Fed Chairman Jerome Powell held a press conference at the annual Jackson Hole economic conference today, and he all but said that a September cut to the federal funds rate is a done deal: “The time has come for policy to adjust. The direction of travel is clear.”
Naturally he threw in the usual propaganda phrases about how the Fed is data driven. He continues: “the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
Remember, with its official statements, the Fed is always careful to try and give the impression that it is not a political organization and responds only to economic data.
But, for whatever reason, Powell and the Fed have now decided official CPI inflation is low enough for the central bank get away with NEW infusions of easy money, even as stocks, rents, home prices, and food prices are all at record high.
On price inflation, Powell all but declares “mission accomplished”: “With an appropriate dialing back of policy restraint, there is good reason to think that the economy will get back to two percent inflation while maintaining a strong labor market.”
So, in addition declaring victory over rising prices – even though last month’s official CPI growth was still nearly 3 percent— Powell is again pushing the myth of the “soft landing” even though there is absolutely no reason to believe the Fed can engineer such a thing.
In fact, if anything, the fact that the Fed now plans to start cutting rates is one of the strongest recession signals we can get.
If we look back at the relationship between rate cuts and recessions, we see that in almost every case that recessions begin shortly after the Fed starts a cycle of rate cuts. The fed started cutting the Fed funds rate in 1989. Then we got the recession of the early 90s. In late 2000, the fed started the rate cuts again. We got a recession in 2001. The Fed did it again in late 2007. The recession began in December 2007, followed by a financial crisis several months later. This relationship even holds for the 2020 recession because even without covid there would have been a recession in late 2020. The Fed had begun to ease the target rate in summer 2019.
Fed rate cuts don’t cause recessions, of course. The boom-bust cycle is caused by reckless Fed-driven money creation.
But it makes sense that the Fed hits the panic button and starts cutting rates when it does because the Fed is reacting to fears about impending recessions. The same is true this time around. The Fed has no special prediction skills, so it sees what the rest of us see: a weakening economy and a much less rosy employment picture than what was sold to us by the administration over the past year. July’s weak jobs report with rising unemployment, combined with this week’s massive downward revision in 2023-2024 jobs numbers, gives us good reason to figure that the Fed is now trying to prevent a recession by flooding the economy with more easy money. […]
— Read More: mises.org
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.
Interesting phenomena. You’d think more money in circulation would result in more job-producing activity. I’m no economist, but I guess it might make some sense to me considering most of the money being loaned is private money, even when the government is printing money. So interest rates set by the Fed ripple through. Investors then earn less return, which may slow investment, change strategies, etc. That, and whatever the money is being borrowed for is not going to any sort of job-producing activity. I imagine it is difficult to quantify how much is actually in circulation in a manner that amounts to economic activity, and how much is held back. And I’m sure there are other factors I don’t know and haven’t thought of.
The theoretical egg heads aren’t likely to do anything unless they fully understand the “why”. But if you have an isolated and measurable cause and effect, you don’t have to understand why. Right, science doesn’t know exactly what gravity is. But it’s behavior is consistent enough, measurable enough, observable enough, that it is used and taken into account all day every day.
That’s the difference between a theoretical scientist and a practical engineer.
We have too many egg-headed theorists, with their heads in the clouds. And not enough “engineers” dealing with the practical reality.
Interesting to think about, though.
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