There have recently been many warnings about near-term oil shortages stemming from the conflict in Iran. Most analysts assume that shortages mean higher prices. As I will explain, the dynamics of a self-organizing economy suggest the opposite outcome — lower prices, deepening recession, and shortages of goods and services that have little to do with price.
Rather than high prices, my major concerns are recession and the disappearing availability of goods and services that we rely on. This might be similar to the empty shelves that many stores experienced in 2020 and 2021. There may also be new government restrictions, intended to work around the reduced oil supply in a way that will allow essential services to continue to operate normally. Oil prices are likely to fall below $40 per barrel, as they did in 2020 with Covid restrictions.
In this post, I will try to explain why this counterintuitive outcome — shortages leading to lower prices rather than higher — is what the self-organizing economy tends to produce. Along the way, I will look at the current state of oil reserves, why the conflict with Iran is unlikely to be quickly resolved, and what the price behavior of oil since February 28 tells us. I will also step back to consider the broader picture: why war can seem like a solution to struggling economies, and what the 2020 Covid experience might teach us about what lies ahead.
[1] Reserves of already-pumped US oil have dropped to concerningly low levels.
On June 17, President Trump said, “We will run out of reserves in about four weeks without a deal.” According to the article, we are not certain whether Trump intended to apply this statement to US or world emergency reserves.
Also, according to this recent video, the US’s largest tank farm seems to be very close to the minimum level at which crude oil can be withdrawn from its tanks. And, on June 23, MSN said, “America may see actual gasoline shortages by July 4.”
The already-pumped oil in storage is intended to be used as a buffer if there are variations in supply or demand. The reason that these buffers are falling low is because considerable oil from them has already been used to mitigate the shortfall in crude oil supply to date.
The shortfall in the supply of crude oil supply cannot be expected to disappear quickly. There has been considerable damage to infrastructure in Iran and elsewhere. It will take years rather than months for this to be repaired. In countries where oil production has been shut in, some wells are likely to produce less after being reopened following many months of closure. Furthermore, Iran has no incentive to completely reopen the shipping lanes, since keeping them potentially closed has the potential to raise oil prices per barrel. Higher oil prices would help the finances of Iran.
[2] Perhaps because of concern about low buffer supplies, the US has negotiated a deal with Iran that seems unfavorable to the US.
Information keeps coming out that indicates that Trump’s current Memorandum of Understanding (MOU) is very favorable to Iran. It looks as if the MOU has been written as if Iran won the war. We are also seeing that other countries have begun acting as if Iran has indeed won the war. For example, on June 23, a joint statement was issued by Iran and Oman. The two countries seem to be co-operating in setting up the collection of funds from ships passing through the strait to cover insurance and other costs.
If we are dealing with a “done-deal,” and the US is coming out poorly, the level of conflict within the US is likely to rise. Many people will be angry with Trump for getting the US into the war to begin with. Unfortunately, there is likely close to nothing we can do about this situation.
[3] Trump or another leader cannot restart the war against Iran and expect to do any better.
A major problem is that the US has substantially depleted its ammunition supplies, and it will take years to replenish them. While the US could perhaps launch a short attack, it would not be able to carry out a sustained campaign for very long.
Another issue is that the armaments that the US has stocked to date are designed to be used in a different type of war than the one that is being fought today. The US needs drones and close-by locations from which to launch them. Iran damaged most of the US’s bases that are close to Iran in the conflict that began on February 28. Without substantial rebuilding, the US has no functioning bases close to Iran from which to launch such drones.
Restocking armaments will likely take several years, especially if new types are needed. Adding to the difficulties of the US is the fact that China has been the primary source of many critical minerals used in the production of high-tech goods and ammunition. In recent years, China has restricted access to these critical elements. The US is now developing mines for some of these minerals, but setting up entire supply chains will take years.
[4] One motivation for attacking Iran might have been to raise oil prices to a higher level.
Based on their models, economists typically reach the conclusion that inadequate oil supplies will lead to high oil prices. It is likely that President Trump and his advisors believed that inadequate oil supply would lead to high oil prices.
Some analysts, including me, would argue that the models of economists are very inadequate; they give misleading indications by leaving out the complex self-organizing nature of the economy.
Higher oil prices are sometimes desirable because they encourage more oil extraction. For example, higher prices allow marginal wells to continue to be profitable longer. They can also make a new, higher-cost source, such as tight oil from shale, attractive for drilling. Looking ahead, higher oil prices would make it easier to get oil company support for ramping up oil production in Venezuela.
Figures 2 and 3 show the connection that higher oil prices seem to have had in encouraging tight oil extraction from shale. Figure 2 shows historical oil prices, adjusted for inflation. Noted on this figure is my view of whether prices were high enough to encourage extraction from more difficult locations.
Figure 2 indicates that prices started to run up in the 2003 to 2008 era, when China started ramping up its manufacturing, and thus its demand for oil. In this same timeframe, there was also a growing demand for housing in the US, thanks to very liberal underwriting standards for home mortgage loans. Thus, the total demand growth for oil was very high.
Figure 3 shows that production of tight oil started ramping up in 2009, after oil prices had been rising for several years.
Another factor in the growth of tight oil production was the availability of cheap credit after 2008, but this has tended to disappear since 2021. Now, tight oil production seems to be leveling out, leading to rising concerns that tight oil production may soon decline, especially if credit is no longer cheap. Having higher oil prices might help postpone the decline of tight oil.
[5] Oil prices since the war started on February 28 have not bounced very high. Recently, they have tended to fall back, close to their pre-war level.
The first thing to note is the fact that the prices on Figure 4 do not reflect the actual prices to the consumer, which have often been greater. The cost of transporting oil has jumped in many markets, but this higher transport cost is not reflected in the “West Texas Intermediate” price of oil, displayed in this chart. These higher prices at the pump have led some of the more price-sensitive buyers of oil products to cut back on their purchases.
Second, there is a lag issue regarding how soon the impact of missing supply actually hits the market. The slow transit time of oil from the Middle East to markets means that the actual disruption of supplies did not hit until at least 50 days later. If crude oil first needs to be processed by local refineries and then the oil products shipped to customers, the lag would be even greater–perhaps 75 or 100 days in total. Thus, much of the price increase to date may be based on a fear of shortages, rather than on an actual shortage issue.
Third, there have been some changes that impact oil “demand.” Some consumers have been told by their governments to work from home or otherwise restrict their driving to save on oil consumption. Also, some flight schedules have been cut back. Recently, Ukraine has been targeting some of the oil infrastructure of Russia, leading to reduced gasoline and diesel availability within that country. All these issues have tended to reduce the demand for oil. The lower demand acts to hold down oil prices.
A fourth issue has to do with worldwide economic conditions before February 28. Even before the war, much of the world was in close to a recessionary situation. There were very many low wage earners who could not afford much beyond the basic necessities of life. Even a small run-up in oil prices tends to affect food prices because oil is often used in farming operations and food is usually transported to market using oil. With higher food prices, poor consumers were forced to cut back on other purchases. This recessionary dynamic can be expected to get worse if oil prices inch up even a bit.
[6] I expect that oil prices will continue to remain relatively low, or they will only briefly rise to high ($150+) levels, even if there are actual oil supply disruptions.
I expect that the dynamics we have been seeing since February 28 will continue, and may intensify. Governments will add new restrictions that will reduce oil use. Airlines will go bankrupt, or they will reduce flight schedules. Recession will become even more of a problem. These issues will tend to reduce usage without raising prices.
[7] What we may see more of is broken supply chains.
There will be more signs in grocery stores and in home product stores saying, “This product is temporarily unavailable.” Car repair shops may tell us that a required replacement part will not be available for several months. Physicians may tell us that a medicine or chemotherapy drug that they normally use is, at this time, unavailable.
[8] The operation of the economy depends on an adequate supply of many kinds of energy. If oil supply is reduced, an economy needs to shrink to a smaller size to match. This is what leads to recession.
One reason for the above observation is that we know that our own vehicles will not operate without whatever fuel they are designed for. This is clearly also true for all the delivery trucks in the world, and for farm machinery and for ships that transport goods across the ocean. With less fuel, fewer trips of many kinds will be made. Workers will be laid off. This dynamic sounds a lot like recession.
The expected lower world oil supply in the near future is not an issue that can easily be resolved. We are already seeing that even with a supposed settlement, disruption in oil supplies seems likely to continue and even to worsen, as the various limits on buffer supplies are reached. Unfortunately, we cannot expect the situation to be completely fixed for several years.
Furthermore, the economy is facing even more disruptions than I have outlined above. For instance, Ukraine has been disrupting Russia’s oil infrastructure with drone attacks. There have also been disruptions to sulfur exports from the Middle East. Sulfur is used in many ways, including as a fertilizer and in the production of sulfuric acid, which is used in the mining of uranium, among other things. In addition, there have been disruptions to liquefied natural gas (LNG) exports from Qatar. The lack of these important products will tend to further damage supply chains and lead the economy deeper into recession.
[9] We are ultimately dealing with multiple not-enough-to-go-around scenarios. This situation will tend to increase conflict in the world.
The dynamic we are dealing with is similar to that in the game of Musical Chairs.
The game of musical chairs is played in rounds. Players walk around the edge of a circle of chairs while music is played. When the music starts, the number of players is equal to the number of chairs. In each round, one chair is removed. The music plays and then suddenly stops. The players must then scramble to grab a chair. Since the number of chairs is now one fewer than the number of players, small fights can ensue.
The problem is basically, “Not enough to go around.” War often sounds like a reasonable solution to leaders.
[10] War can seem like a solution.
Strangely enough, war has multiple advantages to economies that are suffering from difficulties related to low commodity prices and, indirectly, low wages in related industries. One commodity is food. If food prices are too low, farmers will be unhappy that their earnings are low. They may stop farming and try to make a living from putting their land into a land bank and working elsewhere.
If oil prices are low, the oil industry can experience pockets of low wages. There have recently been reports of lockouts and strikes in the oil industry. I would expect these labor actions to be most prevalent where oil fields are depleted.
If a government announces a war, it looks like the government is “doing something” about the country’s problems. There is suddenly employment, either as a soldier, or in building armaments. GDP tends to rise because the war leads to a larger share of the population working. The war can be used to justify the additional government debt needed to hire the additional workers. What convinced me of this relationship was this chart, showing a huge increase in US GDP during World War II:
Looking closely at the chart, it is also possible to see GDP increases during the Korean War (1950-1953) and between the time the US entered the Vietnam War, deploying up to 549,000 soldiers, and the time the US greatly reduced its forces there (1964-1969).
I think much of Europe is now in a situation in which war looks like a solution. Russia may also be in such a situation. Ukraine, with its problems, is also in such a situation.
[11] There may be lessons to be learned from the 2020 Covid restrictions and the ultra-low oil prices that resulted then.
Back in 2019, many people in the financial world were concerned about the economy. In 2019, the US faced significant financial issues, including a budget deficit that increased by $205.4 billion to $984.4 billion. In addition, in September 2019, there was a spike in the interest rates financial institutions charge each other (repo rates) that concerned those who followed financial markets closely.
What took place in 2020 seemed to some of us to be close to miraculous. The strange actions related to Covid greatly brought down the price of oil. Covid also provided an excuse to give money to households. US government debt was able to increase greatly, and, somehow, the world economic system has held together until now. Financial problems were “kicked down the road” a while longer. Without the pressure of financial problems, the economy could work on ways to mitigate the energy problem a while longer.
Economies are self-organizing systems, just as the human body is a self-organizing system. Both are powered by “energy dissipation.” Human bodies tend to heal wounds, like magic. Economists talk about an “invisible hand” being helpful to economies. In situations where the healing of economies does occur, low oil prices can be part of the magic.
[12] What might be ahead?
We are again in a period when the US and world economies are on shaky ground. Debt levels are high, and conflict levels are high.
As I have discussed in this post, I expect the general trend in oil prices will be down, rather than up. The major reason why oil prices are likely to be low is because, with the damage done in the Middle East, the quantity of oil supply available to the world is starting to shrink. As a result of the low oil quantity, the world will produce fewer goods and services. This is close to the definition of recession! (Also, on Figure 1, this is why we expect Wile E. Coyote to fall down, rather than to float up, when his support disappears.)
I expect as oil product shortages hit, local leaders will figure out ways to mitigate the oil bottleneck that the world now seems to be facing. Local leaders will enact rules that make certain that whatever oil is available is used to maintain essential services. It will not be surprising if local leaders keep people at home, using one excuse or another, to keep oil demand in line with the quantity of oil that is available. This is a big part of why oil prices will tend to be low, in a manner similar to 2020.
With low oil prices, I expect that inflation will be low. Pressure to keep raising interest rates will disappear. The economy will not be doing well, but the issue will not be high interest rates preventing new investment.
In my opinion, the world economy needs to reorganize with shorter supply lines to get through the oil “tight spot” that the economy is in. If supply lines could mostly be kept within the areas marked on Figure 7, it seems like a significant amount of transport fuel could be saved.
The conflict with Iran doesn’t seem to be ending well for the US, but there might be a silver lining. The pain the US is experiencing in Iran will hopefully teach the US to stay out of issues in the Eastern Hemisphere. If a conflict with Iran is to ramp up again in the near future, I expect that it will be a European group that will be getting involved, not the US.
We don’t know quite what is ahead, but the experience in 2020 shows that a strange confluence of events leading to low oil prices can actually be helpful. Let us hope that a similar result will be possible this time.
I put up a new post, so I am closing comments on this one.
I also read a note by the famed Zolton Poscar where he hinted that .. US treasury can actually buy 30/40 year JGB bonds to support the imploding JGB bond market.
So Japan doesn’t need to sell USD bonds and U.S. treasury might buy long dated JGB with the yen it has accumulated through its recent intervention… you scratch my back and I scratch your back.
Confetti money my friends… cash is going to be complete trash… and savers should be punished for saving after understanding what US treasury secy did this week.
No wonder every damn risk asset is breaking out .. it’s like cash should be converted into an asset before it loses its value.
https://x.com/riteshmjn/status/2084981915921355003/photo/1
Yes, do exactly what they want you to do. That always seems to work for the best!
These guys, like Zoltan Pozsar, Richard Werner, Ellen Brown, Tom Luongo, Michael Hudson, Wolf Richter, etc, are good people, with good analysis, but they’re completely energy blind, so, in a time of energy abundance, their analysis could have worth, but not now – no theory of anything applies now, because things will break regardless.
Well, to be fair, Hudson and Richter to some extent work with petrodollar and oil/energy resource depletion as varied power-heft dynamics amongst the key world rivals ( and blocs ). Obviously, that doesn’t make them proper ~PO aficionados as you correctly mentioned.
US exports of crude oil have plunged close to a multi-year low despite major SPR releases still ongoing!
Commercial crude inventories falling to decade-lows while refinery runs stay strong = 🇺🇲 simply doesn’t have the ability to meet world’s current need for oil supply. 🛢💰
https://x.com/WhiteTundraSG/status/2084967902839701861/photo/1
“ I disagree profoundly.
10:29 And the reason for this is that the uh is that the Zalinski regime
10:36 is essentially a regime that can go on making war without a country, without a
10:43 people, without a Ukrainian base. It’s a firing platform.
10:50 It now will be funded at roughly speaking 70 billion euros per year for at least two more years. You have all
10:59 sorts of Zelenski spokesman including Kir Bdanov uh in the last couple of days
11:07 or hours keep repeating the point. The Ukrainian Ukraine is a warfighting platform. It’s
11:17 not capable of being destroyed by destroying the the country, the economy.
11:25 No, it has to be isolated in the west where it was ideologically based during
11:33 the World War II. It’s um that no amount of um loss of population through forced
11:43 exile through voluntary exile has destroyed the Ukrainian support for this firing platform nor the financing of
11:52 this platform. for the US side, it is a cheap uh alternative because as Trump
12:01 has explained, as we’ve explained, the US can s can now get the Europeans
12:09 to pay for this war against Russia and pay for the United States to to arm it
12:16 andsupport it”?
But where are the clowns?
Quick, send in the clowns
There ought to be clowns
Don’t bother, they’re here
“The machine reads the mood, not the strait. It scores open as bullish and never checks whether a single ship actually moved. It cannot see that the fertilizer is still trapped in the Gulf. It cannot see that next year’s planting season is being starved right now, in real time, while the market rallies. It cannot see that the structural wound of this war, the constricted flow of the things the world actually needs, is completely untouched by the sentence that just lifted the market. The machine trades the tone and ignores the tonnage, because tonnage is not in its inputs. It was never taught to count ships. It was taught to score words. . . .
The market can be managed with words long before reality can be managed with ships, and managing the market with words is far cheaper, far faster, and requires nothing to actually change in the water. A president and his ministers issuing these statements are not only talking to you. They are feeding the machine that trades on mood, and the machine pays out in market stability that buys political time. “?
https://ajsignalnotnoise.substack.com/p/sentiment-analysis-algorithms-are?r=83255l&utm_campaign=post-expanded-share&utm_medium=web&triedRedirect=true
This one goes out to ks. A doomy nuclear winter article detailing the best places to ride it out. NZ, Iceland, Antarctica lol, Patagonia, Switzerland. Crossposted on ZH.
https://madgewaggy.blogspot.com/2026/08/the-last-places-standing-when-sky-turns.html?m=1
Debating this for yrs, decades..
Few days ago the 1984 was brought back here gain. Supposedly potentates on both sides US/Soviets had nightmares from it, perhaps it had some effect on the following ~disarmament. And the tidbit in the scenario about momentarily able to return to steam power economy kind of rhymes w. the N.Hagens’ cascading collapse profile option.
Today’s situation is slightly different in the sense most of the stockpiles has been turned into pellets and burned in NPPs already, so your washed dishes, pizzas in oven, and miles driven on EVs that was energy originally stored in missile tips.
On the other hand the delivery mechanism has been updated to utmost precision, so fewer remaining and to be flying but more devastating effect nevertheless ( per unit ).
Add more recently the big novelty, strategic assets being targeted by kiddie+ drones, so far with unusual calm response. Can you imagine Chavez, Assad or Castro family attacking US strategic installations ? They would be deleted in hrs to pre-stoneage, millions dead on the spot, no questions asked by anybody..
The piece quoted by reante just above is a quite over-the-top in the description of Switz-survival of a ‘nukulear blast’. Can’t speak to the capacity of all the underground infrastructure, specially not the military ones. (I’m in Switz and all the buildings I have lived in have ‘safe’ ‘bunker’ holds > another topic.) Food sufficiency is hard to dope out as transport / cooking / distribution mechs. are needed, yet imho it is pretty good, 6 months at least, maybe much much more, but … imponderables.
The main points left aside in the article are — the nuclear fall-out, there is no escaping it really (air, winds, etc.) CH suffered quite badly from the fall-out of Tchernobyl, possibly (imho yes) because the damage was ‘properly’ tallied, logged. (Contrary to France for ex.) — concurrent water contamination, and lastly, transport difficulties. (Not exhaustive, *OTHER* is always a category.)
On the plus side, the military ready to fight on the ground, with whatever means available, that holds, as does the ‘existential’ sorta feeling of many, including the huge amounts of foreignors. Social cohesion + Cantonal (v. small territory) organisation will do a lot, e.g. sharing / rationing / organising anything fast / will work as best as one can imagine.
Yes, the article is more of a doom literary genre only.
For example, in the Islandic chapter talks about the fish fleet as easily soldiering on post event ( what fuel doesn’t discuss )..
At least twice mentioned glacier-water melt off as the ace card. Well, that’s again bordering on nonsense, firstly the infrastructure to tap into must be made pre-event ( perhaps some have done it already ), meant in some underground connector fashion ( compound tapped into ~bottom of glacier ). But in open space, above ground setting, there will be always the risk of fall out accidentally getting into your surface pond-glacier water derived systems etc.
Also checked his older articles, and again just theoretical musings, the piece about relocation while structurally sound on the very basics, completely devoid of practical experience of people who have done it already. And recommending Virginia or Colorado is laughable.. unless meant some very soft scenarios.
__
PS given the Iranian performance as of lately, the mountain massive dug-in concept speaks very favorably to CH preparedness as well, although there the major problem will be likely the unequal scale vs other European/NAfrican/MEast countries / pop ~around eventually..
‘Oh Lord, I shall lift up mine eyes unto the hills, whence cometh my hope’?
I love this BS . Real life . Peter Theil has a hideout in NZ . During Covid he wanted to fly there . Problems
1 . Does not know how to fly his private air plane . His pilot and crew said ” NO” because the stay could be indefinite .
2 . His private plane was a small jet that needed multiple refuelling points which were not available .
3 . NZ under WEF candidate Jacaranda Arden instituted the harshest lock down . No flights in .
Mr Theil remained quarantined in the USA .
Talking of ” mice and men ” .
Hilarious. kulm, are you not amused?
Thiel is #2/3 rate level ( or at least at mentioned point in time) to the real wealth and power circle and their true actionable options. Aka real sized planes, boats, subs, and key personal entourage pre-cared for.
Besides, during the UKRo war escalation it has been openly said that new coordinates are dialed in for the real nuclear war now to be also including $B/T’s compound hideouts around the world. Hence clear message out there, don’t expect to suddenly bailout from your co-owned mess so easily..
Thanks Reante… very interesting. Switzerland has a lot of underground bunkers…
Good thing about nukes they burn their candles at both ends and the radiation goes away very quickly.
https://thehill.com/opinion/congress-blog/labor/6003046-ai-impact-job-market/
Most peopleat thks bllg tend to be older, and some of them did not hide their intention that they are entitled for their lavish retirement.
At some point being old will be seen as a crime. The boomers, who still think they deserve something, will be in bad shape.
https://archive.ph/Ypxmt
AEP LOL. It’s been awhile! Look what the cat dragged in.
If there are fossil fuels that can fairly easily extracted, someone will figure out how to do it. But my research [below] shows that, today, one court disallowed drilling these wells.
Ambrose Evans-Pritchard
Britain will soon be Europe’s energy powerhouse
The UK’s winning mix of nuclear, oil, wind and solar should please both sides of the culture war
Cast forward five to 10 years and Britain will be the only major country in Europe with a flourishing energy system across the whole technology spectrum.
The prevailing – dated – narrative of this country as the energy sick man of Europe will be turned on its head. Britain will be able to meet its core internal needs for both power and fuel from its own territorial sources, with enough joules to spare for rising energy exports to the European market. . .
I assume that Labour’s approvals for the North Sea fields of Jackdaw and Rosebank are now a done deal and that “tie-backs” from existing fields will be extended, amounting to drilling-at-will on the UK’s continental shelf.
A decade ago, it looked as if the UK’s depleted oil and gas fields would be worthless, stranded assets. We all have to think again. Seismic imaging and new drilling tech bring billions more barrels into commercial reach. . .
Rolls-Royce is going gangbusters. It is the only company with delivery contracts across Europe for small modular reactors (SMRs). Its 470-megawatt plants will be built in Britain, with home-grown technology.
The UK will be the only European supplier of advanced (Haleu) fuel for fourth-generation SMRs, coming in the early 2030s. In short, the country has a broad nuclear ecosystem, well-placed to build SMRs for hyperscalers.
AI:
The Rosebank oil field is the UK’s largest undeveloped oil and gas field, located approximately 80 miles off the Shetland coast, with an estimated 500 million barrels of oil equivalent. It has faced significant opposition due to environmental concerns and its potential impact on the UK’s climate commitments.
Today’s news:
Court Rules Approval for Rosebank and Jackdaw Oil Fields Unlawful
Environmental campaigners win case against UK government’s approval of two major oil and gas projects, with new approval needed before production can begin.
A UK court has ruled that the approval for the Rosebank and Jackdaw oil and gas fields in Scotland was unlawful, stating that fresh consent must be sought from the UK government before production can begin.
The case, brought by environmental groups Uplift and Greenpeace, challenged the initial approval on the grounds of insufficient environmental assessment, particularly regarding the climate impact of burning fossil fuels extracted from the fields.
Well, I recall when PM David Cameron promised energy abundance of the ‘too cheap to meter’ kind in the UK from ……..fracking. No comment!
I suppose they put this stuff out, rather cynically, in order to give people a sens of some hope.
I bought a thousand candles today. That’s my bid for ‘abundance’……
Question for Reante:
Where does the stock market and its bullshit valuations fit into the hands plan?
The stock market just crashes and burns when Global Finance Capitalism crashes and burns from dollar deflation. Dollar deflation from the Hormooz controlled pulling of the plug times the phase change to the decentralized dollar stablecoins global cooperative national socialisms that seeks to maximize the dollar broad money supply to exploding dollar real value so that dollar -based energy production can be maximized under Collapse MPP. Stablecoins as the parallel financial end-around public-banking Eurodollar 2.0 in response to the deflation-driven Eurodollar shortage that HHH talks about. Rest of World inflating away their currencies in order to chase the collapsing Eurodollar supply and, increasingly, the nationalized, public (Treasury -issued) dollar stablecoins in order to best chase the ever-increasing real value of energy. The mathematical difference between the Eurodollar money supply collapse and increase in stablecoins supply (which comes at the real value of ROW currencies) equals the drop in global real GDP, or something like that.
We’re still just waiting on the shortages and subsequent rationing to hit and catalyze the deflation. My imminent call of last month not so imminent after all… I’m deferring to HHH’s within two-months call now.
(which comes at the cost of the real value of ROW currencies)
What happens to the assets underpinning the new stablecoin system if this happens, treasures, Bitcoin and gold? Do they remains relatively stable, or deflate or inflate relative to the old valuations?
I see Tether’s non- T-bill stablecoin backings as Trojan Horses intended to render Tether insolvent such that it requires partial or full nationalization. I would expect Bitcoin to go to zero, gold to go back to where it started before the bubble at a thousand or less, though given the increase in real value of the dollar, the loss won’t be so bad in real terms.
Nationalization of stablecoins to whatever degree just makes common sense to me in the Collapse context of my national socialisms/social nationalisms if stablecoins are going to become the new public dollar. Bitcoin has no intrinsic value during Collapse that I can see. Stablecoins will be 100% superficially backed by T-bills but ultimately they’re backed by their ability to purchase energy and other essential commodities, hence their public petrodollar status.
Here’s an article I just found on insider debates on the potential nationalization of them. Only one guy considers it to have a realistic likelihood but none of these folks are looking at peak oil collapse. But OTOH, since these private issuers are tightly regulated controlled conduits for t-bill purchases, nationalization isn’t an ideological imperative of national socialism which is still pro-market; it’s just anti-monopolistic.
https://forklog.com/en/nationalisation-of-usdt-and-usdc/
Thanks. I’ve been arguing publicly for the past 5 years that the entire Western system is insolvent, banks, gov, everything, and that the whole lot would be ‘nationalized’ eventually to prevent system collapse. You can imagine how people react to that. If stuff like gold and Bitcoin are not safe stores of value, where are the elites going to hide/store their liquid wealth? Just in property/hard assets alone? Stablecoin treasury accounts?
Yeah I’ve been saying much the same thing so I can imagine. I expect that the Elites have prepared every which way that seems plausible to them because they can afford to. Gold may still be the best store of money long-term if civilization lasts for another decade or more, but frontloading dollar capability is how I’d choose to go about if I had savings but that’s just me. I don’t save because I don’t make much and I frontload capability as a rule because I don’t want to have money hoarded when others don’t have any. That’s a can of worms imo. And it also may just go to waste because the only goods I might want to buy may be suddenly unavailable.
Deflation can’t run forever. Nicole Foss always said dollar deflation would run its course in a few years and the rapid road to hyperinflation would follow it and I can’t argue with that. I feel like I can only see a few isolated things lining up beyond the event horizon. Deflation, stablecoins, the Global Peace Accords and the Decommissioning. That’s about it so far. Not much at all. And it might remain that way.
What specifically are the “Global Peace Accords” and the Decommissioning?
The Global Peace Accords are the global political resolution that comes after the climactic radioactive nuclear power industry fallout from the current engineered war geopolitics that the 7 year old Non-Public Degrowth Agenda (DA) calls the Big Nuclear Scare (BNS) for that reason. The Accords conclude by consensus that given the new economic realities, the humanitarian costs of the nuclear power industry now outweigh the material benefits and so the industry must be decommissioned.
The primary function of the DA has always been theorized to be the covert management of the denuclearization of the civilization while the civilization is still able to denuclearize — it’s a massive undertaking –otherwise chaotic collapse of a nuclear civilization threatens a potentially extinction level event, in the northern hemisphere at least, from all the spent fuel pools exploding due to failing grids no longer being able to cool the pools.
I found this description of the ForkLog periodical:
https://cryptoindustry.com/companies/forklog
About ForkLog
ForkLog stands as a beacon of information in the ever-expanding universe of cryptocurrency and blockchain technology. As the largest Russian media outlet specializing in this dynamic field, ForkLog serves as a vital hub for both novices and experts interested in these disruptive technologies. With its comprehensive coverage and insightful analysis, ForkLog demystifies the complexities of digital currencies and distributed ledger technology for its vast readership. The company has cemented its reputation by delivering balanced, well-researched journalism that presents the facts and explores the far-reaching implications of blockchain innovations and cryptocurrency adoption. Their in-depth articles, market reports, and exclusive interviews provide readers with a panoramic view of the digital economy and the opportunities within it. ForkLog’s editorial content, authored by seasoned journalists and industry specialists, delves into a broad array of topics from the technical intricacies of blockchain development to the latest trends in cryptocurrency markets. . .
The original language of the articles is Russian, but they have been translated into English by AI.
here is another take on what I think will happen to the stock market gold Bitcoin it does sound a bit far fetched but if you look at just before 2022 it looked like it was going to happen but it didn’t.
once deflation hits everything will collapse the central Banks have only one tool at their disposal to fix things or in other words get out of deflation .
interest rates expect interest rates to go negative permanently.
this will lead to the bubbles being reinflated but for the people that stayed in the markets they will be starting from zero.
at this stage this is where you will have to back the market.
so my advice Diogenes is hold on to your precious metals and keep all assets away from the markets and in cash.
once the dust settles after the collapse and interest rates have been set into negative Territory that is when you put everything into the stock market and you watch those precious metals skyrocket.
we are talking about negative 5% interest rates don’t think it will happen it will because the hand or the orders call the shots.
the only thing they cannot control is the natural world.
there is also another possibility the deflation hits taking out everything except the stock market and cryptocurrencyoil prices will naturally drop causing massive deflation as a result less oil will be available but with a high stock market people have money but they just can’t spend it on anything this is where you will see stores not having any stocks because the deflation makes it unprofitable to produce so what’s the point of having money if there’s nothing to buy.
at this stage expect the world to go back to the Stone Age.
Any prolonged period (2 or more years) of deflation will completely destroy the stock market. Literally every listed company has issued insane amounts of debt to fund share buybacks. This debt will become un-serviceable once corporate profits disappear as a result of deflation and be defaulted upon, rendering the equity essentially worthless.
Deflation sounds like a major problem for stocks.
What I am seeing is inflation in food and fuel . Deflation in all other activities especially industrial . There are no new customers and no company is expanding — result everyone is lowering their price to get the customer who might be in the market . I talk real time — my work takes me to companies engaged in automation of production lines , special purpose machine manufacturers , ERP consultants etc , also mass market retail chains specially in the garment sector .
In the great depression milk got dumped in ditches while people went hungry because there were no buyers. That situation cannot happen for any extended period of time time during Collapse or the Elites are dead people walking. Hence the social nationalisms.
The article is not free, but its begining sounds like a warning alarm:
“Growing Risks Amid the Rise of Artificial Intelligence
When the showcases of capitalism resort to the well-known practices of Central European financial groups, it’s worth paying close attention.
Footnotes in the financial statements of tech giants have revealed that total spending on data centers is significantly higher than what is directly reported.
Companies set up separate SPVs—that is, special purpose vehicles—with minimal capital, and private debt funds provide them with the resources needed to build data centers through loans.
There are many risks”
Translated by DeepL.
https://hnonline.sk/finweb/komentare-a-analyzy/96295283-rastuce-rizika-na-pozadi-umelej-inteligencie
Heat damage of crops:
The heat is scorching the apples right on the trees; they’re under a lot of stress. The drought is taking a toll on crops throughout Slovakia
https://hnonline.sk/finweb/ekonomika/96295262-horucavy-palia-jablka-priamo-na-stromoch-su-vo-velkom-strese-sucho-ukrajuje-z-urody-po-celom-slovensku
Yep, that’s one of the disadvantages of modern fruit/apple intensive farming methods, the trees are young-ish / replanted in short cycles, not meant to develop proper shielding leaf structure ever as in the old days for hand picking in ~height ( now deemed less MPP – efficient ) etc.
Moreover, increasing no. of people in every domain are moreons-cre@ins, so I would expect ( seen that ! ) in many orchards even during this heat wave grass moving continues and very closely to the sod etc. Because it must be all nice-tidy for Mr. inspecting-Investor, ” don’t you know ! ” etc.
I rarely cut grass on my property this summer – it would be scorched very soon on heavy clay.
Well, something unprecedented happened here.
My young trees are around 9 years old and coming on nicely.
But the tree which was here when I bought, and which I estimate to be around 35 years of age, suddenly decided to drop almost all of its 400 or so apples!
It isn’t showing any signs of heat stress, is nice and green, hasn’t lost any leaves, and it usually drops quite a few fruits in late July, still leaving a lot to become perfectly ripe in late August. Usually too many to eat.
(They don’t keep at all, unlike the varieties which I planted. but are delicious. )
But not this year! Just a few dozen hanging on this evening.
The hot summer last year certainly resulted in smaller fruits, but no loss like this.
I’m watering the young trees regularly.
The best of the three quince trees looks happy and I hope it stays so!
Growing broccoli and kohlrabi starts to be a failure in my garden: too hot.
Do you have some tip for kolhrabi – is it mostly for cold veg salads or stuffed herring fish rolls ( meaning the root ) or are there any other worthy recipes / usage ?
I once tried ( store bought ) in sort of quickly done hem&eggs chopped the root into it and was not bad add. filler, but would likely use the bed space for other vegs instead.
I just eat it raw. Or my mother used to add it into the soup, espacially chicken soup.
Thanks, I’ll try it again then, perhaps in this weather it could be unusually refreshing.
That was probably some shock reaction indeed.
Usually, incl. this season I expect-observed especially from older apple varieties like 2-3x such sudden load drops step by step.. but for sure coming sooner.
That wise old tree must be a small c conservative. Ain’t about to be messing around with no crazy ass summer.
It took very decisive action, that’s for sure.
As you all say, the spindle method makes for very weak trees. Plant Antonovka apple trees and other hardier varieties, full trees only.
The old tree is a proper one, about 18-20 ft in height now.
The only negative was that the crop won’t keep, and in fact flavour is impaired after only a few days, but very delicious if freshly picked. Apples for breakfast, lunch and dinner is fine by me!
It’s weathered some very hot summers without doing this dramatic shedding.
My other trees, which should crop very late in the season, are also not dwarf varieties – a dwarf plum and a cherry didn’t do at all well, so I avoided that option for the apples, and have the space.
This hot summer ( w.out damp interludes ) perhaps had some advantages, the cherries everywhere got so dark quick, that they sort of made their skin into hard crust-envelope, so no worms – died early also because of the weather forcing, no-few fungus spoilage either. Only token bird damage, and large wasps seamed to be set a back too. Someone from the Balkans explained that such firm cherry crust is known-observable fact for them, but not ( used to ) come every season either..
So, the weather-reality moved northbound massively..
Another ~benefit could be earlier maturing nut bushes and tree nut crops.
The sloes on my blackthorns seem to be maturing very early, in astonishing colours.
This is the first real crop since I planted them as hedges 8 years ago, mixed with hawthorn (whitethorn).
Lots of berries on those too, which I leave for the bird to eat i late winter.
The 200 year-old blackthorn tree, which was dying but I rejuvenated it with some very hard pruning – left it as a stump! – has regrown very strongly and is covered in berries too.
Despite the drought, a young yew bush is putting on strong growth even today. Most odd.
with temperature swings becoming larger it is best to use varieties developed in continental climates. The whole of Western Europe used to be milder.
Who needs fresh apples when you have Kraft Red dye37 ?
“TRUMP’S HISTORIC DEFEAT: THE END OF AMERICA’S UNIPOLAR MOMENT Professor Pape argues that the war in Iran is not simply another lost war. It marks the strategic culmination that brings America’s entire unipolar era to an end. The same country that once demonstrated absolute escalation dominance now watches its preeminent power collapse in real time, and the president in the chair when the history books slam shut is Donald J. Trump. THE HISTORY BOOK VERDICT From 1991 to 2026 the arc is complete, and Trump sits at the final chapter. The first Gulf War proved U.S. precision revolution supremacy with only 147 American dead against the fourth-largest army on earth. That splendid victory shaped decades of global order. Trump’s war is erasing it. He will not be forgotten. He will be remembered as the president who delivered the biggest strategic loss in American history, larger in consequence than Vietnam itself. THE POWER VACUUM EXPLOSION America’s marked decline in regional dominance has created a power vacuum far more dangerous than anything that followed Vietnam. North Vietnam simply unified the country. No lasting vacuum. No global economic crisis layered on top. Today every actor is racing to fill the void: Iran, Saudi Arabia, Turkey, Pakistan, the UAE, and more. Rivalries, preemptive spirals, and proxy contests are already accelerating because power vacuums never stay empty. IRAN’S STEADY RISE While America oscillates, Iran advances drip by drip, consolidating leverage as oil inventories drain and economic pressure mounts. Its goal is clear: force every American troop, base, and naval asset out of the region. That trajectory continues whether Trump escalates or freezes, because the vacuum itself invites Iranian expansion as the rising regional hegemon. THE BOTTOM LINE Trump inherited the peak of American power and is presiding over its dramatic regional collapse. The power vacuum now unfolding is wider, more chaotic, and more consequential than the aftermath of Vietnam. History will record the date range and the name of the president who closed the unipolar chapter. This is the sound of an
empire’s dominance ending in real time. “?
https://x.com/Mark4XX/status/2084597562158338325?s=20
I am afraid Prof. Pape is correct:
“TRUMP’S HISTORIC DEFEAT: THE END OF AMERICA’S UNIPOLAR MOMENT Professor Pape argues that the war in Iran is not simply another lost war. It marks the strategic culmination that brings America’s entire unipolar era to an end. The same country that once demonstrated absolute escalation dominance now watches its preeminent power collapse in real time, and the president in the chair when the history books slam shut is Donald J. Trump.
But at this time, the US$ is still the cleanest dirty shirt in the laundry, at least among the US and its allies. Other currencies (Euro, Yen, Australian $) are in worse shape.There still is a need to stick together and rally around the US$, as bad off as it may be.
I was saying the same thing as soon as the war broke out and I saw Iran flip the tables on USrael, that it was the beginning of the end for the US empire. Israel used the US and Nutten-Yahoo didn’t care if the US empire was exposed and it was.
Well they should care because it is the US empire that allows Israel to get away with mass murder and genocide.
The empire was fighting a 20th century war while Iran was fighting a 21st century asymmetric war. The US has depleted it’s missile stocks and one senior military official said that we now have to decide who do we protect, the US Homeland or Israel.
A young Slovak woman writes about her food experience in the USA:
What’s your impression of American food so far?
Food prices are similar to what we have back home, which surprised me a little. Unfortunately, this is reflected in the quality, which I think is clearly worse. A lot of things taste downright artificial.
Even the food at McDonald’s is kind of rubbery and tastes different than it does back home. Slovak food is incomparably better. I’ve realized that if I wanted to eat healthy, I’d have to pay a lot extra for it.
Read more: https://www.sme.sk/closer/c/slovenka-plavcik-usa-leto-brigada-peniaze
Translated with DeepL.com (free version)
I would agree that purchased food is terrible. A person needs to cook from scratch, at home. A few canned things are OK (beans and tomatoes particularly), but otherwise do your own cooking at home.
But even that is not what it used to be.., e.g. it’s advisable to put 2x salt dosage ( and of higher quality ) to boiling pasta, as it gets at least some potential problems reacted out when later rinsed; and or similarly when cooking lentils it must be pre-soaked in water ( exchanged few times ), there have been test made CAN/US vs RU produced lentils and the residue chem. level is apparent; not sure if it is also question related to gmo or only for other crop..
Last month google searches for “Auto Accident” was all time record HIGH!
Another compounding hockey stick
https://trends.google.com/explore?q=auto%2520accident&date=all&geo=US
Tough life of a woman mayor in Slovakia – she drives under the influence of alcohol:
This wasn’t the first time the mayor of Malatiná had driven while intoxicated. Last time, she tried to get into a fight, according to former police officers.
The case is being handled by the Office of the Attorney General.
https://my.sme.sk/orava/g/politicka-kariera-tatiany-cervenovej?exit=9360c760-c5d2-4572-b9a7-d550a4eb41ee#019fbc7d-8b8a-72f0-b052-8b6e933494dc
This morning on the motorway near me:
“For reasons that have not yet been determined, the driver of a van rear-ended a truck traveling in front of her; the likely cause of the accident was the driver’s fatigue combined with microsleep. Neither the van driver nor the truck driver sustained injuries in the accident. Police administered breathalyzer tests to both drivers to check for alcohol; both tests came back negative.”
https://www.pravda.sk/spravy/domace/clanok/2018197-dialnica-d1-na-povazi-je-pre-nehodu-uzavreta
Last year some guy drove right into our super grocery and crashed inside the store. I was joking around town saying “I heard that store has great “Door Buster Sales” going on.
lol
“Say goodbye to synthetic fertilizers. Dr. Mariangela Hungria, a renowned Brazilian soil microbiologist at the Brazilian Agricultural Research Corporation (EMBRAPA), has been awarded the 2025 World Food Prize—often called the “Nobel Prize for Food”—for her groundbreaking advancements in biological nitrogen fixation. Over more than four decades, Hungria developed over 30 microbial technologies, including inoculants and co-inoculants that enable crops (especially soybeans) to harness symbiotic soil bacteria. These bacteria naturally convert atmospheric nitrogen into plant-usable forms, dramatically reducing or eliminating the need for synthetic nitrogen fertilizers. Her innovations have transformed tropical agriculture, boosting yields sustainably while cutting costs and environmental harm. In Brazil alone, these biological solutions are applied across more than 40 million hectares of farmland (primarily soybeans), saving farmers an estimated US$25–40 billion annually in fertilizer expenses. The environmental benefits are equally profound: by replacing chemical fertilizers, her methods prevent the release of over 180–260 million metric tons of CO₂-equivalent emissions each year (figures vary slightly by source and year, with recent estimates around 230–260 million tons for recent seasons). “?
https://x.com/Rainmaker1973/status/2084519704811466759?s=20
Yes, you can buy some of these symbiotic ” spores – inoculations ” for various ( targeted ) branches of vegetation for some years already. The Brazilian thing is likely extra fine tuned for the Soybeans ( and their climate / soilz ) though.
The previous methods on ~same principle were used for many hundred years prior to that, based on inter-cropping ~legumes etc.
Sure, it works, but it’s just an extender not a brake through.
People will (did) mis-use it for over reach eventually.
Then other limits apply as usual.
There is a newly discovered organelle called the nitroplast, in algae, which is the first known nitrogen fixation by a eukaryote. Perhaps this could be integrated via bioengineering into other crops, eliminating the need for urea fertilizer.
“Elena Newton
. . . China supplying the drones being used to kill Russians.?
https://simplicius76.substack.com/p/disastrous-end-to-zelenskys-40-day/comments?utm_source=substack%2Csubstack&publication_id=1351274&post_id=209392543&utm_medium=email%2Cemail&isFreemail=true&comments=true&utm_campaign=email-half-magic-comments&action=post-comment&r=nm2q
Maybe. What does Elena Newton know?
most comments on his substack are not worth reading. They just become name calling and my side is better. Could read mainstream crap if i wanted that. Articles are good, comments not so much.