First, energy stocks become the new tobacco stocks as their share crater towards zero on the announcement.
But on a more macro scale, the petro-dollar, debt-based system will be the hardest hit.
Let’s say if I know something about this now, perhaps the sovereign debt markets had an inkling of this last year. At one point last Spring there was over $17 trillion of negative interest rate securities issued. At the time, economist and bond market veterans spoke about this as a once in a lifetime event. Never seen before.
Well this is what is in store for all global monetary policy.
I think once in a lifetime events are the future of all the debt markets as most institutional investors pour in to preserve capital during this cataclysmic event.
With the anticipated prosperity of the free-energy windfall, much sovereign will be forgiven in a biblical jubilee type announcement. Since yields are negative the payback will be less than par.
The losses from this will be offset by anticipated gains in productivity and prosperity. However the debt forgiveness will not reach down to the consumer anytime soon. There just can’t be that much upheaval in such a short period of time.
This wind down will take time and much effort, since the need to change centuries-old banking and monetary practices will be put on the back burner somewhat as the US figures out its military policies vis-a vis the Middle East.
As the Chinese proverb states: May you live in interesting times. Tomorrow I write on how this disclosure may come about.