Economies Reopening slowly in the West causing Inflation

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Economies in the western world are starting to reopen. Is this going to cause inflation? Maybe. As of this article companies such as McDonald’s and Amazon are offering hiring bonuses. This is just the tip of the ice berg as companies all across the country are looking for workers. One of the first hint’s of coming inflation is wage hikes. We could be on a long and one way road with no getting off. Once you give wage increases to workers in a tight labor pool it is impossible to take them back. Unless of course there is a depression.

Depressions just don’t happen in the modern world of economics. Not with printing presses available. So what does this Canary in the coal mine mean? Higher prices could be coming as companies pass on the surging cost’s of doing business to you and me. Moving forward more and more companies are going to ramp up production and churn out more goods to meet demand. With surging stock markets and high flying real estate equity a large part of the population is flush with cash.

Of course the homeless camps are rampant and crime in the streets is out of control. But that is a story for another day. Right now wages are rising, cash is still loose and yes inflation is about to go higher. How high know one knows. It is said that China for example has huge stock piles of goodies just waiting to sell to us. There is of course on big question and that is how it’s all gong to get here? Blockages, backups and shortages of dock spaces, cargo ships, truck drivers are a problem.

The Coming BottleNeck

What is a bottleneck? In short it is an exit space for a large volume of material. When we look at the way the world moves goods around these days, supply chains are vital. Almost like an artery connected to a body delivering life giving blood. Once one of these arteries is severed the whole body as a whole could die. If you have ever heard of an artery being clogged you know the damage it can do.

Strokes, heart attacks and many more serious repercussions can occur. Once all these built up goods are unleashed at once it just might cause a serious blockage to the bottlenecks of the worlds trade routes. This might be a fatal blow to the worlds economies unless more Ports, Ships, Trucks and most of all workers are implemented. Supply and demand are being unleashed on populations coming out of lock down. A Tsunami of goods about to come crashing down only to have no way to flow through the bottlenecks of the trade routes.

This coming bottleneck through the trade routes is going to cause massive shortages of every kind of good imaginable. Food for example moves through these trade routes! Once blocked they are very hard to reopen. Just looked at what happened in the Suez Canal Trade route. Now their is other threats coming that can stop the flows, This threat could be the greatest bottle neck the world has ever seen.

Cyber Ransom the New Threat

Cyber Ransom ware is a type of malware or virus. It is used to make data inaccessible. When ransom ware infects a device, it can lock the screen or encrypt all of the files. Ransom ware can also spread to networks to spread and infect other devices. This is a serious threat which is almost impossible to deal with.

The White House along with other governments are urging companies to beef up their internet and network defenses. As the threat of cyber ransom grows it is putting the entire flow of goods at risk. From food chains to energy pipelines there security systems have been hacked.

These high tech criminals are going after the companies with the deepest pockets and they have no conscious.

The recent attacks have propelled ransomware to the top of President Biden’s national security agenda. It is expected to be part of his discussions next week in Europe, during meetings with allies, and in his summit with President Vladimir V. Putin of Russia. The administration accuses Russia of both launching cyberattacks against the United States and harboring ransomware hackers.

Ms. Neuberger noted “a recent shift in ransomware attacks — from stealing data to disrupting operations.” She urged firms to make sure that their “corporate business functions and manufacturing/production operation are separated,” so that an attack on business records, such as emails or billing operations, does not cut off critical production and supply lines.

The past month has shown that companies often do not understand the linkages between those two in their own systems — even if they previously insisted the functions were already separated. When Colonial Pipeline was hit with a ransomware attack last month, the attackers — a criminal group, DarkSide, with substantial operations in Russia — froze the business records side of the business, not the operational controls over the pipeline.

But Colonial, a privately held firm that supplies nearly half of the gas, jet fuel and diesel to the East Coast, took the added step of shutting the pipeline down because it could not get access to its billing systems or monitor the flow of petroleum to specific locations. And with billing systems out of reach, the company had no way to charge customers for deliveries.

Colonial Pipeline failed to communicate effectively with government officials, and ultimately paid a $4.4 million ransom.
Colonial Pipeline failed to communicate effectively with government officials, and ultimately paid a $4.4 million ransom.Credit…Drone Base/Reuters

The effects were immediate: Lines appeared at gasoline stations because of panic buying, airlines ran short of jet fuel and had to make stops on what were advertised as nonstop flights, and prices surged. Colonial failed to communicate effectively with government officials, and ultimately paid a $4.4 million ransom — against the usual advice of the F.B.I.

Coming Inflation

With all these threats to the bottlenecks it is hard to imagine inflation is not real. Of course once a bottleneck is unclogged it will again allow the flow to continue. The big questions are not yet answered though. How long will these clogs last? Will they affect other goods besides the ones clogged?

In my opinion the threats are real and will have dire effects. But there are certain ways one can protect ones self against the coming inflation spikes. Bottle necks are going to be real. Whether caused by a cyber attack or a broken down barge the threats are real. We just might have a roller coaster ride of inflation in the coming years with every ride up higher and higher.

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