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Letter to the editor: Economy of war leads to economy of peril

Wednesday, October 2, 2013 - 12:01 am

When there is war, the private sector laborers’ earnings are coercively taken from through federal taxation and then distributed throughout the military industrial complex. This influx of tax dollars allows weapon manufactures to expand their operations, increasing war profits. The tax dollars allow war contractors to make bigger donations to campaign funds. The taxes fund public work programs for the manufacture of weapons. The tax dollars allow military contractors to hire lobbyists and support politicians who will promote the non-traditional American ideals of military interventionism and enhancing the surveillance and police state upon the U.S. homeland and her citizenry.

Yes, the economics of war brings short-term prosperity to the state and the state’s privileged war beneficiaries, but for the masses of Americans, the Americans who must obtain their wealth not through coercive taxation and confiscation, but through production and the voluntary exchange of goods and services on the free market, this economy of war has led to an economy of peril.

War leads to capital decumulation. Real capital is scarce. When the state takes scarce capital out of the private sector to produce weapons, weapons which ultimately will be consumed upon unfortunate souls or stockpiled until they are recycled, no longer will the entrepreneur be able to use that capital in their businesses for the benefit of the consumer. War demands oil, war demands steel, war demands labor, war demands resources, and as these resources are being used by the state, economic law forces resource prices to rise due to the smaller supply now available for private sector use.

The private sector has been forced to compete against the public sector for the scarce capital. During times of war there is a smaller supply of funds available for private-sector lending, which forces businesses to borrow at higher real interest rates. As a result of war, capital becomes scarce, business operation costs increase, consumers pay higher prices and private sector production decreases.

War has led to currency debasement. The government finances its war deficits by inflating the money supply. As war debt becomes insurmountable, and the public cries for less taxation, the government has begun to monetize the debt. The Federal Reserve creates the new money so the state can pay its war bills, but as the new currency begins to circulate prices adjust upwards and the consumer then suffers the ill effects of this inflationary tax. As government increases the money supply, a larger supply of fiat dollars is chasing the same supply of goods, resulting in higher prices causing the inevitable decline in an individual’s purchasing power.

War has led to high taxes, low household savings, inflation, low savings account interest rates, federal debt, malinvestment, foreign resentment, foreign capital dependence, recession, the decay in standards of living and most importantly the loss of individual liberty. When there’s prosperity there’s peace, when there’s war there’s peril.

Clarence Leatherbury