Running on Empty
Week of August 7-13, 2026
Published in conjunction with The Nation magazine, TRACKING THE CRISIS is a weekly round-up from The Democracy Collaborative tracking the administrative, legislative, and other actions of the Trump Administration as well as the many forms of legal and movement response from across a broad range of social, political, and economic actors. TDC is providing this service for collective informational purposes, as a tool for understanding the times during a period of disorientingly rapid flux and change in the U.S. political economy. This round-up is produced by humans, not by Artificial Intelligence. TDC should not be understood as endorsing or otherwise any of the specific content of the information round-up.
TRUMP TRACKER: Administration actions
U.S. Strategic Petroleum Reserve nearly at tank bottom as Trump pivots to ‘half-negotiations,’ economic pressure tactics against Iran; Iran communicates readiness to hold out, keep Hormuz closed until end of Trump’s term in 2029. After weeks of issuing threats of military destruction against Iran with no perceptible result in his favor, Trump has reportedly pivoted to “semi-negotiating” with Tehran, on reports from Administration officials that Iran is close to economic collapse. Meanwhile, Foreign Minister Araghchi said that no negotiations were ongoing with the United States, although “some” messages are being exchanged through intermediaries. Araghchi announced on Sunday that an agreement with Oman over administration of the Strait of Hormuz is in its “final stages” but did not mention reopening the Strait.
On Sunday, the Wall Street Journal broke the story that Trump had privately admitted to senior aides that he would be willing to declare ‘victory’ and end the war in Iran without a nuclear deal if Iran would agree to open the Strait of Hormuz. At the same time, Iran raised its price for reopening the Strait, including: $300 billion in compensation, the release of $100 billion in frozen assets, lifting of all sanctions, the withdrawal of U.S. troops from the entire region, an end to the naval blockade, and transit fees on every ship that traverses the Strait.
Social media news outlet The Hormuz Report reported that Gulf states have “lost faith” in the Trump Administration’s ability to effect an offramp from the war that would result in a return to prewar conditions on the Strait. According to the report, which was relayed from the Wall Street Journal, regional energy producers are “quietly accepting” Iran’s control over the waterway, because the alternative – a return to full-scale war, resulting in the irreversible destruction of their energy production infrastructure – would be far worse.
On Monday, the U.S. Department of Energy reported that the Strategic Petroleum Reserve had fallen to less than 300 million barrels, its lowest level since 1983. DOE officials, while not saying that the SPR had yet hit ‘tank bottom’ levels, expressed confidence that at least one more major drawdown of the United States’ oil reserves would be possible. Officially, the reserve could technically be drawn down to 70 million barrels before an effective ‘tank bottom’ would be reached, where no more oil could be drawn without causing structural issues to the natural salt caverns where the oil is stored; however, a May report from the Government Accountability Office noted that issues with “aging infrastructure” would make the drawdown process increasingly risky, implying that at minimum, the ‘tank bottom’ level would be more than 100 million barrels.
At the same time, analysts at CSIS told Al Jazeera that it would take “at least one to five years” for U.S. defense contractors to replenish the stockpile of long-range missiles and interceptors that has been severely depleted during the course of the war, and that the rate of production of Patriot missiles currently demanded by Washington would not hit its target until at least 2030.
Trump took to Truth Social on Monday to demand ‘compensation’ from Iran for “all of the people that they have killed and gravely wounded with their roadside bombs and many conflicts,” including U.S. troops killed in regional conflicts precipitated by the United States, the families of Iranian protestors, and people affected by the U.S. and Israel’s wars in Lebanon, Syria, Yemen, and Gaza. The official U.S. military death toll from the war so far is 18, with approximately 600 wounded; the Iranian health ministry has reported over 3,300 Iranians killed in the war so far, over half of them civilians, including over 200 children.
The compensation demand appeared to be part of Trump’s renewed emphasis on economic pressure to force renewed negotiations and concessions from Iran. On August 7, Treasury Secretary Scott Bessent boasted in an interview that U.S. sanctions were “suffocating” Iran’s economy and oil production, and a source close to the Trump Administration told the press that “It’s been turned over to Bessent. Let him off the chain; he will destroy their currency.” Iranian Foreign Ministry spokesman Esmail Baghaei responded to Trump and Bessent’s claims on X, saying: “Beyond its sheer pathos, the claim is a stark testament to America’s compulsive addiction to sanctions” and that it is “no longer ‘policy’ – it is ‘habit’; and more dangerously still, it is an addiction that has displaced thought itself.” He added that the real risk is that “American politicians, clinging to this bad habit, will instead strangle their own remaining chances of a less humiliating exit from a crisis of their own making.”
As of this writing, the war is currently considered to be in a deadlocked state of “neither war nor peace.” While Trump has signaled his willingness to “wait it out” until Iran’s economy ostensibly collapses under Bessent’s economic pressure, Iranian media reports that Iran is willing to wait out the war and keep the Strait of Hormuz closed until Iran’s demands are met, or after the end of Trump’s term on January 20, 2029. A post from Majid Shakeri, advisor to Iranian parliamentary speaker and chief negotiator Ghalibaf, articulated the nation’s strategic reasoning thus: “The path to victory is neither fighting nor a deal – it is managing the process of neither war nor peace, up to the point of victory. Publicly confirming negotiations with the U.S. is sheer folly. The winning approach is denial, ambiguity, and strategic patience.”
Crisis aboard the USS Abraham Lincoln deepens as military press reports at least six sailors attempted to jump overboard out of desperation. At least six U.S. servicemembers aboard the USS Abraham Lincoln, now deployed in the Persian Gulf for a record of over 260 consecutive days at sea, have tried to jump overboard amid deteriorating conditions on the aircraft carrier. A report from the Military Times published on Tuesday, August 11, detailed reports from the families of several sailors aboard the ship who have heard from their loved ones about the acute mental health struggles the over 5,000 Marines and Navy sailors aboard the Lincoln have been going through, including inadequate food, broken showers and toilets, contaminated water, and long workdays with lack of downtime.
The USS Abraham Lincoln has been deployed since November 21 and was on a routine mission when the ship was diverted to provide support for the U.S./Israeli war on Iran, which began on February 28. The ship was originally scheduled to break for port in May, but its deployment was then extended with no end date communicated to servicemembers or their families. The Navy Times described accounts from sailors of incidents where servicemembers have jumped overboard and been rescued, as well as dramatic incidents in which servicemembers were spotted trying to jump and were held back by their fellow sailors.
MSNOW released an exclusive report Thursday featuring text messages they received from the wife of a sailor who had jumped overboard last week, expressing that “I think the boat is finally getting to me and i really dont think i can keep up my peace act anymore, you are right about it all not being okay.” The sailor also said that they had been told they would depart for port on July 15th but then the order had been rescinded, at which point he said “my last hope of being home soon was gone.” The wife told MSNOW that her husband had gone to his chain of command as well as the ship’s medical team to voice concerns about his mental health, but was “brushed off.” She was also not informed by Navy officials about her husband’s suicide attempt until at least four days after the incident on August 3, and has not been in communication with him since he was rescued after approximately an hour in the water. In her interview with MSNOW, she said: “I think that it was handled very poorly because they didn’t inform me and they didn’t want me to know, and they’re just trying to cover this up,”
The Army’s media outlet, Stars and Stripes, reported this week that “interviews with active-duty sailors and family members, along with dozens of public social media comments and posts by crew members, describe sailors struggling with exhaustion and declining morale, including reports of suicidal thoughts.” According to the article, normal procedure for an aircraft carrier includes port stops every 30-45 days for resupply, ship maintenance and rest for the crew. However, as former Navy SEAL Matt Bracken noted in an interview with YouTuber Mario Nawfal, the destruction of U.S. bases in the Gulf region by Iranian missiles and drones during the course of the war has disrupted normal supply operations, and finding a port for shore leave has been difficult due to public hostility to U.S. forces in the region. He also described the unique stressors experienced by sailors with long deployments at sea, comparing their living arrangements to “prison-like” conditions, but without the opportunity of a yard to recreate, relax and “look at the sky.”
On Wednesday, August 12, Sen. Richard Blumenthal circulated a letter addressed to Pete Hegseth and Acting Navy Secretary Hung Cao demanding answers not only regarding the reports of multiple suicide attempts aboard the ship, but also the “broader question” of “whether the Navy can sustain the operational tempo now being demanded of its carrier force, particularly as this administration repeatedly commits US forces to conflicts of its own choosing and increasingly relies on aircraft carriers to sustain those operations.” Several Democratic House members also called for immediate addressing of reported conditions aboard the ship, as well as to allow for Congressional oversight visits to investigate the “horrible situation.”
Pete Hegseth pushed back on Thursday, saying the wave of reports on deteriorating conditions on the Lincoln were “completely misrepresented” by the media. He also said, “I have more respect and gratitude for those sailors than anybody. What they do in those high seas in those austere conditions with less port calls – it’s incredible.” Navy officials, in an official statement, said that they had not recorded an uptick in reports of suicidal ideation aboard the ship.
On Thursday, Associated Press reported that the Pacific-based aircraft carrier USS George Washington had departed the Vietnamese port at Da Nang to relieve the Lincoln, one of two aircraft carriers deployed in the Persian Gulf to enforce the U.S. blockade of Iranian ports. Hegseth told reporters that U.S. military forces can maintain the blockade “indefinitely.”
U.S. Treasury undertakes ‘unprecedented’ bailout of Japanese yen in an attempt to rescue collapsing bond markets, exposing extreme fragility in the U.S. economy and the dollar’s reserve currency status amid historically high debt levels. Last Friday, July 31 at a Trump Administration press conference at Camp David, a Reuters photographer happened to capture a handwritten note that U.S. Treasury Secretary Scott Bessent left on the table. The note, placed prominently under Bessent’s nameplate, appeared to show a ‘to-do’ list with only one item: “Buy Japanese Yen (JPY), $5-10 billion.” Hours later, Bessent announced a historic joint intervention to bail out the collapsing Japanese currency, which has been sliding for months and last week fell to a 40-year low of ¥167 against the dollar, its lowest point since 1986 and surpassing even the nadir of the Asian financial crisis of 1997-1998. It was the first time the U.S. Treasury had directly intervened in the Japanese currency market since the Fukushima disaster of 2011.
Finance analysts noted that with the apparent intentional leak, Bessent – a former hedge fund manager for George Soros who had gained notoriety for shorting the yen to make $1 billion in windfall profits during the Asian financial crisis – was resorting to his trader’s playbook to make the unprecedented move. Ironically, as Bessent was now in a position to save the yen rather than make a profit from its collapse, the signal he intended to send to markets regarding stabilizing the yen to potentially stave off a global financial crisis had the opposite effect: undermining investors’ confidence in the ability of markets not only to keep the yen afloat, but also in the safety of the U.S. dollar amid soaring debt and the increasingly volatile U.S. bond market.
The critical significance of the yen in global markets, and its unique potential to trigger a global crisis, has its roots in the yen carry trade, which underpins nearly all forms of investor leverage in global stock and bond markets. With the Bank of Japan keeping interest rates at or near zero for nearly three decades, investors were able to borrow yen at very little cost and convert the currency into U.S. Treasuries or other currency bonds with higher yields, pocketing the difference as profit to reinvest in private stocks. As long as the yield gap between the yen and the dollar remained competitively wide, and growth in the Japanese real economy justified its debt issuance, investors could borrow yen at highly profitable margins. In recent months, however, underlying weaknesses in the Japanese real economy, exacerbated by the oil shock precipitated by the Iran war, has forced the Bank of Japan to steadily raise rates over the last few years, causing a feedback loop where reduced demand for yen has sent yields surging, closing the gap between the yen and the dollar and further reducing demand for yen, threatening to ‘unwind’ the carry trade and trigger margin calls on leveraged investor debt.
With the yen at historic lows, the Bank of Japan has been making strong interventions to shore up the value of the currency by selling their foreign exchange reserves, such as U.S. Treasuries, to buy back yen at unprecedented rates. As the largest holder of U.S. Treasuries in the world, the Bank of Japan’s forced selling of its Treasury reserves has had the effect of flooding the open market with U.S. bonds, where inflation concerns and weak foreign exchange demand has been pushing long-term yields higher and higher, making the cost of borrowing everything in the United States – from mortgages and auto loans for everyday Americans to AI data centers and the ballooning U.S. wartime military budget – more and more expensive.
The military spending demands of the Iran quagmire has sent U.S. debt skyrocketing at record rates; the CBO reports that the national debt has grown by $155 billion per month in fiscal year 2026 to date, and financial analysts estimate that government debt will top a record $40 trillion as early as October, with interest payments set to run even higher than military spending by the end of the year.
So while Bessent and Trump framed the yen rescue as an altruistic act, with Trump calling the bailout a “token of friendship” and saying “we’ll always be there for Japan,” analysts asserted that the real story behind the yen bailout was to save the crumbling U.S. bond market. Since the start of the Iran war, central banks have been liquidating Treasury reserves to buy oil at elevated prices or defend their own dollar-denominated currencies, and are replacing it with gold instead of buying more U.S. debt amid skepticism that the sputtering U.S. real economy will ever achieve enough growth to pay back its ballooning debt at elevated long-term interest rates. This thesis was further borne out as more details of the yen bailout emerged, which reinforced financial markets’ impression that Bessent’s maverick intervention was more of a desperate ‘Hail Mary’ than an act of central bank charity.
The two most telling details were the unprecedented move by Bessent to sell the Treasury’s Euro reserves instead of spending dollars to raise the required funds, and the subsequent pressure he put on Federal Reserve chair Kevin Warsh to expand borrowing limits on an obscure lending program called the Foreign and International Monetary Authorities (FIMA) Repo Facility, created as a stimulus mechanism during the COVID pandemic, that basically prints dollars that central banks can borrow using their current Treasury holdings as collateral, giving the Bank of Japan an alternative to selling Treasuries and pushing long-term yields even higher.
On the other hand, if the FIMA facility is expanded as Bessent wants and the Fed issues more liquidity to bail out the Bank of Japan, it will have the effect of weakening the dollar against Japanese imports, accelerating inflation inside the United States as the cost of imported goods goes even higher for everyday U.S. consumers who have been struggling to afford the skyrocketing costs of living. This would further weaken the real economy and make U.S. Treasuries appear even less attractive as an investment, causing the U.S. government to spend more on debt service and impose further austerity on working people through cuts to social services and ever-increasing interest rates for household borrowing.
Bessent’s intervention only stabilized the Japanese currency for about 12 hours, boosting the yen to about ¥157 to the dollar before falling back to above ¥160 after trading closed; but the effect of the signals Bessent sent to international markets, and the European Central Bank in particular, may prove more lasting at a time when the Iran war has called the hegemony of the U.S. dollar as the world’s reserve currency into question. Bessent’s decision to dump over $10 billion in Euro reserves in a single overnight trade without notifying the ECB broke with international norms of central bank coordination that had been in place since Bretton Woods; HSBC called it a “highly unusual and unprecedented move,” while Fortune was more blunt in calling it “weird and unwise.”
It also comes one week after the ECB announced that its own €57 billion Eurosystem Repo Facility (EUREP), backed by five European central banks (Germany, France, Spain, Italy and the Netherlands), will go live in Q4 2026, signaling the ECB’s intention to position the Euro as an alternate reserve currency as sustained volatility in the U.S. bond market threatens the long-held status of U.S. Treasury bonds as a safe haven for investment.
In the Financial Times, economist Barry Eichengreen notes that Bessent’s use of the euro as a means of preventing the BOJ’s forced selling of dollar reserves has exposed the dollar’s weakening status as the global reserve currency, especially as other central banks have begun to build the infrastructure for their local currencies to serve certain reserve-type functions, such as China’s recent gold buying spree as a means to back the internationalization of the yuan. Euro-denominated bond issuance has increased 30% since 2024, its highest rate since the currency’s inception, and foreign inflows into the Euro outpaced those into the U.S. dollar in 2025 and 2026, having made the Euro a de facto safe haven for global capital even before the ECB debuts its new facility, which will most likely grease the wheels of de-dollarization and capital flight from the United States.
Tracking the Money: Groups sue Trump over Truth Social insider trading scheme; Iranian official calls for Congressional investigation. This week, a lawsuit was filed in federal court against Trump by media outlet The Intercept and watchdog organization Freedom of the Press Foundation for selling premium “millisecond” access to Trump’s market-moving Truth Social posts for a reported $100,000 per month. The lawsuit describes Trump’s new scheme as “profoundly corrupt” and “unconstitutional,” alleging that Trump “stands to gain financially by giving market-moving government information to those who are willing and able to pay his personal company.”
The lawsuit comes after months of reporting on “mysterious” financial transactions on oil futures and predictive market platforms that preceded major declarations by Trump regarding the Iran war, resulting in billions of dollars in windfall profits. On Wednesday, August 12, IRGC senior adviser Brigadier General Reza Naqdi publicly accused Trump, Jared Kushner, and Steve Witkoff of market manipulation related to the war. In an exclusive interview with PBS, Naqdi called for a Congressional investigation into the Trump family and its inner circle over market manipulation in U.S. war operations, saying: "As soon as the stock market closes, they start hostilities. When the stock market opens, they send positive messages to raise stock prices. All the while, they are buying and selling the stocks themselves.” He added, “They don't even work for America. They work for their own interests.”
Iran has previously claimed that it has documented a “pattern of oil market manipulation” involving Kushner and Witkoff, Trump insiders, and the media outlet Axios around news reports of attacks and Trump’s Truth Social posts, amounting to a total of $9 billion in profits from the alleged “insider trading” operation.
MOVEMENT TRACKER
Protests erupt in Texas over DHS border wall construction in Big Bend National Park. Texas’s Big Bend National Park remains an ongoing site of tension as bulldozers recently broke ground for planned construction of a section of border wall that Terrell County Sheriff Thaddeus Cleveland decried as a “boondoggle” and former Texas Land Commissioner Jerry Patterson called “the greatest folly I have been personally knowledgeable about.” The conflict began last fall, when then-Secretary of Homeland Security Kristi Noem issued an order waiving all regulatory restrictions in order to push through border wall construction in the Big Bend area; after significant public backlash, CBP Commissioner Rodney Scott stated in April that CBP would not be building a wall in the park. However, in May, Homeland Security Secretary Markwayne Mullin issued another notice waiving 35 federal laws in order to construct walls and roads through the rugged and isolated area that accounts for only around 1.3% of border crossings, sparking renewed outcry from lawmakers, conservation and outdoor recreation groups, and the broader public alike.
Pushback from Texas lawmakers has been largely bipartisan. Republican Senator John Cornyn wrote Mullin last week urging him to meet with local stakeholders before proceeding with construction; the Texas House Democrats issued a statement last week calling for an immediate halt to construction; Texas Representatives and candidates on both sides of the aisle have decried the project, along with five border county sheriffs in the immediate area. The project is also being faced with multiple lawsuits, including one brought by the Center for Biological Diversity, Friends of the Ruidosa Church, and a local river guide, arguing that the border wall construction would cause irreparable damage to the park’s ecology, and a suit brought by the Presidio Municipal Development District arguing that the construction may impact the Presidio Flood Control Project’s levees, potentially placing thousands of Presidio county residents at risk of flooding. On August 8, the Tohono O’odham Nation declared its Tribal lands closed to non-Tribal members and posted “No Trespassing” signs at its borders, also in an attempt to block DHS contractors from continuing the border wall project.
Protests in Madison, Wisconsin ongoing over police murder of Corey Ruiz. Unrest continues to simmer in Madison, Wisconsin in the wake of the police shooting of unhoused Black resident Corey Ruiz late last month. Wisconsin authorities this week publicly identified the officer who shot Ruiz, in an altercation that came after the man fled on a bike from an interaction with police, as Kiel Baitinger-Peterson, a white officer with 11 years’ experience in law enforcement. Protests erupted shortly after the killing, which was filmed by a bystander and posted online, and quickly evolved into a continuous encampment-vigil at the site of the incident that lasted 13 days before being forcibly broken up by Madison police, resulting in more than 20 arrests of protesters. The shooting has brought renewed attention to debates around race, mental health, and police use of force within the Madison community, and community outcry has prompted many officials to call for transparency and an independent investigation into Ruiz’s death. The city of Madison has announced plans for a road closure Friday to accommodate expected high attendance of Ruiz’s funeral at the Fountain Life Church.
