By Greg Coleridge.
There are many reasons why nation-states start or join wars – including the current Russian invasion of Ukraine. Controlling natural resources is certainly one of them.
Whatever the reasons, banking corporations and other financial institutions in the U.S., among many corporate sectors, profit enormously from wars – causing massive harm to people, communities, the planet, and self-described “democratic” political systems.
This equation may best describe the reality: Dollars = Debt + Destruction + Defense
One doesn’t have to have a Ph.D. in mathematics or be a computer science genius in algorithms to know that financial institutions in the currently designed monetary system accumulate huge profits (dollars) when nation-states engage in warfare and militarism. This has been true throughout history.
It’s the sum total of these factors:
Wars are costly. Nation-states don’t pay for them out of their reserves. They borrow money by selling U.S. Treasury bonds. Banks profit from interest earned from purchasing U.S bonds. Financial institutions that are primary dealers of U.S bonds profit from selling them. The longer and more costly the war, the more these banks profit. Perpetual wars – like the 20-year-long U.S. war in Afghanistan – yield perpetual profits.
Secretary of Defense Lloyd Austin’s recent admission that the U.S. strategic goal toward Russia was to weaken them implies the U.S. has no interest in diplomacy in the short term. Military quagmires are fantastic for the bottom lines of many banking corporations, as they are for specific military contractors. Peace simply isn’t profitable by comparison.
Federal spending for wars also often results in domestic spending cuts for basic social and economic needs. This includes cuts to state and municipal governments. The financial squeeze results in issuing municipal bonds (as debt). Financial corporations make money from the interest earned from purchasing these bonds. Bank departments that are municipal securities dealers also make money from selling municipal bonds.
Many other corporations profit from the privatization/corporatization of any number of public services if states and municipalities are forced to sell bonds to remain financially solvent.
In addition to human fatalities and injuries, wars damage or destroy physical infrastructure. Increased national debt incurred by nations to pay military contractors to produce weapons that are used against other nations to destroy water systems, bridges, dams, hospitals, energy plants, ports, etc. which must be repaired.
International financial aid to war-torn nations is sometimes in the form of grants, but more often they are loans. International financial institutions like the World Bank and International Monetary Fund provide loans, which earn interest. Most of these loans have specific conditions, called “structural adjustment programs” (SAPs). These are policies that, among many factors, make it easier for foreign banking and other corporations to gain control of the economy and privatize services that were previously public. This is enormously profitable for banks.
“Banks and bullets” go hand-in-hand. A recurring justification for corporate profits, including bank profits, generated from war and conflicts is “defense” – defending people, another nation, “democracy,” our “national interests,” and/or our “way of life.” The dominant narrative isn’t about waging war or attacking but about defending. The War Department was renamed the Defense Department, the Secretary of War became the Secretary of Defense and the War Budget became the Defense Budget after WWII to conform to this narrative.
Many past U.S. military ventures and the existence of 750 bases and installations in more than 80 countries and territories have been explained as providing “defense.” The U.S. military presence in all these places is more about creating or maintaining a “safe business climate” for U.S. based transnational corporations, including banks and other financial institutions to make products, extract resources, maintain open markets, and whenever possible privatize/corporatize public services or assets.
Smedley Butler, a retired U.S. Marine Corps Major General, gave a speech in 1933 on War is a Racket. In it, he stated the real reason behind militarism, “I spent thirty-three years and four months in active military service as a member of this country’s most agile military force, the Marine Corps…I spent most of my time being a high-class muscle-man for Big Business, for Wall Street and for the Bankers. In short, I was a racketeer, a gangster for capitalism…”
Just Money and Democracy
Banks create money “out of thin air” as debt when issuing loans which results in mammoth profits. Their concentrated economic power through the misnamed Federal Reserve Bank (which is largely private/corporate, not public) has exerted tremendous political power over public policies – both domestic and international. Financial corporations are part of the largest single sector of campaign contributions to federal candidates and political parties.
Banks in the current monetary and political systems profit from war – or “bank on war profits.”
A just or sovereign money system, as promoted by the Alliance For Just Money, would reduce their political influence, including whatever interests they have to promote or perpetuate wars and conflicts for profit.
Monetary transformation of this kind, however, is inextricably linked to political transformation. Needed is the abolition of the constitutional “rights” of corporate entities and the power of the super rich through political contributions and investments to influence political and economic systems. Move to Amend’s We the People Amendment is one approach toward this end.
Since the power of financial corporations and other undemocratic financial institutions is global, what’s needed is global monetary and democratic transformation. More systematically is the creation of an inclusive and powerful democracy movement. We don’t have a JP Morgan Chase, CitiBank or any other banking corporation problem – or a Federal Reserve problem – or a World Bank or IMF problem – or even any domestic or international banking regulation problem. Ultimately, we have a democracy problem – as in a profound and declining lack of power and authority by people who are adversely affected by decisions unable to have a real voice in the decision-making.
Creating a powerful and inclusive democracy movement needs to be a goal operating alongside monetary transformation.
Read Greg Coleridge’s Common Dreams article, “War Is (Still) A Racket: Corporate Power and the Russian Invasion of Ukraine.” His article was also featured on Russell Brand’s YouTube channel. Original post on The Alliance For Just Money Blog, May 10, 2022