Is It Time For Another World War? (In 2 Charts)

Tyler Durden's picture

With relative debt-loads for the advanced economies at their highest since World War II as the following IMF chart reveals,

... And investment at its weakest since World War II...

...  The calls for Keynesian fiscal stimulus are growing ever louder (with many mainstream economists having argued that the New Deal’s error was spending too little on recovery, and that World War II ended the Great Depression precisely because it led to truly enormous deficit spending).

Of course, the problem is a current public that is increasingly aware of the nation's debt-load and deficits... so, what is needed is a so-called "good deficit" - or a good enough excuse, or nationally supported excuse, to spend, spend, spend.

As a reminder, on the eve of the last great war, Keynes himself delivered the following chilling address on the BBC, talking about the "grand experiment" of curing unemployment through war expenditure:

 

Carmen Elena Dorobat (of The Mises Institute) notes that two years later to the day, in a lecture delivered shortly after his arrival in the U.S., Mises described what the great experiment really looked like:

We are witnesses to the most frightful and phenomenal occurrence in human history: the decay of Western civilization.

 

London, one of the centers of this civilization... is almost completely destroyed. The buildings of the Parliament of Westminster are in ruins; the House of Commons holds its assemblies in the catacombs. [...] 

 

The theater of war is spreading, and the day seems not distant when peace will have lost its last refuge. It is a moral and material collapse without precedent.

Are we really set to revisit this Keynesian Endgame once again?

A similar situation had occurred in the US in the 1930’s.

 

What solved the question? War! Because World War II had occurred during the 1940’s and that became the solution for the United States. So, let’s look at the entrepreneurs in Japan. They are stuck with the deflationary mindset.

 

They have to switch their mindset and should start making capital investments. We are looking for the trigger.

So is that the cunning plan of the elites?... unleash WW3, tear up the global debt, spend, spend, spend on war -  mass employment achieved to invest/rebuild after the devastation? Problem solved, right?

And no, this is sadly not a rhetorical joke. Recall what Japan's Finance Minister said back in March with Paul Krugman next to him:

(Minister of Finance Aso)

 

During the 1930’s, I remember that in the United States likewise there was a situation of deflation. And the New Deal policies have been introduced by then President Roosevelt. As a result, it worked out very nicely, but the largest issue associated with it is that for a long period of time entrepreneurs and managers of companies did not go to make a capital investment by receiving the loan. It had continued up until the late 1930’s and that is the situation occurring in Japan too. The record high earnings have been generated by the Japanese companies but they would not spend in the capital investment. There are lots of earnings at hand on the part of the corporate in Japan. It should be used for wage hike or dividend payment or the capital investment, but they are not doing that. They are just holding onto their cash and deposits. Reserved earnings have kept going up.

 

A similar situation had occurred in the US in the 1930’s. 

 

What solved the question? War! Because World War II had occurred during the 1940’s and that became the solution for the United States. So, let’s look at the entrepreneurs in Japan. They are stuck with the deflationary mindset.

 

(Prof. Krugman)

 

The important point about the war from the macroeconomic point of view is that it was a very large fiscal stimulus. That fact that it was a war is very unfortunate. It was simply something that led to a fiscal stimulus that would not otherwise have happened.

 

In fact, the story in the 1930’s was that the New Deal, Roosevelt backed off the fiscal stimulus in 1937, because then, as now, there were many calls for balancing the budget. That was a terrible mistake. It caused the major second recession.

 

Yes, obviously we are looking for ways to achieve something like that without war.

But if we can't find any...

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PoasterToaster's picture

Maybe it's time for a civil war. The slaveowner class certainly seems to be egging it on accidentally, while they think they are setting the ground for one of their stupid planned international wars.

A Lunatic's picture

If by accidentally you mean, on purpose, then yeah.......

Erek's picture

A big war is overdue.

.gov needs the money - real bad!

JRobby's picture

It has been ongoing for some time now.

When the petro dollar is threatened, there will be war.

Mustafa Kemal's picture

JR, that appears where we are headed. What I dont understand is where are they going to get the money for such a war?   Or is that how the reset ocurrs? they print so much to both reset through war while destroying the currencies at the same time. I dont get it.

The Saint's picture

I don't know about a world war but we are about to have a good ol' civil war right here in the U.S. of A.

Starts November 9th!

Creative_Destruct's picture

GREAT econ plan for full "employment."

We'll all be employed in a new full time occupation: fighting each other over scraps of (contaminated) meat in the street, post nuke-excahnge.

While our hair is falling out, we're throwing up, and our skin is sloughing off...

KEYNSIANISM CARRIED TO IT'S LOGICAL CONCLUSION.

KEYNSIANISM AT ITS FINEST.

Ms. Erable's picture

But in the good news column for the day: Tom Hayden assumed room temperature, becoming another in a hopefully unending series of Good Progressives.

http://www.newsbusters.org/blogs/nb/scott-whitlock/2016/10/24/nbc-death-...

Pinto Currency's picture

 

Capital is destroyed and inflation runs rampant with war.

And people die.

Citizens don't benefit.

philipat's picture

Um, the Pentagon has "lost" $9 TRILLION and spends at a rate of $700 BILLION pa, more than ROW combined. But that doesn't count I guess?

PS At least what we have to show for it is the F-35, a fighter that CAN now actually fly, but that's about it!

yippee kiyay's picture

A World War plan is behind the conflict with Russia. https://goo.gl/nKJndT

philipat's picture

Hey yippee kiyay, previously mofio then santafe then Aristotle of Greece then Gargoyle then bleu then oops then lance-a-lot then Loftie then toro. Would appreciate regular ZH contributors please take a moment to help me in my campaign against this idiot and report yippee kiyay to abuse@zerohedge.com.

You are a serial spammer and a serial pain in the ass. Might I politely suggest that you go fuck yourself? And get a life.

PS. You might have noticed that my attempt to expose you for what you are is always the same. That’s because your Spam is always the same (Using fake links to your BS site which has no connection to your comments; which are deliberately dramatic to mislead people into responding or clicking on the fake link) so it seems only fair that my exposure of your crap should also always be the same. An eye for an eye.

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

No to civil war.

Class war, on the other hand...

PT's picture

Debt doesn't matter when your creditors are dead.  And that's how you hide the evidence.

It's easy to pay for a war, you just print money, starve your citizens and feed your soldiers.  Now you have as many soldiers as you want.  Need resources?  Just take them "for the war effort".  Anyone who refuses to comply is a traitor, doncha know?

rmopf2010's picture

It is so painly to watch that their greater agenda is to kill Boomers in USA+EU because welfare state is Broken: Retirement pensions, healthcare

A great war will diminish these liabilities to admissable levels


new game's picture

retracement of the human race long overdue. it will be random. no one is safe. the question to ask is how far back in time will the retrace encompass. 116 years? 1 billion to 7.3 billion with retrace using the 

Fibonacci Calculator

http://www.investing.com/tools/fibonacci-calculator

fbazzrea's picture

victors don't repay debts to losers.

it's a modern variation of "to the victor goes the spoils," which includes negating our debt in a pre-emptive action vs. waiting until the repo man comes then making a stand between him and your car. cuz the house of cards collapses when the people realize what just happened. China, Saudi Arabia, Russia, etc., they all want a piece of the pie to satisfy their constituents' demands for collateral.

active vs passive debt elimination. best defense is a good offense... or so that's their plan, i believe.

plus, an entire new generation of Rosie the Riveters buying in to the patriotic chorus, paying their "wartime" taxes, reasoning austerity is good for our nation and pooh poohing on any unpatriotic, treasonous naysayers in our global battle against "evil."

evil is as evil does. the propaganda mills will spin, spin, spin... people will die. our nation will bankrupt itself and ultimately, as history proves time and time again, collapse into a state of poverty and ruin.

Trump 2016!!

 

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

"victors don't repay debts to losers."

Really?

The entire world is in a process of redistribution based on past wrongs. Aboriginals everywhere, USA blacks, women, etc... just wait for all the countries that will be sued over terrorism.

I would change your statement to, "Victors didn't repay debts to losers." They do now.

JuliaS's picture

"It's like signing up for chemotherapy because you're too lazy to cut hair."

- Doug Stanhope

JohninMK's picture

But according to the charts the debt load rose fast during or after the wars. Not before them.

Looking at the chart this war started in 2007/8.

Donald J. Trump's picture

Didn't debt peak at the end of the wars?  it seems by the chart that the lack of debt started the wars.  Here we are at excessive debt and we haven't even started WW3 yet.  btw, anyone also notice debts lowest point around the time Nixon abandoned the gold standard?  not enough debt!

Rabbi Chaim Cohen's picture

"With relative debt-loads for the advanced economies at their highest since THE AFTERMATH FROM World War II..."

 

Fixed it for you, Tylers.

 

KnuckleDragger-X's picture

Civil war is the more likely occurrence. Nobody is interested in putting their ass on the line in another foreign war, but the elites seem to think they can get magically parade the flag around and have everybody follow over the cliff. Too frigging bad the people disagree, and would prefer to hang the elites instead......

jmack's picture

They are setting the stage for civil war as well.  why do you think BLM is agitating and they are bringing in so many "refugees" and  illegals?  Not to mention arming every government bureaucrat.

Orc from Mordor's picture

Maybe it's time for a civil war. The slaveowner class certainly seems to be egging it on accidentally, while they think they are setting the ground for one of their stupid planned international wars.

I suppose you'd be able to pay off all your national debt with the money confiscated from your slaveowners. And moreover, some of it is gonna to be left after that for you to have a couple of beers.

jerry_theking_lawler's picture

This is all assuming the 'GDP' calculation is correct. Its even worse if the GDP is actually lower.

Crassius's picture

Obama is doing everything he can to set the stage.

HRH of Aquitaine's picture

I agree. The USSA has been set up to be the sacrifical lamb.

A Lunatic's picture

What's a few gazillion broken windows in the grand scheme of things.....?

Erek's picture

Big profits for Andersen Windows and PPG!

MopWater's picture

6 gazillion broken windows...nevar uhgain!!!!

RSDallas's picture

Truly mindbogeling!

Allen_H's picture

I think that investment still has to plunge more.

Theta_Burn's picture

So, feeding, housing, healing, 10's of millions of semi literate, mass breeding, fucking retards isn't productive?

With all the community organizing, donations flying left and right, I'm confused as to the ROI..

Connon fodder, or a vote, seems a hell of an investment for just those 2 options..

Erek's picture

A nuclear war will clear that problem and do wonders for urban renewal.

HRH of Aquitaine's picture

That is what is being discussed on Inforwars, right now.

Rebel yell's picture

The entire welfare system must be recalibrated because as it currently stands, people are financially punished for leaving it and seeking employment.I think that it would benefit all involved if it were on a sliding scale. For example, if someone would lose all welfare benefits at a certain dollar threshold, just subtract what they have earned in income from the benefits. If there is an economic reward for them working, they will. It's the Adam Smith invisible hand thing. Also, there are virtually no jobs available in case you haven't noticed with a 62% labor force participation rate and only 47% of working aged adults have full time jobs.
http://www.businessinsider.com/real-employment-rate-47-percent-2011-1

Cluster_Frak's picture

Time for debt war.

romanmoment's picture

This is 1912 my friends, war is coming and it's not going to be pretty.  What's more, the same idiots that started WWI will be responsible for this one as well.  Big finance, big media, big government and certain religions.

 

I'm not sending my kids to die in waves for the globalist elite.  I'll join them to hang the elite though.  Get the piano wire ready.

Erek's picture

I'd like to hear the tune played on THAT piano wire!

zvzzt's picture

will be very high pitched sound..... so many fat bastards pulling down hard on those strings... myself, anything in C major will do

MopWater's picture

NATO vs Russia

USA vs China

India vs Pakistan

Iran vs Saudi Arabia

North Korea vs South Korea

Plus the clusterfuck that is subsaharan Africa...

That's a lotta windows.

Kirk2NCC1701's picture

What about...

- Israel v. Palestinians and Lebanon?

- Australia v. NZ?   ;-)

- Straights v. GayBLT?

- Area51 v. Greys

MopWater's picture

We get Area51 vs Greys, it's everyone against the aliens...

Full on independence day type battle.

rejected's picture

So killing each other is the answer to the economic woes caused by nincompoops poor, and often corrupt decisions.

Joy....

Hohum's picture

Difference between 1945 and 2016 is that we now have lots of corporate and household debt, too.

pebblewriter's picture

It's hard to think of a nook or cranny that isn't leveraged to the hilt.