The Collapse of Another Empire

Cameron Nehrer
May 15, 2010

In a dramatic five-part series of allegorical paintings, Thomas Cole echoed the fear that all civilizations, including our own, must someday perish. The argument he made over a century ago is now becoming true with the collapse of the American Empire. This essay will provide a background of the paintings by Cole and the arguments made within his art as well as give historical evidence to prove his arguments to be true. The characteristics of our empire as well as its implications will be discussed within two different areas of focus: the central bank, and the military-industrial complex. I hope that this essay will provide the reader with an insight to our current situation and awareness of the importance of learning from the past.

All empires move through stages, as Thomas Cole suggests, in his five-part series of paintings called The Course of Empire.  It is an illustration of the life cycle of a great power in civilization. In the series, Thomas Cole paints a picture of each stage of empire in which he names: The Savage State, The Arcadian or Pastoral State, The Consummation, Destruction, Desolation.  In the first, The Savage State, it shows a lush wilderness populated with hunter-gatherers, the beginning of an empire. It is scarcely populated and not industrialized. The painting has visual references of Native American life.  The Arcadian or Pastoral State shows a more settled land with agrarian references.  The settlers have cleared the trees, planted fields, and built a temple. The Consummation shows a much more elaborately built settlement with crowds of people surrounding.  There are merchants and consumer-citizens all around. The overall look of the painting suggests the peak of the empire. Then comes The Destruction, which shows the elaborate settlement being attacked and destroyed, burning and crumbling to the ground.  Finally, Desolation, the final painting, suggests the aftermath of an empire.  Crumbling remains of a lost city fill the area with not a person in sight.  The series shows the details and characteristics of an empire in each stage and has a clear message: all empires are certain to decline and fall.  Could it be that America is on the precipice of collapse; are we heading towards Cole’s Destruction stage?

                   
             In America today we seem to be in a state of corporate exploitation at home and imperial exploitation around the world.  Since World War II, the U.S. government has expanded its reach with an aggressive voraciousness both at home and abroad.  The rise of the American Empire has been swift, silent, and certain.  A Central Bank that inflates the money supply and a growing amount of military conflicts are the two most obvious pieces of evidence that America’s growth as an empire is underway. The supposed land of the free and home of the brave is now nothing but an Empire led by a corporatist machine-like government.  Of course, this may come as a surprise to you.  This is because America is a stealth empire; in the disguise of being some arbitrary benevolent force with noble ends worthy of attaining.  Among many other things, the American Empire has led to an unsound economy, endless wars, and major social problems.  If we are not already in the Destruction stage that Cole painted, any attempt to halt the rise of the American Empire is our only hope in avoiding the future destruction.

There are many issues to cover but this essay will discuss two major issues:  the Federal Reserve and the role it plays in buying government debt to finance the Empire, and the merger of state and corporate interest in the economy and war.  Both of these issues have led to the expansion of a massive Empire that is on the brink of collapse.             

                    
             It’s important to understand how the empire is financed. Typically, there are three ways of financing war and government in general: taxes, debt, and printing money (inflation).   Taxes are the most direct and most painful way of financing the government.  This is arguably the most democratic way, in terms of allowing the public to get a clear view of the cost of government. Debt is a little less painful because it enables politicians to impose the burdens of spending today on future generations, as far as the tax burden. That is why politicians like debt.  They can shower their constituents with handouts and they don't have to raise taxes immediately.  Basically they can have their cake, eat it too, and split the future generations’ cake with the special interest groups that elected them. But this still isn’t as bad as the last way to finance an empire.  The last option is inflation, or the expansion of the money supply. This is only possible when the state imposes legal tender laws and controls credit through the use of a central bank.  Legal tender laws guarantee the Federal Reserve with a monopoly on counterfeiting currency in order to then loan that currency to the government at interest.  This is inherently unsustainable. That is if the public is informed of what is going on. 

                  
             When one is asked “what is inflation?” The typical answer is,  “rising prices.” This is like saying a burning forest is fire.  Its simply defining some phenomenon, in this case rising prices, by what caused it. Too simply define inflation as rising prices is begging the question. This circular reasoning is misleading and often used by those who have an interest in hiding the true cause of rising prices. For it is inflation that causes higher prices, and the creation of money that causes inflation.  Inflation occurs when the new money is created, thus expanding the money supply.  As this new money works its way into the market it drives prices up.  When there are more dollars in the market place chasing the same amount of goods, basic supply and demand models tell us that the price of goods will rise. Essentially, the value of the dollars goes down relative to goods and services as a result of an increase in the money supply. Inflation is the worst way to finance an empire in terms of the invisibility of the cost of any government program because not only is it unseen by the average person, but when the prices do go up, the typical person tends to blame it on the business's who are charging the prices, or the “free-market”, or “not enough regulation” and so on.  So inflation eventually leads to an ideological attack on capitalism because the government, the court historians, and the media pundits have a strong interest in diverting your attention away from the growing empire and on to an attack on an ideology that is opposed to imperial expansion.  With the recent collapse in the housing markets, and the looming world debt crises, the central banking system continues its business as usual in perpetuating debt and speculation.  

America’s adoption of the Federal Reserve System, our Central Bank, came in 1913 with the help of Woodrow Wilson the 28^th President of The United States.  Jointly owned by private banks, The Federal Reserve acts as an arm of the government and is directed by government-appointed officials.  According to the “Federal Reserve Bank of New York” this is their description for what they do,

“The Federal Reserve Bank of New York works within the Federal Reserve System and with other public and private sector institutions to foster the safety, soundness and vitality of our economic and financial systems.” (Federal Reserve Bank of New York)

How safe and sound are our financial institutions?  After all, it is pretty obvious that our economy is in shambles.  Our National Debt alone should raise the flag.  Our national debt as of May 2010 is 12.9 trillion dollars.  This debt is clearly a result of building an empire and can’t possibly continue forever.  The real national debt is much higher when you include the government’s unfunded liabilities.  What are unfunded liabilities? Underfunded social security obligations, underfunded medi-care obligations, unfunded military pensions and unfunded civil servant pensions, and the list goes on. The bottom line here is that the government isn’t collecting nearly enough in revenues to pay for its total projected liabilities.  

            
              The only way our government can lower their amount of debt is through higher taxes or inflation.  But given the current Fed policy, it is likely that we will see inflation.  When creditors begin questioning the U.S.’s credit worthiness, which is starting to happen, demand for US T-Bills decreases.  Of course when there is a decrease in demand for T-Bills, or more accurately U.S. government debt, The Federal Reserve in a frantic attempt to stop deflation buys T-Bills from the government.  The result is, money created out of thin air, which is then loaned to the government at the expense of every American who holds their wealth in dollars.  This method of inflating the money supply to buy government debt is exactly why we have inflation.  The U.S, with the help of the Federal Reserve, is running bigger ponzi schemes than Bernie Madoff could have ever dreamed up.  But as all ponzi schemes come to an end, so will the U.S.’s.  As the U.S. continues a policy of paying off debt by going further into debt by selling T-Bills, eventually the demand for the T-Bills will completely dry up and the U.S. will have to depend on the printing press in order to avoid defaulting.  This will cause high inflation if not a complete currency collapse.

                        
             It is then clear to me that the value of all fiat currency is going to go down more and more everyday as a result of the coming debt crisis.  The term fiat is Latin and means “let it be done”. Fiat currency is established only by government decree.   This sounds normal to most people, but true free-market capitalism principles are completely against the central planning of an economy.  Actually one of the “ten planks” of communism is, “Centralization of credit in the hands of the state, by means of a National Bank with state capital and an exclusive monopoly.”  The Federal Reserve essentially has a monopoly on the legal counterfeiting of money, and this seems to be exactly what Marx had in mind.  But the means of financing an empire through inflation is a sneaky trick.  It is a hidden tax on all Americans.  How long can this scam continue?  Especially if most politicians and mainstream economists have the opinion that the American empire is taking on the role of a “too big to fail”.  

                    
             In his book, What Has Government Done to Our Money?, Murray Rothbard wrote that, “Central banking is now put in the same class with modern plumbing and roads: any economy that doesn’t have it is called “backward,” “primitive,” hopelessly out of the swim.“ (80) He argued in the 1963, that people had a blind faith in the idea of central banking, and in 47 years not much has changed.  All economically developed nations, and most developing nations possess a central bank. The world’s economy is pretty much ran by central banks, yet most people, in blind faith, don’t even understand what the central bank is, or even what it does. Rothbard explains that, “the Federal Reserve not only holds a monopoly on the creation of currency, but is also granted the exclusive privilege of lending its currency, the Federal Reserve Note, to the United Stated Federal government.“(81) This is a combination of powers that has led to massive amounts of debt and inflation, and subsequently the funding of the American Empire. Military expansion and foreign intervention is no doubt propped up with the help of the Federal Reserve through inflation. The result of having a central bank has been not only endless military conflicts and wars of mass proportion, but also an extremely volatile economy.  High inflation makes economic calculation almost impossible when prices are rising rapidly. Business planning becomes chaotic in a time of inflation, and that hurts everybody.  This type of chaos and instability is evidently the beginning of the decline of the American Empire.

It is important to acknowledge that the century of total war coincided with the century of central banking.  If governments didn’t have a money making machine to rely on, when it comes to financing war they would be forced to economize resources.  There would be an incentive to find diplomatic solutions that prevent war, and if wars did start, they would be ended as soon as possible.  Now that countries have central banks, governments can print what they need, and the fiscal limits on war are removed.  As Ludwig von Mises wrote in 1919, "One can say without exaggeration that inflation is an indispensable means of militarism. Without it, the repercussions of war on welfare become obvious much more quickly and penetratingly; war weariness would set in much earlier."(163)

There is no question that financing massive amounts of government and war through inflation leads to an even bigger empire.  So as a rule, as Mises said, “The longer a war lasts, the more centrally planned and government controlled the entire economy becomes."(165) So to the extent that the government is able to hide the costs of war with inflation it puts us further and further on the road to a collapsed empire.  Economic fascism, militarism, corporatism with government collusion and organized special interest groups are all the consequences of using inflation to finance an empire.  If the people of America hope for a better future, they better step back and examine the direction in which we, as a country, our moving. 

Though most Americans have never experienced war through first-hand personal experience, the implications of war on society are massive and affect the majority of human beings on earth whether they realize it or not.  Just as in monetary policy, the actions taken by our government regarding foreign policy are hardly understood and rarely questioned.  There is little understanding of geo-politics; some are even clueless of the reality of the wars and conflicts that we are involved in.  Almost every college student can name the latest “American Idol” or tell you who was recently on “Dancing With the Stars”, but much fewer could tell you what the “Council on Foreign Relations” is, or what kind of consequences our foreign policy might have on the world. But the average college aged adult is apathetic when it comes to politics.  They have grown up in an era that has seen both republicans and democrats call for two different brands of the same type of government: one that has perpetuated war and aggression around the world as well as at home.  What ever happened to the Jeffersonian foreign policy of, “Peace, commerce, and honest friendship with all nations—entangling alliances with none”. (Paul i) Or what about James Madison’s idea that, “No nation could preserve its freedom in the midst of continual warfare.” (Paul 129) 

Unfortunately, war has been justified over and over again as a means to attaining political goals.  In just under 200 years the United States has seen military conflicts and wars that have led to destruction, bloodshed and the loss of many lives. While some revolutions and conflicts in history may have been legitimate, it’s safe to say that State wars have proved futile for the most part, are extremely costly and should therefore be condemned.  The War of 1812, The Mexican War, The Civil War, The Spanish-American and Philippine American Wars, World War I, World War II, The Korean War, The Cold War, The Vietnam War, and now The War on Terror, among many other military conflicts, have all been not only destructive but also arguably avoidable and unnecessary.  The United States Foreign Policy, especially in the last century, has led to a significant number of negative consequences: death, destruction, terrorism and a massive amount of debt that will burden our children.  So why do we fight wars when, in the long run, the costs clearly outweigh the benefits?

To most people, war seems to be regarded as almost second nature or as a normal occurrence in society.  Americans are, for the most part, distant from the reality of the implications of war. Unless people have seen, first hand, the nightmares of war, or have lost a close relative or friend, most are unaware of the negative consequences that war has on society.  The U.S. government, most recently with the War on Terror but also with the War on Poverty and the War on Drugs, has been successful at convincing the public that war is always for a noble cause. Regardless of how much force and aggression is necessary in order to achieve the political goal, it is maintained that the violence is justified in the name of some sacrosanct endeavor, even despite the futile nature of violence and aggression.  Even if war puts us into massive amounts of debt, violates The Constitution of the United States of America, or is responsible for the killing of innocent people it is always said to be necessary to attain some political end.  In an appeal to utilitarianism, the political class seems to believe that the end justifies the means, regardless of what horrible means they believe necessary. In the name of what they believe to be aggregate social utility, these statists have no problem trampling over the rights of individuals. 

Unfortunately today, war and the political goals of our government supersede the Constitution and the life of innocent people, and no one seems to have much of a problem with this.  The majority of Americans are blind to the fact that there is major injustice in this world, and among the biggest contributor to that is the United States Foreign Policy and the military industrial complex it has created.  In We Who Dared To Say No To War, Thomas Woods includes an excerpt from Dwight Eisenhower’s farewell address in 1961, where he warned us about the dangers posed by the “military-industrial complex”.

"This conjunction of an immense military establishment and a large arms industry is new in the American experience.  The total influence—economic, political, even spiritual—is felt in every city, every state house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society."(206)

Eisenhower was aware of the potential conflict of interest within the arms industry almost fifty years ago.  Today the conflict of interest has grown enormous in the arms industry as well as the contracting of private firms for military services.  Of course, his warning about a disastrous rise of misplaced power has been of no help to the congress and political leaders in Washington who have ignored the blatant reality.  The U.S. now contracts private firms to provide certain services to the military, and you better believe those firms made contributions to the political decision makers.  The system is inherently corrupt, and U.S. foreign policy does not serve to protect the American citizens, it serves to protect the military-industrial complex.

The U.S. over extends it’s military more than any other country on the planet under the guise of being some sort of benevolent empire. The U.S.  has military bases in 130 countries.  We are said to be the almighty “peacekeepers” and “freedom fighters” of the world.  This is the kind of Orwellian doublespeak that we here in the establishment slogans spouted through the mainstream media.  The U.S.’s War on Terror is supposedly justified in order to rid the world of evil terrorists who despise freedom.  Media pundits and politicians use certain appeals to fear and other emotions with the use of vague words that are left undefined.

In a speech to Congress on September 20, 2001, President George w. Bush posed this question: “Why do they hate us?” His answer: “They hate our freedoms—our freedom of religion, our freedom of speech, our freedom to vote.”  Since September 11, 2001 most Americans have been lead to believe that there are sophisticated terrorist organizations that want to attack us because they despise our “freedom”.  This has been the main line of propaganda, the typical and cliché war slogan of the War on Terror. 

Many critics of U.S. foreign policy such as Chalmers Johnson, suggest that that the terrorists groups are an unintended consequence from military intervention abroad. Johnson refers to these unintended consequences as “blowback”.  Johnson, unlike George W. Bush and most of the political military establishment, goes to the lengths of asking more important questions.  In his book, Blowback, he explains the likelihood that CIA “covert operations in other people’s countries would result in retaliations against Americans, civilian and military, at home and abroad.”(ix) The political leaders and the news media, use the terrorists as fabled enemies of the public in order to gain support for war. As Johnson suggests, these terrorists aren’t attacking “America”, they are attacking American foreign policy. “Employing the strategy of the week, they killed innocent bystanders, whose innocence is, of course, no different from that of the civilians killed by American bombs in Iraq, Serbia, Afghanistan, and elsewhere.”(xv)

The rise of imperial power has major effects on society as a whole. In Florence Tuttle’s poem, If: A Mother to Her Daughter, she brings to light the negative impacts on the character of the citizens in a country at war.  She exposes the contradictions in the logic of “loyal patriots” who never dare to question the imperial nature of the State.  In lines 13 through 18 of her poem, which is included in We Who Dared To Say No To War, she alludes to the degradation of integrity in the majority of the people while in a state of perpetual war. 

If you can keep your woman’s spirit

And dull the charge of murder on your soul,

If you can ease your conscience with a bandage

And daily sit and dumbly roll and roll;

If you can sing “My Country first” and never

Observe that lands melt freely into one; (156)

Tuttle wrote this poem, during WWI, for her daughter in hopes that she would understand the hypocrisy in war and the injustice it brings about in society.  Her work of art has an amazing way of conveying such a strong message that is still relevant today, though it was written over 90 years ago.  

      
             In the past century, the wars waged by the U.S. have caused devastation.  There is no possible way that the citizens of this country would be putting up with financing wars through direct taxation.  The wars are long, senseless and are in no way benefiting the average person.   All empires have fallen from within after expanding their imperial powers too far; America is no exception.

     
             In the direction this country is headed, and at the pace in which it is moving, America will quickly and possibly abruptly collapse into complete destruction.  As Cole points out in his series of paintings, no empire shall escape the fate of decline or collapse.   It is shockingly clear that both the actions of the Federal Reserve Bank and the foreign policy actions taken by our government are leading us toward an ugly future.  Nial Ferguson, a financial historian, gave us this warning in an article posted in the L.A. Times. “Most imperial falls are associated with fiscal crises. Alarm bells should therefore be ringing very loudly indeed as the United States contemplates a deficit for 2010 of more than $1.5 trillion -- about 11% of GDP, the biggest since World War II.”  Regardless of the false reality portrayed on the major media there is plenty of truth to be found in history. Let it be known that the downfall of civilization is that we don’t learn enough from history.


Sources-

Ferguson, Nial. “America, the Fragile Empire”.  La Times Online.  May 9, 2010.

http://www.latimes.com/news/opinion/la-oe-ferguson28- Feb. 28, 2010

Johnson, Chalmers. Blowback: The Costs and Consequences of an American Empire.          

                    New York: Metropolitan Books/Henry Holt and Company, 2000.

Mises, Ludwig von. Nation, State, and Economy. New York: New York University 

Press, 1983)

Paul, Ron. A Foreign Policy of Freedom.  Lake Jackson, Texas: The Foundation for

Rational Economics and Education, Inc. 2007.

Rothbard, Murray. What Has Government Done To Our Money? Auburn, Alabama:

            Ludwig von Mises Institute, 2005.

Woods, Thomas. We Who Dared To Say No To War: American Antiwar Writing From

1812 To Now. New York: Basic Books, 2008.