Iran war: Hanke warns U.S. leverage slipping and finances insolvent

Johns Hopkins economist Steve Hanke says the Iran war is turning into a strategic and financial setback for the U.S. In his view, the conflict has functionally reduced hostile access to the Strait of Hormuz, with reported Strait throughput down about 95%. He argues Iran controls the chokepoint that matters for global energy flows, giving Tehran leverage to dictate terms while Western economies absorb damage. Hanke also claims Iran’s oil position has not collapsed. He cites reports that Iranian oil exports have risen since the war began, selling with higher prices and smaller discounts. He points to macro indicators including the Iranian rial up about 6% since the start, and inflation still elevated around 67% annually (down from over 80%). He further notes physical oil markets in Asia trading above futures, suggesting a future convergence as “paper markets” catch up to supply reality. On U.S. financial solvency, Hanke uses U.S. government consolidated financial statements (as of Sep. 30, 2025): about $6T in assets versus nearly $48T in on-balance-sheet liabilities. Adding Social Security and Medicare lifts total liabilities to roughly $136T, which he characterizes as insolvency. He links market reaction to rising 10-year Treasury yields as deficit concerns grow, and says higher yields can pressure gold via opportunity cost. Hanke’s policy suggestions include a congressional commission to address existing liabilities and a Switzerland-style debt brake via a constitutional amendment. For crypto traders, the core theme is that the Iran war could keep pressure on risk assets through energy-price volatility, inflation expectations, and rising real rates.