Same Movie, New Reel: From Lockdown to the Strait of Hormuz

Five years ago I sat in a locked-down house with a microphone and narrated a crisis while I was still inside it. This week I’m watching a similar story unfold.

The Strait of Hormuz is a shooting gallery again. After the U.S. and Israel struck Iran back in February, Tehran turned the chokepoint for a fifth of the world’s seaborne oil into a no-go zone. Insurers pulled out. Crews refused to sail. The IEA called it the largest supply disruption in the history of the oil market. Brent ran past $120 in the spring, then drifted all the way back to the high $70s as a fragile ceasefire took hold and the market exhaled. Then this week it came apart. Iran put missiles into three tankers near the Strait on Tuesday. One was an LNG carrier, left burning off the coast of Oman. On Wednesday the U.S. answered with a series of what it called powerful strikes, and the President now says the “agreement” he was touting is over. As I write this, crude is still sitting in the $70s.

Read that last part twice. A fifth of the planet’s oil is transiting a strait where tankers are on fire, the ceasefire just collapsed into an open exchange of strikes, and oil is priced roughly where it sat before any of this began. Energy shock. Broken supply chains. A market that has already decided to look away. If that feels familiar, it should.

Now here’s the line I want to set apart from everything else, because it’s the whole game:

In a crisis like this, the government’s response is almost always bigger than the event that triggered it. Not the missiles. The reaction to the missiles. The sanctions, the money-printing, the emergency powers, the “temporary” measures that never leave. The trigger is loud and brief. The response is quiet and permanent, and it’s the thing that actually reshapes your life and your portfolio.

I know that pattern cold, because I kept the receipts from the last time we ran this movie. Two dozen podcast episodes from the spring of 2020, most recorded from that same locked-down house, arguing with my co-host about a “virus” none of us understood yet. Almost nobody keeps the receipts. Predictions evaporate the second they’re wrong, and the people who make them count on you forgetting. I have the tape. So before we talk about the Strait, here’s my own homework, graded. The two crises are the same crisis in a different mask.

What we saw before the crowd did

The virus was never the part that worried me most. On the episode I recorded around March 12, 2020, one day after the WHO first used the word “pandemic” (they’d dodged it for weeks because they thought it was “stigmatizing”), I said the thing keeping me up wasn’t the death count. It was the supply chain. The break we wouldn’t feel for another four to six weeks, and then wouldn’t stop feeling. That was contrarian when the smart-money take was still “it’s basically the flu.”

It came from watching signals that didn’t fit the story. The Fed had been quietly pumping billions a day into the repo market since the previous fall. It had never done that before. China had welded 11 million people into their apartments, the largest quarantine in history, with leaked videos to prove it. None of that squared with “nothing to see here.” You didn’t need a virology degree. You needed to notice that the official story and the observable facts had come apart.

Then there was the mask reversal, which taught me more about institutions than the virus ever did. In mid-March the Surgeon General told Americans masks would increase their risk. I said on air that this was a lie to cover a supply shortage, and that it would poison public trust. You can’t un-ring that bell when the guidance flips two weeks later. It flipped on April 3. The trust never came back. South Korea’s president had simply apologized for the shortage. Ours insulted our intelligence and called it science.

A few more that aged well. I said money-printing on that scale would give us deflation first and inflation second, which is the sequence we got into 2021 and 2022. I said food prices were going up, and pointed at the fragile cattle supply chain to say why. I said remote work had crossed a line it wouldn’t uncross. A $180,000 New York job becomes a $90,000 Topeka job once the taboo is gone. And in July 2020, on the show with Doug Casey, we said out loud that COVID passports to board a plane were coming. People thought that one was paranoid. It was just early.

The call I got wrong

Here’s the receipt I’d rather not show you. In April 2020 I predicted substantial deflation in home prices and rents. The logic was clean. Recession, unemployment, distress. The logic was also completely wrong. Housing went the other way and didn’t look back. I underweighted the response from the state. I didn’t imagine they’d start sending checks to every American, offer PPP loans to every company that asked, and shovel trillions into the system at the same time. The asset side of a money flood doesn’t deflate. It levitates.

The moment the whole thing turned

If you listen to the episodes in the order they were recorded, there’s a hinge, and it’s sharper than I remembered. Through April, the show is about managing a real crisis. Cash buffers, supply chains, Stoic acceptance, how a wartime CEO behaves when the thing he feared actually shows up. The criticism of government in those weeks is about competence. They’re bungling it.

Then, at the end of May 2020, the frame changes and never changes back. Sitting with a friend and business partner, we started talking about COVID not as a health event but as an Overton-window event. Same move as 9/11 and the Patriot Act: a crisis that shifts the range of things a population will accept. Universal basic income had gone from fringe to “on the table” in six weeks. That was the tell. By July, Doug was describing a coming world of digital money where the issuer knows every transaction and can freeze you out of your own account if you get inconvenient. Where they stop you buying a hamburger because you cost the health system too much. In 2020 that sounded like a Casey riff. It sounds like a product roadmap now.

The line I said back then that I’d underline today: it doesn’t even matter how serious the virus actually is. Once you stop arguing about the pathogen and start watching who benefits from the response, everything gets clearer. The response is the event. The virus was the pretext, and pretexts are interchangeable. That single reframe is the seed of nearly everything I’ve written since. The narrative-control pieces, the digital-dollar pieces, the whole thesis that we’re being managed through psychology instead of force. It’s all sitting right there on a microphone from the spring of 2020, before I had the words for it.

What it means for your capital

That response-bigger-than-the-trigger pattern isn’t just philosophy. It’s the most tradeable thing about a crisis, because the response is far more predictable than the shock. Nobody could have priced the exact arrival of a plandemic. Anyone paying attention could have priced what a captured, indebted government does when one shows up: print, backstop the incumbents, inflate. Debasement is the reflex. And there’s a solution to debasement. Gold, real assets, anything that can’t be conjured on a keyboard.

You can watch the same reflex loading right now. Tankers are burning off Oman, the ceasefire just detonated into fresh strikes this week, and Brent is back in the $70s as if there is no problem. That’s normalcy bias with a Bloomberg terminal. The oil price isn’t telling you the crisis is over. It’s telling you the crowd has looked away. And if you remember 2020, that’s exactly when the second half starts. An energy shock in a world this indebted doesn’t stay an oil story. It becomes an inflation story, then a currency story, and those have the same solution they always do.

So here is what to actually do about it. Three things.

First, buy your protection before the crisis is obvious. The crowd won’t move until the danger is undeniable, and by then the price has already run. That’s normalcy bias. It’s why the move is over by the time it feels safe. You have to act while it still feels early and a little paranoid, the way saying “passports are coming” felt in July 2020.

Second, keep a cash reserve on purpose. The idle cash that a fully optimized portfolio treats as dead weight is the same cash that lets you buy when everyone else is a forced seller. Stay a little under-invested by design, so a crisis is your opportunity instead of your margin call.

Third, own things the system can’t reach into. Get off single points of failure. One currency, one supply chain, one grid. Hold assets that don’t depend on anyone’s promise or anyone’s keyboard: physical gold, real assets, the things that can’t be printed, frozen, or voted away.

Do those three and you’re not bracing for the crisis. You’re positioned before the response prices in. That’s the only version of “thriving in crisis” that ever pays.

Five years on, the tape’s real lesson isn’t any one prediction. It’s that COVID was a rehearsal, and the actors liked their reviews. This is the next act. It isn’t coming. It’s on. A shock in the Gulf that just reignited this week, a response that will dwarf it, and a market lounging in the $70s as if the switch hasn’t been thrown. It has. Don’t watch the war. The war is the narrative, and the narrative is built to hold your eyes. Watch the Strait. The chokepoint is the switch this time, and the lights are already flickering for anyone willing to look up from the story and out the window.

Keep your own receipts this time. In five years you’ll want the tape.

It’s a good day to be paying attention.

— Matt