ipl-logo

How Did The Cold War Affect The Economy

1000 Words4 Pages

Graham Rasy
Mr. Kramek
History Period 5
6/2/23
American Economy During the Cold War
“But the biggest thing that has happened in the world in my life, in our lives, is this: By the grace of God, America won the Cold War '' (President George H.W. Bush). The United States was deemed to have won the cold war but it came at a big risk. With the fear of communism at hand, the U.S. created new policies to strengthen the government and improve the economy. However, throughout the Cold War, the American economy suffered greatly from many economic problems. These issues were constantly overlooked causing more problems throughout the entity of the country. The inner struggles got to a state where most citizens of the U.S. had to endure complications …show more content…

A high base level of defense spending during the Cold War resulted from global anti-communism(Higgs). Countries around the world were afraid of the spread of communism and so most of them focused on internal issues to prevent the spread of it. Regan amplified defense spending through his terms and as a result, overspending in the government left America in debt and with a broken and unstable economy. “Between 1978 and 1980, real military outlays increased by $15.7 billion, or 10.4 percent; between 1980 and 1987, by $84.4 billion, or 50.7 percent. For the entire nine-year buildup, annual outlays went up by $100.1 billion, or 66.4 percent”(The Cold War Economy). America went through a huge increase in military spending as the Cold War went on costing the U.S. 9 trillion dollars and under Reagan national debt tripled. American military spending also continued to rise with multiple economic regressions. “For the entire Cold War period, 1948-1989, real military purchases accumulated to a total of $7,051 billion—equivalent to nearly $10 trillion in 1992 dollars—averaging $168 billion per year” (The Cold War Economy). With a constant high spending in military and government spending, it shows why the American economy was as bad as it was during the cold war. A large sum of money was used in order to gain power in an attempt to stop the spread of communism throughout the world and …show more content…

Low demand during a recession led to unemployment, cap price increases, and lower inflation(Nielsen). When a recession happened, if unemployment rose then inflation decreased and the other way around. This occurs if demand is low, inflation will lower as well just due to the fact that jobs are not needed to fill out a small need. From the years 1970-1985 Unemployment rose and fell between 4.9% to 10%. 1 ⁄ 5 to 1 ⁄ 4 of the nation could not survive on the income they earned(Naranjo). This mostly had to do with the fact that the economy was high consumption and low-savings. Because of this many people couldn't survive just on their income alone showing how much economic troubles left people in debt and some, poverty stricken. Demand-pull inflation allowed consumers to spend more money, driving up prices. Cost-push inflation resulted in higher prices but consumers were not getting the money they needed. In the mid 1970s, unemployment rose(Rust). Even with the amount of unemployment at its highest, people with jobs still could not compete with the rising inflation. Lots of things were continuing to increase and prices skyrocketed also begetting less jobs on the market for

Show More
Related

Panic Of 1837 Economic Analysis

259 Words | 2 Pages

This resulted out of control inflation where paper money downgrade the value of its worth. Failed to pay close attention and monitor the spending resulted in a semi depression.

Read More

Great Depression Dbq Essay

432 Words | 2 Pages

Which lead people to gain money and mortgages that they couldn’t afford causing steep amounts of debt. With low levels of employment it made it far much more difficult to pay off their debts(Document

Read More

Great Depression Dbq

426 Words | 2 Pages

Inflation, played a role in the crash, “an unwarranted increase in currency and bank credit” (Patterson). Employment is what led to people not able to make payments back to the banks, which in turn made the banks fail. Some people were even taking out their money of the banks which also forced banks to close.

Read More

Cold War Dbq Essay

741 Words | 3 Pages

It states that the defense budget was at its highest in the decades of 1940’,50’, and 1990’. What this shows is that these years were not only times of the Soviet Union and the US being at war but also competing with technical and military advances. So in order for the United States to have higher technology and military it was necessary for the defense budget to increase, however this also caused a decrease in sending for other programs in the United States that could have used this funding as

Read More

Soviet Union Dbq Essay

728 Words | 3 Pages

As on document E it shows The military spending differences between the Soviet Union and the U.S. during 1980. This document shows how much the Soviet Union was spending on their military, The USSR was using 11% of their GNP(Gross National Product) on their military and the U.S. was only using 5% of their GNP. I don’t exactly know why they were trying to build their military up by that much, maybe they thought there would be another great war and were trying to be prepared. .Another example is shown on document f, on this document it talks about how the Soviet Union fires earth satellite into space.

Read More

Great Depression Dbq

931 Words | 4 Pages

Since the money was tied to gold reserve, and the amount of this metal was limited, there occurred a shortage of money, and hence the shortage of effective demand for goods and services. Further, in the chain reaction: a sharp drop in prices for goods (deflation), bankruptcy of enterprises, unemployment, protective duties on imported goods, fall of consumer demand, and a sharp drop in living standards. before the beginning of the Great Depression the rate of the U.S. gold reserve growth was slower than the development of economy. This led to the emergence of hidden inflation, as the government printed new money for the rapid growth of the economy. Thus, as Edsforth states the dollar’s gold supply was undermined, the budget deficit grew, and the Federal Reserve System lowered the discount rate.

Read More

New Look Policy Essay

528 Words | 3 Pages

He claimed that the use of nuclear weapons and the development of new jet bomber technology would save America money as it would reduce the need for people in the armed forces, in addition to reducing the production traditional bombs. As the “New Look” Policy was accepted and the “New Look” Military was developed, by the end of 1961, the United States was producing 51,000 bombs per year and had an arsenal of 22,000 weapons. As the United States was very vocal about the development of new technology, they ultimately hoped that the first message of their new arsenal would deter the Soviet Union. Yet, the emphasis on their new, improved, and cheaper nuclear arsenal, only showed America that these agents of “massive retaliation” were “more bang for their buck” as there was a boost in the American economy. Consequently, Eisenhower achieved one of his goals of reducing the military budget, as defense spending decreased and slowly stabilized to significantly lower amount than his predecessor.

Read More

How Did Ronald Reagan Affect The Economy

1319 Words | 6 Pages

However, Reagan did not decrease health, safety, or environmental regulations at the same rate as the other items that helped defeat inflation. Despite his great successes in decreasing taxes, Reagan was not successful in minifying government spending, and in fact, he actually increased it during the ending of the Cold War. The defense budget was apprized 35 percent when he spoke his illustrious line “Mr. Gorbachev, tear down this wall” (which Gorbachev did, two years later). Additionally, the overall government spending gained 2.5 percent each year that he was

Read More

Cold War DBQ

703 Words | 3 Pages

Effects of Cold War on United States domestic policy and society As World War II got closer to an end, the U.S. and the Soviet Union gained great power, and the competition with these two countries increased in many fields like the development of nuclear technology. However, at the same time, relationships between these two countries deteriorated especially due to the conflict of the ideology which is defined as the Cold War started in 1947 and ended 1991. Both domestic policy and society in the U.S. were greatly affected by the Cold War. However, the effect on American society was mostly negative as the conflicts of citizens due to fear of Communism and effect on normal life show.

Read More

How Did Reagan End The Cold War?

587 Words | 3 Pages

In order to fight such an evil, Reagan went onto the offensive, resulting in an enormous increase in military spending. This strategy depended on the Soviet Union not being able to keep up the pace, and due to economic problems from military spending, financing other communist governments, and

Read More

Was Reagan Responsible For The Cold War

588 Words | 3 Pages

On the other hand, Reagan 's increases in defence spending played a massive role in starting the Second Cold War. In 1982, Reagan increased defence spending by 13%. This was followed by an 8% increase in 1983 and a second 8% increase in 1984. By the end of this period, the USA was spending one trillion USD on defence. This terrified the USSR 's leadership, who feared being surpassed by the USA.

Read More

Government Control Over Business In The 1920's

737 Words | 3 Pages

The government was choosing not to regulate businesses with their hands off policy. Since the government did not have control over businesses they couldn't regulate, wages, prices, or even how much could be produced. The prices of goods were decreasing due to overproduction of goods which lowered income. Due to conspicuous consumption in the economy, people felt as if they didn't need to get jobs or these low incomes were good enough to support their family. By using credit they could buy what they wanted and they felt they needed.

Read More

Cause And Effect Essay On Black Tuesday 1920's

913 Words | 4 Pages

Small farmers could not compete with the new economic climate and were driven out of business. Advances in technology increased production but also caused overproduction of food;however, food demand did not rise with the increased production. With this all adding up, increased food production and farmers without jobs, it only added to the unemployment of the time. (Wall Street Crash of

Read More

Components That Led To The Great Depression

674 Words | 3 Pages

Many banks closed and ultimately led to deflation. Deflation is when there is not enough money in circulation so prices begin to drop. Because of deflation many businesses had to lay off a fair amount of their employees. The United States learned that deflation only made matters worse as the unemployment rate increased substantially as about 15 million people were unemployed in 1932. To make matters worse, the Smoot-Hawley tariff caused exports to decrease and also decreased the number of jobs.

Read More

Cold War Social Impact

1800 Words | 8 Pages

The Cold War lasted forty-four years and left a lasting social impact on the United States. The spread of communism and The Soviet Union left many Americans in a constant state of fear and paranoia. The space race between the United States and The Soviet Union significantly impacted the education system in the United States and the curriculum that was taught for years to come. The social emphasis on gender caused a crisis on American masculinity and feminism by influencing many to assume certain gender roles and feel that they were not masculine enough or too feminine because of their view on communism. The Cold War socially impacted the United States through fear, education, and gender.

Read More

More about How Did The Cold War Affect The Economy

Related Topics

Open Document