A September-October Crash Scenario

Crude oil is "inflated" by Western green energy policy and psychotically anti-Russian foreign policy. The ruling class in Washington, DC, New York, San Francisco etc. must be removed wholesale if the public wants cheaper energy. For now, a majority of the public wants to do some combination of permanent lockdowns and nuclear war with Russia and China, so that will not happen. No one on the scene proposes both a return to realpolitik and an energy policy based on actual science and physics, instead of computer models generated by an apocalyptic green cargo cult or a policy that favors oil and gas producers over the rest of the economy.

The main assumption for this crash scenario is the economy declines as expected, but crude oil remains high. The stock rally also eases financial conditions. This keeps inflation and inflation expectations high.

The Federal Reserve, which has dragged its heels on inflation the whole way, stops dragging its heels on QT. When the QT amount doubles to $95 billion in September, the Fed starts actually doing QT.

The combination of higher than expected inflation plus the Federal Reserve getting serious about inflation again triggers a far larger market collapse than the one in mid-June.

This is not the only possible crash scenario, only one of them. As I've been saying for months, there are only two real "free lunch" policy available for the government: peace with Russia and doing anything to increase confidence in energy markets. Ease the sanctions, let energy costs plummet and economic pressure will lift. Sans that, their only hope is that the economy collapses enough to kill oil demand without triggering something like the 2008 market crash because there is no known scenario where things get better without getting worse first.