Steve Bull's Blog, page 222
June 2, 2022
Running on Empty, Part II
How the Petrodollar Poisoned Foreign Policy with Financial Profiteering
Welcome to Part II of Running on Empty, my three-part analysis of the Petrodollar system. Part I of this series explained what the petrodollar system is, how it came to be, and what its financial effects have been on the United States. In Part II, I’ll explain the petrodollar’s implications for foreign policy. In Part III, I’ll show how those implications paved the way for the Russo-Ukraine War, and why that’s causing the system to break down.America’s Chief Export is the US DollarAs explained in the previous installment, the petrodollar system is based on an agreement between the US and Saudi Arabia. Under the terms of the deal, the US guarantees the security of Saudi Arabia and in exchange, Saudi Arabia guarantees that all petroleum is sold by OPEC for US dollars, with the US dollars re-invested into America via petrodollar recycling. The result: Since everyone needs petroleum, everyone needs US dollars. Oil replaces gold as the hard backing for the dollar. 1
Since the petrodollar system was put in place, the US has enjoyed a comparative advantage in manufacturing currency that no other nation enjoys. Under conditions of free trade, a country produces and exports more of a good for which it a comparative advantage, and produces less and imports more of the goods for which it doesn’t. And that’s what has happened: Since the petrodollar system was put in place in 1973, America has produced more and more dollars and produced less and less of everything else. The dollar is today our nation’s #1 export.
How large is the circulation of US dollars? As of April 2022, the American money supply, which economists call M2, stands at $21,728 Billion Dollars. M2 includes three types of money:
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Brace yourselves for an economic ‘hurricane,’ Jamie Dimon says
Jamie Dimon is no meteorologist, but the JPMorgan Chase CEO is predicting an economic “hurricane” caused by the war in Ukraine, rising inflation pressures and interest rate hikes from the Federal Reserve.
“Right now it’s kind of sunny, things are doing fine. Everyone thinks the Fed can handle this,” Dimon said at a Bernstein conference. “That hurricane is right out there down the road coming our way.”
“We just don’t know if it’s a minor one or Superstorm Sandy. You better brace yourself,” Dimon said, adding that JPMorgan Chase (JPM) is preparing for a “non-benign environment” and “bad outcomes.”
Dimon said that the economy is “distorted” by inflation. He’s also worried that the Fed is starting to unwind its bond portfolio, a process known as quantitative tightening, at the same time it is raising interest rates. That’s something that the market is not prepared for, Dimon said, adding that people will be “writing about [this] in history books for 50 years,”
JPMorgan shareholders vote down pay bump for CEO Jamie DimonBut the Fed is in a bind. Dimon said the central bank must raise rates because of surging housing prices and other inflation pressures. He stressed that he still thinks the US banking system is in “great shape” and can withstand these challenges.
Dimon also said that JPMorgan Chase is going to do all it can to attract talent to stay on top of the financial world. The CEO said the bank will be “religious” about paying well to keep its best workers.
Dimon’s more cautious outlook comes just a few days after he sounded a little more upbeat about what’s next for the markets and the economy.
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UN Warns of ‘Total Societal Collapse’Due to Breaching of Planetary Boundaries
Photo: Diana TolkunovaA landmark report by the United Nations concludes that ‘global collapse’ is becoming more likely. But was it watered-down before being published?
When the United Nations published its 2022 ‘Global Assessment Report on Disaster Risk Reduction’ (GAR2022) in May, the world’s attention was on its grim verdict that the world was experiencing an accelerating trend of natural disasters and economic crises. But not a single media outlet picked up the biggest issue: the increasing probability of civilisational collapse.
Buried in the report, which was endorsed by UN Secretary-General António Guterres, is the finding that escalating synergies between disasters, economic vulnerabilities and ecosystem failures are escalating the risk of a “global collapse” scenario.
This stark conclusion appears to be the first time that the UN has issued a flagship global report finding that existing global policies are accelerating toward the collapse of human civilisation. Yet somehow this urgent warning has remained unreported until now.
The report does not suggest that this outcome is inevitable or specify how close to this possibility we are. But it does confirm that, without radical change, that’s where the world is heading.
Planetary Boundaries
The UN’s Sustainable Development Goals and the Sendai Framework are a set of social, economic, legal, political and institutional measures to reduce “disaster risk and losses” – both involve targets to 2030 which the world is in danger of failing to meet.
That failure, however, is directly linked to the rate at which human activities are interfering with natural systems, in particular, ‘planetary boundaries’.
The planetary boundaries framework was developed by the Stockholm Resilience Centre in 2009 to provide what it calls a “science-based analysis of the risk that human perturbations will destabilise the Earth system at the planetary scale”…
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Deep State Predators Need to Terrify Everyone – Alex Newman
Author of the popular book “Deep State” and award-winning journalist Alex Newman says Deep State globalists are afraid the world is waking up to the tyranny they are trying to impose on every country on earth including America. Things are not going as smoothly into their so-called reset as they had envisioned. Newman explains, “The Deep State is in a ‘do or die’ moment right now. They, the elites or predator class, recognize that they are now locked into this. If they try to retreat, there is no retreat. People are waking up at such a rapid rate that they are in a moment where they are going to have to go for broke and try to impose the whole agenda and damn the torpedoes and full speed ahead or they are going to be in big trouble. They are going to be prosecuted. Right this moment, there are conversations in state attorney generals’ offices all across the country, and this is a problem. People are demanding prosecution. . . . Right now, the elites, or predator class, realize if they don’t move forward very quickly, they are going to lose everything. They could possibly end up facing true accountability. I think we are in a very dangerous situation now. When people get into a position like that, they don’t have a whole lot of options. Either they cancel the election or they cheat like crazy or they just collapse everything. The way things are going right now with inflation out of control, the food crisis and famine just around the corner, of course, that they engineered, and the monkey pox and bird flu, they have all there crises lined up…
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June 1, 2022
Looming Price Hikes on Food Set to Hit Americans This Fall
A person shops in a supermarket in Washington, DC, on May 26, 2022, as Americans brace for summer sticker shock as inflation continues to grow. (NICHOLAS KAMM/AFP via Getty Images)ECONOMYLooming Price Hikes on Food Set to Hit Americans This FallHigher inflation could force Fed action, leading to a ‘deeper recession’In its effort to contain inflation, the Federal Reserve has begun what many expect to be a series of interest rate boosts, which are already taking a toll on stock and housing markets, with job losses likely to follow. While Americans grow weary of record high gas and grocery prices, however, another round of price increases is making its way through the food supply chain and is expected to reach consumers this fall.
“People don’t realize what’s fixing to hit them,” Texas farmer Lynn “Bugsy” Allen said. “They think it’s tough right now; you give it until October. Food prices are going to double.”
The 8.8 percent increase in food prices that Americans have already seen doesn’t take into account the dramatically higher costs that farmers are now experiencing. That’s because farmers pay upfront and only recoup their expenses at the point of sale, months later.
“Usually, what we see on the farm, the consumer doesn’t see for another 18 months,” said John Chester, a Tennessee farmer of corn, wheat, and soybeans. But with the severity of these cost increases, consumers could feel the effects much sooner, particularly if weather becomes a factor.
“Nothing that consumers are paying is going to bridge the gap for farmers right now,” according to Lorenda Overman, a North Carolina farmer who raises hogs and grows corn, soybeans, and sweet potatoes. She said the spike in fuel costs has put her farm into the red this year.
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Supply Chain Failures Prove Growing Need for Localized Economies
Organizations fighting for local food sovereignty are among the largest social movements in the world, representing more than 200 million small farmers.TOM WERNER / GETTY IMAGESThe mainstream media — television, print and digital — routinely cycle through the litany of crises gripping the world. One week they’ll tell us about the latest climate disaster. The next, the focus may shift to the war in Ukraine. A few days later, COVID-19’s latest variant might be trending. The hot topic of the day is picked up, described in isolation and then discarded.What we never hear is the fact that these crises are, in fact, connected. They are symptoms of a global economic system that is not only driving up resource use and pollution; it is squeezing people financially, undermining democracy, concentrating wealth and power in the hands of unaccountable global corporations, and exacerbating conflict and violence.
In addition, recent events have highlighted how vulnerable we are because of our dependence on the global economy. Long-distance supply chains are failing around the world, and the cost of living is skyrocketing as a result.
This is clearest when it comes to our most basic need of all: food. At the grocery store, Americans are paying 10 percent more for food than a year ago, while the United Nations Food and Agriculture Organization reports that global food prices hit record highs in March. In the United Kingdom, the price of chicken is set to soon match the price of beef.
Why? Largely because economic globalization — which, in short, involves using public monies and government regulations to favor exports over self-reliance — has ensured that we source our food from ever farther away, via ever longer, more complicated supply chains.
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Crazy Pills
“It’s not denial. I’m just selective about the reality I accept.” – Bill Watterson
In the brilliantly funny 2001 film Zoolander, Ben Stiller plays a past-his-prime male model named Derek Zoolander. As the plot unfolds, Zoolander is unknowingly groomed and brainwashed by evil fashion designer Jacobim Mugatu (played by Will Ferrell) to assassinate the newly elected prime minister of Malaysia. The prime minister campaigned on a platform of raising the country’s minimum wage and ending child labor – thereby threatening the profitability of the fashion industry – and must be eliminated. Mugatu judges Zoolander to be just dim-witted enough for the task.
The movie is absurd and yet so well executed that it works. The sheer number of derivative memes you can find on Reddit and in the Twitterverse pay tribute to its many memorable scenes. One meme stands out from the rest and serves as an apt expression of the spectacle we’re scratching our feathers over today. Zoolander proclaims to have developed three signature looks: “Ferrari,” “Blue Steel,” and “Le Tigre.” GQ astutely describes them as being completely identical, with “a raised brow, pursed lips and the misguided confidence that everyone knows the difference between them.” After observing the crowd’s adoring reaction to Zoolander’s latest flash of Blue Steel on the runway an exacerbated Mugatu explodes, “They’re all the same face! Doesn’t anyone notice this?! I feel like I’m taking crazy pills!!!”
We sympathize with Mugatu’s lament, observing our political class translate its deep misunderstanding of energy into an equally haphazard set of economic sanctions levied against Russia, totally unaware that they are expressing the same ridiculous face at every opportunity. Before proceeding, we should note that pointing out the flaws in the West’s war response is not “pro-Putin,” nor is it “unpatriotic” as some propagandists on Twitter would have you believe…
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IEA chief warns of summer fuel shortages and a triple energy crisis that will outstrip the oil shocks of the 1970s
International Energy Agency chief Fatih Birol has warned of a triple energy crisis that could be “much bigger” and longer lasting than the 1970s. GettyThe US and Europe face fuel shortages as summer vacations get underway, the head of the IEA told Der Spiegel.Fatih Birol warned of potential diesel, petrol, and kerosene shortages, and said the current energy crisis was worse than the 1970s.“We have an oil crisis, a gas crisis and an electricity crisis simultaneously,” he said.By clicking ‘Sign up’, you agree to receive marketing emails from Insider as well as other partner offers and accept our Terms of Service and Privacy Policy.The US could see fuel shortages this summer once people start taking their vacations — and Europe could take a particular hit from the lack of supply, the head of the International Energy Agency has warned.
“When the main holiday season starts in Europe and the US, fuel demand will rise,” Fatih Birol told Der Spiegel. “Then we could see shortages — for example, in diesel, petrol or kerosene, particularly in Europe.”
Birol also told the German newspaper that the energy crisis now underway will be more severe and longer-lasting than the oil price shocks of the 1970s, given it’s applying pressure on three fronts.
“Back then it was just about oil,” he said in the interview published Tuesday. “Now we have an oil crisis, a gas crisis and an electricity crisis simultaneously.”
Oil prices spiked in 1973 and 1979 as the Yom Kippur War and the Iranian Revolution interrupted Middle Eastern crude exports. Geopolitical events have hit the market again in 2022, as western nations impose sanctions on Russia over its invasion of Ukraine.
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The Big Questions We Should All Be Asking Geopolitically
To say that current events are ‘messy’ today would be the height of understatement. Everyday the headlines blare at us some new set of contradictory data points convincing us of some lie that serves someone’s purpose.
No matter how hard we try to keep up with things, cutting out the extraneous to find the nuggets of signal from the jungle of noise is more than a full-time job.
Sometimes, however, it’s best to take a few steps back, fall back on first principles and remind ourselves who the players are, what they want and then ask the big question of each of them… are they succeeding?
But to even ask that question we have to ask ourselves honestly the following question:
“What will they be willing to do to survive under present circumstances?”
This is the most uncomfortable question you can ever ask anyone. What would you do to survive? To protect your family? Your position? Your conception of yourself?
Everyone’s morality has limits. Everyone. Everyone has a shadow, a dark side, a place where they retreat to their Hobbesian self and see the world purely in terms of ‘a war of all against all.’ Anyone who refuses to admit this to themselves is someone you should run screaming from.
Those that always claim the moral high ground, who are always “the goodies!” are those without limits on their behavior. As the great H.L. Mencken proclaimed nearly 70 years ago:
The urge to save humanity is almost always only a false-face for the urge to rule it. Power is what all messiahs really seek: not the chance to serve. This is true even of the pious brethren who carry the gospel to foreign parts.
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