U.S. war spending jumps 21 percent since the beginning of the crisis…

(Click to enlarge)

This is a helpful graph, which crystallizes what is actually taking place amidst all the numbers being thrown around today. We have yet to see anything like it elsewhere.

One under-reported aspect of the GDP numbers released last week is the impact US war preparations spending is having on inflating that measure of economic activity.

Under-reported is a kind way of putting it; the actual term should be “A fucking cone of silence.”

Since this crisis began to blossom in 2007, much of the collapse has been hidden by a marked ramp up in war prep expenditures – first, by the Moron, and now by the Messiah.

This, in addition to corporate subsidies – in the form of Cash for Clunkers, and tax breaks for new home-buyers – accounts for most, if not all, of the bounce in GDP witnessed in the doctored numbers.

If, as CNBC‘s Jim Cramer informed us, and Klaus Kleinfeld, President & CEO of Alcoa confirmed, the first leg of an attempt to find a way out of this crisis is to accelerate a shift of industrial operations from the U.S. to faster growing markets like Brazil, Russia, and China, the second leg is clearly an attempt to improve profitability in the United States by increasing expenditures on those kinds of goods which have no productive use – things anyone who is not insane would consider wasteful.

War preparation, thus, serve a two-fold purpose: First, they allow Washington to fulfill its role as buyer of last resort, and second, they allow profits to be expanded in a way that it does not further increase productive capacity.

What the second point means, in plain English, is that wasteful spending like war preparations makes the US appear less productive than it really is.

Of course, the question posed by that last statement is: Why the fuck would Washington want the US economy to appear less productive than it really is?

The answer is that this has nothing to do with Washington. This is a blindly thrashing attempt to slow unemployment and over-production (the accumulation of superfluous workers, inventories of unsold goods and excess money that cannot be invested profitably.)

If work can be expanded in an area which is not productive – building machines designed to kill people – people, goods and money can be redirected from productive purposes – which only add to unemployment and over-production – into an economic dead end for the time being.

There is, of course, a connection between the Cramer observation, and the rise in war spending:

Since military spending adds nothing to the real living standard of Americans, the net result is that even as Brazil and China become more productive due to investment by Alcoa and other American companies, real wages in the United States become more like those in Brazil and China.

In the words of Tom Friedman, the world gets flatter.

But, of course, we have seen all of this before, haven’t we? It was called the Rust Belt – when manufacturing left the industrial states to move to the Sunbelt, Mexico, and other venues to lower labor costs resulting in the longest period of stagnant wages in US history.