The recent conflict in Iran has shifted from a distant concern to a central problem for the global economy. Over the last few weeks, the disruption to major energy routes and the damage to infrastructure have sent a clear message to all of us. We are moving away from a time of cheap, stable energy and into a period of uncertainty. This situation is more than just a political headline because it acts as a spark for a much larger economic fire that has been building for years.

When conflict breaks out in the Middle East, the first thing we notice is the rising price of oil. We often think of this only in terms of what it costs to fill up a car, but the impact goes much deeper. Everything we buy has to be moved by ship, truck, or plane. When fuel costs more, companies pass those extra expenses on to us. For those of us living in Singapore, we feel this almost immediately through higher electricity bills and the rising price of imported food. Oil is the hidden ingredient in the cost of almost every product we use, and when its price stays high, it keeps the cost of living high for everyone.

This energy shock hits at a time when the global financial system is uniquely vulnerable. For decades, we have relied on a system fueled by massive deficit spending and a growing mountain of debt. This is the Achilles heel of our modern economy. In the United States, for example, the national debt has climbed to about 124% of the entire economy, with trillions more added every year. This was manageable when inflation was low, but the conflict in Iran is now sparking a new wave of rising prices, forcing central banks into a difficult corner. To fight inflation, they must keep interest rates high, which dramatically increases the cost of paying back that massive public debt.

When the interest on the national debt becomes too expensive, it starts to eat up the budget meant for essential services like education, infrastructure, and defense. To keep up with these payments without cutting services, the government is often forced to print more money. This creates a dangerous feedback loop: printing more money to pay off debt devalues the currency, which pushes prices even higher and forces interest rates up again, restarting the entire destructive cycle. Essentially, the more the government borrows to manage its old debts, the more it fuels the very inflation that makes that debt impossible to handle.

We are now entering a reality where the government and the central bank are pulling in opposite directions. While the government continues to spend on military and economic goals, the central bank is trying to pull back to keep inflation from spiraling. This friction creates a high risk of "stagflation"—a painful period where the economy slows down even as the cost of living continues to climb. The old strategy of endless borrowing and easy money is being tested by the hard realities of energy shortages and global unrest. Navigating this path requires us to move away from old assumptions and focus on a more defensive strategy to protect what we have built.

The global financial system has built a massive tower of prosperity on a foundation of ever-expanding debt, which has now become its ultimate Achilles heel.

For decades, this setup worked because low inflation allowed governments to borrow cheaply, but the conflict in Iran is shattering that shield by driving energy prices higher. We are now witnessing the moment where rising inflation and interest rates hit the system’s most vulnerable point: the staggering cost of maintaining that mountain of debt. When interest payments begin to crowd out spending on everything else, the government is forced into a trap of printing more money just to pay its bills, fueling even more inflation.

This marks a fundamental shift away from the era of easy money toward a period of scarcity and currency devaluation. To navigate this, our strategy must move away from traditional portfolios and toward assets that can withstand a world where the old rules of borrowing and spending no longer apply.

In this month’s issue of THE MACRO GPS, we break down the inflation and the currency shifts and moving into future growth areas with better middle-class demographics, clean energy, semiconductors, EVs, Robotics and AI. What this new macro map means for your capital in 2026.

Let’s dive in.

Sincerely,