The current war between Russia and Ukraine, while still concerning, seems to be dying down. The support that the majority of the world gives Ukraine causes Russia to falter, however their nuclear weapons also pose a threat to humanity itself. As of now, the US is likely to stay out of it and defeat will arrive at Russia’s doorstep, but what would war do to the US economy? Observing the examples following the end of previous wars, it can be determined that war causes inflation, a very concerning topic that involves the decrease of value within a form of currency, most commonly reflected by the increase in prices of goods and services in that economy. This is a very natural occurrence and happens nearly every year, but why is it so substantial after war?
Inflation happens after war for many reasons. A very prominent one is an increase in population after a war. The term “baby boom” refers to an increase in births, and this typically takes place after a war because all the soldiers are coming home to their wives, and because they spent so long waiting for each other, they decide to have a child to attempt to bring them closer together and catch up after the months, or possibly years, or being apart. This could be seen especially after World War II, which had such a significant baby boom the generation born at the time was literally deemed baby boomers. World War II, according to the analytics from the Bureau of Labor Statistics, was the largest spike of inflation the US has seen since the war, with a 20% increase of inflation in 1946, a year after it ended, and thus most likely when the children were born. Inflation is also seen after the Korean war, the Vietnam war, and the war in Iraq during the late 90s.
Another reason inflation occurs is due to the lack of a resource in an economy. During a war, many metals, minerals, and natural resources are harvested and used in the construction of weapons for the soldiers. There are so many things that soldiers need in order to fight in a war, and because of that more money and more resources need to be consumed in order to provide them with it. This in turn causes the supply and demand chain to be overloaded, due to the constant need of production. When this occurs, the demand for those resources becomes high, the supply becomes low due to the mass harvesting of them, therefore increasing the cost of both the gathering and production of these materials.
So how is inflation prevented after a war, since it seems like the effects don’t kick in until after the war ends. While the answer is quite simple, it is also very difficult to enforce, and also very risky. It is impractical, and slightly illegal, to prevent a baby boom as this would implicate that intercourse after war is not allowed. This restriction of freedom is not something that anyone in the general public would oppose, as it would go for everyone, which would also hurt the part of the economy surrounding pregnancies and newborn babies. So the only other way to prevent inflation is to reduce the amount of materials we harvest and consume in order to create weapons, ships, planes, and ammunition. While we might not need to produce as much as we needed to during World War II due to the scale of the war and the allies we would have, the restricting of resource gathering might pose a threat to the current already limited economy. Despite this, it is important to do what we can to prevent a large increase in inflation, especially because the current raise in gas prices already comes as a huge blow to the economy. Some day in the future $6 for a gallon of gas may be normal, it’s up to us to determine how close it will be.
The Cougar Connection 