The Inflation Riddle: Supply-Chain, No Free Money and Oil Prices Spiked by Sanctions
Economic slow-down is all but assured, still bond market calmer than 10 days ago
Catherine Rampell hit the nail on the head with her piece in the Washington Post yesterday highlighting the tension at one major port between port laborers, port technology that replaces people, and inflation.
You can read it here:
(https://www.washingtonpost.com/opinions/2022/07/05/labor-biden-west-coast-ports-contract-inflation/ )
Catherine’s piece is but one glaring anecdote in a global supply-chain famously riddled with slowdowns, shortages and delays that have set-off an inflation cycle that was ready to pop-off anyway after ten years of ZERO percent interest rates and trillions of US Dollars of quantitative easing.
Compounding matters further the US/NATO decision to impose energy sanctions on Russia in response to Russia’s invasion of Ukraine has created massive increases in energy costs that go straight to Russia and other oil countries and companies bottom line. So, while the ruble gets stronger and Russia expands its oil buyers to include India, US & Europeans pay big energy bills.
Combined, the supply-chain issues, plus ten years of free money, plus global energy price spikes virtually assure a meaningful global slowdown.
The final aspect of inflation that is most troubling is that political instincts to waive gas taxes or otherwise relieve cost pressure on consumers only exacerbates the very inflation inflicting the pain they are trying to alleviate.
Still, the US bond market appears to take comfort in the fact that the government and the media are taking the issue seriously which from their perspective perhaps suggests it will be resolved because it has been recognized.
How exactly is the trillion-dollar question?
Dylan.
The Inflation Riddle: Supply-Chain, No Free Money and Oil Prices Spiked by Sanctions
D, thank you for reinforcing Katherine Rampell's message. I agree that automation is certainly taking over people's jobs one industry at a time. I guess while government and media expect resolution to the port problem, they (probably willingly) take the eyes off the ball and focus on less important matters (entertainment news?).
Dylan Ratigan is quoting the Washington Post? We are DOOMED. 💔