There are some background matters to be aware of amidst stubborn inflation. The following is a brief discussion of them. There may be other additional concern.
Business Confidence & Energy Security
The economics of the 1890s can be perplexing. The depression then is at times described as the worst that the nation had ever faced; severe enough that starvation was a concern.
It was not over when William McKinley assumed the presidency in 1897; though his policies are nothing that virtually any mainstream economist would recommend today, prosperity returned under his administration. A perhaps under-considered matter is business confidence.
McKinley’s predecessor, President Cleveland, endured a crisis of confidence when the national gold reserve was essentially depleted, and he needed a deal with J.P. Morgan in order to save it. Morgan profited incredibly. After that incident, and other serious problems, McKinley’s (heavily-financed) election, in which he forswore undue influence of bosses such as Thomas Platt—may well have given rise to confidence.
The economy really did recover.
Today, energy prices are inexpensive. However, they have recently recovered from a spike several months ago, during which President Biden sold a substantial 180 million barrels of oil from the United States reserves. A further 26 million is being sold off. As the past energy sales served to moderate pain at the pump amid problematic inflation, there are obvious reasons to justify the action. However, the oil reserve perhaps should be replenished—though climate change is an important issue that costly energy may help solve. Other world suppliers, notably OPEC+, show no willingness to bring prices down however.
Hypothetically, if there is some demand shock in which the price of oil plummets and reserves can be refilled opportunistically, the situation could be supportive of business confidence. On the other hand, amid strong employment data and a solid post-Covid economic recovery—that is also characterized by problematic inflation—if the price of energy increases and there is a supply crunch then the situation could be perceived differently. An energy shock is a known economic risk and is consistent with stagflation.
Broadband, 5G and Publication Revenues
Apparently concern about China is one of the most bipartisan issues of American government. Another could be support of broadband availability. In fact, recent federal spending in the bipartisan infrastructure bill’s $65 billion is an example.
Connectivity is not limited to it though. In fact, 4G LTE speeds are credited with giving us firms such as Lyft, DoorDash and Uber. The Fifth Generation, 5G, is the next horizon and what it fosters may still be ahead.
Needless to say, the era of newsprint is mostly a thing of the past and it should only be hastened by improved connectivity. Traditional publications that have moved online endure plummeting subscriptions and lack of ability to sell advertising space: not just classified and employment revenues are gone, but brand marketing dollars are also being advocated elsewhere. These trends are probable to continue as modern platforms, whether Twitter, Substack, Snapchat, YouTube, TikTok, or something new in the pipeline, compete and take hold. There is a chance that it can bode well for advertising agencies but news publications and magazines may simply fold up like their former customers’ law furniture.
United States Debt & Deficit
The United States debt and deficit have been staggering since the 1980s. There was a brief respite during the Clinton years in which the budget balanced, but its really all been downhill. The debt now exceeds $31 trillion and the deficit is at about $1 trillion of a year. An ongoing issue with a debt ceiling appears serious. The House of Representatives is on firm ground when seeking to improve our nation’s fiscal standing. Despite reassuring statements from Congressional leadership, there is a possibility of this coming down to the deadline and nothing being done.
One potential solution involves the minting of a platinum coin worth $1 Trillion. That could be a temporary fix. Incidentally, if the budget deficit is approximately that already and interest must be paid on over 31 times that, as rates go up, a single coin would be a temporary stopgap.
How many trillion-dollar coins should actually be minted?
War
Perhaps a majority of folks have no living memory of Cold War. Among those who do, there may not be a cognizance of the importance of the Soviet Union and Communism to its adherents, as something they believed in. There may be a tendency to apply similar terms to Sino-American relations, briefly discussed above.
Yet a warm war underway between Israel and Iran could be at least as concerning. Israel and Iran are attacking each other with drones and missiles and it is nothing new. Israel is a nuclear power, Iran aims to be one. Though attacks attacks occur between the countries, and can involve neighbors, it can escalate. Full scale military conflict could draw in other participants.
Environment
Unfortunately, climate change is currently a partisan issue here in USA. It is not clear who outside the Western world, except apparently Brazil’s new leadership, is treating it with urgency. Brazil’s situation is important because of destruction of the Amazon rainforest.
Also, one might suspect that if there were no Taiga, there would be existential issues for the Boreal, and the same for the reverse.
Perhaps as concerning are issues with forever chemicals, PFAS, that are appearing in potable water sources. Negative health effects may occur with concentrations in water that are near zero and below the Environmental Protection Agency’s ability to detect at this time.
DuPont, which spun off Chemours in 2015 and left it responsible for PFAS liabilities, is also drawing heat. Other than that, 3M corporation is evidently as culpable as any corporate entity.