Could a World War Prevent An Economic Collapse?

It has been on my mind for some time now what impact a world war would have on the economy of an individual country, globally, but most importantly, on the economy of the US.

As we all know, the US economy has weakened steadily over the years and continues to do so. To most it is clear that the US economy and its currency will sooner or later collapse. It might very well be years away and I keep my fingers crossed that it will never get to that point.

However, in case the situation would get out of control, could a world war be a solution to it?

What I would like to find out is what kind of power the US government has in relation to the economy when it comes to war. Can they for instance intervene more easily?

I found this article:

For the United States, World War II and the Great Depression constituted the most important economic event of the twentieth century. The war's effects were varied and far-reaching. The war decisively ended the depression itself. The federal government emerged from the war as a potent economic actor, able to regulate economic activity and to partially control the economy through spending and consumption. American industry was revitalized by the war, and many sectors were by 1945 either sharply oriented to defense production (for example, aerospace and electronics) or completely dependent on it (atomic energy). The organized labor movement, strengthened by the war beyond even its depression-era height, became a major counterbalance to both the government and private industry. The war's rapid scientific and technological changes continued and intensified trends begun during the Great Depression and created a permanent expectation of continued innovation on the part of many scientists, engineers, government officials and citizens. Similarly, the substantial increases in personal income and frequently, if not always, in quality of life during the war led many Americans to foresee permanent improvements to their material circumstances, even as others feared a postwar return of the depression. Finally, the war's global scale severely damaged every major economy in the world except for the United States, which thus enjoyed unprecedented economic and political power after 1945.

Source

No, it will not. You see, when WWII stimulated your economy, the enemy didn't have nukes.

It would really depend on the war.

If it was a conventional war, outside the USA, parts of the economy would pick up. In military items, replacements would be built for lost equipment. Afterward, a certain amount of rebuilding done by construction companies. Think in terms of WW2, but more players involved in the rebuilding effort. There would be clear winners and losers in contracts.

If it is a nuclear war, forget it. This type of war would be use or lose. The factories that make the equipment would most likely be destroyed as well as surrounding cities.

Let's have a controlled nuclear war that involves the USA and Russia, Russia also threw a couple of nukes at military targets in Europe. It is a limited engagement, and there are survivors. Realistically, is China in a position to help the rest of the world in rebuilding. She can hardly maintain her own growth with power consumption and factory output. There is no room for extra capacity in construction equipment and factory output. The USA and Russia would have lost several dozen cities and all the infrastructure within those areas. Rebuilding may or may not be an option for some areas. It would be difficult and several years to rebuild to current levels in both countries.

Let's have a war but Russia invades Poland. NATO is instantly involved, but it remains conventional. A few areas inside Poland and Russia are destroyed from bombing and rocket attacks. The conflict last a few days with large loses of armor from NATO and Russia and some aircraft on both sides.

This type of war is great for military contractors. The need for replacement vehicles and aircraft. Small arms manufacturers orders pick up for several months. Overall, growth within the industry involving several nations. Construction also picks up with rebuilding efforts by both sides.

WW2 will never be duplicated again. America was the only power after the war that wasn't touched by the war in destructive ways. We had the factories in place that could supply the equipment and material used to rebuild the factories destroyed in other parts of the world. The closest that can happen again, involves China, but she has her own problems. And I make the assumption that our leadership isn't stupid enough to attack China if we let some nukes fly toward Russia. Releasing the intercontinental missiles will be a very bad day for all the countries of the world, not just the economies.

Keeping a limited nuclear war is also a dream. Once a city is just gone, usually, so is common sense. The need for retaliation is so great, this type of war would escalate to utter destruction of all parties involved. Recovery from this type of destruction would be difficult to somewhat impossible in some areas. The infrastructure would need to be built from the bottom up. This would take time. People would be in survival mode so rebuilding would not be a top priority until basic needs are fulfilled.

Great question for thought....

Originally posted by homo_borg
No, it will not. You see, when WWII stimulated your economy, the enemy didn't have nukes.

Exactly.

Now what is the "Economy"?

It is simply the amount of "Goods/Products" that exist, and the movement they make from 1 person to another.

In a "Good" economy, products move among people quickly, and commonly.

In a "Bad" economy, products do not move around so quickly. Things stagnate.

The reason everyone thinks the economy of today is so poor, is simply due to a few misconceptions that I will lay out here. This is just a simple breakdown of this, by all means look /research into it deeper on your own as there will be MANY factors that I cannot possibly mention in my short post. So u must go research this stuff to learn more about it.

# 1 Inflation
Due to the fact they keep printing more money, without a legitimate resource backing that new money, the money becomes worth less than it was before you printed that new $$$.
In reverse, stopping printing $$$ , and instead burning it, would cause Deflation - making each individual unit of currency$$ to be worth More.

Now Inflation is Related to the economy, but it is not a direct indicator of the amount of goods being traded. So looking at inflation alone will give you a "false reading" of that economy.

#2 Stock Market /Commodities "Speculation"

The stock market and Commodities markets are created so that companys can collect investments from individual investors (like you and me).
When we put our money into buying stocks, we are essentially investing in that corporation, supplying them "Capital" (money$$) to use in their buisness projects. depending on several factors in a corporation, they can issue a certain amount of stock. There are many factors that can occur in relation to these stocks, but generally the higher priced a stock is, the more promising people think its future as a buisness will be. when a companies stock collapses to 1cent or lower, the company essentially runs out of Capital investment (money to play with) , and they actually end up giving more money back to the investors who pulled out already, than they had to begin with . Thus the company can easily go "bankrupt" and become "liquidated" because their stock becomes worthless. The only way to save that stock is to buy alot of it, and as you buy more shares, each piece of stock increases in value (because you obviously value it since you are buying it).

The reason I want to point out that the stock market can be misleading in regaurds to the true health of the Economy is because, the stock market is purely based on speculation on the part of investors.

You invest in a company if you "Feel it will do good" and you pull your investments out of a company because you "Feel it will do bad" in the future respectively. This May or May Not reflect the actual situation with the goods on the store counter. Since it revolves around speculation and rumors so much. There are exceptions, lets look at Walmart for example. They are selling tons of goods everyday, and move things back and forth constantly. People have alot of faith in walmart, and so they keep investing in its stocks. If walmart runs into legal /financial problems, Even if its overhyped and less significant than what is originally thought, this can cause panic in the shareholders thus causing sell outs of stock, and the stock can drop.

Despite the fact walmart had the same amount of goods on the shelf today as it did yesterday, its stock value can change purely depending on random speculative forces by the investors.

These are 2 major issues we must take into account, as they are PART of the "Economic Health" - but they are not the basis by which the Economy is derived.

So in reality there are several layers to the meaning of the word "economy" and many factors that we must take into account to determine its "true health".

Point of all of this being, that if you look at things objectively; you will realize that the Physical economy of today is actually better than it was yesterday.
There are more goods on more shelves at more stores than there was in years past, and there are more workers with more jobs with more cars etc etc etc.

So in fact the economy of the USA, Canada, EU, Africa, ME, Asia etc is in fact better today than it was in the past.

Economic crashes like the "Great Depression" were actually due to several reasons, but 2 of the biggest causes were #1 the dust bowl, which destroyed most of the nations farmland - a true physical economic disaster
and #2 a stockmarket crash based on panic that the future markets would do poorly (pure emotional miscalculations).

What i am saying is that the economy of 2008 is probably the biggest strongest economy in the history of earth. For almost all nations (bar a few exceptions).

What can cause our economy to collapse? Agian, several factors.
Agricultural disasters, like famine/floods/desertification/freezing etc, can initiate a economic crisis. These things have not really destroyed our agriculture buisness right now- but it is a factor we must keep our eye on, since it is crucially important to the "health of our economy".

A non-renewable resource being used up, can also destroy a portion or portions of that economy , as in converse, the discovery of new resources will increase the potential of that economy.

In todays global economy, a huge war would probably actually hurt the economy, as factorys in certain nations would be destroyed, trade lanes disrupted, crops possibly burnt, consumers killed in the conflict, etc. These things will definatly Hurt the economic situation by lessening the amount of trade taking place.

Now , there are also other ways we can look at the economic situation, and depending on your perspective, it would make sense to consider the economy "good or bad" in respect to your individual perspective.

For example if I am a producer, and I sell a particular resource, like Lettuce. And I am the only person selling the lettuce, I can set my own price (and of course I will ask a high price for it because i want profits so i can buy nice things). This is a good economy for me as a producer, because the consumer is forced to pay my price that i demand of him. This is a poor economy for the consumer, as his choice is limited and im screwing him.


Now, lets say alot of new farmers decide to sell Lettuce too, because they see im profiting so much off it. Now there is 100's of producers selling lettuce, each one undercutting the other producers sell price (in hopes the next person to buy lettuce will buy his lettuce instead of mine since his is a bit cheaper than my original price).
This is a bad economy for the producer, because the overflow of producers (competition) causes the price of lettuce to drop. But on the other hand, this is a good economy for the consumers who buy and eat that lettuce, because now , thru competition, they can buy more lettuce for cheaper.

Ill go ahead and stop here, but I hope you understand what im trying to say, as the economy is a deeply complex system, and there are many perspectives you can view it from , each having a different view on "good or bad".

There is more than 1 meaning to the word "economy" and there is more than one way to view that economys "health".It is all relative.

But the bottom line tho, is that when goods do not move around, the overall economic situation stagnates and recedes. And when there is an abundance of goods being traded back and forth, the economy generally thrives and is in "good shape".

Dont just take my word for it tho, as I have only givin the most vague and generalized description of the factors that affect our economy.

I hope you enjoyed this conversation as much as I have, as it is a very important and interesting subject.

To end, I will say this, that I believe the actual real economic state of the world today is far better than it has been in past decades. I think that the media Hypes up the fear- around the economy for their own agenda and actually is lying saying the economy is suffering. Because in reality the economy is doing ok.

[edit on 18-8-2008 by muzzleflash]

Originally posted by hinky
The need for retaliation is so great

these words come to me every time somebody talks about WW2.
we should ask people from Nagasaki and Hiroshima

reply to post by hinky


yes hinky put it very well, and i second his/her explanations about the effects of several different types of war and its effect/relation to the status of the economy.

It is all based on the balance of goods moving around. A small contained war, would be benificial to sectors of the economy *(mainly the military industrial complex) as they would get to resupply the militarys that lost equipment. that means more jobs making more stuff.

But the output of that situation must override the input.
The amount of things made, must outdo the amount of things destroyed.

Because in a nuclear war, almost everything will be destroyed, and the economy will be obliterated as well, because the economy IS the stuff all around us essentially.

Iraq is a good example, the war in iraq actually increased the economic situation of many many companys, as they aquired lucrative contracts and were able to sell goods/work to fill the void of a destroyed Iraqi economy.

In this case, since iraq was previously under economic sanctions (limiting their economy significantly) - the amount of new goods/work introduced (output) outweighted the amount of things destroyed (input).

So sometimes yes, a war can help increase the economic situation, but if the war gets out of hand, and too many things are destroyed, the economic situation is hurt.

Sorry i type so much but this is a wonderful subject and is extremely fun to think/chat about

I don't think any war would be able to 'kickstart' any economy unless you count the economies of the companies and individuals who make the weapons. The average joe smcho on the street will only suffer because his taxes would increase to fund it and he would be told it's for 'national security'.
Joe Public will just accept it anyway because he's been brainwashed to believe that war is for the greater good of the country he's living in, but JP doesnt realise that the world as a whole suffers for anykind of war. Especially these days seeing as most countries have access either legally or not , to nukes.
As soon as a war starts to escalate as especially if the 'bad guy' countries leader is a 'nutter or evil' the country thats losing will fire off a nuke as a deterrent. then everyone will have to fire one off as 'retaliation', then the whole world burns and economies don't really mean anything anymore.

Originally posted by hinky
It would really depend on the war.

If it was a conventional war, outside the USA, parts of the economy would pick up. In military items, replacements would be built for lost equipment. Afterward, a certain amount of rebuilding done by construction companies. Think in terms of WW2, but more players involved in the rebuilding effort. There would be clear winners and losers in contracts.

I wonder what happens if the Dollar would collapse during a world war. Could it be easily replaced by a new currency?

People have been talking about the Amero. Of course you could call that conspiracy crap but I consider it to be partly plausible. The reason being that the US government knows the Dollar will sooner or later collapse. They surely are prepared for that, and a new currency could very well be part of the plan.

How the world economy should look like and more importantly, how the US could benefit the most from that was carefully planned before and during the World War. After the War, the US made billions on aid plans and basically financed the reconstruction of Europe.

Wouldn't it be perfect for the US if a conventional world war would happen en they could thus solve the economic situation?

It would also greatly damage China since it has invested so much into the Dollar.

War will not stop the collapse of the economy. We need to build wealth sending young and creative people out of the country is not helpful to America because those people are more likely to invent something which creates wealth. Creativity not war will pull us up. Americans taking up hobbies like blacksmithing ,bee keeping, metal detecting, wild crafting and barter would do more to grow a microeconomy than sending our creative young people to other countries.

Perhaps not stop. Bear in mind this thread is somewhat older.

Lets change the question into: could it contribute to rebuilding the economy once it has collapsed.

Originally posted by Mdv2
Perhaps not stop. Bear in mind this thread is somewhat older.

Lets change the question into: could it contribute to rebuilding the economy once it has collapsed.

Any War fought now would be for the benefit of the globalists. The globalists are corrupt; they do not build up countries they invade using the American military into more prosperous countries. They just steal the resources of countries which are invaded. All a war would do is enrich the globalists; they could then use their gain to further inpoverish the world and America. For mysterious reasons the globalists, would rather people become poor and miserable than happy and prosperous.