Is War the Only Way Out?

Written By Alex Koyfman

Posted November 17, 2016

Anybody who tells you that Franklin Delano Roosevelt was a great president is either suffering from dementia, or simply doesn’t understand history. 

Despite his unprecedented four presidential victories, he was, arguably, one of the worst Commanders-in-chief of the 20th Century… A man whose policies would have undoubtedly torn this nation limb from limb both economically and socially. 

Though it’s not fair to blame the Great Depression on him, as the genesis of that came years earlier, thanks to unregulated, manic speculation on Wall Street, it was his New Deal response that would have put the nail in the coffin had world history not intervened. 

As Democratic presidents tend to do, even to this day, his answer to the Great Depression was unprecedented government spending. 

Through this program, called the New Deal, FDR created jobs by funding public projects all across the country. 

Highways, dams, bridges, tunnels, canals, schools, universities, hospitals, and anything else his Public Works Administration could think of — more than 34,000 in all — consumed more than half of the nation’s steel and concrete in the most aggressive job creation campaign in history. 

The Road To Hell Was Paved By FDR’s Public Works Programs

The problem was, it just didn’t work. 

FDR’s fireside chats — the speeches he gave via radio on a regular basis, to keep American citizens up to date on the state of the nation — certainly made him the most beloved leader of the era, and the first president ever whose voice was universally familiar to the average American. 

And jobs were created, but the issue was that these jobs simply didn’t add enough value to the economy to establish a pattern of growth. 

New highways and bridges made travel throughout the nation easier, and schools helped to boost national educational standards, but at the end of the day, this was too little, too late to affect an atmosphere of economic expansion. 

The infrastructural foundation that FDR established for the U.S. lacked a key element — demand for new industry. 

Not unlike a bodybuilder who works out incessantly, but never consumes any protein. 

The nation slipped further into the Depression, even as the New Deal accelerated. 

But then, world history threw FDR a lifeline. 

The Biggest Wealth Builder Ever

The deadliest armed conflict in human history began in Europe in 1939. 

An isolationist, FDR refused to send American troops into battle as Nazi Germany consumed most of the continent, while Imperial Japan did the same in the Far East. 

What he didn’t hesitate to do, however, was send the tools of war over to our allies. Planes, ships, bombs, guns, food, and every other kind of supply necessary to fight 20th century war was produced and shipped across the Atlantic to be used, primarily by British, and then Soviet forces as they fought off the fascist onslaught. 

newdealchart

It was the protein that the U.S. needed, desperately, to grow… The external demand for goods that put America’s factories to work producing more than the rest of the world put together. 

The war was three years old by the time American troops first hit European battlefields, and lasted just three more years. 

By the time it was over, Europe and much of Asia lay in ruins; and the winning side was heavily indebted to its creditor and savior — the United States of America. 

It wasn’t until a few years after the close of the war that the American economy finally returned to pre-depression-era levels of prosperity. 

In the years that followed, the debt incurred by our European allies continued to pump life into the American GDP, while the American Dollar came to reign supreme as the world’s reserve currency.

Credit Given Where It Wasn’t Due

FDR, now dead, was remembered fondly. His fireside chats forever stayed imprinted on the hearts and souls of American workers and servicemen and even to this day, surviving members of that generation swear that this man saved the world. 

The truth is… He didn’t save the world. The costliest and deadliest war in history saved his legacy. 

Sadly, history just may be repeating itself. 

One of America’s greatest physical attributes is its remoteness from the rest of the industrialized world. 

Separated from Asia by the Pacific, and from Europe by the Atlantic, our major national rivals would need mountains of resources and manpower just to reach our shores. 

When it comes to invading their neighbors, however, that can be done on foot. 

Perhaps even more importantly, however, is the geopolitical makeup of Europe and Asia versus North America. 

Europe, when counting both East and West, is home to 50 nations. Asia is home to 48. Africa, 54. 

North America is home to just three countries, with the U.S. sandwiched conveniently between two of its biggest trading partners; nations which depend on us more than we depend on them. 

Location Location Location

So while our neighbors would be more likely to commit suicide than attack us, just about everywhere else you look, there are dozens of borders, competing economies, and, oftentimes, conflicting political and cultural frameworks. 

It’s why wars always start abroad, and why we ship our troops and weapons long distances to participate… and why our soil, since the early 19th century, has never been touched by the hands of a foreign aggressor. 

Foreign war, when you remove the cost of human blood, is perhaps the best business prospect for the United States. 

It helped turn each World War into a cash machine that spurred economic and industrial growth, leading to two golden eras for American society in the 20s and 50s. 

Which makes our current state of affairs very precarious indeed. 

We’re $20 trillion in debt as our current president readies to transition to the next. 

debtchart

More than half of that debt was incurred during the current administration, making the next president’s job a herculean task no matter how you look at it. 

Obama’s Legacy… Trump’s Rotten Inheritance 

The jobs created during the outgoing administration have done nothing to expand our economy. Growth is non-existent, debt continues to mount, and the only answer our government has provided so far is more spending.

Where is that external demand for new industry going to come from?

Foreign war — conflicts for which we provide the material, for a price — has worked twice in the last century. 

And as hotspots around the world, including old favorites like the Middle East and Eastern Europe, grow even hotter, that time-tested solution is going to look more and more attractive to an administration about to inherit the biggest mountain of debt ever. 

The key for Trump’s White House will be to remain directly uninvolved while providing the equipment necessary to carry out the mass bloodletting. 

Sounds morbid, but unfortunately, we’re painted into a corner that we cannot just climb out of by doing more of the same — rampant public spending. 

And anybody who says any different is either deluded, or just lying. 

So ignore the rhetoric and accept reality. There will most likely be a major armed conflict, half a world away, in the next four to eight years.

It will be a conflict which we supply, perhaps even officiate. It will be a conflict in one of today’s existing hot spots, and will likely be fought via smaller client states, so that the military superpowers like Russia and China can avoid an all-out global holocaust. 

Big Winners… Big Losers

The biggest benefactor will be the U.S. military-industrial complex, but, with high-tech supply chains being as complex and far-reaching as they are today, the external industrial demand we’re searching for so desperately will be delivered. 

So where does the cool-headed (or cold-blooded) investor go during this time?

Well, aside from gold or silver, which is the usual go-to during times of uncertainty, military contractors of all sizes and specialties should be seeing a renewed era of bullishness. 

For maximum returns, however, I’ve found that it’s best to go as small and specific as possible. 

Right now, an entirely new sector in defense tech is emerging, and growth over the next decade is predicted to multiply the size of this market by a factor of 10, at least. 

The underlying technology is robotics and artificial intelligence… but these aren’t the drones that we’ve grown accustomed to operating in foreign airspace around the world. 

These robots operate in an environment where man has barely set foot — a theater of war which will be highly contested in the next great conflict. 

To learn more about this new class of smart weapon, and to find out how dominance in this new arena just might determine the geopolitical balance of the future, click here for the full report.

Fortune favors the bold,

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Alex Koyfman

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His flagship service, Microcap Insider, provides market-beating insights into some of the fastest moving, highest profit-potential companies available for public trading on the U.S. and Canadian exchanges. With more than 5 years of track record to back it up, Microcap Insider is the choice for the growth-minded investor. Alex contributes his thoughts and insights regularly to Energy and Capital. To learn more about Alex, click here.

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