US debt crisis worsens amid Middle East oil shock, exposing fiscal weakness and risk of deficit monetization.

Economist Steve Hanke warns that the US debt crisis is more severe than commonly perceived, with the recent Middle East conflict causing a major oil supply shock that will strain an already insolvent US government balance sheet. The US faces a negative net position of $41.72 trillion, with total obligations exceeding $136 trillion when social promises are included. This fiscal weakness, combined with rising oil costs and potential increased military spending, could pressure the Federal Reserve to monetize deficits, risking economic instability. Hanke suggests legislative reforms as a potential path to fiscal recovery amid these challenges.