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.