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Sunday, October 13, 2013

The War Machine and Debasement of Currency

Many experts believe that engaging in come sort of conflict, war or revolution helps stimulate the economy. A review of Frederic Bastiat's famous "Broken Window Fallacy" addresses this false notion. Typically, conflicts give the power to expand the State to the size it pleases, and it is done at the economic cost of its citizens. If the state can not substantiate that change in growth, it will borrow the money, print new money, or both. When this happens, inflation hits and it devastates the nation.

Here is an excellent article titled, "What Brought on the French Revolution?". This is an example of how the state uses war to expand the French Government, to the dissent of the French Finance Minster, Anne Robert Turgot.



Excerpts from the article: "Turgot argued perceptively that another war with England would derail his reform program, bankrupt the state, and, even if successful, do little to weaken British power."

"Turgot argued perceptively that another war with England would derail his reform program, bankrupt the state, and, even if successful, do little to weaken British power. "The first gunshot will drive the state to bankruptcy," he warned the king. It was to no avail. International power politics and considerations of national prestige took precedence over domestic reform, and the king dismissed him in May 1776. He would be proved right on all three points."

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