'Complete Catastrophe': Economist Says U.S. Losing The War And Going Broke

3/8/2026 11:37:31 PM	short term up	7 days later	+0.53%	+0.53%

3/8/2026 11:37:31 PM	short term sharp up	7 days later	-1.34%	-2.01%

Introduces Professor Steve Hanke and his Fortune article declaring the US insolvent, setting up discussion on economy, bond markets, inflation, jobs, and Iran war impact.

David Lin

Plays Larry Fink clip predicting either lower oil if Iran reintegrates or $100-$150 oil causing global recession if war continues.

David Lin

Steve Hanke

Disagrees with Fink's simplicity; notes Iranian oil exports have increased since war started, Iranian rial appreciated 6%, and inflation dropped from 80% to 67%.

My Iranian friends report they're selling more oil at higher prices with lower discounts.

Steve Hanke

Physical oil markets in Asia trade much higher than futures; paper markets will eventually be 'mugged by reality' and rise to match physical prices.

The physical market's up here, David, and the paper market's down here.

Asks Hanke to explain his claim that Iran will win the war.

David Lin

Steve Hanke

Iran controls the Strait of Hormuz and will continue to do so, giving them leverage over the West; Trump is cornered.

Western economies are suffering tremendous damage already; OECD says US inflation will hit 4.2%.

Steve Hanke

The US is not a net exporter of crude oil; it imports more crude than it exports, contrary to administration claims.

Forget that we're somehow insulated from world prices in oil. This is another joke coming out of Washington.

Notes 80% of Gulf oil goes to Asia; asks how Iran wins if US/Canada are less affected.

David Lin

Steve Hanke

The US is severely affected; bond market is tanking, stock market is pricing in damage, GDP forecasts are all down.

If you don't think the price of oil is hurting the American economy, you must believe in the tooth fairy.

Steve Hanke

The decapitation strategy (assassinating leaders) was a catastrophic mistake; regime change almost never works.

Anyone reading the scholarly literature on regime changes... shows that regime changes and covert regime changes almost never work.

Steve Hanke

A ground invasion would be a 'Hail Mary pass' with almost zero chance of success against a million Iranian troops.

This is going to be a bloodbath. The Americans, if we put boots on the ground, they're going to be sitting ducks.

Asks why US Navy doesn't stop Iranian tankers.

David Lin

Steve Hanke

US doesn't stop tankers because they don't want oil prices to skyrocket further; they even lifted sanctions on Russian shadow fleet.

They want all the oil available every place to be put on the market.

Steve Hanke

Russia is the big winner, producing oil, fertilizer, and helium; this could be the 'death nail for sanctions'.

Getting rid of sanctions is a good thing. Putting sanctions on is a bad thing.

Outlines Iran's five counter-proposals including missile program continuation and war reparations.

David Lin

Steve Hanke

Iran's key demand is sovereign control of the Strait of Hormuz; they have a 'Muhammad Ali rope-a-dope strategy' absorbing damage while controlling the choke point.

The Houthis haven't moved yet... when the Houthis shut off the Red Sea entrance, that means Suez Canal gets shut. We're talking about shutting the world economy down.

Notes Trump administration says European/Asian countries should police the Strait themselves.

David Lin

Steve Hanke

NATO countries don't have the military equipment; the US itself removed its minesweepers from the area.

The whole thing has not been thought through properly.

Reports Iran is working on a toll system for non-hostile vessels through the Strait.

David Lin

Steve Hanke

Toll system is part of Iran's sovereign control demand; it's cheaper for countries to pay tolls than fight.

India paid $2 million each for two tankers. That's what you let the market work out.

Calls the toll system 'piracy' and questions legal basis for Iran controlling the entire waterway.

David Lin

Steve Hanke

Defends Iran's right to control the Strait as property rights and counter-attack in an illegal war.

If you own something, you have the right to charge somebody for its use.

Introduces the US insolvency topic from Hanke's Fortune article: $6 trillion assets vs $47.78 trillion liabilities.

David Lin

Steve Hanke

The US is insolvent with $48 trillion on-balance-sheet liabilities plus $88 trillion off-balance-sheet (Social Security/Medicare) = $136 trillion total.

The numbers are deteriorating very rapidly. The quality of the balance sheet is getting worse and worse.

Steve Hanke

Trump is asking for $200-600 billion more for the Iran war and increasing Defense budget from $1 trillion to $1.5 trillion.

The bond vigilantes are turning on Trump big time.

CBO projects debt at 120% of GDP by 2030; asks when this translates to higher inflation.

David Lin

Steve Hanke

Inflation depends on Fed monetization; if Fed buys the bonds (like post-COVID), money supply surges and inflation follows.

If the Fed doesn't buy any of the bonds being issued to finance a deficit, inflation can stay under control.

Shows chart of 10-year yield vs gold price; notes they've moved inversely since March; asks if higher yields mean lower gold.

David Lin

Steve Hanke

Higher rates increase opportunity cost of gold, but dollar strength also affects gold; maintains $6,000-$7,000 gold target.

The US dollar has gotten stronger since the war, and that also affects gold. Stronger dollar, weaker gold.

Asks if war can lift economies out of recession, citing WWII narrative.

David Lin

Steve Hanke

The WWII narrative is false; US was already recovering before the war, and post-war boom contradicted predictions of recession.

95% of what you're reading in the press is either wrong or irrelevant.

Steve Hanke

Proposes a commission to clean up the fiscal mess and a constitutional amendment with a debt brake, modeled on Switzerland's 2001 amendment.

Government spending couldn't rise any more rapidly than the real growth in the US economy.

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