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James Hickman
James Hickman is a West Point graduate and former intelligence officer who has had an extensive business and investment career spanning more than 25 years.
It’s impossible to forget those iconic images from the late summer of 2021 – helicopters over the US embassy in Afghanistan. Locals dangling from the landing gear of US Air Force cargo planes desperately trying to escape. The US military frantically packing up their gear to leave the country.
It had only been a few weeks prior when the guy with five decades of experience insisted that the Taliban would never take over Afghanistan. But then it happened within a matter of days.
The intelligence community, military analysts, and State Department all cautioned against such a cavalier approach.
But Joe Biden persisted: despite all the risks, he wanted troops out of Afghanistan before September 11th.
And the results were disastrous.
America left behind thousands of local Afghans who served the US military as interpreters, administrators, etc.
Each was promised a US immigration visa so as not to be murdered if the Taliban took over. But the State Department told them to hang tight for 12–18 months while the bureaucracy processed their requests. Many of them are dead and their families tortured.
Then, of course, the US military abandoned tens of billions of dollars of equipment, weapons, ammunition, and vehicles to the Taliban.
They gave away dozens of US military aircraft, thousands of Humvees and Armored Personnel Carriers, and tens of thousands of assault rifles, all courtesy of the United States taxpayer.
Sadly that was not the final parting gift from the US government to the Taliban.
A recently released Inspector General report found that at LEAST $293 million worth of foreign aid for Afghanistan-based NGOs (non-governmental organizations) was vacuumed up by the Taliban.
“In total,” the report says, “State [Department] could not demonstrate compliance with its partner vetting requirements on awards that disbursed at least $293 million in Afghanistan. State officials acknowledged that not all bureaus complied with document retention requirements.”
The report later noted that, “Since its takeover in August 2021, the Taliban have sought to obtain US funds intended to benefit the Afghan people through several means, including the establishment of nongovernmental organizations (NGOs).”
There are so many things wrong with this.
One, bear in mind that all of this money is borrowed. The US government went into debt to give money to its sworn enemy.
Two, this just extends and intensifies the shame and embarrassment of the Afghanistan withdrawal.
Is this really the behavior of the world’s dominant superpower? They spend 20 years failing to secure a country, give tens of billions of weapons to their enemy, and then hand out cash gifts… simply because their bureaucrats are too incompetent to notice?!?
This is an obvious example of why the US has lost so much of its standing and reputation around the world. China, Russia, Iran, etc., all notice this behavior. And to them, the US government looks incredibly weak.
The implications of that weakness translate into very real financial consequences, including the end of the dollar as the global reserve currency.
Why would any foreign government or institution give even MORE money to the Treasury Department? Any foreign creditor who buys US government bonds right now has to be questioning whether it makes sense to continue to do so.
Seemingly ever day there’s another embarrassing revelation about the US federal government’s incompetence. Politicians in Congress cannot even agree on a basic budget. A major Presidential candidate blames inflation on greed, and her solution to the problem is price controls!
There is virtually zero intent to even try to cut spending and run a balanced budget. The national debt keeps surging to new record highs, while projections on future budget deficits ring in at $22 trillion over the next 10 years. The inflation problem is still not solved and likely going higher.
The Federal Reserve – the most systematically important central bank in the world – is insolvent on a mark-to-market basis.
And on top of everything else, accidentally handing out money to your enemies adds to the vast body of evidence that the US government is inept at everything it does.
This is why the dollar’s days as the global reserve currency are numbered.
Having the global reserve currency means that other nations around the world (who all have to use the dollar) must have a tremendous amount of trust and confidence in the US government.
The Biden administration seems to be going out of its way to make Uncle Sam a laughing stock… which ultimately turns other nations away from the dollar.
This shift is already under way – it’s one of the reasons why central banks have been buying so much gold and reducing their ownership of US debt.
But it’s still early days. This dollar reversal trend still has several years to play out… and it will likely be one of the most consequential economic shifts of our lives.
This article was originally published by Schiff Sovereign.
