrad were extremely depressing places.

There were two rather bizarre attractions, both in Moscow’s famous Red Square. At the time Lenin’s tomb was housed there, and it was almost obligatory to visit it. One entered through a wall and found armed soldiers lining the way to his tomb. Signs in every language admonished visitors to remain silent, as we filed past Lenin himself! Yes, supposedly what we saw was the corpse of Lenin with embalming fluid running through his veins. It could have been a manikin for all we knew, but that was a strange tourist attraction! (After the fall of the Berlin Wall and the demise of the Soviet Union, Lenin’s corpse was removed.) At one end of Red Square sits St. Basil’s Church. It is a beautiful and iconic structure…from the outside. But inside there was…nothing! No pews. No religious paintings, sculptures, or other decorations found in all churches everywhere. Why? Well, the Soviet Union persecuted all religion as the “opium of the people”. There could be but one guide to life in the Soviet Union—Marxist-Leninism.

A Very Depressing Encounter

We were housed in two large hotels and we ate all of our meals there, all of which were lavish and delicious. We had returned to our room after breakfast one morning when my wife left to retrieve a guide book she had left on the breakfast table. When she returned she said that saw our wait staff consuming our breakfast leftovers, which depressed us immensely.

A Return to Bright Lights and Happy People

All of us on the tour, numbering twenty or so, as I recall, were pleasantly shocked back to reality upon flying back to London. The airport was a sea of bright, colorful lights and happy, smiling people. London itself seemed almost overwhelming. For a long time we marveled at everyday life choices and beauty in mundane things like going to a bakery or the butcher shop. For example, our hotel room in Leningrad overlooked the Nevsky Prospect, one of the city’s main arteries. In the early hours of the morning one could look out our window and see a long line forming for the bakery somewhere out of sight. Our one purchase “on the economy” was to buy some sausage prior to our almost all day Red Arrow rail trip to Moscow. It took us a long time to, one, stand in line to view the goods and find out how much it would cost, two, stand in another line to get a payment voucher for the purchase, and, three, to stand in yet a third line to present our payment voucher and take delivery of our sausage. I am not making this up! I have no idea why people were put through this rigmarole, but think about it the next time you walk into a well-stocked grocery store, pick up a loaf of bread, a gallon of milk, and a dozen eggs, pay for it and walk out in just a few minutes. Do you think that New York Mayor Mandami’s socialist government grocery stores will work like those in capitalist countries or like those in the defunct Soviet Union? Yeah, that’s a rhetorical question.

Employing Ali’s “Rope-a-Dope” tactic

Of course the Americans and Israelis still can attack Iranian infrastructure, but aside from causing tremendous hardship on the Iranian people, such attacks will not bring about an Iranian surrender, open the Straits, or prevent further Iranian attacks on American-friendly GCC’s. One might also call this tactic the “Rope-a-dope” defense, named after the American boxer Muhammad Ali in his famous 1974 fight with George Foreman, AKA “the Rumble in the Jungle”. In effect Ali allowed Foreman to expend all his fearsome firepower until he ran out of ammunition. Ali later delivered a knockout blow in the eighth round.

Austrian school commonalities with geopolitics and sports

Although the two incidents above do not seem at first sight to have much to do with economic theory, such is not the case. Success on the battlefield at Agincourt was accomplished with fewer resources, new production methods, and much less loss of irreplaceable national capital; i.e., fighting men. It always pays to accomplish a goal, whether manufacturing widgets or conquering territory, with fewer resources. Not only that, but arrows and long bows could be produced rapidly and cheaply compared to armored knights. Ali’s tactic was similar in that he employed much less capital than Foreman, which gave him staying power in the market. His eyes were on the goal, and he was innovative in how it was accomplished. Big companies are always scared to death of lean, mean, and innovative start ups, which are not burdened by years of accommodation to labor unions, political taxing/regulating bodies, and the like. Like any good entrepreneur Ali kept his eye on winning the fight and was not averse to employing a novel and seeming bizarre method of achieving his goal.

Only now, despite Pentagon censorship, reports are getting out in respected media such as the Wall Street Journal that US naval facilities in Bahrain and probably elsewhere were heavily damaged by cheap Iranian drones and missiles to the point that they may be abandoned as too costly to rebuild and too vulnerable to future attacks anyway. Again the parallel to economic success is striking; i.e., cheap drones conquering (literally) highly capitalized but now shown to be antiquated and vulnerable security methods. One can only imagine the panic going through our military industrial complex that the gravy train may be over.

Employing Ali’s “Rope-a-Dope” tactic

Of course the Americans and Israelis still can attack Iranian infrastructure, but aside from causing tremendous hardship on the Iranian people, such attacks will not bring about an Iranian surrender, open the Straits, or prevent further Iranian attacks on American-friendly GCC’s. One might also call this tactic the “Rope-a-dope” defense, named after the American boxer Muhammad Ali in his famous 1974 fight with George Foreman, AKA “the Rumble in the Jungle”. In effect Ali allowed Foreman to expend all his fearsome firepower until he ran out of ammunition. Ali later delivered a knockout blow in the eighth round.

The dollar’s doom is Israel’s doom

Israel’s very existence may be doomed. The war ended for all time the possibility that Israel’s sovereign territory eventually would be accepted by the rest of the Middle Eastern countries. The bill for this war will be monetized; i.e., the US will print money to replenish its weapons stockpiles and to pay the $300 billion in reparations to Iran, which equates almost to one thousand dollars per every man, woman, and child in America. Furthermore, the Chinese yuan, backed by its huge hoard of gold built over almost a half century, will replace the dollar for international trade settlement purposes. In addition to paying $300 billion dollars to Iran for war reparations, the US will pay millions of dollars in “transit fees” for the privilege of US bound cargo to be allowed to transit the formerly tariff-free Straits of Hormuz. (The war gift that keeps on giving.) This will exacerbate and accelerate the demise of the US dollar as the US will experience hyperinflation ala Weimar Germany in the early 1920’s, making it fiscally impossible to station large US forces at its current overseas bases much less in Israel.

Europe will suffer, too

Europe was the logistical base for the American/Israeli attack on Iran. Russia now sees clearly that European countries are little more than American puppets. Therefore, she has given up on ever being accepted as a normal trading partner there and has thrown her fortunes entirely into the China/Iranian orbit. This is a greater loss to Europe than it is to Russia. Russia will enjoy favorable trade terms with the growing Chinese production machine. Europe will lose access to Russia’s vast natural resources, most importantly natural gas, at a time when it is shutting down its fossil fuel fields in a bizarre attempt to replace them with solar and wind power. Even before the Nordstream pipelines were sabotaged, Europe, and especially Germany, was succumbing to American pressure to stop buying Russian gas in favor of more expensive American liquid natural gas.

The US security state will survive

The US security state apparatus will survive and seek nonexistent domestic terrorists to blame for the defeat in war and the dollar’s demise. It will be tasked with prosecuting businesses and individuals who violate the almost inevitable Diocletian “maximum prices”, AKA ‘price controls’, in a futile attempt to stop runaway price inflation.

The war reveals an out-of-touch US military

On a tactical note, the US military has been shown to be completely unprepared for this new style of war. The tides of war have swung from the offensive, marked by manned airpower, to the defensive, marked by cheap drones and unstoppable hypersonic missiles. The Navy did not learn this lesson after the Battle for Okinawa in WWII, when cheap, slow moving, and short range Kamikazes took out surface ships and chased our carriers far out to sea. Now, there is no hiding our carriers, support ships, and troop transports from these drones and especially hypersonic missiles. If our Navy is within range of the enemy’s shore, it already has been within range of the enemy’s missiles for some time. The era of cowing an enemy into submission by deploying huge carrier task forces to its waters is over.

How did the Israeli lobby take control of US policy?

On the US domestic front, it is clear that this war was instigated by Israel for its own benefit. The US was never at risk from Iran, which has no means of attacking us even if it did have a nuclear device. But Israel is a different story. Iran stood in its way to achieving its goal of controlling all the Middle East through its “Greater Israel” plan. Somehow it was able to convince the US president to back its proposed “knock-out punch” to change the Iranian regime into an Israeli puppet state. Perhaps Israel convinced the American president, who was miffed at being passed over for the Nobel Peace Prize, that he would go down in history as the liberator of the Middle East. Perhaps he thought he could gain controlling access to Iran’s vast oil reserves with a regime decapitation like he did in Venezuela. Maybe Jeffrey Epstein was a Mossad agent with blackmail material in his files? Maybe it was a combination of all three. Who knows? But the real lesson, which the American deep state and the American people will find hard to accept, is that there is no need to control other countries politically in order to enjoy the fruits of their resources and production. This lesson has been learned by China, however.

An experiment in nineteenth century living

I recall an experiment conducted a few decades ago by students from the University of Illinois. The pioneer village of New Salem, just outside the Illinois capital of Springfield, had been reconstructed as an outdoor museum. Abraham Lincoln lived there as a young man from 1831 to 1837. The rude cabins, barns, and other structures were rebuilt as closely to their original condition as records revealed. In fact as a very young boy, taken there by my parents, I thought that the rude buildings were original to the time of Lincoln’s habitation there. I was much older when I saw photos of the faint outlines of foundations from that time. In an experiment of what living conditions were like in that era, the University of Illinois asked for student volunteers who would attempt to live in these reconstructed cabins through a typical Midwest winter. I’m sure they gave it the “old college try”, but these hardy volunteers had to abandon the experiment due to harsh winter conditions. This was just a typical Midwest winter, but it demonstrated how far society has come in providing better living conditions.

Immanuel Kant’s “Humanity Principle”

So, why do environmental activists like Greta Thunberg reject progress that has brought what at one time would have been seen as unimaginable higher living standards to all society? I think I know the answer. It is right in front of us. The very term “environmental activist” tells us that Greta and her ilk care not a whit for the betterment of mankind, except in the most theoretical and secondary way. It is the “environment”, as defined by themselves and brooking no debate, that is the end goal. Man is simply the means to achieve that goal, whatever it may be. Of course, this violates Immanuel Kant’s “Humanity Principle”, which states that man is an end and cannot, ethically, be used as a means to an end. Furthermore, it is “Categorical”, meaning that it applies to all rational beings at all times. Period.

Notice the vast gulf between Kant’s humanitarian ethics and that of environmental activists, who deign to anoint themselves as judge of the extent that people must sacrifice their living conditions now in order to prevent some dire future of the earth, again as defined by themselves and brooking no debate as to its validity. Man must be used as a means to achieve an end. Examples of this error can be seen almost every day; i.e., the worry about resource depletion (which is impossible, by the way, in a free market economy that allows prices to adjust to supply), and claims of overpopulation leading to a Malthusian catastrophe, etc.

A disappointed Al Gore

Naturally, these “activists” must be immune to the solutions that they wish to impose on everyone else, such as traveling vast distances by modern modes of travel in order to attend meetings and deliver lectures in which they decry the same right to others. They are the “anointed”, you see. Al Gore’s touring the earth a few years ago delivering lectures on the subject and producing a film titled “An Inconvenient Truth” is a case in point. The film was released twenty years ago, yet perhaps miraculously the earth hasn’t burned up yet or has shown any signs of doing so, which must be a great disappointment to Mr. Gore.

Ghetto mentality validated by Johnson’s (Not So) Great Society

In the 1960’s this ghetto mentality received a back door justification by Lyndon Johnson’s Great Society programs whose underlying message was that the individual was no long responsible for his life but that “society” had caused one’s disadvantage and “society” was, therefore, responsible for leveling the playing field, so to speak. Our now gargantuan welfare system was born. The ghetto mentality became respectable; so respectable that it has now gone international!

Think not? Then consider the incessant complaints that China is working to undermine our economy by working hard, increasing the productivity of workers, and underselling local suppliers overseas. Who can tolerate such economic warfare? This warrants tariffs to “protect” local industry from hardworking Chinese. Need oil? America will simply decapitate the leadership of an oil rich nation and take it. It seems to have worked in Venezuela, although Iran is proving to be not quite so easy to subdue. Apparently the old-school religion of hard work and fair dealing are so yesterday.

Fiat money is at the heart of the Ghetto mindset

At the heart of the Ghetto mindset is fiat money. Why produce now in order to consume later, the essence of Jean-Baptiste Say’s “Law of Markets”, when a country can just take what it wants by printing money out of thin air? John Maynard Keynes, the founder of the Ghetto mindset, calls this “increasing aggregate demand”. Keynes gave counterfeiting money a respectable name, but it’s pure Ghetto mindset all the same.

An example of the spread of the Ghetto mindset

In order to qualify for welfare, one must first prove to be “disadvantaged”. Out of wedlock births are one path to welfare. I’ll never forget what a young woman told me many years ago. A friend of mine ran a luncheon establishment. This young lady worked for him. I was partaking of one of my friend’s delicious cheese steaks when this young lady told me--out of the blue—that she was going to have a baby. I congratulated her and let slip that I didn’t know she was married. Here’s the incredible part. She said that she was not married, had no intention of getting married, and was not yet pregnant! She then told me that she was going to have a baby with her boyfriend, but they were not going to get married in order that she could qualify for a variety of welfare programs which included cash payments every month, which she said would give her more than she earned working for my friend, plus an apartment. She had it all figured out! This is just one example of pure ghetto mindset.

The Ghetto mindset infects foreign policy

Now let’s get back to how this mindset has infected even foreign policy. To do so let us return to China’s spectacular economic rise over the last several decades. China’s economic and foreign policy is diametrically the opposite of that of the US. China has not papered the world with ever depreciating yuan. It has not invaded countries to take their resources. It has earned its place the old fashioned way—by working hard, working smart, and providing value to others. China is helping industrialize developing economies without interfering with indigenous leadership or basing military assets abroad. It is working to protect its trading partners from US sanctions by quietly building an alternative international trading infrastructure that will be based on gold. To such end China has been accumulating gold for decades both at the governmental level and among its citizens. Furthermore, it has opened gold vaults outside China with the obvious purpose of settling international trade accounts either in gold or a gold backed yuan. In other words, China has laid the foundation for honest trade and honest development. The contrast with the Ghetto mindset of the US and its blustering threats of tariffs and outright military action could not be greater.

Which mindset will prevail?

Now ask yourself which of these mindsets represents a future to which you wish to belong--the Ghetto mindset of entitlement at the expense of others with the real threat of violence or the mindset of non-intervention and value? The choice could not be more obvious.

Gold Standard Takes the Blame

The main, and most obvious, reason that American spending has been in chronic deficit is that it abandoned the gold standard and appears to have no intention of reinstating it. Such is not the case with China and Russia. True, neither country is on the gold standard now, but both have been quietly accumulating gold for many years. Nor has either announced their respective total gold holdings or when and under what circumstances either would be prompted to tie their currencies to gold. Nevertheless, it is clear that both nations have a greater respect for gold than the US and appear to be preparing for its return at least for settling international trade accounts.

For millennia gold, and occasionally silver, were considered to be true money. Nations did go off the gold standard in time of war, but most quickly returned to a gold standard after the end of exceptionally high military spending. All nations, except the US, went off the gold standard in World War I, but eventually returned. The British returned to a gold standard in the 1920’s, but the monetary authorities made a glaring mistake. The British had increased the money supply by approximately double during the war, which made it almost impossible to return at the pre-war pound-to-gold ratio, but they did it anyway. This caused a severe recession in Great Britain as it required a drop in prices of fifty percent. Labor contracts could not be honored and strikes ensued. Gold flowed out of the country, which Fed Chairman Benjamin Strong tried to ameliorate by inflating the dollar surreptitiously. This was but one factor that caused the US stock market crash and led to a sharp recession. Instead of ceasing monetary intervention and allowing business and prices to adjust, as was the policy of President Harding after WWI, first Hoover and then Roosevelt tried to cartelize the economy via price controls. The Great Depression followed. The gold standard took the blame for this debacle instead of Hoover/Roosevelt. In fact it is a very common myth that Roosevelt’s New Deal saved America. Such is economic ignorance perpetuated.

Corrupting the People through Welfare

Secondly, in a gradual process government became responsible for the people’s welfare, displacing the family and local friendly societies. The first large program was Social Security, truly the camel’s nose under the tent. Roosevelt sold the program to the citizens and to Congress using different rationales. To the public he claimed that the program was no different than a private annuity. The government took the people’s forced contributions, deposited them into earmarked accounts, and then distributed them plus interest to taxpayers upon reaching a certain age. Of course, the US Constitution enumerates no power to Congress to run a forced annuity program. So to Congress Roosevelt sold the program as merely a spending program, one of many. Social Security was never intended to replace the individual as primarily responsible for his own retirement income. It was sold as a supplement. Yet today twenty-two million Americans retire with no income stream except Social Security. This represents almost forty percent of retirees. Obviously, the concept of moral hazard is unknown to government.

Lyndon Johnson’s Great Society

The US remained on the gold standard throughout the immediate post WWII decades until Lyndon Johnson’s Great Society welfare programs started to take their financial toll. Johnson wanted to “finish the job” of his hero Roosevelt’s New Deal. Johnson’s Great Society welfare binge is well documented. But the main effect, in my humble opinion, is that it cemented in people’s minds that government is responsible for what had always been one’s individual responsibility; i.e., to look after oneself and one’s family, especially financially. Live within one’s means. Save for a rainy day. A penny saved is a penny earned. These once common bits of wisdom are seldom heard today. When was the last time a politician said that it was the individual’s responsibility to provide for his many needs, including retirement. I’m waiting…. And let’s not turn a blind eye to the cultural damage, such as the rise of out-of-wedlock births.

FRED Statistics Tell the Sad Tale

By the early 1970’s the drain on America’s gold supply from the spending requirements of the War in Vietnam and welfare forced government to take action to stop the gold drain. Of course, it took the wrong action. Instead of accepting the humiliation of devaluing the dollar against gold and promising to be more fiscally responsible in the future, President Nixon “temporarily suspended” gold redemption by foreign central banks. Now government was completely free to print money and print money it did! The monetary base rose from $85 billion in the fall of 1971 to $5,388 billion in February 2026, an increase of sixty-three times, with no end in sight. This largess has caused the annual budget deficit to rise from approximately $3 billion in 1971 to a projected $1.8 trillion this fiscal year, an increase of six hundred times! In fact, President Trump wants another half trillion dollars per year for the military alone, and he’ll probably get it. Over the same time frame, total US debt has risen from $424 billion to $38.5 trillion, an increase of ninety-one times.

Conclusion: The Corrupting Effects of Welfare and Warfare Spending

The factors that have driven uncontrollable US public spending are easy to see and difficult to change. The primary factor is the loss of respect for gold. In the 1920’s the Fed surreptitiously inflated the US money supply to help alleviate Great Britain’s error in reinstating its own gold standard at too few pounds per gold ounce. This error was compounded by Hoover and Roosevelt in unprecedented and fruitless interventions that stifled the US recovery. Social Security legislation was the first welfare program that has steadily corrupted the populace into ceding personal financial responsibility to government. Welfare spending, when added to warfare spending, has led to massive annual federal deficits that are papered over, so to speak, by newly printed money. The FRED statistics tell the sorry tale.

The lynch pin for accepting the US/Israeli rationale is that the current ruling party in Iran is suicidal and would accept the complete retaliatory nuclear annihilation of the country as a worthy price to pay for wiping the Great Satan, the US, and the Little Satan, Israel, off the face of the earth. Therefore, the world should accept as justifiable the Pearl Harbor-style sneak attack on Iran while it was engaged in negotiations with the US over its nuclear program. But what if Iran is NOT suicidal?

There is a wealth of evidence that Iran would respond to the concept of Mutually Assured Destruction (MAD) the same as other nuclear armed countries; i.e., by refraining to attack a detested enemy that can retaliate with nuclear weapons of its own. John Leake has addressed this issue in great detail, and I encourage the reader to study his evidence carefully. It is nothing less than damning to the propaganda that Iran is a special case and that MAD would not deter its so-called Islamic fanatics from launching a nuclear first strike once it attained that capability.

Once this evidence becomes widely known the entire support for the attack on Iran melts away. Left are serious questions about why our government proceeded with its attack when it is incomprehensible that voices within its own government did not know about the counter argument. Did the government know about this argument but decided to attack Iran anyway? Was this argument suppressed, and If so, who suppressed it and why?

The decision to go to war, especially pre-emptive war, must be thoroughly examined by top decision makers, leaving no evidence and no counter argument unanswered. Our government owes this to our valiant war dead and to the fallen citizens of so many countries who have already died in this terrible war. It is not too late to discuss this issue in order to prevent further bloodshed. Examine it carefully and let the chips fall where they may.

How the “Rand Plan” is different

One may ask how this plan differs from other spending restraint plans. Notice that the bill does not single out specific areas for spending reduction, such as President Trump’s failed DOGE plan. The bill is an across the board reduction, which leaves each federal agency to decide where and what to cut. For example, the Pentagon would have its budget reduced by six percent, forcing it to allocate funding among its major commands. The same would be the case with Social Security, Medicare, the EPA, etc. No agency would be exempt, although we can assume that there will be a great uproar, of course. But Congress would not have to negotiate what to cut. In fact, it’s possible that nothing would be cut out entirely. The responsibility would be with those who manage the programs who, after all, should be most familiar with the exact expenditures in their departments. One may say that Congress is neglecting its responsibilities, and there is nothing that prevents Congress from increasing expenditures or defunding anything as long as the six percent total reduction is met. One could envision public outcry over revelations that some high priority programs within a cabinet level departments were suffering cuts in order to save what the vast majority would consider frivolous expenditures. But this negotiation would be conducted within departments themselves and not at the congressional level.

“Subsidiarity” is the key to good decision making

Currently there are precedents for how industry is adjusting to shortages caused by the war in the Middle East and President Trump’s tariffs. For example aljazerra and the Wall Street Journal report that helium from the Middle East , a commodity crucial to many industries, is in short supply and under allocation by importers to their customers. Importers have declared force majeure, forcing them to decide how to economize use of the reduced supply. One can see the advantages of this process, called subsidiarity. Forced allocations are conducted most efficiently and effectively at the lowest operating level possible. This is very common and not always related to war. Supply availability is subject to all kinds of factors. There is every reason to trust that this method of resource allocation, which is a normal one for business (and even households), would work just as well for government programs. Congress allocates money broadly to cabinet level departments. These department heads allocate money to managers of programs within their departments. The politicking for funds occurs within departments and not at the congressional level. It is not reasonable to expect that Congress can efficiently and effectively know which of the hundreds and probably thousands of programs to cut. That is the responsibility of the various department heads and their subordinates.

Uncertainty and Scarcity

Austrian School economists remind us that the world is ruled by uncertainty and scarcity. Recipients of public money would be forced to adapt to an increasingly scarce resource input, one resource input among many. How these recipients adapt to decreased public money is something with which we all deal every day. None of us have unlimited or guaranteed resources. That is the nature of the human condition. There is no reason that government and its agencies should be exempt from this fact of life.

Background to the pre-emptive war on Iran

The more dangerous policy is pursuing national security via regime change overseas. For decades the US has engineered the overthrow of the political leadership of countries deemed vital to its interests. The latest, of course, is Iran, to which end the US has collaborated with Israel, who is pursuing her own security agenda called “Greater Israel”. Whether the US agrees with Israel’s goal or not, it makes no difference. Both the “Greater Israel” tactic and regime change in Iran not only will fail but the attempt was never necessary in the first place.

Israel responded to a horrendously vicious and evil attack upon its settlements by terrorist groups with an unprecedented scorched earth military response against bordering civilian populations. This policy almost instantly switched the world’s moral outrage from the evils of the terrorist attack to shock at Israel’s callous response.

Then Israel was able to enlist the US in attacking Iran, the “head of the snake”, first last June against Iran’s nuclear facilities and now against Iran’s leadership, military sites, and oil facilities. It has been completely successful in achieving these tactical goals, but the strategic goal of regime change eludes it.

Since MAD works, why the pre-emptive attack?

Without going into the current state of the conflict, let us just consider whether this tactic was necessary to achieve its stated goal of “regime change” even if eventually successful. I say it was not necessary. Both the US and Israeli leaders have convinced themselves that, if allowed to produce nuclear weapons, Iran will use them in a first strike against Israel and perhaps the US, even if such a first strike resulted in the complete nuclear annihilation of Iran itself by either a nuclear armed Israel or by the US. Therefore, unlike other nuclear powers, some of which are very hostile to the US and Israel, Iran must be the target of a pre-emptive military strike the goal of which is regime change. Although there is no guarantee that a nuclear Iran would not commit suicide, the US and its allies faced just such a prospect during the Cold War. The US policy for that regrettable era was “Mutually Assured Destruction” (MAD). Neither the US nor the Soviet Union would attempt a first strike because the other would retaliate with an equally devastating strike. MAD worked for forty years and was deemed a success. Why would it not work against Iran today? Are today’s leaders completely ignorant of what worked in the past? I think not. Yet they either have convinced themselves that it will not work against Iran or there is some other goal in mind.

Capitalism is Win-Win

Next let us turn to the US’s response to the growing economic might of China. There are two underlying and fallacious economic premises which guide American economic policy and perversely undermine the goal of furthering American economic prosperity. One, that other nations’ economic growth comes at the cost of American growth and, two, that such growth is a danger to American national and economic security. This fallacious Mercantilist view of the world has resulted in the imposition of economic sanctions by the US against perceived economic rivals and has caused half the world to form organizations, such as BRICS and the Shanghai Gold Exchange, to bypass the US dollar controlled international trading mechanisms, specifically the SWIFT trade messaging system.

Trade settlement in real money, not debased fiat money

The main feature of these new organizations is for trade among countries that, one, do not interfere in the internal affairs of other members, and, two, settle trade in a medium of exchange that will not depreciate, namely gold. When the US unilaterally suspended redemption for its currency in gold in the fall of 1971, its gold was held within the continental US and could not be claimed by its rightful creditors. BRICS has addressed this risk. China, the leader of the BRICS group, is building gold vaults outside China so that members can redeem trade credits in gold itself or in yuan backed by gold.

These defensive responses are expensive and were only initiated because the US used its control of the dollar-based system to punish members for being on the “wrong side” of international disputes that had little to do with trade settlement. It was the typical hubris of a hegemon.

But the US should encourage and celebrate the economic growth of other nations, because these nations will contribute goods and services to the world and buy our goods and services in return. In fact the only thing holding America back from full enjoyment of the world’s output is our own fallacious economic policies, primary tariffs. China’s population is roughly four times that of the US. It just stands to reason that a capitalist China would eventually have a greater GDP than that of the US. So what? Yes. So what? There is no way that a China even ten or twenty times the GDP of the US could threaten our security. Our security is guaranteed by our nuclear arsenal housed in silos in America, under the sea in ballistic missile submarines, and by long range bombers, the so-called nuclear triad.

China’s prosperity will make America even wealthier, just as a more prosperous Japan, South Korea, Italy, Germany, Russia—the list goes on and on--will offer Americans more and better goods and services. This is the wonder of free market capitalism in which everyone participates willingly and without coercion. The US does not need to intervene in the internal affairs of trading partners.

Get government out of the way

The main threat to American prosperity is posed by our own government in the form of trade restrictions and internal regulations that make investing and producing so difficult and costly. But this is America’s problem and no one else’s, just as the internal affairs of other countries are none of our business.

America needs to shed its world domination mentality that will eventually destroy our prosperity. Bring our far flung military home. End debasement of the dollar. The goods of the world will be laid at our feet by willing sellers. Willing buyers will line up to buy our products. No government intervention is necessary.

Although many nations have nuclear weapons, including North Korea, the US has decided that Iran must not be allowed to join the club. And it must not be allowed to control Middle Eastern oil to support the growing Chinese economy, which is a direct threat to American security and prosperity.

Or is it?

An Alternative—Free Market Capitalism

All any government needs to ensure its citizens’ freedom and prosperity is to adopt free market capitalism and a non-interventionist foreign policy. It does not need to intervene in the internal affairs of other nations, no matter how loathsome these may be, and it does not need to control and thereby deny them the opportunity to grow, either militarily or financially. Since these are the main justifications for going to war with Iran, the US could safely withdraw from the region. Furthermore, it could withdraw its bases all around the world without making either itself or its friends unsecure, as long as they also end foreign interventions and adopt free market capitalism.

Free market capitalism recognizes the primacy of free individuals to decide for themselves where and how much to invest. It does not need government to ensure that markets will be open. Neither Individuals nor governments can ensure access to foreign markets, but with a non-interventionist foreign policy there is no reason that any nation would deny its own citizens the opportunity to enrich themselves through trade. If they do, other nations’ citizens will benefit. In short, there will always be markets somewhere for buying and selling. And private individuals are much better than any government for deciding what and where to trade.

Recognizing this approach will require a major change in America. But what looks to be an imminent loss in the Iranian war (you heard it here first) presents a golden opportunity for Americans rethink the purpose of government. Continue with the same losing formula of excessive military spending justified by an interventionist foreign policy or free market capitalism that is based on mutual respect and noninterference in the affairs of others? The answer should be easy.