On Oct 25, 9:15 pm, "Ed Huntress" wrote:

Not the spending for war material. It was the deficit spending, including
the investments made in updated manufacturing, and the debt-based income
that suddenly was in the pockets of workers producing war material. The war
material itself was a dead loss in economic terms.

Since the economy doesn't need that kind of stimulus now, and because the
stimulus now is a smaller proportion of GDP, most of what we see from war
production is the part that's a dead loss.



And it is not exactly nonproductive activity. There will be an
increase in demand for building materials which will create jobs.

But the building materials are not creating *growth* in the housing stock.
They're just replacing the stock that was burned. After the buildings are
rebuilt, there will be no net increase in the housing stock. After all of
that money and that work, we will just be back to where we were before the
fire.



I am not advocating creating wars or forest fires to stimulate the
economy, but just noting that they will stimulate the economy, not
create a recession.

If we were in a recession and needed stimulus, it might help. As it is, not.

--
Ed Huntress

Never meant to say it would have a lot of effect, or that we needed
it. Just that it would not tip us into a recession. The effect, if
any, would be the other direction. It reduces the supply of some
things. And therefore tends to increase prices.

You are right in my opinion. It will not have a long term effect.

Dan