America cannot afford another war because the US Government is in a debt trap already, and it would merely hasten the collapse of her finances. Measured in dollars, gold would soar handing economic power to Russia and China.
We can be sure that the highest levels of government in the US Treasury realise this. Earlier this month, a team of five Treasury officials went to Beijing “to discuss the economy”. We can be certain that the Treasury’s real concern is to find out China’s intentions with respect to her Treasury holdings, and at the least persuade her not to sell any more.
This is an approach by the Americans on bended knee. The Treasury has already tapped out banking and money fund liquidity by issuing T-bills at an interest cost of over 5%, and in the next few months will have to start issuing notes and bonds of longer maturities. As the marginal demand factor, foreigners must be persuaded that it is in their interest to keep buying so as to put a cap on yields.
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The problem for the Treasury is that they can talk to their opposite numbers in China as much as they like, but the reality is that America’s political class is openly belligerent against China over Taiwan, and also against Russia and Iran — China’s allies. China has shown herself to be more patient with the Americans than Russia and Iran. But unless China can extract convincing commitments from America to back off over Taiwan and what they are now calling West Asia (the Middle East to us), the hapless Treasury officials are likely to leave empty handed.
With Donald Trump likely to be the next US President, to the Chinese convincing commitments are virtually impossible, particularly with America’s track record of reneging on its promises and the upcoming presidential regime change. Therefore, the US Treasury will have to tell the White House that funding the anticipated budget deficit will be very difficult. Consequently, the US cannot afford to continue funding Ukraine and protect the Israelis in a conflict which will not only increase the already record budget deficit, but by potentially driving oil and gas prices higher collapse the American economy and those of her NATO partners. Therefore, for the foreseeable future — which is not very long — it remains predominantly a propaganda war, the state of which was revealed by Tucker Carlson’s interview of a calm, cool, and collected President Putin.
The context of the Tucker Carlson interview should be understood. NATO is in a propaganda war against Russia with the antagonists vying for control of the narrative. They have different audiences: the western alliance is trying to convince its own populations only, while Russia is working on informing the non-aligned world. And an independent informed observer is bound to conclude that it is the western alliance which is being more economical with the truth.
But facts are secondary. Viewed in the proper context, it becomes clear whose propaganda gets most traction. While westerners pooh-pooh Putin’s version of events in favour of their own shaky narrative, rightly or wrongly the rest of the world buys into the Putin version. This is not to defend the Russians, but to merely point out that the point of a propaganda exercise is not just to keep your own audience onside, but to convince neutral parties as well. American-led NATO has a losing hand in this respect while Russia appears to hold all the aces.
It also explains our mainstream media’s vitriolic attacks on Carlson, accused of being Putin’s patsy. It exposes an unease amongst all western media, implying that it is itself biased in denial of the evidence.
How did mainstream media get to this untenable position? It’s worth reflecting on the relationship between the mainstream media and a government’s propaganda machine. The mechanism is background briefings, where a government minister or senior member of the permanent establishment imparts “vital information” to enable a correspondent paid by a national newspaper or television channel to specialise, for example, in defence matters.
To be invited to these briefings, a correspondent must be “on message”. And if he or she criticises the official line, he or she is no longer invited. With exclusion from these briefings, his editor has a correspondent who is useless to him. The correspondent knows this, which is why he always toes the official line. And this is why the entire mainstream media in the western alliance backs a one-sided narrative.
It gets worse. The permanent establishment, particularly the intelligence-led deep state, convinces the politicians that its line of thinking is correct. Woe betides the politician who ignores the secret intelligence proffered to him. He has no means of knowing if it is truth or fantasy. But in either case, the intelligence community has it in its power to prove the error in a politician’s ways.
For now, we are in a propaganda war against the Asian hegemons, demonstrated by the reactions to that Carlson interview. But propaganda stokes enmities and emotions in place of reason, reason becoming treason. And it is that which fuels real war.
For now, a sham war is about proxies and covert activity. Ukraine is NATO’s mincing machine; her army still being given weapons to fight a losing cause sacrificing her expendable manpower. One thing which Putin confirmed was that Boris Johnson told the Ukrainians to fight on and not sign a peace treaty, which while vehemently denied by Boris, was already known. Why would he do that? Because the UK is America’s Vicar on Europe’s earth, imposing US foreign policy. Almost certainly, any other British prime minister would have done what Boris allegedly did.
Having lost Afghanistan, the US deep state (ref. Victoria Nuland) was determined to counter that loss by confronting Russia over Ukraine, a project Nuland has been involved with since at least 2014. The reckoning was that Russia would be outgunned, and America through NATO would advance its weapons closer to Moscow. Putin would then lose credibility, Russia descend into chaos, and America would then pick up the pieces. Putin decided to attack first, US strategic thinking was found wanting, and America’s plan failed dramatically.
With respect to Gaza, we don’t know if the US Deep State through Netanyahu, or Iran through Hamas provoked the Gaza situation, if at all. The reason for not dismissing these possibilities is that all governments move in mysterious ways, covering their tracks through secrecy and propaganda. Personally, I think cock-up theory has much to do with it. Whatever the truth, America’s declining control over Middle Eastern politics was an obvious threat to Israel. Rather than face up to with the reality of this shift in power-play and open a dialog with the Saudis and others, Netanyahu who is known to have been close to the CIA chose outright war against Hamas and Gaza to drag the Americans back in.
So dangerous has the situation become that for once the US’s deep state seems at a loss what to do. It has lost its key regional partner in the powerful Saudis who have now joined the Russia—China axis for sound economic and geopolitical reasons. The Arab Iranian enmity has been put to bed and there is now a unified opposition against the widely disliked Americans. This is why Netanyahu’s war policy is such a mistake and could turn out to be the last throw of Israel’s dice. Israel is now fighting for her very survival, and Netanyahu’s bet that the US will come to her aid and guarantee her future is far from certain.
Furthermore, the US presidential election is a hugely disruptive factor, diverting political priorities from foreign policy to domestic matters. Donald Trump signalled this in recent days, turning his back on NATO members not spending their two per cent commitments. And Trump, who is increasingly looking like being a shoo-in for the next President is more of an antagonist in trade than a military warmonger.
To the Russian’s, the US position in both Ukraine and the Middle East must look increasingly precarious. Through Iran, increasing pressure can be applied by proxy organisations on Israel, thereby challenging US weakness. The ultimate objective is clear: get American influence out of Eurasia including Western Europe, leaving the entire continent free to trade with whomever constituent nations choose.
Gone are the days when the Americans could simply manage Muslim nations by divide and rule policies. To say that the Muslim world now despises America more than it fears her is not far from the truth. CIA field officers in the region are sure to understand this, but their reports and memos to Langley appear to fall on deaf ears. The deep state in Langley and Washington is turning the Dr Strangelove parody into reality. The only thing likely to hamper these iconoclasts is the appalling state of US finances.
Earlier this month, the Congressional Budget Office produced its latest fiction in the form of its regular economic and debt forecasts. It is a Keynesian exercise in wishful thinking, which is already out of date. The CBO forecast debt in September 2024 to be $34,825 billion: It is already at $34,227 billion. It expects the budget deficit to fall to $1,500 billion. With annualised interest payments already over a trillion and the economy already slumping, I expect it to be closer to $3 trillion.
The CBO doesn’t expect debt to hit $40 trillion until fiscal 2027. I think it will be closer to that number at the end of this calendar year, because the CBO forecasts a growing economy, takes no account of extra spending in an election year, the lack of a debt ceiling until negotiations start on 1 January 2025, and an expectation that stable-to-falling interest rates will restrict interest costs to $870 billion in the current fiscal year to September.
With respect to interest costs, the US Bureau of economic Analysis says that the quarterly rate of interest annualised at end-2023 was already at $1,026 billion, as illustrated in the FRED chart below.
Also note the hyperbolic rate of increase. No wonder panicking Treasury officials are seeing their Beijing bank managers.
The reality is that the US Government and its dollar are in a debt trap. The only escape route, which is to slash public spending to produce sufficient budget surpluses to stabilise national finances, is not open to it. As soon as markets awaken to this reality, the dollar is toast, along with the entire fiat cohort because they are tied into a dollar-based fiat currency system.
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If American policy is to come to Israel’s aid, the cost of doing so would probably collapse US Government finances sooner rather than later. The propaganda war has failed to convince anyone outside the cosy NATO partnership that America has a moral and legal right to so act. The entire Asian continent and the Global South listens to Putin, not Biden.
No one in the NATO alliance seems to understand that the days of gunboat diplomacy are long over. Modern carriers are easy targets for hypersonic missiles. Furthermore, with their hypersonic missiles, China, Russia, and Iran have superior missile technology to NATO, which has none.
America and her allies are courting a military and financial disaster. With fiat currencies, and debt to GDP ratios of 100 per cent and more they are in no position to threaten Iran, Russia, and China. But with the propaganda war in full swing, convincing us Westerners that we are in the right while ignoring clear evidence, we cannot be sure that sense will prevail.
America’s debt trap is with us already. The speed of the dollar’ loss of credibility will be affected by American and puppet NATO’s belligerence. Putin’s allies and the neutrals know that the escape from a fiat dollar collapse is to possess physical gold, which is why for the last two years central banks have been buying up every tonne they can get their hands on.
Reprinted with permission from MacleodFinance Substack.
