Whenever the signs of an economic weakness emerge, most economic and political commentators declare that the government should increase spending in order to prevent the economy falling into a recession. Economic activity, in this view, consists of a circular flow of money, with one individual’s spending becoming part of the income of another individual. Spending equals income, hence more spending will mean higher incomes.

With the Russian invasion of Ukraine in full force, it seems that while the Ukranians are putting up a fight, longer-term resistance is futile. Russia has already recognized the independence of the embattled eastern states of Donetsk and Luhansk. Donetsk and Luhansk will become Russian puppet states or be absorbed into Russia itself. Ukraine will spend the money of its taxpayers and the blood of its young men fighting a useless war.

Events in Ukraine are happening very fast, and if I tried to predict what will happen there, my prediction would soon be overtaken by events. But one thing is certain. We need to understand the background of the crisis, and we also need to remember the basic principles that should guide American policy.

To understand the background, the best guide is Stephen Cohen, a world-renowned authority on both the Bolsheviks and contemporary Russia. He pointed out in November 2019:

Every self-respecting writer should have a mentor, a character to refer to, a beacon in the night to turn to in times of difficulty or uncertainty. That full stop represents a safe haven from the storm of commas and other uncertain interludes he must battle every day. The basis thanks to which that same writer is able to bear the weight of the situation that torments him/her. That figure, although in most cases is someone with whom you do not have many contacts, embodies a totem, a support structure on which you develop your skills and ameliorate yourself.

As the invasion of Ukraine continues to unfold, those seeking to understand how such a tragedy could come to pass would do well to pick up M.E. Sarotte’s new book Not One Inch: America, Russia, and the Making of Post–Cold War Stalemate.

Adapted from The Skyscraper Curse: And How Austrian Economists Predicted Every Major Economic Crisis of the Last Century.

The Russia-Ukraine crisis is unfolding. With Biden threatening sanctions, what will this mean for domestic monetary policy? With the Fed’s March meeting several weeks away, Fed Governor Christopher J. Waller explained how he expects the year to unfold; starting with the obvious:

Inflation is too high, and I think concerted action is needed to rein it in.

I am sorry to have to report the death of another old friend, Gary North, who passed away a few days after his eightieth birthday. He was by training an economic historian and had a strong commitment to Austrian economics. He greatly admired Mises and Rothbard. He once asked Mises how he had been able to publish his famous article of 1920 on socialist calculation in a journal edited by Max Weber. Mises answered, “Well, I knew him, and I sent it in.” Gary wrote a notable study of Marx, Marx’s Religion of Revolution, and a long and learned commentary on biblical economics.

It was a shock to learn last night that my dear friend Paul Cantor had passed away. He was a great Shakespeare scholar and in Shakespeare’s Rome and Shakespeare’s Roman Trilogy he showed that Shakespeare had a profound knowledge of the reasons for the rise and fall of the Roman Republic. In the book, he compared Shakespeare’s interpretation of Christianity to Nietzsche’s. I had a long message from him on January 5 about this book, discussing a review of it that I planned to write.  He was also a leading authority on popular culture.