Creak! Pop! Diesel Soars, Treasury Interventions Fail to Last, and 2027 Could Be a Very Rough Year for Food

Finance U Public Finance U
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Originally published at: https://peakprosperity.com/creak-pop-diesel-soars-treasury-interventions-fail-to-last-and-2027-could-be-a-very-rough-year-for-food/

In this Finance U podcast, Paul Kiker and I discussed the diesel situation, food issues especially for next year with the El Niño monster along with fertilizer shortages, and the Treasury intervention to drive down long rates by doubling the size of their long-dated buyback program.

It looks like the first place where a quite serious disruption is going to result from the Iran & Russian wars is in diesel product availability and pricing.

Here in good old New England, diesel prices are at all-time highs and have risen $0.78 in eleven days.

The US continues to ship out lots of diesel to the world with the most recent EIA report showing a -1.5 Mb decline in already tight US inventories of ‘distillates’ which include diesel.

The reason for the global shortage is easily seen in this chart, where an -80% decline in diesel exports from Russia and the Middle East has materialized here in August as compared to the past two years:

Maybe now that the prophecy has been fulfilled, things will begin to improve?

On the subject of food, the prices of which were already on the rise before the war (but have since picked up the pace), 2027 looks like it’s going to potentially be quite challenging..

(Source Zerohedge)

Between fertilizer shortages and the arrival of a mega El Niño, next year could be especially brutal for the world’s poorer countries.

This is a pithy and concerning video on that topic:

David Friedberg: El Niño Could Trigger a Global Food Crisis“This Science Corner is about the dreaded El Niño season that is coming up.Ocean temperatures are going to exceed anything we have seen in recent history.Why does this all matter? The reason is the oceans are the… pic.twitter.com/zdjYGHV72r

— The All-In Podcast (@theallinpod) May 19, 2026

It’s never been more obvious that everyone should have a garden and keep a deep pantry and stocked freezers.

This was also quite an interesting week in that the US Treasury (Bessent) couldn’t help themselves from monkeying around with the long end of the US Treasury market (10-, 20-, & 30-year bonds). As Peter Shiff noted, this is sacrificing the future to make today a little bit easier for somebody (not you or me).

The Treasury already had a program of buying so-called off-the-run bonds because the market for those had gotten really stale. It turns out nobody, myself especially, wants to buy a 10-year note yielding 1.25% or a 30-year bond offering 1.87%.

Because there was no liquidity out there, the US Treasury stepped in to ‘make the market.’ When the government issuing the paper has to make the market in that paper, that’s a bad sign.

So, the US Treasury announced they were going to double the program from ~$5 billion per month to ~$10 billion per month.

And wouldn’t you know it? Yields on 10-, 20- and 30-year paper dropped sharply on the announcement. Success! Bessent did it again!

Oh, wait, that was yesterday. Here’s today.

um, guys... pic.twitter.com/0I67Pag9jd

— zerohedge (@zerohedge) August 20, 2026

Annnnnd, it’s gone.

Well, that was fast. This too is not a good look. The US Treasury interventions are being undone by markets as fast as they can be announced.

Something is brewing.

Timestamps

00:00 The Food Crisis Nobody Is Ready For
02:14 The Mood Has Changed
07:58 Diesel Is Future Inflation
13:52 When Private Knowledge Becomes Common Knowledge
18:28 The World Is Running Short Of Diesel
20:21 The No-Landing Crowd Is All In
25:29 The Crash Setup
31:07 The Food Inflation Crisis
34:46 Super El Niño Is Coming
39:02 Prepare Before The Harvest Fails
43:11 The Agriculture Market Breaks Out
44:28 Who Feeds The World If Brazil Fails?
46:02 Destroy Refiners, Destroy Fertilizer Supply
48:45 Treasury Yields Start To Break
53:39 The 30-Year Bond Trap
56:48 Germany’s Funding Crisis
58:14 Japan’s Yen Intervention Fizzles
59:11 The Panic Of 1893 Is Starting To Look Familiar
01:01:33 Enter The Age Of Disemployment
01:03:25 Pick Your Red Lines Now
01:05:00 The Balloon Is Running Out Of Room
01:06:24 Building A More Resilient Portfolio

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Won’t the Fed have to monetize Treasury’s purchase of those long bonds?

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“2027 Could Be a Very Rough Year . . . .”

You have been saying this since 2010.

No offense. Just saying.

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Dunno about you, but every year hasnt felt easier than the last.. for about the last decade :melting_face:

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The full gravity of America’s debt load is untenable. Remember All debt, public and private ends up as per capita debt (the amount of debt each American must assume) and that debt is supported by the per capita income of the country which is the GDP. What is GDP? It is the total income of all persons (to include businesses) in the USA. $32 trillion of income supports debt of $100 trillion (see below).

A private mortgage loan normally only allows for 1/3 of an individual’s income to be used for debt service. In other words, instead this 1:3 ratio the real ratio for us as a country is 3:1 or 9 times under water if we were to try to qualify for a mortgage.
Please note this debt does not count the unfunded, but none-the less required payments (unfunded liabilities) to be made in the future nor does it include the cost of future deficits being piled on each American.

Public (Federal) Debt Breakdown

Total Gross Public Debt: $40.047 trillion

Debt Held by the Public: $32.266 trillion (owed to domestic and foreign investors, individuals, and the Federal Reserve)

Intragovernmental Holdings: $7.782 trillion (owed to federal agencies like Social Security trust funds) [1, 2, 3]

Private Debt Overview

Household Debt: Includes mortgages, auto loans, and student loans, tracking around $17.5+ trillion.

Business/Corporate Debt: Non-financial and financial corporate debt combined adds another $35+ trillion.

Combined Estimate: Total U.S. credit market debt (incorporating federal, state/local government, corporate, and household liabilities) eclipses $100 trillion to $105 trillion based on recent Federal Reserve Flow of Funds trends. [1, 2, 3]

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Subscriber Forum Topic Request: Red Lines in the Sand, what others have developed and how to develop your own.

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So I’m Brazilian and currently I’m living half of the year in Canada, half of the year in Brazil. I will be down there in November, during the rainy season. I’ll let you know if it’s unusually dry.

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https://x.com/peterschiff/status/2090554574868254762?s=61&t=Mwt6vB5qMDygkHDLxH9PhQ

Gonna need a bigger squirt gun.

https://x.com/robinwigg/status/2090497585446355022?s=61&t=Mwt6vB5qMDygkHDLxH9PhQ

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“As fast as Bessent can stick his fingers into cracks in the markets, new cracks are appearing. How much longer can this all hang together?”

Question for Grok:

What does the following sentence in Classical Chinese mean in English?: 推者好也

Grok:

That sentence is 推者好也. It breaks down to “the one who pushes” or “the pusher” as the subject, with 好 meaning “good” or “to like,” and 也 as a classical particle for emphasis or judgment. So, it translates to “The one who pushes is good” or “Pushing is good.”

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Speaking of “New Cracks”, have any of you Peak Prosperity Dudes noticed the irony in that the great Michael Yon (Sobek) and Musako have ostensibly “Moved 2 Safety” in Japan by relocating next to Mt. Fuji, an active volcano that literally experiences at least one earthquake everyday? What Gives, man?!

Apparently, Musako is entering the end of her Pregnancy term, so Sobek has declared that he will embark on a 40 day Fast (not possible, right?) presumably to Fast through until Musako breaks water? Good Lord…. Sobek at one time hung out with the Aghori cannibals in India. True story….

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For you, I suspect, things have been fine. Congrats.

Now imagine you were born in 1995. So you were 15 in 2010 and trying to plot a personal course after the GFC.

And now, in 2026, you are 31+ and trying to figure out how ot afford a house and/or start a family. For the majority of people, by the numbers, this is a complete disaster. No can do.

It’s been a very rough set of years for the youngsters. I stand by that and defend my cautiousness. I strongly advise Boomers to find every legal avenue to pass along what they have managed to accumulate. Myself, especially, included.

After all, if we are not leaving a viable future for our progeny, then we have comprehensively failed, right?

Good. That’s established.

Beyond that, my paradigm says that the more that net energy per capita decreases, the harder life becomes for the average person. So far…uh..so bad.

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Even the trio on Bloomberg this Thursday morning (John, Lisa and Ann-Marie) sounded nervous discussing this.

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As I age into my 6th decade, I am more and more keenly aware that this is overwhelmingly the thing that matters … not the fun you had ski-ing in Japan, not the fine house you own, not your sports car etc etc etc

I have seen waaay to many people reach my age childless and suddenly, shockingly, realise it was all pointless…

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This statement is True…

However, Things seldom work out as planned.

Many of the kids now because of AI, Smartphones, and the ubiquitous very powerful Mind Control Cognitive Warfare are literally mentally broken. Read: “The Anxious Generation”.

Look at the Hikikomori phenomenon. Would you really want a kid who hides in his room playing computer games when you die in your 80’s and the “kid” is in his 50’s?

Children can be a “Blessing”, but the can also be a “Curse”

Question for Grok:

What does the following statement in Classical Chinese mean in English?: 子福为咒也

Translation: “The blessing of children is a curse.”

(or more literally: “Child-fortune is a curse.”)

Breakdown

• 子福 (zǐ fú): “the fortune/happiness of having children” (or “blessed with offspring”)

• 为 (wéi): “is / acts as / becomes”

• 咒 (zhòu): “a curse”

• 也 (yě): classical affirmative particle (“indeed / it is so”)

The structure “X 为 Y 也” is a standard Classical Chinese way of saying “X is Y.”

So the whole statement means that the very thing normally regarded as a great blessing (having children and the good fortune that comes with them) is, in this case, a curse.

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Only if Treasury is unable to sell its other durations. An auction failure would be headlines. Usually people just decide to bid higher rates. “Sure I’ll buy that 20-year, if you give me a 15% interest rate.”

RIght now, all Treasury has to do is sell a few more 1-year bonds to pay for the long bonds they are buying back. The article I saw said their current buy-back was 2 billion, and they are (“at least”) doubling it to 4 billion. The 20-year auction Wednesday was 15 billion. I didn’t look to see what the 10-year and 30-year auction looked like.

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Thankyou, I love that Chinese phrase and insight… especially in these ‘interesting times’ :wink:

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In the future, “They” will have AI robot “kids” who will be able to do all of the work, answer all of your questions, teach you Classical Chinese while scrubbing the mold in the spaces in the shower, and they be “Cute-to-Boot”. They will be around to pick you up when you fall down while trying to masturbate in the shower when you’re 80 years old. And, they’ll only cost $10,000 bucks.

Having human kids is very hit-and-miss.

Li Hong Zhang 李鸿章 had 5 brothers. He was the best Apple in the basket. The kids were all “Not Bad”, but that is very rare. If you get a superlative kid out of the litter, then that’s very Lucky already.

Because of the very powerful AI Mind Control now, the kids are going to mentally fail en masse.

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The phrase 子福为咒也 is not some quotation taken from some ancient Chinese sage. That’s just something I pulled out of my butt.

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I find the el Nino effects confusing as the effects are so varied; the forecast of the hottest year ever for next year, seems familiar (heard that a few times). My bets for coastal pacific Northwest is a early/colder winter. The migratory birds turned up on the coast 10 days earlier than other years, and the early apples are falling off the trees 10-14 days ahead of normal, my late ripening apples that are pickable in late September are starting to fall. The drip irrigated trees, are the same timing as the ones at our summer place that get manual watering. The arrival date of the birds has been accurate every year since I started to keep score (20 years)

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Having Kids who accused their parents of being “Counter-Revolutionaries” because the kids had been Brainwashed during the Cultural Revolution probably felt like a Curse?

The Kids today generally don’t respect you and they think that you’re a huge Idiot unless you’ve get tens of millions of dollars.