Of course Korea and First Gulf War are not here, since they would ruin the author's argument. Cue the chorus of people arguing why Korea and First Gulf are "different."
I don't know if I'm the chorus you're talking about, but they were both much shorter than the ones marked (gulf war 1: 90-91, korea: 50-53). If he shaded those boxes as well to the graph, I don't see it "ruining" his argument. The growth in those four years wasn't exactly spectacular. Very slightly up at best.
The U.S. was only in WWII from 41-45. It was only in WWI from 1917-1918.
Also saying "The war on terror" is kind of misleading since troop levels have varied greatly. To give one example the initial Afghan offensive only involved about 1,300 ground troops. As of 2003 that number was still only at 10,000 (http://www.cbsnews.com/stories/2009/12/01/ap/government/main...)
That's around the same number we had in Somalia (5,300), the '89 Panama invasion (30,000) and several other conflicts. So the fact that the chart starts to level off as of 2001 while these other conflicts don't seem to have made an impact undermines the implied point
Also saying "The war on terror" is kind of misleading since troop levels have varied greatly.
Only if you believe the cause is troop levels. There are lots of things about a war that could be responsible for a correlation that are not directly correlated with number of troops deployed.
The author is contending that armed conflicts have an impact on the economy. I'm offering other conflicts with similar troop levels to disprove that theory. I'd be open to any other factors you think distinguishes the Afghan conflict from these other conflicts but just saying there could be other unnamed factors doesn't further the debate.
Rereading the article, I don't think the author is claiming that at all. The wording of the original yc comment framed the question in terms of whether wars are good or bad or what constituted a war, etc., and that's how we followed, but all the author claims is that wars=inflation and that good dow years follow inflationary spikes.
I would imagine that the only reason why someone would posit this correlation would be to say something on how to view our current situation, and I think he's saying that we've had a bad 10 years (logarithmicly speaking), but once we're out of this war (by him, inflationary) period, things will be great.
I'm not sure if I buy this argument or its implications, but the omission of korea, panama, gulf war 1 and somalia and the inclusion of the GWoT don't "ruin" it for me, at very least.
Thing is, I don't necessarily buy the original authors assertion. It's just that there are lots of other things that could easily have an effect, such as investor mood, government spending tie-ins like growing debt (or debt ratio) and inflation, diversion of investor money from things with higher growth potential into things that have immediate profits, like Xe...
None of those necessarily have a great deal to do with troop strength, but they do all seem to correlate with (some) wars.
They aren't different. There was a post-Korea inflationary period and subsequent recession in 1953-1954 as the Fed restricted monetary policy to quell the inflation:
The trend still holds up, it just wasn't worth mentioning in those cases. I'm more interested in why we got the Great Depression in a period of relative peace.
>I'm more interested in why we got the Great Depression in a period of relative peace.
Speculation. There were very few regulations on the stock market, which led to massive growth across the board. As a result, average people invested their savings in the stock market, because they were all but guaranteed double-digit ROIs. Problem is, stock prices were based on the inflationary pressure of increased investment, not the actual revenues of the companies themselves. When the bubble burst, it hurt everyone. People were worried that their savings would be lost, so they rushed to the banks to withdraw all their money, but the banks didn't have enough to cover their balances, so they shut down. Now, savings weren't insured back then, so when the banks closed their clients lost everything.
As a result of the Great Depression, the government instituted sane financial regulations. Of course, in protecting against busts, they capped growth, so big money types hated them. Thus, neoliberals in the Reagan, Bush (I), Clinton, and Bush (II) administrations systematically removed the regulations that had been put in place to stop serious recessions from happening. There was tremendous growth, then...
This latest recession was entirely foreseeable, and in fact, my friend's grandfather called it. He said in about 2005 that the last time he had seen growth like that, and people generally acting so irresponsibly with their money was right before the Great Depression. In fact, he even called the housing market as the bubble that would pop. I promptly ignored him of course, because he was just some senile old man. Just goes to show, people will only be responsible so long as the pain of their previous irresponsibility is fresh in their minds. When it starts to fade, they get greedy and stupid again.
I think you're missing the post's author's point. He isn't saying "after wars the DJIA goes up", he's saying "after periods of inflation, the DJIA goes up" (see the title of the graph).
Note he still doesn't mention 1929-1933, which seems like a big omission, although it doesn't directly contradict the assertion.
Iraq is definitely a sink hole. But the War in Afghanistan has cost $370 billion which is $200 billion less than Korea (in inflation adjusted dollars).