Consequences of the War
The course of American History was drastically changed by the Vietnam War. The American policies on foreign affairs, domestic politics, and cultural and social history were greatly changed by this event.
Cost
Cost of the war: About 550-660 billion (in today’s) dollars over ten years approximately 5.1 billion per month. Defense spending was 9.5% of GDP in 1968, today it’s 4%
Federal Reserve kept interest rates low, then had to raise them dramatically later. Bond yields (federal govt. debt) went from 4.7% in 1960 to 7.65% in 1970.
Federal Reserve kept interest rates low, then had to raise them dramatically later. Bond yields (federal govt. debt) went from 4.7% in 1960 to 7.65% in 1970.
Inflation
Inflation increased from under 2% in early 60s to over 6% in 1969-70.
Prices for ordinary items increased as much as 15% in a year.
In early years of war, unemployment rate fell – 4.5% to 3.5%.
Prices for ordinary items increased as much as 15% in a year.
In early years of war, unemployment rate fell – 4.5% to 3.5%.
Causes of Inflation
Inflation causes money to hurt businesses. Nixon reduced defense spending and raised taxes.
State and local governments scaled back projects because there wasn't enough money. Strikes broke out, some were destructive. .
State and local governments scaled back projects because there wasn't enough money. Strikes broke out, some were destructive. .
Long Term Consequences:
- Inflation grew through the 1970s, did not end until 1983 (other factors were involved after 1973 – e.g. energy prices)
- Growing federal budget deficits until late ’90s.
- Cutback or elimination of most “Great Society” social programs.
- Drastic drop in defense spending.
- Higher unemployment rate and weakened economy
- Problems occurred just as Western Europe and Japan were getting back on their feet and were competing for same markets – e.g. cars, electronics, steel, eventually computers.
By: Sam B