The financial and economic consequences of another world war?

There are several trains of thought on what a peer/near-peer conflict would look like. The first assumption you have to make is that our only peer opponent now is China. The Ukrainian invasion has shown that our intelligence on the Russian military capability was outdated and we severely overestimated them. The various ways the conflict with China could play out:

1. China is a true peer power. They've spent the last several decades catching up on military technology, and despite being untested have the manpower reserve to make up any differences with the West. They see the writing on the wall, an impending population and economic crisis is coming for them and the CCP thinks the only way to continue growing their power/influence is by stamping out the cultural enemies of the west. One thing to note here is that China has signaled they believe they are catching up to the United States in terms of technology (though primarily through IP theft at universities) and they might believe they have time on their side to wait and surpass us, though this might all be a bluff.

2. China is more akin to Russia. The Chinese military hasn't been tested in decades, and they lack any semblance of institutional warfighting knowledge and experience. Their technology is a facade, and still a full generation or more behind American capabilities. China thinks that its ability to throw a number of bodies into war at an extent greater than the combined population of America and Western Europe can make up for the significant technological disadvantage.

How each scenario could look:

1. If scenario 1 is true and Chinese power is approximately equal to America's, then the worst-case you mentioned above is far more likely. Some recent wargaming results from RAND, assuming China possesses equal missile strength to us, have given a grisly result. Whatever catalyst, Taiwan, Korea, Western Asia/Russia, if China and the United States declare war against each other the first days of the war would result in the greatest mass civilian casualties in history. Most major cities would be bombed, satellite and GPS systems would go down, air-defense systems destroyed, and the inevitable fall of the internet and electricity infrastructure. This will probably bring us back to WWI levels of trench warfare. The entire world will be forced to pick a side and nuclear bombardment is likely, resulting in the changing of the entire world order or the destruction of humanity. Like I said, worst case scenario.

2. If scenario 1 is true, but there is no catalyst sparking open war between America and China, a series of proxy wars could break out across the globe. Africa, South America, Southeast Asia are all probable locations for American-backed forces to confront China-backed forces. From an American perspective, this would likely seem like a larger scale Iraq/Afghanistan. China and America are each afraid of open war with each other, see above why. They use proxy conflicts across the globe in a war of attrition, draining their opponent's resources and encouraging dissent and destabilization within each countries' homeland. The conflict ends with a Soviet Union-esque societal collapse of one side. (This is in my personal opinion the most likely scenario.)

3. If scenario 2 is true, and Chinese military strength is just a facade, I think China tries to wait it out, pushing back my above assertion of war within ten years. They either think that the internal collapse of the United States will happen before theirs, giving them the win, or they can catch up enough technologically to make scenario 1 true. They run the risk of a population collapse even greater than we're seeing in Japan however, and this would likely allow India to quickly surpass them as the Asian superpower. (I believe this to be the least likely scenario, China no longer has time on its side.) Another note, if India does manage to surpass China within the next twenty or so years before any true war, then another whole can of worms is opened that I'm not going to get into, but presents entirely different problems.

4. The last scenario I'll cover, and the one that I hope comes true, is that China believes they are technologically our peer but have severely underestimated American military power. This scenario is similarly unlikely to 3 however, but would be by far the least costly for American lives and dollars. China would declare war on the United States, and summarily see its infrastructure annihilated within weeks. The CCP would fall and Chinese society would have to adapt to Western styles of life, look at post-war Japan as a possible example.

Final conclusions and questions:

I guess my entire point in writing this all out is show what I think our future could be, given a number of different scenarios. Personally, I think American victory is more likely than not, but certainly not guaranteed. Assuming the worst-case scenario doesn't play out and the American heartland emerges relatively unscathed, what would the world economy look like post-CCP? Does the loss of many young American men (and women now) cause a financial crisis, or would we see another post-war boom? Does the United States suffer societal detritus and fracture, allowing someone else to emerge as the preeminent superpower? Would the United States expand its borders/territory, and push globalization further and further?

And what if the worst case happens? The world lies in ruin and there are nuclear wastelands scattered across the globe? Can the human race survive that?

None of these questions have easy answer, but I think they're all worth debating as the likelihood of war draws ever closer.