Christine Lagarde, European Central Bank President, said she plans on raising interest rates only gradually, while acknowledging that the EU’s inflation problem was steadily getting worse.

Speaking at the ECB’s annual economic policy conference in Portugal on Tuesday, Ms Lagarde said Europe’s inflation problem was deepening, but warned that the region also faced weaker growth prospects related to the war in Ukraine.

And

The ECB’s gradualism, as Ms Lagarde described its approach, reflects the larger economic blow that the war in Ukraine has dealt to Europe….

President Joe Biden (D) also (in)famously blames Russian President Vladimir Putin’s invasion of Ukraine for the high inflation in the US.

I wonder if accelerating the shipment of arms and ammunition; accelerating, in particular, the shipment of tanks, artillery, rocket artillery, antiship and antiaircraft weapons; and getting out of the way of transferring combat aircraft (all with associated training and logistics) to Ukraine might then eliminate that inflation cause and boost economic growth by helping Ukraine quickly to win the war inflicted on it.

Graham Allison, Douglas Dillon Professor of Government at Harvard University’s John F Kennedy School of Government, and Eric Schmidt, ex-Google CEO and ex-Executive Chairman of Google and its successor, Alphabet Inc, in a Monday Wall Street Journal op-ed, expressed considerable concern over the US’ growing dependency on other nations for computer chips that are critical to our economy (and to our national security, I add). They proposed three steps to alleviate this dependency.

• double down on [US’] strength in the manufacturing of less-advanced semiconductors
• use [US’] political leverage with the governments of Taiwan and South Korea to persuade TSMC and Samsung to form partnerships with US chip designers and manufacture advanced semiconductors in America
• tighten the links between R&D and manufacturing

That first step, though, is tantamount to surrendering superiority in most-advanced chips to other nations, including our enemies. Emphasizing that can only come at the expense of not emphasizing as much other, more critical, steps (see below). We certainly should push our market dominance in those lesser chips, but only as a source of revenue for other chip production aspects.

The second step is as suboptimal: forming partnerships with others for chip design and manufacture works to stifle our own innovation and skills in innovation in design and manufacture technique and equipage. That makes it too easy to take the lazy way and simply copy others’ work. That costs us the skill and flexible (and intuitive) thought that underlies innovation.

The third step is the only one with real value—and that only to the extent that Government isn’t dictating those links or their nature, and only to the extent that private enterprise owns all of the output from any enterprise/government partnership (subject to some key criteria that would prevent those enterprises from simply freeloading off government/taxpayers).

Allison and Schmidt, while right to be concerned, have missed the Critical Item that’s at the foundation of breaking that dependency.

Also necessary for our gaining control of our own fate is shifting raw material production—lithium, rare earths, nickel, cobalt, and copper, for instance—to within our own borders. Not all of it, to be sure, but enough to ensure at least a core of these critical items along the entire chain from dirt in the ground to components arriving in domestic factories for assembly into finished products are produced domestically.

Even if all we accomplish is doing our own mining, that will go a long way toward short-circuiting our dependency on other nations—whether enemies like the People’s Republic of China or friends like the Republic of China—by giving us strong influence over their processing these materials into computer chips.