The Arms Race !

The American armed forces have shown time and again that their military power is a juggernaut capable of crushing opposition.   It is not fire power that they lack.   What they are not good at is restoring peace after the battle has been won and in what is termed  " nation building " - creating civil order from the debris of war.

Donald Trump's first budget as United States president will increase military spending by $ 70 billion - and that is on top of the six hundred billion regular allocation to the American armed forces.  The president claims that his country's military have been allowed to run down during the Democrats time in the oval office and this deficiency is putting the country at risk.

What will worry many people is how this seventy billion will be financed.   It seems inevitable that there will  be a vast cutback in foreign aid and that is often the margin of survival for some small nation states.  It is highly likely that if America reduces foreign aid the gap will quickly be filled by China and that will tilt the balance of trade power.

Trump has promised that the two areas that will remain sacrosanct within the American economy are welfare and health, but it is reasonable to expect that there will be a spending trim to divert money to the military across the broader spending spectrum - and that will happen at a time when the entire American infrastructure of roads and bridges is sheeted for renewal.

The danger is that this plan looks like exacerbating the already out of control deficit budget situation where America spends more than it earns.   It is only the fact that the mighty dollar is the worlds reserve currency that allows this to continue.   The currency of lesser nations is subjected to fiscal discipline - as both Argentina and Venezuela discovered, and even countries enmeshed in a common currency such as the Euro need to meet standards.

There is no doubt that this increase in American military spending will cause an upsurge in the world arms race.   It will certainly alarm both China and Russia and competing nations finance their own arms spending by selling weapons to third world countries.   It will also stiffen negotiating attitudes.  There is nothing like having massive fire power at your disposal to harden demands at the negotiation table.

President Trump would be wise to reflect on recent history - and it is said that those who fail to learn from history are destined to repeat those same mistakes.    Ronald Reagan's " Star Wars " agenda panicked Russia into trying to duplicate what it saw as a threat and this was beyond its economic capacity..  The Soviet Union simply collapsed, bringing about the end of the cold war.

The patience of creditor nations is finite !   It would be a grave mistake to over estimate the power of the mighty American economy to forever maintain a deficit balance.