I was recently interviewed by veteran real estate investor Ken McElroy, where we discussed the puzzling state of oil markets, including sharp price swings, extreme backwardation signaling near-term shortages, and the mounting pressure on diesel supplies that could drive costs much higher. We also explored the drawdowns of the U.S. Strategic Petroleum Reserve, the challenges of developing Venezuela’s heavy oil resources, the risks of cost-push inflation and potential stagflation, and how AI disruption might complicate the Federal Reserve’s policy choices. Finally, we turned to practical steps individuals can take to protect purchasing power, from gold and silver to broader commodity exposure in copper, uranium, and energy assets.
Harry Dent was on Coast to Coast AM last night, normal predictions for him: giant stock crash soon, gold/silver going down, gigantic real estate crash soon, sell your house now and buy it back later.
Well, this might be a little weird but I used LEO AI to ask about Mussolini. After listening to this great conversation I wonder, will there be an AI Totalitarianism controlling all those issues or will the Fates unplug them?
Here is LEO:
Fascism: The Totalitarian State
For Mussolini, fascism was the overarching political ideology and the “all-embracing” state. He defined it as a totalitarian system where the state is supreme, and no individual or group exists outside of it.
“The Fascist conception of the State is all-embracing; outside of it no human or spiritual values can exist… Thus understood, Fascism is totalitarian”.
Fascism was the political vessel that absorbed all aspects of life, including the economy, culture, and spirit. It was opposed to liberalism and socialism, aiming to unify the nation under a single will.
Corporatism: The Economic Organizing Principle
Corporatism (or the “Corporate State”) was the specific economic and social system Mussolini proposed to replace class struggle (capitalism vs. communism) with class collaboration.
Definition: It organized society into “corporations” (guilds) representing different industries, where employers and workers were theoretically united under state supervision to manage production.
Purpose: Mussolini argued that private enterprise was valid only if it served the national interest. The state would intervene to ensure production aligned with national goals, acting as the “thinking brain” of the economy.
Relationship to Fascism: He stated that the Corporate State was the “cornerstone of the fascist State” and that the state must be “corporate or it is not fascist”. In this sense, corporatism was the mechanism through which fascism achieved its economic control, but it was not the entire ideology itself.
Key Distinction
Fascism = The total political ideology and the supreme State.
Corporatism = The specific economic structure designed to harmonize labor and capital under the State’s authority.
Mussolini explicitly stated that fascism recognized the “real needs” of socialism and trade unionism but channeled them into the “guild or corporative system”. Thus, while inseparable in practice, fascism was the whole, and corporatism was the economic part designed to sustain it.
– LEO AI
Interesting podcast by Alex Cristofaro and Alexander Mercouris.
Takeaways:
Japan has a huge budget deficit, the only thing that has kept Japan afloat is their positive current account surplus due to all their exports. But that surplus is declining due to increased outgoing expenditures for oil That is causing the current weakness in the Yen. The weaker the Yen becomes, the more it costs Japan to buy more oil - creating a self reinforcing feedback loop. So Japan has to protect the Yen. Japan was going to start dumping a lot of their treasuries in order to get money to support the Yen. Bessant has told Trump that the Yen is falling due to the increased oil prices and that the US has to step in. If the US didn’t and Japan dumps treasuries, then the market for treasuries will weaken and the US will have to increase treasury interest rates in order to attract buyers. Of course, increasing rates is not possible due to the size of the current interest payments. An increase in interest payments would accelerate the coming crisis in the American financial system.
Mercouris says that means two things.
One, the US is now buying the Yen - not with dollars but with Euros they have on hand - in order to strengthen the Yen.
Two, the US has to make peace with Iran as the whole crisis is starting to spin out of control. The US will apparently agree to allow Iran to control the Strait of Hormuz (and charge a toll) in order to restore oil supply.
My own take:
We’re screwed. The dynamics playing out simply underline the inherent weaknesses in the world financial system. Supporting the Yen is a short term fix - it doesn’t solve any of the systemic problems. Japan’s debt, the American budget deficit, increasing resource/materials costs are all problems which are not going away.
Iran has the United States by the balls. They can demand anything at this point. But any settlement should be front loaded, that is, promises to release frozen Iranian assets in the future won’t fly for obvious reasons - it will never happen. Instead Iran should demand front loading, the total immediate release of those assets as a precondition to opening the strait. Ditto with Israeli withdrawal from Lebanon and Gaza.
Anecdotally, my small England town petrol station said they are out of diesel. More coming this evening. Not happened (as far as I know) since this kicked off and there was about 2 days of panic buying. Don’t know if delivery windows are being slightly stretched.
That seems very strange as you are not that far from the Stanlow refinery / M6 distribution route. When the restocking does occur I wonder if they will limit how much you purchase, that would be the real indicator of tightness of supply.
I lived near the Stanlow refinery another lifetime ago and remember when the tanker driver strike caused some real issues.
This predicament is not a matter of if but when.
At least you have multiple refineries in UK, we in New Zealand however had our Government close the only refinery we had, we didn’t mothball it we took it apart so we couldn’t reuse it.
If I put my tin foil hat on I would say this has been planned and implemented by our leaders.
The tightness in diesel maybe due to refineries prioritising Aviation fuel over diesel in the fractionation towers.
Perhaps US airforce operations in the Persian gulf is causing localised supply shortages in the UK.
Unintended consequences.
Yes. It could be nothing/holiday traffic passing through and filling up. I don’t know. Not panicking just yet, but I keep the car full anyway FWIW.
Also, yes, UK still has refineries (designed to be nearish airports so they can pipe the aviation fuel to them) - plus oil piped in from Norway. I don’t think everyone (in the US) realises that Europe is not one big place and that everything differs massively across it.
Your video makes no sense. It’s August 4TH. The stock market went up 1,000 points today. The price of oil fell across the board. WTI fell to $75 dollars a barrel. And “we only have weeks left”? Glad we only have weeks to wait before your prognostications fall flat on their faces – again.
Diesel makes the world go round. No diesel, no trucks. No trucks (Alice Friedemann “When the trucks stop running”). Well no deliveries to warehouses or distribution centers, no food delivered to supermarkets, no fuel delivered to gas stations.
Our way of life becomes massively impacted when trucks are not moving goods around.
I listened to this discussion and came away knowing more, even though I knew pretty much where it was going when it started. Just from a listener’s perspective, Chris sounded confident and had strong answers. I’ve noticed a stronger Chris lately with lots of analogies that make the subject matter easier to understand and digest. Stay sharp and on point. This is the Crash Experience, not the crash course.
The interesting question is how these old PhDs that occupy the FED think they will handle Ai.
My experience is that when one occupation is overtaken, a lot of re-education takes place. But how will that happen in a bureaucracy that is overseen by really a pretty ignorant legislature.
From experience, normally the retardedly far away from the money options are the 2nd leg of a spread. Being that far out of the money, either someone was getting a tiny bit more oomph out of a call spread or some market maker that got stuck short gold calls was told by risk they need to protect their tails. Not sure who has a risk department that can even imagine $20,000 gold by December, usually they’re prosaic people, but they could be giving lip service to some rule the enforced from on high. I seriously doubt someone just grabbed the 20k calls standalone.
If it’s a call spread and the market makers are long, no big deal about that tail. But if the market makers are short and gold blows through 15k, the gamma squeeze will be imprinted into legend at least on par with “The Hunt Brothers”.
That’s a cheap seat to sit in. Care to make your own specific prognostication and be judged upon it? Even better if it’s contradictory to the one Chris put on and he can take the other side.
something doesnt make sense here … and I reverse your conclusion… the stock market and the oil price dont make sense… not the supply and pricing analysis
It happened to the dinosaurs long ago. These dinosaur legislators will either adapt or go extinct. Unfortunately, we’ll be left holding the bag for their stupidity.
