After military spending. Now what?

   Military boosts government spending and government debt. Huge budget deficits mobilize men and women towards a single goal, thus ending unemployment. That debt is normally a government bond that is also in possession by the central government. Since the Central government prints bonds and sells it to itself in exchange for Central Government Bank Notes that the Central Government also prints. Private citizens are free to purchase these bonds too, but it is not necessary since the government can monetize debt.

  The debt created a flood of Central Government Notes in the form of legal tender. And this legal tender fall into the hands of men and women that were greatly employed during the war. Since WW2 did not produce much in consumer goods, most men and women did not have the opportunity to purchase anything during the war. Most likely lived on rations and government welfare. By the time the war ended, families had already accumulated a huge sum of household savings. Something economists referred to as pent up demand. Something that can equivalently be termed as pent up inflation. It needs to be remembered that this household savings is in fact government debt.

  With the war over and the government taking a back seat when it came to directing the economy. Labor and factories that had been geared towards bomb making were now taking orders from a new customer. The consumer. And their pent up legal tender notes helped drive up large levels of consumer production and consumption.

  While the consumer economy did take off. It should be noted that it was not enough to keep employment rates above 99 percent. After the Second World War, unemployment climbed again. It was not until the Korean War, did employment levels begin to gear towards 100 percent. And it fell again once the war ended. Without war demands, the only thing left to drive the economy is consumer spending. And that depends heavily on how much income the consumer actually has. Government can print legal tender out of thin air, unfortunately, the consumer can not. Thus government has the capacity to push employment levels to 100 percent. The consumer does not have that capacity.

  Thus for the most part, employment levels, and economic growth, comes down to monetary policy. It is not much more complicated than that.