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War was a costly endeavor for kings in the good old days. They had to rely solely on tax money for all the expenses. Later, they figured out how to fund it by debasing the money. However, this method also had severe limits. Because cash was commodity-based, the debased coins would quickly lead to severe inflation, which would cause unrest in their subjects. Since kings had to go to the war front away from the capital and fight the war themselves alongside their troops, unrest at home could be extremely dangerous. That is why they did their best to avoid debasing the money; even if they did, it was minimal in most cases. Once they started debasing money, they had to find a way to end the war quickly. Otherwise, they could be sure that they would be dethroned.
Some, like Lincoln, dared to introduce worthless paper money during the war, but this bore a lot of risk. Lincoln was lucky that the Confederates also had severe inflation. So, by breaking away blacks from the Confederate army with proclamation, he was able to win the war. But there were no concepts like never-ending war and war against unspecified or poorly specified enemies, targets, and goals. In most cases, anyone besides military personnel would not even notice that a war is going on. Unless the war was fought under intense religious fervor, rarely was there mass killing or destruction of private property and businesses. Armies sometimes may loot on their way to the war front or return to get rations, supplies, and similar stuff. But that was it.
It was not until World War I that mass-scale destruction became a thing in wars, along with the limitless war fronts and indiscriminate bombardments, thanks to the era of central banks. Ron Paul could not be more right when he said it was not a coincidence that the century of war coincided with the century of central banks. Central banks reduced the dependence on direct tax money and started indirectly taxing people. Direct taxation was also always a cause of heavy demands from the public to end the war. So, now, an unlimited war could be fought in space and time because money was no longer an issue. Central banks could now print large amounts of money.
Of course, the indirect tax that replaced direct taxation to a great extent was inflation. Printing large amounts of money to fund the war would cause incredible inflation, reducing the value of earned money, hence indirectly taxing people. Nazi Germany went to the extent that it caused hyperinflation. Money became worthless. People would have to carry a lot of cash in their trunks to do routine grocery shopping. Inflation in other warring countries was massive, too. Inflation made people’s lives far more complex than any other factor. It destroyed businesses, jobs, and buying power, causing starvation and malnutrition. Increasingly, one income was insufficient to care for the family, pushing many women into the workforce.
Of course, the situation did not improve after the First World War or even after World War Two. It only kept getting worse. At least the currencies were still attached to gold, which limited the money printing and inflation to some extent. But, in 1971, Nixon detached the dollar from gold and opened the door to inflation. Incredible inflation hit the US soon after the end of gold standard until Carter appointed Paul Volker as the Fed chairman. He implemented radical policies that no one dared to place and enforce. He raised interest rates by almost hitting twenty percent. He was able to stall inflation and helped the US economy to get going again. But that period of inflation and high interest rates was tough on Americans.
The trends of keeping interest rates low and easy money did not end. The encouragement for baseless, useless, and wasteful wars also stayed alive. So, we became the de facto police of the world. Americans were indoctrinated to take the moral high ground. They assumed the duty of spreading Democracy around the world. In the meantime, one bubble after the other was inflated by easy money, leading to an inevitable bubble popping one after the other. The Economy became a roller coaster. Boms and busts became a routine. Each subsequent bubble was more significant than the other, hence the bust. Dot Com, Real Estate, Stock Market, Crypto, Student loans, Consumer and commercial credit, there were and are bubbles all around us, either already or ready to be popped.
Needless to say, it was never the government’s fault, Greedy capitalists, bankers, Internet, Technology, China, Russia, you name it. Everyone else was at fault except the actual culprit, i.e., the Federal Reserve. It could not be the Fed’s fault because the Fed was making life of politicians very easy. They could go to war anythime; they could start any welfare program anytime; they could favor their funding providers, aka crony corporations; they could bribe their favorite regimes whenever they wanted. They could get outrageous amounts of money for the wasteful programs in their constituency; they could legislate in and about anything. So, it has been challenging to get a vote even on auditing the Fed.
Above all, the Fed has made it possible to start an unending spree of wars. War on drugs, First World War, Second World War, Vietnam, Korea, Iraq, Afghanistan etc., etc. Wars for no good reason, wars with unspecified ends and goals, wars against people who could not reach the US even in their wildest dreams, wars against enemies of other people, wars against dissenters of different governments, wars against factions in other countries, all in the name of spreading Democracy and to make the world a better place. The question is, how do you make the world a better place with war? After all, war is not just war; it leaves lots of scars on all parties involved: dead people, destroyed properties, businesses, and families, and people disabled mentally and physically for life. But the Fed is that stupid blonde in your school who could get away with anything and everything.
