Funding the War

Max B. Sawicky sawicky at bellatlantic.net
Mon Mar 3 08:24:24 PST 2003


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.



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