Cost to USA (Score:5, Insightful) by John Bayko (632961) on Thursday March 20, @10:58AM (#5557834) European countries used to be be warlike and belligerant to one another until industrial capacity simply made war economically unviable any more - this happened in World War I, but random events made World War II possible (part of it was the disbelief that anyone would be stupid enough to go through that again, hence the appeasement and reluctance to stop it quickly). Since then, industrialized countries (except the U.S) have realized that economic realities now completely overshadow military force, hence the de-emphasis on military spending. If the world's largest military power were to go to war with its almost completely undefended neighbour, sure they could conquer it more easily than Iraq, but the economic disruption in trade would shut down about a quarter of the U.S economy. Furhermore, distrust of the U.S and economic sanctions would probably kill another third, even after the war was over and trade could be resumed. Without its industrial base, it's military ability would go the way that Russia's has (5 million military personnel about a decade ago, approaching 800,000 in a few years). In the situation with Iraq there is still economic uncertainty for the U.S. An essay here [ratical.org] makes a claim that the reason for the Iraq war involves the currency used to purchase oil. While I don't think it's correct, it does outline some of the problems which the U.S could encounter by squandering it's begrugingly earned goodwill in economic matters. Basically, the U.S economy has been powered by a few factors that prop up the value of the U.S dollar, which allows the U.S treasury to keep printing them without causing devaluation. Printing money is a economically equivalent to taxation, in that money disappears from elsewhere (value falls, leading to inflation) and appears somewhere else (treasury). However, the importance of the U.S economy following World War II made the U.S dollar a standard currency for world trade, such as for oil (which is priced in U.S dollars). This means that even when not buying U.S goods and services, countries elsewhere need U.S dollars. In addition, most countries prop up their own currencies by buying U.S dollars and keeping them in their treasuries (it used to be gold, but while currencies were released from the "gold standard" in theory, in practice it's useful to have something of relatively fixed value for controlling exchange rates). The result of this is that the U.S treasury could keep printing U.S dollars and the value doesn't go down because they are taken out of domestic circulation. However, when the trust is gone, countries will start looking for alternatives, and it's beginning to look like the Euro is that alternative. Iraq has switched to Euros for selling oil (is main customer is France, after all), and Iran (also on the "Axis of Evil") is looking at it too. Finally countries are starting to exchange U.S dollars for Euros for their reserves - Russia and Vensuala are examples. If the U.S dollars start returning to circulation, you can expect (and it's happening now) a devaluation of the U.S dollar. Once countries realize that their treasury reserves are losing value relative to Euros, there's a good chance they'll switch, essentially leading to a run on currency - the U.S dollar will plummet, U.S trade deficit will inflate, and the U.S economy may suffer a recession that makes the current problems look like a pleasant memory. That is the potential cost for the U.S spreading ill will. That's not the worst case, either - think Russia-style meltdown. Hopefully it won't come to that, but the more the U.S alienates the rest of the world, the more the rest of the world is likely to abandon the U.S economically - and without the economy to sustain it, the U.S military won't last either.