Insanity

The week ended on September 25, 2026, interesting news items to look at for the past fortnight are:

Insanity: On August 21, 2026 I sounded an alarm that a clear sign would be visible that the USD hegemony will crack by October this year. Having explained both the technical and fundamental aspects in the last two blogs, this week I like to take stock of recent data points that reinforce my conviction. This hopefully would allow readers to judge whether my forecast is still on track or whether insanity has set in on my thinking. As is typical, any bold forecast would receive its fair share of cynicism and ridicule. (Fig. 1)

1. Interest rate movements - One of the mistakes made by a casual observer of the financial market is that the US Federal Reserve always has the power to control key global interest rates. This is because the controlled MSM has spent years educating the public that it is. Quite the contrary, the Fed is just another follower of market interest rate movements and has recently been a slow follower. The truth is the Fed can only change the Fed Funds Rate, and typically the Fed follows the market rate of YR2 rate of Treasury notes. (Fig. 2).  

Remember the Fed chant of “transitory inflation” in 2021, the market determined that inflation was out of control and sold off low-yielding Treasuries from mid-September 2021, it was only 163 days later that the Fed finally accepted her error in judgment and began a series of interest rate hikes.

The Fed had recently, on September 17, raised interest rates by 25 basis points. (Fig. 3).

This would have no impact on the Trump Administration to reduce spending, but such an increase in interest payments on the humongous $40 trillion of federal debt means that the interest payment will be similar to any other increase in government deficits and will fuel inflationary pressures. (Fig. 4)

showed after an initial knee-jerk reaction of narrowing the FFR spread, the gap between FFR and Treasury Yield resumed its upward momentum.   

2. US Out of Cash - The technical driver of my foreca-st was that by October 2026, the US economy will be out of cash (Fig. 5).

This week, there were two clear signals toward that forecast. (i) SoftBank offered a $10 billion USD bond priced at around 9–10% when the average non-investment-grade bonds was trading at 7.4%. (Fig. 6).

Both Softbank and the lead bookrunner (Citigroup) knew they would be scrapping at the bottom of the barrel for cash, as both the U.S. Treasury and corporations are crowding out each other for the interests of investors, and (ii) Wall Street analysts have reported that US banks have tightened credit to consumers and corporations to the tune of $1 trillion.

3. AI Problems Surfaced - Oracle ( one of the key hyperscalers) issued a force majeure notice to Blue Owl Capital regarding "Project Jupiter," a massive 2.45-gigawatt AI data center campus in Doña Ana County, New Mexico.  (Fig. 7).

 4. The West is trapped in both the Ukraine War and the Iran War and needs China’s Help - In an op-ed, the Wall Street Journal Editorial Board outlined five key points and warnings Donald Trump should present to Chinese President Xi Jinping, including halting military and targeting assistance to Iran, protecting U.S. artificial intelligence models, defending Taiwan's peaceful status quo, ending rare-earth mineral economic coercion, and using tariff powers to stop support for Russia. Read the full editorial at Wall Street Journal (Fig. 8).

Would China cut off its major energy supplies to let US aggression triumph?

5. Crack Spread - Anyone who had simply focused on the spot crude price increase this year from US$60 to the current price of US$97.47 (+67%), would have severely underestimated the impact of the inflationary pressure brought on by the current geo-political conflict. (Fig. 9).

A crack spread is the price difference between a barrel of crude oil and the refined petroleum products made from it. At the end of January 2026, the crack spread was $25 per barrel, but it has now expanded to over $70 (+210%). The crack spread has widened because refinery capacity in the Middle East and Russia has diminished due to war damage, which prompted operating refineries elsewhere to increase their margins. What is rarely reported in the MSM is the cost of oil transportation and insurance due to severe disruptions and risks. Very Large Crude Carrier (VLCC) daily spot and charter rates have skyrocketed over the past year, with benchmark spot earnings surging from historical averages of $20,000–$50,000 per day up to historic peaks exceeding $1 million to $1.2 million per day on key routes like the Middle East to China, representing roughly a 20-fold to 24-fold increase driven by geopolitical conflict, longer routing around the Cape of Good Hope, and severe vessel supply constraints. So far, the price at the pump has gone up by approximately 70%, but due to a delivery time lag and the depletion of most countries’ strategic petroleum reserves, I am afraid we have not seen the worst-case scenario at the moment.  

6. Runaway Food Cost - In my previous blog post, I reported that for every calorie of food on our plate, on average, a man needs to put in 15 calories of energy. A major portion of that energy input (up to 40%) is fertilizers and pesticides. With the closure of the Strait of Hormuz, there is a supply squeeze for nitrogen and sulfuric fertilizers. (Fig. 10).

As sulfuric acid is essential to convert potash into potassium chloride, the supply of potassium fertilizers will also face shortages. (Fig. 11).

Year to date wheat  and barley prices have increased by 38% and 26% respectively. There are reports that some farmers in Australia has ceased planting and sold the fertilizer stockpile to raise cash.

I will continue to keep a watching brief on global inflation and the factors that may have a serious impact thereon.

Revelation 6:5  When He opened the third seal, I heard the third living creature say, "Come and see." So I looked, and behold, a black horse, and he who sat on it had a pair of scales in his hand. 6  And I heard a voice in the midst of the four living creatures saying, "A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not harm the oil and the wine."