Taxes, Deficits and War: the History Lessons explains that our current regime is far from the first to pay for a war through borrowing (rather than an immediate tax hike):
America finances wars through borrowing. So does virtually every other modern nation. In fact, our modern financial markets were born in the various open-air auctions at which the debt instruments of warring nations were traded. Nations that were expected to lose wars had their bonds discounted by the marketplace and vice versa. Powerful banking interests such as the Rothschilds became very adept at quickly ascertaining real-time war news and using it to receive an edge in the marketplace. Debt in times of war is not an unusual aberration; it is universal.
Some financial insight:
As during the era of the Rothschilds, the danger signal is not that borrowing occurs, but that the marketplace begins to worry whether economic weakness or military defeat will harm the borrower’s ability to repay. This can occur either in the form of outright default for the vanquished party or in the form of repayment in a debauched currency for the overstretched. What is the international marketplace saying about our borrowing? High degrees of confidence have caused them to lend to us at roughly 4%, the lowest rates in four decades.
Should we worry about passing along debt to our children? Not really:
Ronald Reagan ended a multi-generational threat through his military build-up in the 1980s. Soviet missiles are not pointed at us any longer. The collapse of the Soviets freed up enormous resources (remember the peace dividend?) which helped lay the foundation for the growth of the ’90s. The generation following WWII reaped enormous benefits from the defeat of the Nazis. The generation following the demise of the Cold War reaped similar benefits from the demise of the Soviets.