- Iran is apparently mining the Strait of Hormuz…
- How the conflict may impact the Fed…
- Have you heard of the “Presidential Bypass”? It’s a legal loophole the rich use to keep their money. And though you might not know it, you can use the same exact loophole to slash your taxes.
Dear reader,
CNN:
- Iran has begun laying mines in the Strait of Hormuz, the world’s most important energy chokepoint that carries about one-fifth of all crude oil, according to two people familiar with US intelligence reporting on the issue.
- The mining is not extensive yet, with a few dozen having been laid in recent days, the sources said. But Iran still retains upward of 80% to 90% of its small boats and mine layers, one of the sources said, so its forces could feasibly lay hundreds of mines in the waterway.
If true — if true — the Iranians are putting their defiant tongues out at President Trump. He has threatened grave consequences if mining occurred.
Responding to the reports the president thundered that:
- If Iran has put out any mines in the Hormuz Strait, and we have no reports of them doing so, we want them removed, IMMEDIATELY! If for any reason mines were placed, and they are not removed forthwith, the Military consequences to Iran will be at a level never seen before.
- If, on the other hand, they remove what may have been placed, it will be a giant step in the right direction! Additionally, we are using the same Technology and Missile capabilities deployed against Drug Traffickers to permanently eliminate any boat or ship attempting to mine the Hormuz Strait. They will be dealt with quickly and violently. BEWARE!
Inflation Could Hit 3.7%
Oil prices leapt on word of the minings.
The president claimed that the United States Navy wrecked 16 of Iran’s mine-deploying vessels.
Yet Iran is believed to hold in its possession up to 6,000 of these detonative devices. 6,000 is a handsome number.
Meantime, AAA reports that the average gasoline gallon presently fetches $3.48 — a 53.8 cent increase in one week.
Industry sages argue that $5-$6 gasoline is in prospect absent the timely re-opening of the Hormuz Strait, presently under seal.
RBC Economics has given the numbers a good working-over.
They maintain that heightened gasoline prices may elevate the inflation rate to 3.7% in the year’s second quarter.
Prior to the unfolding unpleasantness, that figure came in at 2.9%.
Don’t Worry, It’ll Just Be a “Weeks Thing”
The administration is attempting to pour oil on troubled waters… as the phrase runs… and fittingly in this instance.
United States Energy Secretary Christopher Wright claims that, “In the worst case, this is a weeks, this is not a months thing.”
And the troops will be home by Christmas — as World War I’s contestants gloated in August 1914.
Of course I concede the possibility that events may prove the energy secretary correct. It may be a “weeks thing,” as the fellow styles it.
Yet I am far from convinced it will be.
And if it proves to be a “months thing,” I hazard the issue will bulk large in this year’s midterm elections.
At this very moment, months in advance, I can hear the Democratic shouts:
- Millions of Americans are suffering at the pump because of this president. They can’t afford to buy food or medicine because of the outrageous gas prices that his unconstitutional and illegal war of choice created. As Democrats, we will bring gas prices down and provide needed relief to suffering American families across the nation. We stand for people, not oil corporations’ profits.
Should the issue prove a “months thing,” you will hear it or some variation of it — depend on it.
And that is the precise reason the president’s focus centers so intensely upon the Hormuz Strait.
The Fed Can’t Cut if Inflation Jumps
What of the president’s broader economic agenda?
Jerome “Too Late” Powell vacates the Federal Reserve’s chairmanship in May. The president’s nominee, Kevin Warsh, will succeed him pending confirmation by the United States Senate.
As sure as sugar… the president will expect Mr. Warsh to reduce the federal funds rate. Prior to the present imbroglio, the market had projected perhaps two rate reductions this year.
Yet if elevated gasoline prices — extended elevated gasoline prices — keep inflation on the jump, how can the Federal Reserve reduce rates?
I do not believe the Federal Reserve can reduce rates.
And so the president may rage and fume against Mr. Warsh. He would label him “Wrong Way Warsh” or some such.
Why I Believe Trump’s Seeking an “Off Ramp”
Meantime, whispers circulate that key advisors are counseling the president to seek an “off ramp.”
The president’s press secretary denies the rumors with passionate gusto:
- This story is full of crap from anonymous sources who, I can guarantee, are not in the room with President Trump.
Yet the superexcellent wisdom of Germany’s Iron Chancellor — Herr Bismarck — springs immediately to mind:
“Never believe anything in politics until it has been officially denied.”
The story has been officially denied.
Brian Maher
for Freedom Financial News
