I often like to think that we live in a world of abstractions, spending our days staring at screens, analysing candlestick charts, counting digital assets or checking bank balances that are nothing more than bits on a server. We have convinced ourselves that the economy is a game of algorithms and monetary policy, a sophisticated dance directed from the carpeted offices of Frankfurt or Washington. But every now and then, physical reality — the raw, rough and tangible kind — slaps us in the face to remind us that our entire edifice of comfort hangs by a thread barely 33 kilometres wide. What on earth are you talking about? I'm talking about the Strait of Hormuz. In reality, it's something much deeper: the systemic fragility we have built in the name of efficiency and the narrative that is being forged so that you and I pay the price for their mistakes.
For decades, the corporate mantra has been extreme efficiency. The Just in Time model was sold as the pinnacle of progress: why spend money on warehouses or inventories when we can have the supply chain running like clockwork? If oil, gas or components arrive exactly when they are needed, capital flows faster.
What they didn't tell us is that efficiency is the enemy of resilience. By removing ‘slack’ from the system, we remove our ability to absorb shocks. Today, when drones or geopolitical tensions block a bottleneck like Hormuz, the system has no shock absorbers. There is no plan B because plan B was ‘too expensive’ for next quarter's profit margins; and so, time passed.
It is a perfect metaphor for modern life, as we have been pushed to live without margins: families living from hand to mouth, companies operating at maximum debt, and governments that depend on nothing stopping for even a second. The moment the flow is cut off, the entire architecture creaks. And this is where the real drama begins.
History has recorded a brutal anecdote about César Borgia in Cesena. To pacify a rebellious region, Borgia used a ruthless lieutenant, Remirro de Orco, who imposed order through terror. Once the region was ‘stabilised’, Borgia, in a masterful political marketing move, had his own lieutenant executed and his body cut in two and displayed in the public square. The people were satisfied and stunned. The message was clear: ‘Cruelty was necessary, but I am the restorer of justice.’
Today we do not see bodies cut in half in the squares, but we do see the ‘spectacle of power’ on our screens. Governments and central banks play a similar role. First, they allow (or encourage) a system of debt and extreme interdependence that makes us vulnerable. Then, when crisis strikes — whether due to Hormuz, a pandemic or the collapse of a supply chain — they appear on the scene with their ‘narrative of justice’.
They tell us that inflation is a natural and inevitable phenomenon, or the fault of an external enemy, but the reality is more cynical: physical scarcity becomes a tool of control. If they can get you to accept that ‘there is not enough,’ they can justify decisions that, in normal times, you would consider unacceptable: from credit restrictions to the erosion of your purchasing power through inflation that their tools cannot—or will not—stop.
This is where we must be particularly clear-headed, as most people expect central banks to ‘fix’ the economy by raising or lowering interest rates. This is known as demand-pull inflation: too much money chasing too few goods (a phrase popularised by Milton Friedman, although the basic idea comes from the quantitative theory of money developed by economists such as John Maynard Keynes). But what Ormuz represents is supply-side inflation.
If the cost of energy rises because 20% of the world's oil is trapped in a strait, raising interest rates is not going to make ships go faster. On the contrary, making credit more expensive at a time of rising operating costs is like trying to put out a fire with petrol. Small businesses, those without access to state bailouts, are the ones that run out of oxygen.
The banking system, that third player that always arrives late, begins to record losses and turns off the tap. What started as a problem with ships and drones in the Persian Gulf ends up being the reason why the bank does not renew your line of credit or why your supermarket has raised prices by 40% ‘just in case’; this week we are already beginning to feel the impact.
If we have learned anything in recent years — and this is something I have consistently argued — it is that the digital world cannot ignore the physical world indefinitely. We have lived for 30 years under the illusion that what mattered was software, branding and the ‘user experience’. On the other hand, energy, transport and food are the real infrastructure of existence.
We are seeing a transition towards regional energy blocs and a return to energy self-sufficiency. This is not just geopolitics; it is an economic paradigm shift. Those who own physical assets, or who live in regions with real room for manoeuvre, will be the ones dictating the rules in the next decade. The rest of us will be mere spectators of a ‘narrative of scarcity’ designed to make us accept less while paying more (crude and real).
What then is left for us? For me, that translates into a single word: sovereignty.
In an environment of high uncertainty and manipulated narratives, the competitive advantage is not having more information (we are saturated with it), but knowing what to ignore. Lucidity consists of understanding that the system is designed for the efficiency of those at the top, not for your security.
Being a lucid individual today means:
Ormuz? There is no doubt that the world is small, narrow and physical. While the system creaks and groans trying to save itself, we have the opportunity to build a personal structure that does not depend on whether or not a ship can pass through a 33-kilometre canal. The economy is not what a central bank does; the economy is what each person does with what they have, knowing that the theatre of power will never have your best interests in its script.
Let us remain alert, observing... Let us continue to analyse. Above all, however, let us continue to build our own resilience. The show is not over; it has only just begun. We do not have to be part of the stunned audience.
