Not Worth A Continental

Nicholas von Hoffman at The Nation talks about war and inflation.

Ask George Washington what he thinks about fighting a war on credit. Back in his day, Congress printed money to pay for the Revolutionary War but neglected to tax anybody to back up this funny money of theirs. The bills were called continentals and in due course they lost all their value, hence the once-popular expression, 'not worth a continental.'

I have been wondering when this issue would heat up. There are no free wars and we will have to pay for this one now or later. Asking America to go to War but not to pay for it was always a deeply irresponsible idea.

Johnson's and Nixon's Vietnam war deficits led directly to the inflation of the 70's peaking with a prime rate for borrowers of 20% on April 2, 1980. Another hidden cost so conveniently overlooked by the neocons is that a lot of war spending creates no return on investment. A billion dollars spent on a factory or a transporation system or a power plant or an environmental project produces returns in the form of goods, productivity, energy or clean air. A billion dollars spent on bombs produces...well, bombs.