The world as we have known it for the past 30 years is over. The era of low inflation, ever-falling interest rates, ever-rising stock prices, globalization, and geopolitical stability among the major powers is unravelling. Russia’s invasion of Ukraine has signaled that a new Cold War is upon us and making things worse was the Xi-Putin communique at the Beijing Olympics which marked the beginning of a renewed authoritarian alliance against the West. What this means is defense spending is going to ramp up bigtime with inflationary consequences.
The COVID pandemic has taught us that globalization
and just-in-time inventory processes have made supply chains far more fragile
than we had thought. As a result, higher buffer stocks and the moving of
production closer to final demand will increase economy wide costs. The inflationary process is being exacerbated
by the rush to decarbonize the economy with its attendant underinvestment in
oil and gas. As they say, short term
pain for long term gain. We are also relearning that reckless fiscal and
monetary policies can bring about the high inflation we are now experiencing.
It seems that Milton Friedman and his ideas about money are being resurrected
from the dead.
Domestically there are too many eerie parallels to
1940 America where the Charles Lindberg America First group linked up with the
Communist Party to oppose U.S. intervention in support of beleaguered England.
Just the other day showboating lefties Alexandra Ocasio Cortez and Cori Bush
linked up arm and arm with the right-wingers Paul Gosar and Matt Gaetz seeking
Congressional preauthorization before sending troops in support to Ukraine, a
move that President Biden said is off the table. And, of course, we have Tucker
“Tokyo Rose” Carslon singing Putin’s praise every night on Fox.
This witch’s brew means inflation will remain higher
for longer, a secular bear market for bonds, a very volatile stock market and
as ugly as our politics are today, it will get worse.
I believed you nailed it, Dave. Prayers for the Ukrainan people and the global community..
ReplyDeleteJeez, guys. Good to see you're still working, I guess. Although myself I like being retired and licking my paws. Then old Ron you've always been an honorable man and good citizen, and if infantry combat behind enemy lines taught me anything it was to appreciate and enjoy harmless people, myself once filled with homicidal hatred for "the enemy" with my blood running ice cold.
ReplyDeletePutin isn't the only war criminal on this dying planet, and I'm reminded of how the absolutely despicable and "all powerful" Soviet Empire was brought down by the military equivalent of folk songs. The first legitimate war is the one against war.
As much as we are bound to things as they are, it's time we demand some new arrangements. If we truly wish to abolish war, all we need do is take the money out of it.
Pat