The US Economy and the Iran War

On 18 August 2026, I was on Rachel Blevins’ popular podcast, where we talked almost exclusively about the Iran war. Of course, we discussed the military dimension of the war, but there is little fighting these days between Iran and the US, so there is not much new to say about that aspect of the conflict — at least for the time being! Instead, the focus is more on the economic dimension of that struggle. The US is betting it can strangle Iran’s economy to the point where Iran will concede defeat before the US is forced to do so. At the same time, the US is working overtime to deal with inflation and rising bond yields, which are caused in good part by the Iran war, and which have the potential to badly damage the US economy. Iran is effectively betting that continuing to limit the flow of oil and gas out of the Strait of Hormuz will threaten the US economy to the point where Washington, not Tehran, will cave first. Rachel and I talked just after reports began appearing in the mainstream media about a significant rise in bond yields. This subject has garnered a huge amount of attention since we talked and surely will continue to do so moving forward.