Even the most cursory reading of world history will make one fact crystal clear: war is expensive; very, very, very expensive. In fact, it’s the most expensive thing a country will ever do. Historically, most countries that engage in large scale war eventually bankrupt themselves in the process and are forced to stop. Take the war of 1812 as an example. The U.S. was forced to sell $69 million in public bonds to finance that war. It took almost 25 years to pay off that debt – just from one large scale war. It was this debt load issued through the Bank of the United States and all of the shenanigans that followed it that directly led to the panic of 1819, as I’ve discussed here before.

The Mexican-American war in 1846 again forced the issuing of $63 million of public bonds. That was roughly equivalent to the entire federal budget. They hadn’t even made a dent in it. And, of course, all of this public debt issuance led directly to another bubble/banking panic known as the Panic of 1857. By the time the War for Southern Independence rolled around in 1860, that debt was still hanging around.

It’s also a fact of history that Napoleon sold Thomas Jefferson the Louisiana territory (Louisiana Purchase) to fund his war with England. That should demonstrate the amount of cash needed to fight a large war. He was willing to sell us almost an entire fifth of the North American continent in order to get enough gold to fight the British. And, this isn’t atypical. It’s entirely normal. As I said, war is really, really, really expensive. The cost of sending thousands of men and machinery across the globe to fight a war is just enormous.

All of this leads to the real issue I want to address. How is it then, that the United States apparently can continue to wage war multiple times per decade in seemingly endless fashion and not have any trouble paying for it? One answer: inflation. Massive, massive inflation. That’s the only way that this type of thing is possible. Robert Higgs calls inflation “death fuel” for this very reason. The only way to make war affordable for a country is to inflate it’s currency through debt creation, which then gets monetized by the Fed. That debt then goes to fund military endeavors quickly, before the money has lost it’s buying power. In this way, we are funding war by lowering our purchasing power on a daily basis. At least the selling of war bonds is an up-front way of accounting for the costs of war. Funding it through inflation is more insidious, since nobody sees it happening. It makes killing seem “free.”

Think inflation isn’t driving war? Take these figures:

• The first gulf war cost about $61 billion.
• The Iraq war currently stands at $700 billion.
• Afghanistan is currently at around $200 billion.

I’d say that those numbers show some serious inflation happening. When your government can spend almost a trillion dollars on something and you don’t even notice it economically, you can bet that there are some major inflationary games going on. Just for perspective, by the time we conclude the Iraq and Afghanistan wars(if we ever do), we will have spent more on them than the entire balance of the Social Security Trust Fund(if there was one). That means that we spent more in 10 years than the balance of a program that has been accumulating money since F.D.R was president. That, my friends, is inflation. Also, known as death fuel.