War Economy Chapter 14: Volatility Explained – Why Prices Swing Wildly in Wartime
War turns “normal” price behaviour upside down. Oil, food, shipping, and currencies can spike or crash within days as supply lines break, sanctions bite, and governments scramble to fund military spending. At the same time, some equity markets and defence-linked sectors stabilise or even rally because investors suddenly view government contracts as guaranteed cashflow. This chapter unpacks those moving parts—supply shocks, demand shifts, money printing, sanctions, safe‑haven flows, and the famous “war puzzle”—to explain why prices don’t just move a lot in wartime, they move differently than they do in peacetime.
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