A Global Recession
World War I and World War II were very different from each other, but they had one striking similarity. Prior to each war, economic recessions hit several of the countries involved. World War II famously brought most of the world’s economies back from the Great Depression, and World War I helped the US recover from a two-year recession that had already slowed trade by 20 percent. Correlation doesn’t imply causation, but it’s worth noting which economies recovered earlier than others, which may have had a huge impact on the way things turned out.By 1933, Japan had taken moves to devalue its currency, which led to increased exports and a resulting growth in their economy. They pumped the extra money into weapons and munitions, which gave them a decided military advantage in the years leading up to the war. Germany, on the other hand, entirely crashed, which made the Nazi and Communist parties take similar steps and earn overwhelming support among the populace. We’re seeing some similarities today. While analysts are predicting yet another economic meltdown for Western countries, countries like Iran and Russia are looking to band together to boost their economies. Among other effects, that could lead to a second unit on Iran’s nuclear plant; Germany’s massive internal spending in the 1930s pulled it out of the Depression faster than America or the rest of Europe. And the global recession hit Russia less than much of the rest of the world, due in part to its exports of a quarter of the natural gas used by the entire European continent And then there’s China. The US government is close to $17 trillion in debt, and China owns seven percent of that, or about $1.19 trillion. China recently flew past Japan to become the world’s second largest economy, and if it keeps growing at this rate, its GDP is going to match America’s in about eight years. The risk is if China decides to dump the US debt. China would take a financial loss, but it could be a crippling blow to the US economy—and much of the world, since the US dollar is held in reserve by most foreign governments. If China and the US do come to blows over the South China Sea, the US could eradicate the debt and pump the extra revenue into military spending—the exact same monetary flow that happened in World War II, only this time the guns are bigger. But don’t worry, it won’t happen. Probably.
World War I and World War II were very different from each other, but they had one striking similarity. Prior to each war, economic recessions hit several of the countries involved. World War II famously brought most of the world’s economies back from the Great Depression, and World War I helped the US recover from a two-year recession that had already slowed trade by 20 percent. Correlation doesn’t imply causation, but it’s worth noting which economies recovered earlier than others, which may have had a huge impact on the way things turned out.By 1933, Japan had taken moves to devalue its currency, which led to increased exports and a resulting growth in their economy. They pumped the extra money into weapons and munitions, which gave them a decided military advantage in the years leading up to the war. Germany, on the other hand, entirely crashed, which made the Nazi and Communist parties take similar steps and earn overwhelming support among the populace. We’re seeing some similarities today. While analysts are predicting yet another economic meltdown for Western countries, countries like Iran and Russia are looking to band together to boost their economies. Among other effects, that could lead to a second unit on Iran’s nuclear plant; Germany’s massive internal spending in the 1930s pulled it out of the Depression faster than America or the rest of Europe. And the global recession hit Russia less than much of the rest of the world, due in part to its exports of a quarter of the natural gas used by the entire European continent And then there’s China. The US government is close to $17 trillion in debt, and China owns seven percent of that, or about $1.19 trillion. China recently flew past Japan to become the world’s second largest economy, and if it keeps growing at this rate, its GDP is going to match America’s in about eight years. The risk is if China decides to dump the US debt. China would take a financial loss, but it could be a crippling blow to the US economy—and much of the world, since the US dollar is held in reserve by most foreign governments. If China and the US do come to blows over the South China Sea, the US could eradicate the debt and pump the extra revenue into military spending—the exact same monetary flow that happened in World War II, only this time the guns are bigger. But don’t worry, it won’t happen. Probably.
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