War Spending and Central Banking

The central banking system, a system that functions under the fiat money model like the Federal Reserve, is tied to the military-industrial complex through its ability to create money, fund wars, and support large-scale government spending.

1. Unlimited Money Supply: With a central bank able to print or digitally create as much money as necessary, governments can finance wars without immediately raising taxes or cutting other spending. This allows politicians to fund military operations and defense contracts without facing immediate backlash from voters who would otherwise feel the burden directly through taxation. The Federal Reserve, for instance, can finance large-scale military budgets by purchasing government debt (Treasury bonds), which expands the money supply.

2. Debt Financing of War: Central banks enable governments to borrow money, often through the sale of government bonds, to finance wars. The U.S. government, for instance, has often turned to the Federal Reserve and global markets to finance its military expenditures, including involvement in long and expensive conflicts like those in Afghanistan and Iraq. Politicians are drawn to debt-financed wars because the immediate economic impact (higher debt) can be deferred, while the perceived political and military gains can be realized in the short term.

3. The Military-Industrial Complex: This refers to the close relationship between the government, the military, and defense contractors who profit from government spending on defense. Central banks indirectly fuel the military-industrial complex by enabling large-scale military spending without strict financial constraints. With the ability to create money, central banks reduce the need for government restraint in military spending, leading to a feedback loop where defense contractors lobby for more spending, politicians approve larger defense budgets, and central banks finance this through debt monetization.

4. Profits from War: Large defense contractors benefit from increased military spending, which is made possible by the government’s ability to borrow and spend through central bank facilitation. This spending boosts profits for corporations involved in weapons manufacturing, logistics, and technology, who in turn fund political campaigns and lobby for continued military engagement. The cycle of war becomes financially lucrative for both defense contractors and politicians.

5. Politicians and War: For politicians, war can serve as a tool to rally public support, increase government spending, and shift focus away from domestic issues. With the Federal Reserve’s ability to create money and monetize debt, politicians can justify wars without worrying as much about how to immediately pay for them. Wars become more politically feasible and attractive, especially when they can be framed as necessary for national security or economic growth.

6. Inflation and the General Population: The downside of unlimited money creation is inflation. While defense contractors and the government may benefit from this arrangement, the general population pays the price through inflation, which erodes purchasing power. Yet, inflation tends to lag behind money creation, meaning the immediate benefits of war spending are felt before the inflationary effects hit the broader economy. By the time inflation becomes a problem, it’s often too late for the public to trace it back to war financing.

In this way, the central bank’s ability to create money contributes to the perpetuation of war and the military-industrial complex, enabling massive defense spending without the immediate political cost of raising taxes or cutting other programs. The system becomes self-sustaining, as the financial and political interests behind the military-industrial complex align to maintain and grow military engagements, funded by central bank policies that favor debt and money creation.