The following is a direct excerpt from Marty’s Bent Issue # 1136: “The incentives screwed up: room 21212.” Subscribe to the newsletter here.
The externalities of unfettered money printing are extremely overweight on the negative side of the spectrum. When the government has the capacity to work in conjunction with central banks to print money from scratch to fund an activity, those who control the management of that activity are incentivized to waste extremely to justify their printer-funded budgets. to tickets. There’s no better example than the U.S. military, which currently has an annual budget of $ 768.2 billion for 2022.
Year after year, puppets in Washington DC debate whether or not to increase the military budget. Inevitably, in the long run, the budget has reached obscene levels. Why is this happening? How can this happen? And what does an ever-expanding budget do to the incentives of military officials?
Those in the Pentagon who hit the Hill to explain how much they need in any given year to Puppets will tell you that the “why” is that there are ever-increasing external threats America must defend against. and that they will need more money to protect themselves against them. In reality, as our friend GodSaysHodl explains above, the “why this is happening” probably has more to do with the fact that bureaucratic entities like to have money to spend and they don’t get it anymore. if they seem to need it.
How exactly do you justify a larger budget? Again, we’ll turn to our friend GodSaysHodl who gives us a peek behind the curtain via memories of his time in the Air Force, which involved spending money on unnecessary goods at the end of the year to make it look like the military had spent its full budget and was therefore warranted when the top brass began negotiations on the Hill for the following year’s budget. It’s not an alien threat and a need to defend against it that drives this budget up, but greedy humans working under a perverse incentive system that prioritizes waste over safety. And one could argue that this perverse incentive system leads to things materially worse than waste. Does being needlessly antagonistic on the world stage mean more spending and higher budgets? I think it can certainly be argued that this is the case.
What better way to reap the cash printer profits than to go out and annoy the world, overpay the defense contractors, then come home and pretend the people you pissed off? are now threats against which you need more money to “defend” yourself? You know what they say; when there is smoke there is fire.
As an American, I am continually appalled that these budgets keep increasing as the quality of service provided has been steadily declining throughout my life. You could argue that the unnecessary and constant foreign intervention by the US military has made my life worse. Bombing random people in the Middle East only breeds extreme anger on their part, making them more likely to attack the United States. Putting the physical well-being of citizens at risk. This is only a potential second-order effect.
A good way to help justify a higher budget year after year is to have a high speed of military grade equipment circulating in the various branches of the military. Equipment that is a few years old is being replaced with brand new equipment, and that equipment that is not new is “recycled” through the process of militarization of the national police force. Police forces, which now resemble occupation forces, tend to take this image to heart and act on it; feel empowered to violate the civil liberties of Americans living in the communities they are supposed to monitor. This is exemplified by “no-hit” raids, confiscation of civilian assets at borders and the use of intimidating force during legal and peaceful protests. Over the course of my life it seems that the term “innocent until proven guilty” has been completely reversed, and I wouldn’t be in the least surprised if the ripple effects of overspending by the military allowed by unhindered printing at the Fed played part of that.
How would the incentives change if bureaucrats were unable to access a ticket printer? Would military officials think twice about foreign intervention because the cost of failure would increase dramatically? Would the emphasis be more on strengthening our defenses at home while trying to negotiate peace abroad to avoid any potential physical conflict? I think it can be argued that, yes, those are probable outcomes. A Bitcoin standard encourages efficient allocation of capital, economic cooperation, and more free trade, which has historically led to more peaceful outcomes.
Fix the money, fix the world.
I hope this article doesn’t give the impression that I don’t respect those who risk their lives to genuinely defend the ideals on which America was founded. I’m just trying to highlight the high-level incentives that increase the likelihood of negative outcomes for everyone involved.