Recently I read a book entitled The Good Soldiers that also serves as an object lesson in the disconnect between what’s going on in Washington, D.C. and reality. It was written by David Finkel, a Pulitzer-winning author, and it came to me via a friend who is going through a stage where she feels drawn to books about war, mostly about World War II. Showing flexibility, her interest has expanded to the ongoing conflict in Iraq, the theater of operations that serves as backdrop for The Good Soldiers.
Despite it going solidly against my literary preferences, I dragged the book along during a quick trip to Florida. I figured I’d read a few pages of the book before putting it down – and so was surprised when it sucked me in, and kept me in, pretty much until I was finished.
There are a number of important lessons that can be derived from The Good Soldiers. Given the urgency of addressing the U.S. debt and deficits, the bloated U.S. military budget is clearly the most obvious place to start making cuts that will actually matter. Yet Congress made no such cuts when passing the $690 billion budget requested by the Defense Department – doing so last week by an overwhelming margin.
That budget includes another $119 billion to flush down the toilets of Iraq and Afghanistan. Showing that it has learned no lessons, the Obama administration – encouraged no doubt by new friends in the military-industrial complex – has already managed to spend $750 million in the undeclared war on Libya.
There is a way to use this understanding that the bankrupt U.S. and its allies are doing little more than breaking furniture and making enemies in the Middle East to one’s advantage. Simply, unless and until the U.S. politicians muster enough spine to pull out of Iraq and Afghanistan and slash the military budget, the government’s massive budget deficits will continue.
And if the budget deficits continue, then the trend for the U.S. dollar is sharply downward -- though I remain convinced we’ll see a rally in the near term. That is not conjecture, but the unavoidable conclusion uncovered by a number of objective analyses done on past sovereign debt crises by folks such as Kenneth Rogoff and Casey’s chief economist, Bud Conrad.
To those readers who think that cutting the military budget, or pulling out wholesale from the Middle East, will increase threats to the continental United States, we will have to agree to disagree. In my view, destroying our economy to wage war – in the process squandering the huge commercial advantage of providing the world its reserve currency – is far more destabilizing ... as is making yet more enemies by continuing to lob bombs and kick in doors here, there, and everywhere.
Unfortunately, the U.S. leadership and, I guess, some significant swath of the voting public that supports that leadership are suffering from some sort of mass psychosis (or maybe it’s paranoia) that actually has them thinking that it is somehow in the country’s interest to continue flinging billions of dollars and the lives of its good soldiers into lost causes overseas.
But don’t take my word on the topic; do yourself a favor and pick up a copy of The Good Soldiers today. I can’t say whether or not reading the book will change your mind, but I can guarantee you that its on-the-ground perspective will enlighten you as to the true and disturbing nature of what’s really going on, and the futility of it all. It is anything but entertaining, but is very well written and very illuminating.
Meanwhile, use the military budget as a proxy for the seriousness (or lack thereof) of the government’s intent to reduce its spending by any significant amount. And, absent any serious cuts in that spending, continue to take measures to protect yourself against wholesale debasement of the currency.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.