You Can't 25bp a Chokepoint

The formulaThe rule that sets the price of money

In 1993, Stanford economist John Taylor gave central banks a recipe. It asks two questions: are prices rising faster than the target, and is the economy running hotter than normal? If yes, raise rates. If no, cut.

On the day the Federal Reserve raised rates, Mohammad Bagher Ghalibaf — speaker of Iran's Parliament — posted the formula with two extra terms: one for each waterway Iran and its allies can choke. He called it the "Straits Taylor Rule."

His claim: part of today's oil price is a fear premium. Iran controls the fear, so Iran controls the premium. And if the Fed reacts to oil-driven inflation, whoever moves oil moves the Fed.

Run the rule yourself

Brent crude $100 Output gap +0.0% Neutral real rate r* 1.0%

Illustrative only: inflation is modelled as a simple function of oil (≈3.4% at $100, matching August's print). Target π* = 2%.

Taylor Rule says the policy rate should be

5.1%

Inflation 3.4% · driven by a barrel no rate hike can refill

A tool built for too much borrowing, used on too little oil.

Step one · the doorsClose the front door. Then the back.

The US and Israel struck Iran on 28 February 2026. Within days Iran declared Hormuz closed. In September, the Houthis seized the island in the middle of Bab el‑Mandeb.

Hormuz is the only sea exit from the Persian Gulf. The main bypass is Saudi Arabia's East‑West pipeline to the Red Sea — but tankers carrying that oil to Asia still pass Bab el‑Mandeb. Hold both, and you hold the front door and the back door.

Close a strait

Both routes open. Fear premium: low.

$6.53Diesel per gallon, week of 21 Sept — a US record, up ~74% from $3.76 before the war

73%Share of US freight hauled by diesel trucks

80%Jump in urea fertilizer prices, Feb → Apr. The Middle East ships nearly a quarter of the world's urea

23%Rise in US airfares year on year by August, as jet fuel roughly doubled

Add it up and you get August's report: prices 3.4% higher than a year earlier, energy 16% higher.

Steps two & three · the hikeThe rule fires. Your wallet pays.

On 16 September the Fed did what the rule demands and raised rates — its first hike since 2023. But a hike cools borrowing. It doesn't move a single tanker through Hormuz.

Two days before the war, the average 30‑year mortgage dipped to 5.98% — the first sub‑6% reading in three and a half years. By 24 September it was 7.03%.

Before the war · 5.98%$2,393monthly

After the hike · 7.03%$2,669monthly

Same house, extra cost$3,312per year

Loan size $400,000

The same squeeze lands on car loans, business loans and credit cards — for the same family already paying more for diesel, food and flights.

Iran makes oil harder to ship.
Expensive oil becomes expensive diesel.
Expensive diesel becomes inflation.
Inflation pushes the Fed to raise rates.
Higher rates raise the cost of America's debt — so it borrows more to pay its own interest.

Step four · the empire's billMore for lenders than for defence

The largest borrower in America is America. On 21 September the federal debt stood at about $40.1 trillion, and every hike makes rolling it over dearer.

In the first eleven months of fiscal 2026, Washington paid its creditors more than it spent on its military.

Interest

$1.05T

Military

$833B

Historian Niall Ferguson calls this threshold "Ferguson's Law": once a great power spends more servicing debt than defending itself, its standing tends to recede. By his count, America crossed it in 2024.

Spain1500s

France1780s, before the revolution

Ottomans1870s

BritainBetween the wars

USA2024

Iran's bet: break America through its bond market.

At some point the Fed must choose how the circle ends: keep hiking until housing, stocks or bonds break — or stop hiking, let prices run, and print to fund the deficit, weakening the dollar.

The counter‑moveAmerica's answer is energy

If Iran's war runs through the bond market, America's runs through the barrel. In February 2025 a National Energy Dominance Council was set up to push US oil, gas and power output as high as it can go.

Look at who went offline in 2026 — and who filled the gap.

17%Qatar's LNG export capacity knocked out after Iranian missiles hit Ras Laffan in March

30%Drop in Russian refinery runs by June, after Ukrainian drone strikes roughly every three days

5.6MBarrels/day of US crude exports in April — a record, 21% above the prior high

33Cargoes of US gas QatarEnergy bought by July to meet its own Asian contracts

Long contracts followed: the EU's pledge of $750 billion in US energy by 2028, and on 1 September a 100‑year deal giving a US‑led company rights to 17 Venezuelan oil fields.

The essay behind this explainer argues that America never needed to fire at anyone's energy itself — in March it hit military targets on Kharg Island but left the oil terminal standing. That reading is the author's interpretation, not a stated policy.

Iran makes oil expensive openly. America profits from it quietly.

America's clock

Measured in energy contracts. Wants expensive oil only until customers are locked in — then cheap oil to cool inflation and shrink the interest bill.

$750B EU energy purchases pledged to 2028
100 yrs Venezuela field rights
⅔ Europe's imported gas from the US this year
2 yrs Bessent: Hormuz becomes "just another body of water"

Iran's clock

Measured in Fed meetings. Wants oil expensive for as long as possible.

—

days to the Fed decision, 28 October 2026

Before both the July and September meetings, attacks on tankers and pipelines pushed oil to about $100.

Energy.Money.Intelligence.

Oil decides inflation. Inflation decides the price of money. And in the same fortnight the Fed hike rippled through mortgages, Washington opened a third front — the one that turns cheap, abundant American energy into the scarcest resource of all: compute and the intelligence it produces.

29 SepWhite House

AI becomes "Super Intelligence"

After a summit with the country's top AI leaders, President Trump signed an executive order telling the federal government to replace "artificial intelligence" and "AI" with "Super Intelligence" and "SI." The executives signed a non‑binding safety pledge, which Trump likened to a kind of constitution.

Seating chart for the Super Intelligence Luncheon in the East Room, Tuesday 29 September 2026. One long table. President Trump sits mid-table between Jensen Huang of Nvidia and Elon Musk, with the Vice President opposite. Guests include Dario Amodei, Greg Brockman, Satya Nadella, Jeff Bezos, Mark Zuckerberg, Sundar Pichai, Lisa Su, Hock Tan, Alex Karp, Director Clayton, Chairman Andrew Ferguson, Scott Kupor and Secretaries Bessent and Lutnick.

30 SepQuantico

Project Meridian

In his State of the Force address at Marine Corps Base Quantico, Defense Secretary Pete Hegseth launched an Autonomous Warfare Command for robotics, AI and drones — then announced Project Meridian, a 120‑day study of how war will change and which weapons and technologies America will need. He called its leaders "the best forecasters of future conflict." Fields named in his memo: AI, autonomy, directed energy, robotics and biotechnology.

Elon MuskPalmer LuckeyNewt Gingrichunder CTO Emil Michael

4 OctTruth Social

The Super Intelligence Force

President Trump announced the "Super Intelligence Force" to coordinate federal work so America keeps leading in the technology — engaging consumers, public‑interest and religious groups, critical‑infrastructure providers and SI companies. It is to be led by Director of National Intelligence Jay Clayton, with FTC chair Andrew Ferguson, Pentagon CTO Emil Michael and OPM director Scott Kupor, reporting to Trump and Chief of Staff Susie Wiles.

Jay ClaytonAndrew FergusonEmil MichaelScott Kupor

One name sits in both rooms: Emil Michael.

The barrel

Iran's lever. Whoever moves oil moves inflation, and with it the Fed's hand.

The bond

America's weak point. $40 trillion repriced at every hike.

The brain

America's new lever. Superintelligence runs on electricity — and the country that sells the world its energy can also power the most compute.

114of 120 days left

The Meridian clock

Launched 30 September. Findings are due within 120 days — around 28 January 2027 — followed, Hegseth says, by a full public rollout.

Three clocks now run at once: Iran's in Fed meetings, America's in energy contracts, and the Pentagon's in days until it publishes what the next war looks like.

Where this reading could be wrong

The Fed weighs many inputs beyond oil — wages, services prices, expectations. Ghalibaf's post is rhetoric; it shows intent to influence, not proof of control.
The "America benefits quietly" thesis comes from the source essay. Washington says it wants lower energy prices, and no one has shown coordination.
Project Meridian has drawn conflict‑of‑interest criticism: Musk's and Luckey's companies hold major Pentagon contracts while the study will shape what the military buys next. Hegseth says it will not set strategy or policy.
The Super Intelligence Force was announced with few specifics on what oversight it will exercise, and the industry safety pledge is not legally binding.
The link drawn here between the energy war and the AI push is an analytical lens, not an official rationale.

What to watch

28 Oct 2026Fed decision. Watch tankers, pipelines and the Red Sea in the fortnight before it.

Brent vs $100The line oil crossed before both the July and September meetings.

~28 Jan 2027Project Meridian's 120 days end; public rollout promised.

Aug 2028Bessent's two‑year horizon for Hormuz to stop mattering.

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