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Authored by Nick Giambruno via InternationalMan.com,

The Iran war is straining US weapons stockpiles and raising doubts about Washington's ability to protect the Persian Gulf.

If that weakens the petrodollar and pushes oil producers away from the US financial system, two assets face clear headwinds: the US dollar and US Treasuries.

The petrodollar system helped create structural demand for both.

If oil exporters sell more energy outside the dollar system, fewer oil dollars need to flow back through Wall Street and into Treasury securities.

At the same time, the US government needs to borrow staggering sums to finance its deficits, military commitments, entitlement programs, and interest expense.

That means rising supply of Treasuries could collide with weakening structural demand.

Watch the 10-year Treasury yield.

The 10-year Treasury yield is perhaps the most important financial benchmark in the global fiat system, as it drives valuations and market trends worldwide. It is widely - and erroneously - regarded as the risk-free rate of return.

The 10-year Treasury yield can be thought of as a key barometer of the US dollar-based fiat system - a critical measure akin to its beating heart.

Bond yields move inversely to bond prices. When bond prices fall, bond yields rise.

A rising 10-year Treasury yield signals trouble for the US dollar because it means investors are selling Treasuries, which pushes up the US government's borrowing costs. That is why the 10-year Treasury yield is a major pain point for the US government.

The 10-year Treasury yield was 3.97% in late February 2026. Now it is around 5.26%, an increase of roughly 129 basis points. 129 bps might not seem like much, but with over $40 trillion in debt and growing, every basis point matters.

At today's debt levels, every 1 basis point increase in the government's average borrowing cost adds roughly $4 billion in annual interest expense. So a 129 bps rise is not trivial - it translates to nearly $516 billion in additional yearly interest costs, materially widening a budget deficit that was already around $1.8 trillion.

I expect the 10-year Treasury yield to keep climbing over the coming weeks and months - until it forces the Fed's hand.

At that point, the intervention will be sold as "stability," but the mechanism will be familiar: suppress yields by debasing the currency.

That feedback loop could become one of the defining investment stories of the years ahead.

The Biggest Winner

The biggest winner should come as no surprise.

Gold.

China and the major Middle Eastern oil producers have accumulated gold for years. I do not think that is a coincidence.

They sit near the center of the changes taking place in the international monetary system.

China produces more gold than any other country and ranks among its largest consumers. Nobody outside Beijing knows how much gold the Chinese state controls, but its official holdings tell only part of the story.

China has also spent years constructing the infrastructure needed to connect yuan-denominated trade with physical gold markets.

That preparation makes much more sense when you view gold not as a commodity, but as a neutral settlement asset.

The last monetary transformation of comparable importance began when Nixon severed the dollar's link to gold in 1971.

Gold traded at $35 per ounce under the old system.

By January 1980, it reached $850 - a gain of more than 2,300%.

I think the monetary shift taking shape today could prove just as important.

For more than half a century, the petrodollar helped create structural demand for dollars and US government debt. It allowed Washington to run deficits and export dollars on a scale no normal country could sustain.

Americans have come to regard that privilege as a permanent feature of the financial landscape.

It isn't.

At first glance, depleted US missile inventories may seem unrelated to the future of the dollar. They aren't. Both depend on the same thing: the ability of the US to convert its enormous financial power into real-world economic and military power.

Washington can create dollars without limit. It cannot create missile factories, rare-earth supply chains, control over the Strait of Hormuz, or confidence in the US security guarantee with a keystroke.

If the Iran war exposes the limits of US military power, pushes the Gulf states toward accommodation with Iran and China, weakens the dollar's role in the oil trade, and accelerates the movement of global reserves toward gold, we could look back on this period as the moment the post-1971 monetary system entered its final stage.

What started with a shortage of missile interceptors leads to a much bigger conclusion: the Iran war is exposing the limits of both American military power and the monetary system that power has supported for more than half a century.

The signals to watch are clear.

Watch the oil producers.

Watch the dollar.

And above all, watch gold.

The petrodollar's decline could push Washington toward more money printing - and put your purchasing power at risk. The time to prepare is before the crisis forces your hand.

For investors, the danger lies in assuming the rules that built yesterday's wealth will protect it tomorrow. A monetary shift of this scale could punish that assumption - and reward those who prepare before the crowd.

Authored by Norm Singleton via RealClearMarkets,

During this time of increased political polarization, it is good to know that there is one issue uniting Trump-loving MAGA Republicans, Bernie Sanders-style Democratic Socialists, and everyone in between: opposition to data centers, especially large data centers built for artificial intelligence (AI). Part of the opposition stems from the public's increasing skepticism of AI. An even larger part is generated by concerns over how AI will drive up electricity costs for those living close to the centers, as well as the high amount of water necessary to run the centers.

Many data center critics ignore the fact that these kinds of facilities have been around for years. As the name suggests, data centers are buildings (or centers) that house the infrastructure and data necessary for the operations of digital services such as the cloud. The typical data center includes servers, switches, routers, and fiber optic cables. These data centers make it possible for individuals to use their phones,and tablets to store and share their photos, messages, and documents, as well as to download and use a wide variety of apps.

While some companies, such as JP Morgan Chase, operate data centers for their own use, other companies operate hyperscalers. These hyperscalers are large enough to host multiple clients. Leading tech firms, including Meta (parent company of Facebook, Instagram, and WhatsApp), Google, and Amazon Web Services operate hyperscalers that provide services to private companies and government agencies.

Data centers are not just the physical foundation of the internet; they are a source of high-paying jobs. For example, data centers transformed Ashburn, Virginia from a small rural town to a technological hub. The tax revenue generated from the center helped fund improvements in infrastructure, public facilities, and schools. Data centers did not became controversial until the need for larger data centers to accommodate AI led many to blame AI data centers for the increase in electric prices.

Since 2020, residential electric prices have risen by more than 36%. However, studies show that data centers pay a large and growing share of utilities fixed charges, thus reducing costs for other consumers. In addition, tech companies Microsoft and Anthropic have both pledged to pay for any increased electric costs incurred as result of their AI data centers. Other technology companies have signed President Trump's Ratepayer Protection Pledge to ensure that increased electric costs from AI Data centers are not borne by consumers.

The problem with the electric grid is not that data centers are using too much electricity, but that public utilities failed to invest resources in infrastructure placement during 20 years of flat demand. The increased revenue from AI data centers can help finance the necessary upgrades to the nation's energy grid. AI companies are also exploring uses of alternative energy as a way to reduce costs. Similarly, many AI data centers, including Amazon Web Services and Microsoft, are using recycled water to reduce their demand for fresh water. Some technology firms are exploring a way to expand AI data centers without increasing their neighbors' bills by building them in the ocean. Microsoft has already shown that underwater data centers can be just as, if not more, effective than land-based ones.

According to University of North Carolina Management Professor Nir Kshetri:

"In 2015, Microsoft launched a research project to explore the feasibility, benefits and challenges of underwater data centers." Part of that effort included setting up a waterproof data center on the seafloor near Scotland's Orkney Islands in 2018. It contained 864 servers and was connected to shore by an underwater cable.

"After two years, Microsoft reported that the servers in the underwater data center failed at about one-eighth the rate of servers in comparable land-based data centers. The company is still studying the possible reasons but hypothesizes that in a sealed underwater environment the equipment is less exposed to oxygen, humidity, and temperature fluctuations - as well as less jostling from people working to replace broken components."

Unfortunately, despite their initial success, Microsoft has suspended its underwater data centers when they ended the experiment in 2024. Hopefully, Microsoft or another tech company will take up underwater data center development and/or discover other ways to meet the need for AI data centers without increasing other Americans' electric bills. Tech companies can do this as long as government limits its role to ensuring that companies compensate Americans for any harms caused by their operations.

We publish a variety of perspectives. Nothing written here is to be construed as representing the views of ZeroHedge.

Authored by Curtis Hill via RealClearMarkets,

California has decided it should dictate how the rest of America packages everything from cereal and soap to industrial spare parts.

Seventeen Republican attorneys general have filed suit to stop it. They are right. The rest of the country should say so - and reject California's attempt to impose its policies on everyone else.

California's Senate Bill 54 effectively tells companies: If you want to sell in California, redesign your packaging, cut plastic on California's timetable, and pay fees to a private Washington, D.C., organization called Circular Action Alliance. CAA sets the fees, keeps its methodology confidential, and handles disputes through arbitration rather than a court.

But packaging is not a California issue. It is a national supply-chain issue. Companies do not invent a unique box for Sacramento and another for South Bend. They build one system. When California attaches conditions to its market, those conditions travel. Costs travel with them - onto manufacturers, distributors, and the families who buy toothpaste and canned goods in states that never voted for this scheme.

California is using the size of its market to impose its preferences on commerce that happens everywhere else. The attorneys general call that what it is: one state trying to set national policy.

I have seen this movie before.

As Indiana Attorney General, I led multistate efforts against this same tactic. California cities tried to use "public nuisance" lawsuits to dictate national energy policy from a courtroom in San Francisco. I argued then that California localities cannot regulate economic activity beyond their borders, and that the nation should not sit idle while California tried to turn itself into a regulatory empire.

We also led a coalition to the U.S. Supreme Court challenging Massachusetts's attempt to tell farmers in other states how to house their hens and hogs as a condition of selling eggs and pork in Boston. Same theory. Same abuse. Market access as a weapon.

California and a handful of like-minded states have a playbook: Pass a rule at home. Make compliance a condition of doing business. Watch national supply chains conform because it is cheaper to surrender than to maintain two systems. Then call the result "progress" and dare anyone to object.

That is not federalism. It is the big dog sitting on the porch, growling at every other house on the street.

Multistate action is how the other states push back. One attorney general filing a brief is a protest. Seventeen states joining a federal lawsuit - alongside a business that has already challenged this model in Oregon - send a message a judge must take seriously.

This is not a trade association seeking a special exemption. It is sovereign states defending their authority to set policy for their own people. And it tells Sacramento that when California exports the costs of its policies, the response will be coordinated legal action - not a press release and a shrug.

That is the point of the office I once held. An attorney general is not a commentator; the job is to defend the state's legal interests when another government tries to impose its policies beyond its borders. California's packaging scheme does exactly that. Fees collected by a private organization with little meaningful public oversight are one back door. So is a mandate that forces a plant in Iowa or a distributor in Indiana to pay for California's regulatory experiment.

None of this requires opposition to clean streets, recycling, or reducing waste. States are free to run recycling programs, set their own environmental policies, and punish fraud or deception in labeling. What they may not do is force businesses across the country to follow one state's rules while handing the collection plate to an unelected private organization. States can pursue their own policies. They cannot conscript the interstate economy into a single regulatory religion.

The seventeen attorneys general are doing the unglamorous work of saying no. They deserve support - from other states, from boards that still remember fiduciary duty, and from anyone who understands that the Constitution divided power for a reason. California is large. It is not the legislature of the United States.

If other states sit this one out, they should not be surprised when the next California rule arrives already attached to their store shelves. Empires are not always built with armies. Sometimes they are built with a market, a mandate, and a fee.

Curtis Hill is Senior Fellow with the Free Enterprise Project and former Indiana Attorney General.