Atul Singh | Fair Observer

Even as The Economist is writing about “the coming food catastrophe,” the Bank of England Governor Andrew Bailey is admitting to be unable to stop UK inflation hitting 10%, and the US Bureau of Labor Statistics is recording 8.3% inflation for April, [it is important to dig deeper] to make sense of what to expect in the global economy.

The consequences are disastrous. The war could not have come at a worse time. We had a global financial crisis in 2007-08. After that, central banks followed loose monetary policy with quantitative easing. And then of course governments had to be fiscally loose to combat a pandemic.

Now, the war gives a supply-side shock, which means energy economics is back, food economics is back, and of course, commodities economics is back.

Energy economics? Very simply, the price of oil and gas has shot up. Inflation is ripping through the world and even rich countries are suffering.

Food? Well, we read in The Economist, no less, about an impending food catastrophe — 250 million people are at risk of famine.

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Commodities? Russia is the biggest exporter of natural gas, the second biggest of oil and the third biggest of coal. About 25% of battery-grade nickel comes from Russia. In fact, 50% of USA’s uranium imports come from Russia and this is not to mention copper and palladium and whatnot.

So, there’s a real supply-side shock of monumental proportions. Add to that ships not leaving the Black Sea, and you can see this is going to end very badly.

It will be people who........

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