“Crowding out” is a term used in the news business and public debate for instances when one story is so big it gobbles up all the news real estate, leaving little or no space for other stories.
On Sept. 10, 2001, Defense Secretary Donald Rumsfeld announced that the Pentagon could not account for $2.3 trillion in spending.
That’s a lot of money, but the next morning, terrorists struck the World Trade Center and the Pentagon. 9/11 crowded news about Defense Department accounting off the front pages.
COVID-19 has been one of those big stories for the past two years, so dominant that it has meant inadequate coverage of other important news.
In our own world of money and wealth protection, the Federal Reserve’s failure to detect inflation’s return or comprehend its scope has crowded out attention to other vital developments that endanger your wealth. Chief among them is the threat of war, limited or otherwise.
Nevertheless, it is certain that throughout history, wars, and totalitarian governments have done far more damage to countries, currencies, and human prosperity than even pandemics. Nobody knows the exact number, but the Black Plague in the 14th century is thought to have claimed tens of millions of lives. The Spanish Flu killed 50 million people worldwide in 1918-19.
That compares to some 300 million deaths by war and what R.J. Rummel calls “democide,” or government “murders,” in the last century. The numbers are debatable, but Rummel estimates more than 34 million war dead (combatants and collateral deaths) and 262 million additional deaths from democide, which includes the intentional killing of non-combatants by governments, including genocide, slave labor, concentration camps, extrajudicial executions, orchestrated famines, and so on.
And while pandemics seem to come around every couple of decades, wars are more or less ongoing. While pandemics claim lives, wars claim not just lives but cities and towns, farms and factories, roads and railways, homes, dams, schools, hospitals, sanitation systems, and other infrastructure, all of which spell lasting economic ruination and poverty.
The point is not to minimize the impact of the Coronavirus but to make sure our investment and wealth protection strategies take into consideration today’s rapidly escalating threat of war. Indeed, the standoff between the U.S. and Russia over Ukraine is growing so dangerous that it is only now – after festering and being crowded out – that it is beginning to receive some of the news attention it deserves.
Things are heating up too fast for us to detail the troop movements and charges and countercharges flying under the cover of diplomatic meetings, but things have reached a boiling point. Do not underestimate how serious Russia is about its red lines: keeping NATO from Ukraine. Students of history know that Russia will react defensively to an expansionist military alliance on its frontier (“Ukraine” literally means border) and that it will seek to secure the corridors through which it was invaded by Napoleon, Imperial Germany, and Hitler.
Whether limited or wider, wars are expensive undertakings. Their cost is borne by present income and monetary assets. The Federal Reserve was newly created just in time to help fund World War I, which it did by roughly doubling the money supply and prices along the way. Between 1939 and 1948, the Fed increased the monetary base by nearly 150%. Only price controls, victory gardens, and rationing kept the costs to the people partially obscured as productive capacity shifted from consumer goods to war materials. Vietnam War spending was a causative agent of the inflation of the 1970s and behind Nixon’s abandonment of the gold standard. It was predictable as well that war-time economics would send gold marching higher for years and that the Great Recession, the biggest downturn since the Great Recession, would follow hard upon W. Bush’s elective Iraq war.
Escalating war tensions remind us of the proverbial frog in a pan of water on the stovetop. Even as the temperature rises, the frog can never quite make up his mind to jump out. Then, suddenly, it is too late.
Today’s prospects for war seem to scream that those who have not diversified their wealth and retirement funds into gold will soon find they are in hot water.
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The opinions, beliefs, and viewpoints expressed in this article do not necessarily reflect the opinions, beliefs, and viewpoints of Red Rock Secured LLC or the official policies of Red Rock Secured LLC. Red Rock Secured LLC is not a financial advisor, is not licensed to provide investment advice and neither provides investment nor financial advice. Red Rock is a product specialist that can help evaluate your precious metals purchase options.
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