Woodrow Wilson’s Folly gave rise to more than the 1,000 year flood of Nazi and Soviet totalitarianism and their state orchestrated campaigns of mass murder.
It also opened the door to massive, cheap war finance. And that baleful innovation has sustained the Empire long after Hitler and Stalin met their maker and the case for the Indispensable Nation had become ragged and threadbare.
In the context of American democracy — special interest dominated as it is — the greatest deterrents to imperial adventurism and war are the draft and taxes. Both bring home to the middle class voting public the cost of war in blood and treasure (theirs), and force politicians to justify the same in terms of tangible and compelling benefits to homeland security.
We leave the draft for another day, but do note that when the draft expired in 1970 what ended was not imperial wars — only middle class protests against them.
In fact, the Empire has learned to make do, happily, with essentially mercenary forces recruited from the left behind precincts of the rust belt and southeast and the opportunity deprived neighborhoods of urban America.
But even mercenaries, and the upkeep, infrastructure and weaponry of the expeditionary forces which they comprise, cost lots of money. And that would ordinarily be a giant problem for the Imperial City because the folks in the hinterlands have a deep and abiding allergy to high taxes.
As we explain below, however, Woodrow Wilson solved that problem, too, by drafting the printing press of the newly minted Federal Reserve for war finance duty.
So doing, he opened the Pandora’s box of Federal debt monetization by permitting the Fed to own government debt — a step strictly forbidden by the stringent 1913 enabling statute drafted by the legendary maestro of sound money, Congressman Carter Glass.