As the Financial Times has already reported<\/a>, there is growing concern that the US is already running out of weaponry as a result of this conflict. Stockpiles of Tomahawk missiles are already heavily depleted, and there is concern that they may run out and that the capacity of the US Navy will be undermined as a consequence for several years to come.<\/p>\nI make the point for one obvious reason. As modern monetary theory always says, the constraint on activity is never the availability of money. The constraint on action is always the availability of real resources.<\/p>\n
As a matter of fact, the USA can find the money to advance its war. As the creator of the world's reserve currency, we all pay the price for its military folly.<\/p>\n
A bottomless pit of funds is available to Donald Trump to fight this war, but that will be meaningless and only inflationary if there are no weapons for him to buy. Right now, that looks to be the real crisis that he is facing.<\/p>\n
I am not overly amused to discover that an economic truth MMT has long revealed might be so graphically demonstrated by this sequence of events. The lesson does, however, need to be learned. Economic management is all about meeting real needs through the management of real resources within known constraints, including those imposed by the planet. Managing cash flow is always a secondary issue. It only becomes a concern when politicians, deluded about the reality of the economy they manage and the resources available within it, create money to buy resources that do not exist. Then, and only then, will their money creation result in inflation.<\/p>\n
Sometime soon, it looks as if the USA will learn this lesson the hard way. Then, because what happens in the USA tends to be exported worldwide, we will all suffer the consequences. In so many ways, it would have been so much better if the lessons of MMT had been learned in advance.<\/p>\n","protected":false},"excerpt":{"rendered":"
One thing we think we know about war is that governments can always find the money to pay for it. This is one of the
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