Aftermath: The Economy Is Propped Up by Government Spending

[Celerity]

In today’s edition, we highlight an underdiscussed reason why damage from the war hasn’t eaten the U.S. economy: fiscal stimulus.

https://prospect.org/2026/06/12/aftermath-economy-propped-up-by-government-spending/



Are We Still at War?

As of the beginning of this week, the president of the United States has stated on 37 separate occasions that we were just about ready to sign a deal to end the war. That’s 37 different times the markets reacted by boosting stocks and lowering oil prices, 37 different times that investors breathed sighs of relief, and likely 37 different times that cronies of the president who knew he was blowing smoke got to take profits.

We haven’t totally dispensed with this tomfoolery; statement number 38 came on Thursday afternoon, with claims that deal points had been “approved by all parties.” But the man who found negotiations on a cease-fire “very boring” has spent the past two days attacking Iran with Tomahawk missiles, and receiving fire back in response. We are now “negotiating with bombs,” in the parlance of Pete Hegseth. The latest is that President Trump has threatened a seizure of Kharg Island, Iran’s primary oil export terminal, which could only be done with ground troops.

Trump can’t negotiate an end to the war because the outcome will reveal that he lost. Everyone knows that a framework deal to free up frozen assets in exchange for opening the Strait of Hormuz trades something we already had (open seas) for something Iran wants (unfrozen assets). Trump blathered about “pallets of cash” given to Iran under Barack Obama, and he can’t give Iran pallets of cash now to get out of his mistake. So here come the bombs.

Airstrikes failed to bend Iran’s will before, and I feel confident saying that none will work now. If the president wants to put American troops in harm’s way during an unpopular war with scant popular support, I’d say that Republican Hill staff should start polishing their résumés.

The Trump Stimulus......

snip

[snot]

1. Exactly.

As I understand, Nixon took the dollar off the gold standard in 1971 at least partly in order to make it easier to fund the Viet Nam war; and the dollar's lost value at accelerated rates ever since as we've involved ourselves in one unsuccessful war after another, paying for them by printing too many unbacked dollars, diluting the currency and its value.

[ProfessorGAC]

2. Same Thing As Reagan

The economic growth in the 80s was preponderantly driven by borrowed money & massive defense spending.
That's why Bush 1 got saddled with a recession that required tax raises to drive government revenues which made recession worse.
The Failure has been living like a king off leverage his whole adult life. He thinks this is the way to do it, but unlike him, these borrowing have to be paid back.