We can feel the winds of warmongering blowing through Europe as the continent raises the specter of war with Russia. Recently, the European Commission unveiled a series of measures to strengthen the defense of EU member states, most notably through the ReArm Europe plan. The plan—which was endorsed by the Extraordinary European Council on March 6, 2025—aims to mobilize €800 billion for the EU’s defense capabilities. It includes a redirection of public funds, but not only: it also includes the use of public savings. As announced on March 17, 2025, this strategy aims to get hold of around €10,000 billion in European bank deposits and redirect them towards the arms industry and public defense policies.
Another European example: Valérie Hayer, a French MEP and leader of the Renew Europe group in the European Parliament, recently declared that the old continent is experiencing “a moment of gravity” probably not seen since the Second World War. The culprit? The war in Ukraine and the existential threat posed by Russia to democracy and the European order. To deal with this threat, she and other European politicians want to mobilize the savings of Europeans to finance this collective effort in the arms industry.
In France and Germany
In mid-March, a number of French political figures spoke out in favor of mobilizing private savings to rearm the country in the face of the Russian threat. On March 13, the French Minister of the Economy, Éric Lombard, spoke in favor of this measure before French senators. At the time, there was no question of creating a dedicated savings account, but rather of targeting all the capital saved by the population.
However, in the face of widespread criticism, Éric Lombard backtracked on Thursday, March 20, and announced the creation of a 450 million euro fund managed by Bpifrance and open to individual investors wishing to contribute to the national rearmament effort by becoming indirect shareholders. The minimum amount to be invested in this fund will be 500 euros, with a maximum initial investment that could be of “several thousand euros.” Once invested, these “safe” funds will be frozen for at least five years.
There is the same warmongering rhetoric in Germany. Before leaving office, Olaf Scholz spoke to the Bundestag about the “Zeitenwende,” the historical turning point that Germany is currently facing. He promised to face it by investing massively in the rearmament of the German army, the Bundeswehr. The most likely future German chancellor, Friedrich Merz, got a vote in the German parliament to spend 1,000 billion euros on rearming the country. An unprecedented expenditure in a country that has long delegated its own national defense to NATO and the United States.
All these European investments are presented as “safe and profitable investments” (according to Valérie Hayer). However, as history shows us, these investments are just the opposite.
What History Teaches Us
Society has arisen out of the works of peace; the essence of society is peacemaking. Peace and not war is the father of all things. Only economic action has created the wealth around us; labor, not the profession of arms, brings happiness. Peace builds, war destroys. (Mises, Socialism, p. 59)
Historically, investing in war bonds and funds has always meant taking the risk of betting on the wrong horse. This bet could very well lead to the ruin of the creditors of the defeated state. This was the case in Germany with the impossible repayment of war bonds after 1918. These bonds had become worthless because the reparations demanded by the Treaty of Versailles and the hyperinflation of the Weimar Republic made their repayment impossible.
Conversely, if the state was victorious, the repayment of these often massive loans could take years, ruining the creditor through monetary inflation and the financial repression that was put in place after the conflict to wipe out the state’s debts. This is what happened in the United States after 1945 when the Victory Bonds were repaid. The post-war policy of financial repression kept interest rates low and inflation of the dollar high, causing a gradual decline in the value of the currency. As loans were repaid, the purchasing power of creditors declined in the years following the end of the war.
More serious than the ruin of creditors is the ruin of society. These investments divert capital from genuinely productive alternatives that actually improve people’s living conditions; they retard progress by diverting capital (resources, labor, and money) to these defense industries. They don’t understand that the short-term prosperity offered by the “industry of destruction” is only an illusion and comes at the cost of long-term prosperity for society as a whole.
Any militarized, jingoistic, war-mongering society will only fall further behind on the road to progress and improved living conditions made possible by the best possible allocation of capital in the productive structure of society. As the economist Frédéric Bastiat wrote, war is an illusion of wealth: it creates visible economic activity (the arms industry), but always at the expense of the “invisible” (i.e., lost opportunities and deferred costs). War is never an exit out of a crisis, but the ultimate crisis a society can face.
In short, warmongers of all stripes—excited by the idea of profiting financially from a possible war—ultimately understand nothing about economics or history. Worse, they understand nothing about war.
