The US-Israel war on Iran is expensive. It’s expensive in terms of human lives, first of all. It’s expensive too, in pure currency – about $12bn a week for the US. And it’s expensive in how it’s causing the tectonic structures that underpin our global economy to shift. De-dollarization, the name given to the process countries undertake in unwinding their reliance on the dollar, promises to reorder the world, reducing American power globally. Its impact will be felt domestically in what we pay to borrow and whether we can afford to borrow at all.
Iran’s near-total blockade of the strait of Hormuz has had a dramatic impact on the prices of oil and natural gas, which puts major inflationary pressure on the economy of every country in the world. Practically, inflation makes people and businesses poorer, a process that reinforces itself if it’s not stopped (which is partly why central banks exist).
