alt Hacker NewsThis supports my hunch that the current Iran war creates a lethal trifecta that could potentially cause a dollar collapse. 1. Massive military overspend. 2. Petrodollar squeeze (Strait of Hormuz). 3. Allies pulling out: Europe and the Gulf diversifying both their investments and defense purchases.
#1 creates oversupply of dollars and #2 and #3 lower demand. This study supports the idea that wars can indeed destroy purchasing power.
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One of the goals of the Heritage Foundation is a weak dollar. They believe they can bring manufacturing back to the US this way. I don't think they're right. I do think they will continue weakening the dollar.
In my worst cynical days, I think that's exactly the plan.
Erase US government debt via hyper-inflation, and let the people that will still have liquidity buy all remaining assets the middle class will be desperate to sell at pennies on the dollar.
#1: US military war spending concerns are largely overblown. It's expending what it already has. The spending is mostly on its own internal industry i.e. the US economy (with due respect to broken window fallacy). It arguably makes it all back from the increase in oil prices.
It's a very different thing to fire a $5m missile that you imported vs one that you made domestically with all-domestic components and labor.
You should check your hunch against the reality, at least periodically. The US dollar has strengthened since the current US-Iran conflict started.
Just noting: it's interesting to see the term "lethal trifecta" used here given the relatively recent coinage relating to LLM security: https://simonwillison.net/2025/Jun/16/the-lethal-trifecta/
anyone who sees this are early early early, yes it's very likely to happen, probabilistically.
> Europe and the Gulf diversifying both their investments and defense purchases.
With what? The euro, yuan? Or weapons from france?
I hate to admit it, but it's much less that the US is great because it's the reserve currency, and much more that the world reserve currency is the dollar because the US is what it is.
Weapons are expensive, and it only makes sense to buy them from a country that specializes in them. And a country that makes weapons at huge scale is likely to be big enough tilt the direction of the country to be all the ugly things the modern US military industrial complex is.
Add the fact that some countries are using other currencies to trade oil and goods.
Also, some countries started to use other systems beside SWIFT to transfer money.
I think the idea is crash the stock market to force interest rate drop to refinance the massive debt.
It could also be a play to squeeze China or similar nation dependent on middle east oil. USA semicon production not ready, if there were signals that China was ready for a play on Taiwan maybe this is a gambit to buy some time.
Iran is also playing its own Uno card here by saying that it would consider allowing some oil and gas shipments through the Strait if they have been bought with Chinese Yuan, than the US dollar. ( The Islamic Republic may grant safe passage to oil tankers if the cargo is traded in Chinese yuan - https://www.lbc.co.uk/article/iran-allow-chinese-ships-hormu... ).