Oil: The Ultimate Economic "FireStarter" Tool
Iran, the Collapse of the KOSPI & Korean Won: A Macro HVF Trade
This piece explores a macro HVF trade emerging from the convergence of several major macro set-ups, seemingly disparate and uncorrelated across industries and markets, yet they are increasingly overlapping in ways that create a powerful alignment.
The framework touches on a failing hegemon, a bursting AI bubble, and why certain ‘slave nations’ appear destined to be buried alongside their terminally ill king (US).
1. Government Debt
First, we have the over-proliferated and overvalued US and Rest-of-World (RoW) debt markets. The focus is primarily on government-issued bonds, but the problem extends far beyond that.
It bleeds into illiquid private credit markets, private equity, corporate debt, housing debt, consumer debt, and high-yield markets. It also raises deeper questions about bank solvency, counterparty risk, and the broader implications of what some refer to as The Great Taking.
This raises the question: Is this fundamentally a financial problem dressed in a military uniform?
2. Artificial Intelligence
Second, we have the extraordinary concentration of capital flowing into artificial intelligence.
Capital is being aggressively ‘crowded out’ into the AI sector, creating a speculative bubble that increasingly resembles previous late-cycle technology manias.
3. The Everything Asset Bubble
The broader backdrop: the financialisation of virtually every asset class.
Markets are sitting at what can only be described as peak-perfection pricing, where valuations assume stability, growth, and liquidity that may not exist in the years ahead.
4. Enter the Planned Demolition Agent: War, Oil, and Inflation
The potential demolition mechanism: war, oil, and inflation.
For a retreating hegemon facing diminishing global influence, these forces represent a (death-knell) counterstrike against its major trade-deficit counterparties — particularly China, the EU, Japan, and South Korea.
Add to this mix, the ‘Rockefeller Tax’ — a great ‘strategic’ use of energy prices to accelerate debt debasement and priming for inflation.
During CV19, we witnessed an orchestrated oil glut, followed by an intentionally engineered energy supply-chain shortage.
Oil has always been the go-to weapon when it comes to triggering either raid deflation or inflation (Rockefeller Tax).
As a financial ‘controlled demolition’ tool of intent, oil will likely always play the role of the initial fire-starter, igniting the debt contagion, bankruptcies, and financial instability that follows.
The first stage usually appears as an interest-rate shock and a synchronised global economic slowdown. All the while, oil is conveniently framed as just another commodity — even though it sits embedded in nearly everything we produce, package, and transport, not to mention the fuel behind our holidays and business travel.
