Wednesday, July 20, 2011

The Reason "War is Good for the Economy" = Debt

Here's a half-formed thought that just struck me.

So often we hear that war can be good for the economy.  I recall that George W. Bush prescribed war as a way out of recession, for example.

From the other side of the alleged political spectrum, we often hear that war is all about empire and plunder, i.e., the reason war is good for an economy is that the victor subjugates the resources (and income) of the vanquished.

But the bottom line is that the financiers of war win regardless of the outcome, and in this sense finance (and the debt it creates) drives war.

Combine that thought with economist Steve Keen's credit-based model of economics, and it is easy to see that George W. Bush was right, albeit for the wrong reasons.