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Defending the Defense dollar

Here’s an economics lesson for the American service member.

pull out a dollar bill. Its value isn’t set by gold or precious metal. Only law and world currency markets determine its worth. Why, then, would someone buy mere paper not backed by a tangible asset? For the same reason you might buy stock in a company. Foreigners buy our dollars because they know America has the greatest return on investment of any endeavor in history.

America now finds itself in economic hard times. Does the world’s smart money still consider America a safe bet?

Absolutely, and the U.S. service member has something to do with it.

Since the early 1990s, America has led the way creating a post-Cold War global economy built on international free trade. For better or worse, the U.S. is the lynchpin holding it all together. When foreign countries buy our dollars and debt, they essentially cast a vote of confidence in America and the global economic system we helped establish.

Defense critics point out the U.S. spends more on defense than the next 14 nations combined. True, but we also directly or indirectly protect those nations’ access to international trade. From Bangkok to Baghdad, international merchants know goods and services flow largely unhindered because of U.S. military power. This arrangement benefits our friends and rivals alike.

China, the world’s manufacturing superpower, for example, exported $1.2 trillion in goods last year but doesn’t protect most of the international trade routes on which it so heavily depends. It’s largely the American fighting man and woman keeping global trade free.

Foreign nations may rail against U.S. military power in public, but privately they vote with their money. They understand two important facts: our forces operate with immense restraint and in strict adherence to law; and no international coalition can yet match America’s military prowess. Would China act with our humanity and restraint? Could the U.N. match our decisiveness and competence, should it become protector of the global economy? This is why, rhetoric aside, the world trusts America to protect the global market.

For this reason, our newly elected leaders must tread carefully. Recently, Rep. Barney Frank, D-Mass., called for a 25 percent cut in the defense budget. One lesson the financial crisis taught us is that risk assumed by one global player is risk assumed by all. If America can’t or won’t protect the global trade system, then our national stock will surely go down. Investors will take their money elsewhere, and other nations will fill the power vacuum we leave behind. What will our dollars and debt be worth then?

The 21st-century U.S. military isn’t just protecting our homeland or hunting down terrorists, but ensuring the global economy remains free. If you’re an American service member reading this, you truly hold that dollar in your hands. It isn’t backed by gold.

It’s backed by steel.

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The writer is a freelance writer living in Alabama. He can be reached at bull_67@yahoo.com.