Afghanistan's (Underappreciated) Costs

The Afghan War's human toll is well recognized. Its inflationary costs, on the other hand, are less well recognized.

Many people have questioned if the 20-year fight in Afghanistan was worth it after seeing dismal photographs and videos from the country this year.

This horrific image may become the iconic picture of the Trump-Biden withdrawal from Afghanistan. It appears the situation in Kabul remains desperate with US forces in harm's way. Let's remember the many Americans bravely doing their jobs under the worst of circumstances. pic.twitter.com/avDwKpwhi2

— John Bolton (@AmbJohnBolton) August 16, 2021

According to the Associated Press, through April, more than 172,000 people (American and otherwise) have died in the course of the War in Afghanistan. The cost of the wars in Afghanistan and Iraq that the US has supported with debt is projected to be more than $2 trillion.

Up to $6.5 trillion in principle and interest is expected to be owing by 2050.

This war, like so much of the government's spending, isn't funded by the government's own funds. Money is created via the use of borrowed funds.

Future generations will be burdened by the financial expenses of today's decision makers' debt-financed spending. Because the agony of printing trillions of unbacked dollars isn't felt right once, the seriousness of the deed isn't immediately apparent, but the final outcome is inescapable.

A week after the 9/11 attacks, Congress gave then-President George W. Bush the right to use all "necessary and appropriate action" against individuals involved in the attacks, the federal government embarked on a path that would lead to financial collapse.

One dollar in 2001 had the purchasing power of $1.54 today. The dollar had an average inflation rate of 2.19 percent per year between 2001 and today, producing a cumulative price increase of 54.15 percent.

That means that today’s prices are 1.54 times higher than average prices in 2001, according to the Bureau of Labor Statistics’ Consumer Price Index, a measure that notoriously understates real-world inflation as a result of deploying clever hedonic adjustments, geometric weighting, and substitutions that tend to paint a rosier picture.

Said another way, a dollar today buys no more than 65 percent of what it could buy in 2001. And by other measures besides the flawed Consumer Price Index (CPI), it buys even less.

The government’s borrowing has accelerated rapidly to the upside since the COVID lockdowns and emergency “stimulus” efforts. That portends potentially much higher rates of inflation ahead.

 

Earlier this month, Reuters reported that “world food prices [climbed] in November, [staying] at 10-year peak.”

Using chicken breast instead of Angus beef... or substituting a less costly chicken thigh for a chicken breast may seem like a little trade-off, but what if you can no longer buy chicken at all?

Inflation wreaks havoc on the lowest members of society. Individuals with sufficient financial resources can invest in assets that protect against currency depreciation. Gold and silver, real estate, and even the stock market are all examples of this.

But what about those who work for a living? Are you a senior citizen on a fixed income? Those who want to set up a little money for the future?

The people who are most hurt by the increasing prices are those who are already trying to make ends meet. Fast food businesses' dollar menus have gone, while the expenses of housing, food, automobiles, college tuition, and medication have risen.

One of sound money’s most central features is that it restricts government spending to only what can be extracted from the populace through taxation. A print-and-spend approach to monetary policy enables wasteful and fruitless government expenditures, such as, for example, unpopular decades-long wars.

For the past two decades, Americans have been engaged in a conflict that has cost tens of thousands of lives and billions of money. Many people are asking whether the war was worthwhile.

There are numerous disadvantages that are obvious, but one of the most significant is the eroding of the dollar's purchase power—and the theft of wealth from everyone who possess it.

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