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War Causes Inflation ... And Inflation Allows The Government to Start Unnecessary Wars
War almost always causes inflation.
As liberal economist James Galbraith wrote in 2004:
War causes inflation.
Every
major war in the past century brought inflation to some degree. And so
did two upheavals in the Middle East, the Yom Kippur War of 1973 and
the Iranian Revolution of 1979, which did not directly involve the
United States, except through their effect on the price of oil. Why is
this so? The big reason is that wars must be paid for, somehow. They
require resources that civilians would otherwise use. Those resources
must be diverted to the war effort. Usually, inflation is the easiest
way. World War I was largely financed by inflation, and so were the
Revolutionary and Civil Wars before that. So, though on a smaller
scale, was Vietnam.
Inflation applies the law of the jungle to
war finance. Prices and profits rise, wages and their purchasing power
fall. Thugs, profiteers and the well connected get rich. Working people
and the poor make out as they can. Savings erode, through the unseen
mechanism of the "inflation tax" -- meaning that the government runs a
big deficit in nominal terms, but a smaller one when inflation is
factored in.
***
There is profiteering. Firms with monopoly
power usually keep some in reserve. In wartime, if the climate is
permissive, they bring it out and use it. Gas prices can go up when
refining capacity becomes short -- due partly to too many mergers. More
generally, when sales to consumers are slow, businesses ought to cut
prices -- but many of them don't. Instead, they raise prices to meet their income targets and hope that the market won't collapse.
***
Is there another way? The answer is yes, but it isn't easy.
In
wars past -- notably in World War II and Korea -- the job was done by
steeply progressive taxes including taxes on excess profits, by "forced
saving" (which was an essentially compulsory private holding of public
debt), and by price control. Interest rates were frozen at 2 percent
on government bonds -- and essentially at 0 on bank deposits. The
principle was: No one profits from the war.
This
combination kept inflation down -- prices were stable from 1942
through 1945. Not many grew rich off that war. Instead, my generation
grew up with series EE bonds to our names. They were the promise that
those working to win the war would see some of the material fruits of
their labor later, when peacetime production returned.
Libertarian Congressman Ron Paul agreed in 2007:
Congress
and the Federal Reserve Bank have a cozy, unspoken arrangement that
makes war easier to finance. Congress has an insatiable appetite for new
spending, but raising taxes is politically unpopular. The Federal
Reserve, however, is happy to accommodate deficit spending by creating
new money through the Treasury Department. In exchange, Congress
leaves the Fed alone to operate free of pesky oversight and free of
political scrutiny. Monetary policy is utterly ignored in Washington,
even though the Federal Reserve system is a creation of Congress.
The result of this arrangement is inflation. And inflation finances war.
Economist
Lawrence Parks has explained how the creation of the Federal Reserve
Bank in 1913 made possible our involvement in World War I. Without the
ability to create new money, the federal government never could have
afforded the enormous mobilization of men and material. Prior to that,
American wars were financed through taxes and borrowing, both of
which have limits. But government printing presses, at least in
theory, have no limits. That's why the money supply has nearly tripled
just since 1990.
For perspective, consider our ongoing military
commitment in Korea. In Korea alone, U.S. taxpayers have spent $1
trillion in today's dollars over 55 years. What do we have to show for
it? North Korea is a belligerent adversary armed with nuclear
weapons, while South Korea is at best ambivalent about our role as
their protector. The stalemate stretches on with no end in sight, as the
grandchildren and great-grandchildren of the men who fought in Korea
give little thought to what was gained or lost. The Korean conflict
should serve as a cautionary tale against the open-ended military
occupation of any region.
The [hundreds of billions] we've
officially spent in Iraq is an enormous sum, but the real total is
much higher, hidden within the Defense Department and foreign aid
budgets. As we build permanent military bases and a $1 billion embassy
in Iraq, we need to keep asking whether it's really worth it. Congress
should at least fund the war in an honest way so the American people
can judge for themselves.
Blanchard Economic Research pointed out in 2001:
War
has a profound effect on the economy, our government and its fiscal
and monetary policies. These effects have consistently led to high
inflation.
***
David
Hackett Fischer is a Professor of History and Economic History at
Brandeis. [H]is book, The Great Wave, Price Revolutions and the Rhythm
of History ... finds that ... periods of high inflation are caused by,
and cause, a breakdown in order and a loss of faith in political
institutions. He also finds that war is a triggering influence on
inflation, political disorder, social conflict and economic disruption.The
type of inflation that is associated with wars usually arises from
increases in aggregate demand. In time of war, government spending for
military purposes stimulates demand throughout an economy, at the same
time that a shift of workers from productive labor into war production
causes a decline in aggregate supply.War also causes the type of
inflation that results from a rapid expansion of money and credit. "In
World War I, the American people were characteristically unwilling to
finance the total war effort out of increased taxes. This had been true
in the Civil War and would also be so in World War II and the Vietnam
War. Much of the expenditures in World War I, were financed out of the
inflationary increases in the money supply." (See "American Economic
History," Scheiber, Vatter and Faulkner)War usually leads to the type of inflation which is caused by inflationary expectations. Professor Fischer explains:
"It
occurs when people begin to raise prices not because of actual changes
in supply or demand or cost or the size of the money supply, but out of
fear that some such changes might happen."
***
Professor Fischer also provides an interesting perspective on war-related inflations in the 20th century:
"Inflation
surged after America joined World War I in 1917, then declined after
1919, but to pre-war levels. After World War II, Korea and Vietnam,
war-inflations were not followed by a decline at all. Prices continued
to climb."Professor Fischer had some interesting things to say about the Korean War:
"In
its economic impact the Korean War was similar to the world wars that
had preceded it. Once again, inflationary pressures surged throughout
the world. In 1950, wholesale prices jumped 12% in the United States,
18% in Germany, 21% in Britain, 28% in France, and 32% in Sweden."Professor
Fischer discusses the inflation that took place as part of the Vietnam
War and as part of the 1973 Yom Kippur War. He says that the Vietnam
War was not the pivotal event in the acceleration of inflation during
the 1960s, although he admits that the Johnson administration's
decision to expand public spending for social welfare at the same time
that it fought a major war in Southeast Asia, without a large increase
in taxes, was a major miscalculation.
Other economists agree with Professor Fischer's link between inflation and war.
James
Grant, the respected editor of Grant's Interest Rate Observer,
supplies us with the most timely perspective on the effect of war on
inflation in the September 14 issue of his newsletter:"War
is inflationary. It is always wasteful no matter how just the cause.
It is cost without income, destruction financed (more often than not)
by credit creation. It is the essence of inflation."***
Roger
Bootle, in his book, The Death of Inflation, also traced the historic
link between inflation and war in America's 225-year history:"This
country's first two experiences with high inflation were during the
American War of Independence (1775-83) and during the Civil War. There
was also high inflation associated with the First World War; the
unifying theme running through inflation episodes are the occurrence of
bad times, often as a result of war or its aftermath.""After
the Second World War, inflation became the norm everywhere in the
industrial world. There was another surge of inflation during the
Korean War, which took inflation in the U.S. above 9% in 1951 (and
wholesale price inflation into double digits)."
"The inflation
that accompanied the Vietnam War and the Yom Kippur War, and oil price
shocks in the 1970s, led people to increase their inflationary
expectations, which aggravated inflation itself."
Similarly,
in her book, Money Meltdown, Judy Shelton also traces the relationship
between war and inflation from the Civil War through Vietnam:
"'We
tried to finance the Vietnam War and the Great Society programs
without a tax increase,' admits Charles L. Schultze, Johnson's budget
director at the time, 'and clearly that started our course of
inflation.'"
"Political leaders always have tended to take the
view that in time of war the nation must do whatever is necessary to
succeed, and the financial repercussions can be dealt with later.
Johnson was only following the pattern that had been adhered to by his
predecessors ...."
Libertarian economics writer Lew Rockwell noted in 2008:
You
can line up 100 professional war historians and political scientists
to talk about the 20th century, and not one is likely to mention the
role of the Fed in funding US militarism. And yet it is true: the Fed is
the institution that has created the money to fund the wars. In this
role, it has solved a major problem that the state has confronted for
all of human history. A state without money or a state that must tax its
citizens to raise money for its wars is necessarily limited in its
imperial ambitions. Keep in mind that this is only a problem for the
state. It is not a problem for the people. The inability of the state to
fund its unlimited ambitions is worth more for the people than every
kind of legal check and balance. It is more valuable than all the
constitutions every devised.
***
The connection between war and inflation, then, dates long before the creation of the Federal Reserve.
***
Before
the creation of the Federal Reserve, the idea of American entry into
the conflict that became World War I would have been inconceivable. In
fact, it was a highly unpopular idea, and Woodrow Wilson himself
campaigned on a platform that promised to keep us out of war. But with a
money monopoly, all things seem possible. It was a mere four years
after the Fed was invented under the guise of scientific policy
planning that the real agenda became obvious. The Fed would fund the US
entry into World War I.
It was not only entry alone that was
made possible. World War I was the first total war. It involved nearly
the whole of the civilized world, and not only their governments but
also the civilian populations, both as combatants and as targets. It
has been described as the war that ended civilization in the
19th-century sense in which we understand that term. That is to say, it
was the war that ended liberty as we knew it. What made it possible
was the Federal Reserve. And not only the US central bank; it was also
its European counterparts. This was a war funded under the guise of
scientific monetary policy.
***
Reflecting on the calamity of this war, Ludwig von Mises wrote in 1919
One can say without exaggeration that inflation is an indispensable
means of militarism. Without it, the repercussions of war on welfare
become obvious much more quickly and penetratingly; war weariness would
set in much earlier.***
The story
of central banking is one step removed from the story of atom bombs and
death camps. There is a reason the state has been unrestrained in the
last 100 years, and that reason is the precise one that many people
think of as a purely technical issue that is too complicated for mere
mortals.
Fast-forward to the Iraq War, which has all the
features of a conflict born of the power to print money. There was a
time when the decision to go to war involved real debate in the House
of Commons or the US House of Representatives. And what was this debate
about? It was about resources and the power to tax. But once the
executive state was unhinged from the need to rely on tax dollars and
did not have to worry about finding willing buyers for its unbacked
debt instruments, the political debate about war was silenced.
In
the entire run-up to war, George Bush just assumed as a matter of
policy that it was his decision alone whether to invade Iraq. The
objections by Ron Paul and some other members of Congress and vast
numbers of the American population were reduced to little more than
white noise in the background. Imagine if he had to raise the money for
the war through taxes. It never would have happened. But he didn't have
to. He knew the money would be there. So despite a $200 billion
deficit, a $9 trillion debt, $5 trillion in outstanding debt
instruments held by the public, a federal budget of $3 trillion, and
falling tax receipts in 2001, Bush contemplated a war that has cost
$525 billion dollars — or $4,681 per household. Imagine if he had gone
to the American people to request that. What would have happened? I
think we know the answer to that question. And those are government
figures; the actual cost of this war will be far higher — perhaps
$20,000 per household.
***
If the state has the power
and is asked to choose between doing good and waging war, what will it
choose? Certainly in the American context, the choice has always been
for war.
And progressive economics writer Chris Martenson explains as part of his "Crash Course" on economics:
Along
came a war, the Revolutionary War, and the country found itself unable
to pay for the war with the gold and silver to be found in the
Treasury.
So a paper currency called “continentals” was
printed, and at first it was fully backed by a specified amount of real
gold and/or silver in the Treasury. But then the war proved to be
more expensive than thought, and more and more was printed. Then the
British, aware of the corrosive effects of inflation on a society,
started counterfeiting and distributing vast amounts of bogus
continentals, and soon the currency began to collapse.
Before
long, massive inflation took hold, and Abigail Adams complained
bitterly about this experience, noting that goods were hard to come by,
making life difficult.
Seen on the inflation chart, the
Revolutionary War took the general price level from a reading of “5” to
a reading of “8”. After the war, the paper continentals were utterly
rejected by the populace, who strongly preferred gold and silver. Most
interestingly, price levels promptly returned back to their prewar
levels.
The next serious bout of inflation was also associated
with a war, again due to overprinting of paper currency, and again,
upon conclusion of the war, we saw a relatively prompt return of prices
to their pre-war levels, where they stayed for an additional 30 years.
By now we are nearly 200 years into this chart, and we find that the
cost of living is roughly that same as it was in 1665. That’s a truly
fascinating concept to entertain.
But then a war came along –
the Civil War – and it was a doozy. To finance the war, the North had
to resort to printing a type of currency that still lends its name to
our own currency today. Of course, back then it really did have a
“green back.” Again we see a rapid rise of inflation as a direct
consequence of war that again returned to baseline after the crisis was
over. We are now 250 years into this story and the cost of living is
still roughly the same as it was at the start. Can you imagine?
But then another war came along, this one even bigger than any before, and again it was a highly inflationary event.
And then another war, even bigger
than any before it, which again proved inflationary. But this time,
something odd happened. Inflation did not retreat before the next war
began. Why? Two reasons. First, the country was no longer on a gold
standard, but instead a fiat paper standard administered by the Federal
Reserve, and the populace did not have another form of money to which
it could turn. And second, because this was the first time that the
war apparatus was not dismantled upon conclusion of hostilities.
Instead, full mobilization was maintained and a protracted cold war was
fought; certainly as inflationary a conflict as any shooting war ever
was.
And now if we look at the entire sweep of history, we can make an utterly obvious claim: All wars are inflationary. Period. No exceptions.
Why? Simple, really. Any time the government engages in deficit
spending, it creates the conditions for inflation. However when the
deficit spending is on legitimate infrastructure, such as roads or
bridges, that investment will slowly “pay for itself” by boosting
productivity and paving the way for the creation of additional goods
and services that will ‘soak up’ the extra cash over time.
Wars, however, are special. Vast quantities of money are spent on
things that are meant to be blown up. The money stays at home, while
the goods get sent off to be blown up. When a bomb blows up, there is
no residual benefit to the domestic economy later on. This means war
spending is the most inflationary of all spending. It’s a
double whammy – the money stays behind, working its evil magic, while
the goods disappear. Heck, even if the goods aren’t blown up, there’s
practically zero residual economic benefit to such specialized hardware,
as amazing as that technology may be.
For some reason, the
most recent pair of wars have been presented by the US mainstream press
as being relatively “pain-free” for the average citizen, despite
overwhelming historical odds to the contrary.
In fact, on
this 15-year-long chart of commodity prices, we observe that prices
bounced in a channel, marked by the green lines, for more than 10
years. However, and now hopefully unsurprisingly, shortly
after the start of the Iraq War commodity prices began marching higher
and have inflated nearly 140% in the five years since. Your gasoline
and food bills will confirm this.
So if anybody tries to tell you that you haven’t sacrificed for the war, let them know you sacrificed a large portion of your savings and your paycheck to the effort, thank you very much.
And see this.
The
bottom line is that war always causes inflation, at least when it is
funded through money-printing instead of a pay-as-you-go system of taxes
and/or bonds. It might be great for a handful of defense contractors, but war is bad for Main Street, stealing wealth from people by making their dollars worth less.
And contrary to what many pundits say, war will not lead to an economic recovery.
And
as discussed above, liberals such as James Galbraith and conservatives
such as Ron Paul agree that we wouldn't get into as many wars - and the
wars which we did wage would be ended more quickly - it if the people
were required to pay for them directly instead of war being paid out
of the "hidden tax" of inflation.
The father of modern economics - Adam Smith - agreed:
Were
the expence of war to be defrayed always by a revenue raised within the
year [instead of financing it with long-term public debt], the taxes
from which that extraordinary revenue was drawn would last no longer
than the war. The ability of private people to accumulate, though less
during the war, would have been greater during the peace than under the
system of funding. War would not necessarily have occasioned the
destruction of any old capitals, and peace would have occasioned the
accumulation of many more new. Wars
would in general be more speedily concluded, and less wantonly
undertaken. The people feeling, during the continuance of the war, the
complete burden of it, would soon grow weary of it, and government, in
order to humour them, would not be under the necessity of carrying it on
longer than it was necessary to do so. The foresight of the heavy and
unavoidable burdens of war would hinder the people from wantonly calling
for it when there was no real or solid interest to fight for. The
seasons during which the ability of private people to accumulate was
somewhat impaired, would occur more rarely, and be of shorter
continuance. Those on the contrary, during which that ability was in the
highest vigour, would be of much longer duration than they can well be
under the system of funding.
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so much for that broken window theory...
THanks for the article GW. Nice work, as always.
It was VP Cheney that said "Deficits dont matter" and we know he was the chief proponent of advancing the notion of invading Iraq on behalf of his boss and other interested parties. The justification was also Iraqi oil would pay for the war. Well, here we are a decade later quibbling about whether war is inflationary while at the same time our deficits are astronomical and we are still in Iraq and Afghanistan .In meantime consumer collapsed ,unemployment skyrocketed and credit markets are frozen . China and emerging economies have flourished ,but developed economies languishing for mistake of investing in war rather than in own industries. In the end we will also have delayed hyperinflation according to historical patterns of failed empires. Happy New Year
Government bonds aren't saving, because the money isn't invested. In the case of war bonds, the money is sent to a foreign country to be blown up, and the government promises that later on, it'll forcibly extract some money from some sucker and give it to you. In some cases, you *are* the sucker.
If you loan a mobster a few grand to spend on hookers and blow, and he pays you back by extorting a shop keeper and running a counterfeit press, are you really saving?
It really is no use to argue and try to discern all the valid causes of inflation, because as you are arguing or making your point, the value of your cash and savings is still being continuously lessened. Essentially, you are being robbed; better to spend time and effort arming yourself with time-tested and valid ways of fighting inflation which can preserve your wealth. Life is hard enough without having someone continuously picking your pocket! QE to infinity and beyond! What's in your wallet?
GW, Sean7K, etc. ... cheer up ... there are people dumber than you in the world ...
http://www.msnbc.msn.com/id/40885541/ns/us_news-life/
IrishS,
You repudiate with insults when confronted with the facts.
Time too grow up.
I wonder how much debt China will purchase when we unload on their ass? The DoD/Military Complex will be satisfied to supply the arms from the bleachers this time around, if they can arrange a good opponent for Israel. Wonder who that might be???
see this:
(Click here for larger version.)
You need some classwork in math (calc specifically), statistics, and econometrics (regression work) ...
The greatest amount of inflation in your pretty graph above (the greatest area (and sustained area) under the curve) occurs after two major events:
1. FDR's - The New Deal
2. LBJ's - The Great Society
Notice deflation is non-existent after these two periods in U.S. socialism-lite ...
The Common Good is the greatest cause of inflation.
And yes ... war can be done for the Common Good ... see Weimar -> Hitler -> WWII ...
The ability to wage unlimited war without immediate economic constraint is what sold the modern state on central banking in the first place. Analogy-> During the Spanish American war the repeating rifle, i.e. one with a magazine as opposed to the one bullet at a time Springfield style, first recomended itself rather compellingly to American strategists. They realized that, all else being roughly equal, the military unit with the ability to put more lead in the air in a given timeframe had a decisive advantage. To extend the analogy...the more materiel a given state can rustle up at speed, and the longer they can finance that activity, the more complete their advantage waging war. Central banks are like nukes in this respect you have to have one or you can't compete. Even if a given state has no intention of making war and no territorial/resource ambitions- without access to central banking it will be economically outgunned, a soft, plump target waiting to be gutted. Any state which chooses to host a central bank becomes king shit- The Guttor of said soft targets. That is why all of the European states/royals with an agenda which included survival ended up making their obeisance to RedShield et al from the 17th century onwards. Central Banking is the ultimate offer you can't refuse. It sucks complete dick but until someone figures a way around it, human culture will bear the burden of war, inflation, corrupt money and moral hazard like a fat, stinking albatross around its collective neck.
I think the US and the EU actually NEED a hyperinflation to get out of this mess and be able to start all over.
I even think that's the reason why we get the feeling and actually see the politicians DO NOTHING!
...that's the reason why we get the feeling...the politicians DO NOTHING!
http://www.dailymotion.com/video/x3484s_boston-more-than-a-feeling_music
I don't think we really need this anymore.
People won't be able to cope with this plus all the rest of the bullshit that is happening.
Does war cause inflation or is inflation created to (in effect) deflate the war bills coming due? Wash, rinse, repeat.
Plus war wonderfully destroys infrastructure (doesn't matter where as long as the first world can lend money) which must then be rebuilt. How else can you come up with an excuse to rebuild a bridge that's only 25 years into a 100 year life span?
Bingo ... war is actually deflationary as it results in the destruction of ACTUAL CAPITAL and LABOR (people) ...
Not to get all textbook-y ... but war destroys capital, it does not create it ... which is why war is bad. Not for the inflationary effects, but for the deflationary destruction ...
We should just repatriate all our solders and weapons and let the world fend for itself.
"We should just repatriate all our solders and weapons and let the world fend for itself."
"We should" is a socialist shibboleth.
How about "Don't steal my money and use it to murder people. If at some point I need to be protected from goatherders thousands of miles away, then I'll hire the needed protection".
Dr. A
King of the straw people
>>As liberal economist James Galbraith wrote in 2004:
>War causes inflation.
WRONG. War DOES NOT cause inflation. It's increasing the money supply that causes inflation. Note that I'm using the scientific defintion of "inflation" as an increasing money supply and not the bullshit definition of inflation/deflation: some prices going up, while other prices are going down.
But it's true that a government that imposes fiat currency can increase the money supply and use the newly counterfeited money (stolen wealth) to finance wars.
But doesn't the government make the decision to go to war? Would it go if it could not finance it with fiat currency? Did you read the article?
The expansion of the money supply without market discipline combined with the same supply of goods and services creates inflation. If they didn't start a war, there would be no inflation.
If every war brings inflation, the conclusion war creates inflation is reasonable, unless you can provide an instance where it did not? Your argument is rhetorical- you are splitting hairs and ignoring the brunt of the argument in an attempt to dissuade.
Dr. Acula raises the same point that I raised above and was summarily junked for not fellating the author's premise ...
Single variant correlative analysis and subsequent causation is specious at best ... lots of things "cause inflation" ... but the actual actions involved in war is not one of them ... (again not a warmonger)
"If they didn't start a war, there would be no inflation."
Go ahead and try to argue that absolute ... this should make for a wicked fun thread as you argue the only direct cause/effect of inflation is war and war only ... even George Washington provided himself a caveat out, as I pointed out above ...
Thus the reference to the rhetorical argument to argue against message. Similar to the argument that since you cannot prove that a chemical causes cancer (as you cannot isolate it) it doesn't.
(note) subsequent causation is never spacious- perhaps specious? Now, how silly is that?
Of course, inflation is caused by fiat currency and fractional reserve banking where money supply is increased and the number of goods and services are not. Which is noted in the article, if you chose to read it.
That all modern wars are conducted taking advantage of debt creation and wouldn't be conducted in the same manner otherwise is the relationship being explored. Would all warfare stop? Absolutely not. However, it would be changed. This is the point and the reward would be less inflation.
You assume a very rigid reading of the title to suit a specious argument. Why you would wish to attack a person's hard work to proclaim your devotion to anality is beyond me...
"That all modern wars are conducted taking advantage of debt creation and wouldn't be conducted in the same manner otherwise"
Yes, you can have a based on debt creation, i.e. you can have a war without inflation.
Clearly, war does not "cause" inflation.
"You assume a very rigid reading of the title"
You are engaging in and defending flawed thinking. Counterfeiting should be blamed directly on the people causing it. It should not be blamed on some other crimes that the people causing it want to commit.
Again, did you read the article? Did you see the discussion on the Federal Reserve and the creation of fiat currency? I am not defending flawed thinking, I am attacking the specious use of rhetoric to cast aspersions on a well presented argument.
If you can have a war without inflation, please provide an example.
>If you can have a war without inflation, please provide an example.
This debate is ridiculous. I do not need to produce a case of peanut butter without chocolate, to know that peanut butter does not "cause" chocolate.
If you can have a war without inflation, please provide an example.
http://en.wikipedia.org/wiki/Argument_from_ignorance
With the history of war, there are more than enough possible examples. The problem here is not proof in the absence of evidence, therefore, your example does not apply. Funny, even logic requires an intelligent user.
Read Dr. Acula below for an example of Argument from Ignorance ...
North Korea and South Korea could have a war tomorrow and it won't cause "inflation" ...
Death. CHECK.
Destruction. CHECK.
Intermediate Deflation. CHECK.
Again, you can't argue the premise when you have such a flawed critical basis from which to start ... war doesn't cause inflation. Government == people == cause inflation. Which is why I put above ...
The Common Good is the greatest cause of inflation.
People who think they are doing better for you ... by engaging in war, printing lots of dollars for unemployment, spending your tax dollars on whale fart analysis in Alaska, etc. Inflation is an entirely natural phenomenon of human nature ...
Go read some some Friedman on inflation to understand why you're so entirely wrong ...
http://en.wikipedia.org/wiki/Milton_Friedman
Shooting a man on sunset boulevard would meet your definition of war. Then you refer to the common good as "engaging in war" and as a cause of inflation. Read Friedman- a monetarist on inflation?
Lastly, in the post above, I gave actual examples of inflation and it's effects during WWII. There is not an absence of evidence here. You are impaled on your own sword.
If I want information on inflation, I go to Rothbard or Mises. Friedman, what a joke.
Then you refer to the common good as "engaging in war" and as a cause of inflation.
The point is that there are lots of causes of "inflation" ... war is not the "single end all, be all" cause of inflation. You're the one who raised that ridiculous premise ...
Lastly, in the post above, I gave actual examples of inflation and it's effects during WWII. There is not an absence of evidence here.
So a dataset that includes a single affirmation = causation ... you must work for the BLS ...
If I want information on inflation, I go to Rothbard or Mises. Friedman, what a joke.
Friedman was a genius. I don't agree with everything he has to say ... but to say that Rothbard or Mises or Hayek or any Austrian got it 100% right is a flaw in your cognitive reasoning ability ...
"The assistance of inflation is invoked whenever a government is unwilling to increase taxation or unable to raise a loan; that is the truth of the matter." - Mises
"The pretended solicitude for the nations welfare, for the public in general, and for the poor ignorant masses in particular was a mere blind. The governments wanted inflation and credit expansion, they wanted booms and easy money." - Mises
"The advocates of public control cannot do without inflation. They need it in order to finance their policy of reckless spending and of lavishly subsidizing and bribing the voters." - Mises
"Inflation is the true opium of the people and it is administered to them by anticapitalist governments and parties." - Mises
Yeah ... I might have read some Mises in my studies ...
war is not the "single end all, be all" cause of inflation. You're the one who raised that ridiculous premise ...Please show where I raised that ridiculous premise.
but to say that Rothbard or Mises or Hayek or any Austrian got it 100% right is a flaw in your cognitive reasoning ability ...I don't remember ever saying they got it 100% right.
It seems you have violated your own rules for logic, funny how that happens...
Please show where I raised that ridiculous premise.
"If they didn't start a war, there would be no inflation."
You wrote that above ... pretty clear evidence of the ridiculous premise you suggested you did not raise ...
So, where is the single all be all part of my statement? I must have missed it.
It's ok for you abuse logic, but no one else? Hypocrite.
You are engaging in and defending flawed thinking. Counterfeiting should be blamed directly on the people causing it. It should not be blamed on some other crimes that the people causing it want to commit.
+Infinite logic
" Why you would wish to attack a person's hard work to proclaim your devotion to anality is beyond me..."
Said the man arguing a typo ... hello pot.
This is the point and the reward would be less inflation.
Prove it ... you can't because war >= inflation is a ridiculous premise and your failure at basic logic ensures you couldn't make the case.
If we define inflation as an expansion in M3 without an equal expansion in the goods and services produced over the time of the expansion and an expansion is required to finance a war and there is no material benefit or the benefit is less than the cost of prosecuting the war (including human life costs, resource destruction, resource rehabilitation (eg Marshall Plan), then the M3 creation will be greater than the number of goods and services in circulation resulting in a higher price to be bid for the remaining goods and services. This higher price is typically called inflation.
"there is no material benefit or the benefit is less than the cost of prosecuting the war (including human life costs"
How do I calculate the cost of a human life?
One word, "actuary".
>Your argument is rhetorical- you are splitting hairs
Your logic is bass-ackwards. You are committing the fallacy of post hoc ergo propter hoc:
1. The government wants war.
2. The government goes to war.
3. The government needs inflation (counterfeited fiat currency) to finance the war.
4. Therefore, the goverment creates inflation.
5. Inflation becomes apparent to everyone after the war as the earlier receivers of the new money begin to bid up prices
6. Since inflation appears after the war, the war (not the government) must have somehow caused the inflation
The Bush administration kept the Iraq war spending off the books -- it doesn't get much more obvious than that. It's amazing how little debate this created at the time.
What amazes me is that even now that the facts of that particular situation are widely known and accepted as true, the criminal perps still roam free...
could someone please break a couple of Bush's condoms so that Interpol could just go ahead and issue a planet-wide warrant for his arrest?
Dr A is playing word games. What is "government"? The 3 branches of elected officials in Washington DC? The Federal Reserve, and the Goldman Sacks? The power elite and the Corporations that have big money? If you can't agree on a defined or implied meaning of a word, the arguments goes in circles. Posit, Dr A lives in a moral vacuum were causality can never be implied.
"Dr A is playing word games. What is "government"?... If you can't agree on a defined or implied meaning of a word, the arguments goes in circles."
You didn't specify which definition you accept. So, I will choose one for you. How about, for sake of argument, things ending in ".gov".
For example, http://www.federalreserve.gov/
Now, if you had a point to make, please make it.
Yes of course!
The ambiguity of the Federal Reserve. Nothing Federal, Nothing Reserve. All Powerful!
>The ambiguity of the Federal Reserve. Nothing Federal, Nothing Reserve. All Powerful!
I don't understand your incomplete sentences very well.
The Federal Reserve is certainly federal and not "all powerful", in the sense that its board of governors is chosen by the federal government.
The President selects the chairman from a list supplied to him by the FEDERAL RESERVE.
Your here to conflate the issue not clarify.
"The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors (or Federal Reserve Board" source: http://en.wikipedia.org/wiki/Federal_Reserve_System
i.e. the president appoints the ENTIRE board
The Creature from Jekll Island:A second look at the federal Reserve
The biggest problem in modern banking, according to Griffin, is and has always been the creation of fiat money. Fiat money is money that is "declared" money by the government. It is not backed by anything but promises and deceit. All societies were sound financially when they used gold or silver to back their currency. When the bankers i.e Goldman Sacks via the FED, finally get their way and install fiat money, the result is inflation and boom and bust cycles. Griffin gives numerous examples of this, such as repeated failures by American colonies and European states in using fiat money. The purpose of fiat money is so that the government can spend more then they take in through taxes.
Actually, inflation becomes apparent during the war as scarce goods are bid up with the infusion of fiat currency. Often, price controls are established (see WWII). Gas, Butter, Sugar, Cigarettes and Coffee are rationed.
Now, that economies are more global in nature and currencies can be placed all around the globe, it is easier to examine levels of sovereign debt and inflation. Unfortunately, as the government now lies about inflation and statistics in general, it is more difficult to see the relationship. The deflation in house prices and the destruction of credit in the shadow banking system offsetting the rise in commodity prices and energy.
So, what are we left with? My bass-ackward logic coupled with a store of useful knowledge in economics and your demented fantasy about war and it's non-effects in a poorly informed, but logical argument.
I am more than content with my situation.
I am more than content with my situation
At least you have confirmed one axiom in your efforts ...
Ignorance is bliss.