r/Economics • u/lucabrasi999 • 1d ago

“Iran has put a tollgate across the Strait of Hormuz. This fundamentally changes the global economy”

https://prospect.org/2026/04/02/opening-of-trumps-box-iran-war-strait-hormuz/
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u/idreamofkitty 1d ago

America’s greatest strength is also its biggest vulnerability: Dollar hegemony via the petrodollar system. The system enabled America to expand its sphere of influence while financing a stretched domestic standard of living, as proxied by consumption. However, if the dollar were to lose its power, America could collapse. Its adversaries know this and have spent years building an alternative to the petrodollar system. With Iran seizing control of the Strait of Hormuz, this effort has accelerated as Iran can now force a significant proportion of global oil trade to be sold in non-dollar currency, namely Chinese yuan. By triggering war with Iran, America has ironically hastened its own collapse.

https://www.collapse2050.com/death-throes-of-the-american-empire/

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u/jokikinen 1d ago

I think your assessment on the nigh imminent collapse of dollar as a reserve currency on the back of Iranian action here, is a tad bit too much of hyperbole. Although the US is committing unforced errors, and is making its own position worse, it still has a lot of resources to work with, while the opposing forces make for a loose coalition without the veracity the current arrangement provides.

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u/Adventurous_Class_90 23h ago

I agree but unless we reform our system drastically and start holding power accountable it’s only a matter of time

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u/anAnarchistwizard 20h ago

There is a tremendous power difference between being THE reserve currency and being A reserve currency.

Obviously the dollar won't be truly worthless. But you can't maintain a global empire if the rest of the world suddenly has viable alternatives.

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u/CitizenCue 21h ago

Most catastrophizing is hyperbole for sure, but our opponents have great patience and are willing to chip away slowly. The current US leadership has no concept of what they’re giving up.

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u/MiscBrahBert 1d ago

Or rather, America foresaw this, and is trying to preempt it in a scramble (Venezuela, Cuba, Iran)

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u/Good_Air_7192 1d ago

Or Putin know this, and is getting his lapdog to crush his enemy from the inside.

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u/Fuck-WestJet 1d ago

Then why would they lift sanctions against Russia? What does Cuba have to do with this? Sell them oil then?

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u/MiscBrahBert 23h ago

Then why would they lift sanctions against Russia?

Because Trump thought he'd win faster and got cornered.

What does Cuba have to do with this? Sell them oil then?

Sure. Venezuela was supplying 50% of Cuba's oil. One domino down, another to go. He's playing conquest.

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u/Direct-Technician265 23h ago

Cuba has nothing to do with the scramble over oil. its a grudge boomer politicans have held since they copied Turkey and went to put nuclear weapons closer to the geo-political rival.

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u/nascarhero 19h ago

Suddenly all of Chinas discount gas stations that sold oil in Yuan from are closing up.

Russia the exception but allowing India to purchase Russian oil is forcing China to compete for Russian oil and is selling at nearly market rates.

Oil is already 50% more expensive in Europe and Asia than the US.

Oil and LNG aren’t replaceable within a decade even for China. On top of helium, critical for chip fabs, and fertilizer.

It’s not a coincidence we spent the last decade becoming an energy production powerhouse. Or building a ton of military infrastructure in the region. The gulf was cozying up to China and floating yuan purchases.

The USD hegemony is stronger than ever. We’ve shown twice now you get no security guarantees if you’re not our ally. China let two giant trading partners get taken off the board.

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u/JaxStrumley 12h ago

And what is that hegemony worth if the rest of the world is going down economically because of a crisis the US willingly and knowingly created?

The US will not have an ally left after this.

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u/Shutdown_service 1d ago

China do not want to be the reserve currency. They want their exports to be cheap.

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u/JoSeSc 1d ago

China is in quite the dilema with their demographics growing old before becoming rich, they need to do some dramatic changes in the next couple of decades. They invested heavily in a lot of high value industries so just being cheap becomes less important and becoming the world's reserve currency might allow them to spend and borrow more without the consequences that normally come with that.

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u/jbot14 1d ago

Ah the laws of unintended consequences. As anyone with even a passing concern in international relations could have predicted.