As I said in my last article, I don’t expect the current administration will get its desired (my presumption) war with Iran. But there was certainly an attempt to make a mountain out of a molehill just the other day, so… What if we do? Will it “fix” the recession?
I’m doubting it. Here’s the big deal – wars work by pumping a bunch of money into the economy in quasivalid ways, but not so beserk as to lose the ‘trust in money’ that exists. There are events that can trigger that loss of trust. A big one is for necessary goods to spike to huge levels with no ability to ‘grin and bear it.’
The big one is oil. I’ve discussed it before but will say it again. Kicking off a war there kicks demand WAY over supply, plus there’s inevitable panic, and these drive prices skyhigh. At the same time… we’re a commuter nation. Sorry, it’s just the way it is. We can cut back to a point – carpool, etc., but the reality is that we can’t keep doing business or restructure business to cope with that fast a fuel price increase in anything resembling a short timeperiod. Add to it the current ‘war exhaustion’, which means we as a nation aren’t really willing to tolerate the window of sacrifice till restructuring CAN be done. I’m giving a pass on whether enough people will believe the government CAN make the changes for now.
Bottom line – huge demand driven gas spike which drives huge consumer goods price inflation, and the cutbacks in purchases mean that unless additional money flows companies are losing lots of money – which means unemployment galore. I see a flood of money, of course, but at that point we’re chasing hyperinflation.
Let me put it this way. In addition to my earlier actions for recession, I have a hard one planned. If I believe we are going to war with Iran, I am obtaining as much cash as possible (closing accounts everywhere, borrowing as much as I can manage) and converting to gold and silver immediately. I won’t have enough to be ‘fat on the hog’, but it will probably get me and mine through the rough spots. As I’ve time and opportunity I’ll convert that gold/silver/cash to hard goods (see my response to Cassidy in the previous post for more detail there.)