Steve Hanke: US Is Financially Insolvent and Losing the Iran War

• Stacey George
• March 29, 2026
• Policy
• 0 Comments

Johns Hopkins economist Steve Hanke is making a dual warning: the United States government is financially insolvent based on its own Treasury data, and its confrontation with Iran is backfiring on multiple fronts. The claims, laid out in a Fortune op-ed and a series of public statements, arrive as crypto markets register extreme fear and Bitcoin trades near $66,400.

TLDR Keypoints

• Hanke calls the US insolvent: The US Treasury’s FY2025 financial statements show $6.06 trillion in assets against $47.78 trillion in liabilities, a gap Hanke says constitutes insolvency.
• Iran war assessment: Hanke argues the US-led campaign against Iran has caused global collateral damage, including oil supply shocks and economic disruption across Asia, while Iran’s own economy shows signs of resilience.
• Bitcoin relevance: The insolvency narrative feeds directly into hard-money arguments for Bitcoin, even as the Fear & Greed Index sits at 9/100 (Extreme Fear).

Hanke’s Fiscal Warning: Why He Calls the US Financially Insolvent

On March 23, 2026, Steve Hanke, Professor of Applied Economics at Johns Hopkins University, co-authored a Fortune op-ed with David M. Walker, the former Comptroller General of the United States. The piece carried a striking title: “The Treasury just declared the U.S. insolvent. The media missed it.”

Their argument rests on the US Treasury’s own consolidated financial statements for FY2025. As of September 30, 2025, the federal government held $6.06 trillion in total assets against $47.78 trillion in total liabilities. In Hanke’s framing, this net negative position of roughly $41.7 trillion is insolvency by any corporate accounting standard.

“You have a little over six trillion in assets and almost 48 trillion in liabilities. That means you’re insolvent.”

– Steve Hanke, via Bitcoin.com

The Numbers Behind the Claim

The on-balance-sheet figures only tell part of the story. When off-balance-sheet obligations for Social Security and Medicare are included, total federal promises exceed $136 trillion, approximately 5x US annual GDP. These are commitments the government has legally or implicitly made but has no funded mechanism to pay.

Mainstream economists dispute whether “insolvency” is the correct term for a sovereign currency issuer. A government that prints its own currency cannot technically default the way a corporation can. Hanke’s framing reflects a heterodox but well-credentialed position: the US may avoid technical default, but only through money-printing that degrades the dollar’s purchasing power.

Hanke’s Track Record on Currency and Debt Crises

Hanke is not a fringe commentator. He has served as an advisor to heads of state during currency crises and is one of the most-cited economists on hyperinflation and dollarization. His co-author Walker led the Government Accountability Office and has spent decades warning about US fiscal sustainability.

The Fortune op-ed received what Hanke described as “near-total media silence,” a gap that crypto-native outlets were among the first to fill. This dynamic mirrors how emerging crypto regulatory developments often gain traction in digital-asset media before mainstream coverage catches up.

The Iran Conflict: What Does “Losing” Mean to Hanke?

Hanke’s second major claim is that the US-Israeli military campaign against Iran is failing by its own objectives while inflicting massive collateral economic damage globally. This dovetails with his fiscal argument: military overstretch accelerates the insolvency he warns about.

From fuel rationing in Sri Lanka to restaurant closures in India, flight cancellations in Thailand, and food and fertilizer shocks across Asia — the ripple effects of the US-Israeli war on Iran are global.

THE US-ISRAELI WAR’S COLLATERAL DAMAGE IS MASSIVE. pic.twitter.com/jD1WHbQj6T

— Steve Hanke (@steve_hanke) March 21, 2026

Source: @steve_hanke on X

Sanctions, Oil, and the Scorecard

Hanke estimates the Iran conflict has caused at least a 10% global oil supply contraction in the base case. Approximately 20% of world oil normally transits the Strait of Hormuz, where throughput has reportedly fallen roughly 95% since hostilities began.

The ripple effects are tangible: fuel rationing in Sri Lanka, restaurant closures in India, flight cancellations in Thailand, and food and fertilizer shocks across Asia. These disruptions mirror the kind of policy-driven economic friction that governments in other jurisdictions are also navigating.

According to unconfirmed reports attributed to Hanke’s analysis, Iran’s oil exports have actually increased since the conflict began, sold at higher prices with smaller discounts than before the war. The Iranian rial has also reportedly appreciated 6-13% against the US dollar on the black market, though the exact figure varies between sources. If accurate, these data points undercut the narrative that sanctions and military action are weakening Tehran’s position.

How Financial Overstretch Fuels Geopolitical Weakness

Hanke’s two arguments are linked by a common thread: a government running $136 trillion in total obligations cannot sustain indefinite military campaigns without further debasing its currency. The cost of Middle East military posture compounds the fiscal hole that Treasury’s own numbers reveal.

This framing, where military adventurism drives fiscal deterioration, is consistent with Hanke’s longstanding libertarian and fiscal-conservative perspective. He and Walker advocate for a constitutional amendment modeled on Switzerland’s 2001 debt brake as a structural fix.

Why Crypto Investors Are Watching: Bitcoin as a Dollar-Risk Hedge

The insolvency thesis resonates powerfully within crypto markets. Bitcoin’s fixed 21-million supply cap is the direct antithesis of a government printing currency to service $47.78 trillion in liabilities. When an economist of Hanke’s stature says the US is insolvent, it reinforces the core Bitcoin value proposition.

Bitcoin traded at $66,464 at press time, down 0.72% over 24 hours, with a market cap of approximately $1.33 trillion and 24-hour volume near $20.9 billion.

The Crypto Fear & Greed Index reads 9 out of 100, firmly in “Extreme Fear” territory. That reading is consistent with the macro uncertainty Hanke’s warnings describe: fiscal insolvency headlines, war-driven oil shocks, and questions about the dollar’s long-term purchasing power.

Institutional rhetoric around Bitcoin as “digital gold” tends to intensify during periods of fiscal stress, and the current environment fits that pattern. The broader landscape of tokenized investment products continues to draw institutional attention to crypto markets as macro hedges gain relevance.

There is an irony here: Hanke himself has historically been skeptical of cryptocurrency, favoring gold and currency board systems. According to a single source, Hanke projects long-term gold price targets of $6,000-$7,000 per ounce as a result of war-driven inflation. His insolvency argument is being amplified most aggressively by the very crypto community he has often critiqued.

The Hanke and Walker op-ed closes with a concrete policy proposal: a constitutional debt brake modeled on Switzerland’s fiscal rule. Whether Washington listens is another question entirely. For markets pricing in dollar risk, the Treasury’s own balance sheet has already spoken.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.