Ten31 Timestamp: Druck and Disorderly

**Marty Bent** (0:00)
It's the last day of August. I don't think John and I took a vacation this summer, so we decided to dress down.
It's a T-shirt, 1031 timestamp recap episode today.

**John Arnold** (0:09)
You know, when you do what we do, when you're a professional situation monitor, every day is a vacation, right? So I feel good. I'm feeling rested.

**Marty Bent** (0:18)
I am too.
I am too. I'm feeling well. I got eight hours of sleep last night. Got the kids at the home base back from the shore. Ready to dive in. A lot going on in the world.
We mentioned last week that Jackson Hole would be happening between last week's episode and this week's episode happened over the weekend. We'll touch on that, but we're going to start where we always start, the Strait of Hormuz, Iran, Treasury, launching unprecedented campaign against Iranian regime on Economic D-Day, and also launching Operation Economic Outcast. We want to make clear here today that no one is above the reach of the US sanctions, Bessent said when asked whether the US would sanction Chinese banks that do business with Iran.
I don't think I mentioned it. I wanted to surprise John because I know of how big of a fan he is of MindPrintHash. But I had a conversation with Matt Dines early last week where we talked about Economic D-Day and what it means, but I want to hear your perspective, John.

**John Arnold** (1:15)
Yeah, I haven't actually finished your conversation with him from last week. I did listen to the guys this past week and this is now just a MindPrintHash recap show for the record. But no, I think it brings up a lot of good points and a couple of things that I was going to flag here too. I like Matt's framing that the phrasing of this as Economic D-Day is notable because D-Day is the landing point, not like the end of the war, kind of breaching enemy territory so to speak, and then moving forward and gaining ground from there if it works. But I think it's helpful framing to keep in mind that this is probably even in the administration's mind, kind of the beginning, not the end. Very notable, obviously, for a variety of reasons, broad sweeping sanctions, wide berth of what's being affected here, number of entities, etc. Also, it's not on the screenshot here that we have in the video if you're watching, but secondary sanctions threatened for any institutions or countries that are deemed to be working with Iran along any of these axes that are cited here, which interestingly the first of which is digital assets. Digital assets, technology, gold, aviation, and shipping that in the administration's words, the Iranian regime uses to try to prop up its failing economy.
Secondary sanctions are much broader than your typical sanctions package, and you kind of allow, give the treasury an OFAC leeway to kind of reach into the pockets of actors that are potentially well beyond kind of the first order of who's doing business with Iran like immediately. And I think notable that in Bessent's press conference to talk about this, he was specifically asked, could China even be affected by these sanctions, Chinese banks, and he pretty much deferred and said, no one is gonna be above the reach. Now, you could argue that that's kind of a veiled threat and kind of some bluster. And I think that's certainly how the administration would like you to view it. You could also argue that he could have taken an even stronger stance and said, we're definitely going after China. I don't know if that's strategically advantageous. And he kind of specifically even said, we're gonna try to let people do in his view, quote unquote, the right thing, because there's no reason to blow up a bunch of trade relationships in the global economy if we don't have to. But watch out, because we will.
So I think it's definitely an escalation. And I think that the China angle, as we always bring up on here, is one of the big ones. We probably, really the driving force behind a lot of it, in addition to the ongoing controlled demolition, potentially of zero dollar market, which we can get into. But I do think it's notable, right? It's not, I saw a lot of commentary over the past week saying like, well, sanctions never do anything. And this is just a bluster from the administration because it's kind of scared to go on the offensive or get kinetic and it knows it can't win. So it's kind of throwing this package out there just to kind of as a token way to tuck its tail between its legs and kind of go home. And I mean, I think that's the wrong read.