The debate over the U.S. military operation in Venezuela follows predictable lines. Conservatives defend it through geopolitical necessity. Progressives condemn it through moral principle. Both sides debate whether it’s justified. Neither asks the diagnostic question: What does this operation reveal about America’s condition?
The paradox is stark: We claim we can’t afford to compete with China through infrastructure investment and development partnerships. But we can afford military operations seizing foreign assets while bypassing constitutional governance.
We can’t afford cooperation. But we can afford force.
We can’t afford to build. But we can afford to take.
This isn’t about foreign policy. It’s a symptom diagnosing systemic failure that threatens everything America claims to value: freedom, democracy, economic opportunity, and the middle class itself.
For fifty years, we’ve operated under a fundamental misunderstanding of our own economic system. We run a soft money economy where the federal government creates dollars when it spends, constrained only by productive capacity. But we’ve applied hard money mythology claiming government must balance budgets like households.
This systematic misapplication created artificial austerity preventing strategic investment. While China built 40,000 kilometers of high-speed rail, we let bridges collapse. While they expanded university enrollment from 1.4 million to 40 million students, we created student debt crisis. While they developed manufacturing capacity, we offshored production.
The mythology didn’t fail randomly. It was deployed selectively by extractive elites who captured our institutions. Austerity for public investment that builds middle-class wealth. Abundance for policies inflating asset values they own. The result: strategic weakness forcing us to use military force where we lack capacity for partnership, and accelerating wealth concentration destroying the middle class.
Venezuela diagnoses where this leads. Isolated empire abroad using force because we destroyed capacity for cooperation. Neo-feudalism at home where birth determines outcomes and democracy becomes theater. The people who profited from fifty years of prevented investment now consolidating authoritarian control.
But the diagnosis also reveals the cure: capacity stewardship grounded in understanding economic reality rather than accepting mythology. The choice being made right now determines whether we preserve democratic capitalism or accept neo-feudal decline.
How Hard Money Mythology Created Strategic Weakness
For fifty years, Americans have been told the federal government works like a household. It must collect taxes before spending. Deficits burden our children. The national debt will bankrupt us. Therefore, “we can’t afford” infrastructure, education, healthcare, or strategic investment in your future.
If you’re a fiscal conservative worried about government waste and debt, that concern is valid. The problem isn’t your instinct for fiscal responsibility. The problem is applying household budget logic to a government that operates completely differently. We’ve been having the wrong debate for fifty years.
This story is completely false for the United States federal government.
As I detail in Why Monetary Systems Matter, the U.S. operates a soft money system where the federal government creates dollars when it spends. Not metaphorically. Literally creates them through Federal Reserve keystrokes. Federal taxes don’t “fund” anything because dollars must exist before they can be taxed. Taxes remove money from circulation to manage inflation. The national debt isn’t a burden to repay. It’s the accounting record of dollars government spent that haven’t been taxed back yet: the financial savings of the private sector.
Federal Reserve Chairman Beardsley Ruml explained this in 1946: “Taxes for Revenue Are Obsolete.” Every Treasury operations manager knows this. It’s been operational reality since 1971 when we ended the gold standard.
The real constraint on federal spending isn’t money. It’s productive capacity: workers, materials, technology, organizational capability. If we have construction workers and materials sitting idle, we have capacity to build. The money is not the limiting factor.
For fifty years, we’ve applied household budget logic to a government that creates currency. We’ve treated real productive capacity we could deploy as if it were constrained by fictional budget limits. Every time we said “we can’t afford it,” we were making a choice based on false constraints.
The consequences were catastrophic for American strategic position.
While China invested in infrastructure, we said we couldn’t afford repairs. Bridges collapsed in Minneapolis and Pittsburgh. Roads deteriorated to C- grade. Water systems failed in Flint and Jackson. We had construction workers, materials, engineering expertise. We left that capacity idle because mythology convinced us we couldn’t afford to deploy it.
While China expanded education, we created debt crisis. University enrollment exploded from 1.4 million to 40 million students through sustained public investment. We made college unaffordable. Student debt passed $1.7 trillion, crippling young people at life’s start. We had teachers, facilities, organizational capacity. We starved them because mythology claimed we couldn’t afford investment.
While China developed manufacturing capacity and supply chains making them essential to global production, we offshored production and hollowed out industrial regions. Communities that built American manufacturing strength became economic disaster zones. We had workers, industrial knowledge, domestic capacity. We abandoned them because mythology justified the choice as inevitable.
While China invested in research generating today’s innovations from 1990s commitments, we cut funding forcing short-term thinking. Basic science generating breakthrough innovations got starved. We had world-leading scientists and institutions. We denied them resources because mythology claimed we needed immediate returns.
While China built Belt and Road partnerships across 150 countries through patient development finance, we applied sanctions and military pressure. They created influence through actual infrastructure and partnership. We tried countering with force because we didn’t build capacity for development cooperation.
The pattern is clear: China spent fifty years understanding what patient strategic investment means. We spent fifty years believing mythology that prevented us from competing. For forty years, we watched China’s methodical rise while convincing ourselves we couldn’t afford to compete. Not because we lacked advantages. We had more wealth, better technology, stronger institutions, global partnerships, and the world’s reserve currency providing unlimited capacity to mobilize productive resources.
We had every advantage China lacked. We chose not to use them because mythology convinced us we couldn’t afford what China built from a weaker starting position.
Now we face the consequences Venezuela diagnoses. We can’t compete through patient investment because mythology prevented building capacity. When China establishes influence through infrastructure and partnership, we resort to what mythology never prevented: military force.
But the mythology wasn’t deployed randomly or consistently. Understanding its selective application reveals who profited and how they maintain control.
The Selective Mythology: Austerity for You, Abundance for Them
We always “couldn’t afford” infrastructure, education, healthcare, research (anything building broadly shared prosperity and middle-class wealth). But we always could afford military spending ($800+ billion annually, more than the next ten countries combined), corporate tax cuts (the 2017 cuts alone added $1.5 trillion to debt mythology claims threatens us), bank bailouts (trillions materialized instantly when Wall Street collapsed), and quantitative easing inflating asset prices ($4+ trillion pumped into financial markets).
Austerity for public investment that would build competitive capacity and middle-class assets. Abundance for policies benefiting those who already own concentrated wealth.
This selective application reveals mythology’s actual purpose. Not fiscal responsibility but preventing public investment while enabling wealth concentration.
As I show in Why Economic Models Matter, this wasn’t accidental. Models based on hard money thinking consistently make wrong predictions yet dominate policy discussions because they serve political purposes.
The empirical failures are stark. When the Fed expanded its balance sheet 5x through quantitative easing (2008-2014), quantity theory predicted massive inflation. We got a decade of inflation averaging 1.5%, consistently below the 2% target. Japan ran massive deficits for three decades with debt exceeding 250% of GDP. Hard money models predicted funding crisis, runaway inflation, currency collapse. Japan faced persistent deflation, near-zero bond yields, and a strong currency instead. These aren’t minor prediction errors. They’re complete opposite outcomes sustained over decades.
The human cost of applying failed models is measured in suffering. When European policymakers imposed austerity (2010-2015) based on hard money thinking, Greece’s GDP contracted 27% and unemployment hit 28%. Spain saw unemployment reach 26%. Millions lost jobs, homes, futures because policymakers followed models claiming deficit reduction would restore growth. The models were wrong. The suffering was real.
Yet the models persist because they serve political purposes, not because they describe reality.
The models fail systematically. They persist because extractive elites captured institutions that should expose mythology.
Economics departments funded by corporate donors teach hard money thinking as fact. Media consolidation eliminated investigative journalism exposing capture. Universities shifted from public to private funding, serving donor interests over public understanding. Congress was gutted of capacity through “small government” ideology claiming we couldn’t afford legislative infrastructure (staff cut, research offices eliminated, investigative capacity destroyed).
Every institution that should expose mythology was captured to validate it. Every institution that should enable democratic understanding was neutered to serve concentrated power.
Who benefited from prevented investment?
Wall Street financiers profiting from offshoring, financial engineering replacing productive investment, quantitative easing inflating asset values, and deregulation enabling speculation. They funded think tanks teaching mythology, endowed economics department chairs, donated to Republicans and Democrats alike.
Silicon Valley monopolists benefiting from public research they didn’t fund, infrastructure they didn’t build, and educated workers they didn’t train, then lobbying for tax treatment letting them keep gains while avoiding obligations. They bought media companies, funded politicians across the spectrum, deployed mythology when public investment was discussed.
Fossil fuel executives extracting resources while externalizing environmental costs, lobbying against regulation while receiving subsidies, profiting from commodity price spikes while blocking alternative energy investment. They supported candidates from both parties, funded economic research defending their interests, invoked fiscal responsibility to prevent climate investment.
Pharmaceutical companies capturing patent systems, price-gouging captive markets, extracting billions from healthcare costs, then fighting universal coverage claiming we couldn’t afford it. They hired former regulators, donated across party lines, maintained mythology preventing affordable healthcare.
Private equity firms buying companies, loading them with debt, extracting fees, leaving workers and communities with wreckage, facing no accountability for destruction. They employed politicians from both sides after government service, funded research justifying methods, blocked regulation citing fiscal responsibility.
Defense contractors whose profits depended on military spending mythology never constrained. They captured Pentagon procurement, employed retired generals and admirals, spread campaign contributions widely, ensured budgets grew regardless of fiscal crisis rhetoric elsewhere.
The same extractive elites funding both parties. The donor class whose wealth exploded while American competitive capacity degraded and middle-class prosperity disappeared. As I documented in 50 Years of Economic Myths Have Delivered Americans Into Technofeudalism, this capture was systematic, not accidental.
Both parties maintained mythology because their donors profited from it. Republicans deployed it to block all public investment, invoking debt and deficits to prevent infrastructure, education, healthcare, research. Democrats accepted constraints while demanding “pay-fors” that validated mythology’s premise, proposing marginally less austerity rather than challenging false constraints. Neither explained that in a soft money economy, constraints are productive capacity, not money.
The result: fifty years of artificial austerity for public goods combined with abundance for asset owners produced the massive wealth inequality now destabilizing society. Not because inequality is inevitable in capitalism, but because mythology was weaponized to prevent investment in shared prosperity while enabling concentration.
Your community decays because mythology prevents infrastructure investment. Your children face crushing debt because mythology made education unaffordable. Your job disappeared because mythology justified offshoring. Your healthcare costs spiral because mythology blocked universal coverage. Your opportunities shrink because mythology prevented capacity building that would have competed for your labor and built your assets.
Meanwhile, those who already own assets watch wealth multiply through policies mythology never constrained. Stock portfolios inflated by quantitative easing. Real estate values boosted by restricted supply and financialization. Corporate holdings protected by bailouts and tax cuts.
This is how mythology creates neo-feudalism: permanent aristocracy where birth into connected families determines outcomes more than talent or effort. Where your children’s prospects depend on inheriting wealth rather than their abilities. Where education stratifies into systems for different classes. Where healthcare becomes affordable only for those born into families that can pay. Where political power reflects donations rather than votes. Where democracy becomes theater while real decisions happen in donor meetings.
Why retreat to “fiscal discipline” makes things worse
Some see this trajectory and reach for what seems obvious: more fiscal discipline. Balance the budget. Return to sound money. Impose austerity to restore responsibility.
This impulse is exactly backward. We didn’t get strategic weakness and inequality from too little hard money thinking. We got them from applying hard money mythology to a soft money economy for fifty years. More of what caused the disease won’t cure it.
Balanced budget requirements would force even deeper cuts to infrastructure, education, healthcare, research. The strategic weakness Venezuela reveals would accelerate. Sound money principles would prevent the public investment necessary to address inequality. The wealth concentration tearing society apart would intensify as austerity eliminated remaining mechanisms for building middle-class assets.
This pattern isn’t theoretical. During the 2010s, deficit hysteria reached fever pitch. The Tea Party demanded austerity. Simpson-Bowles proposed cuts. Sequestration forced reductions. Both parties competed to show fiscal responsibility. What happened? Infrastructure continued decaying. Education became more unaffordable. Research funding stagnated. China kept building. Strategic weakness accelerated precisely when hard money thinking was most influential. And inequality worsened as austerity hit working families while quantitative easing inflated asset prices the wealthy owned.
The people advocating loudest for hard money discipline are often those who profited most from mythology’s selective application. They want balanced budgets preventing infrastructure and education, but not tax increases reducing their wealth. They invoke fiscal crisis to prevent public investment, but not to constrain policies inflating assets they own. Retreat to hard money thinking means more of the disease, not the cure.
China’s Success Proves Patient Investment Works
The tragedy becomes undeniable when you see what China accomplished while we believed mythology.
China built 40,000 kilometers of high-speed rail connecting cities across the country through multi-decade commitment. We let bridges collapse and roads deteriorate to C- grade because mythology convinced us we couldn’t afford repairs, despite having abundant construction capacity sitting idle.
They expanded university enrollment 28x through sustained public investment in education. We made college increasingly unaffordable and created $1.7 trillion in student debt, despite having teachers, facilities, and organizational capacity to expand access.
They developed manufacturing capacity and supply chains making them essential to global production. We offshored production and hollowed out industrial regions, despite having workers, materials, and industrial knowledge to maintain domestic capacity.
They invested in research generating today’s innovations from 1990s commitments, understanding markets systematically underprovide basic science with decades-long payoffs. We cut funding forcing short-term thinking, despite having world-leading scientists and research institutions.
They built Belt and Road partnerships across 150 countries through patient development finance. We applied sanctions and military pressure, despite having more resources to compete through partnership.
We had every advantage they lacked when they started this journey. More wealth. Better technology. Stronger institutions. Global partnerships. The world’s reserve currency providing unlimited capacity to invest in our future.
We chose not to use those advantages because mythology convinced us we couldn’t afford what China built from a weaker starting position.
As I detail in Defending Democratic Capitalism Through Capacity Stewardship, this absolutely is about democracy versus authoritarianism. China’s success doesn’t prove authoritarianism works better. It proves patient strategic investment works. Moving forward requires more democracy, not less. Citizens must take a more active and informed role, advocating for capacity stewardship grounded in understanding how our economy actually works.
We pioneered this approach after WWII. The GI Bill. Federal Housing Administration. Interstate Highway System. These weren’t market outcomes. They were deliberate policy choices using public resources to build capacity that enabled postwar prosperity. Multi-decade investment coordinated across political transitions, enabled by informed democratic demand understanding government could deploy capacity for public good.
Then we abandoned it because mythology convinced us we couldn’t afford it. The same mythology that now has us launching military operations because we lack capacity for partnership.
Venezuela is the endpoint of fifty years applying hard money mythology to a soft money economy. We destroyed our capacity for strategic competition. When China offers development, we offer force. When we can’t compete through patient investment, we resort to military operations seizing what we can’t win through cooperation.
The people who profited from fifty years of prevented investment now point to the weakness they created as proof democracy can’t compete. They use Venezuela to demonstrate that force is America’s only remaining tool. They claim our strategic failure proves we need their authoritarian solutions, their consolidation of control, their management of decline.
But Venezuela actually diagnoses the opposite. Our strategic weakness results directly from mythology preventing investment that creates competitive strength. China’s success proves patient strategic investment works regardless of political system. Our failure proves mythology preventing such investment weakens nations regardless of their advantages.
The question isn’t whether democracy can compete. The question is whether democracies can free themselves from mythology that prevents competition.
The Choice: Capacity Stewardship or Neo-Feudal Decline
Venezuela forces a stark choice about America’s future.
You can accept the trajectory the operation reveals: isolated empire using force abroad because we destroyed capacity for partnership. Accelerating wealth concentration at home creating permanent aristocracy. Democracy degrading into theater while extractive elites consolidate authoritarian control. Neo-feudalism where birth determines outcomes and your children inherit decline justified by crises that don’t exist.
Or you can understand economic reality and demand strategic renewal based on capacity we have but mythology prevents deploying.
The answer isn’t retreat to more mythology. Balanced budgets. Fiscal discipline. Sound money constraints. That’s more of what caused the disease. We already applied hard money thinking to a soft money economy for fifty years. That created the strategic weakness and inequality Venezuela reveals. More mythology won’t cure problems mythology created.
The answer is capacity stewardship: understanding what kind of economy we actually have and using that understanding to demand different.
Start with foundational clarity: The United States operates a soft money economy where government creates dollars when it spends, constrained by productive capacity and real resources, not budgets or debt. We have abundant productive capacity (workers, materials, technology, organizational capability). The only thing preventing us from using that capacity is mythology convincing us we can’t afford it.
This means the real questions aren’t “can we afford it?” The real questions are: Do we have the capacity to build it? Do we have available workers, materials, engineering knowledge, organizational systems? Which mechanisms work better for which purposes (markets or public provision)? How do we prevent institutional capture while enabling strategic investment?
When someone says “we can’t afford infrastructure,” the response is: “Show me we lack construction workers, materials, engineering knowledge. You can’t? Then we have capacity. The question is whether we choose to deploy it.”
When they invoke the national debt as crisis, the response is: “The national debt is the financial savings of the private sector. Explain why dollars sitting in bank accounts and retirement funds threaten us. You can’t? Then stop using mythology to justify policies serving extractive elites.”
When they demand “pay-fors,” the response is: “Explain why our soft money system needs revenue before spending. Show me where the Constitution requires this. Show me where operational reality supports this claim. You can’t? Then stop accepting hard money constraints that don’t apply to our economy.”
This reframing transforms political discourse from debating within mythology’s constraints to demanding acknowledgment of reality.
Capacity stewardship means three concrete political actions:
First: Spread understanding of soft money reality. Every conversation where someone invokes hard money mythology is an opportunity. Explain that in a soft money economy, the constraint is productive capacity, not money. Point to operational reality: Treasury documentation, Federal Reserve explanations, the fact that we create trillions instantly when needed. Make it personal: your community’s roads decay not because America lacks construction capacity but because mythology prevents deploying it.
Second: Demand based on productive capacity. When politicians claim we can’t afford infrastructure, demand they explain the productive capacity constraint. When they invoke debt as crisis, demand they explain why private sector financial savings threaten us. Organize this demand collectively. Show up at town halls asking capacity questions. Coordinate with others confronting mythology across party lines. Make this demand of Republicans invoking debt to block investment and Democrats demanding pay-fors that validate false constraints.
Third: Prevent institutional capture. Economics departments teaching mythology as fact need transparency about corporate funding shaping research and teaching. Media amplifying rather than investigating mythology needs scrutiny pointing out validation of false constraints. Universities serving donor interests over public understanding need democratic pressure demanding accountability. Congress lacking capacity to investigate or explain reality needs resources restored.
As I lay out in Defending Democratic Capitalism Through Capacity Stewardship, the full framework shows how this works systematically: transparency enabling oversight, accountability ensuring democratic control, structural checks preventing capture, capacity enabling strategic thinking.
This transcends traditional left-right categories because it’s grounded in reality rather than ideology. It works for fiscal responsibility advocates who want real stewardship rather than false constraints leaving capacity idle. For limited government advocates who want accountability rather than the captured dysfunction that mythology enabled. For opportunity advocates who want competitive capacity expanding genuine opportunity rather than extraction justified by false constraints. For strength advocates who want strategic capability rather than the tactical desperation Venezuela diagnoses.
This isn’t about expanding government for its own sake. It’s about government doing what only it can do: creating the conditions for genuine competitive markets, protecting property rights with infrastructure and rule of law, and ensuring no oligarchs can rig the game against honest enterprise.
In Beyond Capitalism vs. Socialism, I explored how the debate isn’t between sound money and fiscal irresponsibility. It’s between understanding what kind of economy we actually have and accepting mythology that serves power. This is about reality versus mythology, understanding versus accepting false constraints, using our actual capacity wisely versus leaving it idle based on lies.
The Stakes: What We’re Actually Choosing
Venezuela isn’t warning of what might happen. It’s revealing what is happening right now.
Abroad: We’re withdrawing from diplomatic strength into isolated imperial stance using force. China offers development. We offer military operations. China thinks strategically over decades. We react tactically through violence. Six NATO nations publicly distanced themselves from U.S. assertions about Greenland (our closest allies hedging against our unpredictability). Alternative payment systems accelerate to route around dollar hegemony we weaponized. The rules-based international order we built persists, but without American leadership because we demonstrated rules only apply to the weak.
At home: The same mythology justifying Venezuela abroad justifies extraction at home. Republicans deploy it to eliminate public investment entirely. Democrats deploy it to limit ambition through means-testing and pay-fors. Both serve extractive elites who profited from prevented investment. Your children’s prospects increasingly depend on whether they’re born into connected families rather than their abilities. Education stratifies into systems for different classes. Healthcare becomes affordable only for those born into wealth. Political power reflects donations rather than votes. Democracy becomes theater while real decisions happen in donor meetings.
This is neo-feudalism consolidating: permanent aristocracy where birth determines outcomes, concentrated wealth operates without democratic constraint, and force substitutes for strategic capacity.
The people who profited from creating this trajectory now claim they’re the only ones who can manage it. They point to strategic weakness they created as proof democracy can’t compete. They invoke inequality they produced as justification for authoritarian solutions. They use mythology that served them for fifty years to justify consolidating the control that mythology enabled.
But understanding what Venezuela diagnoses reveals we can choose differently.
We can understand how monetary systems actually work. See that government creates money constrained by productive capacity we have in abundance, not budgets or debt. Recognize the fifty years of “we can’t afford it” were lies enabled by captured institutions serving extractive elites. Demand the strategic investments mythology prevented.
We can build infrastructure, expand education, provide healthcare, fund research, restore manufacturing, create partnerships, rebuild institutions. We can compete with China through patient strategic investment rather than reacting through military force. We can address inequality through building shared prosperity rather than accepting concentration justified by mythology.
The choice is yours to make right now through the understanding you spread, the demands you make based on reality rather than mythology, the pressure you put on institutions to serve democratic understanding rather than concentrated power.
Every conversation where you explain soft money reality is one less person accepting Venezuela as necessary. Every demand for productive capacity explanation is one less politician hiding behind mythology. Every challenge to institutional capture is one less validation of false constraints.
This is how political action builds. This is how mythology loses its power. This is how Americans reclaim the possibility of using abundant capacity wisely rather than accepting decline justified by lies.
The work starts now. Share the understanding. Make the demands. Challenge the capture. Build the movement. Refuse the trajectory Venezuela reveals. Choose strategic renewal based on reality rather than decline based on mythology.
Nobody is coming to save us from extractive elites consolidating control through mythology they maintained for fifty years. The choice is ours. The work is ours. The future is ours to build or surrender.
Will you accept the trajectory Venezuela diagnoses (isolated empire using force, permanent aristocracy at home, democracy degrading into theater, your children’s futures determined by birth rather than talent)?
Or will you understand economic reality and demand the strategic renewal that preserves democratic capitalism, expands genuine opportunity, and makes operations like Venezuela unnecessary?
That choice is being made right now. In the conversations you have. The demands you make. The understanding you spread. The political action you take based on reality rather than mythology.
Venezuela is showing you their playbook. Understanding shows you can choose differently.
Which future will you build?