For decades, governments relied on market mechanisms to allocate commodities. But now, energy markets have become theaters of economic war, and governments are being forced to play a larger role.
The inflation, energy and security shocks walloping the world economy are driving a kind of government intervention in markets last seen in the 1970s.Price controls were largely abandoned after the '70s, as both American and global policy shifted toward less government involvement in the economy., which emphasized the government role in running the economy. In its place, a greater reliance on markets emerged during the Reagan administration — and dominated post-Cold War era.
But now, energy markets have become theaters of economic war, and governments are being forced to play a larger role.When Russia stops exporting gas, or the Western countries decide to put on sanctions, the markets that are affected by this are not governed by the laws of supply and demand.
That's because demand for goods is artificially elevated by below-market prices, and with prices locked producers see little reason to boost output., in an attempt to try to corral the inflation that threatened his re-election campaign the next year.
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