Despite the mega-commentary about the Israel-Iran war, and especially the United States’ participation in that war, almost nothing is being debated about how the war is being funded.

I’ll make some comments about Iran later. But we need to focus on the United States, which is by far the most profligate party to this war. And Israel is being funded, like a charismatic and entitled teenage brat, by its (American) sugar daddy.

Most of us should have noticed that, with the exception of new tariffs which are not a significant source of United States government revenue, there has been no move to raise taxes. (The President has clearly invoked the use of tariffs as means of leverage through extortion; though he doesn’t properly appreciate that these taxes are paid by American residents.) Nor has any explicit ‘war loan’ or ‘war bond’ been floated in Wall Street.

The United States is ‘printing money’ to fund the war. This expression is both pejorative and a misnomer. Because printing money is an unmentionable, it’s hardly ever mentioned! Though it should be, because it’s an important financial mechanism, and it is not as sinful as it’s made to sound.

‘Printing money’ is not a literal expression; actually printed (or photocopied) money, counterfeit money, is illegal. Printing money, a figurative moniker, is in fact the day-to-day business of banking, with billions of dollars printed every day (and a near-similar number of dollars unprinted). The technology of printing money is that of double-entry-bookkeeping. Money is a social technology, as is double-entry bookkeeping.

What matters most to us is the role of the central bank – the Reserve Bank – in creating new money. And in particular the relationship between the Reserve Bank and its privileged customers, most of which are governments’ Treasuries and commercial banks. Even more particularly, we are interested in the most highly privileged relationship of all, that between the United States Federal Treasury and the United States Federal Reserve Bank. This exceptional relationship arises because the United States Dollar is the world’s reserve currency.

The War

Here are two quotes from Al Jazeera’s This is America: War on Iran: Cost of weapons and shift in the nature of warfare, 1 April 2026

Richard Gaisford: “It’s a significant contribution being made to the US economy by the defence industries. The last figures we have were for 2024, and that showed that it generated [?] something near one trillion dollars …”.

This comment reflects a wide belief that money is made by economic activity, and that the United States makes money by making, among other things, military hardware and software. The reality, of course, is that the money is made first, and is then used to purchase such hardware and software.

Interviewer: ‘Who has got the means to keep fighting at those levels the longest?’ Kenneth Katzman (a former senior analyst on Iran at the US Congressional Research Service): “The US Dollar is the main reserve currency of the globe, which means that the United States basically has the capability to manufacture money. Your viewers may not understand the mechanics of it, but basically the United States can print money.” (Actually, not only the United States.)

He goes on to address the military asymmetry between Iran and the United States: “The United States is a 28-trillion-dollar economy; Iran is a 400-billion-dollar economy”. Here he is talking about each country’s capacity to produce goods and services; not its capacity to manufacture money. Any amount of money can be made by any country’s banking-government nexus, and at trivial cost.

The interviewer (New Zealand’s Anna Burns Francis), and the other panellist did not respond to that seemingly provocative comment about printing money; there was no further discussion about how the war is being financed, only about how much it is costing. Discussion about the mechanics (and constraints) of printing money would go against the grain that most of us are fed. The public is not supposed to know – and generally does not know – that money is itself costless and can be manufactured, at will, in smaller or larger quantities.

Kenneth Katzman’s comments are not controversial; they are a statement of fact that no economist would disagree with. All countries’ banking systems (of which the central government is a component) have the capacity to print money; indeed, the New Zealand system (and other countries’ systems) necessarily did so in 2020.

The United States has fewer constraints on printing money than do other countries, but not zero constraints.

We note that money, like all financial and financialised assets, is not wealth; it is claims on wealth. So, the affordability of money – in practice – is measured by the ability of the economy to meet those claims, in the event that those claims are presented. (Indeed, the world can afford an octillion dollars’ worth of financial claims if it can be 100% certain that those claims will not be exercised; will not be spent on goods or services. The current world is awash with massive private holdings of financialised assets which, for the most part will not be spent on anything other than other financial assets. In technical language, such money has a very low ‘velocity’.)

We note also that newly printed United States’ dollars permeate into New Zealand through exports, including New Zealand made supplies to America’s war industry; to the United States’ military/industrial complex, which includes the space industry.

How does a country fund a war by printing money?

There are two key issues: rationing, and responsiveness.

The liberal critique against governments’ printing money is a general claim that governments are untrustworthy and spendthrift. In the eighteenth century when the liberal critique emerged, one principal concern was government adventurism in the form of warfare. This classical liberal critique presents one consequence of such government largesse as inflation (extra spending coming up against finite resources), and also presents any instance of general price increases as a consequence of government largesse. When governments consume relatively more resources, then – through the catalyst of inflation – private households and businesses consume relatively less.

The classical liberal critique emphasises this rationing issue, known as crowding out; in doing so, that critique presumes that private spending on goods and services is, per se, more efficient than public sector spending and redistributive transfers. There are two parts to this rationing argument: first, private parties are deemed to better assess (compared to bureaucrats and politicians) which items of spending translate to greater utility (ie happiness); second that relatively more private spending can be classified as ‘investing’, meaning spending for future rather than for present happiness. (Neither of these two propositions is generally true.)

The second issue, less emphasised by classical liberals, is responsiveness or ‘supply elasticity’. Classical liberals tend to assume that spending enabled by printed money does not elicit new production; ie does not bring-about a supply response. While this is true by definition for a hyper-taut economy, for the most part, economies are not hyper-taut and are indeed responsive to additional spending.

In the present case of the United States, the Israel-Iran War – on the pro-Israel side – is being funded substantially by new money printed for the United States government by the United States federal banking system; in the public accounts, this shows up directly as a huge increase in the United States’ fiscal deficit.

While prices are rising faster in the United States than before, this increase in general prices would appear to be substantially due to the supply-side cost-impact of the war itself, and not by increased aggregate demand inside the United States and the countries the United States imports goods and services from.

The United States domestic economy is not as supply-elastic as it might have been, given what ICE is doing to that country’s labour force. Nevertheless, the United States’ economy has been sufficiently depressed that it is now able to increase output without much difficulty. Hence, extra United States’s government spending has not in itself caused consumer prices in the United States to rise. The present chokehold on imports – a result of the war – is however causing CPI-inflation in the United States and the rest of the world. Prior domestic underemployment is one reason why money-printing may not be inflationary.

The second component of a country’s economic responsiveness to wads of newly printed money is that much production can be outsourced to the rest of the world. Thus, United States’ imports increase, the United States’ current account deficit increases, and the rest of the underemployed world gets to benefit from this as an economic stimulus. So, if the New Zealand banking-government nexus refuses to print money as a form of stimulus, the present Trump-printed money does create an alternative stimulus in New Zealand.

Certainly, New Zealand has very high visible and hidden unemployment, so (at present) is easily able to respond to the Trump stimulus. On that basis, New Zealand’s economic growth this year may not be as slow as is widely anticipated; though domestic confidence – in itself, a form of stimulus – may be countering the stimulus coming from the United States. In New Zealand too, any rise in CPI-inflation will be almost entirely due to the global supply chokeholds, and not to the American president’s money printing largesse.

Essentially, the United States is funding its war through its twin deficits: the United States fiscal deficit, and the United States current account deficit. The war is being funded through increased utilisation of underemployed resources throughout the world. In New Zealand’s case, we can see this easily and directly, by observing New Zealand’s increased exports to the United States.

How easily can other countries print money?

Technically, it’s as easy to print money in New Zealand as it is for the United States. However, the New Zealand dollar is not a global reserve currency, so a flood of new New Zealand dollars into the global economy is likely to generate financial risk; or at least perceptions of financial risk. ‘Investors’ – that is, financial traders – out there most likely would be more cautious about holding large quantities of New Zealand dollars (or $NZ assets) than they would be about holding large quantities of United States dollars. That caution generates an exchange rate risk; a risk that would be communicated to financial-asset-holders by the New York based rating agencies such as Standard and Poors.

When the exchange-rate risk is not widely seen as a matter of concern, New Zealand benefits mainly through its routinely-high current account deficit; that is, just the same way as the United States is able to benefit from printing money and enjoying the economic bounty of the world.

If the exchange rate risk becomes a concern however, the world would discount New Zealand dollar assets, and New Zealand would experience high levels of domestic inflation; that is, higher inflation than most other countries. The resulting low New Zealand dollar would confer a ‘competitive advantage’ on New Zealand; the current account deficit would close, exports increase, and reduced imports would create an increased demand for New Zealand- made goods and services.

The issue then becomes how responsive (ie supply elastic) the New Zealand economy is. If the domestic economy is able to respond to these new circumstances (which is the more common experience of other countries), then New Zealand would recover and soon prosper. The alternative is that New Zealand would go into an inflationary tailspin; that is, if its productive system is so hamstrung that it cannot respond to the stimulus of a low dollar exchange rate. One bad sign is over-dependence (as distinct from over-reliance) on imports. A dependent economy cannot switch away from imports. A country which relies on imports by choice, because imports are easily funded by exports, can usually pivot – if required to do so – towards more ‘tradable production’.

So, New Zealand can print money too, though printing in the proportion that the United States does certainly would be unadvisable. However, if a country overprints money, the normal situation is that the extra money just sits there in the banking system. (The brief real estate boom of 2021/22 has been widely attributed to excessive printed money stimulating a process of real estate speculation; though the unique circumstances of that few months – including labour and capital pandemic lockdowns – have not been properly researched. The government could easily have borrowed and then parked that money, but chose not to.)

Generally, the rest of the world is accommodating when some countries print more money (though not when all countries print too much money). The world has been very responsive to the United States for the entirety of post-WW2 history; it was American spending of new money that drove the economic growth of the capitalist world for 80 years.

The present US money printing to fund a globally-significant regional-war can be expected, sooner or later, to encounter an inflationary wall of its own making. The consequences of this war are to make the world economy much less responsive (ie are breaking the world’s economy) just as the American military-industrial complex – indeed the world’s expanding military-industrial complexes – are placing so many extra demands on the world’s economic environments.

War funding under pressure

Countries’ invaded or otherwise attacked on the perception that they are ‘easy meat’ tend to be much more capable of defending themselves than is widely understood. Their monetary systems are not integrated into the orthodox channels of the wider capitalist system; but their domestic monies work to keep domestic economies fully employed while on a war-footing. Yes, Iran will be printing money, and Iranians will be facing substantial visible and suppressed inflation. For Iran, that monetary process is a necessary part of its own defence. Money printing facilitates both necessary rationing in favour of the public sector, and also necessarily pushes the production system to its limits.

War times, historically, have shown that our economic systems are generally much more responsive than we presume them to be. Surprisingly often, the bullies neither win nor even achieve a limited range of objectives. Syria may be coming right today, despite rather than because of the nation which set off that 2010s’ war; a war which cruelly sandwiched the Syrian people between foreign bullies and a consequently more oppressive domestic tyranny.

We note that, when the United Kingdom was under threat during the first years of World War Two, it was able to import much on credit – especially from the United States, which was then a neutral country. China has played a large role in facilitating the United States’ more recent wars, through its current account surpluses. This time China will be helping to fund Iran’s war; as well as accommodating the United States through its ongoing – almost infamous – trade relationship with that country.

Indeed, when the Israel-US-Iran War is eventually over, it will be China’s version of the Marshall Plan which will revive the degraded world economy; part of that revival will be to write-off war debts, just as the United States – through plenty of printed money – eventually accommodated Germany’s reparations bill after World War One, and the West’s war debts after World War Two.

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Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

World War One is really the first conflagration of a Great World War which lasted between 1914 and 1945. That great war was a ‘”game” of two halves’ with an extended and less violent mid-war phase; total war, with an interregnum which exacerbated rather than resolved the trigger issues of early twentieth century ideologies.

These mid-war events – in particular (but not only) the rise of the Stalin and Hitler regimes in Russia and Germany – could not have happened as they did without their being embedded in the Great World War. These regimes epitomised socialist and nationalist social pseudoscientific belief systems; two of the great pseudoscientific Utopias, Marxist Historicism and Social Darwinism. To them we may add the capitalist social pseudoscience (economic liberalism; liberal mercantilism; ‘Social Newtonism’ to coin a new label) which gave the Euro-dominant world the calamitous Great Depression of the early 1930s. These three potentially catastrophic ‘scientific’ Utopias dominated the intellectual ether, so to speak, before 1914. They manifested in their various deeply problematic and distorted ways within the context of the 1914-1945 world war experience. Fascism and economic liberalism had their roots in biology and physics. The socialist pseudoscience – aka Marxism – had its roots in historical materialism, a conflation of (Ricardian) classical economics and Hegelian historicism, an attempt to create a social science of history.

In this regard, we may see the denouement (WW2) of the Great World War as a battle between three problematic personalities: Stalin, Churchill, and Hitler. Each representing their own false depiction of the world as ‘scientific’ Utopia: Marxian Socialism (aka ‘Communism’, in its pejorative sense), Economic Liberalism, and National Ethno-Supremacism. (And we note that each of these pseudoscientific belief-systems carried seeds of each other. For example, Winston Churchill’s liberal mercantilist worldview was imperial, nationalist, and deeply racist. Adolf Hitler [with no interest in appeasing aristocratic or bourgeois interests] pitched his ‘Aryan’ nationalist poison to the German working precariat. And Josef Stalin terrorised and starved his own people, especially but not only in the 1930s while the world was distracted, as the mismatch between reality and Marxian ‘science’ became increasingly evident.)

(We note that, for the post-great-war generation, these issues of the three Utopias were practically resolved in ‘The West’, through for example decolonisation, Keynesian economics, and non-Marxian socialism. Though the Stalinist Utopia took on an even more demonic second phase in Mao Zedong’s China. The Social Darwinist Utopia took on a new life in South Africa and Israel; and for a while continued to inform the Dixie states of the US south. Racism never really left the United States. And Economic Liberalism – initially as neoliberalism, now as Liberal Mercantilism – returned to the world with a vengeance in the 1980s. Today, just as Stalin could not reconcile Marxism with reality; our western liberal elites cannot reconcile the diktats of the prevailing [and increasingly mercantilist] capitalist ideology with reality.)

Were there Goodies and Baddies in 1914?

However we choose to see this 1914 to 1945 period of widespread humanicide, it’s difficult to see a clear group of ‘Goodies’ and a clear group of ‘Baddies’ in June 1914. Thus, we can at least start our analysis of this war without succumbing to the ‘Goodies’ versus ‘Baddies’ (Good versus Evil) narrative. I would argue that the emergence of this as the predominant narrative of modern warfare, and its conflation with Winner versus Loser (‘we won, you lost, eat that!’) narrative, were themselves the single biggest cause of the world’s greatest conflagration to date. (For interest, see this New Zealand Journal of History review of Paul Goldsmith’s book We Won, You Lost. Eat ­That!; a book which derives its title from the late Michael Cullen, former Minister of Finance of New Zealand. Indeed it is Goldsmith who is easily the most qualified current politician in New Zealand to be Minister of Finance.)

Nevertheless, there is a compelling argument that Germany was ‘The Bad Guy’ in WW1 because it was the ‘principal aggressor’, evidenced by the fact that most of the fighting took place on other countries’ territories. True, but the story of aggressor versus aggressee – invader versus invaded – is more nuanced than that. Two comments here: the most significant battle in 1914 – in August 1914 – was the Battle of Tannenberg, fought in Germany (East Prussia); and much of the important action of the war was fought in Germany’s proxy territory, the lands of Austria-Hungary. Though almost none of these battle-sites are in modern Austria, Hungary, or Germany. On the western front, the earliest battles were fought in Alsace-Lorraine, territory then held by Germany.

In reality, the three-way war that ended inconclusively and abruptly in November 1918 (albeit with a clear but not huge ‘advantage’ to the Western Powers) was ‘settled’ as if there had been a decisive military victory to The West. (For the first half of 1918, Germany had won the war in the East and was winning the war in the West.) Victors’ justice soon followed, although the Americans prevented it from descending to show trials of war criminals only the losing side. (We note that a similar process had taken place on the Eastern Front, with Germany able to impose victors’ justice over Russia; indeed the German state had done all that it could to facilitate the second [Bolshevik] Russian Revolution of 1917. Leon Trotsky signed the humiliating Brest-Litovsk Treaty in March 1918, which among other things granted most of Ukraine to Germany. Further, the Western Powers then [ie early in 1918] involved themselves in the subsequent Russian Civil War; see The Allied Intervention.)

In WW1, the victors – the western powers – became ‘The Good’; the ‘victors’ usurped the narrative (as victors do), and would consequently place themselves in the predominant position to determine how the subsequent ‘peace’ would play out.

In WW2, the sequence was reversed. Rather than the victors becoming The Good, ‘The Good’ became the victors (but not the only victors). Indeed from 1944 The Good puzzled over why it took so long for their adversaries to see ‘the writing on the wall’. The answer was largely obvious, the English-speaking ‘Good’ (aka The West) waged relentless terror campaigns against ‘The Bad’; most of The Bad had presumed they were The Good (and fought hard on that basis). The Good had (inadvertently?) reinforced the belief that The West was The Bad, through their malicious and relentless bombing of civilians. Who would surrender to such aerial firebombers; what other kinds of evil could they cook up? In reality The War – as are most wars – was waged between The Bad and The Bad; or – as in the Great World War, it became The Bad versus The Bad versus the Bad versus the Bad (now including Japan). In the end it was victor’s justice that prevailed, posing as the Judgement of The Bad by The Good. The West and Soviet Russia got away with their many pre-war crimes and war crimes, scot-free.

World War One was not a decisive victory on either front

In the land war, while in a stalemate on the western front in 1916 and 1917, Germany had the military upper hand in the first half of 1918. In the end though, the most vital factor was the British naval blockade, and the associated economic war. Germany was being starved. Yet the worst of the food shortages in Germany were in the winter of 1916/17. By early 1918, Germany was able to redeploy battle-hardened troops from the Eastern to the Western Front. And Germany now had access to food supplies from Ukraine.

On the adverse side for Germany, however, was the arrival of American troops into France. These were ‘green’ troops who could not compete with Germans in direct military combat. But they did bring with them, unintentionally, the lethal weapon which may have won the war for the West: influenza.

As I see it, Germany lost its advantage in World War One for three reasons: the economic blockade, the lack of strategic vision of what ‘success’ on the Western Front actually meant, and the influenza brought by the American troops. (The 1918 influenza pandemic was most likely due to a hybrid novel H1N1 virus, forged in France as a result of a combination of the lethal influenza strain traced back to military barracks in Kansas in 1917 and a severe seasonal strain of ‘Asian flu’ already present in France.)

With the lack of strategic direction and military setbacks from July 1918, the German leadership – a dynamic flux, with an overall focus on civilianisation – sought to freeze (or even make concessions in the form of withdrawals from occupied territories) the western frontline so that it could end the war with its eastern gains intact. To this end, a new liberal Chancellor – Prinz Maximillian von Baden (interestingly, in light of later Nazi developments, a known homosexual) – was appointed early in October 1918. Also interesting, Prinz Baden and half a million other German civilians, became “seriously ill” with influenza that spring.

Returning soldiers from the western front were the main transmission vectors of the 1918 influenza pandemic, the ‘Black Flu’, the misleadingly named ‘Spanish Flu’. It is very hard to avoid the conclusion that the influenza, brought in initially by the American troops, played a vital role in Germany’s military setbacks in the late-summer and spring of 1918.

There seems to be very little written about the contribution of either the influenza or the naval blockade to Germany’s truce (a truce which began through Germany’s leaders reaching out to US President Woodrow Wilson; but which morphed into a substantial political defeat) which, to the West, ended the war, but which to many Germans looked very much like a ‘stab in the back’. Hence, from the German point of view, scapegoats had to be found, and the events which led to an eventual continuation of the Great World War were set in train. This was not helped by poorly considered attempts (especially at Versailles in 1919) by France and Britain to make Germany – now firmly ensconced in the western mind as a comprehensive Loser – pay for the war. And, perhaps most significantly, Germany being stripped by the Western powers of the full suite of its military gain in the East. Ukraine and other German-acquired territories were returned to the Russian Empire; now in the form of the ‘Communist’ Soviet Union, although in 1919 very much in a state of a civil war in which the West had intervened.

These events clearly represent the foundations of the Nazi doctrine of Lebensraum; more than anything, Germany wanted Ukraine back. Germany’s main weakness in World War One had been its resource base, especially its inability to feed itself. Germany, from the 1870s onwards, had become a food importer following its rapid industrialisation and imperial outreach (which included Samoa and New Guinea). And Germany also needed time to repopulate, to breed a new generation who could fill and administer what it saw as its ‘rightful’ empire in the west, and in the world.

We can clearly see Germany’s growing vision to replace its former far-flung empire by acquiring – as a proxy empire – France’s overseas territories. We saw this play out in 1940, with the creation of ‘Vichy France’ a nominally independent client state of Nazi Germany, and to whom the whole of the French Empire was designated. (In this light, had Germany’s military plans worked out in the early 1940s, France’s interests in the Northern Levant – Syria and Lebanon today – represented a possible solution for the alleged ‘Jewish problem’ of Eastern Europe. The West had a similar ‘Jewish problem’, which was resolved initially in 1924 by shutting down Jewish immigration to the United Kingdom and United States; that shutdown was still in place post-1945, meaning that The West used the Southern Levant as a repository for its erstwhile Jewish immigrants.)

We might note that, today, Germany is very well aware that it has the same resource vulnerability that it had from 1914 to 1940; and must look East for a solution. In addition, many people in Germany are well aware of a new form of demographic ‘crisis’ that Germany is facing, and that immigration from Eastern Europe (and a further degree of proxy absorption of Eastern Europe) represents its only plausible hope for an ‘ethnic European’ future.

What Happens if The Bad wins a World War (or any war for that matter)?

In 1918 the politically victorious West was able to create a Goody-Baddy narrative, facilitating a victors’ justice by presenting it as Good judging and punishing Bad. One consequence, reinforced by the western campaign of terror over Germany, half of which took place from November 1944 to April 1945. (Documents which have since come to light suggest that this bombing campaign – with the loss of 800,000 German civilian lives through horrible fiery deaths – was a failed genocide. The Morgenthau Plan, for example, advocated what amounted to bombing Germany ‘into the stone age’ – an expression which, applied to Vietnam, resurfaced in the 1960s – reducing Germany’s population from 80 million in 1939 to 30 million. 80 million people standing side-by-side along the equator-line would complete a circle of the world; now imagine randomly executing five-of-every eight people in that circle. Nuclear weapons were one means of making that genocide of civilians and refugees ‘more efficient’, as was actually done in Japan. Britain’s genocide plans included Operation Vegetarian, a dastardly scheme of biological warfare.)

In the end The Good was able to conceal most of its many very Bad contemplations, in large part because it was becoming more concerned to turn its killing attentions onto its erstwhile ally, Stalin’s Russia. Interestingly, as A C Grayling noted in Among the Dead Cities, the British leader of its terror-bombing force equated his efforts (killing 800,000 civilians in Germany) with the numbers of civilians estimated to have died of starvation or malnutrition in World War One as a result of the naval blockade.

Of course, whoever ‘wins’ a world war will use the victors’ prerogative to call themselves The Good. But, if, during a world war, ‘we’ have fully convinced ourselves that we are The Good, and we are suffering unsustainable losses, at what point do we (aka The Good) surrender to The Bad? Do we fight on, futilely, to the last man and woman, as it seemed the Germans and the Japanese were doing in 1945? Do we call a truce, as ‘we’ did eventually in Korea in 1953, and in Vietnam in 1972? Looking back, we are truly grateful that we did end those two Asian wars, one with a result that would be called a ‘draw’, the other becoming a clear defeat in 1975.

In the Good versus Evil narrative, Good never capitulates to Evil; not even if the alternative is the nuclear destruction of all life on Earth.

Truth and Reconciliation versus Accountability and Retribution

As we have seen at the end of World War One, an attempt by Germany at reconciliation to end the conflagration – including a willingness to have war crimes assessed and adjudicated in an international court – turned into a humiliation of Germany; that humiliation, in turn, ensured that the conflagration would recommence at a time of Germany’s choosing.

Fortunately, we have the South African experience of the end of Apartheid as a template for another way: Truth and Reconciliation. The former can always win out over the latter. Processes of humiliation and punishment are accompanied by large-scale processes of evasion and concealment; the incentives are to conceal rather than reveal the evidence of what really happened. It is better to know and not punish, than to punish a few scapegoats and to conceal the rest.

The best outcome is Remembrance, not Punishment and Vengeance. Sunlight is the strongest disinfectant. And to remember all; not to over-remember some things while severely under-remembering most things. For most younger people in the world today, World War One is understood as gritty soldiering in the trenches of the Somme, or under the cliffs at Gallipoli. And World War Two is reduced to Adolf Hitler’s genocidal mania, and Winston Churchill’s ‘heroic’ campaigns to defeat Goering, Rommel and Hitler (thereby, though too late, to save the Jews). Even the Pacific War is largely forgotten, except for reminders every five-years or so of Pearl Harbour and Hiroshima; the rest is unfathomable nuance.

Today

The western powers have tried hard to present themselves as ‘The Good’ in a biblical struggle through their Ukraine client regime, against Vlad ‘The Bad’. Yet the paucity of western Goodness has been so deeply exposed by the western alliance’s complicity in the genocide by Israelis of their co-semitic Palestinians, with whom they share the land known from 1918 to 1948 by some as ‘Mandatory Palestine’ and by others as ‘Eretz Israel’. Whatever we think of the virtue of the various western alliances (starting with the French-British Entente of 1904), clearly they are not ‘The Good’. Like all the other dirty wars in the twentieth and twenty-first century, the contests are between The Grubby and The Grubby, each looking for an opportunity to impose victor’s justice over the other.

Israel is trying to create a nationalist ethno-Utopia in accordance with the principles of Lebensraum. Israel has been doing so since the newly formed United Nations inflicted WW2 victor’s justice upon an indigenous third party in 1948.

Truth and Reconciliation is the answer; researching what happened and how and why, noting the root of the word ‘publication’ is ‘public’. Not one-sided Accountability and Retribution.

Conflicts will always exist. If we can get past the Good versus Bad narratives, we can make deals  which are never perfect for either party; but better for all three parties (noting that world wars have major impacts on third parties, such as the indigenous people of the Levant; and such as the birds, bees, people and trees, all of whom will lose big-time in the case of a self-inflicted extinction event).

Two Interesting Historical Deals

In the Napoleonic Wars – World War Zero – we had the British on one side defending the ancien regime European orders of feudalism and merchant capitalism; versus the French side which (under Napoleon Bonaparte) both advocated for and subsequently destroyed the new revolutionary liberalism.

As in World War One, the British Navy played a major role. Important territories for France were the Indian Ocean islands of Isle de France (now Mauritius) and La Réunion. In 1810, Réunion Island was captured by the British. In 1814 a deal was done. Réunion was swapped for the more economically valuable Isle de France. Great Britain had the military advantage of having captured the less populated part of this ‘France in the Indian Ocean’. Hence, Britain in 1814, leveraging off its relative military success, instigated a swap deal; Britain gained Mauritius (reverting to its former Dutch name), and Réunion was restored to France. (As usual in those times, indigenous people didn’t get a look in!) For France, the only alternative was to continue the fight; in that event, France would eventually have lost both islands. Pragmatism prevailed; the 1814 swap took place.

A second event – also an allegory for our present times – involved a genocide; an event in the Banda Islands (in present Indonesia) described by Bengali writer Amitav Ghosh, in his 2021 book The Nutmeg’s Curse: Parables for a Planet in Crisis. This particularly problematic genocide was perpetrated by the Dutch East India Company (Dutch abbreviation ‘VOC’; Abel Tasman’s employer) in the 1620s. (Mauritius was then also part of the VOC territory; indeed that’s who ruled Mauritius when the dodo became extinct, in 1662.) At that time, England and the Netherlands were the great mercantile rivals in the North Sea, Atlantic Ocean and Indian Ocean spheres. England had possessed one of the more remote Banda Islands, Rhun. To settle the second Anglo-Dutch War in 1667, the Dutch formalised a land-swap deal which at the time seemed very advantageous to them (Manhattan or Pulau Rhun? In 1667, Nutmeg Made the Choice a No-Brainer, New York Times, 2024). England got the last laugh, however. It had acquired Manhattan Island; and, as they say, the rest was history – world history – the island in which fortunes were made from real estate deals.

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Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

On Saturday I came into possession of this letter, transcript below.

I will note that the recipient of the letter is someone I know a bit about; I would like to know more about his time in London, circa 1930-1932. I understand that he attended the London School of Economics. I never met him; but, me being a student of the Great Depression, I wish I had known him while writing my MA thesis.

Eric Salmon lived from 1903 to 1990. Certainly a patrician, he was an Auckland City Councillor and associate of Auckland’s ‘Mayor Robbie’. While he would never have had any sympathy with the Nazi cause, I would like to think that, like me, he would have had some empathy for the German people in 1933; and the many other people then caught up in events – indeed zeitgeists – moving too fast, and on too great a scale.

Sadly, I will never be able to see Mr Salmon’s letter to his German contact (probably written late in 1932). I do not know if he replied to the letter below.

Home Address:

Schwelm (in Westfalen)
Kirkplatz 7

Schwelm, 6th VI. [June] 1933

Dear Mr. Salmon,

                                    Your letter with the interesting account of your native [town?] and the economic position of New Zealand was a great joy to me, and I thank you very much for it. I hope, you won’t take it amiss that my answer comes so late. During the last months I spent all my time in finishing the dissertation for my doctor examination. Some days ago I finally handed it to my professor, and I am now preparing for the oral examination which will take place in the end of July. – How are you getting on with your work?

                        In the course of rather a short time the political situation in this country has thoroughly changed, and the questions you put to me in your letter have found a sudden solution. I may add : also a good one. You are perhaps astonished to read that, for – as far as I know – most of the great newspapers of the world tell you just the contrary. The reason for it is that the European nations, above all France and Polonia [Poland], but England too, fear a new war, and this fear is in an inexcusable way nourished by all those German people who don’t agree with the new spirit and the new methods. The Jewish question is also of great importance. The measures we took against the Jews were not at all cruel or unjustified, as you read in English papers. All we try is only to reduce the enormous influence and power of the Jews in Germany to an extent which compounds to their small number. More and more their influence has become a destructive force in our national life. What you see nowadays in Germany is not a warlike or an extremely militaristic spirit or a mass barbarism (as many foreigners suppose), but the will to build a new nation, in which no longer the unchecked liberalism of the postwar years reigns. We were standing just before a complete breakdown and the chaos of Communism, which would have been fatal for the whole world. In this dangerous moment came the revolution of our nationalist party under the great leader Hitler. It marks the beginning of something quite new in Germany. We know that a great many tasks are waiting for us, but seeing them we are no longer desperate as it was the case in the last years. The new Germany has a new hope, a new will, and a new energy, and with them we shall overcome all problems and difficulties.

      What do you think about the change in Germany, and what do you read in the papers? I should be very glad to hear something about it from you. Hoping you are quite well I am with kindest regards, yours Theodor Hort.

Herr Hort – presumably Dr Hort, soon after – is writing from Schwelm, eleven kilometres east of the Westphalian city of Wuppertal. To the west of Wuppertal is Düsseldorf, on the Rhine; Cologne is to the south, near where the river Wupper flows into the Rhine. To the north of Wuppertal is the Ruhr Valley, Germany’s western industrial heartland. Between Düsseldorf and Wuppertal is Neandertal/Neanderthal. Most of the journey between Wuppertal and Schwelm can be taken on the ‘world-famous in Westphalia’ Wuppertal Schwebebahn, the suspension railway, built between 1897 and 1903, which runs above the Wupper River. I am privileged to have ridden on that railway in 1984.

I had hoped that, because the railway is still there, that Wuppertal had not been bombed by the RAF during WW2. No such luck. I found this article in the Burnie Advocate (Tasmania), 1 June 1943: Wuppertal raid one of heaviest of war. This was eight weeks before Operation Gomorrah decimated Hamburg. (On Wuppertal, refer also: Planning a Bombing Operation: Wuppertal 1943, My grandfather, the bomber pilot, When the singing stops on Christmas Eve, German tragedy of destiny, Wikipedia.)

I have no idea what Theodor Hort’s fate was. Maybe he was recruited for the notorious Einsatzgruppen, which was top-heavy with academic doctors? More likely he turned away, at least in his mind, from the excesses of the New Germany; nevertheless serving his country in some capacity, albeit out of the kind of obligation that would have been hard to refuse. There is a high chance he died during the war. I’m guessing he would have been about 35 years old in 1943.

Throughout the twentieth century, many young Australians and New Zealanders studied at the London School of Economics. (William Pember Reeves was its Director from 1908 to 1919.) So did many upper-middle-class Germans; Herr Hort clearly fell into that class-category. Other Germans to study economics at the LSE included Heinrich Brüning and Ursula von der Leyen.

Brüning was Chancellor of Germany from mid-1930 to mid-1932. Brüning was the centrist politician most associated with the economic collapse of Weimar Germany during the Great Depression, thanks to his ‘liberal’ policies of stubborn fiscal conservatism. He sought to balance the Budget at any cost. Germany and the world paid a very high cost indeed. I understand that the “unchecked liberalism” Hort refers to is the economic liberalism of Brüning and others (think today’s neoliberalism), and not so much the social liberalism of Berlin that was an icon of 1920s’ Germany. (As a part of that social liberalism, Germany in 1918 – Germany’s first annus horribilis last century – became a proper democracy, with proportional representation, and votes for women.)

I would imagine that Hort’s parents would have voted for Bruning’s Zentrum (Centre) party. While it started as a Catholic party, it was actually the foundation party of German ‘Christian Democracy’, having already broadened its base by 1930. Westphalia, Düsseldorf and Cologne represented the West German heartland of centrist Christian Democratic politics. And consistently these places cast the fewest votes for Adolf Hitler’s party. (The city of Cologne, the least-Nazi-supporting city in Germany, was the first large German urban centre to be carpet-bombed by the British, in 1942.)

Nevertheless, at least in March 1933, young Theodor probably voted for the National Socialists. (Although his “great leader” epithet was probably a direct translation of ‘führer’ rather than an expression of devotion.) The Enabling Act of 1933, which ended democracy in Germany, had been in force for three months before Herr Hort wrote this letter. He, like many others in a desperate country, was willing to forego democracy if other goals might better be achieved without it. Further, by 1938, Hitlernomics – borrowing ‘as much as it takes’ to re-arm and reorganise along Spartan lines – was looking like a great success. (Something suspiciously similar took place in the Bundestag in 2025, exactly 92 years after the Enabling Act, using the outvoted ‘lame-duck’ parliament to get the necessary two-thirds majority. This time it was the ‘fascists’ – AFD – who were against borrowing to re-arm; and the outvoted fastidiously-anti-borrowing neoliberal FDP, who should not have been there.)

Finally, here, we should note that Germany as a whole – and certainly western Germany – while Judeophobic, was probably not much more Judeophobic than other European countries (including the USA); and that most German Jews, to 1918 at least, had seen themselves as more Germans than Semites, and played a significant role in the German armed forces in World War One. The circumstances of 1918, however, made it a relatively easy task for would-be-politicians with nationalist agendas to scapegoat Jews. There were vastly more Jews living in the countries east of Germany, and they from 1940 to 1944 ended up being very much in the wrong place at the wrong time. In Germany in 1933, ‘Jewish’ identity was used very much as proxies for the twin-devils who many Germans believed had ‘stabbed Germany in the back’ in 1918 (at a time when Germany appeared to be winning on the western front) and again in (and around) 1931; ‘Bolshevik’ Communists and big-finance capitalists. The 1918 claim of a ‘stolen war’ was an evidentially-false conspiracy theory which had the appearance of credibility to many desperate people looking for simple answers, and scapegoats.

On the Bolshevik matter, while Theodor Hort and others will not have known about it until much later – the winter of 1932/33 was the peak of the Holodomor where four million mainly-Ukrainians were deliberately starved to death by Josef Stalin’s Moscow-based regime. Too many elements of the western press were looking the other way. Soviet Communism was being romanticised in certain middle-class and working-class circles in ‘the West’ (though demonised in others: refer Three Women who Launched a Movement); the mega-atrocities were downplayed by mainstream journalists such as Walter Duranty.

It was the full discovery in 1939 of the Holodomor and the later Great Purge(s) that enabled the Nazis to contemplate an even worse genocide, a substantial part of which became the Shoah. The Shoah, while the worst genocide ever, was neither the first nor the last real-world example of ‘hunger games’ in the last 100 years.

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Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.