Federal Debt Elevator: Going Up
by Gary North: My
Experience With Certified Raw Milk
If you think
the Federal debt ceiling is anything but an elevator, I've got news
saw the story about the Air Force airlift of $12 billion in unmarked
bills that landed in Iraq sometime between 2003 and 2004
no one seems sure just when. The
story was written by a Los Angeles Times reporter and published
on January 13.
officials determined that one giant C-130 Hercules cargo plane
could carry $2.4 billion in shrink-wrapped bricks of $100 bills.
They sent an initial full planeload of cash, followed by 20 other
flights to Iraq by May 2004 in a $12-billion haul that U.S. officials
believe to be the biggest international cash airlift of all time.
a slight glitch in the execution of the plan. Some $6.6 billion
of this three fully loaded planes full has gone missing.
was picked up by the Web, but got little play in the mainstream
media. The Huffington Post and Fox News reported it, but not the
other major media. The fact that several plane loads of shrink-wrapped
$100 bills are unaccounted for is not big news in the minds of America's
mainstream editors. A
search on Google reveals how little mainstream media interest
was a modification published by Fox. The auditor in charge said
that he never used the figure $6.6 billion. He claimed that only
$2.8 billion are unaccounted for. This story was also not picked
up by the media.
My point is
not that the Pentagon cannot account for either $6.6 billion in
missing currency or only $2.8 billion. That is hardly news. My point
is that the conflicting sums are so miniscule in comparison with
what the U.S. government wastes every day that the story is not
considered media worthy when any agency loses this much. The public
is so used to stories of wasted billions that this story is a curiosity
at best. I suppose that it would make a good Bruce Willis "Die Hard
V: Payback!" script, with Bruce going over to the dark side and
leading a team that flies the tax-free money to Switzerland. Yippee-ki-yay.
Yes, the Pentagon
flew $12 billion in currency to Iraq. But why? The reporter did
not ask why Iraq needed American currency. Why not just digits?
Why was the
dollar the needed currency?
up the cash? There were not enough receipts.
story in which the auditor provided the $2.8 billion figure indicates
that he thinks the Iraq government got the money. He doesn't really
know. No one has asked what the Iraqi government intended to do
with U.S. currency, as compared with digits that agencies normally
Who in the
U.S. government authorized this transfer of funds? We do not know.
Whose plan was being executed? We do not know.
at least six years ago. Who in the U.S. government has been researching
this? The money is long gone.
I could go
on with other questions, to no avail. The facts are these: an unknown
someone for no written official reason withdrew $12 billion in currency,
loaded it onto 21 Air Force planes, flew the money to Iraq, where
it was turned over to someone or other, with either $2.8 billion
or $6.6 billion unaccounted for, sometime (no one seems sure) between
2003 and 2004. Explanation:
officials often didn't have time or staff to keep strict financial
controls. Millions of dollars were stuffed in gunnysacks and hauled
on pickups to Iraqi agencies or contractors, officials have testified.
the story is this tidbit: the U.S. government has spent $61 billion
on reconstructing Iraq's economy. This is in addition to the vastly
large sums that the U.S. government spent on destroying the Iraq
economy. Why? For these three words: "We got him."
is not the missing $2.8 billion or $6.6 billion in shrink-wrapped
bills. The lunacy is the entire endeavor in Iraq. But this lunacy
has not penetrated the thinking of the majority of American voters.
There are no protestors in the streets. There are no well-organized
campaigns of letter-writing. Basically, nobody cares.
debates held this week did briefly touch on the issue, but Ron Paul
was the only candidate who said emphatically that our troops should
be brought home immediately. That was easy for him to say: he publicly
voted against the Iraq war.
We are halfway
through Obama's third year, yet 45,000 U.S. troops are still there,
plus however many mercenaries are on the payroll, a figure estimated
in the past at 100,000. No one knows, any more than they know whether
$2.8 billion or $6.6 billion in currency went missing. The point
is, the voters do not really care that no one knows.
does not feel any pain from the war in Iraq. The Iraq war is still
going on. We don't need 45,000 troops plus mercenaries where there
is no war. The World War II refrain "Don't you know there's
a war on?" is applicable today. Hardly anyone knows. It's
no longer news.
public feels no pain, the public does not care what the government
does. The public is oblivious. The missing currency was not a big
story, not merely because editors decided not to run it, but because
they figured that it would not increase ratings or subscriptions
to feature it. It was non-news. They perceive that the public is
interested in other things, such as Congressman Weiner.
of interest gives the politicians a free ride. They need not confront
the issue of specific Federal spending. The deficit in general is
of some interest, intermittently, but not the specific issues of
the budget. Because Congress is unwilling to cut specific programs'
budgets, the general deficit is heading higher. Congress knows that
the public does not care.
In a June
15 article, a
MarketWatch columnist dismissed the Republican candidates' debate
with these words:
answers forced the candidates to use Beltway shorthand in their
answers that must have been indecipherable to any viewer who does
not follow politics for a living. Texas congressman Ron Paul,
for instance, babbled on about his fixation with the dollar as
a reserve currency a concern that is extremely remote for
dismissive verb: "babbled." This is the rhetoric of contempt. The
author of the article is clearly uninterested in something so remote
as the issue of the dollar's reserve currency status. He has not
spent 40 years, as Paul has, studying the Federal Reserve and monetary
policy. In any case, 30-second sound bites do not allow time for
babbling. But that did not faze the columnist's choice of a word.
He, like most
of his peers, is in the obfuscation business. "Pay no attention
to the make-up of the Federal Open Market Committee, where the New
York Federal Reserve Bank a private corporation alone
among the regional FED banks, always has a voting member. Move along.
There is nothing to see here."
But his point
regarding the public was well-taken. The concern of the mass of
voters is not with the world reserve currency status of the dollar.
They are concerned with unemployment. They are concerned with falling
real estate prices, the possibility of the bankruptcy of Social
Security and Medicare, and the disappearance of their dreams of
a comfortable retirement. They are unaware of the tight connections
among all of these concerns and Federal Reserve policy. Their ignorance
benefits politicians, the Board of Governors of the Federal Reserve
System, and the senior managers of the four or five largest U.S.
banks. It gives these high-level decision-makers a free ride.
size of civil government in the modern world is immense. Not counting
the economic burden of regulation and monetary inflation, the tax
burden in the United States is in the range of 40% Federal,
state, and local. It is higher in most other Western democracies.
There is no
way to monitor most of what civil governments do. We know that it
is impossible to monitor the purchasing decisions of over 300 million
Americans. Consider the number of transactions per day. One estimate
of the total number of bar coded SKUs (stock keeping units) of products
not services in the New York City region is nine billion.
The immensity of the amount of information that goes into all of
these decisions, month after month, is beyond the power of human
comprehension. Yet the size of the various civil governments is
close to the size of the private sector.
We do not
try to monitor the decisions of 300 million Americans. We know it
would be futile. It would require an immense government bureaucracy
to do this. We do not want such a bureaucracy.
of this attitude of humility regarding the monitoring of the private
sector should not stop with the private sector. We should recognize
the inherent limits on monitoring most of the decisions of most
government bureaucrats. If we think that we can in some way monitor,
evaluate, and direct these decisions, we are deluding ourselves.
Yet the logic
of all civil government is that voters can somehow set up a coherent
administrative system of central budgeting and management that enables
salaried committees to monitor all of the expenditures of all of
the bureaucrats, seeing to it that waste is minimal, freedom is
maintained for the masses, and the public's will is implemented.
In other words, the implicit assumption underlying modern civil
government is inherently preposterous, i.e., lunatic.
of democratic civil government rest on the assumption that the voters
somehow can monitor the decisions of tax-funded government agencies.
These theories assume that voters and their elected politicians
can maintain control over what is done with the state-confiscated
wealth of the voters. These theories are preposterous. Waste is
inherent in civil government. So is graft. There is no way to monitor
billions of transactions. The possibilities for theft are enormous
and continuous. So are the possibilities for misuse of funds to
suppress our liberties.
a story of some enormous siphoning off of public wealth surfaces.
The story of the 21 plane loads of shrink-wrapped $100 bills sent
to Iraq is such a story. The media rarely pick up these stories
or emphasize them. Why not? Because the media are part of the overall
system of control by the bureaucrats. The mass media are not interested
in shrinking the state. They are interested in expanding it. This
has been true in the United States ever since the Civil War.
RACHET OF SPENDING RISES
perceive that they are being hurt by the transfer of 40% to 50%
of their productivity to civil government, the system is immune
to reform. Until voters feel real pain as a result of this confiscation,
there will be no change. Until voters can identify the cause of
their pain wealth transfer by state coercion there
will be no change.
and the beneficiaries of their policies have an incentive to keep
the pain level of the voters at a minimum. When politicians can
use the voters' fear, envy, or guilt to persuade voters to transfer
more responsibility and greater wealth to the state, they will do
whatever they can to fan the flames of fear, envy, and guilt.
of the shrink-wrapped bills was itself shrink-wrapped by the media.
A story like this has to be buried by the authorities. It testifies
to the inherent absurdity of the democratic logic of the welfare-warfare
state. It points to the impossibility of monitoring the siphoning
off of our wealth.
did not press the official accountant with questions about the justification
of the $12 billion transfer. Instead, he focused on the $6.6 billion
in lost money. The relevant questions relate to the war in Iraq
itself. But that question has caused no incumbent politician any
In every war,
there are a few politicians who oppose it from day one. In American
history, Jeannette Rankin is the towering figure. She was the first
woman elected to Congress, in 1916. You might think that this would
give her an automatic paragraph in every U.S. history textbook.
It hasn't. That was because she voted against World War I (one of
50 who did), and then literally alone voted against a declaration
of war against Japan, and then voted "present" four days later in
response to the declaration of war on the U.S. by Germany and Italy.
The historians never forgave her.
who vote "no" are never proclaimed retroactively as heroes by voters
after the war turns sour. Always, voters prefer to forget that they
were sucked in by the politicians who fanned the war flames. This
analysis applies to bad political policies in general. Opponents
of highly popular bad policies are not rewarded later for their
initial wisdom and courage in opposing the policies. Voters prefer
to believe that they had been right when they supported the programs.
To think otherwise is to condemn themselves as short-sighted fools.
The result is obvious: reduced opposition to bad policies.
So, we rarely
find any revocation of bad policies. They remain on the books. The
bureaucracies that the laws created remain open for anti-business.
There is an occasional exception, such as the Civil Aeronautics
Board (price floors) and the Interstate Commerce Commission (price
floors), but this is extremely rare.
thinks the Federal debt ceiling is now or ever has been a ceiling
has not come to grips with the political reality of the free ride.
Until there is widespread political pain, there will be no debt
ceiling. It's an elevator, and it keeps going higher.
is not yet widespread pain. There is no widespread identification
of the ever-expanding Federal government and the reduction of economic
growth and the increase in Federal debt. The debt ceiling is not
taken seriously by Congress and never has been. It never goes down.
will come due. The can will grow too large to kick. But until then,
the voters will continue to imagine that there are free lunches
in life. They will continue to grant the politicians a free ride.
When the can
is finally too large to kick, the defaults will begin. If you hold
IOUs from the government, you will find that you, not the can, will
get kicked. Hard.
North [send him mail]
is the author of Mises
on Money. Visit http://www.garynorth.com.
He is also the author of a free 20-volume series, An
Economic Commentary on the Bible.
2011 Gary North
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