Pentagon Offers Plan to Arm Ukraine?!

Last week the Wall Street Journal sent out an email alert titled, “Pentagon Offers Plan to Arm Ukraine.”

Sometimes foreign policy memos like this become so common that it’s almost possible to gloss over. But to think that the U.S. is about to get involved in even more foreign military action is certainly concerning, especially at a time when the financial system seems closer than ever to its breaking point.

Aside from whether it’s really wise to get involved in these skirmishes to begin with, where does the money come from to pay for it? The United States has $20 trillion of publicly stated debt. Factor in another $100 trillion or so for the unfunded liabilities (commitments to pay for items like Social Security and Medicare), and it’s not that hard to see that at some point it all has to come tumbling down.

What’s interesting to consider from a market perspective is how important the ability to print and borrow money has become to the U.S. government. All of these military and domestic spending ventures are primarily funded with debt and printed money.

Which is why the Federal Reserve might talk about normalizing interest rates and unwinding it’s balance sheet, yet 8 years laters has only raised interest rates to 1%. Of course at the same time they warn that should the data weaken, they’re ready to be flexible with policy. Starting to sound familiar?

It’s never encouraging to hear about any violent military action, and one can only hope that whatever’s going on is resolved with cooler more peaceful thinking.

Certainly it’s hard to see see how it’s in the budget. Should there be further escalation, this would be only the latest source of pressure on the dollar, at a time when it is needed the least.