war is negative sum game

Fed dropped its previous warnings about the global financial and economic crisis, this act calms the markets, but also raises the question of whether the Fed decides to raise rates in December or not. Previously I predict that the Fed will raise rates in December, now I will hold onto my prediction. As my last blog mentions, the challenge will come after the major countries annouce their 2015 GDP growth rate. My prediction is based on the current economic affairs, excluding the political conflicts between countries, especially wars. I here want to discuss wars in an economics way. War is a zero-sum game, or even negative-sum game. Wars push countries to produce at their maximum capability, even produce a quantity that is out of their production possibility frontier by issuing huge amount of government bonds. If one country loses its war, the resources it used for the war are wasted, the damage caused by wars shrinks the country's production possibility frontier, and the defeated country will be forced to pay the losses of the winner, sometimes overpay the losses. The resources used in the war usually do not add onto the post war economy. And when the scale of war is very big, the winners will find that the defeated countries just have no ability to pay back their losses in the war. The two World Wars are very clear examples that winners and losers are eventually losers and the spectating countries are the true winners.