JUST BECAUSE YOU CAN DOES NOT MEAN YOU SHOULD
Credit: Gemini
Many readers will be unfamiliar with US folktales about "Uncle Remus" including his story about Brer Fox, Br'er Rabbit and the Tar Baby. The wily fox tricks the rabbit into hitting a "tar baby" that would not respond to his cheerful greeting. The harder the rabbit fought to get loose, the more he became entangled. Some have suggested that the wily Benjamin Netanyahu tricked the US into striking the Iran tar baby, hoping to advance Israel's interests. We do not know if Trump was gamed by Bibi or was independently keen for another dramatic military action.
The outcome of the conflict is unknown. We do not opine on the wisdom or folly of Trump's special military operation because we are not privy to any of the facts that were said to have supported it. Assessing whether Iran should be allowed to develop atomic weapons is also beyond our job description. Clearly, it is not in Israels' interest for its implacable foe to have access to them. However, the US is protected by the great moat of the Pacific ocean and therefore not in any present danger. That is to say, the US had no defensive justification for its actions - it was not under attack. Thus, the war is an "offensive" action that requires solid justification. Trump has offered a number of conflicting justifications. History will judge their merits.
America's sixth president, John Quincy Adams, gave a speech on July 4, 1821 saying, "America goes not abroad in search of monsters to destroy." He urged the nation to practice neutrality and non-interventionism, lest "America become a dictatress of the world" and lose its status as an honorable republic. That was sound advice that has been continuously ignored. It is worth remembering that the people of the world have not elected the US to be their policeman, much less their judge, jury and executioner.
Israel may have told Trump that many high-level Iranian political and military leaders were soon to be assembled, could be eliminated in a single stroke and that doing so would cause the Iranian government to collapse, giving the long-oppressed Iranian people the opportunity to retake control of their country. After capturing the President of Venezuela in a lightening strike, Trump likely believed his Iranian adventure would also end quickly.
However, Trump's advisors overlooked the certainty that lower level Iranian political and military leaders would quickly step forward to resist the attack and take up the fight against the "Great Satans" of the US and Israel. They also overlooked the possibility that Iran would attack its Gulf neighbors, damage their energy and desalination plants, close the Hormuz Straight bringing essential global energy and fertilizer deliveries to a halt. They also ignored the recent evidence that conventional attacks by an overwhelming military power do not assure a quick and favorable outcome - witness, Russia's multi-year, stalemated war with Ukraine.
Following the month-long bombings, the Iranian government remains in power, the Islamic Revolutionary Corp that recently murdered thousands of unarmed political protesters still exists, the country has seized control of the Hormuz Straight and is preparing to charge extortionist tolls to ships passing into and out of the Persian Gulf - the latter in violation of international law of Freedom of the Seas. Iran also retains its nuclear enrichment program and continues to support terrorist organizations such as Hezbollah. The present status quo far worse than existed before the conflict started.
Military conflicts are not our beat, however their economic consequences are. Gas, oil and fertilizer prices have soared. When the conflict eventually ends those prices will fall but not back to prior levels. That will have world-wide inflationary impacts. Trump has also asked Congress for an additional $200 billion to fund the current operation and he proposes to increase the annual military budget to $1.5 trillion. The US must also pay to replace hundreds of billions of dollars of used missiles, munitions, fuel, lost/damaged equipment and the costs of maintaining the naval, air and Marine resources in the area.
Where will the money come from? The US government is already running nearly $2 trillion annual budget deficits. Will members of Congress cut social spending by that sum to fund the military? Not a chance - they would be voted out of office and have to get honest jobs. Will they cut any of the other categories in the chart below? Again, not a chance.
Source: Financial Underground
Thus, the US is assured of a continuing increase in its national debt and soaring interest payments on that debt. That process can only go on so long as buyers are willing to step forward to buy the massive quantity of debt. If bond buyers balk, the Fed would be forced to print trillions of new dollars to buy the debt, leading to much higher price inflation. Here is a chart of past, present and projected budget deficits, Bear in mind this chart is premised on no recessions, no further military conflicts, and no new spending programs being enacted over the next eight years.
Source: Financial Underground
The interest payment on the US national debt is currently running at $1.2 trillion a year. The debt has reached $39 trillion. The new debt will just be added to that total. David Stockman writes,
[Trump] has surely earned his place in the history books. The $11 trillion of new debt on his watch to date already accounts for 28% of all the public debt incurred in America since George Washington! In FY 2026 [beginning in Oct 2025] the five-month [budget] deficit of $1.004 trillion amounted to damn near 48% of revenues. And, again, the double-whammy of OBBBA [Trump's tax cuts] and hot war in the Persian Gulf has not yet barged their way into the budget numbers.
It took two hundred years for the US debt to reach $1 trillion. It progressed to $2 trillion in just four years. The most recent trillion of debt was added in just five months. Fed chairman Jerome Powell recently told a group of students that "the level of the debt is not unsustainable but the path is not sustainable. It will not end well if we don't do something fairly soon." However, the likelihood that Congress will "do something fairly soon" is zero. Hence, a monetary crisis is assured as spending (red line) will continue to exceed revenues (blue line) by a growing margin.
Source: Peter G. Peterson Foundation and CBO
Many nations around the world face comparable debt crises. This raises the never-discussed-in-polite -company issue of government solvency. "Insolvency" is defined as the financial state where, 1) an individual, business or government cannot meet outstanding debt obligations as they become due OR 2) when total liabilities exceed total assets. Governments that issue their own fiat currencies, that must be accepted for all payments under penalty of law, can avoid "failing to meet their debt obligations" by the simple expedient of printing endless sums of new money and forcing that debased currency on their creditors. However, governments are also deemed to be insolvent if their total liabilities exceed their total assets.
Fortune magazine recently addressed this issue. It noted that the US Treasury's consolidated financial statements for fiscal year 2025 report total assets of $6.06 trillion against $47.78 trillion of total liabilities. The magazine noted that those reported liabilities do not include the $88.4 trillion of unfunded obligations of social insurance programs such as Social Security and Medicare which are disclosed elsewhere in an "off-balance sheet" Statement of Social Insurance (SOSI). Including that sum brings the government's liabilities to $136.2 trillion. Therefore, Fortune concludes that the US government is plainly insolvent,
Congress has clearly lost control of the nation's finances. America is facing a fiscal catastrophe. The reckoning, long deferred, is becoming impossible to ignore.
The scheme by which US government officials have been able to keep the monetary plates spinning for so long is that it abandoned "sound money" in 1971 when it officially ended the dollar/gold standard. That has allowed politicians to win votes by promising and paying ever-larger benefits to voters, benefits that have not been funded by increased revenues. The government has instead continuously devalued the dollar, allowing it to defraud its creditors. This too is a hallmark of insolvency.
Artemis II
We delight in following scientific developments, especially in the field of astronomy. The photos coming from the Hubble and Webb telescopes showing the deepest reaches of space are astonishing and suggest the utter insignificance of what is happening on minor planet Earth. The payback to taxpayers upon learning the rotational speeds of distant pulsars is nil, yet the incremental increase in our understanding of the universe has some intangible value. Since mankind arose, we have looked at the heavens with fascination and bewilderment. Yet, its impact on our lives (barring meteorites) is de minimus. With this in mind, we turn our attention to the Artemis II mission that just circled the moon and returned.
The launch cost $4 billion. Program costs through 2025 have totaled about $93 billion. The recent round trip was hailed as a great success because those aboard traveled farther from earth than ever before - if only by two thousand miles. Taxpayers are told this trip was crucial in order to test the new rocket, navigation, life support, and emergency systems in anticipation of a future moon landing. This should raise the question of the program's ROI (return on investment). Michael Ramirez is one of America's best political cartoonist. This one struck us as particularly apt because it appears to question the rationale of the Artemis effort.
However, his accompanying post touted the perceived benefits of the program. He wrote glowingly about setting up an outpost on the moon, mining its minerals, and conducting scientific experiments. He noted that Helium-3 may be abundant on the moon and is worth $20 million per kilogram on earth - suggesting that we might harvest it there and return it here. He noted that some asteroids are believed to contain vast quantities of gold and platinum. The implication is that such riches can be gathered and returned to earth.
Let us distinguish between the "possible" and the "practical". To get four astronauts, who together weigh about 800 pounds above earth's gravity, it took the Moon Rocket, that is 322 feet tall (thirty-two stories), weighs about six million pounds, has a main rocket storage tank containing 196,000 gallons of super cold liquid oxygen and 537,000 gallons of super cold liquid hydrogen, and two 17-story tall solid rocket boosters that burn 11,000 pounds of propellant a second. An additional propulsion system (the European Service Module) was needed to propel the Orion capsule to the moon and back.
Should you want to engage in mining on the moon, you would need mining equipment (excavators, haulers, etc.), refining equipment to separate the mined material to high purity for return to earth and operators for both. That would necessitate constructing housing, providing a continuous supply of food, oxygen, water, equipment and health care for the moon workers, periodically bring in fresh workers and return the others home. You would also have to deal with the inhospitable nature of the moon (equatorial daytime temperatures of +250 degrees (+121C) and nighttime temperatures of -208F (-133C).
If it costs $4 billion to get just four people to circle the moon, the cost to engage in mining the moon's resources would be staggering. It would take vast quantities of Helium-3, gold and platinum to make it worth the effort and the risks. If instead, the goal of returning to the moon is simply to beat the Chinese there, the US succeeded in doing that over fifty years ago. If Artemis is supposed to be a prelude to a trip to Mars, realize that Mars is about 25 million miles from earth at its closest, travel time there is some 6-9 months with the total trip lasting several years. The Mar's Rover has already been there and supplied a great deal of information about the planet and confirmed that it also is not practically habitable.
When considering whether to make huge expenditures of taxpayers' money either for war or exploration, political leaders must consider competing needs. If your roof is leaking, causing serious damage to your home, do you repair your roof or spend your money on a vacation to the Caribbean? The US government's fiscal roof is in dire need of repair. This is not the time to engage in costly and dramatic, but unnecessary, activities. Just because you can does not mean you should.
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