Can We “Export Inflation?” Yes We Can, Yes We Are (OfTwoMinds Blog)

Interesting observation:

  • Consider how the price of oil contributed to the collapse of the Soviet Union.
    In the mid-to-late 1980s, the price of oil fell and stayed relatively low for years.
    In 1986, oil fell under $10/barrel. Adjusted for inflation, this was lower than prices paid in the late 1950s.
    Although this ample oil supply was fundamentally a result of super-major oil fields discovered in the 1960s and 1970s coming online, it had a geopolitical consequence few fully appreciate: it pushed the Soviet Union over the fiscal cliff into collapse.
    Oil and natural gas exports were the primary source of the Soviets’ hard cash it needed to buy goods and commodities from other nations.
    Once the oil revenues dried up, the Soviet Union was no longer financially viable.
    Was this lengthy “glut” of oil just good luck for the U.S., or was a policy agreement with Saudi Arabia and other oil exporters that “nudged” the price lower also a factor?

Source: Can We “Export Inflation?” Yes We Can, Yes We Are (OfTwoMinds Blog)

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