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The extraordinary story of Britain’s efforts to finance the First World War
- brudgers 9y agoNiall Ferguson's Pity of War: Explaining World War I describes the finances of the participants in great detail. It's a fascinating read.
- justinv 9y agoSimilarly, Liaquat Ahamed's Lords of Finance is a great read about finances from World War I to the Great Depression.
- gwern 9y agoTruth and freedom tend to be the first casualties of war.
- an_account 9y agoIt makes sense to hide the truth. Deceiving the enemy is a very important tactic of war.
- D-Coder 9y agoDeceiving the citizens is also a very important tactic of war.
- MichaelBurge 9y ago> As the war unfolded, ministers were pilloried for rewarding investors far too generously for surrendering capital which should have been sacrificed gladly as a matter of patriotic principle Interesting how much harder it was for the government to get money back then. Wikipedia seems to say that WW2 cost the equivalent of $4.5 trillion, while the Iraq war is about $2.4 trillion. The Gold Standard seemed to have caused trouble with wars: WW2 had to temporarily suspend gold trading, and it was canceled entirely around Vietnam. Now we can spend trillions with it causing hardly any day-to-day trouble: A blessing when needed, and a curse when not.
- hammock 9y agoHow has it been a curse so far?
- notfromhere 9y agoQuantitative easing has inflated asset prices. Downside is things like gold standards are a huge boon for asset holders and sucks for everyone else
- hammock 9y agoQE would be good for asset holders then...? And gold standard would hold down asset prices. Not sure you're making sense
- notfromhere 9y agoQE is good for asset holders as long as there is no inflation in wages to match asset bubbles. Gold standard tends to cause deflation, which is bad for debtors. I was talking about it from a inflationary perspective. QE didn't lead to inflation in the US example because of the way it was carried out.
- hammock 9y agoAnd wages are not inflating (relative to assets)...so I still don't get how you think QE has been bad for asset holders to date.
- danieltillett 9y agoThe economy is much larger today than back in the 1940s. My memory is something like 40% of the US economy was devoted to the war effort in WWII, while it would have been a couple of percent at most for the Iraq war.
- cat199 9y ago
- byron_fast 9y agoYou have to wonder what is currently unknown today.
- RobertoG 9y agoI don't understand how you can write an article like this without any mention to the gold standard. With a floating Pound the problem of financing disappear as happened later in the Second World War. Note that they would be forced to tax heavily and emit bonds in order to retire money from the economy and avoid inflation, but it would not be a problem of 'where to get the money'. In times of war, the veil disappear and it becomes clear that the important thing is how much the economy can really produce, not how much money the country has.
- neilwilson 9y agoA good comment. You don't necessarily have to tax. Saving acts like taxation, and a £10 note is just a permanent zero interest bearer bond. Ultimately if you can't buy anything (rationing) or do anything (planning) then all you can do is pile up the money as savings.
- arca_vorago 9y agoAll sides of it too!