Economy

  The economy is driven by demand. Whatever kind of demand. Whether it is consumer demand or military demand. And it is that demand that fuels the economy. And it is monetary policy that helps us shape demand. By giving consumers the financial means to consume, they help shape the economy towards one where consumer goods are produced to meet consumer demand. Likewise, if we give the military the financial means to consume, the economy is shaped to produce military goods to meet military demand.

  So its not necessarily a question of if we produce too many warships, we wont be able to produce more cars. When you have an economy as massive as China's, what else are you going to do with 550 million tons worth of steel making and 55 million tons of shipbuilding per year? Because industrial output is so massive, millions would find themselves without work if military demand were to evaporate. The production frontier is where it currently stands because there is state demand for goods and services. If state demand were to contract, so would the economy and jobs along with it.

  The second world war did not cause global economies to contract. In contrast it caused, the greatest economic boom ever seen in the 20th century. It effectively ended the Great Depression. Nowadays, whenever we admire a nation's economic growth. We make statements like, the greatest level of economic growth ever seen during peace time. This is because it is still pale compared to economic growth normally seen during war time.