International Economy Diversification of central bank reserves into larger holdings of euros is much in the news these days. Quite apart from the widening U.S. trade and payments deficit, the Iraq war has created a backlash that has led some Arab and Islamic politicians to urge OPEC countries to price and sell their oil in euros and shift their central bank reserves out of their present heavy weighting in dollars. If this were the 1960s, central banks throughout the world would be cashing in their dollar inflows for gold. But since the United States went off gold in 1971, a built-in market for U.S. Treasury bills has emerged as the only practical alternative to gold. The question is whether the central bank market for U.S. Treasury securities is infinite. If it is, then ...
Chile's Failed Economic Laboratory
an Interview with Michael Hudson for Counterpunch By STANDARD SCHAEFER In acknowledging the recent thirtieth anniversary of the US-sponsored coup that brought to General Augosto Pinochet to power in Chile, a number of articles and opinion pieces have appeared. The Nation recently cast the incident in somewhat sentimental terms. Such efforts to turn Salvador Allende's death into a martyrdom for democratic socialism obscure the most important legacy of the coup. Not only did it give rise to one of the twentieth century's most violently repressive regimes, it inspired subsequent financial dictatorships to use privatization schemes to consolidate their power. As economic historian Michael Hudson pointed out to me, a recent interview in the Moscow Times (October 1, 2003: "Corruption, Chechnya: The Price We Paid for '93" by Ruslan Khasbulatov) confirms this. Recalling the ...
Tech Bubble: Who Benefited?
An Interview with Michael Hudson for Counterpunch By STANDARD SCHAEFER During the boom of the 1990s, neoliberal economists and the financial press promoted the the high tech revolution for its ability to reduce production costs. As long as government did not interfere with markets, technology would lead to an improvement in the quality of life. The ultimate beneficiary was supposed to be the consumer. This did not happen. The main beneficiary was Big Finance. Finance capital, long assumed to play a facilitating role, not a dominating one, actually led to scaled back and distorted technological innovations. Deregulation in finance and the privatization of public services lead to market manipulation, and record consumer debt. Legal protection of intellectual property rights also allowed corporations to keep prices higher than consumers had been lead to expect. Workers ...
The Coming Financial Reality
An Interview with Economist Michael Hudson for Counterpunch By STANDARD SCHAEFER The war in Iraq is allegedly over, interest rates are going lower and there are rumors of recovery although the economy is still in the doldrums. A Bush is president, but an election is around the corner. It sounds a bit like the recession of 1990-1991. In fact, the recovery from that period, anemic as it was marked by very little growth in employment--was actually stronger than this one. The US economy grew at an annual rate of 3.1% compared to the 2.6% annual rate currently. Except for the 1992 recovery, the last seven economic recoveries were much stronger than this one, and each of them, corresponded with the usual amounts of job creation. So far, the current unemployment rate ...
Duck, Duck, Goose: Financing the War, Financing the World
By STANDARD SHAEFER (Interview with Michael Hudson, author of Super Imperialism, Pluto Press, 2003) Now that even the LA Times has begun to show a modicum of willingness to discuss US foreign policy in terms of a potential imperialism, it has become clear that those on the right have avoided this debate so far only by sticking to the strictest, most out-dated notion of empire. The left, however, for too long has been satisfied with talking about cultural imperialism and corporate exploitation, both of which are serious problems. Recently, however, the left has often clumsily explained the economic motives for the war in terms of big oil, sheer greed and more ephemerally as a desire to weaken the euro. This is all likely, but it also reveals the degree to which the ...
Review of Super Imperialism
in FTD - Financial Times Deutschland (German edition of FT) Super Imperialism: The Origin and Fundamentals of US World Dominance Michael Hudson. Pluto Press 2003, 425 Seiten, 32 €, ISBN 074531989 Unser Dollar, euer Problem Wie ein Volkswirt die finanzielle Grundlage der amerikanischen Vorherrschaft erklärt Von Sebastian Dullien Wieder einmal starren Wirtschaftsprognostiker Gebannt auf den Dollar-Kurs. Wird die USWährung weiter abwerten und alle Erholungshoffnungen für die Konjunktur in Europa zunichte machen? Wird gar der Greenback soweit abstürzen, dass Deutschland in die Deflation gleitet und ein zweites Japan wird? Wie so oft in den vergangenen Jahrzehnten ist das Wohl und Wehe der Weltwirtschaft derzeit eng mit der Entwicklung des Dollar verbunden. Und wie schon so oft stellt sich die US-Regierung auf den Standpunkt: „Der Dollar ist unser Geld, aber euer Problem.“ Tatsächlich: Gravierende Probleme mit dem Wechselkurs scheint Amerika selten zu haben, nicht mit seiner ...
Press release: Super Imperialism
How America will get Europe to finance its 2002-03 Oil War with Iraq In the 1991 Gulf War, America got its allies to bear most of the costs voluntarily. After all, U.S. diplomats asked, wasn't the war fought to protect Kuwait and the next petro-domino, Saudi Arabia, from Iraqi attack - and in the process to protect Europe's oil and gas supplies from an aggressive grabber? Wasn't it therefore fair to ask the Kuwaitis and Saudis, along with the Germans, British and other countries, to bear the lion's share of the cost of the oil war? Europe and the Near East agreed to pay, and their central banks turned over some of the U.S. Treasury bonds they had accumulated by running trade and payments surpluses year after year with America. But ...
Railway Financing and the Shape of China’s Future: Some Lessons from American Economic History
Report for the Robert Schalkenbach Foundation “Is it British wealth we want when we desire to develop our resources or build railroads? No, we do not need the wealth, for at this moment we are the richest nation on the face of the globe. We need the money.” – John Brown, Parasitic Wealth, or Money Reform (1898:34) These words were written over a century ago by an American who saw that it was money that put the nation’s tangible wealth, its natural resources and labor, in motion. Recognizing that money was essentially a social and legal institution, a creation of the state, the author urged the government to finance the railroads by printing its own money rather than borrowing from private banks and investors. This would ...
