Outrageous Predictions 2023: The War Economy
2022 delivered a profound inflationary shock to the world, one that was brewing from the excessive stimulus of the pandemic response policies of 2020 and 2021, and then doubly aggravated by supply side disruptions and then in early 2022 by Russia’s invasion of Ukraine. As we say farewell to an inflationary annus horribilis, many believe that we are somehow set to return to some form of normality on the heels of a hefty dose of central bank policy tightening. This year’s Outrageous Predictions argue that any belief in a return to the disinflationary pre-pandemic dynamic is impossible because we have entered into a global war economy, with every major power across the world now scrambling to shore up their national security on all fronts, whether in an actual military sense, or due to profound supply-chain, energy and even financial insecurities that have been laid bare by the pandemic experience and Russia’s invasion of Ukraine.