Do wars create wealth? aka, How did WWII help to end the Depression?

[mheslep]

Obviously nobody would loan us $7 trillion...I wonder how long it would take to print $7trillion worth of $20 bills?

42.618 years non stop, if BEP only printed $20s

 

[WhoWee]

42.618 years non stop, if BEP only printed $20s

Did you do that in your head?

I think we can spend it faster than that...we better either print $100's or write checks.

 

[mheslep]

Did you do that in your head?

Nah, fingers and toes.

 

[Gokul43201]

Didn't we benefit from providing supplies to OTHER countries BEFORE Pearl Harbor.

There may have been some small benefit from that but overall very little money (as a fraction of GDP) went into supplying anyone before PH, and (don't forget that the Export Control Act shut off most trade with Japan). Export receipts increased from about 5% to about 6% in the late '30s and stayed there till '41, when it shot up above 10%.

http://www.freetrade.org/files/images/Exports%20and%20Imports%20as%20a%20share%20of%20GDP,%201900-2006.bmp

http://www.freetrade.org/node/679

 

[Skyhunter]

I meant that rhetorically, in that its a question that's difficult to answer, but not to be overlooked when considering government deficit spending to create jobs.

I understand. I was just being cheeky

 

[chemisttree]

In attachment (when it becomes visible), the first vertical line indicates the approximate timing of the New Deal, and the second roughly marks Pearl Harbor. Unemployment rates were down below 10% - from a high of 25% - before the US declared war on Japan.

The war started in 1939. The decline in the unemployment reflects that almost exactly.
Remember, the US was the "Arsenal of Democracy" before we entered the war.

 

[Skyhunter]

The war started in 1939. The decline in the unemployment reflects that almost exactly.

No it does not.

Unemployment declined until 1937. It climbed in 38 and 39, then began declining again in 1940.

http://fraser.stlouisfed.org/docs/MeltzerPDFs/maremp93.pdf

 

[tormund]

During WWII, most of the men went to war. this opened up many new opportunities for women to get jobs. After the war, when the men returned home, a lot of the women were still able to keep their jobs. This meant more income tax for the government(big surprise there) and thus ended the depression.

 

[Gokul43201]

The war started in 1939. The decline in the unemployment reflects that almost exactly.

Actually, unemployment started declining from '34.

Remember, the US was the "Arsenal of Democracy" before we entered the war.

The weapons embargoes were lifted only in Nov 1939, after which Detroit (and others) got into it big time. But, barring 1938, unemployment rates had fallen every year from 1934. The war effort likely sped up the falling unemployment numbers, but even that really took off only after cash and carry was replaced by the lend lease (approximate names) Act.

http://www.census.gov/statab/hist/HS-29.pdf