The War economy could be contributing to GDP as the Ukrainian war worsened.
The Ukrainian counteroffensive has failed, but regretfully it is not the conclusion to the world’s worst war of this century.
Massive military build-up in NATO countries bordering Russia and geopolitical moves suggest more bloody battles could lie ahead under the ever-increasing mushroom cloud of nuclear war.
If Russia loses the conventional war, nuclear war is likely the final apocalypse chapter.
“A proxy war between two great powers puts humanity on an apocalyptic path to nuclear war,” written in a piece entitled Nuclear War, May 2022.
But despite a dead-end sign warning of nuclear war, both sides are throwing an ever-increasing amount of resources, manpower, and war materials into a wider conventional war leading to inflation and the war economy.
Darren Winters explains, there are three possible scenarios, and two of them point to the doom doorstep of nuclear war.
Scenario 1; NATO mounts a conventional war on Russia,
Russia, depleted of human resources, and fighters, is incapable of mounting a successful counteroffensive, loses the conventional war, fearing an existential threat responds with nuclear weapons.
Scenario 2; NATO’s conventional war on Russia fails due to a lack of war materials and human resources.
Russian troops occupy The Suwalki gap, a logistic chokehold corridor, shared by Poland and Lithuania to choke off the supply of Western arms into the Baltic. The NATO alliance nearing collapse resorts to a nuclear attack on Russia.
Scenario 3; War ends due to one of the great superpowers changing their foreign policy either peacefully or through a civil war military coup.
Fear of Americans spilling blood on European soil changes US public opinion, and the US withdraws NATO forces.
Alternatively, the rising death toll of Russians breaks the pain threshold and the Russian public and military turn on their leader.
So as Darren Winters explains, the Ukrainian war is in the escalating conventional phase, with each side channelling more human resources and war materials into a wider conventional war. The side is willing and able to spill the most blood with plentiful access to war materials, the strategy is to break the other side’s willpower to fight and change its foreign policy.
The superpowers prefer scenario 3, an Empire of ashes and rubble is no victory.
Great powers are locking swords in attrition warfare, a wider conventional war, which will require a transition of the economy into a war economy
Thinking about why the Fed, and its Western-aligned sidekick central banks, ECB, BOE, and BOJ, keep tightening monetary policy with households and businesses already knee deep in austerity.
If inflation is primarily due to the rising input cost of raw materials, then crushing aggregate demand with tighter monetary policy will do little or nothing to reduce inflation. In fact, the best way to reduce cost-push inflation is to increase the supply of raw materials and production.
But tight monetary policy is driving many small businesses with low-profit margins, logistics, and farming into bankruptcy, which is reducing supply and adding to higher prices and household austerity. US bankruptcy filings surge in the first half of 2023.
Moreover, US housing starts and building permits declined, missing the forecast in June.
The cost of credit has skyrocketed, and the cost of servicing a variable mortgage has spiralled to over 50% since the Fed hikes a little more than a year ago. So in the age of central bank-induced austerity, the world’s largest consumers, Americans, are even cutting back on personal hygiene products, toilet paper and toothpaste.
The transition from a civil economy to a war economy is juicing GDP
The civil economy is contracting while the war economy booms.
When states are engaged in warfighting, human resources and materials are channelled into the war economy.
The Dig for Victory campaign, allotments of land, provided by the British government during WW2 to alleviate food shortages, is an example of a wartime economy taking precedence over essentials, even food, during wartime. Textiles diverted for clothing for soldiers took precedence over civilian clothes, Stories of women making dresses from old curtains during wartime Britain are plentiful.
As central bank tightening imposes austerity on the civilian population it is freeing up and transferring resources to the wartime economy
The wartime economy wags MIC’s tail; the military and monetary complex are in on it, backing the USD as a war machine.
Lockheed Martin Reports Second Quarter 2023; Net sales of $16.7 billion, an increase of 8% year-over-year with a Record backlog of $158.0 billion.
BAE Systems 2022 experienced a record Record Order intake of £37.1bn, with sales increased by 4.4% to £23.3bn and dividends increased by 7.6%.
Northrop Grumman’s revenue increased by 9% to $9.6 billion, well ahead of the analyst view of $9.36 billion.
Wartime economy, NATO, needs an enemy
So Russia is an enemy to justify NATO and increasing military budgets.
“The key is for NATO to identify Eastern European sources of manpower provided with NATO technology then used to inflict pain on Russia,” George Soros 1993.
So the West does not care about Ukraine, a metaphoric hand used by the US to fight Russia to cause it pain and possibly gather military intelligence in preparation for a major war.
Wartime economy and alliances
Sweden and Finland accepting NATO weapons near Russia’s border is rattling the Russians.
Meanwhile, Putin offers free grain to six African nations.
The Godfather;” Someday – and that day may never come – I’ll call upon you to do a service for me. But until that day, accept this justice as a gift on my daughter’s wedding day.”
Russia’s untapped source of manpower to fight a conventional war; Africa.
The bloodiest conventional war in history could be dead ahead.
Steer clear of Europe.