Steve Hanke has warned that the United States is losing strategic ground in its ongoing conflict with Iran.
The Johns Hopkins University professor described the situation as both a military and financial failure during an interview on The David Lin Report.
Hanke argued that Iran has effectively gained control of the Strait of Hormuz, a critical artery for global oil supply.
He stated that oil throughput in the region has dropped by roughly 95%, creating severe pressure on global energy markets.
"They are in control of the Strait of Hormuz",
Steve Hanke said.
He added that this control gives Iran significant leverage over Western economies, which are already feeling economic strain.
Hanke claimed that despite conflict conditions, Iran’s oil exports have increased and are being sold at higher prices with reduced discounts.
He noted that the Iranian currency has strengthened by around 6% since the conflict began, while inflation has eased from previous highs.
The economist pointed out widening gaps between physical oil prices in Asia and futures markets, suggesting a coming market correction.
He cited global ripple effects, including energy emergencies in the Philippines and financial aid measures in New Zealand.
Hanke also highlighted supply disruptions affecting Taiwan, particularly in helium used for semiconductor production.
He identified Russia as a major beneficiary, due to its role in supplying key commodities restricted by the conflict.
Hanke dismissed intelligence strategies linked to Mossad, stating they failed to destabilise Iran’s leadership.
"The strategy and the objective of Israel and the United States have failed already",
Steve Hanke] said.
He challenged claims that the US is shielded from oil shocks, noting that it still relies on crude imports despite being a net energy exporter.
"Forget the fact that we’re somehow insulated from world prices in oil",
Steve Hanke said.
On fiscal health, Hanke cited US government data showing roughly $6 trillion in assets against $48 trillion in liabilities.
Including long-term obligations such as Social Security and Medicare, he estimated total liabilities at around $136 trillion.
"That means you’re insolvent",
Steve Hanke said.
He warned that rising US Treasury yields signal growing investor concern over expanding deficits and fiscal sustainability.
Hanke explained that higher yields are also influencing gold prices by increasing the opportunity cost of holding non-yielding assets.
He maintained a long-term gold price target between $6,000 and $7,000 for the current economic cycle.
As solutions, Hanke proposed forming a congressional commission to address liabilities and introducing a constitutional debt brake similar to Switzerland’s model.
He concluded that whether policymakers act on these recommendations remains uncertain.