Signs of Military Failure in Iran: from $40 Trillion in Debt to Toughest Sanctions in History

By reimposing harsh sanctions on Iran, the US is reverting to an exhausted policy that has failed for decades. America’s 40 trillion debt accumulated despite decades of plundering resource-rich countries suggests that Washington needs to try other ways of building a robust economy.

Simon Chege Ndiritu

$40 Trillion Debt Milestone

According to figures from the US Treasury, America’s national debt surpassed 40 trillion on August 18, 2026, for the first time in history. The IMF estimated the country’s debt-to-GDP ratio this year at about 125%. Interestingly, the US GDP value already contains imputed components, meaning the real ratio could be higher. For instance, Federal Reserve Economic Data (FRED) reported a 2022 value of owner-occupied houses equivalent to 7.1% of US GDP figures. Since this is only one component, including other imputed components could push their combined share into double-digit percentages. Therefore, US nominal GDP could be smaller than presented, making the country’s debt-to-GDP ratio even higher. However, the US Treasury Department’s priorities in the face of the skyrocketing debt, as presented by its secretary, Scott Bessent, on August 20, were to economically isolate and ultimately collapse the Iranian government. Bessent announced that the US would impose the toughest sanctions on Iran and did not clarify whether this decision was made because of Iran’s immense oil wealth. Nonetheless, his invoking of equally oil-rich Venezuela as an example, coupled with Washington’s previous wars and sanctions campaigns on other oil-rich countries, cannot be ignored. It seems that while most countries facing hard economic realities choose measures to increase economic output, enhance efficiency, and protect their citizens, Washington instead ratchets up efforts to destabilize governments in oil-rich countries and gain control of their resources.

While most countries facing hard economic realities choose measures to increase economic output, Washington instead ratchets up efforts to destabilize governments in oil-rich countries and gain control of their resources

Expensive War and Decaying Financial Position

About a hundred billion dollars in taxpayers’ money would have been saved, were it not for the US war on Iran. Also, the rise of national debt to 40 trillion might have been delayed, noting that the administration requested about 87.6 billion in supplemental funding due to the war, in addition to 25 billion given to Israel earlier, the bulk of which was used to bomb Iran. Earlier in 2026, the US president, Donald Trump, and Israeli Prime Minister, Benjamin Netanyahu, openly bragged that their goal was to cause a regime change in Iran. This would mean bringing a client regime into power, like in Saudi Arabia or Iraq. Had that been achieved, revenues from over Iran’s 3.3 million barrels per day of prewar crude sales would have been directed to the US Federal Reserve Bank and possibly be used to finance US treasuries and bonds. The resulting puppet regime in Iran would have signed a petro-dollar-style agreement and used Iranian wealth to prop up the US treasury bonds. However, this never happened, and the results are clear for all to see in shaky US financial markets.

When Bessent was outwardly spitting fire and threatening tough anti-Iranian sanctions, that will replace the failed foray for a regime change, he was also grappling with more delicate operations to manage the country’s economy and currency, which were hovering over the abyss. He was dealing with US Treasury yield rates, which had surpassed the levels of the 2007 financial crisis. On August 18, 2026, the US 10-year Treasury bond yields reached 4.75% while the 30-year reached 5.34%, which significantly increased the country’s borrowing cost. Meanwhile, inflation exceeded the Federal Reserve rate of 2%. This was happening at a critical time when the government and firms were borrowing more for military expansion, building AI infrastructure, and reshoring manufacturing. This accelerated rate of borrowing is seen in how the debt grew by a trillion dollars in 5 months. Additionally, the federal budget had a deficit of $2.1 trillion or 5.8% of the GDP, signaling a further increase in debt.

The Treasury faces large interest on its huge debt, averaging $1 trillion annually. Therefore, it not only borrows to meet its expanding deficit, but also to pay its debts and interest, despite the rising costs. To lower the borrowing cost, Bessent announced that the Treasury will double purchases of securities maturing in 10 to 30 years to $4 billion every week, which will be done using money obtained from selling short-term treasuries. This intervention is unlikely to resolve the challenge. Predictably, Bessent’s announcement marginally lowered the yields, with some analysts describing the move as “cosmetic.” While Washington continues to maintain a medieval attitude of gaining resources through war and plunder, its treasury today is not filled with treasure but with ledgers recording financial obligations that must be met at increasing intervals and higher interest rates. Its tough sanctions against Iran are tantamount to imposing a medieval-style blockade, aimed at adding Iran’s resources to US Treasury ledgers. However, the return to economic strangulation means that the military strategy has failed, despite billions invested in the lost cause. Despite this, Bessent invoked the supposed success of a combined military and sanction blockade in collapsing the Venezuelan government and proceeded to postulate that it will happen in Iran. Nowhere is Washington’s desire to use other nations’ resources to sort its poor financial habits clearer.

Can Theft Solve Poor Economic Habits?

Washington has still been unable to utilize the huge Venezuelan crude reserve to turn around its deteriorating financial realities. It cannot invigorate its economy through theft alone. Despite its toppling of the Venezuelan government in January 2026 and effectively taking control of its proven crude reserve of 303 billion barrels (the largest in the world), the US national debt has grown by over a trillion since. While the Venezuelan crude alone would have brought the US over 15 trillion if it were sold at over $50 per barrel, selling such a huge amount in the short or medium term would collapse prices to Zero. Also, Washington’s economy is unable to expand extraction of this oil, explaining why functionaries are rushing to steal Iranian crude, as the latter has well-developed extraction infrastructure. However, Iranians are not eager to see their resources taken by a racial supremacist nation located over 11,000 km away. Washington will need to do more than steal other countries’ resources to pull itself out of its $40 trillion debt hole.

Scott Bessent’s statement of applying dual military and economic pressure on governments and populations of other countries embodies the worst greed and hypocrisy that a country can represent in the 21^st century. It is clear now that the Iranians that Trump was purporting to help, first by supplying them with guns and later by bombing their children and infrastructure, will further be restricted from accessing basics through draconian sanctions. The US administration has been forced to revert to a tired policy of sanctioning Iran, which has been maintained for the last 47 years, without achieving any goal. The situation today is markedly different since Iran has mastered a counter-leverage in its ability to close the Strait of Hormuz, which, in addition to increasing consumer prices in the West, will also reduce dollar-denominated international trade, restricting Washington’s income and worsening its debt problem.

Simon Chege Ndiritu is a political observer and research analyst from Africa