Reply To: Broken Window Less Fallacious?


The US witnessed a wonderful economic boom after WWII. The key factor being that the government eased economic restrictions, controls and rations. Businesses got to shift from products of war and destruction to capital goods and consumables of value. No longer were tax dollars wasted on war supplies, that money was now part of exchange in the market place. In addition, the return of soldiers provided more labor. When land, labor and capital increase economies expand.

Many people credit the destruction of Europe and east Asia as an opportunity for American business to increase exports and boost the economy. It helped considerably, but it was a bubble. Once the battered regions redeveloped the bubble burst. The FED and the US Government, not wanting to admit this, began their path of artificially low interest rates and attempts to prop up the deflating sectors.