How is this news?
It isn't. But it is still a myth that needs to be dispelled.
How is this news?
That only holds true if you believe that U.S. involvement in WW2 was initiated solely for the purpose of ramping up the economy.
Only valid under a certain set of assumptions.
Would the baker have actually spent the money on the new suit? Your example only works if he was in a spending mood. Even if you assume he was, there isn't much difference since the net effect is still an infusion of the baker's money into the market. Whether the baker pays the tailor for a new suit or the glass maker for the new window pane, it's still all the same. And there's no more reason to believe he'd buy a new suit any more frequently than he'd buy a new window. And there again, even if he did, would he always use that disposable income for a new suit or would he spend it elsewhere? It doesn't really matter if he's spending it, does it?
And perhaps more importantly, where was the economy in terms of productivity prior to the initiation of war? A healthy, thriving economy would surely be hurt since resources would be drained from the private sector at alarming rates to provide for the prosecution of the war. The degree of harm being directly correlated to the length of the war.
But a stalled, stagnant economy may very well benefit the population. War creates a demand for goods and services. Demand creates a need for manufacturing. Manufacturing creates a need for working individuals. In an economy where the reality is that nobody works so nobody has money so nobody buys anything so nobody demands anything so nobody creates anything so nobody works, war might just be the impetus to break the country out of the self-feeding death spiral. (Yes, other things could do it, but in our world today, with the litany of regulations and restrictions, war is, sadly, the easiest and most expedient solution.)
That said, there is no denying that this is a temporary effect. One should really consider it the kick-in-the-pants to get things moving and not the actual force behind the movement. The spark, but not the fuel, if you will. And a protracted war will undoubtedly counter any of the gains made in the long term.
I'll stand by the premise that a spark to the engine is still a benefit if the engine wasn't running at all.
snip
Just remember that if we hadn't had that WWII debt, we would have been that much better off.
Except, of course, that we'd be Nazis. Assuming you aren't Jewish. Then you'd just be dead.
I'm not sure it was bad for the U.S. economy. The "broken windows" were almost all in Europe and Asia, so it bad for their economies, and the world as a whole, but the U.S. economy benefited greatly. Our world competitors were destroyed, and demand was staggering and the U.S. was the only manufacturing base left standing.
Also, with the war in full swing, crazy war spending and war bonds beginning to wane, wasn't the US currency essentially worthless at that time?
Worthless? Compared to what? Pound Sterling? It was 4 Mark to the dollar, and that was with U.S. support of their economy. Only the dollar and pound sterling were still standing as worth anything, except, perhaps, the Swiss franc. Bretton Woods pegged the dollar at $35/troy oz. of gold. Hardly worthless.
I'm not sure it was bad for the U.S. economy. The "broken windows" were almost all in Europe and Asia, so it bad for their economies, and the world as a whole, but the U.S. economy benefited greatly. Our world competitors were destroyed, and demand was staggering and the U.S. was the only manufacturing base left standing.
Did not WW2 bring MANY innovations that, when using the non-standing down manufacturing base, create the consumer economy that has also stood today? Refridgeration (cheap and inexpensive due to the technology researched and manufactured for the war), electronics (made cheaply and micronized), automobiles (overstretch of the production capability of the war had a brief retooling to make cars enmasse), etc... all were products thought of mostly as luxuries before the war, but then made commonplace by the research and development and the companies that saw an influx of new customers, but also cheaper products that could be made with "overruns" of the "stimulus" given by the US for the war effort, and made affordable due to the mass production mindset and tooling left over from the war?
Maybe not "prosperity" per sae, but a strong plus of THAT particular war's end. The US rose to power in the world theatre as a manufacturer and scientific leader.
Also, with the war in full swing, crazy war spending and war bonds beginning to wane, wasn't the US currency essentially worthless at that time? Aside from a period of, well for lack of better term, prosperity, how else was the US gov able to begin repayment of bond holders and creditors? These are some questions I have had in my mind for a bit actually!
I'm not sure it was bad for the U.S. economy. The "broken windows" were almost all in Europe and Asia, so it bad for their economies, and the world as a whole, but the U.S. economy benefited greatly. Our world competitors were destroyed, and demand was staggering and the U.S. was the only manufacturing base left standing.
You're looking at a very narrow portion of time in a very small part of the world.
You need to broaden your view of historical and geographical context before you proclaim the War to be a benefit.
That's pretty much what the Democrats passed in 2009, wasn't it? Put people back to work, using money borrowed from our grandchildren. I just posted this because people need to learn from history and stop praising economic failures imposed on us by devout socialists.
They call this the Keynesian economic theory: go into debt for some short-lived benefits; blame the failure on not enough Government spending.
Now wait, I did not proclaim the war as a benefit. I did state my statement was a question. Waiting for someone to refute or support the statements made. Just here to learn sir...
This proceeds from a false definition of wealth. While external trade does tend to produce wealth more quickly for all involved, it is not essential for the production of wealth.An economy only grows if it manages to sell goods or services outside its borders. Imagine a family of 2 parents and 10 kids. The parents represent the government, the kids are the citizens. If the family is in dire straights financially, can it pull out of debt by giving the kids chores to do and increasing their allowance? No. The only thing the family can do to gain wealth is to sell goods or services outside the home.
Also, the boom following the war had much to do with rationing during the war. The rationing was so high that people simply couldn't spend their money and rather than put it into a bank they didn't trust, they just kept the cash in a jar or under a mattress. So once the war was over and it was legal to buy goods again, the economy boomed.
I'm not discounting in terms of "this didn't matter", because obviously it did. Folks with savings have the ability to do things that folks lacking savings do not.I totally agree. The repeal of the FDR government was the biggest reason for the boom. No doubt about it.
However, I don't think you can discount the large amount of liquid assets that were available in the post-war era. Especially when most of those assets went towards the purchase of durable goods.