{"id":3871,"date":"2026-07-24T16:07:59","date_gmt":"2026-07-24T16:07:59","guid":{"rendered":"https:\/\/nextaddressamerica.com\/?p=3871"},"modified":"2026-07-24T16:07:59","modified_gmt":"2026-07-24T16:07:59","slug":"one-economic-concept-reveals-the-true-cost-of-trumps-war-nobel-economist","status":"publish","type":"post","link":"https:\/\/nextaddressamerica.com\/?p=3871","title":{"rendered":"One economic concept reveals the true cost of Trump\u2019s war: Nobel economist"},"content":{"rendered":"
\n

One basic economic concept makes it clear that the true cost of President Donald Trump\u2019s war with Iran extends far beyond the price of oil, and that the hidden inflation could result in \u201ceconomic catastrophe.\u201d This is according to Nobel Prize-winning economist Paul Krugman, who on Friday explained why the economic damage of the ongoing war hinges on more than the price of oil barrels.<\/p>\n

Read more George Will makes scathing case for rejecting Trump AG nominee<\/a><\/p>\n

\u201cYesterday,\u201d writes Krugman<\/u>, \u201cTrump declared<\/u> that the Iran war is going \u2018better than anybody expected could be done.\u2019 He\u2019s delusional, of course. And his delusions are the reason the price of oil is back at around $100 a barrel, and \u2014 as I\u2019ll explain shortly \u2014 the effective price is much higher than that.\u201d<\/p>\n

Krugam asserts that while the economic impacts of the first phase of the war were relatively slight, eased by the world offsetting its oil needs by drawing down inventories, rerouting oil through the Red Sea, and other measures, \u201cthe second Hormuz closure could be worse, for several reasons. Iran\u2019s Houthi allies are now attacking shipping in the Red Sea, threatening that safety valve. Also, inventories are now much lower than they were when the conflict began, and can\u2019t serve as a cushion going forward.\u201d<\/p>\n

\u201cPerhaps the most important thing to realize about the current situation, however, is that oil is more expensive than it looks.\u201d As Krugam explains, \u201cNobody burns crude oil. Oil must be refined into usable fuels, mainly gasoline and diesel. And there\u2019s a global shortage of refining capacity. This partly reflects the war in Iran, but it also reflects Ukraine\u2019s stunningly effective campaign against Vladimir Putin\u2019s energy infrastructure.\u201d<\/p>\n

While the refining capacity shortage has helped keep crude prices down \u2014 \u201cwhy buy crude when you can\u2019t refine it?\u201d \u2014 Krugman asserts that \u201cit means that prices of petroleum products to end users are much higher than one would have expected given the price of crude. The overall \u2018crack spread\u2019 \u2014 the difference in price between a barrel of crude oil and the price of the products into which that barrel is refined \u2014 has exploded, from around $25 a barrel before the war to more than $65 now.\u201d<\/p>\n

Read more Critics slam New York Times for claim Trump shocked staff over Graham loss<\/a><\/p>\n

In this context, \u201cfrom the point of view of end users, this is the same as if crude prices had risen an extra $40 per barrel. In effect, the world is coping with the equivalent of $140 oil even though the headline price is \u2018only\u2019 around $100.\u201d Krugman says that while it doesn\u2019t necessarily guarantee \u201ceconomic catastrophe,\u201d it still could be on the way. <\/p>\n

\u201cLast month\u2019s easing in the inflation rate now looks temporary,\u201d writes Krugman. \u201cWith energy prices surging again \u2014 not to mention the inflationary impact of Trump\u2019s new round of tariffs<\/u>, imposed using the ludicrous excuse that nations aren\u2019t doing enough to stop forced labor \u2014 interest rates will almost surely rise, intensifying the squeeze on families and businesses. Long-term rates, reflecting expected future Fed hikes, are already way up.\u201d<\/p>\n

\u201cThings could be worse,\u201d Krugman concludes, \u201cand they may be about to get worse. The Wall Street Journal<\/u> reports that Trump is in \u2018revenge mode,\u2019 and the U.S. military is surging forces into the Middle East. And if Trump doubles down on failure, drastically escalating his disastrous war, the economic, not to mention human, impacts will get much uglier.\u201d<\/p>\n

Read more \u2018Loaded weapon\u2019: Trump is ready to pull the trigger on suspending habeas corpus<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

One basic economic concept makes it clear that the true cost of President Donald Trump\u2019s war with Iran extends far beyond the price of oil, and that the hidden inflation could result in \u201ceconomic catastrophe.\u201d This is according to Nobel Prize-winning economist Paul Krugman, who on Friday explained w…<\/p>\n","protected":false},"author":1,"featured_media":3870,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-3871","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"yoast_head":"\nOne economic concept reveals the true cost of Trump\u2019s war: Nobel economist - Next Address America<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/nextaddressamerica.com\/?p=3871\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"One economic concept reveals the true cost of Trump\u2019s war: Nobel economist - 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