QE3's coming and its name is... War?
I usually read Zero Hedge’s gloom and doom commentary with a grain of salt but this recent post really caught my eye.
George Washington argues that war is upon us, thanks to another round of Military Keynesianism and quite frankly, it doesn’t seem that far off to me.
Look at the posts on WSO alone; killings in Saudi Arabia, $220 oil, suicide, and grave views on the macro front.
In the news Qaddafi’s bombing the shit out of people and the U.S., France, and others are already in talks to support the rebels.
Turmoil, anarchy, and anger have now blanketed the Earth. Governments have been toppled; inflation is setting up widespread hunger and the world’s economies, especially that of the US, are feared to be unsustainable.
Is war on the horizon?
To mask QE3?
As disgusting as the thought is, under the present circumstances I wouldn’t put it past the current leaders to go for such a thing. Launching another stimulus straight-on would be political suicide, but done in the shadow of military spending it’s just too easy and apparently, somebody already asked for it. With oil prices spiking, killing purchasing power and what not, given time we’d find our target.
Hell, Qaddafi’s perfect for it.
I’m skeptical that this’ll happen, but nevertheless; how do you monkeys feel about war as US economic policy?
Personally I feel that it’s the stupidest thing ever. While it may have worked after WWII and during the Cold War, Dubya’s wars on terror left America with huge deficits eclipsing all jobs and growth it may brought.
And let’s not forget the countless lives lost during the course.
Man, I'm sure the military guys here won't be happy about this if it happens.
I do not think war will have the same effect it did as in WWII.
America may just keep war ships in the Mediterranean for good measure though.
It's called the military industrial complex, and in a pinch, it would save the economy. It might be the right thing to do as well.
I once had very strong opinions about how things should be run, and now I just observe and learn. Personally, I'm thinking everyone's got their panties in a bunch because change is scary, but people overthrowing their own dictator does give me hope that one day everyone will enjoy the freedoms we have.
I'm glad you have your own opinion and all, but the only thing I wish you'd have rephased was this:
I JUST got out of doing five years in the Marines as an 03 and I don't like to think of the lives lost as lives wasted. They died defending something they believed in. Just my .02
Edited. In my defense I was thinking of a friend's friend wherein that may have been the case, didn't mean to offend.
lets have WW3 fuck it, it will end globalization so we can just start it all over again from scratch. Let the Banker parade begin all over again. Anyone ever read "Lord of Finance"?
Many economists I know say it's a myth to think that war is good for an economy, even though it's a claim that is often thrown around...
This presumes that government spending is good for an economy, a highly debatable issue. Furthermore, in war time, spending on military related stuff comes at the expense of other kinds of government spending, so there's an opportunity cost element.
Breaking out the Eisenhower quote in agreement with this.
Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people. This is, I repeat, the best way of life to be found on the road the world has been taking. This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron. ... Is there no other way the world may live?
Personally, I fail to see why we are spending $400 on a hammer for the DOD. The sad part is that I know military contractors and while some of this is cover to divert funds to the black budget, but there are a lot of cases where they really ARE charging $250 for a toilet seat cover.
These guys are starting to sound like Tsun Tzu.
"War as Stimulus" is the greatest Broken Window Fallacy everrrrrrrrrrrrr.
Exactly! Props to you, sir, I couldn't of said it better myself.
First time I've heard of this. I'm saving this for the next argument with in-laws. ZING! I win.
I think the point is that it would allow additional spending that wouldn't otherwise be politically viable. So while war spending (fixing the broken window) depletes resources that could be spent elsewhere (shopkeeper buying something else) it remains to be seen whether or not the money would get spent otherwise. So a war could be all incremental spending in the near or medium term.
Regardless, I don't agree that this will happen or buy into some global conspiracy.
Except for the fact that there's no such thing as a free lunch. The taxes (present or future) needed to fund the government spending could of, obviously, been spent on something else.
Huh, why are you saying that? All winning countries in significant wars had 15%+ growth in their GDP. If you lose, you go to hell, but winning brings a ton of goodies for the "survivors".
You can say that the economic growth can be related with possessing more land and resources from the other countries, however, we all can agree there is a strong correlation between winning war and economic growth.
Aside from the questionable morality of the above response.... (might does not make right and the victor is not always just)
GDP figures cannot measure the tragedy of lives lost, priceless art/history/architecture destroyed, violations of liberty (the draft, internments), etc.
France left an entire generation of bright young men dead in the fields of Flanders... imagine all the entrepreneurs, inventors, etc lost!
Veritas is correct. Have you ever read The Wealth of Nations? Smith considered 3 ideas to be essential for a nation to prosper and one of them was peace.
The notion that war leads to economic stimulus is a fallacy. Of course this economic fallacy took hold when the Great Depression ended coincidently with the beginning of WWII. Just think about it. If a nation is spending the majority of their resources building tanks and ships and sending them off to be blown up that nation is not going to be rich. Simple as that.
I think this podcast below might help you understand some of the empirical issues and complexities with drawing the conclusion you're trying to draw: http://www.econtalk.org/archives/2008/02/easterly_on_gro.html
It kills me that France is one of the most hawkish countries this time around. Probably a way of scoring points with the Middle Eastern/North African population.
Well one way to look at it is because Trichet and Weber are stepping down, they'll be giving their replacements a PR headstart.
@ econ, any insights on why they say it worked during the Cold War?
I'm not totally sure I get what you're saying. I was referring to Sarkozy wanting to bomb Libya, not Trichet wanting to raise rates.
LOL -- yeah, you totally win. Just don't be mad if the in-laws don't see it that way, haha.
Hahaha! Was wondering why they'd want to score points with the Middle East... In my defense its 4am here and I need sleep.
vertias stfu and get rid of that stoner avatar
WWII:
We had a military draft in which millions were pressed into service. (Milton Friedman was one of the main supporters of the end of the draft. Democracies need to voluntarily defend themselves)
We had extreme rationing of food and raw materials.
We had the government take-over of the entire manufacturing base, slashing consumer consumption and choices.
Millions dead, Trillions in damage, Inestimable amounts of history/culture lost, Inestimable amounts of opportunity cost, the rise of the bloodiest regime in history (Stalinist USSR)
The Marshall Plan never came close to filling this hole. It just turned West Germany into a powerful producer/exporter.
The argument that WWII brought the US out of the Great Depression is one of the most dangerous lies in existence today.
I'm surprised no one has mentioned "disaster capitalism" along with the book "The Shock Doctrine" by Naomi Klein. http://www.amazon.com/Shock-Doctrine-Rise-Disaster-Capitalism/dp/031242…
I think that especially with the earthquake/tsunami/nuclear disaster currently in Japan, that this topic of political opportunity through disasters-actual or perceived-will become much more relevant in the coming months, future.
I fucking hate Naomi Klein! Mr. Cheese, I seriously hope you posted that tongue in cheek, as it seems you're a serious thinker. It's not that I hate people who have a different opinion than me, it's just that they should actually back that up with facts, logic, and other serious thinkers (as opposed to idiots like Naomi Klein).
Here's some links that show you just how silly, stupid, and deceptive she is:
http://www.youtube.com/watch?v=vVUFyEY3gmo
While I don't agree with Naomi Klein, the topic is of interest, and there is opportunity to exploit disasters for political gain, whether planned or not. In the case of Japan, they might well benefit from any shakeup that encourages entrepreneurship from the ground up, increases competitiveness and imposes change on the decidedly change-resistant bureaucrats who really run the nation. For years everyone, including many pundits have wondered and voiced their opinions that only a cataclysmic event such as this can be the catalyst for economic change to a nation thats debt to GDP is near 200% and only growing.
I can't really voice an overall opinion on the whole book itself as I am only 30 or so pages into it...but the concept is very interesting nonetheless.
Only a crisis-real or perceived-produces real change.
I actually don't disagree with what you're saying Mr. Cheese. I just hope people will check out the links I provided if you're reading the book, or even if you know who Naomi Klein is.
The Japanese EQ is ANOTHER Broken Window Fallacy.
GDP is a measurement of a FLOW. Wealth is a measurement of a STOCK.
The EQ will spark GDP growth... but it's just borrowing from the future and current wealth. Net LOSS... every time
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