Monetary Austerity within Economic War Machine: The Unexpected Lessons of Russia’s Invasion of Ukraine

Military conflict in Ukraine has been transformed into a war of attrition where the effectiveness of the economic war machine is considered to be a competitive edge in this standoff. Russia’s economic tsars designed a wartime economic mechanism that is a unique mix of Keynesian-style fiscal stimuli and monetary austerity measures aimed at countering demand-led inflation. At the same time both struggling countries failed to meet the cornerstone needs of a functioning war economy: a low interest rates environment to fund war efforts, the effective channelling of savings into private investments, etc.