Nick Hilden
July 15, 2026
ALTERNET
As President Donald Trump’s war with Iran ramps back up, Nobel Prize-winning economist Paul Krugman warns that the conflict has entered a “very scary phase” in which the danger extends beyond “bombs and drones.” As the war spirals out, says Krugman, Trump may bring the fighting back home.
“The U.S. position has been wildly erratic,” wrote Krugman on Wednesday. “First, Trump said he was going to impose a 20 percent toll on all shipping, basically turning the Strait of Hormuz into a U.S. toll booth, which would have been wildly illegal and irresponsible, aside from being impossible. Now he says, no, he’s going to demand that countries invest in the United States, which is also actually wildly illegal. But in any case, it’s never going to happen.”
“And yet,” he continues, “this is extremely scary. The reason to be afraid is not that I think the war is going to come to America. It’s not even that I think the United States is going to seriously try to occupy Iran. We don’t have the troops. We don’t have the missiles. Trump depleted a large share of our weaponry in the course of his failed war so far.”
Krugman explains that he’s most worried because it increasingly looks “as if Trump has given up on trying to extract something that looks like victory.” Just a few day ago, it appeared “that Trump was going to de facto pull out, give up on the project, take advantage of falling oil prices because the strait was sort of kind of open — and try to spin the story about how this was actually an American victory and the economy is great and look at the stock market.”
This plan, asserts Krugman, was both “stupid and doomed,” and was “also kind of amazing because a serious attempt to end the conflict would have required facing up to reality, saying, OK, this war didn’t go well, but America remains great. Sorry about that.” But Krugman says Trump is not “emotionally” capable of admitting such a failure.
Instead, Trump has pivoted back to open conflict and bumbled attempts at extracting concessions, a decision Krugman says is “ominous” in light of the fast-approaching midterms. The return to war means further disruptions, and that Trump can’t rely on short memories and easing gas prices to reduce the headwinds Republicans face heading into the elections.
According to Krugman, “I don’t think it’s a coincidence that just as Trump essentially gives up, not gives up in the sense of abandoning his war, but gives up on trying to achieve anything he can even spin as a positive outcome, that we now have an announcement that this Thursday he’s going to have a primetime speech, which reports say is going to be about election fraud in 2020. Some reports hinting that he might try to declare the two Democratic senators from Georgia somehow illegitimate.”
Krugman says that while no one will believe him, “what is happening is that effectively he’s setting up the pretext, the groundwork for massive interference in the vote this November. That we’re basically seeing the stage set for some kind of attempt to block fair elections, maybe block elections entirely.”
“The fact that Trump is back to bombing Iran is really bad news,” Krugman concludes, “not because I have any real fear that America is going to be at risk from a foreign power, but because I think it signals an enormous risk to us from our own president, our own government. Be afraid, be very afraid.”
Trump’s 'humiliating failures' are even worse than you think: Nobel economist
Alex Henderson
Alex Henderson
July 14, 2026
ALTERNET
Although U.S. President Donald Trump promised a brief military operation against Iran, the war is dragging on after four and one-half months. Liberal economist Paul Krugman is warning that the longer the war lasts, the more it will cause prices for a variety of goods to soar. And in a mid-July column for his Substack page, Krugman argues that the ongoing Ukraine-Russia conflict only makes things worse.
"The U.S. is, once again, bombing Iran while Iranian drones strike shipping," Krugman explains in his Substack column. "Iran, giddy with its success in defying America, is demanding sovereignty over the Strait of Hormuz, while Donald Trump is saying no, he owns the Strait and will collect 20 percent tolls. Folks, this is bad. U.S. national security policy is now entirely in the service of one man's vanity. We got into this mess because Trump thought he could win an easy victory that would let him strut around feeling powerful. Now, we can't get out because he won’t admit that his war has been a humiliating failure."
The former New York Times columnist continues, "The good news is that Trump's temper tantrum will probably do less economic damage than one might have expected — because the cease-fire that is apparently over wasn't doing as much good as one might have expected. The fact is that there is now a disconnect between events in the Strait of Hormuz and the energy prices that matter. This disconnect is coming from a surprising place, another war that was supposed to yield a quick, easy victory but didn't: Vladimir Putin's attempt to conquer Ukraine."
Oil prices, Krugman notes, "rose a lot" after "it became clear that Trump's vision of a splendid little war wasn't going to be fulfilled and that Iran retained the ability to choke off shipping through the Strait (of Hormuz)."
"Millions of barrels of oil a day literally bypassed the Strait via pipelines," according to Krugman. "Suppliers outside the Persian Gulf, including Venezuela, increased production. China sharply reduced its oil imports. And a significant part of world oil demand was met by drawing down inventories. There was, however, another factor: the effective price of oil to consumers — which is the price that matters for demand — rose a lot more than the crude oil prices one usually hears about. Even before the latest crisis that effective price remained far above pre-war levels. And these continuing high prices to consumers kept oil demand low and hence depressed the demand for crude."
Krugman warns that Americans can "expect the pain at the pump to continue and inflation to remain sticky."
"And, of course," the liberal economist laments, "the overarching moral of this story is the immense folly and criminality of a war that has left America and the world in a much worse place than they would have been if Trump and his enablers had just left things alone — or, better yet, had preserved the pretty good deal Iran and Barack Obama had agreed to in 2015."
Although U.S. President Donald Trump promised a brief military operation against Iran, the war is dragging on after four and one-half months. Liberal economist Paul Krugman is warning that the longer the war lasts, the more it will cause prices for a variety of goods to soar. And in a mid-July column for his Substack page, Krugman argues that the ongoing Ukraine-Russia conflict only makes things worse.
"The U.S. is, once again, bombing Iran while Iranian drones strike shipping," Krugman explains in his Substack column. "Iran, giddy with its success in defying America, is demanding sovereignty over the Strait of Hormuz, while Donald Trump is saying no, he owns the Strait and will collect 20 percent tolls. Folks, this is bad. U.S. national security policy is now entirely in the service of one man's vanity. We got into this mess because Trump thought he could win an easy victory that would let him strut around feeling powerful. Now, we can't get out because he won’t admit that his war has been a humiliating failure."
The former New York Times columnist continues, "The good news is that Trump's temper tantrum will probably do less economic damage than one might have expected — because the cease-fire that is apparently over wasn't doing as much good as one might have expected. The fact is that there is now a disconnect between events in the Strait of Hormuz and the energy prices that matter. This disconnect is coming from a surprising place, another war that was supposed to yield a quick, easy victory but didn't: Vladimir Putin's attempt to conquer Ukraine."
Oil prices, Krugman notes, "rose a lot" after "it became clear that Trump's vision of a splendid little war wasn't going to be fulfilled and that Iran retained the ability to choke off shipping through the Strait (of Hormuz)."
"Millions of barrels of oil a day literally bypassed the Strait via pipelines," according to Krugman. "Suppliers outside the Persian Gulf, including Venezuela, increased production. China sharply reduced its oil imports. And a significant part of world oil demand was met by drawing down inventories. There was, however, another factor: the effective price of oil to consumers — which is the price that matters for demand — rose a lot more than the crude oil prices one usually hears about. Even before the latest crisis that effective price remained far above pre-war levels. And these continuing high prices to consumers kept oil demand low and hence depressed the demand for crude."
Krugman warns that Americans can "expect the pain at the pump to continue and inflation to remain sticky."
"And, of course," the liberal economist laments, "the overarching moral of this story is the immense folly and criminality of a war that has left America and the world in a much worse place than they would have been if Trump and his enablers had just left things alone — or, better yet, had preserved the pretty good deal Iran and Barack Obama had agreed to in 2015."
No comments:
Post a Comment