Failing to arrest this fiscal and monetary policy—and soon—will, we believe, result in a Hobson’s choice of policy making, where future prosperity is at substantial risk.

Looming ‘Gray Swans’

There are at least four looming “gray swans” facing the economy. “Gray swans,” as opposed to “black swans,” are events that can be foreseen, but are unlikely. Black swans are totally unpredictable. (A gray swan is comparable to a hurricane in hurricane season, whereas a black swan would be something like a devastating earthquake.) Virtually all of the looming gray swans we can foresee are attributable to bad national policy choices. They include: 1) De-dollarization. The choice to try to weaponize the dollar against Russia for its invasion of Ukraine has led several nations to do direct settlements in their own currencies. We discussed the prospect of this happening here in February 2022. It has now come to be with the passage of the 21st Century Peace Through Strength Act (H.R.8038), which I discussed further here. 2) Oil shock.The Biden administration tapped America’s Strategic Petroleum Reserve to artificially lower oil and gasoline prices shortly after a 2021 election loss by prominent Democrat Terry McAuliffe for his governor’s race in blue/purple state Virginia. New Jersey’s incumbent Democrat, Governor Phil Murphy, barely squeezed out a win over his GOP opponent in that same election cycle in that deep blue state. At the time, the Washington Post said the results showed the “wind was at the back” of the GOP. The Biden White House did the same in October 2022, shortly before the midterm federal elections.

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