Cold War II & Your Wealth

The second phase of the Cold War between the democratic and the authoritarian blocs will result in elevated inflation. Here’s how to protect your wealth.

- Saurabh Mukherjea

Over the past five years, we have grown accustomed to China and America squaring off on trade restrictions and COVID-19, even as the Americans had grown habituated to the Russians meddling in American elections. With Russia’s assault on Ukraine, these smouldering hostilities have now been escalated to what is effectively Cold War II. The sanctions on Russia which have followed the assault on Ukraine and China’s unwavering support for Russia in the midst of all this are likely to reverse much of the globalisation dynamic which was set in motion after the fall of the Berlin Wall in 1989. As Francis Fukuyama says in ‘The Financial Times’, “The horrific Russian invasion of Ukraine on February 24 has been seen as a critical turning point in world history. Many have said that it definitively marks the end of the post-cold war era, a rollback of the “Europe whole and free” that we thought emerged after 1991, or indeed, the end of The End of History.” (https://on.ft.com/3O9nyjb)

For several centuries now, Russia and China have been authoritarian countries with strong centrally run states and with little or no tradition of democracy. The two power structures are a legacy of how history has played out for them.