Ben Bernanke Warns U.S. Congress to Lower the Budget Deficit

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MarketWatch reports that Ben Bernanke urged the United States Congress to put the federal budget on a long-term sustainable path. “If early and meaningful action is not taken [to lower the budget deficit], the U.S. economy could be seriously weakened, with future generations bearing much of the cost,” Bernanke said in testimony prepared for delivery to the Senate Budget Committee. Bernanke said that recent narrowing of the deficit was simply “the calm before the storm” as spending on entitlement programs will begin to climb quickly during the next decade.

Now the word is that the total cost of U.S. war in Iraq may rise to as much as $2 trillion. When it was said to be $1 trillion near the beginning of the adventure, the amount was so high that it was dismissed or ridiculed. Now, we find that the tab might be twice as much. Either way, it’s a lot of money, especially if you don’t have it.

There is one thing you have to remember about empires. They are vast public spectacles. As such, they must follow the rules of all public spectacles. They must begin with lies…develop into farces…and end in disaster. No empire has ever failed to do so. When no substantial enemy threatens it, an empire must find one; and if no rival empire can be found to destroy it, it must find a way to destroy itself.

That was what we thought was really behind the war in Iraq from the beginning. There were so few terrorists, more needed to be created. This goal seems to have been achieved.

But the point where this empire is weakest is financial. Every previous empire had found a way to make the business pay, but America has not made a profit at empire for twenty years. Its businesses are now at a competitive disadvantage; they have higher costs and no domestic source of new capital. Americans do not save.

What’s more, maintaining the empire has become an expensive business. Even Osama bin Laden saw the weakness and publicly announced his strategy – he would make America bleed cash. Now, we see that this is exactly what has happened. The war in Iraq cost $2 billion per week in direct costs. It costs $10 million for each Iraqi ‘insurgent,’ whatever that is, killed. Plus, the war on terror costs billions more.

So far, at least, if the great United States empire wants to ruin itself…at least it is doing what it must.

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Bill Bonner

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