Does excessive government spending to finance military action cause inflation ?

Question

Historically have economies of nations that have high levels of government spending to finance a war , relative to GDP experienced high levels of inflation for years during and after ear ends ??

Answer 1

duh of course they do

Answer 2

Yes,I believe this is true. War is a good and a service that cannot be consumed by the taxpaying citizen. Whenever the government subsidizes something that no one can consume or tax, it is literally, "money down a rat hole". Military armaments do produce high-tech jobs, but in order to buy these from privately-owned corporations, the government must either borrow the money, tax us to raise the money, or do like LBJ did, print lots and lots of money not backed by anything of value, thus causing the rampant inflation that filtered throughout the American economy, producing the "Stagflation" of the late 1970s, until Ronald Reagan slammed the brakes on it by engineering a depression that rivaled the Great Depression of the 1930s. At the height of the Great Depression, the unemployment rate was a staggering 24.9%. In the 1980s, it was nearly 14% where I was living. That drastic of an approach wasn't necessary to stop the Vietnam War inflation. It was like doing an appendectomy by chopping the patent's legs off! To this day, our economy has never fully recovered.

Answer 3

funding a war is expensive...borrowing instensifies and it can drive the cost of money UP. When money gets more expensive, it slows down parts of the economy NOT affiliated with military spending.

However, depending on the war, the "parts of the economy NOT affiliated with the war" can be a few parts or many parts. During WWII, the whole country mobilized almost every manufacturing sector to collect, reuse, manufacture, etc and it certainly helped the economy.

My gut tells me that the war in Iraq is different. It is certainly not affecting us in the magnitude that WWII did...and I tend to think that the net result of Iraq has been to SLOW the economy. Fuel has gone up, interest rates have gone up, housing is starting to slow, the auto industry profit margin has disappeared while it attempts to hold market share, etc.

I guess I would say it depends upon which war/military action you examine...

Answer 4

Printing money is inflation. The diluted value of the $s results in perceived higher costs (lower value of a $). And we're in big trouble.

Answer 5

possibly, i mean the money is supposed to circle around the economy to much loss of money makes money more rare and more expensive = inflation
meaning no more 5lbs of candy for 1 dollar at the shop
*gasp*

Answer 6

yep, you got that right

Answer 7

NO!!!!!!!!! YOU ARE A COMMUNIST!!!!!!!