Posted by
Bull 67 on Sunday, November 09, 2008 6:02:29 PM
Here’s an economics lesson for the American serviceman. Reach into your pocket and pull out a dollar bill. Its value isn’t set by gold or any precious metal, only law and world currency markets determine its worth. Why, then, would someone buy mere paper not backed by a tangible asset? For the same reason you might buy stock in a company. Foreigners buy our dollars because they know America has the greatest return on investment of any endeavor in history.
Historically, America is where the world’s smart money runs in troubled times. But now America finds itself in hard times. No longer a manufacturing giant, we’re now a consumer economy shouldering crippling public and private debt. The US is hemorrhaging trillions in real estate and corporate wealth while embroiled in two expensive wars. A 2007 BBC survey found America’s standing abroad ranking only above Israel, North Korea and Iran. With all this gloom, does the world’s smart money still consider America a safe bet?
Absolutely, and the US serviceman has something to do with it.
Since the early 1990s America led the way building the post-Cold War global economy, an international free trade system. For better or worse, the United States is the lynchpin holding it all together. When the world buys our dollars and debt they essentially cast a vote of confidence not only in America, but the global economic system we helped establish. This is true, even during the current crisis, due in large part to the US military.
Defense critics point out the US spends more on defense than the next 14 nations combined. True, but we also directly or indirectly protect those 14 nations’ access to international trade. From Bangkok to Baghdad, international merchants know goods and services flow unhindered because of US military power. This arrangement benefits our friends and rivals alike. China, the world’s manufacturing superpower, exported $1.2 trillion in goods last year, but China doesn’t protect the international trade routes on which she so strongly depends. Nor is it African ships leading the charge against pirates off Somalia or OPEC armies guaranteeing the flow of oil through the volatile Persian Gulf region. It’s the American fighting man and woman who keep global trade free.
Foreign nations may rail against US military power in public, but privately they vote with their money. They understand two important facts: our forces operate with immense restraint and in strict adherence to law; and no international coalition can yet match America’s military prowess. Would China act with our humanity and restraint? Can the U.N. match our decisiveness and competence should they become protectors of the global economy? This is why, rhetoric aside, the world trusts us to protect the global market.
For this reason our leaders must tread carefully. Recently, Rep. Barney Frank (D-Mass) called for a 25% cut in the defense budget. One lesson the financial crisis taught us is risk assumed by one global player is risk assumed by all. If America can’t or won’t protect the global trade system our national stock will surely go down. Investors will take their money elsewhere and other nations will fill the power vacuum we leave behind. What will our dollars and debt be worth then?
The 21stcentury US Military isn’t just protecting our homeland or hunting down terrorists, but ensuring the global economy remains free. If you’re an American serviceman reading this, you truly hold that dollar in your hands. It isn’t backed by gold...
...It’s backed by steel.