Transcription
The last time Iran caused an oil shock, it was 1979. Back then, the world lost 5 million barrels a day. Inflation went as high as 13%, and it took years to recover.
Okay, so this time, well, we've already lost 11 million barrels a day. That's more than both of the 1970s oil shocks combined. And what I don't really see anybody talking about, at least not as of right now, is that even if peace is declared right now today, which it looks like it is, and I hope and pray it is, but even if every bomb stops falling tonight, the damage is already done. The damage is already locked in. I'm talking about refineries that are destroyed, pipelines that have been bombed out. We're talking about shipping lanes that are closed down, which are causing supply chains to start breaking down. And all of this has already triggered something. It's something I'm calling the debt vortex. I'm talking about a $350 trillion feedback loop that has only three exits. Now, all three of them, they end the same way. And by the end of this video, you're going to understand exactly what the debt vortex is, why there's no clean way out of it, unless you know the three ways, and how to position yourself on the right side of what's coming so you don't, I guess, end up on the wrong side.
Now, this is so important. I had to take a break from my vacation. I'm here at my house in Mexico. I want to drop this special alert to you. So, let's go. All right.
All right, so before we jump into the full video, I want to just talk about something. Um, obviously this is moving very fast. Every single day, hour by hour, there's updates happening. But what we saw happen this week was Trump came out and said, "Looks like a deal is happening." Now, you might recall a video and some videos I made earlier talking about the stages, the 10-point conflict playbook that Trump follows. And of course, this is about step nine of what we outlined. Um, but he announced that a deal is happening, and the markets loved it. Oil prices plunged 10% in a day. Markets started rallying, and then of course, you know, Iran came out and said, "No, no, no, there's no negotiations happening." And then the market started moving back the other way. The market's very sensitive to that. It looks like the negotiations are happening. We have Turkey, Pakistan, Egypt, they're all saying that they're involved in backdoor channels. We have multiple sources that are confirming that.
What I want to talk about is something different, but I do want to address something that the internet is debating about, and they're talking about the "taco." Have you heard of that? The "taco" – Trump always chickens out – versus "The Art of the Deal." You see, everyone says that Trump always tacos out. He always, he always chickens out, right? So whether it was the tariff wars, right? He's going to, he's going to do these, these hardcore tariffs and then he chickens out and he reduces the tariffs. But of course, in, in his book, "The Art of the Deal," that people reference, he talks about his ways to negotiate or to come really strong and hard and heavy, and then you back off of that to look like the other side wins a little bit. So, is it that he chickens out, or is it that it's "The Art of the Deal"? Well, my take is maybe. I don't know. Could be some of both. I think it's more of "The Art of the Deal," but both frames miss the entire point. You have to think in terms of American objectives, right? Like, what, what is, what's best for America? What makes America great? What are the objectives here? And an endless war in the Middle East, that's certainly not in America's best interest. We don't want that. It's not our best objective. The US will push objectives only to the point where it doesn't damage the home front. It's a key piece. He will push as hard as he can before it starts causing, uh, you know, seriously adverse reactions to the US. So whether you want to call it "The Art of the Deal," whether you want to call it "taco," it doesn't really change the calculus, right? Because like I said, the war may be winding down. Hopefully it is. I pray it is. But again, where everyone stops thinking is about what happens next. And as I said, whether they stop today or it continues on for a little bit longer, which only makes what I'm talking about even worse. The problem is if peace is declared, what's already happened can't be undone. The damage is already inflicted, and we're going to be dealing with this for years to come.
All right. Now, I got a couple data points that I want to share with you. I don't want to go through a whole exhaustive list, it'll get pretty long. Let's just say there's a lot of danger, uh, a lot of damage. But we see that Qatar had 3 to 5 years of damage to their LNG capacity. It destroyed 17%. Two of 14 LNG trains plus one of their two gas-to-liquid facilities bombed out. We have, uh, production supposedly sidelined 12.8 million tons a year for up to three to five years. Pretty big deal. Uh, we have costs that maybe are estimated as much as $26 billion, maybe more, to get that repaired. In the Pearl GTL, we saw, you know, that was also damaged. It's the world's largest gas-to-liquid plant. It's operated by Shell. Um, they had a planned expansion. There was six new LNG trains by 2027, but that's probably not going to happen. At least it's delayed at this point. Um, in Qatar, roughly 20% of global LNG supply, and this one completely reshapes energy markets for probably the rest of the decade. Uh, Qatar Energy, they'd had to declare force majeure on their long-term contracts. And I'm talking about to Italy, to Belgium, to South Korea, China, meaning, hey, we can't deliver on our contracts for up to five years. In Iran, massive energy infrastructure hit. South Pars' gas field was hit by Israel. Um, and and that South Pars' gas field shares up to 70% of their domestic consumption, um, from Iran's gas powers their electricity, their heating, petrochemicals. Total gas, uh, gas production damage by about 12%. I can go on. You get the point. A lot of damage has happened. And the key piece is that it's going to cost a lot of money. Yes, we can, we can come up with the money, right? We can, we can print the money. Uh, we're going to get back to that in a minute. But you can't just print new gas lines. You can't just print new pipes. You can't just print the, the material that you need. It's going to take years to get there.
So, what happens with markets when we've removed up to say 20% of that? What happens? Well, let's talk about that now. Like in 2020, during the pandemic, we saw that we had a major supply chain problem. But again, this is not a supply chain problem. This is a supply problem. Supply chain problems, they, they typically fix themselves, right? A ceasefire happens, maybe ships start going back to the straits, problem solved. That supply problems take years. Look at a quote I saw from Dan Pickard, founder of Pickard Energy Partners, and he said that the repair timeline is pretty long. He, he reported that the pipelines, the refineries, the export terminals can take months, potentially, he said, over a year just to repair. So, this is pretty bad, and it's way worse than what we saw in 1979.
How much worse? Well, let's take a look. Let's compare what happened in the oil shock of the 1970s, two of them, to today. In the 1979 shock, supply lost 5 million barrels a day, which back then was about 7% of the world's production, a net loss of about 4% after OPEC offsets. The oil price back then, though, was only $13 and it went to $34 a barrel, which was about a 2.5 times increase in just 12 months. And that pushed inflation up. US inflation hit 13%. So when energy prices go up, everything goes up. US inflation at 13% and unemployment was soaring. It was at 6.1%. So, and that was also just Iran's production. Saudi, Iraq, Kuwait, UAE exports, they all continued normally, right? But now today, in 2026, supply lost is 11 million barrels a day. The IEA chief said that this is more than both of the 1970s shocks combined. And then the price, well, forget those old prices. Brent peaked at $126 a barrel, up from $70 pre-conflict. Uh, we see the traffic in the straits. The Hormuz traffic's down 95%. I mean, big, big, big, big, big drop. Of course, that can come back with peace, right? But this is not just about oil, too. We have fertilizer down 44%. Sulfur is down 31%. Urea is down 20%. I mean, we're talking a big, big supply chain hit. We have physical damage across six countries: Qatar, Iran, Saudi, Kuwait, Bahrain, Oman, all of them hit. So again, this is a pretty big deal, and I don't think most people are prepared for this. I mean, I'm an optimist. I'm hopeful. I think this is going to end pretty quickly here. I pray that it's ending pretty quickly, but I'm also a realist, and I want to understand what this means for us, right? Because the scale of the shock isn't what makes this worse. It's the financial structure that we have underneath it all today. That's the difference. We're talking about a completely different structural problem, different structural mechanics than we had the last time. This is why the same shock produces a completely different outcome. You see, in 1979, the US net international investment position was positive 3.5% of GDP. Right? America was a creditor nation back then. But today, in 2026, US NIP is down negative 85% of GDP. We're the largest debtor nation in history. We have a global dollar-denominated debt that is now $350 trillion, and this didn't exist anywhere at this scale in 1979. In 1979, when the dollar strengthened, capital flowed into US Treasuries. The system could absorb it back then. But in 2026, uh, when the dollar strengthens, it crushes every foreign borrower, the $350 trillion. It crushes all those foreign borrowers all across the planet. They're forced to sell US assets just to survive, which means capital starts to flow out. That is what we're calling the vortex.
Okay. So to understand the vortex, you have to understand there's a four-step cycle. So step number one is there's an oil shock, kind of like we have right now. The oil shock drives costs up. We saw the price of oil going up. When oil goes up, when energy goes up, it slows the entire economy down because the entire economy runs off of energy. So energy goes up, costs go up, the economy starts to slow down. When, when the economy slows down, that means you make less money, your business makes less money, then deficits start to rise. Energy costs start to spike, and then the economy slows down. And when that happens, then you don't make as much. You don't pay as much taxes. So tax receipts fall, and then government spending goes up automatically because they have to offset that. They have to offset the unemployment. They have to pay for the safety net, right? So that just makes the deficit get worse.
And step two is that the US now has to borrow more, right? So when you make less money, the economy slows down, you pay less taxes, tax rates fall. The US has to make up for that gap. So they have to borrow it. But the problem is nobody's buying. Foreign central banks, they don't want to increase their lending to the US anymore, right? They, they can't. They're strapped as well. They have $350 trillion dollars of debt. The dollar is getting stronger. And so that's a problem. The Fed isn't doing quantitative easing. There's no QE. So now the Treasury is forced to borrow from the global private market, which takes us to step number three.
Now step number three is the massive borrowing demand that's needed. It strengthens the dollar, right? Because they need more money. So they have to offer more yield. They increase the yield to attract the money, which makes the dollar stronger. When the dollar gets stronger, it pushes rates up, right? Which seems okay. So, good for some, but now the US government's competing with everybody else for the same pool of capital. And what that does is it crowds out private businesses, crowds out foreign borrowers. And as the dollar strengthens, as those rates rise, it takes us to step number four, which is the stronger dollar crushes the global economy. Because of $350 trillion of debt, the debt gets more expensive and more expensive and more expensive. So it crushes the global economy and takes us back to step one. There's $350 trillion in dollar-denominated debt around the world. So when the dollar goes up, when rates go up, every foreign borrower's real cost of repayment, it also goes up. Now, even if rates didn't move, it still tightens the entire system. Growth is still going to slow down further. Receipts are still going to be dropping down. And again, we're right back at step number one. This is the vortex. It's like a self-reinforcing loop. It's like a flywheel, right? It keeps spinning faster and faster and faster and faster until something breaks.
So, let's talk about the three exits. All right. So, the three exits out of the vortex, um, they all lead to the same room. There's three of them. The first one is a systemic collapse. That basically means that it all falls apart. It's a deflationary crash. Everything gets wiped out, and then there's massive printing to restart the system. Okay. But the end result here is, of course, well, inflation, massive printing, inflation. First a big crash, a collapse of everything, and then the big print.
The second way out of the vortex, the second exit is dollar devaluation. And this is done intentionally. So we're going to intentionally weaken the dollar to make the debt service for the rest of the world easier. Right? But the problem with that is, well, you guessed it, it's also inflationary. It's inflationary by definition. The very definition of weakening it, making it easier or cheaper is inflationary.
And then the third exit out of this vortex is sort of the same. It's money printing. We need quantitative easing to cap the yields. We have to keep that yield curve down. The Fed's going to step in. They're going to buy Treasuries to stop those rates from spiraling out of control. And of course, that's also inflationary by definition. So, as you can see, there's three ways out of the vortex, but every door leads to the same room. They all lead to more dollars chasing the same stuff. Now, there may be a little bit difference in how they work and some time frames in there, but they all end up in the same long-term case: money printing.
Now, some analysts think that this is a, maybe a 2007-2008 level moment, and they think that maybe the straits could stay closed maybe, maybe for months. Some people are expecting that. They could say, you know, they're thinking as a, a full supply chain breakdown. And look, maybe they're right. I, I pray they're not right. I don't think they're right, but maybe they are. But even if they are, it just means the vortex spins even faster. All it does is accelerate where we're going even faster. It doesn't change that there's only three exits to get out of this. Now, my take sits maybe in the middle of the analysts, right? But either way, like I said, the destination's the same. We're just guessing speed, velocity, and time frame.
Now, this is exactly why I built the Wealth Operating System. It's designed for environments just like this. So, if you want to understand how to position your assets, your debt, your tax strategy for what's coming, uh, I'll put a link down in the description down below. It's worth checking out.
All right. Now, with closing, like, what are we going to do about this? Like, what are we supposed to do to protect ourselves and hopefully win? Well, if all three exits, the only exits out of this vortex, the all three of them are inflationary, then the playbook is is pretty clear. I mean, I typically talk about hard assets, right? Hard assets win. In the 1970s, we saw the same thing. Gold went roughly eight times after the 1979 shock. We saw real assets outperform when the printing starts. Right? So when they can have unlimited money printing, then people want to go to hard assets that have a finite supply. Also energy assets, right? Not only is the Trump administration have a massive push to build out energy already, now we have an energy supply. So look at commodities, supply and demand. There's less supply. There's the same demand. So energy assets. So, even if the oil pullback, you know, is short-term, like peace stocks, like I said, hopefully happens maybe by the time you watch this video, the structural damage is there, the prices are going to stay elevated for months. And with energy equities, you know, real cash flow, um, they're looking pretty good. Of course, Bitcoin. Why Bitcoin? Well, Bitcoin hasn't been around since the 70s. Obviously, we don't know how it, you know, how it performed back then. But what we do know is that when the dollar weakens, which it has to for the vortex to release, uh, when liquidity comes back in, we know that Bitcoin has outperformed every other asset when there's liquidity rushing in. We also know that Bitcoin's outperformed gold for the last three weeks straight. We can see the Bitcoin-gold ratio is starting to turn up. Maybe it's an early signal. Uh, the other thing I like is long-duration fixed-rate debt. I don't want to be a debtor. I don't want to hold debt. I don't want to, you know, uh, hold Treasuries, but I do want debt. So, if I'm holding, say, a 30-year fixed-rate mortgage at like 3 or 4%, I'm kind of short the dollar, but I'm also expecting inflation to pay the debt off for me. I love that. So, long-term fixed-rate debt is amazing. Of course, it kind of goes without saying, but savers, cash holders, they're going to lose big time. Maybe not immediately. U maybe not drastically overnight, but slowly, persistently. We saw in the Suez Canal moment. We saw in the UK CPI rose roughly four times over 20 years. So that's not like a collapse, um, but it's definitely like a slow grind that destroyed purchasing power while everyone says that everything is fine, but it wasn't.
So, you know, all in all, this is sort of, uh, a repeat of the 1979 oil shock, except for, like I said, the structural underlying, uh, of the system is way worse. The starting conditions are way worse. So, while everyone's debating whether the war ends right now, whether it continues on, again, that's the wrong question. The question you should be focusing on is that the damage is already locked in. The vortex is already spinning. There's only three exits, and they all lead to the same place. So, which exit are you going to be prepared for? Now, the people who understand this and position right now, they come out the other side wealthier. The people who wait, they wait for certainty, they get inflated away.
Now, if you want the full framework for how to build wealth in this environment that we're in right now, if you want the debt strategy, the tax efficiency, the asset layering, all of that, I built a free training on it. If you want, I'll put a link down below if you want to check it out. But either way, ignore the headlines, focus on the facts, focus on where we're going. You're going to be much better off. As I always say, to your success, I'm out.