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War And U.S. Economy. Essay

1019 words - 4 pages

WAR and U.S. ECONOMYDuring time of war, the economy is expected to strengthen and grow, but under certain circumstances like the ones found in the United States, it can be a different story. There is no doubt that the war with Iraq will create an unstable economy in our country. Positively, a war will certainly encourage and demand many people with unused abilities back to work. I have found in the Gross Domestic Production (GDP) this can be true. This also can carry a huge deficit in real living values that will last for several years. In the future, our nation will be economically worse off.The assumption of many Americans is that an attack on Iraq will help continue what is at this time a pretty weak economy. Without a doubt military action against Iraq will get people off of the unemployment list, but it will not get people to buy goods and services. People might wait that extra week or two to purchase a new car just to see how the economy flows. If this occurs, for example, the cars at the dealership will not be sold at a fast enough rate and then further down the road, people at the manufacturing plants might be laid off. Ultimately, this will sink the economy into a greater recession. However, most people will purchase essential products instead of self fulfilling indulgences, in which money could be saved.A starting aspect for analyzing the economic impact of an attack on Iraq is the Gulf War in 1990. The world at that time was heading into its last recession, making the timing of the war in alliance to the economic cycle very different. The Gulf War came at the end of a boom rather than during the early stages of a recovery. As a result of the Gulf War and Iraq's invasion of Kuwait, oil prices more than doubled. Ever since, Iraq has been giving the U.N. and the United States many problems.Once the Gulf War was over, the price of oil briefly returned to its pre-invasion trading price. This unbalanced rate caused a reasonable amount of economic uncertainty for a short period of time, but in the end there were no long-term damages. Even though this uncertainty didn't take place for a long time, it was damaging to the economy. The U.S. dollar, which had been on a downward drift before the invasion, recovered quickly once victory was to be obtained.In this present situation things are different; the dollar is in more of a vulnerable position. It is definitely weaker, taking into concern the obvious existing account shortage which is more than 3 percent of Gross Domestic Production. This can result in a great instability in the U.S economy. A second major risk is the physical oil supply, rather than the price. The U.S. requires oil for its every day use. This dependency has increased a lot within the last decade.Iraq is such a major oil producer for the US; this war will definitely leave an impact on our economy....

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