Occasional X: How it works (DXXXIII)

“American military spending is only possible because the dollar is the reserve currency. This is not an opinion. It is arithmetic. The United States runs persistent deficits that would be unsustainable for any other country. It finances those deficits by issuing Treasury bonds.” (Sony Thang) With its double deficit, America has been the profit-maker for itself and the Rest of the World. That goes hand in hand with the dollar's role as a reserve currency. The free-market economy runs on profit. Macroeconomic profit is given by the axiomatically correct Profit Law Qm:=(I−Sm)+(G−T)+(X−M)+Yd. The Profit Law implies PublicDeficit=PrivateProfit Qm:=(G−T)>0, i.e., macroeconomic profit is (co-)produced by deficit-spending/money-creation, i.e., the growth of public debt. The Law implies also that America's foreign trade deficit, i.e., Qm:=(X−M)<0, is profit for the rest of the world, i.e., Qm:=(X−M)>0, which takes the form of currency reserves. In free-market economies, public debt has increased with minor interruptions for over 200 years. Therefore, Qm:=(G−T)>0 has been a critical factor for Capitalism's survival. The free-market economy is temporarily saved from breakdown by the deficit-spending/money-creating duo of treasury/ central bank, i.e., the State. This means that the premise of legacy economics, i.e., that the unfettered free-market economy is a self-adjusting, self-stabilizing, and self-optimizing system, is axiomatically false. This means that economics is failed/fake science. Economists are not scientists. They are mostly silly wafflers for a low-IQ audience. The free-market polity is an Oligarchy with parliament / treasury / central bank / capital markets / big business / three-letter agencies as integral parts. With the other determinants excluded for the moment, private financial wealth grows with public debt. Eventually, WeTheOligarchy owns the financial assets, and WeThePeople owe the public debt and are taxed for interest on government bonds as long as the debt is rolled over. Interest payments on the debt reduce their disposable income for an indefinite time. The government taxes WeThePeople on behalf of WeTheOligarchy. This profit/interest/tax triple-whopper produces wealth for WeTheOligarchy and debt and real-income reductions for WeThePeople. Via the foreign trade balance, America distributes part of its macroeconomic profit around the world. In addition to legitimate monetary operations, the central bank is well-positioned to carry out or support illicit operations that are economically equivalent to putting counterfeit money into circulation. The volume of illicit deficit spending and money creation, as well as the quantity of Dark Money in circulation, is not publicly known. Therefore, Profit Theory, Distribution Theory, and Monetary Theory have no empirical leg to stand on. The financial sub-sector, big business, and billionaires recycle some of their profits and financial wealth to control major public, private, and political institutions. Thus, they corrupt the polity. The direction of academic scientific research is controlled by grants. In essence, this is how the self-alimentation and self-preservation of WeTheOligarchy work. Capitalism thrives on free lunches that are ultimately supplied by the duo of treasury/ central bank, i.e., the State. America is still the source of profit free-lunches for itself and the Rest of the World. It's not the absolute amount of military spending that counts; it's the DEFICIT that counts; roughly speaking: ALL government spending (including social spending and interest on government bonds) minus ALL taxes.

— AXEC (@EgmontHandtke) November 2, 2026