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Free «Economic Problems» Essay Sample


Whether wars in Iraq and Afghanistan are justified from environmental, moral, or political perspectives, the economic consequences of the two wars are undeniably noteworthy. The united state of America has been suffering from effects of these conflicts, and there is great concern arising from large amount of money being used to monthly to finance the conflicts. Financing the wars in Iraq and Afghanistan has negatively affected the U.S economy. There is a lot of money involved in these wars while major problems affecting the economy are left unsettled.

The Middle East has been the most militarized region for a long time in the world. The U.S is the root cause of the current problems. This has led to the bad relationship between the Arabs and American making it a terror target zone (Shah, updated 06 Mar. 2011).

The economic problems

One of the economic problems associated with wars in Iraq and Afghanistan is federal budget. The wars have a negative impact on U.S economy because of their noticeable impact on the federal budget. When the wars started the administration seriously underestimated a huge amount of money that used in the conflict resolution effort. The administration thought the Iraq/Afghanistan conflicts would be very short and inexpensive. The administration believed the result would be democracy in Middle East and have controlled in oil prices.



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The mistaken assessment made the united state spend exceeding 2 trillion dollars. The full consequences of the conflicts on the federal budget are acknowledged because of the procedure the administration has reported its conflict related expenditures. These huge expenses have had an unconstructive impact on the federal budget because the money could have been utilized to solve a range of economic problems, such as infrastructure, education, job creation, and health care. The money that could be used to settle domestic economic problems are spent on the Iraq/Afghanistan conflicts instead (Thiele, Web. 2 July 2010.).

Another economic problem associated with the Iraq/Afghanistan wars is decreased household spending. The wars have cost average citizen to dig deeper into their pockets in order to manage the high living standard caused by unnecessary expenditure. Increased taxes to pay for conflicts spending have led households to reduce the spending on other goods and services. This has adversely affected lifestyle of the citizen. Increase in future taxes reduces aggregate demand. Household spending and economic growth has been negatively affected by these wars.

Iraq/ Afghanistan warfare has also affected prices of imported crude oil, affecting economy. The wars caused oil prices to rise and made them unstable. The hiked interest rates led to decline in business investment and consumer spending. It further caused the slowing of the economy, and plummeting of share prices. In addition, spiking oil prices cause inflation, which is a major problem in the world economy. Iraq produces three percent of the world's oil, Iraq wars has forced oil prices upward, decreasing the willingness and ability of consumer to spend on other items and adversely affecting the U.S economy as a whole. Since the United State government have to incur more expenses on importing oil and on interest payments on outstanding national debt, it has been difficult to balance budgets. This has made the government to try to put back the economy in place; but challenges are overwhelming (Sterngold, Web. 2 July 2010).

The third negative economic impact of the wars is the accumulation of national debts. The conflicts in these regions affect the national debts. The wars were financed through borrowing; this really led to accumulation of the national debts. The huge national deficit has increases interest rates on borrowings as the federal government competes against private sector loaners in the financial market. Due to huge borrowings of the government there is little money left for businesses and household to borrow.

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The debt burden caused by Iraq/afghan conflicts is affecting U.S taxpayers in paying unnecessary governments spending. The debt has led to fiscal priorities being set aside of balance due to irresponsible conflict-related expenditure on wars. The best way the government could reduce the federal fiscal deficit is through stopping financing Iraq wars and uses the fiscal savings to cut deficit. Due to the mistakes of the government the living standard in United State went up, to cope with the standard citizen indulge in criminal activities, prostitution, and other illegal businesses. This has left the society vulnerable and unfit for most of the dwellers. Younger generations are bearing the mistake of the government.


The American economy has suffered and will still suffer due to financing war on terror. Various aspects of the economy are unconstructively affected, including oil prices, household spending, government budget, and national debt. The conflicts became economic disasters and the government is still fighting the implications of the wars. The massive spending on wars will still affect the national debt and if not checked will cause enormous. It is to the country's best interest if the government could have stopped the expenditure on war.

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America has become terrorist targets due to the supposed financial assistance the government gave to Iraq and Afghanistan wars. This is a negative influence since most of the Middle East countries are the major oil producers in the world. Oil is the major economy determinant since everything is attached to oil. When the prices escalate the prices of every commodity is affected thus affecting the economy of a country.


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