text: BULLARD: EXPECT HIGHER INFLATION LONGER: St. Louis Federal Reserve Bank President Jim Bullard said in an interview yesterday that inflation could remain “higher for longer,” adding that the Fed is trying to figure out how to get inflation back down to 2%. (AC: This is a new inflationary regime, and a 5%+ Consumer Price Index is almost certainly the “new normal”. I spelled out five reasons why structural inflation is here to stay in yesterday’s Weekly Economic Outlook. – M.S.)GEOSTRATEGIC INTSUMCHINA PREPARING FOR MAJOR CYBERATTACKS ON U.S. AS PART OF TAIWAN REUNIFICATION: Former Cybersecurity and Infrastructure Security Agency Director Chris Krebs said last week that China is preparing to conduct major cyberattacks on U.S. infrastructure and industry as part of its offensive military plans to force reunification of Taiwan with mainland China. Krebs said China is currently laying the groundwork for its planned attacks and that “every single company out there should be conducting simulations, scenarios, impact assessments, tabletop exercises at the objective level around what’s happening in the Taiwan Straits.” (AC: China has shifted gears from its former plans for a political solution to Taiwan’s reunification and is now focused on integrating military operations to achieve its objective. Chinese intelligence and security agencies have likely already mapped out cyberattack targets in the U.S. and are now solidifying their access to those networks and building countermeasures against U.S. post-attack mitigation efforts. Expect China to incrementally increase gray zone activities and information operations as its military increases operations to isolate Taiwan from its western allies. – M.M.)SOLOMON ISLANDS DENIES ENTRY TO U.S. AND U.K. COAST GUARD SHIPS: The Solomon Islands, now under heavy Chinese influence, has denied entry into its waters to two U.S. and U.K. Coast Guard ships. Both ships are conducting patrols to assist partner nations in securing their sovereign waters from illegal fishing and smuggling activity. The Solomon Islands government recently banned foreign journalists who are not respectful of China. Also, a Reuters report out of Australia claimed the Solomon Islands Prime Minister’s office had twice distributed Chinese government money to 39 of 50 members of parliament, allegedly to influence pro-China policies. (AC: The Solomon Islands signed a new security pact with China in April of this year. The agreement was a cause of concern as it permitted the secret deployment of Chinese military forces in the islands and allowed for the construction of permanent Chinese naval facilities. Solomon Islands officials were quick to deny the China basing rights as well as claims that China had purchased undue influence throughout the government via illicit payments. The latest actions by the Solomon Islands government indicate U.S. and Australia’s initial concerns were warranted. – M.M.)