All or Nothing Foreign Policy

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Youtube video link posted 2023.03.30

What follows is an edited transcript.

DANNY HAIPHONG: Good afternoon everyone, good afternoon. You are tuning in to another episode of The Left Lens. How are you all doing this afternoon?

I am joined by Economist Michael Hudson, as you can see here. I am very honored to have him. How are you doing this afternoon, Michael?

MICHAEL HUDSON: Pretty good. The weather is nice. The sun is shining.

DANNY HAIPHONG: Indeed, indeed. So we have a lot to get to. So everyone, you know what to do. Be sure to like the stream as you’re coming in. Hit that share button and share it around where you can. Subscribe to this channel. And of course if you want to support this channel you know where to go.

But let’s get right to it, Michael. I’m going to pull up — you have a new book that has recently released called “The Collapse of Antiquity: Greece and Rome as Civilization’s Oligarchic Turning Point”.

I’m going to pull up your website. Everyone can find this link in the description of this video. But this book traces the roots of this creditor oligarchy.

Right now there is this banking collapse. We’ve had a few banks in the United States collapse. There’s a lot of concern after Credit Suisse was absorbed by UBS, the Swiss bank.

And there’s a lot of worry in the financial markets, among these large monopoly creditors. What is going on, and how does your book help us understand how we got to this place?

MICHAEL HUDSON: Well, what happened in Greece and Rome is very much like what is happening today. And there’s a common denominator in all of the Western Financial systems, debts grow by compound interest.

That is, any rate of interest has a doubling time. [Debts] sweep up steadily, and the real economy grows much more slowly, so that debts mount up without the economy being able to pay them and there’s a crash.

Well, before you had Greece and Rome, you had 3,000 years of Near Eastern civilization realizing this.

And periodically, every new ruler that would come to the throne in the Near East for thousands of years would simply wipe the slate clean of personal debts and start all over, in balance. Because they realized that if you didn’t cancel the debts, then you would have your citizens fall into bondage and would have to work for their creditors and lose their land to foreclosing creditors. All the land would end up in the hands of just a few creditors who would usually overthrow the the government and try to take over.

Well, what made Greece and Rome and all subsequent societies, down to today’s United States, so different is they didn’t cancel the debts. They left the debts in place. And instead of having a ruler, or some central authority able to stop an oligarchy from developing and taking over and monopolizing all of the money and all the land, there wasn’t any central ruler.

This is usually called democracy. But democracies for the last 2500 years have not been very good at being able to check the rise in credit or interest. And that’s why Aristotle said that many constitutions of the Greek states claim to be democratic but they were really oligarchic.

And Aristotle said, — Under democracy, creditors begin to make loans and the debtors can’t pay and the creditors get more and more money, and they end up turning a democracy into an oligarchy, and then the oligarchy makes itself hereditary, and you have an aristocracy.

And unless members of the aristocracy say, — Wait a minute, we’re bankrupting society, we’re reducing the whole society to poverty. Nobody’s going to fight for us anymore because they’re all in bondage.

Unless you have some member of the upper class or some family taking over, like Cleisthenes did in Athens in 506 BC, then you’re going to have what happened in Rome — a Dark Age.

And a Dark Age is when the creditors take over and reduce all the rest of the economy to bondage. Or today you call it “austerity” or “debt deflation”.

So what’s happening in the banking crisis today is that debts grow faster than the economy can pay. And so when the interest rates finally began to be raised by the Federal Reserve, this caused a crisis for the banks.

And the result is the Silicon Valley Bank (SVB) and the other banks that have gone under are just the tip of the iceberg.

When interest rates go up, that makes the market price of bonds and mortgages much less.

Think of a bank as creating credit on its computer. It creates mortgage loans or loans to businesses. But in fact, people have been withdrawing their money from the banks in the last few years, in the last two years especially, because interest rates are going up.

What happened at Silicon Valley Bank — the same thing is happening at New York banks, at banks all over the country.

Banks are paying depositors 0.2% on their deposits. Depositors can simply, if they want, take their money out of the bank and buy US treasury notes paying 4%.

So if you have enough money to make it matter how much interest you get, of course you’re going to take the money out of the bank and buy Treasury notes or money market funds or something yielding more than the bank will pay.

[SVB] was making enormous profits by not paying depositors anywhere near what it was able to charge its clients. And so when the depositors began to withdraw their money, they began withdrawing it throughout the whole US banking system.

How are the banks going to pay? Well, banks invest their money in mortgages and government securities.

[SVB] bought long-term mortgages when interest rates on government bonds were very low, only 0.1%. The bank is able to make an arbitrage profit by paying depositors 0.2% and buying a long-term government bond at 1.8% for 30 years.

Well the problem is that when the interest rates went up, ostensibly to create more unemployment and to prevent wages from rising by bringing on an even deeper recession than we have now, the bank had to sell these Treasury securities in order to pay the depositors. And it had to sell them at a loss.

And all of a sudden the bank depositors and others noticed the fact that, while [SVB] reported all of its assets as what it paid for them — 100 cents on the dollar — when it had to sell them, they were only worth 70 cents on the dollar.

Throughout the whole US economy, banks, on their balance sheet, can report their assets at what they paid. When interest rates go up, the market price goes down, so all throughout the US economy, banks have said that they have more assets backing the deposits than they can ever realize by actually selling them on the market.

So you have basically a fictitious set of economy reportings, and the depositors at Silicon Valley Bank and other banks said, — Well, this is a very tenuous situation, let’s just take our money out.

And the result is that [SVB] had to sell what it had, report losses, and essentially it was insolvent. Well, the real question is: How many banks in America are insolvent?

Whenever interest rates go up, this threatens banks with insolvency, because this is how the financial system is structured. The only hope of the financial system to avoid insolvency — which it did way back in 2008 — was for the Federal Reserve to flood the economy with credit and inflate the economy.

That’s what the Federal Reserve quantitative easing was all about. Low interest rates immediately raised the price of bonds, real estate, and stocks. And the Fed has said its job is to protect the banks by inflating the economy — inflating, not the economy really, but by inflating the asset markets, inflating the bond market, inflating the stock market.

These are the markets that are owned mainly by the wealthiest 10% of the population.

So if you look at the American economy since 2008, when the Obama depression began, real wages have been drifting downward, but the wealth of the upper 10% has gone way way upward.

And that’s a result of inflating the capital markets by the Fed, while trying to deflate the labor market.

The Fed said — We want to support stock prices by making companies more profitable, and we do that by creating a depression, so if we can throw 2 million Americans out of work, then people will be fighting for jobs and it’ll be easier for employers to prevent wages from rising.

The job of the Fed is not to promote employment but to promote unemployment. To create desperation among the workers so that they really can’t keep up their wages with living standards.

And we’re in the same kind of slow crash that you had in Greece and Rome and that you always have in almost any financialized economy where all the wealth is sucked up to the top, and there’s a transfer, not only of income, but of property — of real estate, of stocks and bonds, of companies — to the creditor class. And that’s what we’re having today.

The creditor class in the US is very much like the oligarchy in Greece and Rome or under feudalism, except that class today is no longer a landlord class, because rent is for paying interest and it’s a financial class, not a landlord class.

If you look at where all of this legal system came from that makes Western civilization so different from the rest of the world — well, it’s that Western civilization has a pro-creditor law that turns out to be a law that favors a minority at the top instead of trying to preserve all overall economic growth, which was the objective of economic takeoffs from the Bronze Age, Sumer, Babylonia, to the first millennium, to the Near East, to Asia, for almost every country outside of the West.

So we’re seeing a division between the West and the rest of the world finally today that is very much like what you had 2000 years ago.

DANNY HAIPHONG: That’s a fascinating connection, and honestly I haven’t heard many people make that connection, and it’s very compelling.

You mentioned the Fed, and Jerome Powell has been on record probably more times than I can count talking about this anti-labor policy that has been a reaction to, or perhaps very interconnected to, all that has transpired over the last several years leading into these bank crashes and the bank runs.

Could you talk more about that policy? Why is it that the Federal Reserve is so interested in telling us that they want to lower wages, increase unemployment?

Maybe you can talk about the comparison to 2007, 2008, too. When that crisis happened, the United States government bailed those banks out and basically didn’t punish them, and it was the people who were suffering from subprime mortgages and other ills of this massive credit and debt issue. They were not bailed out.

So what is happening? Why is the Fed seemingly attacking the living standards of ordinary people while the banks that are creating the problem are seemingly doing very well right now?

MICHAEL HUDSON: The problem is not only the Federal Reserve economists, it’s the whole academic economic theory that’s being taught today.

Today’s economic theory — it’s junk economics, basically. It imagines that the root of all inflation is labor wanting more wages, and the solution to any inflation — and in fact to any economic problem — is to pay labor less.

This is the kind of junk economics that came out of the University of Chicago — the monetarist ideas of Milton Friedman, and it goes back to Austrian economics in the late 19th century.

It was an anti-labor theory of how economies work, to oppose socialist theories of how economies work, and in fact to try to tell people, again and again, that the root of every problem is labor getting greedy and wanting to survive and wanting to protect its living standards instead of being forced further and further into debt.

Well let’s look at economic reality. I think all of your listeners know — what’s certainly in the news every single week for the last year has been — what really has caused the inflation.

There are a number of things, for instance, America’s sanctions against Russian oil and food exports. It blocked Russia’s exports of oil and Russian accounted for 40% of the world’s oil trade and an even larger proportion of its gas trade, and much of its agricultural crop trade — grain trade — as well.

Well, once this oil and gas and food is taken off the market, energy prices have gone up, food prices have gone up, and that’s one major cause.

Another major factor is the fact that the economy in America and Europe is becoming much more monopolized, and the monopolies have simply been raising their prices, especially the agricultural distribution monopolies that buy from the farmers and sell to the grocery stores and the other big distributors.

The monopolies, really their costs are not going up very much. But they say, — Well the Fed’s talked so much about inflation being a problem that we’re anticipating that inflation is going to be another 10% next year, so we’re just raising the prices.

So they’ve increased their prices way over the cost of production to make “super-profits”. And in fact, the monopolies in the US have been making super-profits, which is why the stock market has not gone down, unlike the bond market and the real estate market.

And talking about real estate markets, there’s been a huge 20% increase in the cost of housing in the United States. Again, that’s because of the policies that were put in place by President Obama. His staff — Obama and Treasury Secretary Geithner — really forced the economy into what is an unavoidable depression by bailing out the banks instead of writing down the junk mortgages in 2009 and 2010.

Instead of writing down the mortgages to the realistic market value, Obama evicted eight or nine million American families, primarily Black and Hispanic families or low income families. They had to sell their houses.

Meanwhile the Federal Reserve was lowering interest rates, enabling private capital firms like Blackstone to come in and begin buying up all these properties. Along with other capital firms, they became absentee landlords.

So the result is that since 2008 home ownership rates have fallen in the United States from 58% or 59% in 2009 to where they are now, which is below 50%.

Less than half of Americans own their own homes, as a result of monopolists buying tens of thousands — millions — of homes as investment.

So the American economy is shifting, from a middle class economy, where people own their own homes, to an absentee-owned landlord-run economy, run by the landlords essentially borrowing from the banks in a kind of symbiotic relationship.

Economists call this the FIRE sector: Finance, Insurance, and Real Estate. All together.

The decrease in homeownership, increase in absentee landlordship, monopoly power, and the American sanction and economic, and now military, war against Russia, China, Iran, and their allies, is what is really pushing up prices, much faster than wages have come up.

Wages are much less than the rate of inflation. You can be sure it’s wages that are not pushing it up.

But the Federal Reserve economists are taught in school — there’s almost no description of actual statistics for students who get an economic degree today. There’s no economic history taught anymore in the curriculum, as it was in the 1960s when I was in graduate school.

There’s not even a history of economic thought, so that you don’t get the concept of “economic rent” and exploitation that the 19th century was all about. Adam Smith and [David] Ricardo and John Stuart Mill and [Karl] Marx, up through Thorstein Veblen — people like that.

Essentially you have economics trivialized into just a few generalizations that have become part of the class war.

What the banks and the 1% have discovered is: if you can prevent people from knowing what is actually causing the inflation; if you can prevent them from looking at actual economic statistics; if you can get economic history and thought out of the curriculum, they’re willing to believe there’s no alternative. Because all they see in the mainstream media — New York Times, Washington Post, Wall Street Journal — all they see is the same propaganda statement, that all of our problems are because labor is making too much.

Well, the real problem is that labor is making so little that it’s not able to buy the goods and services that it produces, because it has to pay higher mortgage costs, it has to pay higher credit card costs.

This week the Federal Reserve announced that the average credit card debt in the United States was $10,000. So the average credit card holder holds $10,000 in debt.

If you pay your credit card regularly, the rate is 20%. If you have a late fee, or you’re behind, then it goes up to about 30%.

All of this is counted as growth in GDP. The late fees that banks charge — and they make even more in late fees and penalties than they make in interest at 20% — is called “financial services” in the GDP. As if the banks are providing a service of charging their cardholders much higher interest and penalty rates.

So, you could say that, not only are the bank statistics fictitious, but the whole GDP accounting format that counts finance, landlordship, and economic rent as part of the product, even though it’s unearned income, it has nothing to do with production — even though interest and rent are charges that should be subtracted from GDP as economic overhead, they are counted as part of GDP growth.

Likewise, when people get sicker — as during COVID — and they have to pay higher medical costs and insurance, that accounts for 18% of GDP, which is medical overhead. As if somehow the economy is growing when people have to pay more for their health insurance programs or when they get sick.

So it’s a kind of inside-out economy.

I think I went all the way through graduate school without anyone ever mentioning even once how GDP statistics are actually put together, or what really is causing inflation. It was all said to be “the money supply”. Well, most of the money supply is supplied by banks, not by the government.

The banks create credit, and they create credit mainly to buy assets already in place. 80% of bank credit is for mortgage loans. Nowadays, it’s often to commercial property developers or absentee owners to buy property, as well as families to buy property.

Well, if you look at the paper this week, a lot of banks that have made loans to commercial property developers —  that is, big buildings — the big building are operating at only 60-70% capacity, certainly here in New York.

And a lot of the mortgages are falling due this year and next year. And so now people are worrying, if the building owners — the absentee commercial owners — are simply going to walk away from the building because they owe more on the mortgage than the property is worth — then the banks are going to be stuck with yet more assets that are worth less than they had lent out and less than they owe the depositors.

So you’re having a run on the bank in the United States. For the last week people are taking their money out of the small- and medium-sized banks, and they’re putting them in the large banks — Chase Manhattan, Citibank Wells Fargo — the banks that were the most crooked and responsible for the bank crash of 2008, from the junk mortgage collapse.

Because the government has said that these banks are too big campaign contributors to fail — that’s the Too Big To Fail. If you’re a big campaign contributor, and you’ve given enough money to the heads of the Senate and the House subcommittees on banking, then you’ve got your guy in there as a lobbyist.

But the Two Small To Bail Out meaning — too small a campaign contributor to care about — didn’t. I’m sure none of your listeners have had a voice in who’s going to be appointed to the head of the Democratic or Republican congressional committees on money and banking.

The way that the Democratic party is organized — every committee head has to contribute a given amount of campaign money that they raise to the Democratic party to promote its development.

You can imagine: Who are the largest contributors to the political campaigns to enable the heads of the committees to buy their chairmanship of the Senate and House committees?

Well, Wall Street and the banks make sure that they give enough money to a politician who’s on the banking committee — that they have their guy, whether it’s oil and gas or agriculture monopolies or industrial monopolies or information technology — they will also give money to the candidates that will essentially act as lobbyists for them.

And that’s what politicians are in the United States today. They get elected by raising money by finding political backers of positions they are willing to support as lobbyists in Congress.

Well, Silicon Valley was one of the major mainstays of contributors to the Democratic party. So you can imagine — since Silicon Valley private capital funds were the major depositors of over $250,000 in the Silicon Valley Bank — that the government is going to do everything again to serve their interests.

Of course they were bailed out instead of wiped out, as should have been the case — and in fact would have been much better for the economy if they would have been wiped out.

When you wipe out the large deposits and the bank goes under, you wipe out debt. And what America needs — you could say what Western civilization has needed since Greece and Rome — is the kind of debt cancellation that kept Near Eastern economies growing for thousands of years before Rome took over the West.

DANNY HAIPHONG: Those are all great points, and I think it might be appropriate now actually to move into this great article in a speech by Sergey Lavrov last week for a Russian magazine Razvedchik (“Intelligence Officer”).

He talks about how multipolarity is an emerging trend, and it feels like the Global South — Russia being one of the major countries —  are moving away from this sort of neoliberal financialization.

You talk about a $10,000 average debt, Michael, in the United States — roughly half the country makes $30,000 per year. So when you’re talking about an average debt of that much you’re talking about people really underwater.

But if you could talk about what Sergey Lavrov said. Why is it significant in terms of what’s going on today?

Because we have a lot of developments that have just broken in the last few days, the last 24 to 48 hours, that I feel like are very related to what he had to say.

MICHAEL HUDSON: Well Lavrov actually said the exact opposite of what you described him as saying. It’s not that the other countries are withdrawing from the dollar area, it’s that the dollar is driving other countries out of the dollar area.

It began in 1954 by overthrowing Iran’s government. Then after the Shah fell, it grabbed Iran’s savings in the United States.

But most recently, a year or two ago, it grabbed all of Venezuela’s savings, its gold supply in the Bank of England.

But most seriously, last year the United States said, — Russia has refused to sell its oil and gas to American buyers. Therefore we’re grabbing all this money in the West, $300 billion. We’re grabbing it because we want to bankrupt Russia. Our intention is to bankrupt Russia and divide it into five states so it can never become a strong military country again, and especially so that it cannot support China, which we also want to divide into a few States.

So it grabbed Russia’s money and threatened to cut Russia, China, and other countries off from the SWIFT electronic bank clearing system so that their banks could not relate with the United States.

And it raised an iron curtain, not to contain Russia and China or Iran, but an iron curtain around Europe to prevent Europe and other English-speaking countries — Lavrov calls them “the golden billion” — the White population of the world, as opposed to Russia, which is now considered racially and ethnically non-White by the Ukrainian Nazis basically.

The US has declared economic and social war against the whole rest of the world and is isolating it with the sanctions that you’ve seen against Iran, Russia — rising sanctions against China over TikTok.

America has said, — If China develops a new technology in the United States, we insist that it sell its technology to Americans. We have to monopolize all information technology so that now that we’ve deindustrialized the American economy, we can live without industry simply by monopoly rents. If we control the patents of information technology, and chemical patents, and the health patents for pharmaceuticals, then we can just live on our patent rights as if we’re landlords.

And in fact, monopoly rent, patent rent, and the rents from TikTok are very much like land rents. This was the whole point of Adam Smith and John Stuart Mill and David Ricardo in the 19th century warning against remaining a rentier economy.

So Lavrov explained that, — Well, we’ve been isolated. We made a mistake in how we look at the West. Even though NATO continued, despite the promises in 1991 that NATO would be dismantled if Russia dismantled its military alliances. We thought that we had security in the fact that we were providing gas and oil and other raw materials to Europe and it was becoming prosperous as a result of its economic ties with us. And we thought that this mutual gain of trade was going to ensure that there wouldn’t be any hostility.

And Lavrov said, — We were surprised that you had last week the German foreign minister, Baerbock, saying that the German leadership finds it more important to support Ukraine. She said, — It’s more important to support the Nazi party there, more important to promote the right-wing Ukrainian government, than to have European and German prosperity, or what the voters want.

Ms. Baerbock said, — It doesn’t matter what the voters want. We’re here to support Ukraine.

She didn’t add that she’d been put in place and nurtured for a decade by American finance non-governmental organizations that have found opportunists like her to promote the career of people who are willing to, once they’re in office, represent American foreign policy instead of their own voters.

America has pulled a color revolution at the top, in Germany, Holland, England, and France, essentially, where the foreign policy of Europe is not representing their own economic interests. America simply said, — We are committed to support a war of (what they call) democracy (by which they mean oligarchy, including the Nazism of Ukraine) against autocracy.

Autocracy is any country strong enough to prevent the emergence of a creditor oligarchy, like China has prevented the creditor oligarchy.

Like Putin and Russia have been able to to check the kleptocrats that were sponsored by the United States in the 1990s and to say to the kleptocrats, — Well you can keep the money but you have to support pro-Russian policies, not simply sell out your oil to American companies to take over. Oil and natural resources are Russian companies. We’re not going to lose our national patrimony on that.

So Lavrov wrote a very eloquent article. I’ll read you one thing that he said:

[Quote begins] We no longer have any illusions about converging with Europe, being accepted as part of the “common European home,” or creating a “common space” with the EU. All these declarations made in European capitals have turned out to be a myth and a false-flag operation. The latest developments have clearly shown that the ramified network of mutually beneficial trade, economic and investment ties between Russia and the EU were not a safety net. The EU did not think twice about sacrificing our energy cooperation, which was a pillar of their prosperity. We have seen that the European elites have no independence and always do whatever they are ordered to do in Washington, even if this results in direct damage to their own citizens. [Quote ends]

So what he explained in this article was that the mistake that Putin and the Russians made was I think a legacy of their Marxist materialist background. They thought that the politics of all countries was going to reflect the economic interests of their countries.

They couldn’t quite believe that Europe and other countries would support a policy that was directly against their economic interests, like refusing to buy Russian oil and gas, which meant ending the entire German steel industry, and the glass blowing industry, and the fertilizer industry, all of which required gas imports from Russia.

So the sectors of the German economy that have made Germany the leading, dominant nation of the Europe Union are wiped out. The only choice of European steel companies and other companies is to move to the United States.

One doesn’t know what’s going to happen to their labor force, but obviously there’s going to be a crisis here.

And you’re having similar policies in Holland and France. You’re having all these countries not acting in their own economic self-interest.

Well, where does that leave the materialist approach to history when you’re doing something like that? It’s a surprise. Lavrov said:

[Quote begins] The global majority countries, where some 85 percent of the world’s population lives, are not willing to pull chestnuts out of the fire for their former colonial parent states. [Quote ends]

Last week you had a big meeting between the Russians and Africa. Next month you have a big meeting of African countries in St. Petersburg Russia.

You’re having countries essentially being driven out of the American Empire by the American policy of trying to have all-or-nothing.

You could say that American policy also isn’t really helping its economy.

America had been getting a free ride internationally by the dollar standard. All the money that it’s spent on building 780 military bases around the world, pumped dollars into foreign central banks. They recycle this money to the United States largely by buying Treasury securities and just resending it back.

America printed more money than it can ever afford to repay. Just like a bank owes depositors more money than it can pay when the value of its mortgages and investment go down. The United States, now that it’s deindustrialized, has no way of paying foreign countries the money that it’s run up in their own currency.

In other words if countries said, — We want to take the hundreds of billions of dollars that we’ve invested, we want to take it back into our own currencies or into gold or into something else.

America doesn’t have the means to pay. And there’s a recognition that this policy of building up debt has not only imposed debt deflation on the American economy, not only pushed the American economy into a chronic austerity and depression, but it’s driven the whole world to pull away and use its economic benefits for itself.

I think that yesterday France announced that it was going to buy gas and oil from China and pay in yuan. You’re already having other countries denominating their trade no longer in dollars.

It’s not that they’re withdrawing, it’s that the United States has driven them away because China is afraid to get any more dollars.

It’s worried that, since President Biden has said that we’re in a 20 to 30 year war against China to decide who’s going to rule the world, American democracy or Chinese autocracy, meaning efficient industrial production versus deindustrialization, obviously China thinks, —We better save ourselves from having the fate that occurred to Russia.

So that’s what’s happening in the world. I think it’s Lavrov who’s explained this more clearly than anyone else. You get in his speeches and those of President Putin just a feeling of disgust with the West, and they’re really disgusted at having been suckered into believing that Europe was going to act in its own self-interest instead of acting as a political and economic military colony of the United States.

DANNY HAIPHONG: Indeed. And there are a lot of developments that have come out. You mentioned France, but there’s a lot of others, even in just the last 24 to 48 hours to speak to.

But before we get to that, could you speak maybe briefly about Europe kind of shooting itself in the foot, going against its own economic interests, and Russia and many countries now realizing this.

But on the other hand, there’s a lot of connections oftentimes, what you’ll hear is that Wall Street, the financiers, finance capital, really benefits from war. Is that the case when it comes to this increasingly aggressive move to push out countries like Russia, like China, to push them away?

Who benefits? Is finance capital benefiting, and how?

MICHAEL HUDSON: I don’t think you can say finance capital benefits, it’s just the opposite that’s happening. It may be that banks that lend money to the major military industrial complex do benefit.

But finance capital would benefit much more with active world trade. Banks traditionally, ever since the Middle Ages, have made a substantial part of their earnings on financing international trade, through short-term collections outstanding on trade credit. You need banks to play a role when you’re importing from some country, to make sure that the money is going to be there and the money will be paid when the export is actually delivered.

Banks make money on financing international investment. So if you have a move to autarky that doesn’t help the banks.

After World Wwar I, when you had the US government insisting on inter-ally debts to the point that it broke down Europe and kept the debt flow going only by lowering interest rates and creating a stock market bubble that broke in 1929 — that didn’t help finance.

So finance really doesn’t benefit by war, and this war is not being led by the financial sector.

It’s led by the neocons that have a completely different motivation for war. It’s a real, visceral hatred of Russia. It’s not an economic hatred, it’s an ethnic hatred of Russia, and just an emotional hatred of Russia, followed by a racial hatred of China. That’s always been as American as apple pie.

So you’d think there would be some financial interests that oppose the war. And in fact, what’s surprising is that the anti-war movement in the United States is not being led by the left. Who are the big anti-war people?

Mainly the Libertarians, the Republicans, Donald Trump — where is the left? Not Bernie Sanders. He supports Biden and Ukraine. Not by the Democratic party.

The question is whether Trump and other Republicans are going to try to make the 2024 election precisely one of saying, — Well, if you’re for American prosperity, including employment for American wage earners, we’ve got to end the war economy.

Whereas the Democratic party said, — It’s worth cutting back Social Security here. It’s worth cutting back medical support, Medicaid and social spending in order to fight the war. Military spending is sacrosanct and the war is essentially what our State Department, our CIA, and the Federal Reserve, and Miss Yellen, is all about.

This is going to be very interesting. This is the first time I think when it’s not the right wing that’s in favor of the war. Although if you look at World War I it was the peace groups and the left that were the first in almost every country to applaud the war, except for Eugene Debs and the socialists in America. And Karl Liebknecht and Rosa Luxembourg in Germany.

The social democratic parties were all for the war, and you’re having that again today. Who would have thought that it would have been a party calling itself the Green party that’s the leading belligerent pro-war party in Germany, and the social democratic parties in Europe that are all for the war.

Again, we’re not in a reflection of economic interest anymore but political interests. I don’t know whether you call it an ethnic war, or what you call it, but whatever it is, it’s a national hatred of Russia, China — maybe it’s just of the “other”.

Maybe just any foreign country that the United States does not control it looks at as an enemy. And if it’s unable to exploit it, it looks at that as being a threat to its very identity.

DANNY HAIPHONG: Yes indeed. And that trend you talk about, the social democrats, or we could call them maybe the establishment left.

Joseph Burrell comes to mind. He’s a part of the Spanish Socialist Workers’ party in Spain, but he is maybe one of the most enthusiastic promoters of The White Man’s Burden, of all things, when it comes to this war that they are waging in Ukraine against Russia.

But you just mentioned how the world is reacting to this. Now we have really important developments taking place.

Over the past several months we’ve had Saudi Arabia talk about interest in BRICS. There are rumors that they’re going to join BRICS sometime this summer. They’ve just joined, or they’ve just ratified, approved, the decision to join the Shanghai Cooperation Organization (SCO).

And now you also have Brazil announcing — Lula had to cancel his visit, he was going to visit this past week but he had the flu — but they just announced a trade deal with China where they would trade specifically in RMB or Chinese yuan instead of the dollar.

What is your reaction to these developments?

MICHAEL HUDSON: They go hand-in-hand with the fact that the Global South countries, especially Brazil — by the way, Lula is going early next month to China — they are in a squeeze today, especially now that the rise in the Federal Reserve’s interest rate has increased the dollar’s exchange rate.

All these Global South countries owe very heavy dollar debts. And they can’t afford to pay these dollar debts and at the same time pay more money for their imports of oil and gas and food. So what are they going to do?

Are they going to go without energy and turn off the lights and restrict their diets just so that they can pay foreign creditors? Or they’re not going to pay the foreign debts?

Well China has been playing a very active role in Africa and other countries offering credit for Chinese exports on much softer terms than the United States — of not foreclosing or not calling countries in default, and indeed is backing a debt write-down.

Well you can see where all this is heading. At a certain point — we’re not there yet — but China will say, — Well, you owe a lot of dollar debts that are pushing you into austerity and pushing you into reliance on the International Monetary Fund (IMF) that is even more anti-labor than the Federal Reserve. You can deal with us and we’ll have our imports and we will have a mutually beneficial trade with you on easier credit terms that you can afford.

— We realize that if you trade with us, you’ll be sanctioned, just as a countries that traded with Russia were sanctioned. So why don’t you trade with us — 75% of the world’s economy — instead of with the US and Europe dollar-euro bloc that’s only 15-25% of the economy. We’ll take care of you.

That really is where the global fracture between the dollar bloc and the other blocs are going. The Western creditors and bondholders are saying, — Well, wait a minute. If we’re going to have a debt write-down as occurred in the 1980s with the Brady bonds for Latin America debt write-downs, then China has to write down its debts too.

But China says, — Well, we’ve organized our credit as equity. Our credit is basically for building ports, for building infrastructure that’s we’ve put in place that’s actually going to be earning an income for the countries. We’ve made productive loans.

The IMF loans, the World Bank loans, and similar bondholder loans are what’s called “odious debt” — they are debt that does not help the client countries, the debtors, earn the money to pay the debt with the interest. And it’s debt that was negotiated by client oligarchies that were put in power and backed by the United States.

This is the case especially in Brazil because, certainly at the time I was dealing on Wall Street with a Brazilian foreign debt in 1990, over 30 years ago, just about all of Brazil’s dollar debt was owed to the domestic Brazilian oligarchy.

It was Brazilians who held the dollar-denominated Brazilian government funds. I suspect that’s still the case, because American and European bondholders felt burned by Brazil, Argentina, and other Latin American countries.

So apart from a few vulture funds buying these debts at low prices, you have the domestic oligarchy — the domestic banking class, the financial class, the monopolist class, the old colonial class — owning this debt and, since they’re also the class that runs the central bank and indeed the government, they know they’re going to pay the foreign debt, because the foreign debt of Yankee dollars is paid to themselves.

The Brazilian ruling class is the recipient of the Yankee dollars. So at some point this debt crisis, certainly for countries like Brazil and I think Argentina also, are going to be involved, not necessarily a break simply with the US dollar, but with the domestic oligarchies that were client oligarchies of the United States — the oligarchies backed by the United States and overthrowing Lula years ago and replacing them with the dictator Bolsonaro, who’s just returned to Brazil in the last couple of days.

So you’re going to have what is not only a global fracture but it will finally be the domestic class war of socialism versus oligarchy, and that’s the word that you had way back in Greece and Rome. That’s why it’s worthwhile seeing that all of these strains occurred long before. They’ve occurred again and again. And you’d think that it would help to read the history of these strains and see what’s worked out and what didn’t work out.

In fact, the oligarchy almost always is won by violence, and that’s certainly been the case in Brazil. I remember back in 1964 I met with Brazil’s former president I think Kubitschek, who had just been overthrown, who told me and a few others who were with me the story of what had happened and said, — You have to live with it, because America controls who’s in control of Latin America.

It’s its backyard, and it only trusts dictators. It doesn’t trust democratically elected leaders, because America is frightened that a democratically elected leader might represent the voters who elected him, instead of the little US Embassy with envelopes stuffed full of dollars [for bribery], and the army trained in the United States to overthrow democratic leaders.

That’s really the polarization dynamic that the whole world is facing today.

DANNY HAIPHONG: I want to bring up on that point a graph an image that I think speaks to this phenomenon.

A lot of people are kind of surprised about Saudi Arabia’s decision to diversify.

This [graph] only goes to 2021, but here you just see in terms of trade volume with China — China’s Saudi Arabia’s largest trading partner — and here you have the United States over the years since 2001. You’ve seen, especially over the last five to eight years, a massive shrink in trade volume between the United States and Saudi Arabia, while China has really grown in terms of its influence in terms of trade.

Back to your point on you know the changing global economy and what’s happening with the dollar but also what you spoke about earlier in regard to finance and how things have transpired.

You said the United States supported all these oligarchies. Many people in the West would say that Saudi Arabia is one of those kinds of client states. But Saudi Arabia is now moving much closer and closer to China.

What explains this? Why is this happening and why is it happening right now?

MICHAEL HUDSON: Well in 1945 when the United States put the post-war economic order in place with the IMF, the World Bank, and other organizations, the United States was the leading industrial country as well as financial country.

In terms of its control of the world gold, it actually increased its gold holdings by 1950 to 75% of the world’s monetary gold. So other countries were convinced not to issue their own fiat currencies.

A condition of America’s British Loan of 1945 was that England committed itself not to devalue sterling to make its exports competitive until 1949, and to dismantle the Sterling Area’s protectionism. [01:01:15]

Other countries, in order to have access to money to fund their own economic recovery and to buy industrial goods that they needed, had to rely on the United States. Since the epoch of Margaret Thatcher and Ronald Reagan in the 1980s, the wealthy class in the United States — the 10% — found that it could make much more money by financial means than by industrial mains.

And in fact, the corporate employers found they could increase profits not by lowering wages in the United States, but by simply moving their production facilities to China and other countries in Asia and producing at lower wages.

So the whole idea of free trade, especially under the Clintons after 1990, was an attempt to replace American industrial labor with Asian and other industrial labor, including the maquiladoras along the border with Mexico.

Maquiladoras were factories put just over the border to get low-price non-unionized labor, Mexican labor, as opposed to American labor.

So you had a decision led by the Democratic party to replace American labor with less expensive foreign labor, and under Clinton also to deregulate the financial sector and essentially turn what was a traditional commercial banking sector into a brokerage house sector, into financial gambling on derivatives, financial stock purchases, buying and selling companies.

Money was made by industrial companies not by expanding their profits and building more factories and machinery and hiring more labor to produce more.

Money was made by going to Wall Street and buying money to take over companies, break them up, turn their real estate into gentrified housing instead of a commercial use or industrial used, and essentially pushing the United States into what turned out, as if by a surprise, into dependency on other countries that are actually doing the production of the world.

So now you have a critical mass of countries, 75-85% of the world’s population, saying, — Wait a minute, if we’re producing all of the industrial products and raw materials that make industrial products, what do we need the dollar American and European rentiers for? What do we need American credit for if we can create our own credit, just the same way America does, electronically, just print it.

That’s Modern Monetary Theory (MMT).

— What do we need foreign landlords and foreign owners of our raw materials from? The oil companies make big messes. They don’t clean up the pollution they caused. We can just take them over and run mining and oil drilling in ways that are environmentally sound. What do we really need the United States and Europe for? What is its role?

Well, the United States and Europe say, — Our role is to refrain from bombing you. Our role is not to treat you like we’ve treated Libya and Iraq and Syria. We can offer you not-bombing-you like we did in these countries. That’s all we can offer.

And what do you think foreign countries think of that offer?

DANNY HAIPHONG: It’s a really bad one. It can get down to just that basic point there.

You have the United States, that graph really hits the nail on the head of that point. Saudi Arabia, despite how close it has been with the United States, it’s not necessarily being offered more than what it’s already received.

And as China gains more prominence, could you talk about, actually, because China is really at the center of all of this. China is becoming the biggest trade partner for most countries in the world, Saudi Arabia included. Saudi Arabia is now making these decisions to diversify. So is Brazil. The BRICS countries.

All these developments really have China at the center in a lot of ways, where the Chinese yuan is becoming increasingly important.

How did this come to be? Because it wasn’t too long ago where China was considered one of the poorest countries in the world, and now it’s not only leading economically but also a lot of these moves and developments have to do with diplomatic leadership and political leadership worldwide as well.

MICHAEL HUDSON: Well two things. It’s not only China, it’s Russia. Saudi Arabia for years, what it wanted more than anything else from the United States was military arms, especially when its Sunni leadership was thinking of military war with Shiite Iran.

So the one thing that Saudi Arabia did depend on United States industry for was armaments, airplanes especially. In the last few months, Saudi Arabia has begun to buy arms from Russia. You can imagine how this has upset the American military industrial complex, because this was where America was making enormous monopoly rents off its high-priced armaments.

And other countries do not have such a high cost as “Pentagon capitalism” does.

You can see what was happening with Saudi Arabia. [Their thought process is], — America’s always really wanted to control our oil industry and it’s always been threatening that it’ll become our enemy if we make peace with Iran. Well, we want to make peace with Iran because otherwise Iran may blow up our oil fields, and they may sink a ship in the [Strait] of Hormuz and prevent our exports from occurring.

The Saudi Arabians are deciding, you never want to put all your eggs in one basket. They’re diversifying, and that includes Russia.

Regarding China, Saudi Arabia realizes that if for any reason Iran is pushed into sinking a ship in Hormuz to stop the oil trade, that there’s another route to Europe. The Chinese, in the last few weeks, have been talking to Saudi Arabia about a long roundabout sea trade route up through the Pacific, up to the Arctic Ocean, and then down through Europe from the north, not from the south and the Mediterranean. So that’s one thing.

But your real question I think was about why China pulled ahead, and not the United States.

China is pulling ahead by doing exactly what the United States was doing in the late 19th century. It’s pulled ahead by using an active government sector to subsidize basic needs.

The United States in the 19th century, and this was all spelled out by the first professor of economics at the first business school in the United States, Simon Patten, who taught at the University of Pennsylvania.

He said, — The United States emphasizes a fourth factor of production besides labor, land, and capital, and that is public infrastructure spending. The Erie Canal has made possible the grain exports of the midwestern grain coming into upstate New York into the east coast.

He said that public railroads, public education, public health, all of this, the role of government infrastructure is to lower the cost of living by providing basic needs like education, healthcare, a job, freely or at least at a subsidized cost.

Well, this is what made American industry able to undersell industries that did not have as rapid or as well-developed a public sector in Europe.

Well, since Reagan and Thatcher privatized the public sector, now you have the public sector trying to make profit.

The railroad system was privatized when the Butcher Brothers of Philadelphia broke up Penn Central and separated all of the real estate from the railroad and then sold off the real estate leaving the railroads without real estate financing, and obviously the cost went way up.

You had the privatization and carve up and break up of the public sector in the United States. The costs went way up. That’s why privatized healthcare in the United States absorbs 18% of GDP. Whereas, even in conservative England in the 19th century Benjamin Disraeli, the Conservative prime minister, said, “Health, all is health”, and wanted to provide healthcare. After World War II, Britain’s National Health Service was a model for the whole rest of the world.

Now it’s been Thatcherized, especially under Tony Blair and the Labour party, which has moved to the right of the Conservatives, just as the Democrats have moved to the right of the Republicans in the United States.

China has not only kept basic infrastructure in the public domain, but it’s kept the most important utility in the public domain: banking.

You have the Bank of China creating the credit. The function of the Bank of China is not to create public credit for take-over loans to take over companies, break them up, and reduce employment. It’s to help the economy grow.

The function of a government-controlled bank is to increase capital investment and employment and construction for housing to provide for the economy’s basic needs.

Well, that is what has enabled China and other countries that are following the mixed-economy plan to outperform the United States. And that’s what the United States calls “autocracy” and says China is an autocracy because it has public banking instead of leaving it in private hands to do to China what our banks have done to the American economy.

So you can imagine how humorous in a way this seems. Obviously the autocracies are socialist countries with a mixed economy where the government provides public basic needs. Democracies don’t. Democracies abolish the infrastructure, privatize it, usually selling it off to American or European buyers, and say that, — There’s no such thing as a basic human need. Land can be a commodity to make financial gains from by charging rent that people have to borrow money to buy.

[Democracies say,] — There’s no such thing as a public need. Health is not a basic right. It’s a monopoly opportunity for pharmaceutical companies and health insurance companies to make enormous gains. Having a job is not a public right. Losing a job is a right of the financial and corporate class to create enough unemployment to keep wages down so the profits ostensibly can go up.

So basically, a democracy is a country that lives in the short run for privatized financial gains and an autocracy takes long run planning into account and keeps planning in the democratically-elected sector, not in the hands of the financial centers such as Wall Street, Paris, the city of London, or other other banking centers.

That’s the real split of the world. And it’s not democracy versus autocracy, it’s financialization versus socialized mixed economies.

DANNY HAIPHONG: Indeed, all very good points. Michael, you’ve been totally generous with your time. I have one last question about the Summit for Democracy and then two short Patreon member questions.

I wanted to ask you, because you brought up the autocracy and democracy narrative that the United States especially has been promoting.

The Summit For Democracy 2.0, I guess you could call it, is happening right now Costa Rica, Zambia, and a few other countries are supposedly helping “sponsor” it. Of course, there was a Summit For Democracy in December 2021.

I watched it, painfully, it was very early in the morning. It was one of the worst things I think I’ve ever seen in terms of just television and entertainment, even in just politics. It was very canned, it was very superficial.

The Summit For Democracy, for the United States, seems like a very important event that encapsulates something that you mentioned earlier about, with the US having nothing to offer it’s kind of pushing the world away.

And one of the ways it’s doing this is by this propaganda war. It’s like a hyperintense propaganda war about the dangers of China and Russia and the so-called “autocratic states” versus the United States and the collective West, its allies, vassals, whatever you want to call them in the collective West. So they’re pushing this hard.

What’s your reaction to this Summit for Democracy 2.0? How does it fit within this larger economic context that you have spoken about?

MICHAEL HUDSON: Well, it’s being broadcast live on Zoom as we speak today. And it’s very interesting. The center point of the Democracy Forum says is to support the Ukrainian Nazi regime.

Let me quote for you. It has a document, the third paragraph of the meetings that are being held as we speak:

[Quote begins] We deplore the dire human rights and humanitarian consequences of the aggression by the Russian Federation against Ukraine, including the continuous attacks against critical infrastructure across Ukraine with devastating consequences for civilians, and express our grave concern at the high number of civilian casualties — [MH interrupts quote to speak]

This is after eight years of Ukraine bombing civilian territories in the Donbas, claiming that the Russians were subhumans. This is the Ukrainians treating the Russians as a race war — not as an ethnic war, but as a race war, as if Russians somehow were different — with Nazi insignia.

The attendants of the meetings today are supposed to agree that:

[Quote begins] we demand that Russia immediately completely and unconditionally withdraw all of its military forces from the territory of Ukraine within the internationally recognized borders, and call for a cessation of hostilities. [Quote ends]

In other words, surrender. Well, why would countries go to that? It’s true that India is there and Mexico is there. But even India, Mexico, and Albania said, — We’re not going to sign that document. We’re going to come here because we want foreign aid and we don’t want to be killed at one of your color revolutions in our countries.

This is such blatant pro-Nazi propaganda. They’ve just defined democracy as Nazism. After all, that nationalism called itself National Socialism.

So, you see the Orwellian rhetoric of this whole thing. It’s obvious that democracy is any country that supports the United States by definition, no matter whether we’re dealing with a Latin American dictator or any of the other dictators. The coup d’état in Ukraine is a democracy. Just a charade.

In fact, this is why I think it’s important to look way back at Greece and Rome. That is celebrated as a democracy founding Western civilization. What they mean is, the oligarchic law, that was also achieved by five centuries of civil war and violence.

Every politician urging a debt cancellation and redistribution of land, ending with the Gracchi Brothers and with Julius Caesar, who the Romans feared were going to cancel the debts and free the debt-bondage Romans.

All of this is what democracy has been able to turn into its opposite throughout most of history. We’re just seeing that re-enacted in Orwellian terms in this week’s meetings — Zoom meetings, at least, so I can’t say they are in Washington. But the US-sponsored meeting where I think countries are showing up because they don’t want to overtly “insult” the United States. But obviously it’s a charade.

DANNY HAIPHONG: Yet another attendee or representative at this Summit for Democracy is Taiwan, and there’s a lot of controversy around that, given that Tsai Ing-wen, [president of Taiwan], is touring the United States right now to the tune of protests outside of here in New York City.

There are a couple patreon questions. Morgan wants to know if you would agree that the US dollar is backed by US terrorism, and, if so, why?

MICHAEL HUDSON: Ever since the Korean War, ever since 1951, the entire US balance of payments deficit has been military in character. Overseas military spending is what has been pumping dollars into the world central banks.

The dollars for instance spent in Vietnam were turned over to the local banks, and since Vietnam was a French colony originally the Vietnamese banks sent the dollars on to France where General de Gaulle would make a very conspicuous act of cashing them into gold every month.

So, literally, the dollar’s role in the world has been supplied by its 780 military bases, and I guess you can call that terrorism. Let’s just say military spending, and the military role is at the center because that really is I think the main thing deterring countries from withdrawing from the dollar standard.

The United States is giving them the service of not bombing them and not assassinating their leaders and not having a color revolution to overthrow them. That’s what the United States can offer. Not interfering with their elections unless they do something that the United States doesn’t like, like not showing up at least on Zoom for the [Summit for] Democracy meetings today.

DANNY HAIPHONG: It reminds me of Ukraine, Michael, because I feel like not only is Ukraine a flashpoint in this huge geopolitical struggle that the US is imposing upon the world against Russia with this war, but also Ukraine’s economy has been decimated.

I think the IMF just approved a $15.6 billion agreement to bail out Ukraine’s economy, but it’s essentially a failed state at this point. There really isn’t an economy. The government budget is almost entirely met by the collective West.

What’s your opinion on the Ukraine situation in relation to this terrorism question?

MICHAEL HUDSON: What’s been destroyed is the IMF’s credibility. The IMF’s rules say, number one, no more “Argentinas” since 1991. You cannot make loans to a country with no visible means of payment.

Number two, Articles of Agreement, you cannot make loans to a country at war. Making loans to Ukraine shows that this is an odious debt — literally an odious debt. It’s a debt to a government that has come to power by coup d’etat. It is responsible for attacking and goading Russia into protecting its Russian-speaking population from racist genocide by troops wearing the Nazi insignia reliving World War II for the Russians.

The IMF loan to Ukraine gives the Global South countries immediate reason to annul all debts owed to the IMF and the World Bank as agents of the US subversion of their countries, giving them loans on conditions that instead of helping them repay the debt, they impose austerity programs that actually prevent IMF clients from repaying their debts.

So this has completely discredited the IMF as a tool of, I won’t say American fascism, let’s say as a tool of the US military. It’s as if the IMF is really operating out of a small basement in the Pentagon in Washington. So that’s the major effect.

Obviously there’s no way that Ukraine can pay. The US government has said, — Well we’re holding the $300 billion that we’d illegally grabbed from Russia. Not illegally — we make the laws! The rest of the world may call it illegal. International law may call it illegal. But when America does it it’s not illegal.

That’s why President Nixon said, — When the president does it, it’s not a crime.

Well, when America does something against international law, it’s not illegal because we are the only democracy in the world’s essential country.

I think Russia will say, ultimately, Ukraine’s going to be divided. Eastern and southern Ukraine just to the west of Odessa is all going to be a part of Russia. So I think Russia will probably smile and say, — Well actually we are willing to spend the $300 billion dollars to rebuild Ukraine. We’re going to build the part of Ukraine that, since 2008, has been systematically bombed and under attack, and now is under attack by Ukrainians focusing on hospitals, on civilian centers.

[Russia will say,] — So yes, we’re going to spend the $300 billion on rebuilding the Donbas, the Luhansk region, and the southern coast, and Crimea. But we’re going to spend the $300 billion ourselves. We don’t want to have to spend it in the United States. We’re going to spend it at home, and we’re going to spend it in China and India and Iran — countries that are actually helping a provide the construction work, the reconstruction work, and the building-up of the infrastructure that will make Ukraine, eastern Ukraine and Southern Ukraine, what it could have been had not the American neoliberals promoted the kleptocracy throughout the former Soviet Union in 1991.

DANNY HAIPHONG: Indeed. I think this is the perfect question to end this interview on, Michael. For those who may not be aware, Patreon members, Substack paid members, and YouTube members — and all those links are in the description — can submit questions that I will ask at a certain point with my guests during our conversations.

Sean wanted to ask — this might be a good place also where you can plug your own work Michael to end our conversation — he wanted to ask about if you have a published list of books that we should be reading?

Maybe to what he calls a “relative normie” — like people he may know, as well as himself. What should people be reading? I think it’s a good opportunity also for you to talk about your own books, because you have quite a few that I think are very critical.

MICHAEL HUDSON: Well there are not that many people writing along the lines that I’m writing.

Steve Keen is writing along the lines. His “Debunking Economics” is a good book. He has a Patreon website that has a lot in it.

Stephanie Kelton and Randall Wray — my former colleagues at the University of Missouri in Kansas City — are worth reading. Stephanie just has a new book out.

Richard Werner has written a lot of good books on economics.

Dirk Bezemer and I have written a number of articles together in academic magazines on GDP analysis.

There are not that many people who are writing along the lines that I am.

There are other websites to follow, like Naked Capitalism. I got some of the ideas today from Amarynth’s Global South website. That is very good on up-to-date information on US foreign policy and war.

There are a number of websites about the war in Ukraine. Smoothiex12 by Andrei Martyanov is very good. Moon of Alabama is very good.

Things are happening so fast, and it takes so long for a book to actually be published and printed, that these current events are very important.

I think reading history is very important, but I don’t know anyone who’s writing much in history because the history departments have all been closed down at universities and excluded altogether from the economics curriculum as I mentioned, so there’s not really very much.

Ben Norton has a very good site. Radhika Desai and I have a fortnightly review of what’s happening on Ben Norton’s site with the geopolitical split in the world.

DANNY HAIPHONG: Very good. And I want to encourage everybody to go to the description of this video after I end here. You’ll find his website, a link to his latest book, “The Collapse of Antiquity”, and you can find all of his books on the website as well.

Michael, thanks so much again for joining today.

MICHAEL HUDSON: It was a good discussion. I’m glad it was so timely, with the Summit for Democracy going on.

DANNY HAIPHONG: It seems like everything’s been going on in the last few days. Take care.


After reading the transcript, I have thought through my answer to the extent to which the U.S. Government’s antagonism toward Russia is based on economic interest beyond the obviously personal animosity to Russia as an independent nation and even as a culture, given the banning of Russian musicians, athletes, composers and art.

Now that I’ve had some time to think about this problem, even if financial institutions don’t benefit from the New Cold War directly, what is at stake on a broad systemic level is today’s U.S.-centered finance capitalism and its control of world trade and investment. That control is now threatened by other countries being driven out of the U.S.-European system. But it need not have isolated the U.S. banks and economy from the rest of the world. That is a result of the amazingly short-sighted U.S. grab of Russia’s $300+ billion financial assets in the West.

So we are back with the idea that the Cold War 2.0 really is self-destructing the geopolitical range of U.S. finance capitalism. It was quixotic to imagine that the U.S. really could defeat Russia and China, carve them up and treat their carcass in the way that U.S. strategists have treated Germany and the rest of NATO Europe.

All one can say is that the unrealistic U.S. foreign policy is the geopolitical equivalent of fictitious capital.

Michael Hudson


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