by Martin Armstrong, Armstrong Economics:
In the past few days, Iran has experienced the biggest protests against the ruling Islamic Republic since it crushed the 2022. The rial has fallen by more than 90%—but that dramatically understates the disaster. The real decline is closer to 97-98% depending on your baseline. The regime is the weakest it has ever been. All its proxies, from Hezbollah to the Assad regime in Syria, have been shattered across the Middle East. Tehran and much of the rest of the country are running out of water; the economy is in sharp decline; and more Iranians are going hungry, especially members of what was once the middle and upper-middle classes.
TRUTH LIVES on at https://sgtreport.tv/
Empires Fall in Economic Crisis
The most recent protests were triggered by deteriorating economic conditions, but they are the most recent manifestation of deeper-rooted public anger against the regime. The immediate trigger for these protests appears to have been a budget bill, rejected by parliament, in which the government proposed removing the preferential exchange rate (285,000 rials to the U.S. dollar)—a mechanism widely viewed as a rent distribution channel. Regime-connected networks profit from the spread between official/preferential rates and the open market. While the preferential rate is widely viewed as a corrupt insider deal for regime-connected networks, many households also feared that removing it—without a credible, transparent replacement—would immediately raise prices for basic goods. That mix of rage at corruption and anxiety about inflation turned the debate over the exchange rate into a trigger for protest.
The rapid depreciation is compounding inflationary pressures, pushing up prices for food and other daily necessities and further straining household budgets, a trend that could be intensified by a gasoline price change introduced in recent days. Currency traders in Tehran quoted the dollar above 1.3 million rials, underscoring the speed of the decline since Dec. 3, when the rial hit what was then a historic low. The timeline of collapse unfolded with accelerating momentum:
December 3, 2025: Rial hit what was then considered a historic low
December 13, 2025: New gasoline pricing system implemented
December 14, 2025: Dollar breached 1.2 million rials
December 16, 2025: Dollar reached 1.31 million rials
December 31, 2025: The Iranian Rial breached a catastrophic psychological barrier. It reached a record low of 1.45 million rials to one US dollar
January 7, 2026: The US dollar quoted at about 1.47 million rials
The historical record is brutal: no government has survived intact when their currency collapsed by 90% or more in a month. The pattern is absolutely consistent across history. When you look at the worst hyperinflations in history, government survival or legitimacy becomes impossible.
Weimar Germany (1923): By late 1923, prices were rising over 30,000% per month, doubling every few days, and this hyperinflation completely wiped out the currency—it had to be replaced with a new Rentenmark to restore stability. This economic turmoil fostered extreme political movements and ultimately played a role in the rise of Adolf Hitler and the Nazi Party The National Interest. The Weimar Republic didn’t survive—it was replaced by the Nazi dictatorship.
Read More @ ArmstrongEconomics.com
