Putin's War: A Sober Lesson For U.S. and Its Allies

Kremlin thug Vladimir Putin strutted on the world stage for weeks, daring any country to intervene with his plan to invade Ukraine. The West, including the U.S., bloviated and did little else.  Sensing weakness, the former KGB agent unleashed his military on Europe's second largest country.

While Putin issued chilling warnings about Western inference, President Biden and Secretary of State Anthony Blinken threatened sanctions, but appeared helpless in the face of the Russian pariah's threats. Their tone was defeatist. It was a striking juxtaposition on the projection of strength. 

Russia's mafioso-president was relying on U.S. vacillation.  After all, Putin had invaded Georgia, annexed Crimea, intervened in Syria's civil war, interfered with American elections and waged cyber warfare. In response, the U.S. inflicted sanctions, which proved inept and short-lived.  

It wasn't until Russian troops stormed into Ukraine that the U.S. and Europe levied sanctions targeting Kremlin banks, imports and rich oligarchs.  Even as sanctions were unfurled, Mr. Biden admitted the restrictions would not deter Putin.  The West played defense while Russia was on the offensive.

The ruthless dictator's ambitions are to reclaim territories of the old Soviet Union and to defang the NATO military alliance.  Ukraine had been lobbying NATO for membership. Putin loathed  the idea of NATO forces and weapons camped on his border.

Europe is economically handcuffed by its reliance on Russian natural gas.  The European continent gets nearly 40% of its natural gas from Putin, according to the U.S. Energy Information Agency (EIA).  In addition, Russia ships 48% of its crude oil production to European nations.

Germany depends on Russia for 65% of its natural gas. Poland gets 50% of its supply from Russia.  Italy receives 43% of its natural gas from Russia, while France imports 16% of its needs.  Smaller countries, such as Czech Republic, Hungry and Slovakia, are nearly totally dependent on Russian gas.  

Those figures explain why Europe balked at diplomatic suggestions to embargo Russian oil and natural gas, the so-called nuclear option. Today, if Russia turns off the spigot, European homes and factories go cold and dark. Natural gas prices would skyrocket, crippling the entire continent's economy.

The United States, despite its title as the world's largest oil producer, also is ensnared in the Russian bear trap.  

Until the invasion, few Americans knew the U.S. is also dependent on Russian crude.  Beginning in 2021, our nation began importing between 12 and 26 million barrels of crude oil from Russia every month.  In November, the latest data available, Russia shipped 17.8 million barrels to this country.  

For context, the U.S. uses about 18.9 million barrels of crude oil every day, according to the EIA.  President Biden pleaded last year for Russia and OPEC to ramp up oil production to ease U.S. gasoline prices.  OPEC ignored Biden's overture, while Russia willingly acceded.

Biden surrendered American oil independence when he became president.  One of his first acts was to cancel permits for the Keystone XL pipeline, a 1,200 mile project from the Canadian province of Albert stretching down to Nebraska to join an existing pipeline. 

The pipeline was designed to carry 830,000 barrels of Canadian crude to the U.S. every day. Through executive orders and regulatory maneuvers, the Biden Administration has made its mission to decrease American oil and natural gas production, leading to higher prices at the gasoline pump.

Europe made a deal with the devil in the Kremlin because it had few crude oil and natural gas reserves. Decades ago, Putin schemed to exploit Russia's rich natural resources to make Europe a vassal of Russia. 

Russia received an unexpected assist from environmentalists. Germany, in particular,  embarked on a Green Energy diet, turning to wind and solar power.  Nuclear facilities were unplugged.  Coal burning plants shuttered.  However, the unreliability of alternative energy created power gaps.

To meet energy needs, Europe turned to Russia, which had laid the groundwork to seize the opportunity.  Putin bulked up Gazprom, a Kremlin controlled company, into a natural gas powerhouse. Over two decades, Russia constructed natural gas pipelines into Europe to supply the continent. 

In 2011, Russia turned on the spigot on the first pipeline, called Nord Stream 1.  A second line was added a year later.  The 759-mile pipeline runs through Ukraine and Poland, which creates a potential problem for Putin.  Germany is the largest customer for Russian natural gas on the continent.

With an eye to expanding its European footprint, Gazprom began constructing a 764-mile long natural gas pipeline, dubbed Nord Stream 2, in 2016.  The pipeline traverses under the Baltic Sea from Russia straight to Germany's Baltic coast.  The undersea line will double current natural gas capacity.

Although Gazprom owns the entire pipeline, it only paid half of the $11 billion in costs.  The remaining costs were shared by Shell and European natural gas and energy companies: Austria's OMCV, France's Engie and Germany's Uniper and Wintershall DEA.  Europe is heavily invested in the pipeline.

In the wake of the Ukraine invasion, Germany's new chancellor Olaf Scholz called off certification of the pipeline.  The largely symbolic move will have little immediate impact on Russia since Nord Stream 2, completed last year, was already on hold, awaiting European Commission and German approval.

Germany had green lighted the new pipeline after the Biden Administration last year lifted sanctions on the project.  Those sanctions had been ordered by President Trump.  Only after Russian troops entered Ukraine did Mr. Biden reverse course and reimpose the sanctions. 

Those sanctions will not stop Russian natural gas from flowing through Nord Stream 1 pipelines to supply Europe with natural gas.  In fact, Putin has virtually guaranteed he will continue to pump natural gas without interruption because it enriches Russia. Gazprom even raised prices before the invasion.

With unrest in Ukraine, the U.S. and Europe will soon begin feeling the pain of sky-high gasoline prices at the pump. Any disruption of oil production by Russia will ignite a gold rush for a crude oil.  In January, the global benchmark for a barrel of oil passed $90.  

Oil traders are predicting a barrel of crude oil will touch the $100 milestone soon.   That compares to $41.96 in 2020 and $54.25 in 2017.  A rise of $10 a barrel for crude oil correlates to approximately a 25-cent per gallon rise in gasoline prices.  Experts are forecasting $5 to $6 gallon prices in the U.S.  

Putin wins no matter what Germany or the West does.  Rising prices for crude oil make Russian oil and natural gas more valuable on the open market.  And Putin just inked a $117.5 billion deal with China, to keep Russian exports of oil and natural gas flowing despite any delays in Nord Stream 2.

There are two lessons for the U.S. and Europe. First, they can no longer kowtow to the unhinged Putin. His threats have to be met with strength and an immediate response.  Also, the allies should work together to support a regime change in Russia. As long as Putin is in power, the world is not safe  

Secondly, dependence on Russia for a strategic resource, such as energy, gives Putin the bargaining chip he needs to discourage interference with his expansion plans and his effort to weaken NATO's resolve to come to the aid of other countries in future confrontations. 

Energy independence would help insulate Americans from spiraling prices for crude oil, triggered by the Russian invasion. In addition, the U.S. could assist Europe by shipping crude oil and liquified natural gas to ease the continent's dependence on Russia.  

However, the Biden Administration has made it clear it will not unshackle energy production, a decision that leaves the U.S. at the mercy of OPEC and Russia for crude oil to satisfy our nation's energy requirements. 

Russia's incursion into Ukraine is a pivotal point for the world.  These are dangerous times. How the U.S. and its allies react will determine how other rogue nations, including China, Iran and North Korea, view the West's willingness to discourage future military aggression.  

The Frenzied Global Race For White Oil

Not since the early days of the oil boom, has the world witnessed such a feverish pace of energy exploration.  From Argentina to Chile to Bolivia the hunt for lithium, dubbed "white oil", is fueling a surge in mining. Global demand for the silvery-white metal is expected to more than double by 2024.

Lithium is a key component in batteries that power electric vehicles (EV) designed to replace gasoline burning cars.  Lithium is a lightweight, alkali metal that stores energy efficiently and can be repeatedly recharged. A 1,200-pound battery in a Tesla Model S requires about 138-pounds of lithium.

Burgeoning global sales of electric cars, which increased 80% in 2021, are at the heart of the frenzied search for lithium reserves. By 2050, up to one billion electric vehicles are forecast on the roads worldwide, about 72 times more than the  EV's operating in 2020. 

Another contributor to the spiraling lithium demand is batteries for tablets, laptop computers and smart phones. Increasingly, lithium is also being deployed in electric grids to store energy from renewable sources, such as wind and solar.  Demand sent lithium prices skyrocketing 240% in 2021. 

In the global race to replace fossil fuels with with clean energy, the environmental impact of extracting lithium is surfacing as a major ecological issue. Most lithium is derived from traditional mine drilling or brine extraction, processes which scar the land or pollute water sources.

In Argentina and Chile massive amounts of water are used to loosen underground brine deposits, leading to contentious squabbles over the water supply. About 500,000 gallons of water are used per ton of lithium.  For some desolate areas, that could represent more than half of the available water supply.

Regions with rich lithium deposits are in poor, remote places, far removed from the nearest EV. The largest reserves of lithium--8.6 billion tons--are located in Chile, Australia and Argentina.  Nearly half of the world's known reserves reside in Chile.  These countries are also the top producers of the metal.

The United States has an estimated 630,000 tons of lithium reserves, the majority located in Thacker Pass in Nevada.  Area residents, Native American tribes and ranchers are opposing the building of a mine in the area.  To date, the opponents have stalled exploration and development.

Silver Peak Lithium Mine in Nevada represents the lone lithium operation in America.  It produces about 5,000 tons of lithium carbonate a year with capacity for 6,000 tons. That is less than 2% of the world's supply.  The operator extracts brine from an old lake bed that contains shallow ponds of lithium.

Estimates are the U.S. will need 500,000 metric tons per year of raw or unrefined lithium by 2034 just to power electric vehicles, according to California-based battery supplier OneCharge.  For comparisons sake, the entire global production of lithium in 2020 was 440,000 metric tons. 

China is the dominate player in lithium batteries.  Over the past decade, the government has spent $60 bullion to shore up its lithium industry. Additionally, China has the world's most robust lithium supply chain.

It is the largest importer of lithium-ion battery cells in the world and has the most ambitious electric car manufacturing schedule, planning to reach 52% of sales by 2040. China's lithium imports in 2019 were worth $46.9 billion,  China also exported 48% of the world's supply of lithium-ion cells and packs.

In recent years, China has been snapping up stakes in mining operations in South America and Australia.  China has invested $4.2 billion in lithium deals in South America during the last two years. The regime has also been tightening its grip on the supply of cobalt, a lithium-ion battery component. 

The threat is China will dominate the global supply of lithium just as OPEC once controlled the world's petroleum production, setting production limits and the price.  If China cuts off the U.S., American automobile and electronic industries will be left to scramble for lithium and lithium-ion batteries. 

Currently, the U.S. imports 90% of its lithium metal from two countries: Argentina and Chile.  Europe imports nearly every ounce of battery-grade lithium it uses,.  More than half (55%) originates in Australia.  Other principal suppliers include Chile (23%), China (10%) and Argentina (8%).

China is plotting to monopolize the supply and production of lithium batteries. The country already account for more than 60% of global lithium-ion battery production. In recognition of the threat, the Biden Administration has signaled it intends to provide $2.91 billion to boost U.S. battery production.

But public-private-regulatory partnerships are also needed to support lithium mining and production at home, to boost battery cell and pack manufacturing facilities and for recycling plants for battery disposal. Unless the U.S. acts soon, the nation will fall further behind China in this strategic area. 

Lessons From Pandemic: Public Trust Easily Lost

Since the beginning of the pandemic, disciples of Dr. Anthony Fauci demanded adherence to science.    Anyone who challenged the octogenarian medical advisor was labeled a science denier. That shielded Dr. Fauci and his partners at the Centers for Disease Control (CDC) from legitimate professional criticism.

With the protection of the legacy media, Dr. Fauci and the CDC pushed for isolating an entire country and in the process shut down the world's biggest economy.  They issued calls for mask and vaccination mandates.  They lectured Americans on how many family members could attend a Christmas gathering.

In the beginning,  Americans generally heeded the health warnings. They were frightened by dire news reporting, often lacking context, about the virus.  The New York Times and other newspapers carried updated COVID death and case counts on the front pages. Fear was a weapon for compliance.

When miracle vaccines were introduced at the end of 2020, there appeared a light at the end of pandemic tunnel. President Joe Biden and Vice President Kamala Harris evolved from suggesting the vaccines were rushed into production to becoming its biggest cheerleaders. Vaccines would halt the pandemic.

Administration officials, including the president, donned masks on every occasion, even wearing one as they walked  to the podium in a nearly empty room.  They were following the science.  Masks work to protect the wearer from spreading or contracting the contagious virus. No one questioned the science.

Just when there appeared to be a rising optimism for a return to normal, President Biden unleashed executive orders to require vaccinations for Americans in businesses, government, the military and health care workers.  The federal government usurped responsibility for Americans' health decisions,.

This appeared to many legal scholars to be unConstitutional, a breach of freedom.  Court cases were filed by a growing number of states. Americans were divided into two camps: those who believed it was necessary to force Americans to get the jab versus those who wanted to make their own choice.

By mid-year in 2021, more Americans were wearying of the never ending mandates.  They wanted to exercise their right of freedom from authoritarian rules.  States began lifting mask mandates, opening schools, liberating citizens from Washington's vaccination obsession and resuming normal life.

Clearly,  politics not science is carrying the day. Never was it more clear when Democrat states New Jersey, New York, Connecticut, Delaware, Massachusetts and California announced last week they are revising or dropping mask mandates.  Mandates are deeply unpopular with voters.

Ironically, these moves come at a time when the spread of COVID remains rampant.  Hundreds of thousands of Americans are getting infected every day.  More than 3,000 are dying. In January, COVID killed more Americans than the flu has in three years.  There were 55,000 deaths, reports the CDC.

The seven-day fatality average in January was the highest point it has been since last winter before vaccines were widely available. Omicron is expected to push the U.S. total deaths past the one million mark, according to Andrew Noymer, a public health professor at University of California-Irvine.

So has the science of masks and vaccinations changed?  Mask policies are the victim of an admission by the CDC that a cloth mask is virtually useless against the spread of COVID.  And there have been thousands and thousands of so-called breakthrough cases of the fully vaccinated.

This month the CDC released a report showing that the effectiveness of the booster shot for fully vaccinated individuals begins to wane just four months after the jab, adding to public skepticism.  In another surprising move, the FDA postponed its decision on a Pfizer vaccine for children four and under.  

These are signs of a broad concession that vaccines are not the Holy Grail scientists once thought they were.  The are better than no protection against COVID, especially for high risk Americans, but the vaccines do not last as long as the CDC and Dr. Fauci claimed at one time.

As a result, there has been a near total collapse of faith in the government, the CDC and Dr. Fauci in particular, when it comes to the pandemic.  A NewsNationaPoll, conducted by Decision Desk HQ, found that a meager 15.5% trust the president and only 31% trust Dr. Fauci.

Other polls may show higher trust levels, but the research confirms Americans are losing faith in public health officials, particularly those in Washington.  An ABC News survey found that 43% of Americans do not trust the CDC.  Faith in Mr. Biden on the Coronavirus skidded to 37% in January.

The new media fared even worse.  One poll found that only one-in-ten Americans trust the information churned out by the news media on the pandemic.  At the same time, fully two-thirds of Americans trust the advice of their primary care provider on COVID.

A recent Kaiser Family Foundation poll reflects the growing resentment of Americans with continuing restrictions.  In the survey, 75% of Americans expressed frustration and fatigue over the current state of the COVID pandemic. Fully 77% believe it is inevitable most people will be infected.

Some Democrat and Republican governors, eyeing upcoming midterms, are feeling the heat. That explains the about face on mask mandates and the softening of vaccine mandates.  Despite the administration mandates, 63.6% of Americans are fully vaccinated as of January. 

Politics is trumping science.  As the pandemic has stretched through the months, the line between science and politics has been blurred. That partly explains the erosion of public trust.  However, in a pandemic, trust in government and in one's fellow citizens is key to successful communications.

Dr. Fauci and the CDC were cast in the dominant role of the disseminating information on the virus.  It was incumbent on those speaking for the administration to be accurate, transparent, and truthful. When decisions are communicated, Americans expect facts to support the health directive. 

Unfortunately, the keepers of the information fell into a pattern of vacillating between contradictory positions, often igniting the flames of disinformation.  Worst of all, instead of admitting mistakes or just acknowledging the answers were elusive, Washington's health officials were unrepentant. 

Meanwhile, scientists, epidemiologists and health experts who disagreed with the prevailing advice from Dr. Fauci and the CDC were censored.  They were booted off social media.  Their studies were scrubbed from scientific websites  Despite their credentials, they were not allowed to have a dissenting opinion.

The censorship was conducted with the full-throated backing of Dr. Fauci, the CDC and the administration.  The move backfired.  When you end debate on a novel virus and insist on only one version of science, public mistrust deepens.  Americans are smarter than government officials believe.  

Now even Dr. Fauci has joined the billowing chorus of health officials in predicting the "full blown" pandemic could be ending soon.  He admitted that more health decisions will "increasingly be made at the local level rather than centrally" mandated.  

Then the face of the pandemic did the unthinkable by adding: "There will also be more people making their own decision on how they want to deal with the virus." Hate to burst his self-inflated ego but many Americans have been doing this since the winter of 2020 passed.

The inimitable doctor and the CDC should take stock of their communications missteps.  The lesson is trust is easily lost if Americans believe they are not getting the entire story.  Every contradictory directive, unexplained advisory and inflexible restriction chips away at public trust.

Communications also should be tailored to specific audiences.  At the start of the pandemic, more information should have been directed at the most vulnerable: the elderly, immune compromised and those with comorbidities.  Instead, the government aimed its information at the general public.

Defenders of Dr. Fauci and the CDC will retort: the COVID virus was an epidemiological mystery that required more than a year to unravel. Fair enough.  But it behoved officials to admit they didn't have all the answers. Temper advice with a caution that it is subject to change as more facts are known.

In a free society, health officials will fail or succeed in dealing with a pandemic by mobilizing public trust in the government and among its citizens.  A thorough airing of the contrarian views from health experts is healthy. Showing trust in citizens to do the right thing is crucial. 

Those are valuable lessons for health authorities to remember during the next pandemic.

SCOTUS Nominations Stir Political Histrionics

The circus is coming to Washington.  Feats of political daring and contrived theatrics will unfold under the Capitol dome instead of a big tent.  It will be entertaining for the political class inside the Beltway. But for most Americans, the Senate confirmation of a Supreme Court justice is unwatchable absurdity.

Once upon a time, presidential appointments of Supreme Court justices was a civil process.  From 1789 until 1965, every nomination by a sitting U.S. president was ratified by a voice vote.  The last justice to receive this cordial treatment was President Lyndon Johnson's appointment of Abe Fortas 57 years ago.

Since the nomination of Clarence Thomas by George H.W. Bush in 1991, the Senate has turned what once was a dignified process into a farce. Justice Thomas and Brett Kavanaugh in 2018 were blindsided in the hearings by dubious sexual allegations.  Justice Kavanaugh was nominated by President Trump.

Amy Coney Barrett, another Trump appointee, was hectored by Democrat Senator Diane Feinstein over her Catholic faith.  Senate Democrats successfully filibustered the Trump nomination of Neil Gorsuch, hoping to sink the Supreme Court candidate.  What happened next, flabbergasted Democrats. 

Senate Majority Leader Mitch McConnell invoked the so-called nuclear option to pave the way for approval of the nominee on a simple majority vote.  McConnell reminded critics it was former Democrat Senate Leader Harry Reid who broke tradition and pushed the nuclear button in 2013.

Those nominations cited above were approved by razor-thin margins along party lines. Compare their treatment to recent nominees by Presidents Obama and Clinton. Stephen Breyer and Ruth Bader Ginsburg, Clinton nominees, were approved by bipartisan votes of 87-9 and 96-3, respectively.

Obama nominees Elena Kagan and Sonia Sotomayor breezed through confirmation on 63-37 and 68-31 bipartisan majorities.  Can you detect a pattern?  Democrats employ the politics of character assassination to scuttle GOP nominees, while Republicans concede a president's right to appoint a qualified person.

Now the nation is being treated to a new phenomenon.  President Biden pledged during the campaign to name an African-American female to the highest court.  There were no other qualifications mentioned.  He has since justified his injection of race, saying the high court "should look like America." 

That is a sudden about face for Mr. Biden.  Then Senator Joe Biden voted against Clarence Thomas, who was nominated to succeed the lone African-American on the court, Justice Thurgood Marshall.  If Thomas had not been confirmed over Biden's objections, the Supreme Court justices would have been all white.

When President George W. Bush nominated  African-American Janice Rogers Brown to the D.C. Circuit Court of Appeals, Senator Biden opposed the choice.  After Justice Brown won confirmation, her name was later listed as a possible replacement for retiring justice Sandra Day O'Connor. 

Senator Biden signaled he would filibuster the nomination before President Bush even announced his final pick.  This was Senator Biden's opportunity to make Supreme Court "look like America."  How can anyone take him seriously now?  His nominee is political payback and nothing more.

Mr. Biden's commitment to racial preference stems from the primary campaign when his flagging fortunes depended on a win in South Carolina.  Influential South Carolina Democrat Jim Clyburn pledged to deliver a primary victory, in exchange for a black female court appointee.  

That's why Mr. Biden announced he would replace Justice Stephen Breyer with an African-American female.  There was nothing altruistic about his choice.  This was a political calculus by the president to pay the debt he owed to Rep. Clyburn.

Mr. Biden's clumsy announcement, narrowing his field of candidates to black women, has not played well with voters. An ABC News/Ipsos poll this month found 76% of Americans believe the president should consider all possible nominees, rather than limiting the field to a single race.  

If you're wondering whom Mr. Biden will select for the judicial vacancy, put away your Ouija board. Rep. Clyburn has already endorsed South Carolina Federal District Judge J. Michelle Childs. South Carolina Republican Sen. Lindsey Graham has seconded the Clyburn choice.  Case closed.

The hearings may seem like a formality with Democrats holding the majority, however, this will be a matinee worthy of Ringling Brothers. The media has already shown its hand, casting Republican opposition as racist.  Any serious questioning of the nominee will be interpreted as white patriarchy.  

There have been 115 justices who have served on the Supreme Court since it was created in 1789--two black men and five women.  An African-American female on the court would indeed be historic. However, imposing racial, gender or ethnic quotas denigrates the dignity of the nation's highest court.

Wage-Price Spiral Threatens American Economy

Menacing economic storm clouds looming on the horizon threaten America's growth.  Wages are rising at the highest peak in decades. Prices for goods and services are spiking.  As a result, inflation is marching upward, triggering a risk of a wage-price spiral that will cripple the economy.

During the double-digit inflation of the 1970's, wages and prices chased each other.  Spiraling inflation eroded the standard of living for workers.  Employees demanded higher wages to offset inflation's erosion of their purchasing power.  Businesses, in turn, jacked up prices to cover the increased wages.   

This never ending cycle of wage-price pressure fueled a 12% inflation rate in 1974. Once started, wage-price spirals are like trying to brake a speeding locomotive.  The inflation rate zoomed to 14.5% in 1980. Companies' profits slumped and consumer spending plunged, stalling economic growth.

After years of dithering, the Federal Reserve finally acted in 1979 when Paul Vocker took the reins.  He ended the days of easy money by rapidly hiking interest rates.  The prime lending rate kept climbing until it hit 21%.  Volcker's tough medicine stabilized prices, but triggered two recessions.

There are eerie similarities between that inflationary crisis and today's economic environment.  Most economists and stock market promoters shun any comparison because they fear the stock market will crater.  They have a boatload of reasons why this period of swollen inflation will be different.

As the inflationary storms brewed last year, economists, stock analysts and the Federal Reserve Bank dismissed surging prices as a transitory hiccup. They predicted the supply side would soon catch up with the post-pandemic spending spree, restoring price equilibrium.  They were appallingly wrong.

Despite warnings from a few bank CEO's, the Fed stubbornly dug in its heels on increasing interest rates to temper inflation.  When the Fed finally changed direction, it was too late.  Fed Chairman Jerome Powell has signaled three interest rate hikes this year. The threat of a fourth is a real possibility.

The Fed's inaction is hard to fathom.  The data has been streaming in from the Bureau of Labor Statistics (BLS), the Department of Commerce and the Federal Reserve's 12 district banks. (Note: Data used in this blog comes from those three sources.) The indicators were clear but Powell demurred.  

Since last year, the economy has been on a treadmill of higher wages and higher prices.  Private sector wages increased 4.1% in November the largest jump since September of 2001 when wages spiked 5%. Both figures are 12-month rolling averages. Fourth quarter gains were 4% as wages keep rising.    

In 1974, wages skyrocketed 6%, contributing to a double-digit inflationary rate. The U.S. may soon hit that number because every day brings news of more companies hiking wages to attract workers and then hiking prices. Inflation in November hit 7% and forecasts are for higher rates ahead. 

The top line inflation number doesn't tell the whole story.  Food prices were up 5% in November.  Energy costs escalated 29.3% on a 12-month rolling average.  In the 1970's, runaway oil prices were one of the key drivers of inflation.  Few will concede the connection today.  

The Fed's key inflation gauge, Personal Consumption Expenditures Price Index or PCE Price Index, soared by 5.8% for the year.  That topped the previous period's increase of 5.7%, becoming the fastest inflation since 1982.  This is exactly what happened in the 1970's. Denial doesn't change facts.

Workers are hard to find, adding to wage pressure.  Thousands either left their jobs or were furloughed or terminated in the pandemic.  A large number have decided to remain on the sidelines. Others rejoined their firms, then left for higher paying jobs.  The share of workers leaving their jobs has risen to 3%.

The labor participation rate--an estimate of the economy's workforce--stands at 61.9%, which is 1.5 percentage points lower than the level in February, 2020. It means there are less people working or actively looking for a job. There are currently nearly 11 million job openings in the U.S.

An estimated 10 million workers are missing, compared to the pre-pandemic numbers. President Biden points to the 3.9% unemployment rate as proof the job market is robust.  However, that figure does not include millions of discouraged workers and those marginally attached to the workforce.

The wage-price spiral deniers point to the fourth-quarter 6.9% growth in the country's Gross Domestic Product, the broadest measure of the nation's production of goods and services, as proof of a healthy economy. However, most of the growth owed to businesses restocking depleted inventory.

That means the GDP uptick was not the result of increased consumer spending. Excluding the inventory effects, the nation's output grew at a puny 1.9% in the fourth quarter. That is a worrying sign for economic growth this year.  It portends only modest gains in growth for this year. 

All the data paints an ominous economic landscape. Inflation continues unabated.  Wages are billowing to catch up in a job market that has more openings than qualified workers.  Inflation and wages moving in tandem will feed the vicious inflationary cycle that will force the Fed to keep boosting interest rates.

Because the Fed sat on its hands for too long, the danger is an overcorrection.  As the Fed tinkers with rates, the cost of borrowing, credit card debt, car financing, home mortgages and home equity loans  spike.  In the face of the onslaught, consumer spending will retreat, making a recession more likely.

The Fed is standing on a precarious precipice. With the mid-terms lurking, it may be difficult for the Fed to remain independent and do what's best for the long term, instead of caving to political pressure. If the Fed crawfishes on its announced rate hike schedule, inflation will get worse.        

Biden's Year One: Unchecked Chaos and Division

President Biden campaigned for the nation's top office as a uniter.  He lectured there were no Red or Blue States, just Americans.  He promised an end to chaos.  The adults were moving into Washington to fix America.  After one year in office, there is more division, more chaos and less trust in government.

In poll after poll, Americans agree on just one issue: the country is hopelessly divided.  In an NBC/Wall Street Journal poll published in October, eight in ten adults expressed dismay at the bitter division.  A Pew Research poll found 85% of Americans are weary of the political divide.

A USA Today/Suffolk University poll found 66% of respondents think the U.S. is on the "wrong track", while just 20% believe it is going in the "right direction." This same poll put Mr. Biden's approval rating at 38%, one of the lowest levels recorded for the first year of a president's term.   

Polls indicate a chasm has been expanding since the pandemic.  Mr. Biden's vaccine mandates and demonization of the unvaccinated have split Americans into two camps, pitting those wanting to make their health decisions against those who believe government can dictate those choices.

When the president went to Georgia to deliver his roundly criticized speech on voting rights, he did not sound like a healer.  Instead, he accused those who opposed his attempt to federalize elections as siding with racists, such as Bull Conner, George Wallace and Confederate president Jefferson Davis.

He could have included in that number former West Virginia Senator Robert Byrd, who was a member of the Ku Klux Klan at one time. But, Byrd was a Democrat, so he gets a pass.  Mr. Biden eulogized Byrd's leadership,  but forgot to mention the senator filibustered against the 1964 Civil Rights Act. 

Mr. Biden, who claimed at a news conference he achieved more in his first year than any other president, has presided over the most chaotic period in history.  Inflation is spiraling, slapping a hidden tax on every American.  His anti-fossil fuel policies spiked gas prices, hurting average households.   

Food prices are ballooning.  Apartment rents are soaring.  Homes are becoming unaffordable for many Americans as prices skyrocket. COVID is still raging. The tide of illegal immigrants invading the southern border reached a peak in 2021. Empty shelves dot grocery stores in America.  

Crime is sprinting to record levels in many states.  Twelve major cities broke records, surpassing grim milestones in just the first 11 months of 2021. Chicago led the nation with 739 homicides, followed by Philadelphia (521) New York (443) and Los Angeles (352). FBI data for 2021 is not available. 

Real wage growth for workers is down by 1.0% since February 2020 when inflation is taken into account.  The president likes to brag that workers hourly pay has increased 4.8%.  However, inflation zoomed to 7% in December, the highest rate of price increases in nearly 40 years.

Americans have seldom faced such dire circumstances. It is unnerving, especially for younger generations. Americans are less optimistic about this year than their counterparts in other developed countries; a trend documented in polls.     

In a recent Ipsos Tracking Poll, Americans want Mr. Biden to focus on the economy, the pandemic, jobs, immigration, crime and unifying the nation, in that order.  Yet Mr. Biden is currently championing voter rights and a multi-trillion dollar entitlement expansion, issues that aren't on Americans' radar.  

His plummeting poll numbers reinforce the fact the president has failed to connect with working Americans.  He has chosen the path of deferring to the elitists--big donors, wealthy climate activists, the progressive base, unions and racial demagogues--instead of the average Joes he claims to identify with.

Democrat strategists insist the problem is Mr. Biden's achievements have not been recognized in the face of unprecedented challenges. But that's a smokescreen.  The issue is Mr. Biden's priorities do not align with what most Americans care about: the economy, inflation, jobs, crime, immigration.

Little wonder Americans trust in government plunged to its lowest levels in 2021.  A National Election Study found only about one-quarter (24%) of Americans say they can trust the government in Washington will do what is right either always or most of the time.  

Political allies are urging Mr. Biden to change his messaging and leave the White House to talk directly with Americans. That may be the worst advice ever delivered to a president by his own party. Unless Mr. Biden jettisons his current policies, chaos and destructive division will become the new normal.  

A Boomer Manifesto: Stop Hating Us!

An Open Letter To Millennials:

Pay attention whiny Millennials.  I'm talking to you 23-to-38-year-olds. Stop scapegoating Boomers.  Boomers left a better world than we inherited.  Yet you complain about your circumstances.  Life is never easy for any generation. Just accept it and get over yourselves. Be happy for goodness sakes.

Many of you moan that Boomers bequeathed you a rotten world.  The climate is a furnace.  Oceans are dirty and choking in plastic. College loans are a financial yoke.  Homes are unaffordable. Child care costs too much. Boomers snatched all the wealth.  The economy is unfair. Life generally sucks.  

Millennials grumble they are tethered to their work.  They're on call 24-hours-a-day, seven-days-a-week. Many haven't stepped inside an office in more than a year, but carp about their jobs.  Millennials lament no generation has faced such unrelenting job tension.  There is no escaping work.         

Their rants on social media are epic meltdowns.  "What's it like to be an fossil?" Millennials rage when Boomers challenge their cranky attitude .  If confronted with history and facts, they are dismissive: "Okay, Boomer!" Blaming other people for your plight will be the epithet for your generation.  

Millennials voices are suddenly trendy because they have surpassed Boomers as the nation 's largest adult generation.  Boomers, those born from 1946 to 1964, clung to that distinction for decades until the latest Census data confirmed Millennials outnumber the former by a margin of 72-to-70 million people.

The name Boomer originated from the term Baby Boom, the phenomenon of a sharp rise in birth rates after World War II. Beginning in 1946, there were a record 3.4 million births, the highest ever recorded in a single year.  That was the beginning a population explosion that lasted through 1964.

Counting yourself as Baby Boomer was once a badge of distinction. No longer.  Millennials and their cousins in younger generations feel entitled to free child care, free health care and free college because Boomers have it too good.  Oh, and Boomers should pay for the free stuff.   

Let's acknowledge that stereotyping any group, especially an entire generation, is unfair.  There are many hard-working, very intelligent, deeply motivated, joyously satisfied Millennials.  However, their voices are drowned out by the bellyachers.  Those are the ones that need a history lesson.

Boomers were endowed with paucity.  Most parents didn't graduate college.  They were not hedge fund managers.  We lived in modest neighborhoods. Vacations were a luxury.  Boomers were not gifted a car the day we received our driver's license. Few grew up in affluence.  We were grateful for what we had. 

In elementary school, teachers drilled us on how to survive a Soviet Union nuclear attack by hiding under our desks. Kids had nightmares about the bomb.  Boomers remember the day the world trembled when a Russian fleet headed toward Cuba. A bloody military confrontation appeared imminent.  

We dealt with the fear of polio, a crippling disease that struck children. We wept the day a U.S. president was shot and killed.  The news about the assassination broadcast over school public address systems stunned us.  How could anyone murder a president of the strongest nation on Earth?   

Those events shook us to the core.  Our world felt unsafe. There were no counselors to help us deal with the trauma. Our parents example of grit and determination in the direst times gave us strength. Taught us how to deal with adversity.  The lessons proved invaluable once we were on our own.

Boomers earned the title of the most educated generation, many becoming the first in their family to be awarded a college degree. College was certainly not as expensive as today, but household incomes were far less too.  Many Boomers worked in the summer and during college to pay the costs.  

During that time the Vietnam War was raging in Asia.  Thousands of students were drafted and sent to the jungles in Vietnam.  Boomers served with distinction but were unwelcome when they returned home.  Anti-war protests, led by Boomers, roiled campuses and changed public opinion against wars.

After college, jobs were not as plentiful as post-World War II.  Job competition was fierce. Those who had jobs worked long hours. There were times we slept at the office and toiled on weekends. While iPhones were not welded to our hands, bosses used landline phones to keep us connected to the office. 

Boomers didn't break America, we tired to fix it.  We embraced civil rights long before Black Lives Matter.  Boomers were on the front lines of marches for equality.  Dr. Martin Luther King found disciples among white Boomers.  Boomers were the first generation to attend desegregated  schools.

Boomers kickstarted environmental activism.  We were the first generation to spearhead cleaning up  polluted lakes and rivers.  We joined organizations dedicated to the environment. Boomers were the force behind recycling. No past generation had been willing to tackle environmental issues.

Boomers, often branded the "me" generation, answered the call to join a new outreach program called the Peace Corps.  Thousands volunteered to work in the U.S. and overseas to help others in need. Over the years, Boomers embraced volunteerism as part of every American's civic duty.

Boomers give the world the Internet, which linked the entire planet. They invented an ingenious device called the computer. Boomers also created wireless communications, including the iPhone. They designed computer software.  These discoveries ushered in a new digital era that thrives today.

We huddled around television sets to watch the U.S. land on the moon in 1969, spurring a generation's interest in space, science, math and technology.  This unimaginable feat left an indelible impression on Boomers, imbuing a whole generation with exuberant optimism and self confidence.    

With every passing year, Boomers are now mocked for driving up the costs of Social Security and Medicare; benefits we paid for in taxes. Instead, Millennials should thank us. Boomers started the fitness craze which evolved into a healthier lifestyle, resulting in extended longevity.  

Don't hate Boomers because we are hard-working, industrious, competitive and have pursued the American dream. Yes, Millennials, there are obstacles to the life you seek.  They may seem insurmountable. Economic circumstances, work demands and life choices are arduous.  

But Boomers want you to succeed.  You are the future of this country. We are sympathetic with your trials and tribulations.  But you can learn from our experience. Embrace the current challenges and rise above them.  Create your own future. Pity parties are not productive. 

One day Millennials will be judged by younger generations too.  What will they say about you?  You can start today by turning down the volume on the litany of complaints and forge ahead with renewed determination to become the greatest generation ever.