The “Warfare State” Has Consumed the Middle Class

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“Shall we expect some transatlantic military giant, to step the Ocean, and crush us at a blow? Never! All the armies of Europe, Asia, and Africa combined… could not by force, take a drink from the Ohio, or make a track on the Blue Ridge, in a trial of a thousand years. At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.” – Abraham Lincoln, 1838

The United States spends roughly $800 billion a year on defense; the People’s Republic of China, about $146 billion. The Russian Federation lays out around $55 billion, annualized, while the Islamic Republic of Iran’s military spending annualizes at $15 billion – not accounting for the crippling 13%-plus inflation it’s experiencing.

Finding reliable figures for military expenditures of Syria, Yemen, Afghanistan, or the tattered remnants of al-Qaeda and ISIS would be a waste of time.

It’s enough to say that not a single one of these state and non-state actors can reasonably be expected to show up on our shores, “D-Day style,” at any point in the near future. And if you expect any of these adversaries might come ashore, cannons blazing, in Cleveland, or San Francisco, or Austin, or Bismarck, N.D., then I respectfully submit you may be watching a little too much cable news.

And in the slightly more likely event that one of these foes were to, say, set off a dirty bomb in any of these places, it’s doubtful an extra aircraft carrier would prevent it.

And yet, if the manifestly stupid, hopelessly censored mainstream media – run by just five conglomerates – were to be believed, hordes of jihadist enemies are closing in from all sides, moments away from striking.

Then again, this pale shadow of a legitimate Fourth Estate has also – just as dangerously – confused an East Coast stock bubble for real, widespread prosperity and strength.

No, folks, the real danger to American security and prosperity – what’s left of it, at least – is safely ensconced, thriving in its ultimate evil, right here…

The American Ideal – Lost?

I was recently visiting Section 60 at Arlington National Cemetery. It’s a newer section of the vast, national military necropolis, where the honored dead – men and women of all classes who have served or died mainly in Vietnam, Afghanistan, and Iraq – lie.

I was there in the cemetery on personal business. More than one person with whom I once shared beers, time, and memories are now permanent residents of Section 60, which is to say: Gone.

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Why? Because, like my colleague Thomas Lott (a veteran who left Yale in 1968 to spend the first years of his then-blonde youth in Vietnam), they believed in this country, in each other, and in the promise of our national ideals.

Red or blue, most of us, I surmise, share those same beliefs.

But I’m not sure I can say the same for the civilian Pentagon officials who lobbied and pushed the Global War on Terror well beyond its necessary expiration date for financial and political motives that have little to do with national security, and far more to do with a few well-funded lobbies off K-Street and their private checking accounts.

Whatever the political and financial dishonor perpetrated in the shadows of D.C., nothing – nothing – can detract from the valor of the men and women lying in Arlington and countless other, smaller cemeteries across the country.

They served an ideal; they represent the American ideal. Full stop. Period.

But despite all the blood we’ve spilled, the friends and family we’ve buried, I’m not at all sure that American ideal is actually serving Americans anymore.

In school, from the Pledge of Allegiance of the first grade all the way to the Constitution I revered (and studied) in law school, the philosophical foundations on which this country is built made sense. That is, the Enlightenment ideals of Madison, Jefferson, and Adams, gave me – gave all of us – a compass worth following and a nation worth supporting – be it with a rifle, a pen, a dollar, or a legal brief.

What made equal sense was the balance of powers of our three branches of government, as well as the separation of war-lobbyists (legalized bribery) and State, as well as the separation of Wall Street and State.

I believed this then; I believe this still.

But something has gone amiss. Something has gone terribly wrong.

In the years since I left the ivied walls of constitutional law and theory to live in the actual halls of practice – including stints in intelligence and Wall Street – I’ve seen an increasing encroachment on and erosion of these ideals.

The Pentagon–Wall Street–Government Axis: Not Part of the Original Plan

Stated more bluntly, Wall Street, like K-Street, is no longer separate from our “State,” but frankly sleeping in the same dirty bed.

Folks, this is a very dangerous trend.

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The President of the United States, for instance, is an almost unthinkably powerful person these days, having grown more powerful year in, year out since the Kennedy administration. The awesome power to prosecute a war, for instance, was once de facto and de jure reserved for the peoples’ representatives in Congress. Obviously, that’s de facto no longer the case.

The un-elected Chair of the U.S. Federal Reserve, too, wields horrifying, albeit indirect, power over our economy – our daily bread itself. This is nothing short of appalling. In “saving” us from the calamity of 2008, they’re going to destroy us with the cure!

In my father’s markets, the Fed was an unknown, almost invisible blip on Wall Street. Today, it’s the new Wizard of Oz – the epicenter of nearly every market headline and discussion…

Worse, its “cure” has done nothing but distort the credit markets and stage an entirely fake recovery (fake, that is, for all but the top 10% of wealth-holders). It’s unleashed the biggest securities bubble ever seen – and soon, a crash to match.

I wonder if Ben Bernanke will still be on his book tour then…

Meanwhile, the rise of the warfare state that Eisenhower warned of in 1961 is no different. It has metastasized from a collection of brave West-Pointers and military professionals into a cesspool of highly questionable civilian “advisors.”

And these same National Security “advisors,” who have slithered into the ears of Presidents George H.W. Bush through Trump, have consistently pushed a military agenda overseas that has less and less to do with America’s security than one might otherwise want to consider.

But again, I won’t and can’t go there.

But I will encourage you to ask yourselves just what American security interests you feel justify thousands pairs of American boots on the ground today in Iraq… Syria… Jordan… Mali… Somalia… Libya… Chad… Central African Republic… Djibouti… Niger… and soon, possibly Iran?

Is it to avenge 9-11? To capture Osama bin Laden? To find those elusive weapons of mass destruction?

Do your own thinking, your own fact-finding, your own research, and common-sense smell-testing. I’m not here to stand on a soap box, but simply to request you create your own.

Most of you, I’ll wager, are already asking yourselves such questions. And those of you who voted for Trump – you’ll recall that he was particularly vocal and brave, at least in the primaries, about getting Americans out of foreign-war nightmares like Syria.

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And yet we are still there – crossing swords with names like Russia and Iran over a chunk of (oil rich) territory in northern Syria…

But even Trump, it seems, could not fend off the cackle of war hawks who lurk in the shadows (and his national security board) of the very swamp he paid lip service to draining.

Also, the sons and daughters of Trump, Obama, Kushner, et al., are unlikely to be toting M-4’s onto the streets of Ramadi, Aleppo, or even Tehran anytime soon.

And needless to say, most of the sons and daughters of the top 1 to 5% here on Wall Street are not lying in Section 60 of Arlington.

Don’t believe me? I have the numbers…

But this by no means suggests that patriotism and military service are shirked by the middle or even rising upper class. In fact, 50% of the armed forces’ enlisted recruits come from the top 40% of the U.S. income distribution.

Nevertheless, the bulk of our volunteers stem from that ever-shrinking, median-income family – that “other America” in the $65,000-income range.

This is the America that lies between our two prosperous, densely populated coasts – places that I know all too well in my so-called “fancy life” and “fancy schools.”

But I know that middle, fly-over America as well. It’s where I grew up, held a baseball in my fist, and made friends who’d later enlist in wars while I won scholarships to those shiny campuses out East.

And don’t get me wrong: The sons and daughters of Choate, Andover, and Harvard have made their own contributions to service, be it with or without a gun.

There are numerous ways to stand up for one’s ideals.

But when it comes to risk, war, or economic hardship, it is becoming increasingly undeniable that middle America – the one that Wall Street forgot and that the Pentagon takes for granted-tends to suffer the most when things get, well, distorted.

Which, at long last, brings me to the very heart of the matter: Things are bad, and getting worse, for the majority of Americans.

Middle America – and the Middle Class – Has Been Forgotten

And my point is this: Middle America – that is, the America that struggles, believes, and works to make and keep America’s foundation strong – is at its greatest risk today.

Why?

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Because that America – the heart of this country – has been overlooked by the country they still believe in.

If you think this is just an opinion from a Wall Street apologist or Ivy-League cad, then let me leave you with some facts rather than platitudes.

By the way, I saved these facts for the end because I want them to sink in. To really stick.

And here they are – check them for yourselves:

  • 52% of American children live in homes supported by the welfare state. And what’s even worse, this is nothing new – but part of a long, buried American truth.

Middle class

  • 40% of U.S. Households today could not raise $400 in cash in case of an emergency without having to sell something.
  • According to the U.S. Social Security Administration, 50% of all American workers made less than $30,500 dollars last year.
  • This means that nearly 50% of American “middle class” families live just $1,000 above the national and federal poverty level for a family of five ($29,420).

In short, the historical backbone of this great country, the landscape that I was born into, is well, crumbling.

And the death blow – the coup de grace – doesn’t seem to be far off on the horizon.

The razor edge of rising interest rates is about to slice this country’s debt bubble wide open.

It’s not far beyond the phony “surging GDP growth,” “record-high employment levels,” and “earnings beats” we’re inundated with on a daily basis.

And when that blow comes, it will land on the heads of that 50% of workers earning less than $30,500; it will crush those folks who couldn’t raise $400 cash without selling something.

They’ll be ruined – again, for the second time in a decade – by something they had nothing to do with. And – again, for the second time in a decade – it will be because of the Wall Street–Pentagon–government axis, the fancy lads in D.C. and New York who’ve grown fat on the Fed carry trade or who lobby for military contracts down in the swap.

What I’m saying here, what I’m warning about here, needs to be heard by one and all, whether you’re on Madison Avenue, Malibu Beach, or Main Street, Ohio.

About the Author: Matt Piepenburg writes about stocks, D.C., Wall Street, and the surging risk of crippling recession here at SignalsMatter.com.

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