There’s this not often talked about connection where inflation and war tend to fuel one another.
When there’s war, spending goes up. To handle deficits, governments start printing more money, which then leads to inflation.
People end up struggling financially, and that just adds to political instability.
And guess what? That political instability can spark new geopolitical issues, which basically starts the whole cycle over again!
You are correct OP. Wars do increase inflation as government prints more money for that. Well, only one country does that. But no need to call names now. For other countries, inflation might not necessarily be caused by war. There are other factors like high production costs, rising fuel prices, import dependence, poor economic policies, and currency devaluation like Nigeria and some other African countries.
At the end of the day, the citizens are the ones to carry that burden. That's why you won't blame the citizens who are looking for an alternative to secure the little money they have by buying digital assets like Bitcoin.
There is nothing here that is rarely discussed, inflation, war, political instability, geopolitical tensions are very discussed issues.
War causes tension, tension on government spending, it causes poverty to masses, breaks international relationships.
For example the US and Iran war is concluding and many of what could be giving to Iran are something if proposed would have averted the war.
It's easy for the two to influence each other because the government themselves are fully aware and conscious of it, I might even go as far as saying they allow it happen on purpose for either personal or political reasons. And just like you says it is a perfect loop that keeps running even for generations to come because the way it is designed, the scheme benefits who ever sits in that power and that even why they sometimes purposely crash the system, so they can put someone they know and control in power for them, its just a full circle indeed man, at least that's what I believe.
It's not only war, but pandemic too. Government need to print more to cover more spending, as a result is an inflation. From graph above, wildest inflation that happened recently is around start of covid until WHO announced end of covid public health emergency.
In the world war II the US money supply is doubled, might be doubled again with the recent Iran war. Political instability and war is never good if you care enough about economic stability that could grow your capital. Your stock might rise but the inflation eat some portion of it.
Honestly saying it's easy to suspect hidden motives when people still sees the same issues or problems repeats itself all over again. But in many cases,political instability and economic crisis can happen because of poor decision, competing interests and mismanagement, and not necessarily because a single group intentionally orchestrated or arranged everything. What do matters more is to look at the evidence behind every situation. Because most times reality can be less coordinated than how people think, even if the consequences on ordinary people are still very much real
I think the biggest loss is to the common people. A few people decide to go to war but the whole society has to bear the pressure of inflation, job insecurity, and the rising cost of living. This pressure breaks people not only economically, but also mentally. Over time, social trust decreases, and a kind of uncertainty in daily life becomes permanent and at the same time future plans become blurred for many because no one can understand exactly when and how the situation will change. Ultimately, this uncertainty affects from generation to generation which also gradually weakens the stability of society. The saddest part of this whole situation is that the common people often do not realize how these changes in their lives are the result of major political and economic decisions.
War causes inflation, but inflation doesn't cause war on most occasions, and let me tell you why. When there is war, the inflation keeps increasing because import and export becomes a problem, and when there is not enough import, the prices of goods increase drastically, and this mostly affects the lower classes, who earn less money, and when inflation rises, they start to face the most problems because they can't afford to buy the goods they used to buy before, but they can't do anything other than bearing the hardships, they can't start wars or stand against the system because they don't have enough power to do that.
War requires resources, man power, and most importantly leadership, and those who spend all their lives struggling to provide for their family can't go into war because they can't afford to do that, and those who are well-off, have enough money saved and also earn enough money, they don't go against the system or even raise their voice. And, when there is inflation and economic instability in a country, people might raise their voice against the government, do protests and everything, but that doesn't initiate wars, it might create civil problems.
When there is war, we automatically have unstable economy activity and some will definitely be taken advantage of this as against others, this is where the role of inflation set in and those that are majorly affected at the poor, while even after the war, the price is seems not to come down because of the catastrophe the incidence of war has created over the economy, it is why we often have increasing inflation rate and this is affecting the way the traditional economy operates, because the value of money reduces as a result of increasing inflation.
It's because wars disrupt the supply chains and production for starter. Commodity prices are bound to get affected (increase) one way or the other and all that compounds to inflation. As for inflation leading to war, I think it depends on the political nature of the country. Take an example of the US. When was the last time they had political instability due to inflation?
The Citizens simple vote out the incompetent lead and hope the next one does better. No wars in this case.
In most cases it does not initiate war, but it can make things bad in the country.
If prices are out of control and people are unable to purchase, if government is weak and cannot control basic life, then unrest may begin, and sometimes a coup or civil conflict.
Well, it's not the usual case of inflation causing interstate war, but it can certainly cause a country to become chaotic and violent. It's more of a matter of making the fire bigger, not necessarily lighting it first...
It doesn't seem that curious when you give it just a little thought. In a world of globalization we are easily affected by things happening on the other side of the world. Retailers are in hyper competition these days because purchasing and supply chains are super efficient. Each product can be driven down to the lowest possible price, if it's produced in China and shipped in bulk via container ships. However if the oil supply suddenly dries up or a key transport route across the ocean is blocked, then it can cause massive changes to that logistics chain and they take a while to work through but create added costs. That filters through to almost everything we do and certain regions are more sensitive than others to causing these shocks.
There is always inflation. War can accelerate inflation. Political instability usually occurs in the event of defeat in a war. In the event of a victory, no inflation in the winning country can cause political upheaval. On the contrary, victory always solves domestic political problems. But defeat can create such problems even if there were no problems at first. Defeat always ends with a loss of power because there is a loss of legitimacy.
We cannot deny the relationship between war and inflation, where there is war there will be less productions and a lot of money will be chasing very few products which will increase prices drastically and as there are lots of money that is pursuing the products such a currency will devalue. We can say that inflation would be inevitable in such an economy because a bottle of soft drink will cost up to 10 times it's normal price and people would fight to pay for it because they have the cash and it is a scarce commodity.
If a government that is in a war situation decides that their way forward is to print more money then their currency will become 'toilet paper, the inflation would hit to a very high level because there will be excess money in supply that will not match the low production of goods. The best option for a government in a ware is to regulate prices of commodities and have subsidies for some goods and services.
In these era, agreed that inflation can lead to war, but many of these issues are started from political issues instead of the inflation itself. When we are only a common citizen that works daily for company, it is truly impacted for one bottle of soft drinks price rises and we still buy it and will make us poorer than ever. If the inflation started from the US itself, it truly would make it hard for the other small and developing countries to gain business. Impacted also to the export imports in the industry, the political prohibitions will make it more difficult to deal with.
Wondering if there is a stable world situation right now, will this is whether make the economics growth or not. Because still many people are greedy and felt never enough for what they had, is it only war that impacted the inflation itself or maybe the peoples mindset lead the greediness and making the economic instability? Maybe not only war impacted to inflation, isnt it?
There are many causes of inflation, war is not the main cause of inflation. Inflation is usually caused by epidemics, natural disasters, internal instability, corruption, decline in production, geopolitical instability and war. Inflation does not create a cycle with war, rather there are many causes of inflation. Even inflation does not cause war.
Wars are waged by those rich countries that have a lot of money and control inflation. Those who are the victims of this inflation are regularly exploited. The cause of war is usually due to looting the resources of other countries, for the benefit of political parties, religious riots and attacks on sovereignty.
The U.S is a perfect example of a democratic country where the voice of the citizens is heard mostly when it concerns leadership and governance. Perhaps they learnt well from previous spending on the Vietnam war and how the decoupling of gold from the dollar came to be.
Maybe this is one reason also why countries these days prefer geopolitical economic wars like raising of interest rates and tariffs instead of just starting wars and suffering or having a repeat of inflation and economic hardship that comes with it.
When money is treated right, it would ensure there is global peace and economic growth otherwise we know what happens when it's used as a means to perpetuate crime, corruption or fund wars.
I agree with you that there is always inflation. But in the case of war it accelerate. But now I have learnt one more thing and that is if war is going on in somewhere else it will also accelerate the inflation in your own country. We all experienced this type of inflation during Iran and US conflict. Especially if it is the case of under developed countries then situation could be worse. Because of higher dependency on the imports disturb the economy. World is now interconnected each other, disturbance or disastrous in one country can impact thousands miles away.
Well it's not that rarely discussed and in fact quite a common talking point in most political news sites, so maybe broaden your news source intake if you're not seeing it. Trump starting a hopeless war with Iran has caused massive inflation in America and most other countries too. Fuel prices on gas and diesel jumped by 20-30% as a direct result of this in many places, which also feeds through into the p ices or everything else going up. We are not even out of the woods yet in terms of settling back into peace again without any tariffs, and on top of that it can take 3-6 months for prices to normalize again. However most businesses are quick to raise prices, but will try to hold on to more profit and rarely reduce prices as their costs come back down.
War especially would create inflation because its so destructive, even if you win the war. In a global marketplace if you now destroy a market for your goods and export relationship for your nations industry you have shot yourself in the foot in any case.
War makes less sense then ever in the modern context, you have to be absolutely sure there is no better path and this is a total enemy with no interest in your nations economy. Even Russia, China probably every country has some involvement in USD at some level of commerce so its become nonsense to start a war most often.