(Zero Hedge)—As Peter Schiff explained in his podcast, that’s a big problem when the entire economy is built on a foundation of cheap money. But most people in the mainstream don’t seem to grasp the gravity of the situation.
They don’t realize that we are at the beginning of the end of this whole phony economy.
In a nutshell, the economy is buried under trillions in debt. The cost of the debt is rising. The economy simply isn’t built to handle an even moderately high interest rate environment.
But here we are.
Every day, we’re getting closer to a major stock market crash, or a financial crisis, or both.”
And he emphasized that the crisis is inevitable. Nothing can derail it in the long run. He said Federal Reserve Chairman Jerome Powell could put off the implosion in the short run by doing something drastic to change the narrative. That would entail at least hinting at interest rate cuts.
Otherwise, this is going to happen. Whether it’s tomorrow, the next day, or the next week is hard to tell. But what seems apparent to me is that we’re about to go over a cliff. I just don’t know how much more distance there is between where we are now and the edge of that cliff. But we’re going there.”
What is going to push us over the edge?
The rise in interest rates as the bond market continues to collapse.
Peter pointed out that he’s been warning about this for years. And he’s not alone. In July, Jim Grant said we could be heading toward a generational bear market in bonds.
Bond yields are now at the highest level since before the 2008 financial crisis with the yield on the 10-year Treasury approaching 5% (currently 4.56%). The last time it was that high was in 2001.
There is one big difference between then and now. In 2001, the national debt was $3.3 trillion. Today, it is over $33 trillion.
We have a lot more debt now than we had back then. So, this is a much bigger problem.”
Peter said the mainstream financial media doesn’t seem to appreciate the fact that they are looking at the beginning of the end of this whole phony economy.
The economy is built on a foundation of cheap money. It’s not just the economy; it’s every facet of it. The government, the deficits, the government budget is built on cheap money. And it’s not just the federal government that’s been gorging on this cheap money. A lot of the state governments, municipalities — they’ve all issued a tremendous amount of debt over the last 15 years.”
This was by design. The central bank wanted to “stimulate” the economy. With that goal in mind, they held interest rates at close to zero for nearly 15 years. People were incentivized to borrow and spend. So, they took advantage of the cheap money and levered up.
And what was I saying for years? This is a mistake. I said just because it’s cheap doesn’t mean you should do it. My analogy was should you do heroin if it’s free? … No! Just because it’s free doesn’t mean you want to inject it into your body. Because eventually it’s going to cause a problem, and that’s exactly what is happening now.”
Now the proverbial chickens are coming home to roost. All of that cheap money is coming back to bite the people who borrowed it because interest rates are going up and the debt is still there.
It is a disaster in the making.”
It’s not just bond yields. All interest rates are rising. Mortgage rates are approaching 8%. The average credit card interest rate is close to 21%. Meanwhile, credit card debt has spiked to well over $1 trillion.
An economy built on borrowing easy money can’t keep chugging along when the easy money is gone. It’s like trying to run an engine without oil.
Meanwhile, the mainstream hasn’t come to grips with the fact that the dynamics have changed.
As yields rose with the Fed’s rate hikes, a lot of people bought bonds thinking that a 4% yield would make them a lot of money when rates quickly fell back toward zero. The easy money of the last decade-plus made everybody believe that was the norm. Peter said it’s not going to work that way this time around.
Peter also pointed out that there are still inversions in the yield curve. Long-term yields remain well below where you would expect given short-term rates. With a 6-month Treasury yielding at 5.5%, a 30-year bond should be over 7%. But it’s currently only at 4.7%.
That’s not how a yield curve works. It’s positively sloped. Usually, at the beginning of a recession, you’ll get an inversion of the yield curve, where the long end will be below the short end. But under normal circumstances, when you’re not in a recession — and everybody claims that there’s no recession, that we’ve got this resilient economy, that maybe a soft landing but not a real recession — if that’s the case, the yield curve needs to normalize.”
The reason long-term bonds come with higher yields is investors are taking on more risk with more time. So, what is the biggest risk?
The real risk is inflation — that your money will be worth a lot less in 30 years.”
And what is the biggest factor driving that inflation risk?
It’s the size of government deficits. Because the bigger the government deficits are, the more inflation the government is likely to create. So, when you have large fiscal deficits, you would expect to have a higher premium on longer-term bonds.”
Bypass Big Tech Censors
Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.