Bacon's Rebellion

Democracy Thrives in Sunlight

Virginia Policy in the Face of Inflation and Recession

—

by

sherlockj
in

by James C. Sherlock

I now expect both higher inflation and a recession, perhaps a deep one.

The West is at war, whether or not we are prepared for the effects on our federal and state governments.

The bad guys have a lot of natural resources that help keep our economy running. They will cost more and supplies will be constrained. Defense budgets will have to rise. Our governments are waking up to that slowly and too late. We will discover the costs of too late.

The greens should have already discovered the costs of too early on feeling good because a barrel of oil is produced by a dictator rather than in America. The costs of too soon.

The classic way to repay a debt that otherwise cannot be paid back is to inflate the currency at which the debt is denominated. The federal government is extended beyond its ability to borrow and to pay back investors for inflation risk without more inflation. It will cost state and local governments far higher rates to fund new debt.

Virginia is about to spend or refund rather than save money that was generated by the federal activity that raised the debt.

I intend to comment as best I am able on the effects of inflation and recession in every Virginia policy-related article going forward. That does not mean I will prove ultimately correct or if so at what scale they will occur, but rather that they need to be considered.

Under this scenario some bulwarks of education and healthcare, topics to which I have dedicated the last 10 years of my life, may be greatly affected, but it is time to consider what we cannot lose and what we may have to change.

Share this article

ADVERTISEMENT

(comments below)

ADVERTISEMENT

(comments below)

Comments

16 responses to “Virginia Policy in the Face of Inflation and Recession”

  1. energyNOW_Fan Avatar
    energyNOW_Fan

    Believe economist Gary Shilling agrees with the 2022 Recession, especially with the war now he is doubling down on that prediction. Inflation not so much perhaps.

    A. Gary Shilling
    @agaryshilling
    Jan 31
    The #FederalReserve’s credit-tightening will probably precipitate a #recession, as has occurred in 11 of 12 earlier credit-tightening efforts. As the #economy falters, the Fed will reverse course and ease credit again, to the benefit of Treasurys. See my Feb. 2022 INSIGHT report

    No Boomergeddon?
    https://www.bloomberg.com/opinion/articles/2022-03-07/ballooning-u-s-debt-is-a-bomb-that-won-t-detonate

  2. vicnicholls Avatar
    vicnicholls

    “I now expect both runaway inflation and a deep recession.” Knew that Biden took office.

    “We are at war, whether or not that has dawned on our federal and state governments.” Knew that also, but for other reasons and people aren’t listening.

    “The federal government will wake up to that slowly and too late.” I’m not sure they will wake up. Mind is depraved and too far gone.

  3. energyNOW_Fan Avatar
    energyNOW_Fan

    Believe economist Gary Shilling agrees with the 2022 Recession, especially with the war now he is doubling down on that prediction. Inflation not so much perhaps.

    A. Gary Shilling
    @agaryshilling
    Jan 31
    The #FederalReserve’s credit-tightening will probably precipitate a #recession, as has occurred in 11 of 12 earlier credit-tightening efforts. As the #economy falters, the Fed will reverse course and ease credit again, to the benefit of Treasurys. See my Feb. 2022 INSIGHT report

    But no “Boomergeddon” he says-
    https://www.bloomberg.com/opinion/articles/2022-03-07/ballooning-u-s-debt-is-a-bomb-that-won-t-detonate

    1. James C. Sherlock Avatar
      James C. Sherlock

      Mr. Shilling discussed post-war economic growth reducing debt. He did not offer a prediction when the war that we are currently in will end, or indeed even acknowledge it.

      1. energyNOW_Fan Avatar
        energyNOW_Fan

        He acknowledged the war in his INSIGHT monthly newsletter which I do not currently subscribe, so I only saw first sentence. But I would support using Shilling as an economic consultant.

  4. Eric the half a troll Avatar
    Eric the half a troll

    Conservatives’ predictions are not the most reliable forecast of the future….

  5. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    You need to look at numbers in addition to the inflation rate. As one prominent economist argues, the country’s economic posture is a lot better than the public thinks it is. A long-running survey of consumer attitudes found that an individual’s thinking about the economy was strongly correlated with partisanship. A fascinating finding was that Republicans have a more pessimistic view about the economy now than they did in 1980 when unemployment was above 7 percent and inflation was around 14 percent! https://www.nytimes.com/2022/03/03/opinion/biden-economy-inflation-jobs.html

    1. James C. Sherlock Avatar
      James C. Sherlock

      I don’t reference the public’s attitude about inflation, just the international environment for increasing inflation from which Virginia cannot be shielded.

      I don’t agree that this is a partisan issue.

      Rises in the price of oil have correlated with recessions in 1974 and 2008, both periods of what is called stagflation.

      Unfortunately, we are not just talking about oil prices this time, but also Russia and Ukraine are major producers of metals such as nickel, copper and iron. They are also heavily involved in the export and manufacture of other essential raw materials like neon, palladium and platinum.

      About 90% of neon, which is used for chip lithography, originates from Russia, and 60% of this is purified by one company in Odessa – that Odessa

      Finally there is wheat.

      Bunge reports that Ukraine, commonly known as the breadbasket of Europe, has over a quarter of the world’s chernozem or “black earth” and 54 percent of its land is arable according to the Food and Agriculture Organization of the United Nations.

      Chernozem is a very fertile soil that produces high agricultural yields and offers excellent agronomic conditions for the production of crops, especially cereals and oilseeds.

      Wheat futures have risen by about 40% so far this year.

      1. Dick Hall-Sizemore Avatar
        Dick Hall-Sizemore

        The increase in wheat futures should be good news for Virginia’s wheat farmers, who have seen record law prices in recent years. https://augustafreepress.com/virginia-winter-wheat-crop-ready-to-go-into-the-ground/

        1. James C. Sherlock Avatar
          James C. Sherlock

          It’s an ill wind that blows no one good. Wheat production in Virginia is concentrated in the Northern Neck.

        2. James C. Sherlock Avatar
          James C. Sherlock

          It’s an ill wind that blows no one good. Wheat production in Virginia is concentrated in the Northern Neck.

          1. Lefty665 Avatar
            Lefty665

            What goes around comes around. Supplying wheat to warring nations, starting in the 1840s, brought waves of prosperity to wheat farmers in Louisa County, especially in the uniquely fertile Green Springs area. That included Russia during the Crimean War in the 1850s.

            Farmhouses in the area often document that prosperity through their successive waves of expansion. In some cases original structures were completely wrapped in “new” construction.

          2. Matt Adams Avatar
            Matt Adams

            That’s only good until the US is sucked in to provide blood and treasure and surely we will be sucked in if it continues.

          3. Lefty665 Avatar
            Lefty665

            Yeah, I was just observing that Virginia has profited from war driven wheat pricing for close to 200 years.
            Treasure is already provided, and it may be the blood of everyone in the world if we don’t come to our senses. The Cuban Missile Crisis in ’62 should have taught us something. The Russians are no more willing to have hostile armed forces on their border today than we were in ’62.

        3. energyNOW_Fan Avatar
          energyNOW_Fan

          I already wrote a BR article on oil seeds for green diesel, but I would still think that could be profitable crop in the current environment. Also the practice of the southeast states sending forest wood to Europe is probably set for expansion, green or not in the view of the beholder. In my view not so green. Oh wait we converted the farmland to solar.

  6. VaNavVet Avatar
    VaNavVet

    Hopefully, Sherlock will prove to be wrong about both runaway inflation and a recession. We will have to see how the Fed does in navigating these times.

Leave a Reply

Read More