Tag: economy

The Easy Money Fairy Tale Is About To End…Violently

For the better part of the last couple years, I have wondered whether financial markets are permanently broken. Not simply overvalued or temporarily irrational, but actually broken at the mechanical level and permanently distorted. I’ve written about it.

The basic process that is supposed to make capitalism work goes like this. Capital flows toward good ole’ fashioned productive uses (like the George Foreman Grill™) and away from flashy hot-shit stupid ones (like the Apple Vision Pro). Good businesses eventually outperform bad ones. Fraud eventually gets exposed. Making money is the point of a business. Price is a rationing mechanism and is determined by free markets. This system appears to have been dead for the last 10 years, at least.

Nowadays, we function under a derivative of capitalism (hereinafter referred to as “crony capitalism snorting bath salts, operating under policies so disorganized they’d make a Jackson Pollock painting look like the blueprints for a nuclear reactor”) where trillions of dollars can be created overnight, governments and central banks focus obsessively on a handful of key numbers, and preserving the nominal value of stocks and other financial assets has become the priority.

Everything else in the economy is then forced to adjust accordingly, and if you don’t like it, or it causes the price of your Whopper Jr.™ to go to $57, f*ck you…that’s just how money works nowadays.

We’ve spent most of the last 20 years systematically removing consequences from the financial system. Rates went to zero and stayed there for years. The Fed expanded its balance sheet by trillions. Every major crisis was met with an intervention, liquidity facility, bailout or assurance that policymakers stood ready to keep the machine running. Capital was forced to become extraordinarily cheap, and investors eventually became conditioned to believe it would remain that way. We laughed off our country’s credit downgrades. Economists and analysts turned into total pussies and cowards, crumbling into bits every time the market sold off 5%. Financial projections have turned into Hunter Thompson-esque 3AM drug induced astral projections.

And we turned into the real life version of Idiocracy for markets.

Keep reading

We Are at the Mercy of the Fed, Whose Leaders Believe that Printing Money Solves Every Other Problem

I’m sure that most of the discussions in the closed-door meetings at the Fed’s recent Jackson Hole Symposium centered on the problems of printability. They certainly won’t be part of the paper presentations or press conferences.

The US government has been spending like a teenager with an unlimited credit card that they don’t have to pay off since going off the gold standard.

The Fed doesn’t even have a monetary policy in any sense. It’s been playing games for more than a quarter century, really ever since 1971, and even earlier going back to its very beginning of the Fed. These games center on the problems of printability. The Fed prints as it pleases and it wants to please its masters.

Its mandate is not CPI inflation rate target or the Unemployment Rate target of the “natural rate of unemployment”—that is a tall tale to gain public acceptance and gain credibility for itself. They are like two warning buoys in a harbor, but not their real goals.

Their real mandate is also two-fold. It’s to serve the interests of the state, especially to facilitate budget deficits and the national debt and to serve the interests of the big banks.

The only role the working-class plays is a byproduct of the real mandates: if some families temporarily benefit from Fed activities, so be it. It especially has a political role to fool the voters around election times. That is why politicians are now so “concerned” with beef prices, diesel fuel prices, and mortgage interest rates. Their real concern is to get reelected and to stay in power.

That is where “printability” comes into play. With a central bank, the Fed, all the problems of government and society can seemingly be addressed with the Fed printing more money. New spending programs, new wars, new subsidies, welfare benefits, etc. are all made possible with a few keyboard entries on a computer at the New York Fed.

The price inflation only comes later as the money makes its way through the hands of the banks, the government, and to businesses that end up driving up resource costs. Eventually, in the end, higher prices emerge and, even later, higher wages. After that, unemployment and bankruptcy result and the cycle begins anew. The citizenry is none the wiser as few people figure out the Fed’s game as it once again “comes to the rescue!” with lower interest rates.

The biggest problem with printability is how it affects political behavior and social ideology. Do you live under a budget constraint or not? Without a budget constraint, people and politicians assume that government can solve all our problems at no cost and politicians (who are very short-term oriented) spend without constraint. They vote for everything. They go along with stupid wars and policies. They pass budgets with huge deficits. They go unconcerned with the national debt. Americans and their government are now completely dependent on keeping the monetary spigot opening ever wider.

This cycle is of a historically long duration thanks to the appearance of the covid situation and the Fed’s and the government’s $10 trillion bailout. Then, when CPI inflation skyrocketed and they had to cut back a little, they started through the back door. releasing their hoard of $2.5 trillion in Repurchase Agreements through the banks and the stock market took off.

Keep reading

‘Survival Mode’ – Farmers Crushed As Trump’s War On Iran Sends Diesel Cost Soaring

As Donald Trump’s war on Iran nears the seven-month mark, the economic damage is reverberating all over the world, and all across the United States. Among the Americans who are feeling the most pain from a war their federal legislators never declared are the nation’s farmers, who are growing increasingly desperate under the weight of rising costs for diesel, fertilizer and equipment.

It’s a demographic that leans hard to the right, but now feels let down by Trump and others in Washington. “It’s his war that caused this, this war in Iran. We’re not winning that war. And many farmers feel like we shouldn’t be there,” farmer John Boyd, Jr told CNN. Trump says the war in Iran is necessary to prevent the country from building a nuclear weapon. However, going back to 2007 and up to the eve of the war, the US intelligence committee has repeatedly assessed that Iran was not building one. 

“I’ve done this 34 years. I have never worried and stressed like I have the last year,” North Carolina farmer Matt Bell told CBS News. “We’ve cut everything we can cut.” Trying every option he can think of to improve his cash flow, Bell has put off replacing equipment, produced some of his own fertilizer, and opened a pumpkin patch and hayride business for the fall. The rising costs come after a difficult period had already weakened his operation’s financial security. 

“The last several years in agriculture have been terrible, and we have just cut the fat anywhere we could. But we’re just getting to the point now there’s nothing left to cut. You cannot run without fuel. You cannot run without fertilizer. You have to have that,” Bell said. 

As a result of a major reduction in oil exports from the Persian Gulf, the nationwide average cost for a gallon of diesel hit $6.49 this week, up 75% from a year ago, according to the AAA. Lately, the price volatility has led Bell’s diesel distributors to offer price quotations that are only good for a matter of hours. He’d budgeted $35,000 for fuel in 2026, but blew past that number in August. “Every piece of equipment on this farm runs on diesel,” he emphasized. 

In an interview with Sky News, Texas cattle rancher Lynn Fleming said her August outlay for few was almost double what she’d paid in recent years. “Obviously the main [factor] is what we’re facing everyday with the Iranian situation,” Fleming said. Her husband, Robert, said he felt blindsided by the war. “We had no idea that he was going to pull the prank with the Strait of Hormuz. He didn’t tell us … he was going to go do the military maneuvers and try to control the oil supply over there. We had no warning of what was going to happen.” A major cornerstone of Trump’s 2024 campaign was his pledge to be a “peace president” who would refrain from starting any new wars.    

Keep reading

As Gas Prices Soar, Congress Goes Home

Instead of six more weeks of winter, we will have at least six more weeks of war, brought to us by Secretary Hegseth and his boss, President Trump, with the help of Speaker Johnson who avoided a procedural vote, taking it upon himself to adjourn, under the Rule 1, Clause 13, of the House of Representatives.

Consider. The Administration, compelled by Israeli interests, has driven America into a war of choice against a nation that represented no threat to our country. The war against Iran is becoming more dangerous every day, more casualties, more expense, and more devastating economic and moral consequences.

On September 15, the House of Representatives expressed its constitutional will and voted 220–204 to direct the President to end American participation in the war against Iran.

This constitutional crisis extends beyond one resolution or one cabinet secretary. The House exists as an independent branch of government, with its own authority over war, appropriations and impeachment.

The Speaker, by preventing a recorded vote on the Hegseth Impeachment and sending members home, prevented the House from exercising one of its most consequential checks on executive power. The practical effect was to protect the Administration from an immediate confrontation with a chamber that had voted to end the war.

Keep reading

America Is Making More Diesel Than It Has Since 2019. It Still Costs a Record $6.29.

The most useful number inside this week’s record diesel prices is not $6.29. It is $1.97 — the gap between a gallon of on-highway diesel and a gallon of regular gasoline. Sit with that one, because it is the whole story.

Diesel holds roughly 14% more energy per gallon than gasoline — 137,381 Btu against 120,166 Btu, using the Energy Information Administration’s own 2026 conversion figures. It currently costs 45.5% more to buy. Every argument ever made for paying extra for a compression-ignition engine was built on the first number. The pump is being priced off the second.

Record diesel prices are not, whatever your instinct says, a story about a crude oil shortage. The United States is on track to produce more crude this year than in any year in its history. American refiners are making more diesel than they have since 2019. The fuel set a nominal record anyway. Understanding why means looking past the barrel and at the machinery that cuts it apart.

The number that broke the record

The EIA’s weekly survey put the national average on-highway diesel price at $6.285 per gallon on Monday, September 14. The agency says that is the highest figure in nominal terms since the series began in 1994, and the highest in inflation-adjusted terms since 2022. We flagged the moment diesel first pushed past $6 earlier this month.

The velocity is the part that should worry people. Diesel climbed 31.8 cents in a single week. In the Lower Atlantic it jumped 49.1 cents in seven days. Year over year, diesel is up roughly 68%. Regular gasoline over the same twelve months is up roughly 36%. West Coast diesel averages $7.250 a gallon. California averages $8.039.

Two fuels, one barrel, wildly different trajectories. That divergence is the clue.

American refineries are already running flat out

Here is the fact that reframes everything. U.S. distillate production averaged 5.1 million barrels per day from January through August, the most since 2019, and refineries ran at 97% utilization in the week ending September 11. There is no idle capacity waiting to be switched on. The industry is not holding back. It is redlined.

What changed is where the diesel goes. Refining activity has fallen in Russia, China and the Middle East, leaving the rest of the world short of middle distillate and bidding for America’s. U.S. net distillate exports have sat near or above the 2021–2025 high since February. Inventories, which normally build through summer, went sideways instead. By September 11 they were 15.8 million barrels, or 13%, below the five-year seasonal average.

The United States is not running out of diesel. It is selling diesel to people willing to outbid you for it.

That shows up in the crack spread, the rough measure of what a refiner earns turning crude into product. The EIA’s September Short-Term Energy Outlook raised its 2026 distillate crack spread forecast to $1.57 a gallon, up 20.8% from the previous month’s estimate, and lifted the 2027 figure to $1.25. Refiners are not the villains of this story. They are unambiguously the beneficiaries.

Keep reading

Bessent Tells Japan to Do What Washington Refuses to Do

Treasury Secretary Scott Bessent is now pressuring Japan to rein in government spending and restore credibility with the bond market as Japanese yields surge. Reuters reports that Bessent confronted Japanese officials over what Washington sees as an inconsistent combination of aggressive fiscal spending and monetary policy, warning that instability in Japan’s enormous government bond market could spill directly into U.S. Treasuries. Japan’s 10-year government bond yield has climbed above 3%, reaching levels not seen since 1996, as investors increasingly demand greater compensation to finance one of the most indebted governments in the world.

Bessent understands the problem perfectly when he looks at Japan. Government cannot continue borrowing endlessly, suppress interest rates, manipulate its currency, and assume global capital will sit there forever accepting whatever return politicians decide to offer. Japan has spent decades experimenting with virtually every form of monetary manipulation imaginable. The Bank of Japan pushed rates below zero, bought enormous quantities of government bonds, controlled the yield curve, and expanded its balance sheet until it became one of the dominant holders of Japanese government debt. None of that eliminated the debt because it merely postponed the day when the market would again determine the price.

Japan’s government debt remains above 200% of GDP, and rising yields dramatically change the arithmetic. When rates were near zero, Tokyo could carry an enormous debt load because servicing costs remained artificially suppressed. Once yields rise, refinancing becomes progressively more expensive. The government then must issue still more debt to cover interest expenses, cut spending, raise taxes, or find new buyers willing to finance the entire operation.

What makes Bessent’s warning remarkable is that Washington is confronting the same fundamental problem. The United States has surpassed $40 trillion in federal debt, the Treasury must continuously refinance existing obligations while financing new deficits, and the 10-year Treasury yield has been testing levels around 5%. Bessent has simultaneously expanded Treasury buybacks in an effort officially aimed at improving liquidity while clearly recognizing the political and financial importance of preventing disorder in long-term government debt.

He is therefore telling Japan something Washington desperately needs to hear itself: the bond market eventually demands fiscal credibility. Bessent is especially concerned because Japan does not exist in some isolated financial universe. Japanese institutions are among the world’s largest foreign investors and major holders of U.S. assets, including Treasuries. When Japanese yields were virtually zero, enormous amounts of Japanese capital moved abroad searching for returns. If yields at home become sufficiently attractive, some of that capital has less reason to remain overseas. That is where Japan’s debt crisis can become America’s problem because capital can begin returning home precisely when Washington needs enormous amounts of foreign money to finance its own deficits.

Keep reading

Bessent Says Rates Will Drop When Iran War Ends, Defends Trump On Media Ban And AI Policy

Treasury Secretary Scott Bessent was a guest on CNBC’s Squawk Box this morning and covered a lot of ground including the interest rates, the China trade talks, AI accountability and the President’s decision to ban the White House press corps of MS NOW, CNN and Politico.

Bessent, in an interview that aired Monday morning on CNBC’s Squawk Box, shrugged off last week’s decision by the Federal Reserve to increase interest rates to 3.75% to 4% — its first rate hike since February 2023. “Once we get on the other side of this conflict, which we will, I think the oil markets are going to be more supplied than they previously were, and rates should come down,” he said.

Right now the 10-year note is yielding at 5% plus or minus on the treasuries. That’s up 100 basis points since the war with Iran began in late February. He admitted that the Treasury Department’s $5 billion plus buyback of 10- and 20-year notes on September 10 did nothing to bring down the yields on long-term bonds in the aftermath of the announcement. However, he said they would have gone up even more without the announcement.

“Since President Trump has come in, the U.S. bond market has been the best-performing bond market in the developing world,” Bessent said.

The official also spoke at length about his 12-hour meeting on Sunday with Chinese Vice Premier He Lifeng ahead of the Trump-Xi summit at the White House later this week. He outlined a safety framework for AI with He and established a channel to deal with any future incidents — whether caused by “uncontrollable agents,” nonstate cyber attackers, or even bioweapons. He also spoke about the November 10 expiration of the U.S.-China trade truce and how Iran’s biggest trading partner is China.

Keep reading

Ukraine Pounds Major Moscow Refinery As Global Diesel Crisis Threatens Economic Shock

Military conflicts, economic wars, and resource wars are converging ahead of the Northern Hemisphere winter.

Export restrictions on critical materials and energy products are adding economic pressure worldwide, raising the risk that supply disruptions and retaliatory measures widen existing conflicts. With no clear path to de-escalation, the potential for spillover from active war zones remains top of mind.

The most pressing news so far this morning is that Ukraine launched a major overnight drone strike on Russia, hitting a Moscow refinery despite President Trump’s request for Ukraine to stop striking Russian energy infrastructure as a global refining crisis deepens.

Bloomberg reports that the Gazprom Neft-owned Moscow Oil Refinery, about 16 miles from the Kremlin, was struck by drones. The facility has a processing capacity of around 245,000 barrels a day and supplies fuel to the surrounding metro area.

Ukrainian President Volodymyr Zelenskyy wrote on X, “One of Russia’s key oil industry facilities and the aggressor’s logistics facility were hit. These are billions of dollars that sustain the war machine. The systems used included FP-1, RZ-100, MICH-2000, Palianytsia, Vendetta, Liutyi, Bars, Flamingo, Sichen, and Pelican.”

Last week, diesel futures and refining spreads climbed to record highs as worsening supply disruptions in the Gulf and Russia tightened availability of the industrial fuel that powers the global economy.

Potential export restrictions, or extensions of existing restrictions, are compounding the squeeze. A report on Tuesday said Moscow was considering extending its diesel export ban, while Senate Majority Leader John Thune told reporters that day he was “open to exploring” a US diesel export ban.

The squeeze was even more severe in refining spreads. The US heating oil crack, which measures the difference between fuel and crude prices, surged to $117 a barrel on Wednesday, the highest level in Bloomberg data going back to 2009.

Keep reading

“Not Enough Raw Material!” – Resource Wars Put Tungsten In Crosshairs As Western Rearmament Supercycle Looms

The UK just invested £71m to restart a tungsten mine, with an option on half the output. Other governments will follow. I should be pleased – I’ve spent years arguing the West needs to fund its own supply.

The problem is I’ve seen what happens next. In 2008, Japan and South Korea poured billions into securing critical mineral supply chains. They funded projects across Australia and Canada. The result: no material produced. The money went to a generation of junior mining executives. I remember them on their boats in Monaco – very grateful, very happy. Governments have good ideas. The people they back to deliver on them are sometimes another matter.

The challenge is that a government is a jack of all trades – it can’t tell a good mine from a bad one, so it hires engineers who write glowing feasibility reports with a waiver in the small print. And there is no shortage of people who call themselves management. Most of them are clowns who shouldn’t be left alone with a box of matches.

Japan and South Korea learned. They stopped trying to pick winners and pushed the risk onto their industrial base – the companies that buy the stuff. Those companies know how to protect a dollar. If the new money follows that model, the checks might land somewhere useful this time.

Tungsten markets

Michael Dornhofer, ISBP – assessment as of 11 September, 2026

Tungsten prices in the USA and Europe stay unchanged for another week and are still around 3000 USD/mtu WO3. Reports from China show their domestic price trend moved to an upward tendency.

The reason is quite simple: There is not enough raw material! As the APT price in China is only about one third of the western price, Chinese APT producers are not willing to buy western concentrates on western price level. But without a significant amount of imported raw material, the industry is running short on raw material. Soon it will become clear whether the Chinese domestic prices will go up towards western levels, or China might reduce output of downstream products for export.

The coming weeks will show us. And there’s another interesting development that even some “experts” overlooked. On 5 August, China placed several foreign entities under sanctions and banned them from operating in China. One entity on this list is the non-profit organization RBA.

RBA (Responsible Business Alliance) is the world’s largest industry coalition dedicated to promoting responsible business conduct. RBA has more than 600 member companies including Apple, Tesla, Microsoft, Amazon etc. and runs the RMI (Responsible Minerals Initiative) program.

Nearly the entire western downstream industry insists on RMI certificates for their total supply chain. When, due to the ban of RBA, no RMI audits and certificates are possible in China, western downstream producers cannot accept any tungsten material or downstream products coming out of China.

China wants to replace the RMI audits by audits performed by CCCMC (Chinese Chamber of Commerce for Metals & Chemicals). But knowing that China imports thousands of tonnes of concentrate from countries like Myanmar and North Korea, and so material from these countries are in the tungsten supply chain in China, it’s questionable who would trust Chinese audit certificates.

So, this easy-to-overlook new regulation in China could lead to an additional “firewall” between China and RoW, which might have a very significant effect on the tungsten world market.

Michael Dornhofer is founder of ISBP (Independent Supply Business Partner) in Graz, Austria. He has spent more than 20 years in tungsten, including 13 years at Wolfram Bergbau und Hütten, Sandvik’s tungsten business, and has worked as an independent agent and consultant to the tungsten and hard metal industry since 2019.

Keep reading

‘As of Today, Ukraine Doesn’t Have a Steel Industry Anymore’: Mining CEO Reveals How Russian Strikes Are Destroying Kiev’s Economy

While Ukraine is ‘winning’ in the MSM headlines, its economy is being depleted by overwhelming drone and missile strikes.

If you look around the MSM today, all you’ll see is the image of oil refineries on fire in the Moscow region, after the largest drone attack on the Russian capital since the beginning of the war.

While there’s no denying that the attack on the last day of Russian elections is quite the ‘PR victory’ for Kiev regime leader Volodymyr Zelensky, it is nothing compared to the absolute havoc wreaked by the relentless Moscow strikes on Ukrainian economic targets.

We feel tempted to say that Russia’s new jet drones struck Kiev every day in September, but it is not entirely the case.

Drone attacks on Kiev were recorded on September 1, 2, 3, 4 and 5; on September 8, 9, 10 and 11; on September 15, 17, 18, 19 and today, 20.

It’s important to stress that these attacks often came in multiple waves per day, targeting military, economic and infrastructure targets.

Today, as the Globalists gloat with the disruption of Russian elections, Kiev residents wake up to a city shrouded by smoke from the relentless strikes.

Keep reading