Submitted by Peter Tchir of Academy Securities

Treasuries, Treaties, and Treatises

Let’s start with Treasuries. We laid out the approach we would take if we were Warsh last weekend in Warsh’s Mark Antony Moment (a play on coming to “bury” inflation, yet having quite the opposite effect, at least in terms of interest rate policy). 

After Bessent’s “attempt” to drive bond yields lower, we analyzed the possibilities in Treasury, Treasuries, The Fed, and Iran. The primary focus was on bonds, though we had to toss in the “possibility” of Economic Armageddon for Iran.

On Monday we discussed the Fed on Fox Business, but they picked up our theme on Tuesday where Academy was the chyron on Varney & Co. Academy had the pleasure of spending the first half hour on Bloomberg TV on Thursday where we covered rates, Iran, energy, Global ProSec, and maybe even Situational Awareness (it all becomes a bit of a blur).

Please read Thursday’s report, in conjunction with last weekend’s report (or watch the video links) to get a sense of our outlook for Jackson Hole and what the Fed should (or needs to do) to support Bessent’s efforts.

Today, we will add some additional information to reinforce our take on the power of a Federal Reserve Operation Twist.

A Fed “Operation Twist” Is the “Real” Deal

As of today, according to Bloomberg, the U.S. government has $7.5 trillion of T-bills outstanding and $21.7 trillion of coupon debt outstanding.

Bessent is buying “at least $4 billion” per “operation.” These operations are almost weekly, and while the threat of “at least” is interesting, jumping from $2 billion to $4 billion wasn’t enough to move markets for long. This is NOT QE. Gold rose, and the dollar fell, in response to Bessent. Likely overdone as this is more about re-arranging the deck chairs, rather than creating “money,” which is what the “debasement” trade seemed to buy into.

I’m not sure the Treasury Secretary should ever refer to any part of the US yield curve as illiquid. But Bessent did. Maybe he is remembering the “good old days” when nothing happened in August. I don’t think this August was sleepy, nor particularly illiquid.

Having said that, the Federal Reserve owns over 50% of all bonds maturing between 10 and 15 years from now. That seems a long way from “free” markets. The Fed’s holdings of longer-dated bonds are quite high (nearing 20%). It might be illiquid and partially “artificial,” but not in the way that Bessent implied.

The Fed owns almost half a trillion of bonds maturing within the next year.

These are coupon bonds (not T-bills).

The average coupon is 2.9%, so the Fed is bleeding money. They own, on an accrual counting basis, these bonds at the yield they purchased them at (probably lower than 2.9%) and fund at Fed Funds Effective (3.63%). It explains why the Fed was helping to “artificially” reduce the deficit with their payments to Congress, and now they are adding to our deficit woes by bleeding carry.

Let’s imagine the Fed selling that $426 billion, and buying the same notional amount of bonds with 20+ years maturity. A small up-front loss (they’d have to monetize the premium they paid for their bonds), but a very big pick-up in carry (5.25% or so on carry vs funding of 3.63%). It would also represent over 15% of the total amount of bonds with a maturity of 20 years or more (and over 20% of the float the Fed doesn’t already own).

If they decided to do the same with their bonds maturing in 1 to 3 years, they’d have a bigger up-front loss, but more carry going forward, and would own over 50% of the debt outstanding.

I don’t know what percentage of ownership constitutes “cornering” a market, but we’d pretty much be there.

From Warsh’s perspective (and that of all Fed members), Operation Twist does NOT count as QE because it keeps notional amounts the same. If the admin wants to see the long end of the yield curve go down, they need to stop “playing” with the amounts Bessent controls and go all in on a Fed-driven Operation Twist.

Can’t say I’m a fan, but why not?

In the coming days we should find out if Bessent is “on his own” or if the Fed is throwing their weight behind his efforts to control the longer end of the bond market.

When Bond Traders Say “Done” – They Mean “Done”

Whatever else you learned in school, or on the trading desk, the most important thing you are taught is “done means done.” You’ve committed your capital (or the firm’s capital) and it might be a good or bad decision, but you are “done.” You are stuck with that trade. Trying to back out, or change the terms, or beg for some accommodation, may work (exactly once), but your reputation is toast.

I haven’t done a deep dive on any of the following (so I could be wrong), but it is difficult not to see a pattern emerging, that seems problematic down the road. There are many factors outside the public domain, and we all know negotiating deals is not easy, especially when the parties involved are very far apart on many of the issues. However, the concern is that the negotiating strategy we sometimes use could be misconstrued by certain countries and work against us in some circumstances.

• Canada getting 50% tariffs (again). But according to Canada they walked away when the U.S. introduced unfavorable terms at the last minute.
• Saudi Arabia getting help to develop non-military nuclear capabilities. But that seemed to derail almost immediately, when there was “confusion” over terms that supposedly required the Saudis to agree to join the Abraham Accords. Again, the goal is for the Saudis to join the Accords one day, and it is unclear if this was a part of the discussions initially.
• The “Board of Peace” (a misnomer if there ever was one, given some of the cast of characters involved) announced a peace deal between Israel and Hamas. Which would be great if even one of the sides had agreed.
• Not sure why we are “both” pulling back on military exercises in South Korea and reaching out to North Korea. Yes, there are reasons (South Korea importing a lot from the Middle East and not helping in the war, etc.) but still seems odd.
• The original MOU with Iran. Within days, the $300 billion of economic relief sounded like it needed to come from other countries, none of whom had agreed. The language about the Strait seemed pretty favorable to Iran, and different than what the President said (hence why we were quickly back to fighting over it). Iran is notorious for changing terms and making any negotiation difficult, which is why it is said that while Iran has never won a war, it has never lost a negotiation. We know it will likely take more time to get Iran to agree on a satisfactory deal, but the devil is always in the details.
• The UK had the first “friendly” trade deal. Who knows what has actually been documented, but it didn’t stop the U.S. from adding some tariffs for sending troops to Greenland while the U.S. talked about annexing Greenland.

Bottom Line

Either the Fed helps Bessent on Treasuries, or this recent intervention will fall flat (and probably do more harm than good, which is often the case when an intervention is attempted but doesn’t succeed).

My gut is there is more to come, but we really need to see something from Warsh and the Fed at or before Jackson Hole.

Whatever negotiating tactics worked well in Trump 1.0 don’t seem to be as effective during Trump 2.0. I could be wrong, and am playing chess in the wrong dimension, but I’m concerned the U.S. is “kicking the hornet’s nest” (which probably needed to be kicked), but the outcome might not be as good for the U.S. economy (and the stock market) as it could be!

On Iran, it seems there is only so much we can do economically without confronting China, and that is a confrontation that is fraught with dangers to our economy (and another reminder of why we need to smelt, process, and refine things here in the U.S. ASAP – or with our close neighbors, but that seems to have taken another step in the wrong direction).

Or maybe I’m just tired and cranky as the dog days of summer have taken a toll on my psyche. 

And this report had nothing to do with Treatises, but it seemed to go well with Treaties and Treasuries, and I thought it might attract Spider’s attention as he teaches me a new word almost every time we see clients together!

Canadian Prime Minister and WEF globalist Mark Carney has been a disaster for Canada since he entered office.  There were many critics who believed the Trudeau regime could not be topped in terms of self destructive behavior, but one could easily argue that Carney is far more dangerous and far more devious.

This week the Canadian government abandoned a nearly finalized trade deal with the US in the final hour of talks, leaving many analysts (and Canadians) bewildered.  According to U.S. Trade Representative Jamieson Greer and related reports on the negotiations, the U.S. offered significant tariff reductions that would have given Canada preferential treatment relative to other major exporters.  

The offer included a reduction of tariffs on steel from 50% to 25%, a reduction on Canadian autos from 25% to 15%, a removal of the 10% tariff on Canadian lumber and cooperation on numerous other measures, representing the best deal offered in comparison to any other country which relies on heavily US markets.  Carney abruptly ordered negotiators to walk away, claiming the deal was “not good enough”, and declared further retaliation against the US.  

So basically, Carney is saying:
Canadians will lose buying power, pay more for goods, and lose jobs, but it’s a sacrifice I’m willing to make to save face with the “elbows up” crowd. pic.twitter.com/cGVMnahbxy

— Pascal Anglehart (@DemosKratosCA) August 22, 2026

As of this moment 50% tariffs have been implemented on the majority of Canadian goods – The sudden shift represents economic suicide for Canada given their deep dependence on the US.  And what Carney doesn’t tell Canadian citizens is, there are no practical alternatives to fill the trade void left behind.

Around 78% of all Canadian exports rely on US consumer markets.  These goods and resources only make up around 13% of all US imports.  Meanwhile, around 15% of US exports go to Canada.  In the US, exports make up 11% of total GDP.  In Canada, exports make up 33% of GDP.  

Economic is partially about psychology, but it’s mostly about numbers, and the numbers just don’t add up for the “Great White North”.  By every metric, Canada needs the US more than the US need Canada.  Without these exports, Canada would suffer severe instability within a few years.    

The Canadian Central Bank, though, has tried to dismiss the dangers of prolonged trade disruptions with the US and Carney has sought to temper public concerns with posturing and bluster:

“You’re at war when you get attacked. We got attacked.”

This “war” rhetoric from the Prime Minister has been constant since he entered office – A clear attempt to sensationalize trade negotiations and excite the Canadian public with existential fears.  Bizarrely, Carney insinuated that the US was threatening Canada’s sovereignty, culture and languages.  The hypocrisy of a devout globalist pontificating about national culture and “sovereignty” is stomach churning, but these declarations are highly strategic. 

‼️Just in – Mark Carney addresses Americans in French:

-to my American collegues, let me be CLEAR … our culture, French language and our soverignty are NOT on the table

-announces SWEEPING retaliatory tariffs on American goods

He will burn us to the ground for Quebec. pic.twitter.com/2OaPPhplSO

— Tablesalt 🇨🇦🇺🇸 (@Tablesalt13) August 22, 2026

Carney has been pursuing trade deals with the EU and China in an attempt to “replace” US markets and save Canadian exports.  These agreements are being hailed by the Davos crowd as a “New World Order” that decouples from the US economy.  However, there are a number of problems.

The US makes up over 30% of total global consumer markets.  The entirety of the EU makes up around 15% of consumer markets and China makes up around 12%.  Together these regions still don’t fill the hole left by the US, and there are numerous expenses attached.

China regularly enforces tariffs on Canada, while shipping goods overseas to Europe or Asia adds price hikes to Canadian goods that would not be an issue in trade with the US.  Meaning, they will sell far less overseas. 

Furthermore, Chinese trade deals tend to come with strings attached.  China is seeking economic and resource expansion into Canada, which is ruffling feathers among Canadian companies and citizens.  Beyond that, the CCP often demands influence over government policy within the smaller countries it partners with economically (Canada’s relationship with Taiwan has been a point of contention as the CCP exerts pressure). 

This is Carney today admitting that limiting trade with China due to forced labor practices was part of the deal he walked away from.
Translation – Ya we care about forced labor, but not enough to stop dealing with Chinese markets that may or may not use it. pic.twitter.com/YfUTbfrUae

— Ryan Gerritsen🇨🇦🇳🇱 (@ryangerritsen) August 22, 2026

In other words, Carney claims to be saving Canada from being dominated by the US, but he will end up selling his nation’s sovereignty to China or the EU just to spite the Trump Administration.

Carney’s behavior in light of these negotiations might seem bizarre, but it makes perfect sense if we consider the possibility that his goal is to cripple the Canadian economy deliberately and make it a pawn in a greater war waged by the Davos elite to isolate conservative movements in the US.  The majority of anti-globalist and anti-multicultural movements around the world rely on American efforts to defeat the progressive agenda.

In other words, global lines are being drawn right now for a fight over who will decide the course of the future.  Carney is clearly steering Canada to the side of the WEF ideal.  

Authored by Jonathan Turley,

There is a novel (and highly dubious) lawsuit filed in Delaware by the nation of Azerbaijan against CNN for a story claiming that it was cooperating with Israel in attacks on Iran. Republic of Azerbaijan v. CNN, Inc. borders on the legally frivolous, but it is likely politically advantageous to show Iran that it contests the allegations.

In its Complaint, Azerbaijan details the development of hostilities while maintaining neutrality:

Azerbaijan, which shares a border with Iran to the south, is not and has never been a participant in the Iran War. Azerbaijan has not supported military operations by any of the warring nations.

…Azerbaijan maintains a policy of neutrality and independence. Azerbaijan does not host any foreign military bases on its territory and, as a non-aligned state, maintains a strict official policy and legislative framework against foreign military footprints.

The basis for the lawsuit is what the country calls “CNN’s reckless reporting” on June 5, 2026 in a post titled “Exclusive: Israel sent troops to Azerbaijan during Iran war, sources say.” The article claiming that Azerbaijan allowed Israel to use its territory to launch attacks against Iran no doubt raised the ire of the Islamic Republic.

Indeed, the Complaint lays out how Iran threatened any countries assisting Iran and suggested that the story was putting them at risk of an Iranian attack:

Ali Larijani, a senior Iranian official, threatened: ‘The countries of the region must either prevent the use of their soil by America against Iran themselves, or we will.’ Similarly, Iran’s Islamic Revolutionary Guard Corps (“IRGC”) has issued a press release unambiguously stating that ‘Countries that host the aggressor American military and have placed their land at the disposal of the aggressor criminals for attacks on Iran should be prepared to receive a corresponding response, and should activate their civil defence [sic] units to safeguard the lives of their citizens and move them away from likely targets.’

The complaint, however, faces even more daunting legal challenges. While the Complaint alleges that “CNN’s false reporting caused reputational harm to Azerbaijan and threatens tenuous international relations,” it is doubtful that a court will view this as a viable tort claim under defamation.

We have previously discussed lawsuits by countries or nationality groups that have been dismissed. The leading case on defamation, New York Times v. Sullivan, expressly states, “For good reason, “no court of last resort in this country has ever held, or even suggested, that prosecutions for libel on government have any place in the American system of jurisprudence.”

In 2000, a state court dismissed Air Zimbabwe v. Chicago Tribune Co. (Cal. Super. Ct. 2000), due to the fact that Air Zimbabwe is “a government entity, is precluded under the First Amendment from pursuing a defamation claim.”

Moreover, there are elemental problems in making such a claim. A country would be treated as a public official or figure subject to the “actual malice” standard, requiring knowing falsehood or reckless disregard of the truth. CNN clearly had sources that led it to believe the accounts were true. Indeed, many countries, including those asserting neutrality, have secret agreements or accommodations in this and other wars.

Proving that no such agreement existed or that there was not a defensible basis for the story would be very difficult.

The question of harm is also intriguing. Many would view cooperating against Iran as an admirable decision for Azerbaijan. Although it clearly puts Azerbaijan at odds with Iran, it puts it in alignment with other countries such as the United States. It is difficult to see how damages would be measured in such a circumstance, even if a viable claim on the merits could be established.

This case asks a court to adjudicate global political questions with shadowy sources and factual claims. I would be surprised if any court would relish such a trial and expect that Republic of Azerbaijan v. CNN, Inc. will soon join the list of dismissed actions.

The five-day 2026 World Humanoid Robot Games at Beijing’s National Speed Skating Oval are well underway, and on Saturday, an AI-powered humanoid robot reached 14.5 meters per second, or 32.5 mph.

china’s AI robot just hit 14.5 m/s pic.twitter.com/0K4wQ4g9pB

— el.cine (@EHuanglu) August 22, 2026

More than 2,000 humanoid robots are participating in the World Humanoid Robot Games across 51 disciplines and more than 1,000 competitions spanning running, table tennis, and soccer.

Holy smokes…

Humanoid robots are coming for tennis.

100% autonomous…pic.twitter.com/0Q3i4GuTfa

— Min Choi (@minchoi) August 21, 2026

The games opened during the same week as the 2026 World Robot Conference in Beijing, where companies displayed 3,000 products, and the blockbuster IPO of China-based Unitree. Together, the events and IPO suggest that China is pulling far ahead of the US in humanoid robotics. The main reason is that China controls much of the global supply chain for actuators, motors, optics, and other critical components required to manufacture humanoid robots.

Welcome to China, and welcome to the future!

Maybe we will soon witness humanoid robot formation in China’s military parade.@WHRGFUN ©️@boosterobotics pic.twitter.com/dVqkVRGghu

— Shen Shiwei 沈诗伟 (@shen_shiwei) August 23, 2026

Related:

• China Dominates The Humanoid Robot Race. Can Trump Close The Gap?

Arthur MacWaters, who co-founded Legion Health, an AI-native telepsychiatry company, emphasized on X, “We’re having debates about data centers, and China is publicly developing superhuman robot armies. What the actual hell are we doing here, guys?”

Another X user said, “We’re shooting ourselves in the foot because we want to sit around and watch Netflix and eat Cheetos.”

We’re shooting ourselves in the foot because we want to sit around and watch Netflix and eat Cheetos

— Jess Fields (@jessalanfields) August 23, 2026

MacWaters responded, “It’s civilizational suicide.”

While the Trump administration is moving to reindustrialize the US and reshore critical supply chains, the Democratic Party’s socialist wing and its far-left allies are advancing an agenda that risks weakening the country from within.

The timing is dangerous. As China expands its AI infrastructure, advanced-manufacturing base, and military power, DSA proposals to block new data centers and neuter US defense capabilities would undermine two pillars of national power. What may be pitched as economic or social reform increasingly carries major national-security consequences and may suggest that these movements are being influenced by subversive networks within left-wing NGO spheres (read here).

We set the narrative at the start of the year that humanoids will move beyond factory floors towards the battlefield. Ukraine confirmed this (see here). 

Authored by Brandon Smith via Alt-Market.us

Recently one of the most important debates in the history of conservative discourse raged across the internet, with sides deeply divided and solutions rare or nonexistent. This debate went largely unnoticed by the rest of the country but it regards the deepest underlying foundations of our economic future.

I am speaking, of course, about the “Great Burrito Debate” of 2026.

Okay, maybe I’m exaggerating about the significance but I do think this conflict taps into the core of people’s concerns about America’s inflation problem. Not only that, but it exposes a lot of misconceptions people have about what inflation is, what’s causing it and who is to blame.

The burrito debate started as an honest discussion about the cost of living crisis and somehow ended up as dog-pile on conservative manners when it comes to economic discourse. Many conservative and libertarian commentators jumped into the fray with their two cents, though, the vast majority of them have minimal economic background, which I think added more confusion than clarity to the issue.

After two decades of macroeconomic analysis (and predicting the stagflationary crisis well in advance of the Ivy League “experts”) I thought I might offer my own perspective.

Keep in mind, those of us in the alternative economic field had to fight against the lies of the Biden Administration as well as establishment economists like Paul Krugman and Federal Reserve officials like Janet Yellen just to wake the public up to the fact that inflation was upon us and that it was NOT “transitory”.

Ultimately, everyone’s bank balances and monthly bills could not be denied and the gas-lighting ended. The only recourse of the establishment at that point was to blame Trump for all of it. The “Herbert Hoover” comparisons were rampant.

Who Really Has The Power To End Inflation?

To be clear, Trump has reduced the size of government by around 12%, which is an incredible accomplishment considering the amount of legal resistance that was put in place to stop him. However, he did not reduce government spending, which is currently 3% higher than under Biden.

One problem is that 60% of all federal spending is mandatory. By law, programs like Social Security, Medicare, Medicaid, etc. all scale their spending to match inflation and there is very little that Trump can do about that. Then there’s the rising interest on debt payments, which is controlled by the Federal Reserve, not the President. Trump’s cuts were only focused on discretionary spending, on institutions like USAID, and even those measures were repeatedly throttled by activist judges.

Trump has tried to circumvent the bureaucracy by issuing tariffs as a counter to the debt problem, but once again, activist judges have intervened. For those who claim that tariffs are “causing inflation”, this is simply false. The contribution tariffs make to CPI is negligible (around 0.5 percentage points). The media (and some libertarians) continue to falsely claim that tariffs are an issue.

This is where I think the public has a disconnect from the reality of the situation, and this includes fiscal conservatives who think they are “holding Trump’s feet to the fire” over US debt. The president is not all-powerful and he has very little control over the direction of the US economy. If he made all the cuts these people demand, he would have to become a dictator and he would have to do it by force.

That is to say, they can’t have it both ways. Either the President takes a constitutional hands-off approach to the economy and government spending, or, he goes full-bore Francisco Franco, declares himself supreme leader, and starts chopping out large pieces of the government (the Spanish “Stabilization Plan” of 1959, not the price control plan of 1939 which ultimately failed).

That’s the only way these kinds of policies are going to happen in the US because Congress isn’t going to do jack. Congress’ primary job is to maintain the status quo, not enact solutions.

The reason fiscal reform is impossible is because our modern government is designed to perpetuate itself; it is designed to grow forever. This is accomplished through the bureaucracy, which is the REAL power base within American politics. Most people do not understand that political leaders come and go, but the bureaucracy is forever and there are no term limits.

The socialist parasites within these structures control the direction of the country and the economy (this includes the central bank). When they face any real political opposition, they simply stall, obstruct, and wait for that political party or leader to leave office. Trump, for example, has only four years to redirect a system that has been on the wrong path for decades. It’s not going to happen without bringing the hammer down.

This brings us back to the “Burrito Debate” and the issue of inflation vs public expectations. The debate started with a post quoting college students complaining about the cost of basic necessities including a “$20 dollar price tag” on burritos. This triggered a wider discussion about affordability vs perception, then spiraled into an argument over conservatives not having enough empathy for struggling youth.

Critics asserted that conservative dismissals of the ongoing cost of living crisis will lead to younger generations rushing to support socialism, and MAGA would be to blame. There are two elements to this argument that I think need to be addressed and I’ll try to summarize as best I can.

Gen Z Has No Point Of Reference Because History Is Ignored

First, there’s the issue of younger generations not having a point of reference for how bad the cost of living crisis today is compared to previous generations. Second, there’s the lack of understanding among older generations on where the current crisis is likely headed in the future without drastic action.

Of course, no burrito actually costs $20. This is a terrible contention which is not based in reality. Maybe it’s the most expensive burrito in the most expensive restaurant in a high cost city like San Francisco or New York, but for the majority of the country a burrito is pocket change.

This brings me to the first issue, which is the younger generation’s lack of historical perspective. To be clear, the current inflationary crisis in the US is NOT the worst inflationary crisis this country has seen in modern times. Not yet, anyway.

From 1972-1981 (just after the US dollar was fully detached from the gold standard), the US suffered one of the most brutal series of inflationary beatings in the nation’s history. Inflation rates hit as high as 13% per year, food prices rose by around 120%, rent prices jumped by 75%, home prices rose by 150% and gas shortages were rampant.

The 1970s demoralized middle-class America. The poverty rate hit 14% and the unemployment rate peaked at 9%. Wages remained stagnant or even dropped for some workers. The average yearly income by 1981 was only $12,000 for individual workers. Most younger people today complain about how “the boomers had it easy” with food prices and house prices back in the day. They don’t actually consider how low wages were, or how high inflation was.

The point is, yes, Gen Z is struggling. Their fears should not be dismissed as frivolous. That said, I think because of internet culture and false expectations, many young people assume they are going through the worst crisis of all time and that no one understands them.

In reality, generations before them had it MUCH worse. The inflationary crisis of the 1970s did not end until the Federal Reserve exploded interest rates to 20%, causing a deflationary reset and making loans unattainable for most people for years.

If you are in your 20s and you think you’re not supposed to be struggling, I’m here to tell you that you’re wrong. We all had to struggle, many of us with terrible wages and low job availability compared to today. Don’t expect to be living comfortably until your mid-30s. It’s just the way things have always been.

Every generation experiences periods of economic uncertainty. But this doesn’t mean that there’s not considerable danger looming in the near future.

Kicking The Can Has Created An Economic Time Bomb

What some conservatives get wrong is the notion that the system can be fixed politically and that things will improve if we only keep Democrats out of office. Keeping leftists away from power is always a good thing, if only to prevent the country from going completely communist and cannibalizing itself. But when it comes to inflation, once an avalanche is set in motion it can’t be stopped and this avalanche has been building for decades.

Inflation cannot be reversed without a deflationary event. Since the credit crash of 2008-2009, political leaders and the Federal Reserve have been aggressively trying to prevent any deflation (the Keynesian standard). Which means that America (and most of the world) has not taken the deflationary medicine we should have taken years ago. Instead, we kicked the can down the road.

Some “experts” believe we can kick the can down the road for eternity. This is foolish.

The Catch-22 is that the central bankers must continue to intervene to prevent deflation but each time they do they pump up the money supply and create even more inflation, which then demands more deflation for balance.

The pandemic event was the most recent instance of this intervention. The covid bailouts caused an immense inflationary reaction and the spike in prices that followed is what most of Gen Z is feeling today as they enter the work-a-day world.

If the Fed stimulates, more inflation is on the way. If they hike interest rates and refuse to intervene, the US faces a deflationary crash. This is where we’re at in 2026 and yes, Gen Z and Gen Alpha will be hit the hardest unless something is done. But what?

The only policy solution that makes sense is an organized deflation plan, if such a thing is possible. Meaning, a reformed government would have to eliminate the central bank, hike rates far higher than they currently are, refuse to bail out failing companies relying on cheap debt, then institute austerity measures on social programs for everyone except the disabled and elderly. This is basically what Franco did (while also hunting down hundreds of thousands of liberals and communists, but let’s set that aside for now).

This government would have to find a way to cut spending, balance the budget and also act to mitigate greater damage to consumers by reducing taxes wherever possible (perhaps even ending property taxes on single family homes).

That would require a level of institutional coordination and cooperation that does not exist in the US right now. Again, Trump, or someone else, would have to act like an economic authoritarian and dictate every detail of the operation.

The system could return to a more normal condition after the economic bubble has been strategically burst, but I suspect similar actions would have to take place perhaps every 25 years to prevent another buildup of inflationary pressure. It would be a kind of “reset”, but not in the way that globalists at the WEF imagine. It would be a planned reset coordinated with the public so we are no longer waiting around for the bankers or random chance to decide when a crash is going to occur.

Meaning, each generation would have to accept the responsibility of dealing with a controlled deflationary downturn for at least a few years. Planning such an event would make it possible for the public to prep ahead of time. It could become a sort of deflationary tradition; similar to a Jubilee.

The only other option, as noted, is to do nothing and wait for the bubble to burst on its own. Eventually, high prices will drag down spending enough that deflation sets in. Job losses will jump. The Yen-carry trade will derail. A Black Swan event will pull the rug out from under us – Something will happen that sets the deflationary chain of events in motion and the central bank will do what it always does: Print money.

This is true of almost every country in the world right now. The US is not the only economy facing inflationary dilemmas, it’s just the largest.

A time will come when the dollar won’t be able to take it anymore and the currency system will break. Then, your burritos really will cost $20 or more and that will be a terrible day of reckoning. It’s a conundrum that should have been dealt with back in 2009, but NO ONE wants to be responsible for the financial pain caused by taking that bitter deflationary pill.

Europe’s industrial demise has become impossible to ignore. The continent’s automotive manufacturing base is being hollowed out by high energy costs, regulatory pressure, and a flood of cheap Chinese electric vehicles, with Germany, once Europe’s industrial powerhouse, emerging as the epicenter of this terrible decline.

Germany’s largest manufacturer by revenue is Volkswagen Group, whose CEO, Oliver Blume, is warning employees that the coming weeks will be critical as Europe’s largest automaker prepares to detail the most extensive restructuring in its history.

“The next few weeks will be crucial: everyone must pull together,” he told local outlet Bild am Sonntag. “We have drawn up the largest transformation plan in the history of the Volkswagen Group.”

The upcoming meetings, scheduled for next week, are expected to provide employees and union representatives with new details about the plan to shed 50,000 jobs.

“The next few years will be decisive in determining who stays in the race and who comes out on top,” Blume said, pointing to massive pressure to slash costs, fundamental shifts in the market, and global turmoil.

Blume warned, “The global car industry is in the midst of a massive crisis. And the Volkswagen Group is right in the thick of it. Geopolitics, trade barriers, regulation, weak markets and fierce competition are all taking their toll.”

Christiane Benner, deputy chairwoman of VW’s supervisory board and head of Germany’s IG Metall union, told local outlet Frankfurter Allgemeine Zeitung that Blume’s plan to cut 50,000 jobs is a “hard provocation,” adding that trust in management is severely “strained.”

Meanwhile, Volkswagen is holding “concrete negotiations” with Chinese automakers about assembling their vehicles at German factories, Benner said. Such deals could help protect domestic jobs and improve plant utilization, though she cautioned that they would represent only a “complementary measure” rather than a comprehensive solution.

Talks aimed at securing the future of VW’s Osnabrück plant are also progressing, according to Benner, who added that Qatar blocked a potential agreement involving Israeli defense contractor Rafael to convert a civilian production line to military production.

Whether the issue is the death of a industrial base, the Third World invasion of Europe, or disastrous green and energy policies that have sent energy prices through the roof, Brussels’ terrible decisions are, as Nomura analyst Andrzej Szczepaniak described, “seeding political change” that will push the continent “toward more populism.”

Authored by Naveen Athrappully via The Epoch Times,

A total of 55 people have been infected with E. coli and Salmonella across 15 states in an outbreak linked to alfalfa sprouts, according to the Food and Drug Administration.

Of those 55 people, 46 were infected with Shiga toxin-producing E. coli, or STEC, seven with Salmonella, and two with both pathogens, according to the FDA’s Aug. 21 update. Four people have been hospitalized, and no deaths have been reported.

Minnesota accounted for the largest number of infections, with 21 cases, according to data from the Centers for Disease Control and Prevention.

Wisconsin followed with 17 cases. Florida, North Carolina, North Dakota, and New York each reported two cases. Iowa, Indiana, Kansas, Michigan, New Hampshire, Pennsylvania, South Carolina, South Dakota, and Washington each reported one.

According to the CDC, illnesses began on May 31, with the most recent case beginning on Aug. 8.

State and local health officials have been interviewing sick people about the foods they ate during the week before becoming ill. Of the 37 people interviewed, 26 reported eating alfalfa sprouts.

Traceback investigations at grocery stores and restaurants identified alfalfa sprouts distributed by Minnesota-based Everything Sprouts LLC as a source of illnesses, according to the FDA.

On Wednesday, the FDA began an inspection at the company and collected product samples. Investigators are working to determine the source of contamination and whether other products or companies are connected to the outbreak.

Everything Sprouts said in an Aug. 21 statement that it was coordinating with the FDA and CDC to recall certain lots of alfalfa sprouts because of potential contamination with STEC and Salmonella.

The recall covers Everything Sprouts Alfalfa sprouts sold in 5-ounce plastic containers with lids and distributed from May 27 through Aug. 21. The products were shipped to retail grocery stores in Minnesota and Wisconsin as well as certain third-party distributors.

The company said federal and state agencies had notified it of reported illnesses. It also said it had tested its products daily during the outbreak and had not received a positive laboratory result.

Everything Sprouts said it was continuing to work with public-health officials to investigate the potential problem and would provide updates as more information became available.

The company also said that, as of its statement, it had received no direct reports of illnesses involving the recalled products.

According to Everything Sprouts, STEC and Salmonella infections can cause serious health problems. STEC infection can lead to acute diarrheal illness within several days of ingesting the bacteria.

Most people recover within about a week, according to the company, but people with weakened immune systems can experience more severe or prolonged illness and may develop complications requiring medical attention.

Salmonella infections can become especially serious in frail people, older adults, young children, and those with weakened immune systems.

Symptoms can include fever, vomiting, nausea, abdominal pain, and diarrhea, which can sometimes be bloody. In rare cases, Salmonella can enter the bloodstream and cause more serious complications, according to the company.

In addition to Everything Sprouts-brand alfalfa sprouts, the CDC linked the illnesses to the company’s Calco-branded sprouts in an Aug. 21 food-safety alert.

The CDC advised people who bought the affected products not to eat them and instead throw them away or return them to the place of purchase. It also recommended cleaning items and surfaces that may have contacted the sprouts with a dishwasher or hot, soapy water.

The CDC advised people to contact a health care provider promptly if they develop warning signs including diarrhea accompanied by a fever above 102 degrees Fahrenheit, bloody diarrhea, vomiting severe enough that liquids cannot be kept down, diarrhea lasting more than two days without improvement, or signs of dehydration.

Nikkei Asia reports that China is restricting or delaying exports of germanium- and quartz-based materials to Taiwan, creating “painful supply-chain bottlenecks” across the island’s key aerospace, semiconductor, and optical companies.

The supply disruptions reinforce the urgent need for the US and its allies to accelerate supply-chain decoupling and secure alternative sources of critical materials. Beijing’s ability to weaponize shipments could prove devastating during a military conflict or allow China to slow Western semiconductor and AI infrastructure buildouts while its domestic AI companies and infrastructure projects close the gap.

“It’s an industrywide issue. Many of my peers have encountered the same problem, and it could significantly extend lead times across our business,” one executive in the optical industry told the Japanese outlet, requesting anonymity for fear of retaliation from Beijing.

For context, germanium’s most critical uses are in defense optics and communications infrastructure, and it plays a significant, though largely indirect, role in the AI buildout through fiber networks, photonics, and data-center connectivity rather than the GPUs used in chip stacks.

Taiwanese manufacturers warned that prolonged customs reviews for germanium- and quartz-based materials began last year and that lead times continue to worsen, causing some suppliers to miss customer delivery schedules. Sources said one chip equipment manufacturer had to delay production on one chip line for months due to the supply squeeze and noted that sourcing materials outside China is extraordinarily difficult.

“The quality and precision for quartz is very strict for the chip industry, and currently we don’t have an alternative source from China,” one Taiwanese executive told the outlet.

“We have been told that some of our Chinese suppliers have been summoned by the authorities and questioned about their customers and shipments,” said one of the sources. “We have already lost some orders because longer lead times for certain materials mean we can’t meet our customers’ delivery schedules.”

Aerospace suppliers are also reporting disruptions involving Chinese magnets.

“We have found that key permanent magnets essential for making motors have faced some disruptions because of Chinese export controls, and it’s not that easy to find cost-effective alternatives in other places,” an executive with an aerospace supplier told the outlet.

China’s weaponization of critical-material supply chains amid heightened tensions with Taiwan suggests that the supply-chain decoupling theme will only accelerate from here.

Last week, Piper Sandler initiated coverage of LightPath Technologies with an “Overweight” rating and a 12-month price target of $15, citing the defense supplier’s proprietary BlackDiamond infrared glass, which completely “circumvents” the need for germanium amid “significant cost increases and scarcity stemming from recent Chinese export controls.”

Clarke Jeffries, vice president and senior equity research analyst at Piper Sandler, specializes in industrial software and defense technology. In a note titled “BlackDiamonds Are Forever,” Jeffries outlined the core value proposition underpinning LightPath’s investment thesis:

Central to LightPath’s value proposition is the exclusive license to BlackDiamond, a synthetic glass that circumvents significant cost increases & scarcity from recent Chinese export controls on germanium.

With an exclusive license, and now competing at cost parity (or below) to Germanium, we believe LightPath is poised to capture meaningful share in of IR and Multi-Spectral optics market as the technical advantages of the BlackDiamond technology scale to large diameter optics and have the opportunity to be designed into large upcoming defense programs.

Beijing’s tightening grip on germanium, tungsten, and other critical-material export flows merely confirms that the supply-chain decoupling investment theme will remain intact for many years.

The US and its allies must secure alternative sources before China further weaponizes export controls, which could soon create operational bottlenecks across the defense, semiconductor, and AI-focused industries.

That is why our decoupling theme is moving further upstream. On Wednesday, we examined Almonty Industries as a potential alternative supplier of tungsten (read report).

Summary:

• Nearly 200 Ships Navigated Strait Last Week, Up From 150 the Previous Week
• Trump Views Hormuz As “an American Territory” 
• Axios: 40 Tankers Transited Hormuz Friday Night, But Real Crisis Is Diesel

Hormuz Commercial Traffic Surges 

Shortly after President Trump declared the Strait of Hormuz “an American territory” on Friday evening, the New York Post published a new report citing UK Maritime Trade Operations data showing that commercial traffic through the critical waterway has rebounded sharply as more vessels use a US-backed route along Oman’s coast. This suggests that the US military presence and offensive operations in the region have degraded Tehran’s ability to fully control the waterway.

Nearly 200 ships navigated the strait last week, up from about 150 the previous week and just 40 two weeks earlier, according to UKMTO data. Traffic has recovered to roughly 20% of prewar levels, when the waterway carried about one-fifth of the world’s seaborne oil.

“It increasingly looks like Iran has at least partially lost control of the strait,” Homayoun Falakshahi, head of crude oil analysis at Kpler, told CNN.

“The Oman route absolutely makes the most sense,” added Dan Pickering, founder of Pickering Energy Partners, noting that it allows vessels to avoid the possibility of paying a toll to Tehran.

President Trump told a crowd in South Carolina late Friday, “We don’t even know if we won, because I view the Strait of Hormuz as an American territory right now.”

BREAKING: Trump says he view Strait of Hormuz as an American territory pic.twitter.com/NBKGGBgvWu

— Insider Paper (@TheInsiderPaper) August 21, 2026

Let’s revisit a mid-March note from Ex Uno Plures’ Zoltan Pozsar, who explained at the time that Trump was “methodically building a portfolio of assets” to pressure China, centered on strategic energy-supply nodes and maritime chokepoints that have historically supported Beijing’s access to cheap crude imports. His note highlighted the Panama Canal, Venezuelan oil flows, and the broader significance of Iran and the Strait of Hormuz.

Axios: 40 Tankers Transited Hormuz Friday Night, But Real Crisis Is Diesel

Axios political reporter and Middle East correspondent Barak Ravid reported early Saturday that 40 tankers transited the Strait of Hormuz on Friday night, citing three unnamed US officials.

“Around 16 million barrels of oil moved out of the strait through the southern channel on Friday night,” Ravid wrote on X.

🚨🚢🛢️Around 40 tankers transited in and out of the Strait of Hormuz through the southern deep channel on Friday night. Around 16 million barrels of oil moved out of the strait through the southern channel on Friday night, three U.S. officials told me

— Barak Ravid (@BarakRavid) August 22, 2026

The latest Bloomberg vessel-tracking data show that 13 ships transited the critical waterway on Saturday, with seven traveling east to west and six moving west to east. Traffic remains well below the levels recorded during the brief memorandum-of-understanding period from June 15 through mid-July.

On Friday, President Trump called the Hormuz chokepoint “an American territory”…

“We don’t even know if we won, because I view the Strait of Hormuz as an American territory right now,” Trump said, addressing a crowd in South Carolina.

Trump joked about bombing Iran during the speech, saying, “It’s a Friday night. We have plenty of time… and what the hell do I have to do? Go back and bomb Iran a little bit more?”

Axios reported Wednesday that the US military had established a shipping corridor in the critical waterway, which carries millions of barrels of oil each day. There was no word from Ravid on whether the 40 tankers sailed through the new shipping corridor.

Even with these transits, the emerging energy crisis is not centered on crude availability, as SPRs around the world are being tapped to offset lost production in the Gulf region. Instead, the real crisis is materializing in the refined-products market.

The focus emerged at the start of the week when Bloomberg’s front-month US diesel crack spread (HOCL1 Index) topped $100 a barrel, as we warned: “Industrial economy either grinds to a halt or consumers about to be hit with the biggest energy pass-through in history.”

Diesel crack hits record $102. This is absolutely unprecedented.

Industrial economy either grinds to a halt or consumers about to be hit with the biggest energy pass through in history pic.twitter.com/OtAdgrCvb3

— zerohedge (@zerohedge) August 17, 2026

Then, by Wednesday, Jeff Currie, the former Goldman Sachs commodities chief and now co-chair of Abaxx Markets, appeared on CNBC to explain that the real crisis is not in crude but in diesel markets.

“Nobody on the planet Earth consumes crude oil,” Currie told CNBC. “Refineries do. Everyone else consumes gasoline, diesel and jet fuel, and those markets look considerably uglier.”

By Thursday, Currie explained that the convergence of tight physical markets, currency debasement and policy intervention represents the hallmark of a structural commodity bull cycle.

“Stop looking at crude. Nobody consumes it but refineries. The economy runs on gasoline and diesel, and that consumption-weighted basket costs $165 against $85 WTI,” Currie wrote on X. Read the report.

Related:

• Diesel Crack Spread Madness Deepens As Jefferies Finds No Easy Exit From Russia’s Refining Crisis

The US diesel crack spread closed below $100 on Friday, but the Hormuz disruption, compounded by Ukraine’s decimation of Russia’s refining capabilities, is creating a perfect storm for global diesel markets ahead of the Northern Hemisphere winter.

Authored by Steve Watson via Modernity News,

Spain’s peak summer season has been disrupted once again by a revolting viral trend that has forced the closure of swimming pools and waterparks across the country, leaving families stranded and facilities scrubbed clean at public expense.

At PortAventura World’s Caribe Aquatic Park on the Costa Dorada this week, lifeguards evacuated both the adult and children’s pools after detecting human faeces in the water.

The incident, reported on a Tuesday afternoon and allegedly repeated the next day, left the popular resort’s aquatic areas shut for the remainder of the day under strict health protocols.

In recent years, Foreign Instagram & TikTok users have taken it upon themselves to try and get public pools to close by defecating in the water.

It’s caused a serious public health crisis, already leading to the closure of more than 300 pools in Spain, which all had to be… pic.twitter.com/sWXRbaXvLC

— Lozzy B ??? (@TruthFairy131) August 22, 2026

The park, which draws millions of visitors annually including large numbers of British and Irish tourists, applied mandatory cleaning and testing procedures before reopening.

One swimmer captured the scene on social media, writing: “It’s 4.33pm in the afternoon and some pig has just defecated in the pool and they’ve kicked us all out. This isn’t AI, this is reality. If you’re at Caribe Aquatic Park you’ll have seen it. We’re all out of the pool.”

@bartoloventura1 Holi son las 4:33 de la tarde y un gorrino o gorrina se acaba de defecar en la piscina de Costa Caribe y nos han sacado a todos esto no es Ia esto es una realidad si estáis en Costa Caribe lo habréis visto estamos todos fuera de la piscina#bartoloventura1 #viral #fyp #portaventuraworld #viral ? sonido original – bartoloventura1

The so-called “brown challenge” or “reto marrón” involves deliberately defecating in public pools or releasing faeces from bags concealed in swimwear, with the explicit aim of forcing closures.

?? Meanwhile in Spain

Waterparks are being forced to close in peak season.

Why?

Because culturally enriching Youths are participating in ‘The Brown Challenge’ whereby they defecate outside in the Swimming Pool Water. pic.twitter.com/RBGIGduWGf

— Concerned Citizen (@BGatesIsaPyscho) August 22, 2026

By law, contaminated pools must be thoroughly cleaned, hyperchlorinated, and often tested repeatedly for bacteria such as E. coli. Facilities typically remain closed for 24 to 48 hours.

Health authorities warn of risks including norovirus, Salmonella and Cryptosporidium, which chlorine does not always eliminate and which can cause severe stomach illness, particularly in children.

PortAventura officials stated: “The safety and well-being of our visitors is our top priority, and our team is trained and prepared to manage this type of situation with the utmost diligence and efficiency.”

They added, “We rigorously applied all the health protocols established by current regulations and the Public Health Agency of Catalonia (ASPCAT). Specifically, in the event of any detection and presence of faeces, vomit or other visible organic waste in the water, swimming is immediately prohibited until the situation is normalised after the corresponding protocol has been applied.”

This is no isolated prank. Spanish media and local councils report that more than 300 pools have been affected in recent seasons. Municipalities from Galicia and Valencia to Madrid, Andalusia, Castilla-La Mancha and Catalonia have issued alerts.

Some towns have closed the same facilities multiple times in a single summer. Costs mount quickly: draining, refilling and lost revenue can run into thousands of euros per incident.

Fines for those caught range from €1,000 to several thousand euros, with bans from facilities, yet identification remains difficult because pools cannot install cameras in changing areas or demand ID on entry.

The Camp de Tarragona area, home to PortAventura, has been among the hardest hit. Nearby municipal pools in Vila-seca, l’Arboç and other towns have faced repeated shutdowns. Similar scenes have played out in Toledo, Zamora, Burgos, Jaén and across the Basque Country, where an Olympic-sized pool was evacuated in the middle of a heatwave.

Deliberately defecating in shared public spaces and spreading one’s own filth is not the act of a civilised person. It is literally the behaviour of animals. In nature, certain creatures mark territory with waste precisely to signal dominance, to claim space, and to drive off rivals.

What we are witnessing in Spanish pools is the same impulse, only now performed by humans who have been told their presence is an enrichment rather than a burden. When people treat public spaces as open sewers, they are asserting hierarchy in the most primitive way possible,.

This public health nuisance does not exist in a vacuum. It arrives against the backdrop of Spain’s accelerating migration crisis under the socialist-communist government of Pedro Sánchez.

In April, authorities launched a mass amnesty via emergency decree that opened the door for hundreds of thousands of illegal migrants to regularise their status, obtain work permits and move rapidly toward citizenship.

Queues of predominantly young men from Morocco, Algeria and elsewhere formed outside consulates as applicants scrambled for the required documents. The government initially spoke of around 500,000 people; applications soon exceeded one million.

By July the scale was clear: more than one million applications for legal status, granting recipients free movement rights across the entire Schengen zone.

Opposition figures, including Vox leader Santiago Abascal, accused Sánchez of engineering a long-term electoral advantage by naturalising large numbers of foreigners and altering the demographic balance.

European conservatives warned that the policy risks collapsing Schengen itself by allowing unrestricted onward travel. The New York Times, for its part, hailed Spain as a “beacon of the global left.”

That same open-border approach has played out dramatically in the Spanish enclave of Ceuta. In late July and early August tens of thousands of mostly military-age men crossed from Morocco in a matter of days, overwhelming local services.

Beaches became open-air camps littered with waste. Hospitals reported outbreaks of scabies, measles and other infections. Police and military personnel assigned to clear the sites themselves contracted scabies.

Despite official claims that most would be returned, thousands remained, and the cycle of clearance and reoccupation continued. The visible impunity has emboldened further attempts to reach the Spanish mainland.

Just days ago, dinghies packed with North African men landed on tourist beaches near Cartagena, sending holidaymakers scrambling for their belongings.

Local mayors expressed fury at the ease with which the vessels reached shore undetected. The message from Ceuta appears to have travelled: if thousands can simply walk or swim into Spanish territory and face little lasting consequence, smaller acts of disruption elsewhere become easier to attempt.

The “brown challenge” sits at the intersection of social-media exhibitionism and the broader erosion of shared standards that accompanies rapid, unmanaged demographic change.

Public pools and waterparks are among the last remaining low-cost spaces where ordinary Spanish families and European tourists gather in summer. When those spaces are repeatedly rendered unusable by deliberate contamination, the social contract frays further.

Taxpayers fund the clean-ups. Parents keep children away. Businesses lose peak-season revenue. The pattern is familiar across Western Europe: facilities built by one population become contested or degraded under pressures introduced by another.

A country that once marketed itself as a premier holiday destination now contends with closed pools, stormed beaches and the quiet calculation by many natives that the old rules no longer apply equally to everyone.

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