WEBVTT - The Rising Wave of US Debt & Fair Value Bitcoin 0:00:00.480 --> 0:00:02.760 Hello, and welcome back to another episode of The Mark 0:00:02.800 --> 0:00:06.240 Moss Show, where we're talking about the world changing as 0:00:06.280 --> 0:00:09.560 a world of decentralization and deglobalization is upon us, and 0:00:09.600 --> 0:00:11.440 we got a lot to cover. I've tried to bring 0:00:11.480 --> 0:00:13.440 to you some education in some of the latest breaking 0:00:13.440 --> 0:00:16.079 news headlines so you can see the signs that play 0:00:16.120 --> 0:00:17.880 by play of how this world is breaking down. And 0:00:17.920 --> 0:00:20.639 so we're gonna talk about what is going on in 0:00:20.640 --> 0:00:23.320 the economy. Everyone's screaming for a recession while the markets 0:00:23.320 --> 0:00:25.000 are high. We're going to talk about some of these 0:00:25.040 --> 0:00:27.040 signs that we have there. We're going to talk about 0:00:27.080 --> 0:00:31.360 this new bill that just got past in bitcoin that 0:00:31.440 --> 0:00:34.920 has massive implications. This is just breaking news. We're gonna 0:00:34.920 --> 0:00:36.800 talk about what the heck is going on with commodities, 0:00:37.040 --> 0:00:41.120 specifically with oil, what is going on with China. Man, 0:00:41.159 --> 0:00:42.559 We have a lot to cover. We're going to talk 0:00:42.600 --> 0:00:47.600 about what's going on in the US with some big, big, 0:00:47.640 --> 0:00:49.640 big domestic news. Anyway, I got a lot to cover. 0:00:49.760 --> 0:00:51.240 You don't want to miss this. If you do miss 0:00:51.280 --> 0:00:53.239 any of it, don't worry. We got your cover. You 0:00:53.240 --> 0:00:55.040 can check it out on the podcast. Just search the 0:00:55.120 --> 0:00:58.160 Mark Moss Show in your favorite podcast player, or go 0:00:58.200 --> 0:01:01.760 watch me on YouTube search Market Disruptors and you can 0:01:01.760 --> 0:01:03.960 watch me and listen to me over there. But just 0:01:04.040 --> 0:01:06.000 jumping right in, Like I said, we had some big 0:01:06.040 --> 0:01:09.840 news in the bitcoin space this week, which is the technology, 0:01:09.840 --> 0:01:12.880 the decentralized technology that's really starting to drive massive change 0:01:12.920 --> 0:01:15.280 around the world. And one of the big changes that 0:01:15.360 --> 0:01:23.240 just happened is something called FASB Financial Accounting Standard Board. 0:01:24.080 --> 0:01:26.240 All right, it's a big deal. Bloomberg reported on this 0:01:26.640 --> 0:01:30.840 Bloomberg Tax specifically about these financial accounting standards. And so 0:01:30.920 --> 0:01:34.679 basically as a company, as a corporation, you have to 0:01:34.840 --> 0:01:39.080 follow what's called GAP General Accepted Accounting Principles or whatever, 0:01:39.400 --> 0:01:41.920 and so you have to file this, you have to 0:01:42.000 --> 0:01:43.440 keep your books in a certain order, you have to 0:01:43.440 --> 0:01:45.400 file your reports in a certain order, especially if your 0:01:45.440 --> 0:01:48.680 publicly traded companies. So there's all types of regulations, especially 0:01:48.760 --> 0:01:50.680 especially in the banking sector, but all types of regulations 0:01:50.680 --> 0:01:53.160 that talk about how you can hold assets, how you 0:01:53.160 --> 0:01:55.600 can classify them, how you can value them, how you 0:01:55.640 --> 0:01:58.480 report them, and all these different types of things and 0:01:59.000 --> 0:02:02.560 the way that you're a able to handle and manage 0:02:02.600 --> 0:02:08.320 assets very greatly, and they change the incentives for you 0:02:08.360 --> 0:02:11.200 to want to have those types of assets. So, for example, 0:02:12.400 --> 0:02:14.280 if I can hold a certain type of asset that 0:02:14.320 --> 0:02:16.760 gives me a lot of leverage, I might want to 0:02:16.840 --> 0:02:19.600 hold that for reasons besides just holding it, but also 0:02:19.639 --> 0:02:22.040 I might want to hold an asset but that the 0:02:22.080 --> 0:02:23.720 incentives work against me and I don't want to. So 0:02:23.960 --> 0:02:27.040 let me break this down for you. So for bitcoin 0:02:27.080 --> 0:02:32.040 and other cryptocurrencies, for example, the new rules under this 0:02:32.560 --> 0:02:36.360 Financial Accounting Standards Board, the new rules would allow a 0:02:36.400 --> 0:02:40.600 better reflection of the actual market value of the digital assets, 0:02:40.919 --> 0:02:43.800 as well as bring greater transparency to the financial reporting 0:02:43.840 --> 0:02:48.160 of companies that hold them. Now, these changes aren't in 0:02:48.160 --> 0:02:51.079 effect yet, it's just getting published. They expect to be 0:02:51.080 --> 0:02:52.760 published by the end of this year and then go 0:02:52.800 --> 0:02:57.000 into effect as soon as twenty twenty five, but it 0:02:57.040 --> 0:02:59.560 looks like companies will able to start applying them earlier 0:02:59.600 --> 0:03:04.320 than that. And so basically the old treatment before this 0:03:04.560 --> 0:03:08.760 is that like bitcoin or cryptocurrencies, is an intangible asset, 0:03:09.040 --> 0:03:11.800 which means that if the price went lower than what 0:03:11.840 --> 0:03:14.079 the companies bought it for, then they'd have to take 0:03:14.120 --> 0:03:17.600 an impairment charge on their books, even if they didn't 0:03:17.639 --> 0:03:21.359 sell and so we talked about this a couple weeks 0:03:21.400 --> 0:03:25.840 ago with SpaceX had to mark down the bitcoin that 0:03:25.880 --> 0:03:28.480 they had on their books. So in the old treatment, 0:03:28.600 --> 0:03:30.400 if the prices went down, they had to take this 0:03:30.480 --> 0:03:33.960 impairment charge. They had the negative, but they didn't get 0:03:34.040 --> 0:03:37.040 the positive. If the price went up, they couldn't receive 0:03:37.080 --> 0:03:40.320 any benefit on their books unless they sold it all right, 0:03:40.600 --> 0:03:43.000 So this means so if you're a business, if you're 0:03:43.000 --> 0:03:46.920 a corporation, if you're reporting these numbers, then you want 0:03:46.960 --> 0:03:49.800 to know what your balance sheet has, So that means 0:03:49.880 --> 0:03:52.240 what are the assets on the books. So typically, if 0:03:52.280 --> 0:03:54.600 I'm looking at a publicly traded company, I want to look 0:03:54.640 --> 0:03:58.520 at like what is this company's liquidation value? If I 0:03:58.560 --> 0:04:01.840 bought this company liquidated, how much inventory do they have? 0:04:01.960 --> 0:04:04.920 How much money in the bank do they have? How 0:04:05.000 --> 0:04:07.320 much is the total bye of all their assets? So 0:04:07.360 --> 0:04:08.920 let's say that the total valve of all their assets 0:04:08.920 --> 0:04:11.200 is one hundred million, but I can buy them. I 0:04:11.240 --> 0:04:13.280 could buy the stock for a fifty million. That's a 0:04:13.280 --> 0:04:15.880 pretty good deal. The problem is is that under these 0:04:15.920 --> 0:04:20.000 old accounting rules, you can't use bitcoin or crypto assets 0:04:20.200 --> 0:04:23.400 fair market value. So you bought bitcoin at a dollar 0:04:23.440 --> 0:04:25.800 and now it's worth thirty thousand. You went, you know, 0:04:25.800 --> 0:04:27.560 you had one hundred thousand dollars with a bitcoin, now 0:04:27.560 --> 0:04:29.040 you got one hundred million dollars with a bitcoin. You 0:04:29.080 --> 0:04:31.400 can't put the one hundred million on there. And so 0:04:31.480 --> 0:04:34.159 because of that, a lot of these big corporations don't 0:04:34.200 --> 0:04:37.840 want to add it because they only get the negative 0:04:37.839 --> 0:04:41.000 this impairment charge. They have to market down showing that 0:04:41.000 --> 0:04:43.000 they're in a loss, which is what happened to SpaceX, 0:04:43.800 --> 0:04:46.440 but they can't show the upside. So, like I said, 0:04:46.440 --> 0:04:50.679 when bitcoin price plunk surges goes up, the companies aren't 0:04:50.720 --> 0:04:52.760 able to reflect that. So this is a really, really 0:04:52.760 --> 0:04:55.680 big deal. This could make companies. I think it will 0:04:55.720 --> 0:04:58.480 make companies way more likely to add bitcoin to their 0:04:58.520 --> 0:05:02.840 balance sheet and long term holders because now they can 0:05:02.920 --> 0:05:05.240 report the appreciation with they're having to sell anything, so 0:05:05.279 --> 0:05:08.880 they can take little bets today with these bitcoin or 0:05:08.920 --> 0:05:12.800 crypto assets, expecting a big return, and then in the 0:05:12.800 --> 0:05:15.680 future they could report earnings based off of the new 0:05:15.800 --> 0:05:18.960 balance the new asset prices, which could make them look 0:05:19.000 --> 0:05:21.960 like geniuses, which could bolster their balance sheet, which could 0:05:22.880 --> 0:05:26.640 ultimately republic tread company affect their stock price now Michael Saylor, 0:05:27.480 --> 0:05:31.320 the CEO of When now I step down of micro Strategy, 0:05:31.440 --> 0:05:33.279 I think he's still the chairman of the micro Strategy. 0:05:33.839 --> 0:05:35.760 He's one of the biggest bitcoin holders in the world, 0:05:35.960 --> 0:05:39.640 one of the most publicly outspoken Bitcoin advocates in the world, 0:05:39.880 --> 0:05:42.760 and he believes this is massive news. He's been trying 0:05:42.760 --> 0:05:44.080 to get this to go through for a long time, 0:05:44.160 --> 0:05:46.279 so it's a big deal. Some other things I saw 0:05:46.320 --> 0:05:48.239 in the bitcoin space this week. In the crypto space 0:05:48.240 --> 0:05:50.480 this week was really really interesting, and I don't want 0:05:50.480 --> 0:05:53.200 to say crypto space, it was specifically in the bitcoin space, 0:05:53.960 --> 0:05:56.520 and it's because of the bitcoin mining. So most of 0:05:56.560 --> 0:05:59.000 the other cryptocurrencies have all moved over to something called 0:05:59.080 --> 0:06:02.080 proof of steak where they don't use mining. And you've 0:06:02.080 --> 0:06:04.000 been seeing over the last couple of years how bitcoin 0:06:04.240 --> 0:06:08.039 mining specifically is this detriment to society, How it's going 0:06:08.120 --> 0:06:10.680 to ruin the environment, how bitcoin is going to use 0:06:10.720 --> 0:06:13.000 more energy than a small country. You're going to use 0:06:13.040 --> 0:06:14.280 all the energy in the world, and how big of 0:06:14.320 --> 0:06:17.039 a deal that is, how bad that is. But we're 0:06:17.080 --> 0:06:20.440 actually seeing I've been reporting for years now, and we're 0:06:20.440 --> 0:06:23.120 already starting to see the shift in the media's narrative 0:06:23.160 --> 0:06:26.640 around this, We're starting to see that actually bitcoin isn't 0:06:26.839 --> 0:06:29.560 bad for the environment. As a matter of fact, it 0:06:29.640 --> 0:06:32.400 could just be the savior. So what do I mean 0:06:32.440 --> 0:06:35.839 by that. Well, over the last several years, you've seen, specifically, 0:06:35.880 --> 0:06:39.200 I've been watching in Texas how there's massive problems with 0:06:39.200 --> 0:06:42.200 the energy system. In Texas. They had the power go 0:06:42.279 --> 0:06:44.240 out in the winter and during a big freeze, and 0:06:44.320 --> 0:06:45.840 it was a big problem. They had to go out 0:06:45.880 --> 0:06:47.479 in the summer when it was too hot, and it 0:06:47.520 --> 0:06:50.360 was a big problem. Last summer happened again, and this 0:06:50.480 --> 0:06:54.839 summer it's just happening again. And what happens is during 0:06:54.880 --> 0:06:58.280 certain times in periods, you need more energy than others. 0:06:58.279 --> 0:07:01.080 Pretty simple. Right in the day when everyone's at work, 0:07:01.240 --> 0:07:04.080 energy use is less. At night, when everybody comes home 0:07:04.120 --> 0:07:05.760 and has to turn their lights on because it's dark, 0:07:05.920 --> 0:07:08.880 energy surges go up. When it's hotter, everyone turns their 0:07:08.880 --> 0:07:10.840 air condition on higher, so you can see that it's 0:07:10.880 --> 0:07:14.880 higher usage changes. But the problem is is that if 0:07:14.920 --> 0:07:17.600 I provide energy, I can't just turn it up and 0:07:17.640 --> 0:07:19.240 down like that. It's not just like a knob that 0:07:19.280 --> 0:07:21.600 I can control. And so what they've been doing is 0:07:21.640 --> 0:07:25.120 they've been creating more base loads so they can produce 0:07:25.200 --> 0:07:28.640 more energy all the time, but then diverting some of 0:07:28.680 --> 0:07:32.000 that load over to bitcoin mining, and whenever they need 0:07:32.000 --> 0:07:35.000 that excess demand, they just shut down the bitcoin mining 0:07:35.040 --> 0:07:36.960 and put the excess demand over there. When it's not needed, 0:07:36.960 --> 0:07:38.920 they push it back to bitcoin mining. And we just 0:07:38.960 --> 0:07:42.360 saw that Texas was teetering on the edge of blackouts 0:07:42.400 --> 0:07:45.400 again as they've been having this heat wave and as 0:07:45.400 --> 0:07:48.720 the demand was squeezing on the grid, and so Texas 0:07:48.840 --> 0:07:53.360 nearly had to start rolling out blackouts, but they didn't 0:07:53.400 --> 0:07:57.480 have to because at nine pm local time, they called 0:07:57.520 --> 0:07:59.640 up the bitcoin mining companies and said, hey, could you 0:07:59.640 --> 0:08:02.240 turn off off your equipment for us please, And they 0:08:02.280 --> 0:08:05.400 did and all that excess demand was able to go 0:08:05.480 --> 0:08:08.240 right back to the grid. I mean, if this isn't 0:08:08.360 --> 0:08:11.160 a wonderful fairy tale story, then I don't know what is. 0:08:11.640 --> 0:08:16.320 Because there is no other solution for this problem without bitcoin. 0:08:16.920 --> 0:08:19.320 Now we see the same thing happening in Iceland. Iceland's 0:08:19.320 --> 0:08:21.360 able to create more energy than it needs, but most 0:08:21.440 --> 0:08:24.200 of it's going to waste. They have all this excess 0:08:24.320 --> 0:08:27.640 energy because when they need to create it for when 0:08:27.640 --> 0:08:30.240 it surges up. But when it doesn't surge up, what 0:08:30.280 --> 0:08:32.360 do they do with it? No one in Iceland wants 0:08:32.440 --> 0:08:35.600 to buy this non guaranteed power. Factories don't want it, 0:08:36.559 --> 0:08:38.840 nobody wants a Households don't want it. No one can 0:08:38.960 --> 0:08:42.880 use it. That's because most power consumers only need it 0:08:42.920 --> 0:08:45.720 when they're online, when they're home. But you know who 0:08:45.760 --> 0:08:49.960 doesn't Bitcoin. So bitcoin minors can jump in and grab 0:08:50.000 --> 0:08:54.240 that excess energy, that wasted energy and use it. And 0:08:54.280 --> 0:08:56.960 so we're starting to see this change the entire world 0:08:57.040 --> 0:08:59.520 that the media narratives changes changed in the world. We 0:08:59.559 --> 0:09:02.000 saw it into Texas, happened, they saved the day. It's 0:09:02.000 --> 0:09:05.000 happening in Iceland, and it's coming to an area near you. 0:09:05.280 --> 0:09:06.840 If you're just tune in, you're listening to the Mark 0:09:06.880 --> 0:09:08.920 Maas Show run through some of the latest breaking news 0:09:08.960 --> 0:09:10.720 headlines this week, so you can stay up to date 0:09:11.080 --> 0:09:12.880 on how this world is changing as we look at 0:09:12.880 --> 0:09:15.679 through the links of politics, finance, and technology. I want 0:09:15.679 --> 0:09:16.920 to come back. I want to talk about what's going 0:09:16.920 --> 0:09:19.880 on in the US economy, what's happening in the global commodities, 0:09:20.840 --> 0:09:22.199 and a whole lot more. You don't want to miss it. 0:09:22.240 --> 0:09:24.319 I'll be right back in a minute. Don't go away, 0:09:24.480 --> 0:09:26.680 I'll bear back, all right, Welcome back. If you're just 0:09:26.679 --> 0:09:28.480 tune in, you're listening to the Mark Maas Show. We're 0:09:28.520 --> 0:09:30.760 running through some of the latest breaking news headlines this 0:09:30.800 --> 0:09:32.600 week so you can know what the heck is going 0:09:32.640 --> 0:09:36.079 on as the world is going through de globalization or 0:09:36.120 --> 0:09:38.760 as I call it, decentralization, and of course we can 0:09:38.800 --> 0:09:41.440 see this everywhere. I've been talking about for a long 0:09:41.480 --> 0:09:43.320 time and I will continue to talk about a long time. 0:09:43.440 --> 0:09:46.120 Is the rise of this, well, it's deglobalization. It's the 0:09:46.240 --> 0:09:50.839 rise of the challengers to the US homogeny, the US 0:09:50.880 --> 0:09:53.400 dollar standard, of the US international order, whatever you want 0:09:53.400 --> 0:09:55.440 to call it. And of course we see it with 0:09:55.520 --> 0:09:58.520 Russia and China challenging the US order. They've been de 0:09:59.160 --> 0:10:01.640 dollarizing for over a decade now. But now we have 0:10:01.679 --> 0:10:06.160 the rise of the bricks. And there's some very very 0:10:06.160 --> 0:10:08.320 interesting things if you know where to kind of look 0:10:08.400 --> 0:10:10.840 between the weeds and see what the heck is going on. 0:10:10.960 --> 0:10:14.600 And really, when you look at things, if you really 0:10:14.720 --> 0:10:19.200 understand things at their first principles level, at their base level, 0:10:19.960 --> 0:10:22.839 from a philosophical level, you know that energy is the 0:10:22.880 --> 0:10:25.520 most important thing in the world. Without energy, nothing happens. 0:10:25.559 --> 0:10:28.200 Life doesn't happen, Plants don't grow, animals don't grow, we 0:10:28.240 --> 0:10:32.439 don't live. So everything comes down to energy, and the 0:10:32.720 --> 0:10:36.200 law of energy states that energy cannot be created, it 0:10:36.200 --> 0:10:40.040 can only be transferred. So energy from the ground transfers 0:10:40.040 --> 0:10:41.880 to a plant. When the cow eats that plant, the 0:10:41.960 --> 0:10:44.320 energy is transferred to the cow. When I eat the cow, 0:10:44.360 --> 0:10:47.120 that energy is transferred to me. And when I think 0:10:47.120 --> 0:10:49.040 and type on the computer, that energy is transferred. So 0:10:49.040 --> 0:10:53.839 we transfer where its transferring. Oil has been the base 0:10:53.880 --> 0:10:56.440 of that, and you can look back through history and 0:10:56.440 --> 0:10:59.440 see that the nations that have the oil have been 0:10:59.480 --> 0:11:01.120 the ones that been the most prosperous and have been 0:11:01.160 --> 0:11:03.880 able to control kind of the world. And that's why 0:11:03.960 --> 0:11:07.160 the US dollars maintained its global homogyny because of the 0:11:07.240 --> 0:11:10.040 Petro dollar, the agreement that was found that started with 0:11:10.679 --> 0:11:14.679 Saudi Arabia in nineteen seventy four to always price dollars 0:11:14.679 --> 0:11:17.480 in oil. But all of that's being threatened now because 0:11:17.480 --> 0:11:21.680 of the bricks nations, and so Russia part of the bricks, 0:11:21.720 --> 0:11:24.720 the r and the bricks Saudi Arabia, who's now a 0:11:24.760 --> 0:11:28.880 new entrance into the bricks are now, you know, some 0:11:28.960 --> 0:11:31.800 of the largest oil producers in the world, and they're 0:11:31.880 --> 0:11:34.800 deciding that they don't want to keep pumping out their 0:11:34.840 --> 0:11:38.720 scarce resources out into the world in exchange for US 0:11:38.800 --> 0:11:41.680 dollar treasuries that are just losing value, and so they've 0:11:41.720 --> 0:11:45.679 been deciding to reduce the amount of oil they're producing. 0:11:45.679 --> 0:11:48.199 As a matter of fact, Saudi Arabia has extended its 0:11:48.320 --> 0:11:52.040 voluntary cut of one million barrels per day until the 0:11:52.120 --> 0:11:53.760 end of the year. Now, a lot of this pushed 0:11:53.760 --> 0:11:56.319 oil prices up, which then in turn push all energy 0:11:56.320 --> 0:11:59.720 prices up, which then in turn pushed every single price up. 0:12:00.040 --> 0:12:03.840 The Bite administration tried to counteract it, and not tried 0:12:03.880 --> 0:12:07.200 to they did. They were able to counteract that by 0:12:07.720 --> 0:12:13.120 dumping our strategic petroleum reserves, so they drained them. As 0:12:13.160 --> 0:12:16.120 a matter of fact, the petroleum reserves are now at 0:12:16.160 --> 0:12:20.120 the lowest levels they've been in forty years, following last 0:12:20.160 --> 0:12:24.640 year's record drawdowns. At the same time, US production of 0:12:24.720 --> 0:12:27.079 oil is at an all time As a matter of fact, 0:12:27.200 --> 0:12:29.360 US produced twelve point eight million barrels per day of 0:12:29.400 --> 0:12:33.520 crude oil in June, matching its production from pre pandemic 0:12:33.559 --> 0:12:37.840 back to February of twenty twenty. But even with the 0:12:38.040 --> 0:12:42.280 US's increased production and the draining of the SPR, we're 0:12:42.280 --> 0:12:44.200 seeing that the oil prices are going back up. They're 0:12:44.240 --> 0:12:46.320 up to a new one year high this week, and 0:12:46.400 --> 0:12:49.720 it looks like it's going to continue moving higher now. 0:12:49.760 --> 0:12:51.920 Like I said, in the past, the US has been 0:12:52.040 --> 0:12:55.440 dumping d SPR patroleum reserve into the market to bring 0:12:55.520 --> 0:12:58.720 you dump more supply to bring the price down. But 0:12:58.760 --> 0:13:01.400 the problem is, like I said, that it's running low. 0:13:01.440 --> 0:13:03.720 As a matter of fact, that the lowest since nineteen 0:13:03.960 --> 0:13:08.920 eighty three. So what are they gonna do. We're already 0:13:09.120 --> 0:13:11.600 maxing out the amount of oil we can produce. We've 0:13:11.640 --> 0:13:14.319 already dumped pretty much everything that we can into the market. 0:13:14.880 --> 0:13:17.120 But the problem is is that no matter how much 0:13:17.160 --> 0:13:18.760 we dump into the market, which we run out of, 0:13:18.800 --> 0:13:24.720 no matter how much we produce, Russia, Saudi Arabia, Iran, 0:13:25.000 --> 0:13:28.400 they just turned theirs down. You see. They can play 0:13:28.440 --> 0:13:31.240 this game for a lot longer than we can, and 0:13:31.320 --> 0:13:35.000 so we're not really able to control the price of energy. 0:13:35.120 --> 0:13:39.679 And it's a problem. And it's a problem because, as 0:13:39.720 --> 0:13:42.400 I said, when the price of energy goes up everything 0:13:42.559 --> 0:13:44.679 goes up. You know that food that you went eat 0:13:44.720 --> 0:13:46.960 at Chipotle and picked up at your grocery store, It 0:13:47.040 --> 0:13:50.000 had to be driven there, and it probably had to 0:13:50.040 --> 0:13:53.040 be shipped on a plane or a boat to get there, 0:13:53.960 --> 0:13:55.600 and it probably had to be dug out of the 0:13:55.600 --> 0:14:01.359 ground with a tractor. And all of those things require energy. 0:14:01.400 --> 0:14:03.439 And so when the price of energy goes up, everything 0:14:03.480 --> 0:14:06.920 goes up, and energy is going up. Now again, the 0:14:07.960 --> 0:14:10.800 treat petrol reserves are not just dwindled down to their 0:14:10.800 --> 0:14:13.920 lowest level, but they're dangerously low. And so now we're 0:14:13.960 --> 0:14:16.280 in a situation where the US is actually now trying 0:14:16.280 --> 0:14:18.679 to refill them and buy more oil. As a matter 0:14:18.720 --> 0:14:21.320 of fact, the Department of Energy, the DOE, purchased three 0:14:21.440 --> 0:14:25.160 million barrels of crude oil for the spr for delivery 0:14:25.200 --> 0:14:29.040 in August. The average price per barrel was seventy three dollars, 0:14:29.680 --> 0:14:31.880 which is lower than the average price of ninety five 0:14:31.920 --> 0:14:34.200 dollars per barrel that the oil is sold for last year. 0:14:34.280 --> 0:14:37.240 So they did okay. They sold it for about ninety 0:14:37.240 --> 0:14:39.760 five bucks. They bought it back for in the seventies. 0:14:40.320 --> 0:14:43.800 Not a bad trade. They are purchasing this from Exon 0:14:43.920 --> 0:14:48.000 Chevron Marathon Valero not bad. I don't know if that's 0:14:48.040 --> 0:14:51.120 a good strategy. I don't think the Biden administration should 0:14:51.120 --> 0:14:54.000 be trying to trade the oil that we have, but 0:14:54.040 --> 0:14:56.320 so far it worked. Now, they had originally said they 0:14:56.320 --> 0:14:58.480 were going to buy oil when it was in the 0:14:59.000 --> 0:15:02.880 seventy dollars range. They sort of missed that, but they 0:15:02.920 --> 0:15:05.960 are buying three They did buy three million barrels oil. 0:15:06.000 --> 0:15:09.160 But here's the problem. You see, in order to get 0:15:09.160 --> 0:15:14.200 prices to come down, they were selling it to increase 0:15:14.240 --> 0:15:18.000 the supply. But the problem is Saudi Arabis and Russia says, well, 0:15:18.040 --> 0:15:20.400 then we'll just turn down our supply, will counteract that. 0:15:21.000 --> 0:15:23.800 So now we're in a period where they're turning down 0:15:23.840 --> 0:15:28.640 their supply and now the spr has to be refilled. 0:15:29.680 --> 0:15:33.360 So what happens with that? Well, if you want to 0:15:33.360 --> 0:15:36.440 know what I think, I think it means more inflation ahead. 0:15:36.480 --> 0:15:39.440 I think oil continues to go up. I think that 0:15:40.160 --> 0:15:43.360 inflation continues to go up. And this is a big 0:15:43.400 --> 0:15:45.480 problem now, as I always say, nothing goes up or 0:15:45.480 --> 0:15:48.200 down in a straight line. Now, a lot of the 0:15:48.200 --> 0:15:51.520 headlines that you saw basically illustrated that they just didn't 0:15:51.560 --> 0:15:53.400 understand what they were saying, so, for example, you saw 0:15:53.440 --> 0:15:56.440 headlines of the last month or two oil's crashing. You know, 0:15:56.480 --> 0:15:58.800 the last several months, six eight months, oil's crashing. As 0:15:58.840 --> 0:16:00.920 a matter of fact, it's the reason high inflation has 0:16:00.960 --> 0:16:02.560 come back down to where it is. I've broken this 0:16:02.600 --> 0:16:04.840 down many times. If you look at the CPI basket, 0:16:04.880 --> 0:16:07.840 the Consumer Price Index, you can see that it's broken 0:16:07.880 --> 0:16:10.600 down by food and shelter and energy and things like that, 0:16:10.800 --> 0:16:13.000 and you can see that it was just energy that 0:16:13.080 --> 0:16:16.000 was coming down. Nothing else was really coming down. It 0:16:16.120 --> 0:16:19.280 was just energy. And the reason why is because when 0:16:19.360 --> 0:16:22.600 the Russia Ukraine War kicked off and the sanctions were 0:16:22.640 --> 0:16:24.920 placed on Russia, the whole world thought, we're going to 0:16:24.920 --> 0:16:27.680 go into this massive supply problem where all that Russian 0:16:27.760 --> 0:16:30.320 energy would come off the market, and so the price 0:16:30.440 --> 0:16:32.200 is shot up in advance of that, and we went 0:16:32.240 --> 0:16:35.160 from about eighty ninety dollars a barrel up to about 0:16:35.160 --> 0:16:38.200 one point fifty. But then pretty soon, very quickly, the 0:16:38.240 --> 0:16:40.680 world sort of realized, well, none of these sanctions at 0:16:40.680 --> 0:16:42.320 the US or the G seven placed on them, or 0:16:42.360 --> 0:16:46.400 NATO placed on them worked. Caps on Russian oil didn't work. 0:16:47.040 --> 0:16:49.040 The Russian oil is still going to market, and so 0:16:49.200 --> 0:16:52.560 the prices just came back down to where they were 0:16:52.960 --> 0:16:55.440 before all this happened. So all these headlines that you 0:16:55.440 --> 0:16:59.560 saw where it's plunging, it's crashing, No, it was just 0:16:59.600 --> 0:17:02.960 returning back to where it was before it had artificially 0:17:03.000 --> 0:17:05.199 spiked based off of an assumption that never came to 0:17:05.240 --> 0:17:11.679 be true. So now we're back into normal territory and 0:17:11.720 --> 0:17:14.479 now it's going back up. Now. In addition to this, 0:17:14.520 --> 0:17:16.280 again you always have to just think about supply and demand. 0:17:16.280 --> 0:17:19.359 It's actually pretty simple. Now, it's not simple to understand 0:17:19.359 --> 0:17:21.240 all the dynamics that make up supply and demand. But 0:17:21.280 --> 0:17:24.520 I saw this week more headlines that the United States 0:17:24.520 --> 0:17:28.920 decided to close more oil and gas permits to drill 0:17:29.000 --> 0:17:31.119 for oil and gas that were given under the Trump administration. 0:17:31.200 --> 0:17:33.679 So Trump opened it up, we could increase the supply, 0:17:34.040 --> 0:17:36.439 and again the Bide administration is shutting them down. So 0:17:36.720 --> 0:17:41.320 if we continue to shut down the supply side, the 0:17:41.359 --> 0:17:43.919 rest of the world cuts down the supply side, and 0:17:43.960 --> 0:17:45.480 the US has to be a buyer to fill up 0:17:45.480 --> 0:17:48.880 the sprs. And turns out you and I still need 0:17:49.040 --> 0:17:51.600 energy to live. Turns out we still need to ship 0:17:51.600 --> 0:17:56.359 food around the world. Turns out. So what happens and 0:17:56.480 --> 0:17:59.359 that's the price going up. You got that good thing. 0:17:59.359 --> 0:18:00.679 You're figured that out right. If you're just tuning in 0:18:00.760 --> 0:18:02.200 us into the Mark Maas Show, I'm breaking down the 0:18:02.280 --> 0:18:04.240 latest news headlines of this week. I got a lot 0:18:04.280 --> 0:18:06.120 more to cover, but I gotta take quick break. I'll 0:18:06.119 --> 0:18:08.439 be right back. Don't go away, all right, welcome back. 0:18:08.480 --> 0:18:10.560 If you're just tune in, you're listening to the Marcomas Show. 0:18:10.600 --> 0:18:13.120 We're talking through some of the latest breaking news headlines 0:18:13.160 --> 0:18:15.639 this week, so you can understand what is going on 0:18:15.680 --> 0:18:19.240 in the world through the lens of politics, finance, and technology. 0:18:19.400 --> 0:18:21.800 And I want to dig into the economy for a 0:18:21.840 --> 0:18:23.879 little bit here. It's a sort of a tale of 0:18:23.880 --> 0:18:27.680 two markets, if you will. Right where we see that 0:18:27.920 --> 0:18:31.720 there's all these signs that the economy is not doing 0:18:31.760 --> 0:18:34.920 good and we're headed forward recession. But then we see 0:18:34.960 --> 0:18:36.960 all these other signs that looks like the economy is 0:18:37.080 --> 0:18:41.119 really good. We see signs. Well, when you see the 0:18:41.119 --> 0:18:43.159 economy not doing good and potentially going to recession, then 0:18:43.200 --> 0:18:46.920 why is the markets doing so good? The equities, the stocks, 0:18:47.359 --> 0:18:51.240 but then the bond markets are looking bad. So we're 0:18:51.280 --> 0:18:55.359 seeing this like a bipolar viewpoint in both the economy 0:18:55.400 --> 0:18:58.119 and the markets. And I say that in two separate things, right, 0:18:58.160 --> 0:19:00.680 the economy and the markets. We're breaking these apart. And 0:19:01.040 --> 0:19:03.800 it's important to understand this piece because you have to 0:19:03.840 --> 0:19:07.040 realize that the economy is not the market now. It 0:19:07.080 --> 0:19:11.119 should be it used to be. Because if an economy 0:19:11.160 --> 0:19:13.320 is doing good, meaning you know, people have money, people 0:19:13.320 --> 0:19:18.359 are buying, and you know everyone's happy, everyone's spending money, 0:19:18.400 --> 0:19:23.320 then I'm spending money at stores, buying goods and services, 0:19:23.520 --> 0:19:27.760 which means then those businesses do better in their reporting, 0:19:27.800 --> 0:19:31.119 they post higher revenues, higher profits, and then it pushes 0:19:31.160 --> 0:19:33.320 the stock prices up. That's how it's supposed to work, 0:19:33.760 --> 0:19:36.600 but we became detached from reality over the last decade 0:19:36.680 --> 0:19:38.960 or so when we kind of went to this era 0:19:39.000 --> 0:19:41.520 of free money where the stocks that do the best 0:19:41.600 --> 0:19:43.800 are ones that don't even make any money, which is 0:19:43.840 --> 0:19:46.159 kind of weird, but really where the disconnect happened was 0:19:46.240 --> 0:19:49.320 in twenty twenty and during the pandemic, we saw like 0:19:49.640 --> 0:19:52.520 literally the entire economy shut down, like literally, businesses that 0:19:52.600 --> 0:19:55.159 have been around for decades were forced to close, stores 0:19:55.200 --> 0:19:59.080 were forced to close, and so the economy just completely cratered, 0:19:59.600 --> 0:20:02.680 but the markets took off to new all time highs. 0:20:03.320 --> 0:20:05.199 And so now we see this two separate things. And 0:20:05.320 --> 0:20:07.880 it's important at least for me to think about these 0:20:07.880 --> 0:20:10.280 things separately, because the markets do not equally the economies. 0:20:10.280 --> 0:20:12.800