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Strait closure could force Fed to print as Treasury buyers flee

Sunday, April 12, 2026 · from 4 podcasts
Forward GuidanceBTC SessionsJack Mallers ShowBreaking Points
  • Iran's control of the Strait of Hormuz has shattered U.S. maritime dominance, letting allies pay Tehran directly.
  • The oil shock is gutting U.S. tax revenue, forcing the Fed to print money to fund the debt.
  • Japan may dump U.S. Treasuries to pay for $200 oil, triggering a global bond market crisis.

The U.S. can no longer guarantee the free flow of oil, and its closest allies are paying Iran directly for passage. French and Japanese ships now transit the Strait of Hormuz by cutting deals with Tehran, often in yuan or stablecoins instead of dollars. Krystal Ball and Saagar Enjeti noted France even voted against a U.S. use-of-force resolution at the UN, receiving immediate transit clearance in return.

Iran isn't closing the strait but running a sophisticated tollbooth. By allowing some oil through, they avoid a total global collapse while charging a premium and enjoying de facto sanctions relief.

"The 80-year-old bargain of the blue water navy has expired."

- Krystal Ball and Saagar Enjeti, Breaking Points

The economic shockwaves are structural, not speculative. Diesel hitting $8 a gallon forces surcharges on every physical good. More critically, Luke Gromen notes U.S. interest and entitlement costs already exceed 100% of tax receipts. A strait-induced recession will crater revenue further.

The Treasury faces a binary choice: default on obligations or print the difference. Analysts agree the Fed will choose the printing press.

"The system cannot afford high interest rates when it also needs to finance a 40% increase in military spending."

- Luke Gromen, BTC Sessions

This monetization trap accelerates as traditional Treasury buyers flee. Japan, a massive holder of U.S. debt, is an energy importer. Lyn Alden warns that spiking oil prices will force Japan to sell Treasuries to survive, pushing U.S. yields higher in a vicious feedback loop.

Jacob Shapiro argues the war has exposed a fatal asymmetry: Iran's geography and cheap drones nullify U.S. military tech. Every expensive interceptor fired at a $20,000 drone is a loss, and the U.S. cannot move Iran away from the chokepoint.

Washington's strategic failure is China's opportunity. Shapiro notes China built renewable capacity and secured Russian pipelines to survive this chaos. While the U.S. exhausts itself, Beijing watches allies like the Philippines reopen energy talks with China.

The real war isn't in the Middle East; it's for control of the global monetary order, and the U.S. Treasury market is losing.

MarketsMacroEnergyTradeFed
Mentioned:BitcoinChinaFederal ReserveIranJacob Shapiro
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JapanStrait of Hormuz

Source Intelligence

What each podcast actually said

Forward Guidance
Forward Guidance

The Iran War is Accelerating the End of Globalism | Jacob Shapiro • Apr 7

  • The immediate macro impact hinges on ship traffic through the Strait of Hormuz, which recently dropped to near zero but has risen to about 20% of normal levels.
  • Shapiro argues LNG and fertilizer shortages pose greater risks than oil, as Europe's post-Russia energy plan relied on new Gulf capacity and farmers have already missed annual application windows.

Also from this episode:

Politics (4)
  • Jacob Shapiro initially predicted the US-Iran conflict would last less than four weeks, citing Iran's asymmetric advantages in geography and cheap weaponry that overwhelm US high-tech military assets.
  • The US shale revolution removes its direct energy dependence on the Gulf, but Trump's political vulnerability stems from consumer price sensitivity, mirroring Biden's 2022 midterm pressures.
  • China's strategy toward Taiwan focuses on economic isolation and political erosion, not military invasion, a lesson reinforced by watching US and Russian failures in Iran and Ukraine.
  • The Philippines declared an energy emergency due to the Strait disruption, then immediately reopened energy talks with China, signaling how the war pressures US allies toward pragmatic realignment.
Business (3)
  • The Iran conflict accelerates existing trends of deglobalization and supply chain multipolarity, forcing investors to identify regions resilient to energy and food disruptions.
  • Mid-tier petrochemicals like plastics face severe shortages with no strategic reserves, while critical inputs like helium have stockpiles that mitigate immediate semiconductor risks.
  • Shapiro warns that if the conflict persists into May, global economic damage will intensify, with political instability likely following food price spikes in emerging markets.
History (1)
  • Shapiro frames the current era as analogous to the 1890s, a period of great power shifts, energy transition, and technological revolution, not the 1930s path to world war.
AI & Tech (1)
  • He remains optimistic about long-term growth driven by AI, robotics, and a diversified energy transition, arguing investors should develop macro scenarios beyond daily headline noise.
MacroEnergyTradeChinaWar
BTC Sessions
BTC Sessions

The Real War Isn’t in Iran — It’s in the US Treasury Market | Luke Gromen & Lyn Alden • Apr 7

  • Luke Gromen argues the US Treasury market, not the military, is Iran's primary target. He states a prolonged Strait of Hormuz closure risks systemic collapse by disrupting the global energy and financial system.
  • Alden cites Egypt as a leading indicator of crisis impacts, where a tripled natural gas bill forced 9 PM curfews on businesses, devalued the currency by roughly 10%, and curtailed economic activity.
  • Gromen warns of nonlinear supply chain breaks from the energy shock. He argues gross self-sufficiency metrics are misleading, as missing minor components from affected regions can halt entire production lines globally.
  • Alden explains manufacturing's network effect, using a consumer products company example. They found US manufacturers could not replicate Chinese-made parts at any reasonable cost, requiring product simplification.
  • Gromen states military action risks starvation for hundreds of millions by Christmas. He and Alden warn the crisis will cause severe food shortfalls in the global south, as fertilizer prices rise and wealthier nations outbid others.
  • Alden distinguishes between temporary price inflation from supply shocks and permanent inflation from monetary stimulus. She notes initial demand destruction in discretionary spending can precede a debt-driven monetary response.
  • Gromen argues the US faces a fiscal death spiral. With interest and entitlements consuming over 100% of receipts, a recession-induced drop in tax revenue will force a choice between default and monetizing debt.
  • Gromen points to a record $15 billion Treasury buyback and Fed reserve management as evidence of soft yield curve control, aimed at preventing the 10-year yield from breaking above 4.4%.
  • Alden outlines the monetization sequence: breaking funding markets lead to Fed liquidity facilities, then balance sheet expansion, and finally Treasury buybacks. She notes the Fed will act to prevent a failed Treasury auction.
  • Gromen highlights Japan's emerging market behavior, where rising JGB yields relative to Treasuries weaken the yen instead of strengthening it. He monitors the dollar-yen times oil metric as pressure on US yields.
  • Alden explains the global piggy bank mechanism. Energy-importing nations like Japan must sell dollar assets, primarily Treasuries, to pay for oil when the dollar and oil price both rise, transmitting stress to US markets.
  • Gromen defines a US 'Suez moment' as the best-case outcome: walking away, allowing a yuan-for-gold-for-oil system, leading to dollar devaluation, high inflation, yield curve control, and capital controls in the US.
  • Alden argues the dollar system has entrenched longevity due to tens of trillions in dollar-denominated debt. She sees a gradual shift to a multi-polar reserve system, accelerated but not caused by this crisis.
  • Gromen sees gold as the escape hatch from dollar debt. A revaluation of global gold collateral via an oil-linked price surge could allow the world to redenominate claims without a catastrophic financial crisis.
  • Both analysts are cautious on Bitcoin in the near term, correlating it with software stocks. They expect risk asset declines if the crisis prolongs, but see sharp sell-offs from liquidity events as buying opportunities.

Also from this episode:

War (3)
  • Gromen and Lyn Alden agree a swift resolution to the Strait crisis is unlikely. They state even a best-case reopening would cause supply chain disruptions and inflation for three to five months.
  • Gromen's base case for the conflict is administrative hubris, comparing it to kicking a beehive. He cites a credible source suggesting a US strategy to let Iran and Israel mutually degrade, as both threaten dollar hegemony.
  • Alden sides with Occam's razor, stating the administration underestimated Iran after the Venezuela operation. She criticizes a lack of strategic thinking, citing failed Dogecoin policies and tariff overreach.
MacroFedEnergyBanking
The Jack Mallers Show
The Jack Mallers Show

Jack Mallers

We Were Right. Now What? • Apr 7

  • The closure of the Strait of Hormuz, a chokepoint for 15-20% of global oil flow, is causing severe commodity inflation. Brent crude is up 50%, diesel nearly 50%, and jet fuel up 95% according to the data Mallers cites.
  • Mallers argues the US faces a monetary trilemma: forcibly reopen the strait at high cost, negotiate a deal that looks like a loss, or print money to manage the ensuing economic crisis. He believes all paths lead to significant money printing.
  • Mallers cites Jerome Powell stating the Fed will 'look past' the oil price shock, which he interprets as a signal the central bank will not hike rates and may cut them to avoid a sovereign debt crisis given high US interest expenses.
  • He advises financial prudence: earn more than you consume, review debt, turn on Bitcoin DCA strategies, and avoid trying to time the market amid global economic fragility, while maintaining that no one is coming to save individuals.

Also from this episode:

Politics (1)
  • Mallers asserts the US strategy in the Strait of Hormuz has failed, as evidenced by Trump extending military deadlines multiple times and Iran rejecting ceasefire offers while allowing only select ships passage under its terms.
Business (2)
  • March ISM data shows services employment collapsing while prices rise, a classic stagflation signal Mallers calls the Fed's worst nightmare, forcing a choice between fighting inflation or supporting a weakening economy.
  • Mallers connects systemic failures in money, food, and health, arguing fiat currency debasement leads corporations to optimize for cheap, processed food ingredients, which in turn contributes to metabolic disease and rising cancer rates.
Adoption (4)
  • Mallers highlights a shift away from the petrodollar, noting Iran is reportedly allowing ships through the strait in exchange for Chinese yuan or stablecoins, not dollars, due to OFAC sanctions fear, which he sees as a monetary order change.
  • Strike is developing a yield-on-cash product where customer fiat could fund overcollateralized Bitcoin-backed loans, aiming to offer returns above the Fed funds rate by lending to productive Bitcoiners rather than the US government.
  • He believes Bitcoin adoption for payments is limited not by technology but by Gresham's Law and incentives, as people prefer to save appreciating Bitcoin and spend depreciating fiat, especially when credit cards offer cash back and rewards.
  • Mallers frames the current era as a battle for the future monetary order, with Bitcoin representing an open-source, proof-of-work alternative to a potential gold-backed Chinese yuan system or a failing fiat regime.
Science (1)
  • Mallers personally follows a carnivore/keto diet and periodic fasting, arguing it avoids processed foods he links to spiking cancer rates. He cites the Warburg effect, claiming cancer cells are glucose-dependent and ketosis starves them.
MacroEnergyBTC MarketsHealthBanking
Breaking Points with Krystal and Saagar
Breaking Points with Krystal and Saagar

4/6/26: Iran Total Control On Hormuz, Energy Rationing, US Casualty Coverup, Iran Worried About US Nukes • Apr 6

  • Oil prices remain high despite rumors of a ceasefire, with Brent crude at $108 per barrel and WTI crude at $110 per barrel.
  • The US national average for gasoline is $4.11 per gallon, with California prices reaching $5.92. Diesel averages $5.61 per gallon, just 20 cents off its all-time high.
  • Iran has solidified control over the Strait of Hormuz, allowing only approved vessels like those from Iraq, France, Japan, and Oman to pass, reducing traffic to near record lows.
  • Global energy rationing is emerging, with Europe imposing jet fuel restrictions, Bangladesh seeing fuel-related robberies, and Southeast Asian governments mandating work-from-home to conserve fuel.
  • Jet fuel scarcity is an underdiscussed crisis, with BP Italia canceling flights and forward contracts priced at $195 per barrel, threatening to make air travel and cargo radically more expensive.
  • Parsi warns Iran's major escalatory card is attacking Gulf oil infrastructure, which could spike prices to $150-$200 per barrel and cause years-long supply shortages, unlike the current transit bottleneck.

Also from this episode:

War (6)
  • France voted against a UN Security Council resolution for a use-of-force mission to open the Strait of Hormuz, and a French vessel was subsequently allowed through.
  • Sagar argues the US Empire's core function of guaranteeing global trade is effectively over, as allies like France and Japan negotiate directly with Iran for Strait access.
  • Satellite firm Planet Labs has enacted a complete blackout of war imagery from the Iran region at the direct request of the US government, hindering independent damage assessment.
  • An Intercept report alleges a US casualty cover-up, with nearly 750 troops wounded or killed since October 2023 and CENTCOM providing outdated, low-ball figures to the press.
  • Trita Parsi states the Trump administration armed Kurdish militant groups during Iranian protests, which explains the unusual scale of violence from some protest elements at the time.
  • Parsi assesses that Trump's erratic threats, including an Easter message vowing 'hell,' signal desperation and have raised fears among former US officials that he may consider using nuclear weapons.
Elections (2)
  • Voters with a negative view of both parties now favor Democrats by 31 points, a significant reversal from the last election.
  • Trump voter confidence has dropped, with only 62% now 'very confident' in their vote, down from 74% in April 2025.
WarMacroEnergyDiplomacyMarkets

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