No, Bernanke … Defense Spending Does NOT Help the Economy!

George Washington's picture

 

http://ourgovernmentisbroke.com/wordpress/wp-content/uploads/2013/06/Uncle-Sam-11-e1370881400909.jpg

Image courtesy of Steve Hess

Debunking a Widely-Held Myth

Preface: Many Americans – including influential economists and talking heads still wrongly assume that war is good for the economy. For example, former Federal Reserve boss Ben Bernanke just claimed that cutting defense spending would harm the economy.

And extremely influential economists like Paul Krugman and Martin Feldstein promote the myth that war is good for the economy.

Many congressmen assume that cutting pork-barrel military spending would hurt their constituents’ jobs. And talking heads like senior Washington Post political columnist David Broder parrot this idea.

As demonstrated below, it isn’t true.

Nobel-prize winning economist Joseph Stiglitz says that war is bad for the economy:

Stiglitz wrote in 2003:

War is widely thought to be linked to economic good times. The second world war is often said to have brought the world out of depression, and war has since enhanced its reputation as a spur to economic growth. Some even suggest that capitalism needs wars, that without them, recession would always lurk on the horizon. Today, we know that this is nonsense. The 1990s boom showed that peace is economically far better than war. The Gulf war of 1991 demonstrated that wars can actually be bad for an economy.

Stiglitz has also said that this decade’s Iraq war has been very bad for the economy. See this, this and this.

Former Federal Reserve chairman Alan Greenspan also said in that war is bad for the economy.   In 1991, Greenspan said that a prolonged conflict in the Middle East would hurt the economy. And he made this point again in 1999:

Societies need to buy as much military insurance as they need, but to spend more than that is to squander money that could go toward improving the productivity of the economy as a whole: with more efficient transportation systems, a better educated citizenry, and so on. This is the point that retiring Rep. Barney Frank (D-Mass.) learned back in 1999 in a House Banking Committee hearing with then-Federal Reserve Chairman Alan Greenspan. Frank asked what factors were producing our then-strong economic performance. On Greenspan’s list: “The freeing up of resources previously employed to produce military products that was brought about by the end of the Cold War.” Are you saying, Frank asked, “that dollar for dollar, military products are there as insurance … and to the extent you could put those dollars into other areas, maybe education and job trainings, maybe into transportation … that is going to have a good economic effect?” Greenspan agreed.

Economist Dean Baker notes:

It is often believed that wars and military spending increases are good for the economy. In fact, most economic models show that military spending diverts resources from productive uses, such as consumption and investment, and ultimately slows economic growth and reduces employment.

The Proof Is In the Pudding

Mike Lofgren notes:

Military spending may at one time have been a genuine job creator when weapons were compatible with converted civilian production lines, but the days of Rosie the Riveter are long gone. [Indeed, WWII was different from current wars in many ways, and so its economic effects are not comparable to those of today's wars.]  Most weapons projects now require relatively little touch labor. Instead, a disproportionate share is siphoned into high-cost R&D (from which the civilian economy benefits little), exorbitant management expenditures, high overhead, and out-and-out padding, including money that flows back into political campaigns. A dollar appropriated for highway construction, health care, or education will likely create more jobs than a dollar for Pentagon weapons procurement.

 

***

 

During the decade of the 2000s, DOD budgets, including funds spent on the war, doubled in our nation’s longest sustained post-World War II defense increase. Yet during the same decade, jobs were created at the slowest rate since the Hoover administration. If defense helped the economy, it is not evident. And just the wars in Iraq and Afghanistan added over $1.4 trillion to deficits, according to the Congressional Research Service. Whether the wars were “worth it” or merely stirred up a hornet’s nest abroad is a policy discussion for another time; what is clear is that whether you are a Keynesian or a deficit hawk, war and associated military spending are no economic panacea.

The Institute for Economics & Peace (IEP) shows that any boost from war is temporary at best. For example, while WWII provided a temporary bump in GDP, GDP then fell back to the baseline trend. After the Korean War, GDP fell below the baseline trend:

IEP notes:

By examining the state of the economy at each of the major conflict periods since World War II, it can be seen that the positive effects of increased military spending were outweighed by longer term unintended negative macroeconomic consequences. While the stimulatory effect of military outlays is evidently associated with boosts in economic growth, adverse effects show up either immediately or soon after, through higher inflation, budget deficits, high taxes and reductions in consumption or investment. Rectifying these effects has required subsequent painful adjustments which are neither efficient nor desirable. When an economy has excess capacity and unemployment, it is possible that increasing military spending can provide an important stimulus. However, if there are budget constraints, as there are in the U.S. currently, then excessive military spending can displace more productive non-military outlays in other areas such as investments in high-tech industries, education, or infrastructure. The crowding-out effects of disproportionate government spending on military functions can affect service delivery or infrastructure development, ultimately affecting long-term growth rates.

 

***

 

Analysis of the macroeconomic components of GDP during World War II and in subsequent conflicts show heightened military spending had several adverse macroeconomic effects. These occurred as a direct consequence of the funding requirements of increased military spending. The U.S. has paid for its wars either through debt (World War II, Cold War, Afghanistan/Iraq), taxation (Korean War) or inflation (Vietnam). In each case, taxpayers have been burdened, and private sector consumption and investment have been constrained as a result. Other negative effects include larger budget deficits, higher taxes, and growth above trend leading to inflation pressure. These effects can run concurrent with major conflict or via lagging effects into the future. Regardless of the way a war is financed, the overall macroeconomic effect on the economy tends to be negative. For each of the periods after World War II, we need to ask, what would have happened in economic terms if these wars did not happen? On the specific evidence provided, it can be reasonably said, it is likely taxes would have been lower, inflation would have been lower, there would have been higher consumption and investment and certainly lower budget deficits. Some wars are necessary to fight and the negative effects of not fighting these wars can far outweigh the costs of fighting. However if there are other options, then it is prudent to exhaust them first as once wars do start, the outcome, duration and economic consequences are difficult to predict.

We noted in 2011:

This is a no-brainer, if you think about it. We’ve been in Afghanistan for almost twice as long as World War II. We’ve been in Iraq for years longer than WWII. We’ve been involved in 7 or 8 wars in the last decade. And yet [the economy is still unstable]. If wars really helped the economy, don’t you think things would have improved by now? Indeed, the Iraq war alone could end up costing more than World War II. And given the other wars we’ve been involved in this decade, I believe that the total price tag for the so-called “War on Terror” will definitely support that of the “Greatest War”.

Let’s look at the adverse effects of war in more detail …

War Spending Diverts Stimulus Away from the Real Civilian Economy

IEP notes that – even though the government spending soared – consumption and investment were flat during the Vietnam war:

The New Republic noted in 2009:

Conservative Harvard economist Robert Barro has argued that increased military spending during WWII actually depressed other parts of the economy.

(New Republic also points out that conservative economist Robert Higgs and liberal economists Larry Summers and Brad Delong have all shown that any stimulation to the economy from World War II has been greatly exaggerated.)

How could war actually hurt the economy, when so many say that it stimulates the economy?

Because of what economists call the “broken window fallacy”.

Specifically, if a window in a store is broken, it means that the window-maker gets paid to make a new window, and he, in turn, has money to pay others. However, economists long ago showed that – if the window hadn’t been broken – the shop-owner would have spent that money on other things, such as food, clothing, health care, consumer electronics or recreation, which would have helped the economy as much or more.

If the shop-owner hadn’t had to replace his window, he might have taken his family out to dinner, which would have circulated more money to the restaurant, and from there to other sectors of the economy. Similarly, the money spent on the war effort is money that cannot be spent on other sectors of the economy. Indeed, all of the military spending has just created military jobs, at the expense of the civilian economy.

As Austrian economist Ludwig Von Mises pointed out:

That is the essence of so-called war prosperity; it enriches some by what it takes from others. It is not rising wealth but a shifting of wealth and income.

We noted in 2010:

You know about America’s unemployment problem. You may have even heard that the U.S. may very well have suffered a permanent destruction of jobs.

 

But did you know that the defense employment sector is booming?

 

[P]ublic sector spending – and mainly defense spending – has accounted for virtually all of the new job creation in the past 10 years:

The U.S. has largely been financing job creation for ten years. Specifically, as the chief economist for BusinessWeek, Michael Mandel, points out, public spending has accounted for virtually all new job creation in the past 1o years:

Private sector job growth was almost non-existent over the past ten years. Take a look at this horrifying chart:

 

longjobs1 The Military Industrial Complex is Ruining the Economy

 

Between May 1999 and May 2009, employment in the private sector sector only rose by 1.1%, by far the lowest 10-year increase in the post-depression period.

 

It’s impossible to overstate how bad this is. Basically speaking, the private sector job machine has almost completely stalled over the past ten years. Take a look at this chart:

 

longjobs2 The Military Industrial Complex is Ruining the Economy

 

Over the past 10 years, the private sector has generated roughly 1.1 million additional jobs, or about 100K per year. The public sector created about 2.4 million jobs.

 

But even that gives the private sector too much credit. Remember that the private sector includes health care, social assistance, and education, all areas which receive a lot of government support.

 
***

 

Most of the industries which had positive job growth over the past ten years were in the HealthEdGov sector. In fact, financial job growth was nearly nonexistent once we take out the health insurers.

 

Let me finish with a final chart.

 

longjobs4 The Military Industrial Complex is Ruining the Economy

 

Without a decade of growing government support from rising health and education spending and soaring budget deficits, the labor market would have been flat on its back. [120]

***

 

So most of the job creation has been by the public sector. But because the job creation has been financed with loans from China and private banks, trillions in unnecessary interest charges have been incurred by the U.S.

And this shows military versus non-military durable goods shipments: us collapse 18 11 The Military Industrial Complex is Ruining the Economy [Click here to view full image.]

 

So we’re running up our debt (which will eventually decrease economic growth), but the only jobs we’re creating are military and other public sector jobs.

 

Economist Dean Baker points out that America’s massive military spending on unnecessary and unpopular wars lowers economic growth and increases unemployment:

Defense spending means that the government is pulling away resources from the uses determined by the market and instead using them to buy weapons and supplies and to pay for soldiers and other military personnel. In standard economic models, defense spending is a direct drain on the economy, reducing efficiency, slowing growth and costing jobs.

A few years ago, the Center for Economic and Policy Research commissioned Global Insight, one of the leading economic modeling firms, to project the impact of a sustained increase in defense spending equal to 1.0 percentage point of GDP. This was roughly equal to the cost of the Iraq War.

 

Global Insight’s model projected that after 20 years the economy would be about 0.6 percentage points smaller as a result of the additional defense spending. Slower growth would imply a loss of almost 700,000 jobs compared to a situation in which defense spending had not been increased. Construction and manufacturing were especially big job losers in the projections, losing 210,000 and 90,000 jobs, respectively.

 

The scenario we asked Global Insight [recognized as the most consistently accurate forecasting company in the world] to model turned out to have vastly underestimated the increase in defense spending associated with current policy. In the most recent quarter, defense spending was equal to 5.6 percent of GDP. By comparison, before the September 11th attacks, the Congressional Budget Office projected that defense spending in 2009 would be equal to just 2.4 percent of GDP. Our post-September 11th build-up was equal to 3.2 percentage points of GDP compared to the pre-attack baseline. This means that the Global Insight projections of job loss are far too low…

 

The projected job loss from this increase in defense spending would be close to 2 million. In other words, the standard economic models that project job loss from efforts to stem global warming also project that the increase in defense spending since 2000 will cost the economy close to 2 million jobs in the long run.

The Political Economy Research Institute at the University of Massachusetts, Amherst has also shown that non-military spending creates more jobs than military spending.

 

So we’re running up our debt – which will eventually decrease economic growth – and creating many fewer jobs than if we spent the money on non-military purposes.

High Military Spending Drains Innovation, Investment and Manufacturing Strength from the Civilian Economy

Chalmers Johnson notes that high military spending diverts innovation and manufacturing capacity from the economy:

By the 1960s it was becoming apparent that turning over the nation’s largest manufacturing enterprises to the Department of Defense and producing goods without any investment or consumption value was starting to crowd out civilian economic activities. The historian Thomas E Woods Jr observes that, during the 1950s and 1960s, between one-third and two-thirds of all US research talent was siphoned off into the military sector. It is, of course, impossible to know what innovations never appeared as a result of this diversion of resources and brainpower into the service of the military, but it was during the 1960s that we first began to notice Japan was outpacing us in the design and quality of a range of consumer goods, including household electronics and automobiles.

 

***

 

Woods writes: “According to the US Department of Defense, during the four decades from 1947 through 1987 it used (in 1982 dollars) $7.62 trillion in capital resources. In 1985, the Department of Commerce estimated the value of the nation’s plant and equipment, and infrastructure, at just over $7.29 trillion… The amount spent over that period could have doubled the American capital stock or modernized and replaced its existing stock”.

 

The fact that we did not modernise or replace our capital assets is one of the main reasons why, by the turn of the 21st century, our manufacturing base had all but evaporated. Machine tools, an industry on which Melman was an authority, are a particularly important symptom. In November 1968, a five-year inventory disclosed “that 64% of the metalworking machine tools used in US industry were 10 years old or older. The age of this industrial equipment (drills, lathes, etc.) marks the United States’ machine tool stock as the oldest among all major industrial nations, and it marks the continuation of a deterioration process that began with the end of the second world war. This deterioration at the base of the industrial system certifies to the continuous debilitating and depleting effect that the military use of capital and research and development talent has had on American industry.”

Economist Robert Higgs makes the same pointabout World War II:

Yes, officially measured GDP soared during the war. Examination of that increased output shows, however, that it consisted entirely of military goods and services. Real civilian consumption and private investment both fell after 1941, and they did not recover fully until 1946. The privately owned capital stock actually shrank during the war. Some prosperity. (My article in the peer-reviewed Journal of Economic History, March 1992, presents many of the relevant details.)

 

It is high time that we come to appreciate the distinction between the government spending, especially the war spending, that bulks up official GDP figures and the kinds of production that create genuine economic prosperity. As Ludwig von Mises wrote in the aftermath of World War I, “war prosperity is like the prosperity that an earthquake or a plague brings.”

War Causes Inflation … Which Keynes and Bernanke Admit Taxes Consumers

As we noted in 2010, war causes inflation … which hurts consumers:

Liberal economist James Galbraith wrote in 2004:

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.

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.

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.

 

***

 

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.”

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.

 

***

 

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.***

 

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:

If we look at the entire sweep of history, we can make an utterly obvious claim: All wars are inflationary. Period. No exceptions.

 

***

 

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.

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.

Given that John Maynard Keynes and former Federal Reserve chair Ben Bernanke both say that inflation is a tax on the American people, war-induced inflation is a theft of our wealth.

IEP gives a graphic example – the Vietnam war helping to push inflation through the roof:

War Causes Runaway Debt

We noted in 2010:

All of the spending on unnecessary wars adds up.

 

The U.S. is adding trillions to its debt burden to finance its multiple wars in Iraq, Afghanistan, Yemen, etc.

Indeed, IEP – commenting on the war in Afghanistan and Iraq – notes:

This was also the first time in U.S. history where taxes were cut during a war which then resulted in both wars completely financed by deficit spending. A loose monetary policy was also implemented while interest rates were kept low and banking regulations were relaxed to stimulate the economy. All of these factors have contributed to the U.S. having severe unsustainable structural imbalances in its government finances.

We also pointed out in 2010:

It is ironic that America’s huge military spending is what made us an empire … but our huge military is what is bankrupting us … thus destroying our status as an empire.

Economist Michel Chossudovsky told Washington’s Blog:

War always causes recession. Well, if it is a very short war, then it may stimulate the economy in the short-run. But if there is not a quick victory and it drags on, then wars always put the nation waging war into a recession and hurt its economy.

(and remember Greenspan’s comment.)

It’s not just civilians saying this …

The former head of the Joint Chiefs of Staff – Admiral Mullen – agrees:

The Pentagon needs to cut back on spending.

 

“We’re going to have to do that if it’s going to survive at all,” Mullen said, “and do it in a way that is predictable.”

Indeed, Mullen said:

For industry and adequate defense funding to survive … the two must work together. Otherwise, he added, “this wave of debt” will carry over from year to year, and eventually, the defense budget will be cut just to facilitate the debt.

Former Secretary of Defense Robert Gates agrees as well. As David Ignatius wrote in the Washington Post in 2010:

After a decade of war and financial crisis, America has run up debts that pose a national security problem, not just an economic one.

 

***

 

One of the strongest voices arguing for fiscal responsibility as a national security issue has been Defense Secretary Bob Gates. He gave a landmark speech in Kansas on May 8, invoking President Dwight Eisenhower’s warnings about the dangers of an imbalanced military-industrial state.

 

“Eisenhower was wary of seeing his beloved republic turn into a muscle-bound, garrison state — militarily strong, but economically stagnant and strategically insolvent,” Gates said. He warned that America was in a “parlous fiscal condition” and that the “gusher” of military spending that followed Sept. 11, 2001, must be capped. “We can’t have a strong military if we have a weak economy,” Gates told reporters who covered the Kansas speech.

 

On Thursday the defense secretary reiterated his pitch that Congress must stop shoveling money at the military, telling Pentagon reporters: “The defense budget process should no longer be characterized by ‘business as usual’ within this building — or outside of it.”

While war might make a handful in the military-industrial complex and big banks rich, America’s top military leaders and economists say that would be a very bad idea for the American people.

Indeed, military strategists have known for 2,500 years that prolonged wars are disastrous for the nation.

War Increases Terrorism … And Terrorism Hurts the Economy

Security experts – conservative hawks and liberal doves alike – agree that waging war in the Middle East weakens national security and increases terrorism. See this, this, this, this, this, this and this.

Terrorism – in turn – terrorism is bad for the economy. Specifically, a study by Harvard and the National Bureau of Economic Research (NBER) points out:

From an economic standpoint, terrorism has been described to have four main effects (see, e.g., US Congress, Joint Economic Committee, 2002). First, the capital stock (human and physical) of a country is reduced as a result of terrorist attacks. Second, the terrorist threat induces higher levels of uncertainty. Third, terrorism promotes increases in counter-terrorism expenditures, drawing resources from productive sectors for use in security. Fourth, terrorism is known to affect negatively specific industries such as tourism.

The Harvard/NBER concludes:

In accordance with the predictions of the model, higher levels of terrorist risks are associated with lower levels of net foreign direct investment positions, even after controlling for other types of country risks. On average, a standard deviation increase in the terrorist risk is associated with a fall in the net foreign direct investment position of about 5 percent of GDP.

So the more unnecessary wars American launches and the more innocent civilians we kill, the less foreign investment in America, the more destruction to our capital stock, the higher the level of uncertainty, the more counter-terrorism expenditures and the less expenditures in more productive sectors, and the greater the hit to tourism and some other industries. Moreover:

Terrorism has contributed to a decline in the global economy (for example, European Commission, 2001).

So military adventurism increases terrorism which hurts the world economy. And see this.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
VWAndy's picture

Another fine example of dogma spewed out by a PHd. Its pretty normal actually. Been going on a long time. This is why it is so important to question everything, and everyone.

 Its not that people will lie. That is a cosmic given and thats ok. That we fall for it is not ok.

 

CHX's picture

"War is a racket". 

Bonus (it never gets old) : https://www.youtube.com/watch?v=2B_SxGmSJP0

Gadfly's picture

The statement that war is “good for the economy” is a slogan used by those in power to manipulate those without any power.  It’s a grotesque and obscene con job.  War is not “good for the economy.”   It’s good for a very small number of people who own the banks that loan the money for the wars, and the companies that manufacture the bombs, guns and bullets.

But even if it were true that “war is good for the economy,” the statement (and the sentiment it represents), is morally bankrupt and depraved.  If someone says, “War is good for the economy,” aren’t they also saying, “It’s okay to go to war, because it’s good for the economy.”   If that’s what they are really saying, what’s the difference between that, and saying it’s okay to be a hit man or murderer because it pays well?  If we all went out and bought guns and started killing each other wouldn’t that help the economy by increasing gun sales?  Aren't they morally equivalent?

War is institutionalized murder, plain and simple.  It is also one of the greatest con games and rackets ever devised.  It is wolves leading sheep to slaughter.  I’d go to jail before I’d ever go out and kill someone I didn’t know, never had a fight with, never had a beef with, and didn’t have a very good reason for killing them.  That’s what we should be teaching our kids.  Don’t ever do someone else's killing for them.  Don’t ever kill for profit or power.  If we refused to fight in their wars for money and their profit, then who would do their fighting?   Who would do their dirty work?  No one.  And even if they find a few dupes to do their dirty work, it doesn’t have to be you or me, or our children.       

savagegoose's picture

depends on whose cities are being destroyed on how much negative affect it has.

Prober's picture
Prober (not verified) Aug 18, 2015 8:34 PM

Hey pseudo-GW

AFTER you convince the russians, north koreans, chinese, islamic cult worshipers, etc

THEN

I will believe you

till then

just more of your anti-america propaganda tirade

Duc888's picture

 

I'm so sick of motherfukkerzlike this asshole.

 

Have Thebernanke, his immediate family,extended family, uncles,aunts, nieces and nephews, even his distant relative....all hop on some fucking boat and go to what ever motherfucking "war" he feels will stimulate the economy.

 

Same the the Clintons, Bushes, and all the other Washington shitbags who want / need a war.

 

Go for it assholes.

 

Every last one of you scumbags...

OC Sure's picture

 

 

Go look up George Carlin's exposé on "why I don't vote."

 

Is it really the spare part's fault or is there a more fundamental cultural / philosophical issue that needs to be expunged?

OC Sure's picture

 

 

 

The proof is in the making of the pudding!

Please address the cause and not the effect.

Therefore, please explain to the class how any [counterfeiting] spending helps the economy.

You have swallowed their bait and are just wrestling a tentacle. 

Way2Go!

Vendetta's picture

well after gutting the economy of 50,000 plus factories in the pursuit of the milton friedman globalization ideology what else is left of manufacturing but the MIC?

optimator's picture

You could have shortened the article to simply say a production line making refrigerators has the same effect as making machine guns except the Fridge has a useful purpose.

dreadnaught's picture

we dont know how many Quadrillions go into Pentagon Black Budgets/off budgets/outright theivery

kchrisc's picture

"...$1.4 trillion in deficits..."

How much of life is that? How much murder is that.

Zion is a scheme, not an ethnicity.

 

Come to think of it, much of my life stolen went to taking much life overseas.

. . . _ _ _ . . .'s picture

“There is no instance of a nation benefitting from prolonged warfare.” ? Sun Tzu, The Art of War

Secret Weapon's picture

Only a psychopath can think war is good for anything. 

SmedleyButlersGhost's picture

Say it again
War - Edwin Starr (Original Vinyl) - YouTube
www.youtube.com/watch?v=dpWmlRNfLck

1033eruth's picture

Very poorly written article.  No one cares what Bernanke says, nor the other warmongering assholes in Congress like John (I never saw a conflict I didn't want the US to get involved in) McCain and Graham and so many others.  

I'll sum all your bullshit in the article into an easy paragraph or two (no graphs necessary).

The US, unlike all the rest of the countries in the world, maintains the perpetual war for immensely immoral and unethical reasons.  Its called the PAC donation cycle.  

First, Uncle Fraud has to drum up sentiment from the general public in order to go to war (see unending list of false flags and overseas crises we need to cure, for national security of course.  Then once some portion of the general public is vocal about getting involved, OR, its constantly presented to us by the media as a crisis that needs attending, it gives Uncle Fraud the greenlight for interfering.  

Now, its time to set our military consumers into motion.  They go in, blow shit up and a percentage of every bullet, bomb, and government contract is remitted back to congressional supporters that voted for and in some way supported our invasion of (fill in the blank).  This is turn helps to get those bribed congressmen, back into office so that they can continue to support the perpetual war, where it counts the most.  Those that vote for its funding.  

Its all money flushed down the toilet because once the money is spent, it creates nothing.  Once the military spending stops, you have NOTHING to show for it.  Its like building the perpetual bridge to nowhere - all based on lies and government fabricated false flags (all of which is classified) so that we can continue the PAC donation cycle for perpetuity.

 

Reaper's picture

All adventures have costs. When the adventure is over what have we won and what have we lost? The sheeple pay the costs. The sheeple die for some glory awarded by some god.

Economics is not a science, but rather a modern alchemy, which promises to create gold from printing money, or giving government central planners more power, or through conflicts or wars. The stupid sheeple want to believe, so they believe.

All decisions based upon emotion negate thinking. What god or philosophy justifies this war? Why ought I trust in that god or philosophy? Regardless of what I imagine, could I be killed in this war? Do my leaders place the same value on my and my families' lives as I do? War as noble or glorious is for fools.

My grandfather, who was in WWI, told me you're cannon fodder for the demented in charge. I learned to say NO and owe nothing, not even truth, to the swines of war.

SmedleyButlersGhost's picture

fuk i'm slow - McAuliffe (sic)?

MFL8240's picture

War is good for the economy except for those who are killed, maimed and destroyed.  Fuck you Bernanke and fuck you Krugman and fuck all of the tribal scum who have ruined the US jobs, and the banking system to enrich themselves.  Send your fucking families off to fight these wars and leave our kids alone!  

Spungo's picture

100 years later and we're still debating whether or not WW1 was good for Britain's economy. This is just sad.

SmedleyButlersGhost's picture

On a BBC broadcast some months ago, they talked about how the Brits had rolled over, not retired, the last WW1 (yes that is 1) bond for a new interest rate. WTF was the total interest on that one and how about all of the others

decided to look
The UK Government has said that it will 'retire' £218m of the UK's £2bn First World War debt by refinancing bonds originally issued by Winston Churchill.
The UK has paid a total of £1.26bn in interest on these bonds since then.
The debt has not been paid off before because of the relatively low interest it incurs.
The Treasury plans to cut the annual cost of the debt by re-borrowing money at current market rates. It is the first such move for 67 years.
The bonds that Chancellor George Osborne has acquired have a lower rate than the 4% interest on the debt.
The continued existence of the war bond debt illustrates the lasting shadow cast by World War One.
According to the UK Treasury there are currently 11,200 registered holders of the bonds.
Winston Churchill first issued "4% Consols" in 1927 when he was Chancellor partly to refinance bonds from the First World War.
In addition to the war bonds, some of the debt being refinanced by the Treasury dates back to the 18th Century.
One of these bonds was issued by William Gladstone in 1853 to consolidate the capital stock of the South Sea Company, which was founded in 1711.
The South Sea Company collapsed during the South Sea Bubble financial crisis of 1720, leaving behind it a lot of debt.
In 1932 Chancellor Neville Chamberlain converted some war bonds into "perpetuals". This gave the government the right not to pay back the loans, as long as they continued paying 3.5% interest on them.
Perpetual bonds, as the name suggests, pay a steady stream of interest forever.

Goldilocks's picture

THE ALIEN CYCLE ~ PIGS IN SPACE ~ MUPPET SHOW
http://www.youtube.com/watch?v=cUtZXrNKlHg (2:01)

The Muppet Show Pigs in Space The End of the Universe
http://www.youtube.com/watch?v=2mUlo9kb8Ig (3:17)

The Muppet Show--Pigs in Space: Dissalvatron
http://www.youtube.com/watch?v=If2vHbaSmJA (2:14)

SmedleyButlersGhost's picture

I find it hard to take that the subject matter of this article doesn't even giving a passing mention to the question of the right and wrong of a 'war' -- its human cost on all sides. OK - so war is on the same level as  exchange rates because "it's all about the economy"?   WTF - so sacrificing blood and lives is an economic calculation? Gen Butler would puke if he weren't dead after reading this article.

SmedleyButlersGhost's picture

Sorry about the dbl post.  actually my anger and disgust is at the thought of a bunch of economists, politicians etc sitting around discussing the economic aspect of 'war' seemingly oblivious to its human cost. I believe they do that and damn them for same.  Should not be directed at your authorship - always enjoy your thoughts and am amazed that someone publishes actually stays on to reply to posts.

Kickaha's picture

You make a valid point, SBG.  The emotional loss is devastating, but impossible to quantify, which leaves only an economicc analysis.  What is the actual "human cost" a nation incurs when one of its military gets killed in some inexplicable foreign adventure?  I'm not sure, but let's start with the total man/woman hours put in by that unlucky soldier's parents to raise him up to be outstanding cannon fodder?  The cost of educating him through high school?  The cost of his share of the utilities in his home for 18 years?  The cost of the food that helped him grow to adulthood?  The man hours the decedent put in to developing his own life so as to become a human being capable of carrying some amount of responsibility?  What if he left a wife and some kids behind, what is the amount of financial support that he could have provided to his family if he had not gone off to war?  Sure, when you build a bomb, there is a cost involved, and when you just blow it up, all those costs are wasted.  It is pretty much the same as if you built a bunch of cars and sent them straight to the junkyard crusher.  There is no way that this is a net gain for the economy.  But the true economic cost of wasting a man or woman by getting them shot or blown up is much, much higher than most people realize.

Beam Me Up Scotty's picture

Exacltly.  As if killing brown people half a world away is OK because it makes our eCONomy stronger.  Pathetic.

Berspankme's picture

Please Please somebody make this fucker Die already. fuck You Ben

Charles Offdensen's picture

If we remove all benefits to stocks of companies that do business with uncle sam then we would see a different attitude toward campaign contributions.

Cut them off from the teet!

SmedleyButlersGhost's picture

I find it hard to take that the subject matter of this article doesn't even giving a passing mention to question of the right and wrong of a 'war' -- its human cost on all sides. OK - so war is on the same level as  exchange rates because "it's all about the economy"?   WTF - so sacrificing blood and lives is an economic calculation? Gen Butler would puke if he weren't dead after reading this.

George Washington's picture

Of course ... but since so many don't care about morality, I write posts like this ... and like this:

Painful Facts's picture

It seems counter intuitive. Hard for someone to know if torture works if they haven't been tortured themselves. But yeah you'd say anything to make waterboarding stop. I've had kidney stones and a botched root canal tooth pain before. I was crying like a little baby both times and if there was something I could say to make the pain stop I'd say it, I'd also give up my life savings or anything else to make it stop. But would I give up info on my friends and families that would get them in danger to make the pain stop? Sad to say yes. You're not thinking straight when in a state of pain. So a terrorist would be getting tortured into giving up info on his fellow friends/terrorists and I think he would give them up to get pain to stop, aka it would work.

Charles Offdensen's picture

GOVERNMENT spending does not help the economy!

Fixed it for ya!!!

Beam Me Up Scotty's picture

It helps Peters eCONomy when its taken forceably from Paul.  What they won't tell you is that, while Peter is spending MOAR because the government is helping him, Paul is spending LESS because the government just took it from him.

rwe2late's picture

GW

The immigration/refugee problem deserves mention as a major blowback cost

to the "wars" (including the so-called "war on drugs")

http://www.counterpunch.org/2015/08/18/war-begets-war-refugees-the-moral...

 

quadratic_equation's picture

The article is too long and it's boring to read.  The writer could have just summed up his argument by giving an example like I'm giving below but it's contrary to his opinion.

Let say Uncle Sam spend on defense, say building the F-35.  When you look at the F-35 facility you'll see restaurants and donut shops and other businesses mushroom in the sorrounding.  Aren't those businesses helping the economy?  Given that the F-35 is worthless junk and expensive, money stolen from taxpayers pocket (private sector), still it has somehow helped the economy by giving jobs not just to those directly envolved in the military project but also to the businesses that built up in the sorrounding.

Kickaha's picture

The farce is strong in this one.

 The money spent on the F-35 could have been spent on pretty much any other construction or manufacturing program.  Those non-military programs would have donut shops and other businesses mushroom in its surroundings.  The F-35 project did not increase one single job.  It just shifted existing jobs into the congressional district of some senior congressperson.  Gain one there, lose one somewhere else.

Now, I suppose that if you build the F-35 with borrowed money, then it is gain a job now, lose one sometime in the future when the interest costs slowly eat into the income that otherwise could be saved and later invested in new projects.  Of course, when it looks like that day is fast approaching, there is always QE and ZIRP to keep that can flying down the road. And so, here we are.

Stuck on Zero's picture

Simple explanation.  The F-35 factory hires all the good labor by outbidding the private sector so everything costs more.  The jobs that used to produce things for the consumers now make F-35s.  

Sparkey's picture

Several of the "Economists' mentioned are really publicrelations practicioners, seeking to mould the attitudes, and feelings of the public,,,.

IF War is what we need, and perhaps we do Bennie B said something recently in support of that idea, I expect 'someone' to say we need a bigger war, America does extremely well in Big Wars, look at WW1&2, we made real money, and when it was over there was no ambiguity about who was the Boss, smaller Wars,,,we do 'OK' but it isn't the same, we need a big war to put us back on easy street!

 

I can't go. too old, but my Grandson he plays games on the computer all the time I think he'd make a dandy Drone Pilot!

RMolineaux's picture

Greenspan and Bernanke's opinions are like a wad of gum - they stick on whatever they land on in the convenience of the moment.  They have no independent criteria and merely quote others. 

Beam Me Up Scotty's picture

Why not just make military hardware and dump it into the ocean then??  We wouldn't be pissing people off and making them want to kill us, and we would be stimulating the economy.  This idea really isn't that much different than paying someone to dig a ditch and paying someone else to fill it in.  Dropping bombs on brown people in caves, or giving them arms IS NOT in our long term best interests.

 

Fuck you Paul Krugman. 

new game's picture

why don't we build light rail coast to coast? why don't we repair replace the deteriorating infastructure? why the fuck don't we...

because the empire must conquer and is run by insider psycopathic power hungry derranged motherfuckers.

they have no feelings and emothions other than immeadiate friends and family. the sytem breeds these fuckers as it morphed to highest bidder for power(and moar money), self reinforcing til doom...