I’ve only time for a quick note, trying to put together some coherent thoughts on what’s going on with the war/econ nexus on which I’ve been focusing in recent days.

The right place to start is the oil price, which has been on a crazy ride and as I write, is well off its peak.

The gas price, however, hasn’t gotten the memo and is up to $3.54 today, up from $3.48 yesterday and $2.92 a month ago.

So, where do we go from here? Here’s the bottom line, as I see it. Warning: this requires understanding Trumpian psychology; do not try this at home.

Trump viewed the Maduro operation as pretty much perfection from his perspective. A literal one-night intervention of shock-and-awe to take out a bad guy, impeccably implemented by our armed forces. No spillover into markets, and, if anything, a play for more oil supply. Never mind that the original Venezuelan regime remains intact.

Iran isn’t that. Yes, there was the same decapitation of an enemy leader—and the same intact regime problem—but there’s this problem called the Strait of Hormuz (SoH). By shutting that down, leavened with attacks on other Gulf energy-providing states, Iran was able to hit us, and even more so Europe, in the wallets. All totally predictable, of course, but these folks don’t do that sort of planning.

When confronted with costs, Trump often backs off. That’s the root of the whole TACO [Trump Always Chickens Out] thing, but also the source of his gentle treatment of China, who used their almost absolute control of the refining of “rare earths”—key inputs into much of our tech and defense production—to back him down.

In this case, Iran is flexing its Strait of Hormuz control, and this raises the economic costs for the rest of the world and the political costs for the Trump admin and their Congressional allies. We can’t know which way this will bounce, but markets seem convinced that the admin is truly about done with this adventure.

If so, what a mess! Iran will have learned that, yes, the US/Israel coalition can hit hard (which they already knew), but at least the senior partner will back off if you shock the oil supply. They need not worry about regime change or even about dialing back of their nuke pursuits.

The provisional punchline is this: give a world-class army to an authoritarian leader who a) faces no constraints from Congress and is served by a bunch of yes-man lackeys and b) fully discounts the future, meaning doesn’t do the geopolitical chess exercise of weighing the many possible implications of his interventions, and he will deploy that army to do one-hit wonders. Take out a global bad guy, claim credit, move on to the next bad guy.

That “worked,” from his perspective, in Venezuela. It did not work in Iran.

Jared Bernstein is a former chair of the White House Council of Economic Advisers under President Joe Biden. He is a senior fellow at the Council on Budget and Policy Priorities. Please consider subscribing to his Substack.

Reprinted with permission from Econjared.