Adding to the brewing disaster, Obama has been deceived by his military and neoconservative advisers into expanding the war in Afghanistan, a large mountainous country. Obama intends to use the draw-down of US soldiers in Iraq to send 30,000 more American troops to Afghanistan. This would bring the US forces to 60,000--600,000 fewer than US Marine Corps and US Army counterinsurgency guidelines define as the minimum number of soldiers necessary to bring success in Afghanistan--and less than half as many as the army that was unable to occupy Iraq.
The Iranians had to bail out the Bush regime by restraining its Shi'ite allies and encouraging them to use the ballot box to attain power and push out the Americans. In Iraq the US troops only had to fight a small Sunni insurgency drawn from a minority of the population. Even so, the US "prevailed" by putting the insurgents on the US payroll and paying them not to fight. The withdrawal agreement was dictated by the Shi'ites. It was not what the Bush regime wanted.
One would think that the experience with the "cakewalk" in Iraq would make the US hesitant to attempt to occupy Afghanistan, an undertaking that would require the US to occupy parts of Pakistan. The US was hard pressed to maintain 150,000 troops in Iraq. Where is Obama going to get another half million soldiers to add to the 150,000 to pacify Afghanistan?
One answer is the rapidly growing massive US unemployment. Americans will sign up to go kill abroad rather than be homeless and hungry at home.
But this solves only half of the problem. Where does the money come from to support an army in the field of 650,000, an army 4.3 times larger than US forces in Iraq, a war that has cost us $3 trillion in out-of-pocket and already incurred future costs? This money would have to be raised in addition to the $3 trillion US budget deficit that is the result of Bush's financial sector bailout, Obama's stimulus package, and the rapidly failing economy. When economies tank, as the American one is doing, tax revenues collapse. The millions of unemployed Americans are not paying Social Security, Medicare, and income taxes. The stores and businesses that are closing are not paying federal and state income taxes. Consumers with no money or credit to spend are not paying sales taxes.
The Washington Morons, and morons they are, have given no thought as to how they are going to finance a fiscal year 2009 budget deficit of some two to three trillion dollars.
The practically nonexistent US saving rate cannot finance it.
The trade surpluses of our trading partners, such as China, Japan, and Saudi Arabia, cannot finance it.
The US government really has only two possibilities for financing its budget deficit. One is a second collapse in the stock market, which would drive the surviving investors with what they have left into "safe" US Treasury bonds. The other is for the Federal Reserve to monetize the Treasury debt.
Monetizing the debt means that when no one is willing or able to purchase the Treasury's bonds, the Federal Reserve buys them by creating bank deposits for the Treasury's account.
In other words, the Fed "prints money" with which to buy the Treasury's bonds.
Once this happens, the US dollar will cease to be the reserve currency.
In addition, China, Japan and Saudi Arabia, countries that hold enormous quantities of US Treasury debt in addition to other US dollar assets, will sell, hoping to get out before others.
The US dollar will become worthless, the currency of a banana republic.
The US will not be able to pay for its imports, a serious problem for a country dependent on imports for its energy, manufactured goods, and advanced technology products.
Obama's Keynesian advisers have learned with a vengeance Milton Friedman's lesson that the Great Depression resulted from the Federal Reserve permitting a contraction of the supply of money and credit. In the Great Depression good debts were destroyed by monetary contraction. Today bad debts are being preserved by the expansion of money and credit, and the US Treasury is jeopardizing its credit standing and the dollar's reserve currency status with enormous quarterly bond auctions as far as the eye can see.
Meanwhile, the Russians, overflowing with energy and mineral resources, and not in debt, have learned that the US government is not to be trusted. Russia has watched Reagan's successors attempt to turn former constituent parts of the Soviet Union into US puppet states with US military bases. The US is trying to ring Russia with missiles that neutralize Russia's strategic deterrent.
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