We could be living through the early stages of WW3 and a war economy.
A war economy is the organization of a country’s production capacity and distribution during a time of conflict.
The human cost of a war economy can not be overstated.
War is a tragic and senseless loss of human life.
Around 70 to 85 million died in the first mechanized war in WW2, according to World Population Review.
WW2 concluded with the massive destructive power of two nuclear bombs dropped on Hiroshima and Nagasaki killing 200,000 people on 6 and 9 August with much more dying of radiation sickness.
“Around 70 to 85 million died in the first mechanized war in WW2, according to World Population Review”
At the dawn of the nuclear age, a cold war followed as the great powers, the former Soviet Union and its republics, known as the East, and the US and its allies engaged in a nuclear arms race.
The post-WW2 multipolar world saw the two great powers US and Russia accumulating a nuclear arsenal and where the balance of terror capabilities on both sides had fostered peace.
The nuclear revolution was born and it was characterized by decades of peace between the great powers based on mutually assured destruction MAD doctrine.
MAD was so hideous that the great powers would avoid war. Nevertheless, power struggle continued in the form of the cold war and proxy wars, where the great powers fought each other using the hands of others.
The US Empire strives for hegemony with a US dollar-centric world where it sees Washington DC as the world’s capital and other countries as satellites or colonies.
But Russia, which France’s Napoleon and Germany’s Hitler failed to invade and conquer, refuses to orbit around the US, instead, it wants its throne back and is striving for a multi-polar world.
“Russia, which France’s Napoleon and Germany’s Hitler failed to invade and conquer, refuses to orbit around the US, instead, it wants its throne back and is striving for a multi-polar world”
The two great powers are at war over the throne. Bilateral diplomatic relations have collapsed, and WW3 and a war economy are on the stage
There has also been a tit for tat expulsion of US and Russian diplomats. US President Biden has called Russian President Putin a “pure thug” and “war criminal” making it crystal clear that the US isn’t planning to restore diplomacy with Russia, albeit with Putin in the Kremlin.
Asset conviction by both sides is a feature of a war economy
So foreign company assets become the property of the Russian. The US has frozen tens of billions of dollars worth of assets belonging to Russians and their government. The US has also frozen 300 billion of Russia’s foreign currency reserves.
Meanwhile, NATO weapons and intelligence are being utilized to kill Russian forces and high-value Russian military assets in Ukraine. Special forces could probably be active in Ukraine.
Some historians believe WW3 started with the sinking of the Russian warship, the Moskva.
The sinking of warships marked the early stage of world wars, a bloodbath. Britain sinking German ships in Jutland marked the beginning of WW1. Japan sank US ships in Pearl Harbor, WW2.
“IAnyone who would consider interfering from outside: If you do, you will face consequences greater than any you have faced in history” – Putin
The US publicly admitting they provided Intel to Ukraine to sink Moskva could mark the beginning of WW3 and the war economy
The US is also providing $3.4 billion for weapons to keep the war flames burning to weaken Russia, according to US Secretary of Defense Lloyd Austin.
But the Ukrainian outside the Russian sphere of influence is considered an existential threat to Russia.
Great powers go to great lengths to seek nuclear advantages.
Nobel peace prize winner former President Obama spent one trillion US dollars modernizing nukes.
So, it doesn’t matter who sits in the oval office, the US is obsessed with seeking nuclear advantages.
Russia has developed the next generation of missiles, RS-28 Sarmat and nicknamed “Satan II” by NATO. Perhaps the cold war 2 started in 2014 with both great powers in a new nuclear arms race to gain nuclear strategic advantages.
When a great power believes it is facing an existential threat and has exhausted all means to fight a conventional war, the likelihood of a nuclear war is high.
Encroaching a great power’s borders and aiming missiles at them is an existential threat. It invites war, which will almost inevitably end in a nuclear war.
Placing NATO weapons on Russia’s buffer zones, near its border, Ukraine, Finland, and Sweden provides the US with the ultimate nuclear strategic advantage and splendid first-strike capabilities.
The doctrine of peace through MAD is off the table, making Russia vulnerable to a first-strike attack. So arming Ukraine, sharing intelligence, and imposing economic sanctions will not weaken a great power’s willingness to fight, particularly if it believes it is under an existential threat.
The US and allies are not weakening Russia, instead they are merely making nuclear war more likely
“Anyone who would consider interfering from outside: If you do, you will face consequences greater than any you have faced in history,” Putin
So the US admitting that its Intel was a factor leading to the sinking of the Moskva reminds me of the famous one-liner from Dirty Harry, “Go ahead, make my day.”
Empires in their twilight have itchy fingers, and when they feel power slipping away, they go to war.
“GPS satellites could be targeted in space” – Win Investing
So what are the characteristics of a war economy, bearing in mind there is no time for diplomacy or money for peace?
Securing weapon makers’ critical supply chains get priority over resources. Supply chain problems have hit all sides of the defense industry.
Shortages and scarcity, which can lead to a black market, are characteristics of a war economy
Acute labor shortages is another characteristic as the working population is either killed or incapacitated, resulting in a loss of GDP, unless war takes place in another country.
Survivors face psychological costs and mental trauma.
In a War economy logistics business is also impacted
So shipping lanes become hazardous in wartime. Russia’s waters have already been earmarked as high risk by a London marine insurer.
WW3 could be the first star wars
GPS satellites could be targeted in space.
Faced with military losses in Ukraine, the bear could look to the sky, take the fight to the stars and blindfold the bald eagle.
Spy satellites, and military satellites guiding smart weapons, could be targeted by both sides in WW3.
How do central banks react to a wartime economy?
Monetary policy transitions to being accommodative, with more liquidity to support war efforts, and war bonds are issued.