We love anticipation and revel in excitement. Time seems to pass more slowly when we are waiting for something.

Anticipation can build so much that, sometimes, reality itself is disappointing. It doesn’t live up to the expectations we set for it.

Whether you have counted down the days until a loved one returned, took candy from an Advent calendar or ever sat on pins and needles for something, you have anticipated.

It’s an aspect of thought that is dominated by us. Outside of Pavlov’s dogs, animals don’t really enjoy the sensation of waiting (and I’d argue that his experiment was hardly enjoyable for the test dogs). But, we do.

This is also why Return of the Jedi sucked.

And Batman Forever. And The Godfather Part III. And Shrek the Third, Back to the Future III, Goldmember … I could keep going but I think you would agree, the final chapter is normally terrible.

Some of them were just poor excuses to cash a check, but others were not. A few were significant stories that had to conclude, like Star Wars. A lot of people cared about what happened next, they had to make Return of the Jedi.

The problem is that we hate when we find out the answers. We don’t like when possibilities end. Conclusions aren’t any fun.

Money isn’t any different.

It has a last chapter and there is a conclusion. If it’s anything like most conclusions, you won’t like what happens next with money…

To be fair, I am slightly over-generalizing Part III’s. Some of them can be great and there are a few final installments that we do love.

These are the ones that still allow our minds to wander. They provide more questions than answers and force us to draw our own conclusions.

Take The Good, The Bad and The Ugly for example. Most young film fans don’t know it was actually part of a series. Those that were around when it came out, barely remember the first two installments themselves. And today, when looking through lists that rank the greatest movies of all-time, it’s hard to find one that doesn’t include this film.

It didn’t provide all of the answers. The Good, The Bad and The Ugly made us determine what happened next on our own.

What did Tuco and Blondie do with their money? Did they ever work together again? Did they change or realize an error in their ways? These and many other questions were left open at the end.

The West wasn’t any better than it was before the story started, the Civil War continued and these two men only had a little bit more money to show for it.

Every conclusion in The Good, The Bad and The Ugly was left up to us.

Alas, we have to press on.

Whether money is like The Good, The Bad and The Ugly or Return of the Jedi, It’s too important. We have to know what happens next with money.

[Plus, we are just as ready to change topics as you are]

“Well … What happens next?”

“A lot of things. To help explain, let’s first review what we have already learned…”

There is a bunch of noise around money. IRA’s, insurance programs, derivatives, interest calculations, and many other “money things” overwhelm and can be confusing. These tangential elements are just noise, though, and money itself is actually quite simple. One just needs to look at how money is made and what it does for a basic understanding.

We started with the currency creation process and it’s two components: debt and money. We examined how money is made from debt and debt from money. We moved to how this paradox has shaped our intellectual history, then looked at it’s origins and how it came into practice.

Second, we dove into the intended (and actual) suppliers of these two components: debt, supplied by people and government, and money, supplied by financial institutions. We then posited that there is an inherent flaw in the system itself, which allows the supplier of money to also fractionally expand the dollars printed into more, intangible “money”. This has resulted in an expanding gap between the amount of dollars in circulation (approved by the polis, let’s say) and the amount of money in circulation (created by banks, let’s also say). This is done through an ability to issue loans with minimal reserve requirements and the application of interest on those loans. The gap, which is now owned by financial institutions in the form of unpayable interest (or more valuable debt), means supply ownership has shifted, and both money and debt are supplied by one entity — the financial institutions.

This being said, the Money Series is not meant to bash but explain something incredibly complex – money – in a simple way. Our hope is that this piece will urge the reader to reconsider some of the aspects of the monetary system that we take as holy Gospel.

In this spirit, let’s not simply focus on the problems; let’s give it a chance…

We’ll go back to the core system itself … And take out all of this dollars verses money and debt valuation mumbo-jumbo.

The polis (people) creates debt. If we want blanket-onesies, then that’s where investment goes. If we don’t want blanket-onesies then investment won’t go there.

The banks create money. There is debt for blanket-onesies and they can print money, so they print it. If they don’t think blanket-onesies are a good investment then they won’t do it.

The check is the federal government. Investment may not go towards blanket-onesies but it has to go somewhere so the government issues bonds for stuff. They’re held accountable to the people though and have to be elected, so these bonds have to be for something else that the polis wants. But, the government is also held accountable to financial institutions who print the money they need to pay for stuff.

Seems like a good system. It’s tight, sound and there is accountability everywhere. Well, almost everywhere. If you read those three paragraphs again, you’ll notice that it is missing one key link in the accountability chain.

But where is it?

Let’s see … The government is held in check by public elections and financial institutions’ ownership of the money supply…

The polis is held in check by the banks’ willingness to invest and the government has their thumbs on us with taxation…

Then, banks can only print money with bonds from the government and … and … and wait?

Where is our check on the banks?

There isn’t one.

Sure, we could try to cutback on loans and the debt we take on, but in Part II we already saw how this is next to impossible. Additionally, we no longer control debt itself, so the only check we may have had on banks has been taken away (again, read Part II, this is all explained there).

But there should be a check on the economy. It’s just as much a factor in our decision making as law is. And there’s a check on that.

The leaders in finance should be elected, just like the leaders in law. The populous should have a say in how much debt is created.

“Big deal … Who cares if we don’t have a check on finance. It’s just money. A blanket-onesie never hurt anyone.”

“Perfectly reasonable objection. What happens next, though, means it’s not just a big deal – that we don’t have oversight on banks – but a matter of life and death.”

[This is also where you will start to dislike what happens next with money]

The majority of money ends up in the following three places: Federal Budget, Enterprise, Individual Wealth.

These also represent the entities we have been describing throughout the Money Series: Government, Business, People.

But, let’s look at each…

1) Federal Expenditure, is broken up in two ways:

First, there is a portion called “Mandatory Spend”. This money is spent on “Entitlements” or things like Medicare and Social Security/Unemployment. Like the name says, this is mandatory and cannot be negotiated unless federal law changes. Basically, the government has to set aside X amount each year to cover “Entitlements”. We spend about $2.5 trillion on this portion with about 50% towards Social Security/Unemployment, 40% towards Medicare and the rest in a few different areas.

Second, “Discretionary Spend”. This is money that goes towards things like the Military, Education, Environment, Research, etc. The amount we spend on each “Discretionary” item is not set in stone and most of the budget preparation activity revolves around this. This is what lobbyists focus on, for the most part.

The breakdown of this is as follows … Military 55%, Under-budget recovery of “Mandatory Spend” items 19%, Education 6%, Government Bureaus (like FEMA) 6%, Housing 5%, Environment 3%, Research 2%, and the rest go to various areas.

2) Enterprise. A lot of money goes back into business itself. Investments, Expenditures and Profits quantify this portion of where money goes, but most agree those can be summed up by a given company’s Revenue.

The players are start-up and small businesses, mid-sized and large independents, major corporations and internationals with a heavy U.S. presence. Some are privately held, others public. Some are headquartered here, others not. This is also where our financial institutions reside, including the Fed (“It’s about as federal as Federal Express”).

The 2014 Fortune 500 top 10 … 1) Wal-Mart, 2) ExxonMobil, 3) Chevron, 4) Berkshire-Hathaway, 5) Apple, 6) Phillips 66, 7) GM, 8) Ford, 9) General Electric, 10) Valero. Important to note, AT&T came in at 11, Verizon at 16 and HP at 17 (you will see why this is important in a few moments).

3) Personal Wealth. Not a lot of explaining to do here. This chart pretty much sums it up:

I think we are all pretty keen on the wealth gap. The top 1% of the US owns 43% of the wealth, we’ve been beaten over the head with statistics like this one.

Perhaps more interesting are the wealth gaps within the wealth gap. Like the ones forming in the top 20% itself. Our money is not only piling up at the top end of our population as a whole, but within that top end as well. Our wealthiest are not only separating themselves from the middle and lower classes, but from the rest of the upper crust.

…Starting to notice something suspicious?

We helped you out a bit by putting some of the more notable information in bold.

I’ll give you another hint. America is excellent at three things: Natural Resources, Technology and War.

Despite what our middle school history teachers told us about religion and freedoms, the first American settlers came here for one thing and one thing only — Natural Resources. At the time of our colonization, Britain was one of the most powerful empires in the world, but was facing a Resource crisis. It had an armada of war ships that needed timber, a huge population that needed food and tobacco, and could not let Spain, France, or any other power get their hands on the Americas. Our purpose for being here was the harvesting of Natural Resources.

Naturally, higher demand for Natural Resources leads to better Technologies to produce and meet this demand. From cotton to steel and factories to cyberspace, the U.S. has been the world’s tech innovator for centuries. The Resources we produce have also evolved with Technology. At our inception it was timber and iron, then we moved to coal and steel, then oil and silicon.

When you have an abundance of Natural Resources, other people want them. When you are a target and have the best Technologies, you become pretty good at fighting. Examples of this are rifling in firearms that allowed us to beat the British with longer range (than their smooth bore muskets), the railroad in the Mexican-American War, the telegraph in the Civil War, the Atom Bomb (and several other innovations) in World War II and Drones in the Middle-East.

Now that this is established, let’s go back to what’s in bold.

For a nation that is so Resources and Technology minded, and is also good at fighting, War can be a very profitable enterprise.

The numbers don’t lie. Our government spends more on the military than anything else and our biggest companies are in the Resources and Technology spaces.

So, when wars break out, it is one of the most lucrative things for the American economy. We borrow more money than we do in peacetime and spend more of it on Resources and Technology than when we are not at war.

It’s a weird paradox. Our people die, but our economy benefits.

I am not the first to discover this relationship, though. When Dwight D. Eisenhower was president, he actually coined a phrase for it:

The Military Industrial Complex

Political Scientists have since defined Ike’s term as, “The policy and monetary relationships which exist between legislators, the armed forces, and the arms industry that supports them.”

Any entity that had a hand in all of these parties would really benefit from war, wouldn’t they? Well, there is such an entity…

Banks.

Since the advent of the Federal Reserve in 1913, the U.S. has fought in and completed three major wars. Below is a list of these wars and the events that triggered our entrance into each of them…

World War I America enters following the sinking of the Lusitania ocean liner by German U-Boats

World War II America enters following a surprise Japanese attack at Pearl Harbor

Vietnam  America enters after two U.S. Destroyers were sunk by North Vietnamese PT Boats in the Gulf of Tonkin

Most Americans believe that we we were simply responding to acts of war. Which we were. However, since then, some more information about these events has become declassified and/or rediscovered…

World War I British and French governments took out huge loans from U.S. banks to finance the war. As it raged on with no end in sight, they had to keep borrowing more money. By 1917, a loss would have meant total bankruptcy for these countries and massive losses for U.S. banks. Shortly before the Lusitania set sail, British and French officials met with the heads of American banks to deliver the news and begin working towards a new outcome. Recently resurfaced was a small press release issued by the German embassy a couple of days before the ship left port. Perhaps out of good conscious, one of the Germans at the embassy outright warned those leaving on the Lusitania that they had orders to torpedo any American vessel passing through those waters. The Lusitania went anyways and was torpedoed in the vary waters the press release described.

Estimated corporate profits from Word War I: $16 Billion

Today worth: $250 Billion

World War II Throughout the 1930’s, our economy was a dumpster fire. On December 7th, 1941, President Franklin D. Roosevelt told us that on that day – which “lived in infamy” – we were completely surprised by Japan’s actions and that there were no warnings of an attack.

Since then we have found a note from FDR’s Secretary of War, Henry Stimson, dated November 25, 1941, describing a conversation between the two, “The question was how we should maneuver them into firing the first shot…” He then added, “It was desirable to make sure the Japanese be the ones to do this so that there should remain no doubt as to who were the aggressors.”

In the months leading up to December 7th, Roosevelt outright provoked the Japanese. He was aggressive diplomatically and even used illegal measures to anger Japan. He halted all US oil imports to Japan, which wiped out their fuel supply. He then froze all Japanese assets in the United States. And, finally, violated international war rules by making public loans to nationalist China for military aid to the British. Both were enemies of Japan by war.

All of this, shouldn’t overshadow the now declassified radar reports (from before the attack) showing the Japanese fleet positioning themselves. These reports picked up some national news coverage several years back, only about 50 years too late.

It is also important to note that there was a propensity to go to war with Germany, as well. American businesses were already deeply rooted in the European Theater.

At the time, the Nazi war effort was dominated by two corporations. One of which, IG Farben (84% of explosives) had a silent business partner in U.S. Standard Oil (Rockefeller Interest). The Nazi Luftwaffe could not operate without a special additive that was patented by Standard.

Additionally, The Union Banking Corporation of New York City (headed by our friend Prescott Bush) was later exposed to have millions of dollars of Nazi money in their vaults. It was eventually seized for violating the Trading with the Enemy Act. Bush became a politician.

Estimated corporate profits from World War II: $38 Billion

Today worth: $490 Billion

Vietnam The event that sparked this war is especially interesting because The Gulf of Tonkin Incident (as it came to be called) just didn’t happen.

[Look it up for yourself. It’s all public information now and very easy to find.]

Former Secretary of Defense, Robert McNamara said “The Gulf of Tonkin Incident was a mistake.” Declassified documents later revealed it was more of a farce. This was capitalism pinned against communism in the 1960s, so the pretext was barely needed and not as important.

What’s more revealing is how the war in Vietnam was conducted.

For some reason, in the middle of the war, LBJ lifted trade restrictions on the region. First, this allowed the Soviets to legally resupply their ally (our enemy). But even more scathing, this move opened the flood gates for American banks to lend money to Soviet manufacturers. This money ultimately allowed Russia to produce advanced military technology for the barely industrialized North Vietnamese.

Arming both sides is only the half of it, though. There was also structural elongation of the war by coalition military forces (led by the United States). Curiously, unique rules of engagement were established, including things like: 1) North Vietnamese anti-aircraft missile systems could not be bombed until they were known to be in operation (what?); 2) No enemy could be pursued into surrounding areas (Laos became a haven for VC troops); 3) No target could be attacked without approval from the highest levels of the military (even if they were shooting at you).

These rules made the war nearly impossible to win, but it was never meant to be won; it was meant to last and make money.

Estimated profits: $200 Billion

Today worth: $1.2 Trillion

I’ll leave you with what is, in my opinion, one of the most powerful speeches of the 20th century.

It was given on September 11th, 1941 by former Congressmen Charles Lindbergh (also featured in Monty Carlos’ banner feed). The date of this speech has intrigued me for a while now. Not just because of what’s obvious (9/11), but because it was given three months before Japan attacked Pearl Harbor:

When hostilities commenced in Europe, in 1939, it was realized by these groups that the American people had no intention of entering the war. They knew it would be worse than useless to ask us for a declaration of war at that time. But they believed that this country could be entered into the war in very much the same way we were entered into the last one.

They planned: first, to prepare the United States for foreign war under the guise of American defense; second, to involve us in the war, step by step, without our realization; third, to create a series of incidents which would force us into the actual conflict. These plans were of course, to be covered and assisted by the full power of their propaganda.

Our theaters soon became filled with plays portraying the glory of war. Newsreels lost all semblance of objectivity. Newspapers and magazines began to lose advertising if they carried anti-war articles. A smear campaign was instituted against individuals who opposed intervention. The terms “fifth columnist,” “traitor,” “Nazi,” “anti-Semitic” were thrown ceaselessly at any one who dared to suggest that it was not to the best interests of the United States to enter the war. Men lost their jobs if they were frankly anti-war. Many others dared no longer speak.

Before long, lecture halls that were open to the advocates of war were closed to speakers who opposed it. A fear campaign was inaugurated. Propaganda was in full swing. There was no difficulty in obtaining billions of dollars under the guise of defending America.

The War on Terror is more profitable than any of the previous wars combined.

Which is hard to fathom given that during World War II, everything and everybody in the United States was part of the war effort.

“All the world’s a stage”, huh?

Money is an interesting show. The concept is Good, the production is Bad, and the outcome is Ugly.

The West isn’t any better than it was before the story started. The war continues and all we have to show for it is a little bit more money.

With no oversight, we have no say in what happens next with money. Guess we’ll just have to see.

Good thing we love anticipation.