The Battle of Iran

World War Three Is Already Here. You Just Aren't Being Told.

Lodestone Pacific Advisors July 2026

The United States is at war with Iran. This much is on the nightly news.

What is not on the nightly news, and what you will not hear from any anchor on any American cable network, is the actual nature of the conflict you are watching. The framing you are being given goes something like this: a regional dispute over nuclear ambitions, an extension of decades-long Middle Eastern tensions, a decisive show of American military power against a rogue state. This framing is structurally wrong. It mistakes one battle for the entire war.

The Battle of Iran is one theater of operations within what China and Russia already openly describe as World War Three.

The leaders of the two largest military powers opposing the United States are saying this out loud, in their own languages, through their own state media, to their own populations. China's foreign ministry and Russia's foreign ministry have issued a steady drumbeat of coordinated statements since the war began in February 2026, framing the conflict in Iran as part of a broader struggle between what they call "the resistance" and the American-led hegemonic order. Wang Yi and Lavrov held back-to-back calls in the opening days of the war. Russia's foreign ministry called it "reckless" and warned of humanitarian, economic, and even "radiological" disaster. China declared the attacks a violation of international law and fundamental norms, and condemned the assassination of a sovereign country's leader.¹ Former NATO deputy supreme allied commander Richard Shirreff has warned publicly that if the US gets "sucked into a ground war in the Middle East," China and Russia would "waste no time" exploiting the situation.² Iran's own foreign minister has openly stated that Russia and China are providing military cooperation to Tehran, including intelligence sharing and electronic warfare support.³

The framing from both capitals is consistent and deliberate. This is about the architecture of global power.

The only population on earth that does not understand this is the American public.

The Most Effectively Propagandized Nation in History

That last sentence will strike many readers as provocative. It should not. It should strike you as obvious.

Americans tend to associate the word "propaganda" with authoritarian states. With North Korean loudspeakers and Soviet posters and Chinese internet censorship. The assumption is that propaganda requires a heavy hand, a visible apparatus of state control. But the American system is far more sophisticated than anything the Soviets ever built. It does not require a Ministry of Truth because it has something better: a private media ecosystem whose profit incentives are perfectly aligned with the informational needs of the state. There is no need to censor when you can simply choose what to amplify. There is no need to lie when you can omit. The result is a population that is not uninformed but misinformed, not silenced but misdirected. Russia, Iran, and China all employ cognitive warfare and weaponized narratives, but the American version is unique in that the population genuinely believes it is immune to such influence, which is precisely what makes it so effective.⁴

Consider what you are not being told.

You are not being told that the war in Iran has depleted more than half of America's stockpile of at least four critical munition categories. According to CSIS analysis, the US has expended at least 45% of its Precision Strike Missiles, roughly half of its THAAD interceptors, nearly 50% of its Patriot air defense interceptors, and approximately 30% of its Tomahawk cruise missiles.⁵ In 39 days of fighting, the US struck more than 13,000 targets and burned through an estimated 3,700 to 4,500 advanced munitions.⁶ The cost ran roughly $1 billion per day.⁷

You are not being told that replenishing these stockpiles will take between two and five years. Not because of funding constraints. Because of production capacity. The Pentagon is currently receiving roughly 15 new Tomahawks and 20 new Patriot missiles per month. Zero THAAD deliveries are scheduled for 2026.⁸ As former Pentagon comptroller Elaine McCusker put it, "the timeline for replenishment of munitions for the most part will be measured in years."⁸ And as retired Marine Colonel Mark Cancian of CSIS warned: the missiles most useful in a potential conflict with China over Taiwan are now the ones in shortest supply.⁹

You are not being told that the United States cannot restock these weapons without inputs controlled by China.

This is the fact that changes everything. And it is the fact most aggressively kept out of the public conversation.

The Supply Chain Trap

Every F-35 requires more than 900 pounds of rare earth materials. A single Virginia-class submarine contains about 9,200 pounds.¹⁰ Tomahawk cruise missiles, Patriot interceptors, THAAD systems, Predator drones, radar systems, precision-guided munitions of every variety: all of them depend on rare earth magnets, and specifically on neodymium-iron-boron (NdFeB) magnets that require heavy rare earth elements like dysprosium and terbium to maintain magnetic performance under combat conditions.

China controls approximately 60% of global rare earth mining, over 90% of separation and processing, and more than 93% of magnet manufacturing. The US depends on China for roughly 70% of its rare earth imports.¹¹

And China has been systematically tightening the valve. Gallium and germanium export controls came in 2023 and 2024, targeting semiconductor and radar readiness. Antimony controls arrived in late 2024, targeting ammunition primers. Rare earth and magnet controls landed in December 2025, targeting F-35 actuators, EV motors, and wind turbines. Tungsten controls followed in 2025, targeting armor-piercing rounds and industrial tooling. Then, in late 2025, China applied its own version of the foreign direct product rule to rare earth magnets for the first time, requiring export licenses for any foreign-produced magnets containing even 0.1% Chinese-origin rare earth materials.¹² These are the most consequential export measures Beijing has ever imposed on the defense sector. Companies with any affiliation to foreign militaries are now largely denied export licenses.¹² Reports from the South China Morning Post have suggested the US may have only weeks or months of certain rare-earth inventories remaining for defense manufacturing.¹³

Craig Tindale, whose work on Constraint Warfare has been foundational to our analytical framework at Lodestone, coined the term "golden screws" for this dynamic: the specific, non-substitutable inputs required to keep a machine running. The targeting of these golden screws is the deliberate activation of strategic leverage accumulated over three decades.¹⁴

Tindale also articulated a principle that deserves wider recognition: the most effective constraint warfare requires no action by the enemy. They watch as the West blockades itself.

In September 2025, US Magnesium in Rowley, Utah, the sole domestic producer of primary magnesium, went bankrupt. Magnesium is the reductant required to produce titanium sponge. Without titanium sponge, you cannot build F-35 wing spars. China did not need to bomb that plant. They only needed to control the alternative supply price until the company failed.¹⁴ The United States imposed a blockade on its own aerospace defense sector.

The Pentagon knows all of this. The GAO estimated the cost to fix these supply chain gaps at $18.5 billion, a rounding error in a trillion-dollar defense budget.¹⁰ And yet the domestic processing infrastructure will not be fully stood up until 2027 at the earliest, per the Pentagon's own timeline.¹³ As one defense executive put it: you cannot fight a twenty-first-century war with twentieth-century supply chains.¹³

So ask yourself: if you were China, and you had spent thirty years building a chokehold on the materials required to manufacture Western weapons systems, and you watched your primary adversary expend half its advanced munitions stockpile in a war it cannot win against a country that your ally is resupplying with intelligence, drones, and ballistic missiles... would you call this a coincidence?

Or would you call this the plan?

The Strategic Logic of Attrition

We need to name what is happening clearly, because it is the most consequential military dynamic of our time and almost nobody in the American media is willing to say it.

China and Russia are running a coordinated strategy of attrition against the United States across two active theaters: Iran and Ukraine. The objective in neither theater is to win the war outright. The objective is to make both wars last as long as possible, consume as many advanced Western munitions as possible, and degrade American military readiness for the only conflict that actually matters to Beijing: Taiwan.

This is basic strategy. The kind of thing that gets taught at war colleges. And the evidence is everywhere.

Iran fired more than 2,000 drones and 500 ballistic missiles in the first four days of the war alone.¹⁵ Those numbers dropped by 83% and 90% respectively after the first week, not because Iran ran out of capability, but because the initial barrage had already forced the US to expend its most expensive and most strategically valuable interceptors. A $20,000 to $50,000 Shahed drone absorbed a $4 million Patriot interceptor.¹⁶ The cost asymmetry is staggering. And then the US Navy paused $14 billion in approved weapons sales to Taiwan because it needed the munitions for the Iran theater.¹⁷

Read that again. The US paused weapons deliveries to the very island it is supposed to defend from China because it was burning through those weapons in a war against China's ally.

Luke Gromen, whose FFTT research has been formative to our thinking at Lodestone, articulated the PPP GDP dimension of this dynamic years ago: when bullets start flying, Purchasing Power Parity GDP is the metric that matters, not nominal GDP. China's PPP GDP sits at roughly $35 trillion. The US is at $28 trillion. Russia adds another $6 trillion. The BRICS core occupies positions one, three, and four in global PPP rankings.¹⁴ This isn't a minor trade bloc. It represents the majority of global manufacturing capacity and commodity production.

When the guy with the bigger PPP GDP can produce a hundred missiles for the same cost you spend on one really sophisticated one, the math of attrition warfare gets existential. Right now, the math is working against the United States.

Two Theaters, One War

Ukraine and Iran are the same war. They serve the same strategic function for the Russia-China axis. They are the Western Front and the Eastern Front of a global conflict that has been underway since at least 2022, when G7 nations froze $300 billion in Russian reserves and demonstrated to every non-aligned government on earth that dollar-denominated assets carry confiscation risk.¹⁴

In Ukraine, the objective was always endurance, not conquest. Russia has absorbed enormous losses and continues fighting because the strategic calculus is straightforward: every Patriot battery, every HIMARS round, every Stinger missile, every Javelin sent to Ukraine is one that will not be available for the defense of Taiwan or the broader Indo-Pacific. The war has dragged on for more than four years. As of June 2026, it has now lasted longer than World War One.² Every month it continues, Western munitions inventories decline.

In Iran, the dynamic is identical but compressed. Thirty-nine days of intense combat burned through what took years to accumulate. The ceasefire bought a pause. Now fighting has resumed.⁸ And every Tomahawk and JASSM fired at Iranian targets is one fewer available for the Taiwan Strait.

The genius of this strategy, if you can call it that, is that it exploits America's own instincts. The US is constitutionally incapable of fighting a limited war. When it engages, it escalates. It brings overwhelming force. It expends its most advanced and expensive weapons systems first. This is doctrine. And China knows it.

So China watches. It provides diplomatic cover. It buys Iranian oil to keep Tehran's war economy functioning.¹⁸ It restricts the rare earth exports needed to restock the missiles being fired. And it waits for the inventory numbers to hit the levels where a move on Taiwan becomes feasible.

The 2027 window has been discussed in defense circles for years. TSMC produces 90% of the world's advanced semiconductors. A disruption would cost the global economy $2.5 trillion annually.¹⁴ But China faces a closing demographic window: its working-age population peaked in 2011, will decline 25% by 2050, and its fertility rate has fallen to 1.09.¹⁴ If China intends to take Taiwan by force, the window is narrowing. And the United States is burning through the weapons it would need to stop them. In a war on the other side of the world. Against Iran.

The Fentanyl Parallel

The military dimension is the most visible, but it is hardly the only front in this war. The full picture requires understanding that World War Three is being fought across every domain simultaneously.

Financial warfare: central banks have purchased over 1,000 tonnes of gold per year for three consecutive years, the largest coordinated exit from the dollar system in modern monetary history. The USD share of global reserves has fallen to 56.32%, the lowest level in thirty years. Eighty countries determined in 2023 to move toward local currency trade settlement. Russia conducts over 90% of its trade in rubles and non-sanctioned currencies. China's yuan invoicing now exceeds 54% of its imports and exports.¹⁴

Economic warfare: China's export controls on rare earths, antimony, tungsten, gallium, and germanium are precision strikes against the American defense industrial base, aimed at the "golden screws" that Western manufacturing cannot substitute.¹⁰ ¹²

And then there is the fentanyl epidemic, which has killed hundreds of thousands of Americans over the past decade and traces directly to precursor chemicals manufactured in China. This is the reverse Opium War. In the nineteenth century, Britain flooded China with opium to extract trade concessions and weaken the Qing dynasty. In the twenty-first century, Chinese chemical manufacturers flood the United States with synthetic opioid precursors that have hollowed out communities, overwhelmed public health systems, and consumed law enforcement resources at staggering scale. Whether this constitutes deliberate state policy or simply tolerated externality is debatable. That it produces strategic benefit for Beijing is not.

Every domain. Every vector. All simultaneously.

What This Means

Here is the part where I'm supposed to offer a reassuring conclusion. Some version of "but American resilience will prevail" or "our institutions will adapt." I do not have that conclusion to offer, because I do not think the evidence supports it.

What the evidence supports is this: the post-1945 American hegemonic order is being dismantled, methodically, across multiple domains, by adversaries who understand the physical world better than America's financial elites do.

At Lodestone, we have spent the better part of two years building an analytical framework around a single organizing principle: physics constrains finance, not the other way around. Energy is the ultimate economic denominator. The causal hierarchy runs from thermodynamics to energy to matter to infrastructure to economic output to financial claims. When financial claims exceed what physics can deliver, it is the claims that break.¹⁴

This framework, which we call "Long the Substrate, Short the Abstraction," is more than an investment thesis. It is a description of how the physical world actually works. And reality is asserting itself with increasing violence.

The monetary regime is fracturing. The supply chains are fracturing. The military stockpiles are being depleted faster than they can be replenished, by adversaries who control the inputs needed for replenishment. Meanwhile, the expert class in the United States continues to interpret these developments through outdated models. Supply constraints get treated as demand fluctuations. Structural breaks get classified as temporary distortions. The frameworks remain intact while the underlying system changes beneath them.

The American public is not being told any of this. Not because the information is classified. It is published in CSIS reports, GAO audits, and defense trade journals. It is discussed openly in Chinese and Russian state media. It is visible to anyone willing to look. But looking requires abandoning the narrative frame that American media provides, and that frame is comfortable. It tells you that Iran is a regional problem. That Ukraine is about democracy. That China is a trade competitor. That the dollar is safe. That the arsenal is deep.

The frame is wrong. The war is here. It has been here for years. And the people running the other side of it understand the physical world, the thermodynamic constraints, and the fragility of American supply chains far better than the people running ours.

The ledger is closing.

Recognition precedes adaptation.

Long thermodynamic reality.

Logan McCabe

Lodestone Pacific Advisors

Weathering storms and building resilience in a fragmenting world.

Sources

• The Washington Institute, "Tracking Chinese and Russian Statements on the Iran War," April 25, 2026.washingtoninstitute.org
• The Week, "Is World War Three Coming? What Countries Will Be Involved?" July 2026.theweek.com
• Armstrong Economics, "Iran, Russia, China, and the Emerging Axis," March 17, 2026.armstrongeconomics.com
• Small Wars Journal, "Narrative as a Weapon: Russian, Iranian, and Chinese Approaches to Cognitive Warfare," March 19, 2026.smallwarsjournal.com
• CNN, "US at Risk of Running Out of Missiles if Another War Breaks Out After Depleting Stockpile in Iran Operations," April 21, 2026.cnn.com
• Al Majalla, "How the 2026 Iran War Depleted America's Munitions," May 26, 2026.en.majalla.com
• Al Majalla, ibid. Estimated total cost of $28-35 billion over approximately 39 days of conflict, per CSIS and AEI analysis.
• CNN, "Iran War Heats Up While US Weapon Stocks Remain Depleted," July 12, 2026.cnn.com
• CSIS, "Last Rounds? Status of Key Munitions at the Iran War Ceasefire," May 27, 2026.csis.org
• Modern War Institute at West Point, "Minerals, Magnets, and Military Capability: China's Rare Earth Weaponization Should Be a Wake-Up Call," July 10, 2025.mwi.westpoint.edu
• CNBC, "How China's Rare Earth Restrictions Could Disrupt the US Defense Industry," October 14, 2025.cnbc.com
• CSIS, "China's New Rare Earth and Magnet Restrictions Threaten US Defense Supply Chains," October 14, 2025.csis.org
• Yahoo Finance / South China Morning Post, "Chinese Publication Claims US Has Two Months of Rare Earths Left," March 24, 2026.finance.yahoo.com
• Lodestone Pacific Advisors, Strategic Investment Framework, v10.0 (2026). Internal research document integrating analysis from Craig Tindale (Constraint Warfare, Hard Bifurcation, Golden Screws), Luke Gromen / FFTT (PPP GDP warfare, fiscal dominance), Zoltan Pozsar (Bretton Woods III), Kathleen Tyson (reserve currency dynamics), and others.
• CSIS, "Last Rounds?" ibid. Iran launched 2,000+ drones and 500+ ballistic missiles in the first four days; launches declined 83% (drones) and 90% (ballistic missiles) after the first week.
• Fortune, "The US Military Has Depleted Half Its Stockpiles of Its Most Expensive Munitions in Iran War," April 24, 2026.fortune.com
• Al Jazeera, "Rebuilding US Weapons Stockpile May 'Take Years' Post-Iran War," May 28, 2026.aljazeera.com
• The Washington Institute, "Two 'Axes' Converging in Iran," March 18, 2026. Oil exports to China have been helping Russia and Iran weather Western sanctions, generating more than $50 billion per year for Tehran.washingtoninstitute.org

The frameworks and analysis presented here represent the author's current thinking and are subject to revision as new information becomes available. This content is for educational and informational purposes only and does not constitute investment advice.