Global supply shocks are historically rare events. All the more extraordinary to have two such shocks in quick succession—the second arriving even before the first has entirely faded away. That is what the world now experiences in the form of the Great Pandemic followed by the Great West-Russia economic war. The most visible symptom of the supply disruption is the sky-high price of energy and a range of other commodities.
What Is the Effect of Sanctions?
The waging of a long and all-out military war usually, if not always, exerts a toll in terms of surging prices. But what about economic war waged through Western sanctions by states not simultaneously engaged in direct military conflict? The laboratory of history for such warfare is small. Indeed, there is no experience with which to usefully compare the West’s economic war against Russia in the present. There are grounds to think that there will be serious long-term price-inflation-fueled damage on the perpetrators. (The consequences of price increases for the country on the receiving end of sanctions is a subject for another day).
Brendan Brown is a founding partner of Macro Hedge Advisors (MacroHedgeAdvisors.com) and senior fellow at Hudson Institute. As an international monetary and financial economist, consultant, and author, his roles have included Head of Economic Research at Mitsubishi UFJ Financial Group. He is also a senior fellow of the Mises Institute. He is the co-author, with Philippe Simonnot, of “Europe’s Century of Crises under Dollar Hegemony: A Dialogue on the Global Tyranny of Unsound Money.” His other books include “The Case Against 2 Per Cent Inflation” (2018) and he is publisher of “Monetary Scenarios,” “Euro Crash: How Asset Price Inflation Destroys the Wealth of Nations,” and “The Global Curse of the Federal Reserve: Manifesto for a Second Monetarist Revolution.”
