“There is no such thing as a former KGB man.”

          Vladimir Putin, 2004

Another month passes and we make the discovery that our current bout of inflation is not going to be as transitory as the Administration and the Federal Reserve were telling people at the beginning of summer. Paying $45 to fill up the car with gas or a turkey that costs 50% more than it did a year past was hard to ignore. Some commentators, me included, think that this will go on for at least fifteen to eighteen months. An issue that impacts adjusting

to it is that those under forty have not seen anything like this before and have been conditioned to believe a smiling face standing behind a podium and giving a press briefing. I however can remember an IRA investment in the early ’80s that was paying a 12% interest rate (which compounded would double the investment over six years).

In the background, one hears the gentle beating of war drums, as hints of an armed conflict with China over a potential invasion of Taiwan keep surfacing in the mainstream press. It matters not that in every wargaming scenario that has been played out at places like the Naval War College, such a conflict has resulted in disaster for United States forces. Given that the Chinese always take the long view of things, with time as one of their main allies, I am in the camp that thinks that such a conflict would not be an armed conflict, but rather an economic one. China continues to be a large purchaser of gold bullion every year. At this point, they are thought to have accumulated somewhere between 20,000 – 40,000 tons of gold. Our holdings in Fort Knox are thought to be somewhere between 8,000 – 9,000 tons of gold. Can we maintain our status as a reserve currency if China decides to back its currency with gold? For those countries not believers in modern monetary theory it will present an interesting question.

And then there is the question of energy. Germany shuts down all its nuclear power generating stations as France embarks on a building campaign to increase its dependency on nuclear power. Germany looks to replace nuclear with Russian gas coming through a pipeline, no mind the political risk thereof. Nuclear power is in many respects the green solution to global warming except for a bias against nuclear power. How to reconcile that dichotomy?

The United States has gone in a little more than a year from being a major exporter of oil and liquified natural gas, to needing to import energy. The solution – release petroleum from our strategic energy reserve. A release is announced, in conjunction with the actions of several of our allies to also release petroleum. We released an amount equal to two days of our oil consumption in this country. OPEC, rather than increasing production will keep it flat. Ergo, the release of our strategic reserves is at best a political gesture having the equivalent effect of a fart in a windstorm. Add to that a Federal Reserve Chair who finds his voice and starts to speak about the need for a continued tapering of bond purchases (read as – “rates must go up”) and it becomes apparent that cash is in, equities and bonds are not.

The New Variant

Our hope is that Omicron does not prove to be the genesis of coal in everyone’s stocking this Christmas. And one hopes that the message that can be imparted will be based on science AND a correct exposition of the statistics involved. We now have vaccines developed with multiple methodologies of acting and producing an immune response to the Covid virus. We are also seeing new therapeutics. One hopes that the New Year brings an appreciation of how best to live with this virus, as with other viruses, over the long term. Roosevelt was prescient and did speak for the ages when he said, “There is nothing to fear but fear itself.”