Let The Circle Be Unbroken -- 1

The United States has lived—and thrived—on three economic circular flows since World War I. When the first two came to an end, there were immediate economic repercussions. What we seem to be living through now is the end of the third circle, or cycle.
World War I, for those who recall their history, was not a bad war for us. We came in late, took minimal casualties, and went from debtor nation (to most of Europe) to creditor. We had tons of what businessmen call “receivables”, there was just no clear way to collect all the money.
In their foolishness, the statesmen who met at Versailles in 1919 decided to make defeated Germany pay all the damages for the war. (This, of course, became the biggest single cause of World War II in Europe.) The problem in 1919 was that Germany was at least as broke as Russia, France and Britain—and she was stripped of her colonial assets.
She could no more pay her “reparations” to France or England than I can pay off the national debt. Then we stepped in, using the money we made from selling munitions during the war, and loaned Germany lots of money.
That’s how the circle began. We “loaned” money to Germany, Germany took some of it and paid reparations to France, Britain and Belgium. Then all four of them came to the United States and spent that money buying American products to ship home.
This produced feverish prosperity in the urban sectors of American society and sent the stock market to dizzying heights. (At the time there was a popular hymn that had the refrain, “Let the circle be unbroken.” As long as it was, the Twenties roared.)
In 1928, we got peevish. Why, demanded Congress, should we go on loaning money to Europe? So we stopped. A year later, so did prosperity. There were a variety of causes, there always are, but it is no coincidence that the Crash coincided with the breaking of the circle.
We went bust. We stayed bust until World War II. Once again we were selling munitions—except that this time our laws required munitions go out on a cash and carry basis. What really brought us out of the Depression was that England decided that the safest place to build British factories was across the Atlantic, out of range of German bombers.
They went through their cash assets faster than General Motors. If someone had taken a trip to the US and brought back for his nephew some sample American coins, these had to be turned in. Britain spent every cent she had buying from us and building war factories here.
In 1941, Britain went on “welfare”. That’s what Lend Lease was—especially in the restrictions it imposed on the recipients, here again, especially on our old rival, Britain. Just like a welfare family in our current society, England was required to divest itself of all monetary assets—AND NOT TO ACQUIRE ANY ADDITIONAL ONES.
That clause killed the British Empire more effectively than the Atom bomb killed Japan. We watched carefully to make certain England accumulated no currency reserves during the war. If needed, we removed items from the Lend Lease list to make Britain spend any new reserves on things Lend Lease used to buy.
At war’s end (September 2, 1945) we stopped Lend Lease cold. Like any welfare family, Britain was not allowed to be in any shape to go on feeding, transporting, medicating or clothing 12 million Tommies around the world. No surprise that the core of the Empire had collapsed by 1948.
We picked up the goodies. Guess why Roosevelt stopped in Saudi Arabia on his way home from Yalta? British oil fields became American oil fields, et cetera, et cetera. Same thing happened to pieces of the Dutch, Japanese, Belgium, Italian and French empires.
World War II was a far more wonderful war than World War I had ever been. Again, our casualty rate was not insupportable (after all the Russians and the British did most of the dying), and we came out with tons and tons of cash and receivables.
Time for the second circle.