It was great chatting with Jesse from Commodity Culture on why the Energy Cliff will be BAD NEWS for financial assets. Unfortunately, the market doesn’t understand this as they continue to purchase a record amount of U.S. Treasuries and global bonds of all flavors.
According to SIFMA Research, the Global Bond Market increased from $119 trillion in 2021 to $129.8 trillion in 2022, while total World Gold Demand was a paltry $300 billion. I’d imagine 2023 will be another record year as Financial Paper is the new Investment Fad.
You can check out more of Jesse Day’s interviews here: COMMODITY CULTURE.
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Thanks for good discussion. You guys waste no time delving into important issues. This IMO is a key point, at 19m49s:
https://youtu.be/2HuPZWdePoA?si=3mQ8FgJXn9tkV27t&t=1188
The broad market is in denial or simply ignorant of energy fundamentals. I’m reminded of a comment from a relative during an emergency many years ago: “Don’t tell me, I might not sleep tonight.” Many people don’t seem to change their behavior except through crisis. We have been hearing for some time that Europe is particularly vulnerable to an energy shock. Looking ahead, I wonder if mass psychology could finally shift depending on such a simple thing as whether or not we have a bad winter. People in general may not understand the economics of energy, but they do understand the impact of a high heating bill, and if we get serious cold spell across densely populated areas, resulting in shortages and related trouble with normal business activity, THAT could be enough to spark awareness of long term energy insecurity, spilling over into concern about the broad economy, bad government policy, lack of leadership, and all the related troubles that follow from that line of thinking. This is not even considering the additional economic burden of supporting all the migrants being imported to support vested interests, or other issues brewing. I find it hard to believe that prices can stay at current levels for long. The latest slump strikes me as politically motivated, a manifestation of denial, TEMPORARY.
Fluff, if Steve is right about the energy, and I think he is, then they will have no choice but to heavily manipulate the prices of energy.
Nothing agitates this “hive” like $4+ gallon gasoline. As long as stawks are up, gasoline is cheap, and the fast food flows, then the sheeple can’t see any problem in the world worth keeping them up at night. But you let gasoline break $4 a gallon, and the sheeple start looking for a rope and the name of the person(s) responsible for turning off the oil tap.
Yes, it is that easy to control and manipulate hundreds of millions of people in this Matrix.
As always, Steve, you provide hard hitting facts under an intense light of reality.
In regards to Bear Stearns/Lehman, we cannot forget that there was a lot of money lost by a certain sector of people (average Joes), but another group made a killing on the GFC. The group that got filthy rich can’t wait for it to happen again so they can benefit from the billions/trillions in bailouts that will follow. The “average institutional investor/manager” doesn’t fear another Lehman moment, he is counting on it. The GFC consolidated wealth, created bigger, richer banks, and put more control in the hands of the regulators that caused the GFC.
Sure, for us it was a “crisis” but for them, it was a windfall. There were no consequences for the players that were responsible. They were rewarded. If anything, the GFC made them love the “Treasury” world and paper assets even that much more.
It will be an energy cliff that finally derails this runaway, financial, rocket train, or it goes on much, much longer than we imagine.
Hi Stave
I will suggest you to publish a book for investors with your concept of energy return on energy invested
Steve,
My compliments on this highly cogent overview; outstanding!