Funding the War

[Max B. Sawicky]

Our system, for lack of a better word, of economic governance
is so strongly stacked against inflation that printing money
IMO is highly unlikely.  The war would be abandoned before its
cost was sufficiently high to motivate inflationary finance (sic).

The orthodox explanation for the VN era problems is that the economy
overheated, partly due to military spending, and the failure to raise taxes
accounted for subsequent inflation.

I would say the other key cause of 70s problems was oil price
spikes.

In retrospect this might have all been 'managed' better,
but for details on that score I'd defer to Prof. DeLong.

mbs

Doesn't the depend on how much the war costs? If it gets very expensive they
might have to start printing money on the side, no? Isn't that what LBJ did
in 1967 and 1968? By the way, if anyone has any good suggestions explaning
the link between the Vietnam war and the economic troubles of the late 1960s
and early 1970s, I would appreciate it. I had a few students ask me about
this.