Opinion polls show that Americans are gloomy about the current state of the economy, which 68% rate negatively. Not surprisingly, President Joe Biden and his fellow Democrats are focusing on the good news – a low unemployment rate and improved household balance sheets – rather than on the biggest weak spot: inflation.

Another Russian attack on Ukraine would destroy the entire post-Cold War settlement in Europe. Large-scale wars and occupations would again become the norm. The West finally seems to have realized that it cannot allow this.

Financial markets have become volatile once again, owing to fears that the US Federal Reserve will have to tighten its monetary policy significantly to control inflation. But many investors still hope that the Fed will go easy if asset prices start to fall substantially.

But the negative correlation between stock and bond prices presupposes low inflation. When inflation rises, returns on bonds become negative, because rising yields, led by higher inflation expectations, will reduce their market price.