Keep pulling the thread on Michael Every.
The effective closure of the Strait of Hormuz has triggered an unprecedented global energy crisis, removing 13-15 million barrels per day of oil production from the market. This event is the focal point of complex geopolitical maneuvering between the US, Iran, Israel, and China, with a high risk of further escalation.
The US administration is overtly using economic and financial tools as instruments of foreign policy. This includes offering Fed swap lines to strategic partners like the UAE and planning to leverage stablecoins to replace the Eurodollar system, explicitly linking monetary tools to geopolitical objectives.
China has demonstrated a new level of influence over global oil markets, using its massive strategic petroleum reserves (over 1 billion barrels) to manage the supply shock. By controlling its refined product exports and drawing on its inventories, China has acted as a more effective emergency backstop than traditional players like OPEC.
The incoming leadership at the Federal Reserve under Kevin Warsh is signaling a radical shift away from pure demand management. The new approach may involve setting different interest rates for different economic sectors and using QE-style balance sheet support for the physical economy (e.g., mining, shipbuilding) to drive re-industrialization.