Money Is Made of Debt # Money Is Made of Debt *How the money system runs into energy, shipping, fertiliser, land and politics* This article is about why, in October 2026, gas, oil shipping and money itself all became more expensive at the same time, and why all of it is connected. It joins three layers. The first is monetary: almost all money is created through debt. The second is physical: why debt runs into energy, tankers, fertiliser, metals and soil. The third is political: why the Middle East and Ukraine have stopped being just news and become the knots through which the whole world gets more expensive. ## Part I. Money and debt ### Four stories from October Here is what happened in October 2026. * **Gas.** On 13 October the gas price at the Dutch TTF hub (Europe's main reference price for gas) went above 1,000 dollars per thousand cubic metres. By 23 October it had reached roughly 1,090. * **The rate.** In September the US Federal Reserve under its new chairman Kevin Warsh raised the federal funds rate to 3.75–4.00%. That was the first increase since July 2023. The next meeting is scheduled for 27–28 October. According to the September minutes, most participants allowed for one more increase before the end of the year. By the end of October the market was pricing a pause instead: fresher inflation data had weakened expectations of another step. * **Gold.** An ounce traded around 4,000–4,150 dollars and by 24 October had returned to roughly 4,000. The record stayed in January: spot reached 5,589 dollars, the COMEX future 5,627. * **Oil shipping.** On 9 October Bloomberg came out with an estimate: delivering oil from the United States to China had become more expensive than ever at about 80 million dollars per voyage; on 13 October Datamar News retold it. On 22 October Bloomberg named about 60 million. Recounted per barrel, that is tens of dollars for delivery alone. Taken separately, this is an ordinary monthly summary: gas, the rate, gold, tankers. Together they add up to a chain. > A nine-step chain > > The chain looks like this: > > * money is created out of debt; > * debt requires constant growth; > * growth runs into energy, shipping, fertiliser, metals and land; > * those resources lie in vulnerable points on the map; > * conflict at such a point makes the whole system more expensive; > * inflation becomes persistent and rates stay high; > * high debt presses on budgets; > * budgets have to sell and hand over resources faster; > * the social model starts to crack. ### Where money comes from Picture an accountant in a bank. A client asks for a loan of 100 thousand. The accountant does not take money out of a safe; he makes two entries: "client's account +100" and "client owes the bank 100". The money and the debt appeared at the same moment, out of one operation. The image is simplified. A real bank cannot write down whatever it wants: it is limited by its own capital, by regulator requirements, by risk assessment and by the fact that someone has to want those loans. But the essence is conveyed correctly: **a new deposit and a new debt obligation are born at the same time.** Then the chain does its work. The borrower spends the money, it settles on accounts in other banks, and those banks gain the ability to issue their own loans. That is how the money supply grows, link by link. This is the real mechanism. The old school version ("a deposit came in, 10% was kept in reserve, the rest was lent out") explains it poorly. The Bank of England showed in 2014 that a bank does not pass other people's deposits onward: it issues the loan first and thereby creates the deposit. And the main brake here is not the reserve but the bank's capital, risk and borrower demand. The classical scheme is described in the Federal Reserve's booklet Modern Money Mechanics. The state issues bonds (receipts promising to return the sum with interest). The central bank creates money to buy them. Commercial banks continue the process with loans. Not all money is the same, and this is worth knowing: * cash and reserves are liabilities of the central bank; * deposits in banks are born out of lending; * when the central bank buys bonds (this is called quantitative easing), it creates reserves first, not money in people's hands; * budget payments create deposits even without bank lending. So it is more accurate to say not "all money is debt" but this: a significant part of modern money was born out of credit and lives as an obligation under it. Servicing that obligation requires a constant flow of money. Hence a practical conclusion. In such a system money grows together with credit, and when credit contracts it disappears together with deposits. The system does not like stops: every old debt needs a new flow. ### The rate is the price of debt The central bank's rate is the price of money created out of debt. The everyday image is a mortgage with a floating rate: the rate went up, the payment went up. Car loans, corporate borrowing and government debt get more expensive in the same way. Every percentage point makes servicing debt more expensive and refinancing it too (refinancing is the name for paying off an old debt with a new one). The image is simplified: a state's debts are spread across maturities, and the rate affects payments not instantly but gradually. In October the Fed keeps money expensive because inflation in the United States turned out higher than expected because of energy. But there is a trap here. Part of inflation arises not from an excess of money but from the physical expensiveness of energy, shipping, insurance, fertiliser, metals and food. *The rate cannot print a tanker.* *The rate cannot build a copper mine quickly.* *The rate cannot bring back black earth.* *The rate cannot open the Strait of Hormuz.* *The rate cannot cancel the war premium in an insurance policy.* *A central bank treats one cause of inflation, and the second one does not depend on it.* *It is also bad that this fight itself makes debt heavier: every point of the rate makes servicing what has already been accumulated more expensive.* ![The Fed rate and physical quantities: what rose in October 2026](/upload/upload-money-made-of-debt-fig2_rate-cannot-print-a-tanker_en.svg) The Fed rate against physical quantities, October 2026 ### 2020–2026: cheap money and who received it **The facts.** On 26 March 2020 the Fed zeroed the reserve requirement ratio for US banks. The rate went to almost zero. The Fed's balance sheet grew from roughly 4 to almost 9 trillion dollars by 2022: the central bank was buying bonds. The US budget added about 6 trillion dollars of support under three anti-crisis programmes. The result is visible in the Fed's data on wealth distribution (Distributional Financial Accounts). The net worth of US households (everything they own minus debts) grew from 101.8 trillion dollars in the first quarter of 2020 to roughly 185.7 trillion by the middle of 2026, that is by 83%. The figure has to be read carefully: * the count starts from the bottom of the covid crash; from the peak at the end of 2019 (about 107.6 trillion) the growth is about 72%; * these are nominal dollars; if one assumes that the dollar lost about 23% of its purchasing power in that time, the real growth is noticeably smaller: about 40%; * the 2026 value is an estimate from analytical reviews, and the Fed refines history with every release. The share of the top 1% of households in the second quarter of 2026 reached 32.5%, a record since 1989, when the observations began. For corporate shares and fund units the picture is even sharper: the top 1% holds 50.9% of all paper, the top 0.1% holds 25%, and the bottom half of the population is left with 0.6%. For the top 0.1%, shares make up about three quarters of their own financial assets; for the bottom half, more than half of their assets is real estate (estimates on Fed data). ![Who stands first in line: net worth and equities by US household group, Q2 2026](/upload/upload-money-made-of-debt-fig1_who-first-in-line_en.svg) Net worth and equities by US household group, Q2 2026 The rise in asset prices is often explained by the abolition of reserves. That is a weak explanation: after 2008 there were already more than enough reserves in the system, and in 2020 the Fed merely confirmed established practice. The real channels were different: central bank bond purchases, budget injections, zero rates and the rising value of assets. > First in the queue > > Inflation and cheap money work as a redistribution. This was described long ago and is called the Cantillon effect: whoever comes to the distribution of new money first buys at the old prices, and whoever receives it last pays the new ones. Banks, the budget and asset owners stand at the head of the queue. Wages, pensions and deposits stand at the end. Which of them inflated asset prices more, budget payments, bond purchases or zero rates, economists assess differently. ### Interest and the eternal growth of debt Credit creates a deposit and at the same time an obligation to return more than was created. Hence the thesis of the system's critics: at the moment a loan is issued, the money for the interest does not exist. The image is musical chairs: the music plays while new loans are issued, and nobody wants it to stop. Economists answer: there is no need to repay everything at once. Money circulates, debt is refinanced, issuance continues, and one person's obligation is another's asset. That is an honest argument too. But both sides agree on the main point: servicing accumulated debt has become a heavy load on the world economy. In October 2026 the IMF lowered its forecast for world growth to 3.1% and warned that growing interest payments are bringing developing countries to a debt crisis. > Obliged to grow > > The system will not collapse tomorrow, but nominally it is obliged to grow: with new money, new credit, refinancing, inflation, a redistribution of incomes. Otherwise the old debt has nothing to be paid with. When exactly this ends cannot be said. There have been many predictions of collapse, and they failed more than once. The article describes the mechanics, it does not name a date. ### Inflation as a tax without a law Inflation is called a hidden tax. That is an image, not a legal term. But the arithmetic is verifiable. According to the consumer price index of the US Bureau of Labor Statistics, for goods that cost a dollar in 1913 people pay about 32–33 dollars in 2025. The purchasing power of the dollar fell by about 97% over the century. The everyday image: the same basket of groceries costs more and more, while the wage stays the same. Inflation comes in two kinds, and they are easy to confuse: * monetary: there is more money and credit than there are goods; * physical: goods are in short supply or expensive to deliver, with dear energy, shipping, insurance, fertiliser, metals and food. The inflation of October 2026 is noticeably physical. Such a tax has no law, no rate and no cashier. It was not introduced and it will not be cancelled. It is paid every time a price passes from the producer to the buyer. The conclusion is this: inflation does not reduce to printing money. It is also the price of the physical complexity of the world. ## Part II. The physical ceiling ### Energy lies under all prices The economy rests on energy: it turns into motion, heat, light, chemistry, transport, the internet, weapons, fertiliser and food. When energy gets more expensive, everything gets more expensive: resource extraction, ore processing, fertiliser, shipping, insurance, electricity, defence. The "virtual" is no exception: data centres and networks run on electricity, the bill just arrives later. Brent crude in October 2026, by ICE futures, went from roughly 100 to 117 dollars a barrel. The yearly range turned out wider: from 61 dollars in January to 138 in April. Mid-month EIA spot estimates diverged from the futures by almost 20 dollars, which is why the futures series is the one named in the text. Gas at TTF is above 1,000 dollars per thousand cubic metres. A caveat is needed here: TTF is usually quoted in euros per megawatt-hour, and the conversion into dollars per thousand cubic metres is a market estimate taken from reports; it depends on the exchange rate and on the method. The tension comes from geography: the threat to the Strait of Hormuz, Houthi attacks in the Red Sea, the detour around Africa, the consequences of the conflict with Iran, rising insurance, a shortage of tankers. Hormuz, Bab el-Mandeb and the Suez Canal are not points on a map but the valves of world energy. When they are squeezed, the whole chain gets more expensive. ### The Middle East: war around Hormuz **The facts.** On 28 February 2026 the United States and Israel began an air campaign against Iran. In response Iran effectively closed the Strait of Hormuz, the narrow passage through which, before the war, about a fifth of world oil and gas flows passed. According to reports, there was later a truce and a memorandum on ending the war and the blockade of the strait, but on 8 July the temporary agreement between the United States and Iran collapsed: Iran struck several merchant ships. Iran had created the body that governs the passage (the Persian Gulf Strait Authority) back in May 2026, and on 27 May OFAC sanctioned it. Iran considers unsafe those ships that do not agree their crossings with that body. The United States says it and its partners control the strait, keeps a naval blockade of Iran and escorts ships. **October.** This is the hardest month for shipping since the war began. * According to the analytics company Kpler, between 28 September and 4 October 10 tankers were hit in the strait; according to the British centre UKMTO, another 15 attacks were recorded between 6 and 14 October. * According to the International Maritime Organization (IMO), by 14 October there had been 113 incidents involving merchant ships, and at least 24 seafarers had died. * On 22 October Tehran said that in a single night seven tankers had caught fire or been damaged after being hit by strikes or mines. Newspapers write of growing fears of a return to full-scale war. * According to Kpler, oil exports through Hormuz in the week to the start of October were about 8.5 million barrels a day (roughly 40% below the pre-war norm), and in the seven days to 13 October about 11.6 million. * Oil is increasingly transferred from ship to ship in the Gulf of Oman: that protects it from strikes but requires more vessels. A tanker voyage from the Persian Gulf to China has risen to a record 1.4 million dollars a day, more than five times the pre-war level (Bloomberg and the Baltic Exchange). In parallel, the war in Yemen continues, the one Saudi Arabia intervened in in 2015, leading a coalition against the Houthis after they took Sanaa and displaced the recognised government. Years of campaigning brought Riyadh no decisive result, and the Houthis, according to reports, today attack airports, oil facilities and ships linked to the kingdom. > The bill did not add up > > The kingdom, which had counted on dictating terms in the region, met an adversary that turned out stronger than expected.> The shock of the year > > For the monetary chain this is the main physical shock of the year. The war is not about money, but it breaks the delivery of energy, and the whole world pays for it through prices, insurance and rates. I will not undertake to predict how events go further: neither a truce nor a return of war would be a surprise. ### Delivery: when the road costs more than the cargo Freight is the charge for carrying cargo. The everyday image: a taxi in a snowstorm to the airport costs as much as half the ticket. The ticket is "expensive", although the plane has not changed. So it is with oil: the oil itself has not become that much more expensive, but delivery has eaten almost half of its price. **The facts**, from Bloomberg's report of 9 October, which Datamar News retold on 13 October. Shipping oil from the United States to China cost about 80 million dollars per voyage, more than a standard Falcon 9 rocket launch (about 74 million). That is roughly 41 dollars per barrel, where a year earlier the average was about 4.50. With WTI at about 91 dollars, freight was about 45% of the price of oil. The broker SSY noted that, adjusted for inflation, these are the highest rates since supertankers appeared in the 1960s. The head of Vitol, Russell Hardy, said: "There really are not enough ships to cover all the demand." The class of vessel is not named in the retelling. But the arithmetic points to a VLCC supertanker: 80 million at 41 dollars per barrel is about 1.95 million barrels, and a VLCC carries about two. This is the editorial team's calculation, not a quotation. A fresher Bloomberg estimate from 22 October is about 60 million per voyage, and that price is already strangling demand. The difference is explained by the class of vessel, the type of deal, price swings, fuel, port dues and insurance. The point is one: for delivery alone a barrel becomes tens of dollars more expensive. Why there are not enough tankers: * a general shortage of oil tankers; * routes were rebuilt after the war with Iran; * traffic through Hormuz has recovered to roughly 80–82% of the pre-war level; at the same time about 40% of the Gulf's oil goes around the strait anyway, through pipelines of Saudi Arabia and the UAE, and the total exports of the Middle East in October turned out higher than before the war; * Middle Eastern producers transfer oil from ship to ship off Hormuz, and every voyage is about a week longer; * part of the fleet goes around Africa, avoiding the Houthis; * damaged ships are in repair; * empty passages to regroup the fleet eat up carrying capacity. The consequences are already visible. Refining margins are compressing: Repsol's, by RBC's estimate, may have fallen from 36 dollars per barrel in the third quarter to about 15 in October. West African sellers give discounts to compensate for expensive delivery to China. A modern tanker costs about 240 million dollars, more than 60% above the level at the end of last year (Clarksons Research). A separate layer is insurance. The war premium in a policy spreads the price of war across every barrel. It is paid not by the one who shoots but by the buyer of fuel at the other end of the route. The conclusion for the reader: inflation is not created only by money and rates. It is also created by the physical impossibility of moving energy between continents quickly and cheaply. The military risk of one region turns into a tax on moving resources for everyone. ### Fertiliser: the price of gas turns into the price of bread Nitrogen fertilisers (ammonia, urea) are made mainly from natural gas. Expensive gas hits fertiliser directly. The chain is short: gas, ammonia, fertiliser, harvest, food, calm in society. According to analysts' reports, fertiliser output in the Gulf countries and in Europe has already shrunk because of gas prices and supply disruptions. Phosphorus fertilisers became more expensive because of delivery problems. Farmers in many regions are cutting application rates. A farmer sees the fertiliser bill and can cut the rate at once. The harvest will show it a season later, and the price of bread reacts even later. So the consequences of October 2026 will be seen by the buyer in 2027, especially in the Middle East and North Africa, where grain and fertiliser are imported. Expensive bread has more than once become a political detonator. That is why October is dangerous not only for today's prices but for the tension it lays down for next year. ### Copper and the price of capital Copper is needed for power grids, electric cars, renewable energy, defence systems, data centres, cables and motors. The best deposits were developed long ago, and the ore is getting poorer. To get the same tonne of copper you have to process more rock, and therefore spend more energy, water, chemicals, money and time on permits. By industry estimates, the copper industry needs hundreds of billions of dollars of investment in the coming decades. Here debt and physics close into a loop: * new mines are built on credit; * expensive credit freezes projects; * frozen projects guarantee a future deficit; * the deficit keeps prices high, and they drive inflation; * inflation forces central banks to keep rates high; * high rates once again make projects more expensive. The same goes for nickel, aluminium, lithium, cobalt, rare earth metals, uranium, potash, phosphates and steel. The problem is not that a resource "ran out". The problem is that every next tonne demands more energy, capital, water, shipping and political control. ### Soil: the thing you cannot print Money can be created out of credit; soil cannot. Black earth, humus, soil organisms, the ability to hold moisture and a reserve of trace elements were formed over centuries. Fertiliser supports them partially; money cannot replace them. Plants take nitrogen, phosphorus, potassium, calcium, magnesium, sulphur and trace elements out of the soil. A country that exports a harvest and does not return organic matter to its fields exports its own fertility. This can be called the export of virtual fertility. Mineral fertiliser maintains the volume of the harvest but does not restore soil structure, organic carbon and biological life. Some researchers believe that high-yield varieties have gained mass while nutrient density (protein, minerals, vitamins) lags behind it. This "dilution effect" has been studied, but the estimates argue with each other, and it can be relied on seriously only with references to specific work. > Financial cycle against biological > > For the debt system this matters. Debt requires growth. Growth requires cheap food and export revenue. The export model squeezes rent out of the land faster than the soil can recover. The financial cycle begins to devour the biological one. ## Part III. The world around the debt ### Asia as the main resource challenge The deep conflict of the century does not reduce to the confrontation between the West and Russia. It lies in the industrial development of China, India and other Asian countries. About four billion people in China, India, South-East Asia, Pakistan and Bangladesh still consume far less than the inhabitants of developed countries. **At the start of the century an American spent several times more electricity than a Chinese person and many times more than an Indian**, and the same held for oil, metals and food. When those countries approach the developed level, the world system faces not an abstract "shortage" but a sharp rise in the cost of extraction, processing, shipping and insurance. New consumers get harder deposits: farther, deeper, dearer. That is why developing countries become more expensive at an accelerating rate. > Not proof of a plan > > Resource competition, the struggle for sea routes and energy nodes were discussed in open analysis long before 2022. This is not proof of a single secret plan. ### Russia as a resource hub Russia in this picture is not only a military adversary and a nuclear power but also the largest resource hub: oil, gas, coal, nickel, palladium, platinum, aluminium, titanium, iron ore, fertiliser, grain, timber, the Arctic, black earth, fresh water. For China and India it is a supplier and a way to depend less on sea routes controlled by the United States and its allies. For Europe it was for decades a source of cheap energy, on which the industrial model rested, above all the German one. > A lever on European energy > > For the United States, Russian flows are a lever of pressure on European energy and on cooperation between Russia and China. That is why sanctions, the freezing of reserves, price caps, control over insurance and shipping are not only "punishment" but also a struggle to manage the resource flows of Eurasia. Three questions to any flow: who buys, who ships, who insures. The one who answers the second and the third holds the flow tighter than the owner of the deposit: you cannot take a well away, but a route can be redirected. This does not mean that someone wanted to physically take the subsoil. It is enough to control payments, insurance, technology and routes. ### Europe: the loss of cheap energy After the Cold War the European model stood on four supports: cheap Russian gas, open markets in China and the United States, the American NATO umbrella, low defence spending with a generous social policy. After 2022 the structure broke. Gas was replaced with expensive liquefied gas, above all American. China became a competitor. The United States asks for more defence spending. Industry moves to where energy is cheaper. The social model contracts under inflation, energy prices and an ageing population. > Asymmetry, not intent > > Arguing about intentions is useless; looking at the result is better. Europe has become dependent on American gas, security, technology and financial markets and is turning into the resource-market periphery of the transatlantic system. This is an asymmetry of structure rather than someone's evil intent. ### Europe: the streets and another turn of debt In October the pressure came out into the streets. From 17 to 19 October protests took place in at least five countries of the European Union, including France, Italy, Portugal and Belgium (agency reports); another wave passed through Albania, which is not in the European Union. The occasions were energy prices and budget cuts, although in France the movement began with school blockades and the fuel theme joined later. The scale was noticeable: in France 1,206 people were detained in the first two days, over the weekend the count of detentions in the country reached 2,400, and participants were counted at about half a million. Curfews were introduced point by point. In Paris, from 23:00 to 06:00, in the nights of 22 to 26 October, police closed Place de la République and part of the Les Halles quarter; the prefect wrote that the measure proved effective. Similar restrictions were announced by Nice, Lyon, Lille and Marseille. The Belgian story links money and the street more clearly than others: prime minister Bart De Wever proposed cutting 10 billion euros from the budget, and in the same week students came out in Brussels and Liège, and police detained 195 people. General strikes are scheduled for November: 20 November in Italy and in November in Spain, the first in fourteen years. > The circle closes > > This is a continuation of the same monetary chain: > > * energy becomes more expensive, fuel inflation enters the prices of everything; > * central banks raise rates, and debt becomes more expensive; > * governments cut spending in order to service debt; > * people come out into the streets; > * governments take a new loan to soften discontent; > * the debt grows. The circle closes, and Europe has less and less reserve: industry loses margin, the population ages, debt ceilings are close. Every concession to the street turns into a new loan and a new interest payment. ### Two knots of the world system The military map of October is not accidental: two regions stand out where the fighting coincided with key resource and transport nodes. **The Middle East** (Red Sea, Persian Gulf). The key resources are oil, gas, liquefied gas, petrochemicals, fertiliser. The nodes are Hormuz, Bab el-Mandeb, Suez. Europe, China, India, Japan, Turkey and Africa suffer most. Expensive energy makes shipping, fertiliser and food more expensive, food drives inflation and pulls rates with it. **Ukraine, Russia, the Black Sea region.** The key resources are grain, oils, fertiliser, metals, the power system, ports, subsoil. The nodes are Black Sea ports, pipelines, railways. Europe, the Middle East, Africa, Asia and Ukraine and Russia themselves suffer. Destroyed logistics create shortages of food and metals, prices and military spending rise, debt presses on budgets. October 2026 shows how military geography turns into inflation: where they shoot, the whole world becomes more expensive. ## Part IV. Ukraine ### Chronology: the conflict did not begin in 2022 The Ukrainian story cannot be explained by the events of 2026. It lives in a long argument about security, sovereignty and external unions. #### Ukraine and NATO * 2003: Ukraine's national security concept fixed the prospect of membership in the alliance. * 2004–2008: under Viktor Yushchenko the course became public: army reform, exercises, interoperability standards. * 2008: the Bucharest summit declared that Ukraine and Georgia would become NATO members. A membership action plan was not given. * 2010: under Viktor Yanukovych Ukraine returned to a non-aligned status. * 2014: after the annexation of Crimea and the war in Donbas the non-aligned status was abolished. * 2015–2019: military reform, NATO standards, joint exercises. * 2019: the course towards membership in the EU and NATO was written into the constitution. #### Russia and NATO * 2007: Vladimir Putin's Munich speech with sharp criticism of the alliance's expansion. * 2008: after Bucharest, Moscow began to state directly that Ukraine's and Georgia's accession was inadmissible. * 2014: after Crimea and Donbas, systemic statements began about the inadmissibility of NATO military infrastructure in Ukraine. * 17 December 2021: the Russian foreign ministry published draft treaties with the United States and an agreement with NATO banning further expansion. * 2022: the NATO theme became one of the public justifications for the war. * 2022–2025: NATO confirmed the prospect of Ukraine's membership and gave no direct invitation. The chronology does not prove a single design. It shows something else: the geopolitical layer of the crisis has been documented for a long time, and it cannot be ignored in a conversation about money, debt and resources. The events in Ukraine can be laid out in three movements. **The first movement, the ram (2022–2024).** War makes assets cheaper and moves the budget onto external money. Own revenues go to the front. **The second movement, debt dependence (2024–2025).** Creditors (the IMF, the EU, the G7 countries) set conditions: reforms, audits, independent regulators. Financing gradually turns into management. **The third movement, access to assets (2025–2026).** Reconstruction opens external capital to future resource flows on terms that would have been harder to obtain in peacetime. The freezing of the front in this logic is not simply a pause but a fixation of what has been achieved. The frame does not require a plan to "destroy and take". A structure is enough: war makes assets cheaper, debt gives leverage, reconstruction opens access. It describes a structure, not the Ukrainian people and their choice. The three movements are the author's interpretation: the coincidence of dates is an argument, not a proof. **The fund and the minerals.** On 2 October 2026 the American-Ukrainian investment fund closed its first deal in critical minerals: about 30 million dollars went into a project to extract uranium, beryllium, rare earth metals and zirconium. The local partner in the deal is Ukraine's BGV Group of Hennadii Butkevych; the fund's portfolio was valued at about 70 million dollars across five projects. The Rada ratified the minerals agreement in May 2025 (338 votes). Under it, half of the new resource rent, that is the income from developing the subsoil, goes to the fund, where the American side participates on equal terms. The word "rent" requires caution here: in the documents and in commentary, "rent", "revenue" and "income" are confused, and a strict assessment needs the text of the agreement. **Land.** In the five years since the moratorium was lifted, from July 2021, Ukrainian registries recorded more than a million hectares of agricultural land sold: by March 2026 Derzhheokadastr counted 334,803 deals for 1.001 million hectares, and by June analysts at KSE counted 512.8 thousand deals for 1.154 million. The hundred largest agroholdings concentrate about 5.35 million hectares, and another 600 thousand hectares of large farms remained on territory controlled by Russia. The summary data do not show what exactly was sold: shares, state land, leases or transfers into management. **Privatisation.** The big privatisation programme of 2026 includes the Odesa Port Plant, Sumykhimprom, Indar and other enterprises. The auctions took place exactly in the month of this article, and they found no buyers. Sumykhimprom was offered on 13 October with a starting price of about one billion hryvnias: that was the third failed attempt. The Odesa Port Plant was offered on 19 October at about 4.3 billion hryvnias, but no bids came in at all. Auctions for the Demurinsky mining and processing plant and for Motordetal-Konotop were scheduled for 20 October. **The front.** On 21 October official Kyiv allowed the freezing of the front line as a first step towards a truce. Volodymyr Zelensky clarified the position: he is ready to fix the line of contact but will not recognise the occupied territories as Russian. According to reports confirmed by the White House and by the general staffs of both countries, on 23 October they agreed a local ceasefire in the area of Oleshky in Kherson region; the start dates differ, the White House named 29 October and the militaries of both sides the 27th. Technical consultations between Ukraine, Russia and the United States are planned for the first half of November. ### Official positions and other explanations The American and Ukrainian sides describe the fund as an instrument of reconstruction, energy resilience and transparent investment. By their statements, every deal returns money into the Ukrainian economy. Critics see in the same fund debt dependence and the transfer of resource rent to external players. There are other reasonable explanations, and they cannot be thrown away: * Ukraine needs money for the war and for reconstruction; * the IMF, the EU and the United States demand reforms as a condition of money; * the fight against corruption and the shadow economy is a motive too; * private capital will not come otherwise; * part of the Ukrainian elites sees the goal in integration into western financial and legal institutions; * war destroys infrastructure and narrows the choice; * part of the elites buys security with economic attachment to the United States and the EU; * resource nationalism: to monetise the subsoil and the land for the sake of the budget; * the global competition for critical minerals is wider than the story of "seizing Ukraine". > A subject inside a structure > > Ukraine has become the point where a military conflict, debt pressure, resource potential and the competition of external centres of power intersect. It remains a subject for now, but it acts inside a rigid structure of dependence. ## Part V. Markets, capital and wealth ### Capital that pumps itself **The facts.** American companies buy back their own shares: on the order of a trillion dollars a year in recent years (the exact figure for the right year should be taken from S&P Dow Jones Indices). A buyback reduces the number of shares, and earnings per share rise even if the earnings themselves have not grown. Part of the buybacks is paid for with borrowed money. A significant part of management pay at American companies is paid in shares, so a manager benefits from raising the share price. The S&P 500 index grew about 14–15% a year over ten years with dividends included (about +313% by August 2026, by a calculation on the SPY fund). That is noticeably faster than borrowing costs for a large company. As long as that holds, it pays to borrow and buy back shares. This supports the price, the price justifies new buybacks and new borrowing. > A loop that pumps itself > > This is a loop that pumps itself: cheap credit, buybacks, a higher price, new credit. **The facts.** In 2026 the loop slowed down. According to S&P Dow Jones Indices, Alphabet and Meta bought back no shares at all in the first half of the year and directed about 130 billion dollars into AI capital: data centres, networks, equipment. Meta at the same time borrowed 24.9 billion on the market. Cheap money has not disappeared; AI capital intercepted it, and AI capital builds capacity instead of raising the share price. #### A note. * Leverage works both ways. If market returns fall below the cost of borrowing, the debt stays and the benefit disappears. Large banks' forecasts for the next decade are noticeably lower than past returns (on the order of 3–7% a year), but those are forecasts and they can be wrong. * Buybacks, by analysts' estimates, are mainly paid out of companies' free cash, not only out of borrowing. * Part of the price growth is the real growth of company profits, not only cheap money. ### The price of expectations The P/E ratio shows how many years of profit the market values a company at. A P/E of 20 means: for a unit of annual profit, investors pay twenty. For the whole market it is better to look at Shiller's long-term measure (CAPE): price to the average profit over ten years, adjusted for inflation. It smooths out random spikes. **The facts.** Historically the CAPE of the American market is about 17.8. On 1 July 2026 it was about 41, and at the peak before the dotcom crash, in December 1999, it reached 44.2. After that peak the Nasdaq index lost about 78% between March 2000 and October 2002. The ordinary P/E of the index on the profit of the past year was about 28.5 at the end of July 2026 (Multpl's calculation on Shiller's data), and by 23 October it had fallen to about 26 (Multpl). The forward P/E on expected profit, by J.P. Morgan's calculation on 30 September, is about 19 (FactSet on 23 October, 18.7): that is the price of future profits, not of today's. The image: a queue for a scarce good. People stand because others stand, and the queue grows by itself even though there is no less of the good. #### A note. * CAPE hardly helps to guess what will happen next year. Past peaks preceded corrections with a lag of zero to about eight years. * Comparing different decades is not entirely honest: accounting rules have changed, the composition of the index has changed (today there are many technology companies with high margins), and the level of rates has changed. * The index is pulled up by a small group of giants. Most of them do have enormous real profits. According to data as of 24 October 2026, the forward P/E of Nvidia is about 24.5, of Apple about 32. The exception is Tesla: about 216. > Belief instead of profit > > For part of the companies the price rests on expectations rather than on today's profit, and the market is vulnerable if expectations are not met; for a noticeable part of large companies the share price matters more than profit. Amazon's history can be read both ways: investors paid for years for a belief in growth, and that belief was in the end confirmed by profit. Had it not been confirmed, the result would have been a bubble. ### One person as a million? The question has stood for a long time: how is it that in a society where technology is so developed, one person receives as much as a million others? There are explanations for this. * **Scale.** A programme or a platform was written once, millions use it, and every next user costs almost nothing. * **The winner takes almost everything.** Network effects make the market leader stronger and stronger: a messenger is needed where everyone is. * **The income from ownership grows faster than the income from labour.** This is exactly what the Fed's data on the share of the top 1% show. Defenders of such a system answer that a founder owns a share of a company that created value for millions, and that this is not a wage for an hour of work. Critics answer that income often comes from market power, privileges and weak taxes, not only from a person's contribution. Economists are not united here. **A note on the word.** The phrase "accumulation of wealth" implies that a person worked and saved for a long time. But the point is different: capital itself generates income, and that income requires no labour. "Concentration of ownership" and "income from ownership" fit more precisely. > An inheritance tax > > It should not be enough for children to live on the interest from capital accumulated by their father. What is usually proposed against this is not to change money but to introduce an inheritance tax: some call it fair, others say it hits those who saved and worked. The idea of "living on income from ownership" also runs into the fact that interest has a second explanation: it is payment for giving up spending money now, and for the risk of losing it. **Financial capital.** The old scheme "money, commodity, more money" is increasingly replaced by the scheme "money, more money": income comes from the rise in the price of an asset, not from a product. > The boundary of the model > > Such a model is poorly compatible with long-term development and accumulates risk, and when and how it ends is unknown. Critics will recall that capitalism's dead end was announced more than once (the 1930s, the 1970s, 2008) and the system rebuilt itself every time. Other economists believe the valuations reflect real future profits. The accumulated risks in the global economy require a transition to another formation. ## Part VI. Exits ### Money from distribution, not from debt > Credit out of savings > > If money appears through the distribution of wealth in society rather than when a loan is issued, credit remains, but it becomes a transfer of what has already been accumulated rather than the creation of something new. A bank would have to take someone's real savings. Then there is no need to pay interest for money that nobody created, and the risk of bubbles on credit leverage is smaller. The idea is not new. Irving Fisher proposed in the 1930s the so-called Chicago Plan with full reserve banking. In 2018 Switzerland held a referendum on the "sovereign money" initiative, and it was rejected. #### A note. * Credit becomes more expensive, and large long-term projects (energy, ports, mines) are harder to finance: they would have to be funded out of savings, equities and state funds. * Someone has to decide how much money to issue and how to distribute it. If issuance outpaces the growth of production, inflation returns even without bank credit. The problem moves from the banks to whoever determines issuance. * The market creates credit substitutes wherever there is demand: receipts, instalment plans, loans between companies. ### Gesell's money Silvio Gesell (1862–1930) proposed "free money": money as a means of exchange only, without interest. So that it would not be hoarded, he proposed making it lose value in storage, so that it is spent or invested. The everyday image: money "rusts". Similar money existed in Europe before: from the 12th to the 15th century, bracteates circulated, losing part of their value every year. A practical test took place in 1932–1933 in the Austrian town of Wörgl. Local money with such a rule went quickly into circulation and revived trade. The experiment was small and short, and the Austrian National Bank stopped it, so nothing can be said about how it would work at the level of a country. Fisher and Keynes rated the idea highly, but mainly as an idea. This is close to the author's thought about income without labour but does not coincide with it. Gesell fights the hoarding of money and interest, not where money comes from, and credit remains in his scheme. Money that loses value hits money, not capital: it would be moved into land, houses, shares and business. Gesell could not foresee the blockchain: he died in 1930. Today's supporters of digital money say that in digital money such a rule is technically easy to introduce, and therefore the idea can be tested in practice. ### Blockchain and transparency > A register does not remove leverage > > One of the possible exits that supporters of digital money hope for is a register in which it is visible who created how much money, and there are fewer intermediaries between the state and the person. Then it is easier to see who issued what and how much, and part of the fees disappears. **A note.** Technology by itself does not solve the problem. Credit can be issued on a blockchain too, and there is credit leverage there as well. Bubbles and pyramids in the crypto world have arisen more than once: the collapses of FTX and Terra/Luna in 2022. Intermediaries have not gone away either: people use exchanges, wallets and stablecoins run by private companies. Whether the system becomes more stable depends on the rules of issuance and lending, not on the technology itself. ### The bottom line The old colonial model, in which metropoles took raw materials and the colonies kept silent, no longer works in its pure form. Former colonies and resource countries demand their share of the income, processing on the spot, settlement in their own currencies, access to technology and the right to choose between centres of power. The new model has not been built yet. The world lives in a transition phase, where finance, resources and war have again become one whole. The debt system knows how to create money. But it does not know how to create cheap energy, safe sea routes, tankers, insurance capacity, copper mines, fertiliser, black earth, fresh water, stable states and trust. > The physical base under the machine > > That is why October 2026 shows not simply "expensive": the financial machine has begun to run into the physical base it stands on. While money is made of debt, and debt runs into oil, gas, tankers, copper, fertiliser, land and politics, the chain will repeat. Expensive energy hits shipping, shipping hits prices, prices push rates up, rates make debt heavier, debt presses on budgets, budgets press on people. With other countries, currencies and dates. This is not a forecast but a description of the mechanics. ### What to watch yourself So as not to depend on other people's predictions, one can follow indicators that are published openly. * **The Fed's rate and the minutes of its meetings.** The next decision will be announced on 28 October. * **Gas prices (TTF) and oil (Brent).** Whether they rise together with the cost of delivery. * **Oil freight rates.** Reports from Bloomberg, Datamar and brokers. * **Attacks on ships in Hormuz and oil export volumes through the strait.** Data from UKMTO, IMO and Kpler. * **Gold.** In 2026 it behaved as an indicator of real rates and risk: a record in January on expectations of easing, then a fall by a quarter when the Fed turned to raising rates. The classical logic "gold rises when trust in debt money falls" gave the opposite signal this year. * **The share of the budget that goes to interest on debt.** Data from the US Treasury and the IMF. * **The P/E and CAPE of the market and the share of the top 1% in wealth.** Data from the Fed and Robert Shiller. * **The yield of 10-year Treasury paper and the term premium.** When the Fed lowers its rate while long yields rise, the market is demanding payment for risk, not for policy. * **Treasury auctions and TIC reports.** The ratio of bids, the share of dealers, the deviation of the average price. Once a month TIC answers the question of who credits the United States: non-residents or domestic funds. * **The capex of hyperscalers and debt for data centres.** Reported capex, bond issues from Meta and Oracle, private credit for data centres. This is the speed of the new fuel: the market capitalises income that has not been received yet. Marx called such a construction fictitious capital. Alphabet and Meta did not buy back shares in the first half of 2026 and directed 130 billion dollars into construction. The loop has not disappeared; it has changed fuel. * **Related-party deals and vendor financing.** A chipmaker invests in the buyer of its chips, a contractor lends to the customer. The measurement is simple: the share of the backlog secured by obligations of the same parties. * **Depreciation against capex.** The write-off period for chips in the accounts against their real service life. When the period in the accounts is longer than the resource, reported profit is overstated. **The P/E and CAPE of the market and the weight of the ten largest companies in the index.** Data from the Fed and Robert Shiller. The equal-weighted index against the ordinary one shows whether the market rests on ten names. This is the share of the top 1% inside the market itself, measurable daily. * **Measuring the crowd.** FINRA margin debt, the share of one-day options, the IPO window. The crowd enters with leverage in the late phase, so leverage is its measurement. **How to read this article.** The aim of the article is to present data to the reader in the form of a digest of events and trends. It is deliberately simplified: the mechanisms of money creation, the causes of inflation and the motives of states and companies are in reality more complicated, and serious professional disputes go on around them. The facts and figures in the text are given with dates and sources, and what could not be confirmed is marked with the words "according to reports". The conclusions and causal links are the author's opinion, and the reader is entitled to disagree with it. Check the figures against primary sources and draw your own conclusions. This is a general discussion, not financial advice. ### Sources * Federal Reserve System. Modern Money Mechanics. * Bank of England. Money Creation in the Modern Economy, 2014. * Federal Reserve Board. Distributional Financial Accounts (DFA), 2026 releases; Financial Accounts of the United States (Z.1). * U.S. Bureau of Labor Statistics. Consumer Price Index, 2025 inflation recalculation. * Federal Reserve. FOMC decision of 16 September 2026; minutes of the September meeting; materials for the meeting of 27–28 October 2026. * International Monetary Fund. World Economic Outlook, October 2026. * Exchange quotations for Brent, TTF and gold, October 2026. * Datamar News. Shipping U.S. Oil to China Now Costs More Than a Rocket Launch, 13 October 2026 (retelling of Bloomberg's report of 9 October). [https://datamarnews.com/noticias/shipping-u-s-oil-to-china-now-costs-more-than-a-rocket-launch/](https://datamarnews.com/noticias/shipping-u-s-oil-to-china-now-costs-more-than-a-rocket-launch/) * Bloomberg. Oil Tankers Plying the US-China Route Command $60 Million — It's Crushing Demand, 22 October 2026. * Industry estimates from SSY, Clarksons Research, Vitol and RBC as cited in Bloomberg and Datamar News reports, October 2026. * Al Jazeera. Iran steps up Hormuz surveillance, 14 October 2026; US and Iran both claim control of Strait of Hormuz, 17 October 2026. * CNBC. Rebounding oil exports through Strait of Hormuz are vulnerable to stepped-up Iranian tanker attacks, 6 October 2026; Tanker attacks in Strait of Hormuz surge to wartime high, 9 October 2026. * USNI News. October Sees Near Daily Strikes on Ships in Hormuz, 9 October 2026. * The Washington Post. Iran says 7 oil tankers attacked in the Strait of Hormuz, 22 October 2026. * NATO. Bucharest Summit Declaration, 2008. * Verkhovna Rada of Ukraine: law on non-aligned status, 2010; abolition of non-aligned status, 2014; constitutional amendments, 2019. * Ministry of Foreign Affairs of the Russian Federation. Draft treaty on security guarantees between the USA and Russia and draft agreement on security guarantees between NATO and Russia, 17 December 2021. * Press releases of the US Treasury and Ukrainian official documents on the American-Ukrainian investment fund, October 2026. * Resolution of the Verkhovna Rada on ratification of the minerals agreement, May 2025. * Public registries of privatisation and of the Ukrainian land market, 2026. * Derzhheokadastr and KSE: Ukrainian land market data, 2026; State Property Fund of Ukraine: results of the big privatisation auctions, 13–20 October 2026. * Agency reports on the protests in European Union countries, 17–19 October 2026; reports on the Belgian government's budget proposal and on Volodymyr Zelensky's interview, October 2026. * Prefecture of Police of Paris. Order No. 2026-01407 of 22 October 2026 on a partial curfew, 22–26 October. * Reuters: reports on the local truce in Kherson region and on Kyiv's position, 20–23 October 2026. * Industry data from FAO, IFA, IEA, S&P Global and CRU on fertilisers, soils, metals and energy are used as contextual estimates. * Robert Shiller's CAPE data (Shiller PE), calculation for July 2026; S&P 500 return calculation on the SPY fund (August 2026); forward P/E data for large companies, October 2026. * S&P Dow Jones Indices: data on share buybacks, first half of 2026; Alphabet and Meta reporting for the same period. * Silvio Gesell. Die natürliche Wirtschaftsordnung, 1916; Irving Fisher. 100% Money, 1935; results of the Swiss referendum on the "Vollgeld" initiative, 2018.