Date: 2025-07-03 Page is: DBtxt003.php txt00026417
RANDOM TPB INTERACTIONS
Justin Fox and Susan Warren at Bloomberg
Draft communication not yet sent!
Justin Fox and Susan Warren at Bloomberg
Draft communication not yet sent!
Original article:
Peter Burgess COMMENTARY
I drafted this message to Justin Fox and Susan Warren at Bloomberg about a year ago ... but it was not sent at that time. I don't remember why not, but it should have been!
Peter Burgess
Dear Justin ... Dear Susan
I became a young CFO in the USA in the 1970s and got to learn about inflation first hand ... it was referred to back then as 'cost-push' inflation because the core energy costs throughout the non-OPEC world were going up and up and up. Before 1973 the crude oil price was less than $3.50 a barrel. During 1973 it went up to $13.40 and by the end of the decade was more than $30.00 a barrel. Corporate profits in almost every sector of the US economy evaporated, and prices were pushed up to cover the cost increases. There was little or no 'embedded profit' in any of the supply chains.
Fast forward to the present time and the business economics are completely different. The energy sector is not dominated by OPEC in the same way, and the US economy is less dependent on imported energy than it once was. Most sectors of the US economy are at record levels of profitability and the same goes for many parts of the global economy. Inflation is now being caused by the decisions of corporate boards to maximize prices and profits because at this point in the business cycle 'They can' and history shows that leaders in the business community have always done this unless there are draconian measures to stop them.
I learned accountancy in the UK in the 1960s and as part of my training did some of the 'grunt work' on the tax returns of some high net worth individuals and major companies in the UK. Starting in the war years and continuing at least into the 1960s there were very high tax rates ... like in excess of 90% marginal tax rate ... applied to high levels of individual remuneration and higher profits than the historic norms.
The modern economy has been 'financialized' in an impressive way if you look at it from the point of view of a financial investor ... and the present inflation will not hurt investors anything like as much as it will impact the majority of the US population. From my perspective, the Biden administration has done a commendable job of legislating to improve the US economy in spite its razer thin majority in Congress and little or no support across the aisle ... or indeed in the media.
I have just done a road trip from the New York area to Denver (and back by plane). I did many trips like this in the 1960s when I was in my 20s mainly by Greyhound bus. My big surprise was that I was seeing a different America than what I seem to have been reading about in the media .. left, right, mainstream and social. All the bad news that's fit to read seems to be editorial policy and reporting on the truly good news nowhere to be found. Sad...............