Connexion
La Russie a rapatrié 205 de ses militaires détenus en territoire contrôlé par Kiev et a procédé, en échange, au
L’article Échange de prisonniers entre la Russie et l’Ukraine au format 205 contre 205 est apparu en premier sur STRATPOL.
Le centre culturel Maison russe de Prague a été attaqué aux cocktails Molotov le 26 mars, selon son directeur, Igor
L’article La Maison russe de Prague attaquée avec des cocktails Molotov est apparu en premier sur STRATPOL.
Donald, you just wrote the most honest colonial confession of the 21st century.
When you say Venezuela must “return” its oil, land, and assets to the United States, you are not talking about law.
You are talking about ownership.
You are saying, out loud, what empire has always believed in private: What lies under Venezuelan soil belongs to Washington. What grows on Venezuelan land belongs to U.S. corporations. What Venezuela builds for itself is “stolen” if it is not built for you.
That is not security. That is naked imperial entitlement.
Let us be precise.
Venezuela did not invade Texas.
It did not occupy Florida.
It did not sabotage American refineries or seize American ports.
Venezuela did one thing.
It took back control of its own oil from foreign companies and tried to build a sovereign project outside the dollar.
From that moment, its fate was sealed. Coups. Sanctions. Freezing of assets. Recognition of a fake “president” who never won an election.
Now you talk about armadas, blockades, and “terrorist” designations.
Everything you accuse Venezuela of, the United States has done on a planetary scale.
You talk about drug trafficking.
Colombia was your closest partner for decades.
You talk about human trafficking. Your own border, your own allies, your own corporations profit from it.
You talk about terrorism. Latin America is full of mass graves and dictatorships installed, trained, and armed by Washington.
And you dare to call a blockaded country a “foreign terrorist organization” for the crime of refusing to hand over its oil.
A blockade is not a policy. It is an act of war carried out with banks instead of bombs. It starves civilians. It denies medicine. It crushes currency. It manufactures the humanitarian crisis you then use as justification for more aggression.
Venezuela did not “steal” anything from you.
Those oil fields were not born with an American flag on them.
What you call “our assets” are contracts that a sovereign nation chose to end.
You are not demanding justice. You are demanding restitution for lost privileges.
Strip away the rhetoric, and the message is simple: The “largest armada” is not there to defend America. It is there to discipline a country that chose sovereignty.
It is a message to every nation in the Global South: If you nationalize, we will strangle you. If you de-dollarize, we will isolate you. If you resist, we will call you terrorists.
Venezuela is not the thief in this story. Venezuela is the house that finally changed the locks.
And the fact that you call its oil “ours” is all the proof anyone needs that the biggest foreign terrorist organization in this equation is not in Caracas.
It is in Washington.
Michael tells what most probably happened with the so-called announcement of action or war against Venezuela. Michael and Richard also explains the National Security Strategy and how it really is intended to work.
This is a little older but given the charade that we are watching in terms of a Ukraine plan, it is a perfect day. This is why Russia thanks the US because the US is part of the charade and Russia just does not have to do it. Reminder, these negotiations are being done and advertised and leaders are making statements and flying to and fro while discussing this with a sham president that has no authority to even speak, let alone carry out anything.
NIMA ALKHORSHID: Hi, everybody. Today is Wednesday, November 26, 2025, and our dear friend, Michael Hudson, is here with us. Welcome back, Michael.
MICHAEL HUDSON: It’s good to be back.
NIMA ALKHORSHID: Please subscribe and hit the like button to help us reach more people. And you can see Michael Hudson’s website (below his name): michael-hudson.com. You can go there and follow Michael.
MICHAEL HUDSON: It’s michael, hyphen, hudson, dot, com (michael-hudson.com).
NIMA ALKHORSHID: Michael, let me start with the [28]-point plan on the part of the United States. They have proposed [28 points]. It seems that they have reduced it, after the meeting [Marco] Rubio had in Geneva with Europeans and Ukrainians. They have reduced it, as Donald Trump mentioned. We thought that it would be 19 points, but Donald Trump today said that it’s going to be 22 points.
But after all, looking at the document, what is your take on what’s going on, with the document?
MICHAEL HUDSON: The important thing to realize is it’s not a peace proposal. It’s not a plan at all. It’s a bold attempt to shape the terms in which the public views the entire Ukrainian coup d’état at Maidan in February 2014, followed by the whole Ukrainian attack on the Russian-speaking population, and the last (almost three) years of war. It’s a fight to shape public opinion, and it’s (in that sense) a brilliant propaganda attack. President Putin and Foreign Minister [Sergey] Lavrov have given speech after speech explaining the whole history, explaining how the Russians intend to end the war when they win and they create a new government — free of the Nazis, free of the Russia-haters — and disarm Ukraine, and prevent it from joining NATO.
What NATO and the Americans have done is, instead of just giving a different speech and saying, okay, here’s your narrative, here’s ours, they’ve encapsulated their answer, and their counter-argument, and their counter-narrative, in the form of a point by point, listing by listing — as if it’s a proposed articles of agreement [document]. And, of course, these articles will never be agreed upon. There’s no way in which either Russia or NATO (Europe, and the United States) — not to mention Zelensky’s government in Ukraine — can accept them.
So, the purpose is not to get any agreement at all. It’s to make people think in terms of: How do we view what’s happening? What’s the war all about? Who’s responsible for it? And these points have been crafted by propagandists, to sort of win the hearts and minds of the people, in support of the Maidan coup.
The aim has been sort of leaked to the press, going all the way back — to reverse the way of, how World War II ended. What Europe wants to do is say: We want to refight the end of World War II. And already in 1944, Churchill was saying: As soon as the war is over, let’s attack the Soviet Union. Europe said: Well, let’s go back to that point — 1944 — okay? That’s 80 years ago. Let’s see whether we can refight, at that point. Now we can attack Russia.
That’s really what it’s about, and it’s an outrageous trick. It’s been carefully thought out and propagandized. So the peace proposal is not intended to bring peace. It’s just a propaganda charade at pretending to negotiate peace. And it’s really a propaganda effort. In a word, the aim is to essentially obfuscate what is really happening.
By the way, Foreign Minister Lavrov said yesterday at a French news conference that Europe’s “elites opted for war and have staked their entire political careers on the slogan of inflicting what they call a strategic defeat on Russia.” [Dialogue F-R YouTube channel, Nov. 21, 2025]
Well, that has failed; so NATO realizes it’s lost the war. It doesn’t have the arms to fight. You’ve seen the Russian advance, accelerating day after day. So NATO says: Well, okay, we’ll lose the war. How do we win the peace? And that’s going to be: How is history (and current voters) going to look at what’s been happening? What is all of this about? And if you look at the U.S. press (the New York Times and the Washington Post) and the British press, it’s which side of the fight is analogous to the Nazis and [Adolf] Hitler? In the New York Times yesterday, you have [Thomas] Friedman talking about, well, how can Trump appease Hitler? Trump is “Putin’s puppet.”
These agreements are really Russia’s demands. (Well, of course, they’re not Russia’s demands before. You can read the Russian demand, and what Putin and Lavrov have said.) So, I think we can [discuss], if this were really an agreement to discuss: Where do we go from here, and how do we think about solving this fighting in Ukraine?
Article 1 should be: Were there any war crimes committed? That’s what it’s all about. And a basic issue is, well, if they were, by whom, and against whom? And who are the victims? And what were these crimes? Well, Russia has already announced that when it conquers Ukraine and installs a non-Nazi government, it’s going to hold a modern Nuremberg trial. It’s going to convict parties that have committed war crimes. That is what terrifies the NATO leaders, not to mention the kleptocrats in Zelensky’s regime that have enriched themselves and been embezzling the loans — from Europe, the United States, and, especially, the International Monetary Fund — to buy properties offshore, and Bitcoin, and the things that kleptocrats do to hide or conceal the money they’ve taken.
Well, for the Russians, it’s vitally important to establish the historical record, because that’s the key to what is going to be the body of international law following on from all of this.
Again and again, President Putin and Lavrov have said: We thought that the Nuremberg trials had established the international law of war crimes. We’ve been attacked. Russia is not the attacker. The Maidan [the coupists] was the attacker. The Ukrainian attack on the Russian-speaking population — the civilian population — was a war crime, breaking the rules of war. We came in to protect the Russian speakers. The populations of Luhansk and Donetsk have voted to become part of Russia, which were, in practice, [Russian] all the time during the Soviet Union, when there wasn’t any real separate Ukrainian nation.
The Russians are basing their actions, and their intentions, on international law. To do this, they have to have a Nuremberg trial — a war-crime trial — to reiterate: What is the appropriate international law to deal with the situation, such as we’ve been fighting, for more than two years, in Ukraine? And the West says: Well, it was Russia that’s the attacker. Russia has committed the war crime. That’s the travesty of what’s happening.
But it’s the aim of the U.S. and NATO narrative to turn the war into a new Cold War propaganda weapon against Russia, aimed at turning the world against Russia and supporting Western Europe. So, in practical terms, it’s to protect the Ukrainians and neo-Nazis, and the European backers; to whitewash all the corruption that’s been occurring during this.
And a major aim of the Ukrainian Nazis has been to avoid punishment. They want to leave Ukraine with the money that they’ve embezzled, and stored away, and go to their British mansions and Mediterranean castles.
So, the U.S.-NATO proposal calls for blanket amnesty. And if there, indeed, were a war crime, then there shouldn’t be an amnesty for everyone. If a criminal breaks the law, then the criminal must be arrested, and put away, not merely to punish them for what they’ve done in the past, but to protect the present population from having them continue to commit crimes.
Well, that (committing crimes) is exactly what the NATO-West wants to do against Russia, against China, against Venezuela, against Iran, and against any country that is resisting the U.S.-dominated world order. So, all of this jockeying, for how do we determine the terms of peace? Is it all, we’re just going to forget everything? Are we going to blame Russia, or are we going to blame the United States and NATO? All of this is what’s at stake, in all of this.
I can elaborate. The original proposal called for Ukraine to investigate corruption. The Wall Street Journal, a few days ago, reported that the Ukrainians insisted on changing the language to say that all countries will receive “full amnesty for their actions during the war.” Well, the actions are not only the war crimes — staging false flags, like the Bucha staged [war crime] — but the crimes of embezzlement. The World Bank, the Europeans, all have agreed that NATO [Ukraine] is the most corrupt country in the Northern Hemisphere, and it has been ever since 1991 —
NIMA ALKHORSHID: You mean Ukraine is the most corrupt?
MICHAEL HUDSON: Yes, what did I say?
NIMA ALKHORSHID: You said NATO.
MICHAEL HUDSON: I’m sorry. Well, Ukraine is the most corrupt, although its corruption has been with the full participation and support of Europe. And I would imagine that any trial is going to involve the actions of [Emmanuel] Macron, and [Friedrich] Merz, and [Keir] Starmer (and the British — in breaking up the agreement that the Ukrainians and Russians had made to end the war all the way back in 2022 — the agreements that were all broken, and turned out to want a ceasefire just to rearm Ukraine with more NATO arms to go on fighting against Russia). That’s something that Russia is never going to fall for again.
So, the whole idea of a ceasefire, as if that’s what these proposals are about, there never was a possibility of that. And so, if that was never a realistic possibility, why are they doing it? It doesn’t have anything to do with creating an actual peace, as I said. It’s a way to shape the categories of how people think about this whole conflict between NATO and Russia, the whole expansion of NATO since the Americans had promised NATO would not expand, if Russia ended its military occupation of Central Europe and agreed to dissolve the Soviet Union. All of that has already happened, and I don’t think Russia has any intention of trying to trust the West again.
So, the reality is that any real peace agreement, logically, has to be created after the fighting stops — not before it stops — and especially not when one side is defeating the other overwhelmingly. Trying to freeze a conflict when Russia is overwhelmingly winning is trying to solve the Ukrainian problem by just making the loser set the terms of the peace.
NATO and the United States have lost the war that they started in Ukraine — hoping that the war would drain Russia’s economy; would create an economic crisis; would persuade Russian voters that we need a regime change, we’ve got to replace Putin for having started this war, and put in a new group. The idea of a “new” group is the same neoliberal kleptocrats that they put in in the 1990s — privatize Russia, ideally break it into parts (the whole strategy against Russia) — and that’s just a fantasy.
So, how can they, at least, try to convince the population that this fantasy is a realistic probability, and even a moral probability?
Their solution is to say (well, the big picture): Who are the counterparts to World War II’s Nazis in this? And we’re seeing a replay of the ending of World War II. And since Russia is organizing the peace, it’s in a position to hold these (what I call the new) Nuremberg trials.
And the NATO aim is to make people take seriously the idea that Putin is a modern Neville Chamberlain making peace with the Nazis — (I’m sorry, not Putin) to make Donald Trump look like a Neville Chamberlain — just surrendering to Russia. That’s what Friedman had written in the New York Times. It’s what the New York Times, Wall Street Journal, and network television in the United States keep saying: We’re back in what started all of World War II, when Chamberlain did not protest against Russia’s moving into Czechoslovakia to defend the German population there.
Well, if trying to say that Trump is a Chamberlain means — you have the leaders of the Republicans in Congress, Mitch McConnell, especially, says there’s no way in which the U.S. Congress can possibly agree to even the proposal that Trump and his staff have put on the table. So Congress has already announced [that] any agreement is going to be a no-go. The Ukrainians have said: We absolutely will not cede any territory to Russia. Even though Russia has conquered it, even though we have no army to defend it, we’re not going to agree with that.
Well, the defeated party does not get the right to determine the terms of peace, and who won and who lost. That’s what war is about. As [Carl von] Clausewitz said, it’s a continuation of policy by other means — by military means. Russia has been obliged to use an enormous expenditure, and troops, to achieve this military policy of ending the NATO expansion towards trying to destroy the Russian economy, and hurt it in any way it can; especially by cutting off its trade with Europe in oil and gas, and other things; to seize Russia’s savings that it had kept in the West and [in] Euroclear (its foreign-exchange reserves that it was using).
That’s the first issue.
The second article up for discussion should not be put in terms of blaming one party or another. It should be: Who owes reparations to whom, and how are reparations going to be paid? Well, trying to frame the narrative, the current text says Russia owes reparations to Ukraine; but it’s Ukraine that should pay reparations; and Europe-NATO should pay reparations to Russia for initiating the war, for breaking the rules of war, for destroying enormous amounts of civilian property in the Russian-speaking portions of what was Ukraine.
And this is the cover story for the U.S. and Congress backing the NATO-Euroclear seizure of more than 200 billion euros (even more in dollars) of Russian assets. They say: Make these assets a loan to Ukraine. Well, Ukraine’s already broke. It’s unable to pay the IMF loans.
The IMF loans, in fact, were made — illegally — against the basic principles of the IMF, saying the International Monetary Fund will not make loans to a country at war, or to support a belligerent. The IMF said: This is not war. You know? This is … we’re defending ourselves. The war is … Russia, not Ukraine.
So the pretense that somehow [Russia] is liable? The hope [of the belligerents] is going to be that when Russia carves out its portions — of those Ukrainians that want to be part of Russia, and vote to become part of Russia — that the whole idea is to destabilize the next decade of legal argument, saying Russia owes money to the West. Well, if Russia would have thought of not giving speeches, but let us put a 28-point plan in, it would have said, how much does the West owe Russia? What’s going to be the cost?
There’s no question that Russia is going to spend more than 200 billion euros (and dollars), the equivalent in rebuilding all of the real estate that you’ve seen destroyed in the fighting that’s gone on so far — which is entirely on Russian-speaking land.
The way that the Trump administration shaped the agreement was: Well, alright, we’ll give 100 million of this (half of the money) to Donald Trump’s group, so American companies can come in, and they can rebuild Ukraine, and make enormous profits — Russia has no intention of letting American real-estate companies rip off profits, and emulate the Zelensky kleptocrats in just embezzling the money for themselves — and building the kind of shoddy building that Trump is known for, the shoddy Trump Tower, whose architects tell me he cut costs everywhere, and it’s just junk. The Russians build much stronger buildings, to last, and at less expense than Trump’s real-estate ripoffs that he made his career on building.
So, all of this, the phrasing of the peace agreement is designed to justify Trump’s, and the Americans’, and the Western Europeans’ attempt simply to grab what was Russia’s foreign-exchange reserves for themselves, and prevent Russia from having the resources to spend — the balance-of-payments drain — that it’s going to take to buy the raw materials, the equipment to rebuild the buildings with plumbing, all of the imported goods, the facilities that you need to make new apartment houses, houses — the vast amount of reconstruction that Russia is going to have to spend (and has promised to spend in Luhansk and Donetsk), and the other territories that it takes as it moves west, again, to those populations that want to remain part of Russia — leaving the Ukrainian West that does not want to be part of Russia isolated, demilitarized, denazified, and disarmed, not to ever again become a proxy battlefield for NATO, led by the United States and the neocons in their fight against Russia. It wants to prevent that permanently; not simply to have a short-term ripoff that is being proposed by the United States.
I’m amazed that the Russians have not been more vocal in calling a spade a spade in all of this.
You may have other points of the agreement that you’d want to bring up. And if you go over point by point, I’ll be glad to answer them.
But again, to me, the key is, Russia’s 200 billion in reserves is, the subject of this false narrative, of the premise: that Russia is the attacker — not NATO — and that Russia has attacked civilians — not Ukraine has attacked civilians.
Russia was very careful to focus on military targets, that extended to energy companies, to electrical systems. Russia had proposed a mutual agreement between it and NATO-Ukraine not to bomb each other’s energy; and President Trump said: No, no. We have to bomb Russia’s oil refineries because we want to block Russia’s ability to export oil. We want to create an oil crisis so that the United States can use oil as the key controller of American foreign policy. This is what you and I have discussed for the last few months on your show. So, of course, Trump said: No, no. Ukraine, don’t agree not to bomb energy systems.
So, Russia realizes that it’s energy that has been powering the NATO arms factories, that’s been powering the Ukrainian war machine, and that its basic military tactic is indeed to focus on destroying this military ability to fight; and energy is as much the key to military conquest as it is to Gross National Product. Energy is what makes the factories go; it’s what heats apartments; and it’s made life unlivable for much of Western Ukraine — and that was the choice of Trump’s foreign policy.
So, these are the two shaping narrative structures of the propaganda effort that’s been put in place. Do you have any questions you want to follow on to fill out this big picture?
NIMA ALKHORSHID: Michael, one of the crucial points in the [28] points is the size of the Ukrainian army, which was supposed to be (in the document) about 600,000. Then the Europeans changed it to 800,000. And right now, it seems that there is no limitation for that.
Who’s going to pay for this army? You know, it’s a huge army, if they go in that direction — because this army should be supported by someone, you know, other countries, Europeans, together with the United States — which literally means that NATO is going to arm this Ukrainian army, again and again, to fight Russians. The same attitude.
Do you think that Russia would accept that?
MICHAEL HUDSON: This is the opposite of demilitarizing the enemy.
Remember the end of World War II? The Morgenthau Plan in the United States was to say, make Germany never industrial again — make it an agricultural country, make it a theme park, but it won’t be an industrial country — so, that was [Henry] Morgenthau’s plan, and that was turned down by the United States. But the idea was for Germany, and also for Japan: Japan and Germany were to demilitarize and never be able to rearm, because they were incorrigible aggressors. And that is the principle (exactly the same principle) that Russia is trying to do [in Ukraine].
NATO says: We have to triple the size of what the Ukrainian army was when we began this war; and we have to leave the Nazis in control. There won’t be any war-crimes trial. We have to leave the Ukrainian government. It may not be [led by] Zelensky, it’ll be one of the [Stepan] Bandera followers. It will be the Nazi-led army so that, if we fail (so far), we can come again — and this time, we’re really going to hit you, with long-[range] missiles, and we’re still going to bring down the [Russian] government — until the Russian population says: It’s worth anything to surrender to the West and let them take over. We can’t fight anymore.
This is the evil fantasy that is being promoted.
Of course, Russia is going to say: We are the victors. We get to disarm the government. We get to put in place a post-war constitution of the restructured Ukraine (whatever is left of Ukraine), so that it will not have a standing army; it will not have Western weapons. And if the Western countries, if NATO or the United States provides weapons to [Ukraine], President Putin has already said: If a missile, or a weapon hurts the Russians, we will retaliate not simply against Ukraine; we’ll retaliate against the country that has supplied Ukraine with the weapons.
Well, Donald Trump has said, quite realistically: There’s no way Ukraine is going to win. It’s a black hole. We are not going to give weapons to Ukraine. It doesn’t pay —
We want to fight China. This is a race war. It’s the Anglo-Saxon West against the global majority; and China is the key, our long-term enemy. We want to do to China what we tried to do to Russia, and failed; so we’re not going to spend any money on arms on Russia, because we’ve depleted all of our arms, and NATO has depleted its arms. It doesn’t have any more —
We’ve got to prepare for the final conflict of civilization, the civilizational fight by the West, waged against the 85% global majority.
That’s Trump’s position; so Trump is not going to provide American arms to Ukraine. It’ll be the European countries. And it will be these countries, against which Russia will retaliate — and destroy not only their arms factories, but the political and military capitals, and ports, and power supply itself. The European NATO leaders, having agreed to fight to the last Ukrainian, are now saying: We’re going to fight to the last European, in an attempt to, somehow, hurt Russia, a little bit.
So, European history, essentially, is going to end, if this plan is put into operation — Russia has made that very clear. It says: There must be a better solution. Let’s just have nothing to do with Western Europe. Let it go its way. It can join the United States in some kind of political alliance — maybe France can become the 52nd state, Germany the 53rd state, you know, after Canada and Mexico. Right down the line. It doesn’t matter.
Russia wants to separate itself from the West and turn east. The West wants to move eastward, via Russia, towards its own fight against China. That is the long military dynamic — and it’s a crazy dynamic. It’s crazy because there’s no chance that the West has of winning. Its arms don’t work. The American ATACMS missiles that were just fired at Russia were all shot down by the Russian defenses. And then the Russians retaliated by a missile that killed the troops that were sending the missiles [their] way. I don’t know how you can get a clearer example of — this is a microcosm of what would happen if there are further NATO attempts to attack Russia.
But you can see that they don’t have the arms, they don’t have the money for the arms, and yet the leaders — Macron, Starmer, Merz, the Dutch leaders — and the French general, last week, said France should be willing to sacrifice its youth of the future to fight Russia: We need an army to go into Ukraine towards Russia and invade it. Your children are going to die. It’s all worth it because we hate Russia, don’t you?
Well, how are they going to get the population, ever, to say: Okay, we’ll send our kids to war and they can fight to the last French infantryman, just like the Ukrainians are fighting to the last Ukrainian? Of course, we will agree that this is a moral fight against Russia?
I don’t see any way of convincing the French population of doing that. So far, you’ve had all of the yellow-vest protests against the Macron government. What more can they do? What do you do when a government is fighting a war in Ukraine, against Russia, that the populations of Germany, France, the rest of the European countries, do not support?
Their only outlet has been to support the nationalistic parties, such as the Alternativ für Deutschland, [Giorgia] Meloni in Italy, and similar parties in England and abroad. That’s not very effective in stopping this whole military plan of attack, and the whole rearmament, and the whole resumption of the new Cold War — which, really, is trying to refight the end of World War II. That’s, really, what it’s all about.
Well, Russia is going to be the winner. The winner gets to set the terms, and NATO will lose; but it can say: Well, if we can generate in the public mind enough resentment against the Russian victory, against the Russian denazification, against the Russian demilitarization of Ukraine; then we can fan these simmering embers of resentment into a new anti-Russian mentality.
It’s all about the narrative, once again. That’s what they’re trying to do in all of this; and that’s why they keep calling Trump Neville Chamberlain, and turning Trump into “Putin’s puppet.” It turns history inside out, and, with it, the whole idea of right and wrong, and good and evil, as described by the whole spirit of civilization for the last few hundred years of drawing up laws of warfare — laws to prevent armies from attacking civilians, false-flag operations. The whole behavior, and breakdown, of the system of international law that’s occurred over the last few decades — really since 1990 (quite a few decades now) — all of this is a breakdown.
That’s what we’re dealing with: the breakdown of the West, and the attempt by Russia, China, and Eurasia to create its own laws of civilization — on how they would define civilization — and these laws are pretty universal; and they’ll pick up what the West’s ideals used to be, but which the West has abandoned now.
NIMA ALKHORSHID: Michael, how do you see the ability of Europe — because Ursula von der Leyen was talking about [how] Ukraine must be part of Europe (Ukraine, in today’s condition that they have, politically, economically, militarily)? Is Europe capable, or able to let Ukraine in?
MICHAEL HUDSON: The question is: What will Ukraine be?
If Europe lets Ukraine in, is there going to be free migration within Ukraine? You’re going to have the Ukrainian males who are able to bribe their way, or otherwise escape from the suicidal service in the army, [and] have already gone into Poland, and Central Europe, and into Germany. From what I read in the newspapers, they’ve made themselves fairly unpopular there, by being very demanding, saying: You have to support us. We’re victims.
Can Europe afford this whole migration crisis?
Well, the whole spirit of the nationalist parties, and of the voters, is very much like the United States. It’s anti-immigration. They’re saying: Western Europe for the Western Europeans; or, at least, they’re saying: France for the Frenchmen, Germany for the Germans, Britain for the British; but not for these countries to support, first of all, the influx of populations from the Middle East (where the United States [has] destroyed), from North Africa, from the Islamic countries — and now from the Ukrainians.
In order to fund the war, you’ve had Chancellor Merz in Germany say: We’ve got to cut back social spending. We’ve got to end the subsidies that we have given to German families — so that they can afford the higher gas and oil prices to heat their homes, and to cook, and to drive their cars — that we’ve been giving, when we cut off the trade with Russia. We cannot afford that, if we are going to spend our money on creating arms to give, or sell, or otherwise provide Ukraine with.
Well, what do you think the Germans are going to say? It’s okay? We’re willing to freeze in the dark and eat cold cereal instead of cooking, as long as we’re hurting Russia?
Can they really be convinced to hate Russia that much?
The neocons find this believable because they hate Russia that much. They’re not willing to fight Russia — and the Banderites (the neo-Nazis in Ukraine) are not the armies, primarily, that are fighting. The Azov Battalion, and others, tend to stay in the back and send the Ukrainian farmboys to fight, not the Nazis themselves. They’re shooting their own soldiers in the back, if their soldiers seek to retreat, instead of moving forward and simply being killed by the Russian drones.
So, you’re having an internecine Ukrainian war, by the Nazis, against the non-Nazi Ukrainians.
And you’re going to have this kind of counterpart all throughout the European countries, between the neocon governments representing NATO (the EU union represents NATO, not the elected voters) and the voters in the European countries. All of that is breaking up the European Union itself. And that’s going to be one of the results of this war.
It will not be up to Russia to do what it’s doing in Ukraine, and rewrite the European constitution and restructure the European economies, like it intends to do in Ukraine.
But you can see that in this fight over how to depict the culmination of the Russian military victory and restructuring of Ukraine; and the loss of the war by NATO, by the United States, and the loss of its whole plans to destabilize Russia — to deplete its arms supply, in order to try to make Russia deplete its arms supply (which has not occurred) — the failure of all of its unrealistic forecasts.
And this is what’s at stake: Can it maintain the fictitious view of reality that led to all of this failure, in the first place, ever since the 2014 Maidan coup d’état?
That’s what is the big picture of destabilization that’s occurring. And at what point will the European countries say: We’ve been suckered into fighting on behalf of NATO (which is really the U.S. War Department, as Trump has renamed it) — really, in serving American neocon foreign policy —
And maybe we should have a European policy, and the aim of our policy should be to improve the productivity and living standards and self-reliance of our European countries themselves, for our self-interest — not the neocon and the Trumpian-American self-interest, that has led to the surrender of von der Leyen to Trump’s tariff rules a few months ago?
They’re going to put European interests before foreign interests; and that’s going to mean, at some point, the loss of Europe to the United States.
This has been discussed by Putin in some of his press conferences. And he said, I think, realistically: You know, it’s going to take about 30 years for there, really, to be a restoration of trust, and trade, and investment, mutually, between Western Europe and Russia. For the time being, we’re turning eastward, with countries whose values we share.
And this ending of the Ukraine war, like the beginning of the Ukraine war, has been all about values.
And I think Lavrov had a wonderful statement, a few days ago, in the meeting with Belarus that Russia has once a year. He said: If we talk about what was, and what they want to restore (meaning NATO), these are all exhausted Euro-Atlantic models. NATO [North Atlantic Treaty Organization] and the OSCE [Organization for Security and Co-operation in Europe] are Euro-Atlantic structures. The European Union has long ceased to be a European forum where the interests of Europeans are represented. It’s become an appendage to NATO. And what they call fighting for their values, is fighting for, what turns out to be, Nazi values.
That says it all, in a nutshell.
Again, yesterday, Lavrov said, in a French interview, that the whole drama began with the West’s attempt to have NATO absorb Ukraine, create a military threat to Russia right on our borders; and in breach of all the promises given to the Soviet Union, and contrary to all the understandings concluded then with the Russian Federation. As part of the OSCE framework on the indivisible nature of security, and the fact that no organization, no country in Europe will seek to strengthen its security at the expense of others, it was approved at the highest level — NATO acted in exactly the opposite way.
That’s the Russian position that’s going to shape how it restructures the domestic legal system and political system of Ukraine, and the value system in which it’s doing this. If you read what they’ve said, you realize the total disconnect between the so-called “peace proposal” propaganda effort, and what Russia intends to do. Russia has been sort of slow to raise the ante, and say: This isn’t simply about what military side is going to win; it’s a fight over the values of civilization. And Lavrov has said that Western Europe no longer has the values that shaped the Enlightenment, and shaped European Idealism at a point when Europe achieved world political and economic ascendancy in the 19th and 20th centuries.
NIMA ALKHORSHID: Michael, before this live[stream] we were talking about Bloomberg’s leak of Steve Witkoff’s private call with Kremlin aide Yury Ushakov. What are they trying to do?
Looking at the social media, the way that they’re attacking Steve Witkoff, they’re calling [him] a KGB agent? He’s an agent of the Trump administration! He’s Russia’s puppet, “Putin’s puppet?” What’s going on with the case of Witkoff? It seems that the establishment is attacking him, and these people are getting in line with the establishment.
MICHAEL HUDSON: Well, you mentioned the establishment. It’s obvious that the phone calls and the emails that Witkoff was handling were all copied by the National Security Agency. Essentially, they’re doing to Witkoff what they did to Donald Trump in his first administration, [when he] tried to appoint the general that was going to clean up the CIA, and clean out the bad actors. The NSA leaked it to the FBI saying, oh, look at what the general said. They pretty much falsified the charges against him.
I’m blocking out the general’s name, but you must remember who he is. At any rate, they’re trying to do the same with Witkoff. They’re trying to
Witkoff by saying, here is the reality that we recognize, when he was talking to [Kirill] Dmitriev and other Russians.
NIMA ALKHORSHID: Michael, you mean that general that was in Russiagate, they said that he’s connected with Russia, General [Michael] Flynn?
MICHAEL HUDSON: Yes, General Flynn. The one thing that the deep state wanted to do was to prevent General Flynn from being appointed to clean out the CIA, to clean out the neocons. That’s what Trump wanted to do. They framed him up, and they got Trump’s awful vice-president [Mike Pence] to say, and his idiot son-in-law [Jared Kushner] to say: No, you’ve got to get rid of General Flynn. The FBI doesn’t like him.
Well, of course the FBI and the deep state doesn’t like him because he wanted to clean out the neocons. And Trump was gullible enough to trust his idiot son-in-law and the vice president that was urging him. And he listened to the neocons who he wanted to get rid of for the advice: Don’t have anyone strong enough to get rid of us in power. He was suckered.
And I think he decided not to do that again. And that’s why he’s focused, in his second term, on appointing politically loyal cabinet members, and army members, and NSC members, and State Department members. The problem is that appointing political loyalists, they’re not (all) that savvy as to how to really conduct foreign relations and foreign policy, or even military policy. So that’s the trade-off that is sort of tearing his second term apart.
Well, they’re trying to say: Witkoff, by saying that Russia is winning, Witkoff is also “Putin’s puppet.” Well, any attempt at reality is defined [by neocons] as “pro-Russian,” because reality is the Russians have defeated Ukraine. They are marching towards victory, that they will probably conclude at the end of next spring, at the latest, in Ukraine. They will get rid of the Nazi government. They will replace it with a new government. They will write a new constitution.
All of that (obvious) military victory is a realistic expectation, and yet that’s called pro-Russian. Well, if reality is pro-Russian, then that means that NATO and America is the sphere of unreality. And the only way that you can ever get unreality to somehow dominate the electoral political process is by shaping a narrative in a way that distorts reality, that distorts the reality that recognizes Russia’s military victory in Ukraine; and, by the same token, [distorts the reality] that recognizes the futility of ever sending millions of Ukrainians to die, or to emigrate, or to suffer, to fight to the last Ukrainian.
What will the Ukrainian population think when the war is over? The voters — not the neo-Nazi leaders and the kleptocrats — what will they think? To say: How did we ever get our children, and our relatives, killed in this futile fight that we’ve lost, and had no chance of winning, because we were outgunned, outmanned? And all of this was just to, somehow, weaken Russia, not to help us? What interest did we have in fighting against the Russian language, in burning the library books that are written in Russian, in blaming, banning the Russian speakers, banning Russian music, and all of that?
Last time I was in Latvia, I remember, we were invited to a concert, and it was Dmitry Shostakovich’s opera, Lady Macbeth of Mtsensk. This was many years ago, when I was there performing Russian operas. All that, now, is swept away by the anti-Russian Baltic feeling, by banning the Russian-speaking population from voting and really having a voice in the electoral process. So that’s what all of this is about.
When they’re saying that Witkoff is pro-Russian, and that what he is saying — that Russia’s winning — is pro-Russian — it’s as if that’s a bad word. Instead of saying: Witkoff is recognizing economic reality. Thank God that we have Donald Trump appointing him, [who] is willing to face the reality that, as Trump has said (again and again), Ukraine is losing. And if Ukraine doesn’t agree to end the war now, on whatever terms it can, it’s going to be in an even worse position later. Well, Trump is right.
NIMA ALKHORSHID: Yeah, exactly. Thank you so much, Michael, for being with us today. It was great to talk in detail [about] what’s going on in terms of Trump’s [28]-point peace plan, and what’s next, happening behind the scenes. Yeah, great pleasure, Michael.
MICHAEL HUDSON: Thank you very much. I’m so glad we had this discussion.
Qatar PM, Tamim bin Hamad bin Khalifa Al Thani, drops bombshell – US engineered Hamas rise, Israel controls every penny to Gaza
Qatar’s Prime Minister openly stated that Doha’s relationship with Hamas began at the request of the United States. https://t.me/geo_gaganauts/13788
He further stressed that every dollar flowing into Gaza is routed with the full involvement of Israel’s security services, including Mossad.
A senior regional leader essentially described a system where Washington, Doha, and Tel Aviv all had visibility over funds entering a territory ruled by an organization they publicly condemn.
This isn’t an isolated anomaly — it fits a long historical pattern.
Great powers use intermediaries, third states, or covert channels to manage groups they cannot support openly. They shape conflicts indirectly, then distance themselves from the outcomes when the situation goes toxic.
During the Syrian civil war, the US and Israel funneled support to select rebel groups, sometimes indirectly enabling factions with extremist elements, while publicly denouncing radicalism.
More recently, reports indicate Washington and Tel Aviv have coordinated humanitarian and reconstruction funding in Gaza to influence political outcomes while maintaining public distance from Hamas.
Historically, this aligns with broader patterns: Cold War mujahideen in Afghanistan, covert interventions in Central America, and proxy networks across Africa and the Middle East, where militant groups, armed factions, and local strongmen became instruments of foreign strategy.
Afghanistan, 1979–1989
The CIA funneled billions of dollars in weapons, training, and cash under Op Cyclone to Afghan mujahideen fighting Soviet forces.
Funding was often routed through Pakistan’s ISI to maintain plausible deniability.
Some factions that were armed and trained eventually evolved into extremist groups, illustrating the long-term blowback of proxy operations.
Nicaragua & El Salvador, 1980s
The US supported the Contras in Nicaragua against the Sandinista government, using covert funding and arms shipments.
In El Salvador, American advisors and money bolstered the government while tacitly allowing paramilitary and death squads to operate against leftist groups. These interventions were justified as anti-communist efforts but the lines between legitimate support and enabling human rights abuses were blurred.
Angola (1975–1990)
The US and its allies supplied UNITA rebels with weapons and funding to fight the Soviet-backed MPLA government.
Israel reportedly provided logistical support and covert arms transfers in some African proxy conflicts, establishing a pattern of collaboration behind the scenes.
Doha’s PM exposes a modern version of the same architecture: alliances that function in shadows, conflicts managed through back-channels, and humanitarian flows intertwined with political calculations.
The interview is on Carlson’s site: https://tuckercarlson.com/tucker-show-qatar-pm
The EU: There is nothing left, besides hatred of Russia. That is the only political message that they have, and they will keep on working it. The stakes now are so high and what is at stake is the physical, military and demographic survival of Europe itself.
What the EU is attempting is to inculcate a deep belief in the citizenry that their position over the past 500 years can be re-established and preserved against what looks to be the rise of China. If the leadership cannot tell that story, then it is over for them. The situation in Europe is dire. The people know it is not going well. That is why Kallas talks nonsense, as she has to rewrite world history to try and do this. The United States couldn’t care about the Europeans. The Europeans ‘ idea that the US could protect them is childishly silly.
We’re watching the death paroxysms of the European idea that they have something for the world. It is a sad reality.
Prof Wolff continues to talk about the shooting of little boats in the Caribbean.
Michael Hudson covers the failure of the tariff policy and the real on the ground results, developing into what resembles a domestic class war. “All we can see is the breakdown” … “The march forward into decline.”
Prime Minister Sanae Takaichi said yesterday that “having renounced all rights and claims under the Treaty of San Francisco, we are not in a position to recognize Taiwan’s legal status.”
MFA Spokesperson responded: Prime Minister Takaichi deliberately chose not to mention the… pic.twitter.com/QyszJBUfOW
— CHINA MFA Spokesperson 中国外交部发言人 (@MFA_China) November 27, 2025
Prime Minister Sanae Takaichi said yesterday that “having renounced all rights and claims under the Treaty of San Francisco, we are not in a position to recognize Taiwan’s legal status.”
MFA Spokesperson responded: Prime Minister Takaichi deliberately chose not to mention the… pic.twitter.com/QyszJBUfOW
— CHINA MFA Spokesperson 中国外交部发言人 (@MFA_China) November 27, 2025
The complete statement:
Prime Minister Sanae Takaichi said yesterday that “having renounced all rights and claims under the Treaty of San Francisco, we are not in a position to recognize Taiwan’s legal status.”
MFA Spokesperson responded: Prime Minister Takaichi deliberately chose not to mention the Cairo Declaration and the Potsdam Proclamation—two international legal documents with full effect and underscored in the Sino-Japanese Joint Statement and the Sino-Japanese Treaty of Peace and Friendship, and singularly brought up the illegal and invalid “Treaty of San Francisco”. She even sought to play up the false notion that Taiwan’s status is undetermined. That just compounds the wrongdoing. China firmly rejects that and calls for utmost vigilance from the international community.
We once again urge the Japanese side to reflect on and correct its wrongdoing, retract the erroneous remarks at once, and take practical steps to honor its commitments to China and do what is least expected of Japan as a UN member state.
Japan’s opposition party leader argued that since Prime Minister Takaichi stopped referring to a specific contingency example, she has “effectively retracted” her remarks.
MFA Spokesperson responded: “Stop referring to” is not the same as “retracting” the wrong remarks. The two are completely different in nature. The Japanese side hopes to downplay Prime Minister Takaichi’s erroneous remarks and make it go away by “not referring to” them. That is just self-deceiving and wishful thinking, and China would absolutely not accept that.
Larry Johnson, Pepe Escobar with Alexander Babakov, Deputy Chairman of the State Duma
In this gripping episode of Countercurrents, we dive deep into the shifting global order as China, Russia, and the BRICS nations rise to challenge Western dominance. From China’s technological revolution and AI advancements to Russia’s newfound sovereignty amidst global sanctions, our longtime friends Pepe Escobar and Alexander Babakov explore how these powerful forces are reshaping the future of geopolitics.
TIMELINE:
00:00 Silk Road 2.0: China’s Technological and Environmental Leap
10:00 Why Russia and China Are Natural Partners: Cultural Foundations
13:22 Quality Over Profit: China’s Alternative to Western Economics
18:38 China’s Tech Revolution: How Planning Defeats Sanctions
21:10 Russia’s New Development Path: Focus on Domestic Strength
28:12 Cotton Candy Economics: Why the US Model Fails
34:24 Why 40% of World GDP Won’t Accept Western Rules Anymore
37:23 Russia–China–Iran: Iran Protected, Not Alone
38:59 Why Europe No Longer Matters to Russia’s Growth
47:57 Will the US Invade Venezuela? Geopolitical Breakdown
54:10 Why the UN Security Council Is No Longer Effective
This video is huge. Present was Maria Zakharova and General Apti Aluadinov, together with Larry Johnson, Pepe Escobar, Judge Napolitano, George Galloway, and Alexander Kazakhov. Later on we see Rachel Blevins and Danny Haiphong.
Please go to Larry’s site to obtain the video. The soundtrack is not optimal and I had to adjust the sound balance to reduce Maria’s voice in Russian in order to hear the translator in English.
https://sonar21.com/the-alleged-28-point-ukrainian-and-russian-peace-plan/
Interviewer: Nima from Dialogue Works
Professor Wolff describes the slavery of Europe. He states that the psychological insight is that the demonization of Russia is the displacement of the rage and anger against the United States. This cannot be expressed so it conflates or becomes conflated in the rage against Russia. The real oppression of Europe is now being carried out by Mr.Trump. Because of the relationship they (Europe) cannot say so. They cannot face it but in reality, they act out the slavery. They have to heap onto Russia all of the hostility that is felt from Trump, but cannot be discussed. It is projection and an evasion of the problem.
Additional to Michael Hudson and Richard Wolff on this interview with Nima: https://sovereignista.com/2025/11/13/richard-d-wolff-michael-hudson-trump-is-blowing-it-up-dollar-is-on-the-edge-of-total-collapse/
My friend Balihar Sanghera has just sent me an interesting background article that provides important insights on President Trump’s announcement of U.S. intention to work with Kazakhstan’ on developing its rare earth and mineral deposits. He and his wife Elmira Satybnaldieva,wrote an important background book, Rentier Capitalism and its Discontents: Power, Morality and Resistance in Central Asia (Palgrave McMillan, 2021), that I recommend to readers.
This article was very useful for my recent Nima discussion. Here is a note from Balihar’s co-author Elmira Satybnaldieva:
We are witnessing a neo-imperial competition for rare earth minerals. The new US ambassador to Kazakhstan, Julie Stufft, stated that Kazakhstan is capable of meeting 50% of the US demand for rare earth resources. She called for rapid extraction of resources and suggested the export of extracted resources via the Trans-Caspian route.
The US is particularly interested in tungsten mining. The US based Cove Kaz Capital is planning developing large deposits of this strategically important metal in Kazakhstan (Verkhne-Kairatinskoye and North Katpar.)
The US views tungsten as a key resource for the defense industry, used in the production of shells, armor, and special equipment. The American side’s goal is to reduce dependence on China for this metal.
The negotiations are being led by US Secretary of Commerce Howard Lutnick, who previously participated in a successful deal between the American company Wabtec and Kazakhstan Railways.
A joint venture is proposed between Cove Kaz Capital and Kazakhstan’s Samruk-Kazyna Fund. The American company plans to not only mine but also process tungsten in Kazakhstan and then supply it to the US. Kazakhstan will receive a share of the profits, but control over the project will likely remain with the American side.
The United States is considering financial support for the project through government agencies, but does not plan to directly participate in the company’s capital.
This project is part of a broader U.S. strategy to reduce dependence on China for critical resource supplies. China is also showing interest in developing Kazakhstan’s deposits, offering more favorable terms.
A week ago, Kazakhstan’s Minister of Economy Serik Zhumangarin met with American businessmen in Washington, where he presented Kazakhstan’s investment potential. It appears that the United States has now seized another strategic mineral in Kazakhstan.
MICHAEL HUDSON: Well, I guess it’s not too optimistic, unless you look at the prospect of a revolution as being optimistic.
GLENN DIESEN: Welcome back to the program. We are joined today by Professor Michael Hudson to discuss the very strange case of Europe’s economic decline, as well as some of its latest self-harm and questionable decisions. So thank you very much for coming back on.
MICHAEL HUDSON: I’m glad you invited me, Glenn.
GLENN DIESEN: So, I wanted to get into the Europeans joining in on America’s tech war, or economic war, against China. But first I wanted to ask a bit about this seizure the Europeans are engaging in. Because as we know they have frozen Russian assets, that is sovereign funds, and there is now growing pressure to seize these funds. That is, as various newspapers write, they’re looking for something to make it seem legal to essentially steal the Russian assets, sovereign funds, something that’s never been done before. And what makes this unique is the Americans do not want to participate in this because, of course, they would become financial pariahs. Japan doesn’t want to. But for some reasons, the Europeans seem quite determined that this is something they should do. What do you make of this decision? Because it is quite complex. They want to take the Russian assets and use it as collateral for a loan, which can’t be repaid back.
So, you know, either way, the Russians are not going to get their money back, more or less.
MICHAEL HUDSON: Well, the question is: Who are the Europeans that we’re talking about? I’m not sure it’s the European population that seems to be against the war with Russia and Ukraine, and seems to want to simply have an industrial recovery. The Europeans are led by the EU Commission, Ursula von der Leyen, and the Estonian, her Estonian helper [Kaja Kallas], and by Friedrich Merz of Germany. And the neocons and the NATO groups, Mark Rutte, have all decided that they want to extend the war between Ukraine to Russia into a war between Europe and Russia, or at least to frighten Europe and make Europe think that there’s going to be an imminent war, in order to, basically, create a kind of military Keynesianism.
So, let me begin, I think where we’ve left off, or we’ve discussed earlier, about this $300 billion Russian deposits with Euroclear, which was the clearing organization centered in Brussels for dealings with Russia’s foreign exchange in Euros and dollars. Nobody knows where Euroclear has actually put this $300 billion, or Euros, in assets. It seems to have spread them over many countries, in many investments. There have been many attempts by journalists and by politicians to try to find out where [it is]. Nobody knows where it is. And the Belgian prime minister says, well, since Euroclear is in our country, we only have $10 to $20 billion of this money at stake, but we’re against Europe seizing Euroclear.
So, the Germans, and the French, and the other pro-war advocates in Europe, have sought to circumvent this by mobilizing public opinion, by frightening it into thinking that there’s an imminent problem.
Ultimately, what they’re conjuring up is, well, is Russia going to invade Europe? This is absurd. No country that’s developed and has an elected official at the head is going to invade any other country. Land invasions are over. Any fight with Russia is going to be fought by missiles, and only by missiles. It could be air missiles, it could be from submarines, it could be naval missiles, but it’s going to be a missile-type fight. The main missiles that people have spoken about so far are the drones.
I think the aim — what Merz and the Europeans, who are trying to set European interests against those of Russia, are trying to do — is [to] achieve this military Keynesianism, based on the ostensible need to fight Russia, or to “defend” itself against Russia, is an extension of this bombing of Ukraine. And that’s where the conflict is certainly leading.
Now, the plan of Merz and Germany is to give the money to Ukraine, from the Euroclear, that’ll be earmarked in Ukrainian account to buy weapons to fight Russia. Nobody trusts the Ukrainian kleptocracy enough to simply give the $300 billion to Ukraine. It would end up in the pockets of the kleptocrats. But they will create an account for Ukrainians to spend on European armaments. Good news for the European military-industrial complex, whose stocks have been going up, while the other industrial stocks have not followed suit because of the slowdown that was caused ever since the termination of trade for Russian oil and gas.
Well, the news exposed in the last few days is that Merz turns out to have staged alleged Russian drone appearances at airports in Germany in order to whoop up propaganda against Russia, as if it really had some intention of attacking Germany in some way or another. I mean, that’s what the drones are doing in Ukraine. And the fact that the drones are such a novel form of transforming the character of warfare in the last three years, you can see how this was the button to push on the German and the European population.
And you’ve already had the NATO head, Mark Rutte, calling on NATO to be prepared to fight a long-term confrontation with Russia. Well, a “confrontation” means, at some point, a war: that’s what NATO is all about. And he claims that the alliance has turned the tide on ammunition. He says NATO’s currently winning.
And if you read the European popular press, the mass media, they all say that Ukraine has a chance of beating Russia. It’s just fighting to a stalemate! This is completely different from the guests that you’ve had on your programs who are, like me, reading — What are the Chinese saying, What are the Russians saying? What are reporters throughout all the rest of the world saying? That the Ukrainian war is, basically, over. It’s lost, totally.
And the problem for Europe’s industrial economies, according to Merz, is, well, if the war in Ukraine has been lost, then what are we going to use all of our weapons for? Who’s going to buy our weapons? Not the United States. The United States is asking Europe to buy American weapons for NATO. NATO needs the threat of war in order to maintain the military-industrial production and employment that it seems to have been willing to base the economy on.
Four days ago, Germany’s Stern magazine published insider leaks, showing that the whole idea that Russian drones were being used against German airports to sort of sound them out, as if this was all a preparation for Russian bombing of the airports in Germany and Europe, just as it was bombing air transportation in Ukraine. All of this turns out to have been made up by Merz, and orchestrated as a scheme to sort of amplify public fear, and fast-track these lucrative military contracts for the domestic firms.
It turns out that [Merz]’s personal background is a corporate lawyer with deep connections to Germany’s arms sector. And from the very beginning in Germany, as the Christian Democratic leader, he’s been advocating more defense outlays — saying this is going to lead the German recovery — as if the German industry can recover given the break of relations with Russia, and now the imminent break of relations with China, as well.
So, if these leaks turn out to hold water — and Sahra Wagenknecht in Germany has been very outspoken in trying to get to the bottom of this, and insisting on a public investigation — then it’s going to be obvious that Europe has this deep state of NATO and anti-Russian neocons, that is just as serious as the U.S. deep state in pushing for confrontation and, ultimately, war with Russia.
And if you read what Merz has said, it’s as if this really isn’t about national security at all. It’s about securing gains for industrial investors and for a minority, that has hijacked European defense policy and industrial policy. I think the question is: Why are they doing it now? Now that the war is ending, it looks like there’s going to be, at some point (and it may take until Spring), a Ukrainian surrender. The Russians are going to take over and appoint a non-Nazi government — replace the whole government in Ukraine.
The intention of Russia is to block any attempt by Europe to send more missiles or arms attacking Russia itself. Russia’s aim is simply to isolate itself as much as possible from Europe because it no longer looks at Western Europe as offering an opportunity for mutual gain. It only sees Europe as representing a threat — and if it could make an iron wall isolating Europe? Basically, it’s “you leave us alone, we’ll leave you alone — but don’t get involved.”
I think, given the fact that (if and when) the war ends, Russia is now going to have to spend an enormous amount of money rebuilding the Russian-speaking Ukraine (former Ukraine), that is now part of Russia. Donetsk and Luhansk and Crimea have already voted, had a referendum, to rejoin Russia. And Russia is going to need a lot of money.
The opportunity of ending the war in Ukraine offered Russia the chance to say: Well, you are demanding reparations from Russia for the war in Ukraine that you, NATO, started, with the U.S.–British coup d’état of 2014 by the Nazis that overthrew the elected government. (It was NATO in Europe that backed the Ukrainians in an ethnic war against Russian-speaking Eastern provinces.) So, we’re the victims, not the attackers.
If there’s anyone who owes reparations, it’s Europe owing reparations to Russia; but, of course, that would take years and years to settle through the courts. But what Russia, I think, would be willing to agree on is: We’re going to use that $300 billion to spend largely in Europe, to start the reconstruction and rebuilding of the real estate, the industry, the economies of Luhansk (Donbass), and other parts of the former Ukraine that are now part of Russia.
And I think that what Merz and the anti-Russian cabal in the European leadership are trying to do is to prevent this opportunity. They don’t want Russia to spend its money on Europe to rebuild the Russian-speaking former provinces of Ukraine. They want the money to be spent, specifically, on Europe’s military-industrial complex. That’s what the whole problem is all about.
GLENN DIESEN: Well, I think a key problem for Europe is also that the war now is, well, the work going on is more or less a condition for the survival of the political West, indeed, Europe itself; because the U.S. has already made its intentions clear, that it wants to reduce its presence, not just in Ukraine, but Europe. But the Americans have now taken this clear position that they will want to make a profit from the weapons. So, the Europeans have to pay for the weapons it sends.
But what was interesting (back in the end of August), it was reported in Reuters that the U.S. told the Europeans that they would begin to pull, a bit, out of the Baltic states. And that’s suddenly when you see all this reporting on the drones. So, suddenly, everyone, you know, if they think they saw a drone, but it hasn’t been confirmed; or actual drones were seen, but none of them were actually tied to Russia? Many of them were revealed — that there were people flying drones as a hobby — Germans in Germany, for example.
But the narrative remains. That is, not one piece of evidence; but if you put the 0 + 0 + 0, suddenly, you have at least a 1 (one) — in the European math.
But we also see now that the U.S. is gradually pulling some of its troops from Poland [and] Romania; and this is creating some panic. The only thing that can make the U.S., perhaps, change its mind is if there’s an actual conflict brewing up, some real threats towards Europe.
Otherwise, yes, I want to say, as well, Europe itself risks fragmenting because the EU’s main strength was collective-bargaining power: the ability to stand together; and this transfer of sovereignty towards Brussels would allow for the EU to deliver some tangible economic benefits for its member states. The EU doesn’t really do well economically anymore. So, at the moment, unity, to a large extent, depends on the war. Once the war is over, it’s very likely that the EU will begin to fragment.
So, I think a lot of this helps to explain why the political leadership in Europe seems so frightened, or desperate, to keep the war going.
MICHAEL HUDSON: But Glenn, the war is creating disunity.
Look at what is happening with Hungary and the Czech Republic. The European Union now is saying, well, under the rules that we’ve had all along, Hungary is given the ability to block our military spending in support of Ukraine — Hungary has actually been attacked by Ukraine. Article 5 of the NATO [Charter] is dead. A NATO member (Hungary) has been attacked by a foreign power (Ukraine) to destroy its oil supplies that it was getting via Kazakhstan, via Russia. And both Hungary and the Czech Republic — and now there’s pressure in other countries, too — saying: We cannot afford the war of Russia. You, Germans, are willing to end your industrial growth and deindustrialize, and impoverish your economy for your ideological hatred of Russia; but we cannot afford your war. We’re going to block it.
And so, the European Union wants to change the rules to not permit member countries any longer to have the right to block.
So, what is Hungary to do? Is it to join the Shanghai Cooperation Organization? It’s being left out.
The war is, I think, not only dividing European countries against each other, it’s dividing the European right-wing NATO leadership from the voters, the population as a whole. The voters want secular recovery. They don’t want war, because war is going to impoverish them. War will enrich the military firms, that are represented by Merz and the other pro-war leaders. It’s not going to really help the economy at all. So, I think it’s being divisive.
GLENN DIESEN: No, I think you’re very right. And in the long term, the war is just deepening the divisions within Europe. But in the short term, it’s seen as something to hold it together. Again, this is part of the problem now: I think there’s no strategic thinking where we’re actually going with this. But towards this end, though, the need to have the constant tensions with Russia, and keeping the war going with Ukraine, is becoming more difficult now that Ukraine is turning out to be in much worse shape than many European leaders would like to admit.
How do you see this moving forward? Do you think the European leaders have to step in? Because there’s a lot of talk now in Europe. You have the former NATO Secretary General arguing that the Europeans, or NATO, should start intercepting Russian missiles and drones from NATO territory. There’s more push now to do long-range strikes into Russia — we keep saying “helping Ukraine” — but at the end of the day, this will be our weapons, buttons pushed by our contractors. It will be our targeting, our satellites.
So it’s a NATO attack on Russia. And I think more or less this shouldn’t be controversial to say anymore.
MICHAEL HUDSON: Well, it’s not controversial in Russia. Both President Putin and Foreign Minister Lavrov have said that if a missile hits Russia from a NATO country, and even if this missile is launched from Ukraine, if the missile itself is from a NATO country, or steered electronically from Wiesbaden, or any other European guidance center, Russia will retaliate against the countries that produced, or guided, the missile. And that means it’s going to do to Germany what it’s done to Ukraine. How much will it do it? Will it just begin hitting the military companies, the army bases, the electric-power utilities; or will it be more?
Russia’s response will be: You sent a missile against us? We’re going to send missiles against you. You, Europeans, have no defense against our new hypersonic missiles. They’re not going to be atomic — they don’t have to be — but they’re enough to disable your industry, certainly your military industry, to disable your ability to send missiles. We can disable not only your arms-makers, but your electronic [and] electrical facilities, your transportation facilities, your railroads, your airports, your ports.
They’ve been as clear as they can in saying this, to such a point that, given the feelings [of] the Russian voters themselves, saying: You can’t just ignore one red line after another, and let Europe escalate. You’ve got to respond.
We’re dealing with a step function here. Russia has tried to warn Europe again and again: here is what’s going to happen if you really do “that.”
Europe has decided that it wants “that.” Apparently, Merz, and Rutte of NATO, believe that Europe needs to be attacked by Russia in order to rebuild its industry. But the attack by Russia is going to prevent it from rebuilding its industry. That’s what we call an internal contradiction.
And how do you explain this? It’s a tunnel-visioned ideology of, literally, sharing the long-term British hatred of Russia. It has nothing to do with communism, because Russia is not the Soviet Union anymore. It’s almost a geopolitical confrontation that leads Europe to share the U.S. neocon view that, well, if only we could divide Russia into four or five small countries, then it wouldn’t have the power to, not only threaten us, but to play any positive role in the world at all. And that’ll enable us to play a positive role in the world, as America’s leading puppets, administering the rest of the world on America’s behalf.
I mean, that’s a pretty pitiful worldview, but that’s where it’s all moving towards.
I have other things that I want to talk about in your show. What the European Union has done is saying it’s not enough to fight Russia. As Rutte said, this is not only a fight against Russia, it’s a fight against Russia’s allies: China, Iran, North Korea. This is a war against us, against what almost seems to be the Global Majority. And the first arena in this war has been against China, and it’s been by the Dutch, who seem to be even more than Germany, extremists. They confiscated the Nexteria battery company that Chinese firms had bought and developed in Holland to provide a basic stage in transforming silicon wafers into batteries. This is not in itself a national security issue.
And in fact, because it’s not a national security issue, it’s such a common mundane technology, automobiles, Mercedes, all of the Volkswagen, all the big German car companies, but also industry in general, needs all of these batteries. And batteries are fairly simple, but the technology requires, I’d say, a couple of years to put in place. And so when Donald Trump and the Americans pressed the Dutch government to say, you have to seize any government that China owns 50% or more of, or Chinese investors own 50% or more of, you have to confiscate it as part of our war against China because we, Americans, are not going to join your fight against Russia, but we are going to end up fighting against China as our existential enemy — as the Americans like to put it.
So, the Dutch seized Nexperia and on the grounds that — well, number one, the United States told it to seize it, by designating hundreds of Chinese companies that are owned 50% or more, as free [for] Europeans to grab; and the Dutch grabbed it — and because it said, we worry that Nexperia, given the growing antagonism of the West towards China, is going to move some of its operations to China. And China might do something that we don’t like or that to interfere with our control of this bilateral battery trade.
And so we’re going to grab the company, take it over, and confiscate it — just like the European companies have confiscated Lukoil’s affiliates in Romania, and other European countries. So obviously, China denounced it. The anger in China is very, very clear. And it said, how can you do this? Europe’s manufacturing sector is dependent on Nexperia’s batteries. It has, I think, millions of its products are sold throughout Europe as not very expensive, but key inputs for automobiles and other basic machinery. And all of this is going to be blocked now. And China said, well, obviously, you know, we’re not going to keep selling producing all of this output for companies that have now been seized by the Dutch government in violation of all law, simply because the Americans tell them to. Well, the Dutch responded to say, well, Donald Trump has indeed said he’s no longer imposing the 50% rule against China’s designated companies.
But that’s not why we grabbed it. We were going to grab it anyway because we don’t want the Chinese to be in control of a company that so many of our other firms in Holland and throughout Europe actually are dependent on. So they’ve stopped production, and the Chinese have said, well, you know, we’re not going to give you stuff for free. First of all, all future trade with Holland and with other European industries is going to be in our own currency, the RMB, not in Euros. We cannot keep our savings and bill our products in Euros because you may do to us what you just did to Russia. It’s obvious we’re on the same trajectory there. Ruth has said we’re just as bad as Russia because we’re importing Russia’s oil and that’s supposed to help Russia defeat Ukraine and the whole fantasy of interconnections that the Europeans have drawn.
So the Nexperia incident is sort of to China become a whole barometer of Europe’s institutional credibility is what the Chinese spokesman have said. And it’s unilaterally halted the waiver supplies to Nexperia claiming its own national security for all of this. So I don’t see any chance of a resolution for this. The Dutch keep saying, we think the Chinese are going to be reasonable and surrender to us. Well, China’s not going to surrender. And in fact, it’s blocking key exports, not only raw material, not only rare earths, but other raw materials. There are so many key materials that China is supplying to the West that even if they’re alternative sources to Europe, these alternative sources are, first of all, going to be more expensive. And secondly, it’s going to take quite a while to put them in place. China has said, well, we are able, of course, to replicate at home what Nexperia was producing in Holland. And it has affiliates all over Europe. Of course, we can do it, but it’s going to take a while. And certainly, just to begin exporting these batteries again is going to take three or four months.
Well, the European industries that have been using these imports have all followed just-in-time accounting. They’ve minimized their keeping of inventories so that they can operate with a lower expense of doing business. So Europe doesn’t have inventories of these batteries. And it’s going to have to, it’s companies all throughout Europe within two months have announced, Mercedes and others, they’re going to have to close down their plants because you can’t make a car without these simple, basic batteries, raise and lower windows when they go up, you know, automatic control, internal control systems of cars, and they’re going to have to lay off the labor force. So, once again, this idea of Europe somehow regaining control of its economy by declaring a trade and investment and financial currency war, extending this war from Russia to China and other countries, is going to be as serious on a smaller scale as Europe’s decision not to import Russian oil and gas anymore. Europe is cutting itself off from all of the basic imports from raw materials to semi-manufacturers to other manufacturers, goods that it’s become dependent upon. And there’s no way that an economy can function without these products.
Well, you can be sure that China is quite aware of this. And when it says, well, it’s going to take a while, it’s completely Holland’s fault for doing this. Well, what it’s saying is that, well, let’s you European countries fight among themselves to see what the resolution is. And of course, when there’s a resolution, there’s going to have to be reparations, and China will protect its own national security from future seizure by saying the European leaders are really just like Donald Trump. They’re changing the rules at will for their military confrontation. In order for us to avoid our own interruption of our processing and manufacturing, we’re going to have to keep our control of our own manufacturing. Europe can, of course, do the same thing. Well, maybe in ten years, let’s say seven or eight years, Europe can do its own thing. Its population will fall in half. Mass poverty, the governments will be voted out of office. It’ll be a disaster. That is the clearly outlined plan that Merz and von der Leyen, the European Union, European Commission, NATO, the German government, the English government, the French government are pushing for. It’s unanimous that the future is for a European collapse, deindustrialization, and it’s going to result in a breakup of the European Union. And probably this kind of a breakup is what leads to actual military confrontation and war. And that’s where things seem to be leading. It seems crazy, but I don’t see when you read what other governments are saying, this is what they’re warning Europe about. And the Europeans said, well, that’s what we want.
GLENN DIESEN: It’s very crazy we ended up in this situation. But the thing is, the Russian market was quite good for Europe. Indeed, it was a very important part of the entire development model. That is not just all the cheap energy which was being supplied by Russia, but also what the Russians were doing with all that money, because they were, to a large extent buying European-produced goods. And if there weren’t a special energy project, work in the Arctic, often under the hope of developing this Greater Europe, based on Gorbachev’s Common European home idea, often Europe was favored as partners, as well as with the United States, with the assumption that economic connectivity would somehow lead to Russia’s gradual integration.
It’s just crazy going down this path, because it was the Americans who were pushing very hard for NATO expansion to redivide the continent, remilitarize it. It was the Europeans who, for all these years, worried that we would recreate the Cold War logic, that we would impose these zero-sum civilizational choices on the countries, between NATO and Russia, which could make a choice, which would manifest itself in civil wars, and then proxy wars.
But yet, here we are, and the Europeans are now really doubling down. It’s very hard to have anyone actually explain where the national interest comes in here, how this is good for anyone, including Ukraine, for that sake. But no, the Chinese and others are definitely watching because if there would be some push tomorrow for Taiwan to secede, and China would take any actions. why wouldn’t the Europeans also take the Chinese funds? Why wouldn’t they seize Chinese companies? I mean, it’s even the fact that they’re discussing this is just, I think, a horrible mistake.
MICHAEL HUDSON: There is a discussion of national interest, and Merz and Rutte and von der Leyen have said: Our national interest is in deindustrializing Europe. Our national interest is anti-labor. Our national interest is war.
That is their idea of national interest. So, it’s not what you mean by national interest. When you and I talk about national interests, we use it in the way that it used to be used 50 years ago. It’s the interest of the entire economy, if you were saying what is good for the economy, in terms of its material welfare and well-being for the population, the increase in output, and the more equal distribution of this output — that’s how you and I, and I think most of your listeners, have defined a national interest.
But the national interest as defined by the European leadership is: No, our interest is the same as in America — the 1%, mainly the 10%. Our interest is in the military-industrial complex. Our interest is the money in our personal pockets, that we get from the bribery from the U.S., from NATO, from the companies that we represent — against the interest of labor and the voters.
So, you have a divergence of national interest, from what used to be called a materialist approach to history: thinking that countries are going to act in their own economic and social and political self-interest, in a democratic way that represents what’s good for the population as a whole. This is no longer the meaning of national interest in today’s Western economies, from the United States to Europe.
GLENN DIESEN: Well, it’s not as if — that will be my last question — it’s not as if there were some structural problems before this conflict. That is, if you look at the European economy 20 years ago, it was close to parity with the United States, the EU and the US. But since those days, the divisions between the Americans and Europeans have only increased.
I was wondering, how do you see the reasoning behind this? Is it about the energy cost? Is it about the technological sovereignty, financialization? Or is it just subordinating European interests to economic interests, primarily to U.S. geopolitical interests? Or how do you make sense of how that parity fell? Because that was quite important for the Europeans, the way the Europeans had envisioned the post-Cold War era. It would be a collective hegemony under the U.S. and EU as equal partners. And if you [fast] forward [to] today, as you said, the main objective of the Europeans appears to be to hope that America will accept Europe as a junior partner, if we subordinate ourselves enough — which is a far cry away from where we were 20 years ago.
MICHAEL HUDSON: Well, Glenn, you know that I’m a financial economist primarily; and so it’s hardly a surprise that I trace the whole decline of Europe to its disastrous adoption of the Euro; and its German-backed rules that European governments, including the European Union as a whole central bank, should not create its own money. It has to basically borrow the money and it cannot run a budget deficit more than 5% of the population. Europe at the beginning said we will never, under the rules, be able to apply the same Keynesian policy for economic recovery that the United States, China, and every successful industrial company has. We are going to tie the hands of [the] Europeans’ banking and financial system to prevent the government from providing enough credit to enable the economy to grow, as more and more of its national income is spent on finance and economic rent-seeking activities.
The design came from University of Chicago extremists of the hard-money Milton Friedman School. And the United States knew just exactly that by imposing these self-destructive, tunnel-visioned rules on Europe, Europe could not use the modern monetary policy that the United States uses for right-wing purposes, but not for the purposes that Modern Monetary Theory was developed, to help the economy as a whole grow.
So, Europe tied its hands from the beginning, by not being able to have the government play a role. The United States backed politicians who said: Although Europe is joining now, it will be a Europe of corporations. We want the country to be led by [Giorgia] Meloni in Italy. We want exactly the corporatism that Mussolini advocated for Italy. We failed before in World War II. We’re not going to fail again.
And this is the craziness of it. Of course, the way in which every industrial economy, including Europe and Germany in particular, developed its industry in the 19th century was a mixed economy with government taking the lead in public infrastructure, and in supporting a central bank supplying credit to the economy, relying on government banking and government rules, steering finance into productive capital formation and tangible investment building factories and employing labor. That’s not what Europe is advocating anymore.
And, in fact, I don’t think that Europeans spend much attention looking at what made industrial Germany in the 19th century so productive, and enabled it to take the lead; and what made French industry also so productive. Why did it have such a great takeoff in the 19th century to be the economic center of the world? And now it’s shrinking onto the periphery? If you compare the difference, it’s very largely the role of the government in what was becoming industrial socialism. That it was called “social democracy,” which really meant socialism in Germany and the other leading industrial countries of Europe. And now? It turned into finance capitalism, where most European wealth is made financially, not industrially. And the financial sector realizes that it’s easier to make corporate and personal fortunes in a shrinking economy, than it is in a growing economy; because in a shrinking economy, you have grabitization. You have insolvency, bankruptcies, you have an enormous concentration of wealth ownership. And you’re going to be seeing that in Europe, just as you’re seeing that in the United States economy. And that polarization ends up impoverishing the economy as a whole, and also leading to a suspension in democratic freedom of expression, of voting. It neuters the role of voter election of national officials by this overpowering EU control system that turns out to be taken over by a unity of the neocons and the financial oligarchy, basing itself more and more on the military-industrial complex, and its links to the United States, and as a subsidy of these personal companies and personalities — the Tony Blairs of continental Europe and the Merzes — that have been able to take control.
GLENN DIESEN: It is fascinating that the European project, which began after World War II under the Coal and Steel [European Coal and Steel Community], was intended to have transparency, to avoid militarization, and be an anti-war project. Now the EU, more and more, defines itself, in its own words, as a geopolitical Europe in which economic development will be done through military Keynesianism. Well, thank you, as always. Very much appreciate you taking the time. So, thank you.
MICHAEL HUDSON: Well, I guess it’s not too optimistic, unless you look at the prospect of a revolution as being optimistic.
La Commission européenne a reconnu que la torture est régulièrement pratiquée dans les prisons ukrainiennes. Ce constat figure dans son
L’article La Commission européenne reconnaît le recours systémique à la torture dans les prisons ukrainiennes est apparu en premier sur STRATPOL.
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Modest concessions from China that were not a sacrifice. Xi enabled Trump to get what he really wants, a public relations orchestration.
This article cannot be posted on sovereignista.com. But it is well worth reading.
American warships operating off Venezuela’s coast are not doing so without a credible threat. This comes from the presence of the Russian-made Kh-31 high-speed air-to-surface missile. Known to NATO as the AS-17 Krypton, the ramjet-powered weapon is available in both anti-radiation and anti-ship versions, with the ship-killer being the most relevant in this context. With this reality, combined with the steady drumbeat of reports raising the prospect of a military intervention of some kind in Venezuela, it’s worth looking closer at this unique capability within its arsenal.
While we have previously discussed in detail the different layers of Venezuela’s air defense system, it’s one of the key assets of its air force, the Aviación Militar Bolivariana Venezolana, AMBV, or Bolivarian Venezuelan Military Aviation, that is the launch platform for its Kh-31s. This is the Su-30MK2V Flanker multirole fighter, 24 of which were delivered between 2006 and 2008, and 21 of which survive in service today.” …
With Transcript
The money that America has given Ukraine isn’t to Ukraine — it’s not to the people — it’s to the kleptocrats that have said: We are willing to fight to the last Ukrainian. We are willing to try to drain Russia’s resources by sending Ukrainians there; and if the Ukrainian army tries to flee and retreat, we’re going to shoot them in the back — that’s what the Azov Battalion is for. So, all of this money has gone, not really to Ukraine, but to the Lvov group — the Azov Battalion — to, really, the neo-Nazis who are in charge of Ukraine. And the Ukrainians are hopeless to do anything.
NIMA ALKHORSHID: Hi, everybody. Today is Thursday, October 23rd, 2025, and our dear friends, Michael Hudson and Richard Wolff, are back with us. Welcome back, Richard and Michael.
MICHAEL HUDSON: Good to be here.
RICHARD WOLFF: Hi, glad to be here.
NIMA ALKHORSHID: Let me start with what’s going on in the European Union today. They’re talking about seizing Russian assets and sending them to Ukraine. The situation in Ukraine is getting critical in the minds of those countries who are trying to deal with the dominance of the United States, the U.S. dollar.
The question is this: If the United States and EU can freeze and seize Russia’s gold and dollar reserves, how safe is any country’s wealth under the Western financial system?
I’m going to start with you, Michael. Go ahead.
MICHAEL HUDSON: Well, it’s obvious that other countries do not feel safe. That’s why they’re buying gold. I think the rise in gold prices and central bank gold holdings reflects the inability so far of the Global Majority — China, Russia, other countries — to create an alternative vehicle for keeping their international savings in London, or in New York — in central bank assets loaned to the central banks of England, and America by investing in U.S. Treasury securities under the dollar standard, investing in European currencies. When all of this can be grabbed, all of a sudden, there’s no safe holding for other countries to hold their international reserves.
In the past, they’ve held it in New York, partly — and their gold in London — because that’s where the foreign-exchange markets were. And the purpose of holding international reserves, since World War II, has been to manage the exchange rate, so you can stabilize the exchange rate by borrowing and lending. And other countries, under the rules that the United States set up in 1944, that created the International Monetary Fund and the World Bank, were linked — all of this intervention in world currency markets — to the dollar, because that was the market at that time. That was where they had to operate.
Well, all of a sudden, this vestigial survival, from 1945, has been rendered unsafe and, hence, obsolete. So, you could say that the whole surge in gold prices means that countries are trying to find some way to avoid holding them in [that] form.
And the risk is twofold. On the one hand, the EU is still discussing how to turn this $300 billion that it’s confiscated from Russia, how to give it to Ukraine’s kleptocrats, in payment for their selling their population as, in effect, the mercenary army to NATO.
The money that America has given Ukraine isn’t to Ukraine — it’s not to the people — it’s to the kleptocrats that have said: We are willing to fight to the last Ukrainian. We are willing to try to drain Russia’s resources by sending Ukrainians there; and if the Ukrainian army tries to flee and retreat, we’re going to shoot them in the back — that’s what the Azov Battalion is for. So, all of this money has gone, not really to Ukraine, but to the Lvov group — the Azov Battalion — to, really, the neo-Nazis who are in charge of Ukraine. And the Ukrainians are hopeless to do anything.
Well, the problem’s not only, therefore, with foreign countries dealing with the central banks and the government of the United States; it’s the whole international court system that is going to — according to the EU — we are going to make sure that we never have to pay this $300 billion, because we’re going to ask for trillions of dollars of reparations for Russia defending Ukraine’s Russian-speaking population — in Luhansk and Donetsk — and now Odessa, that said: We want to be part of Russia.
And their defense is really an attack: We, the West, are allowed to attack Ukraine, to announce that the Russian speakers are subhuman. We can break the rules of law, by attacking consumer areas, civilian areas; not focus on military at all, but just try to destroy whatever is left for Russia to have. But, then, we’re going to say that they are attacking us by fighting back.
It’s like Israel accusing Gaza of attacking Israel, by fighting back against the eighty-year war against the Palestinians.
As long as you’re having the Western financial system backed by a judicial court system that, like the International Monetary Fund and EU, acts as an arm of NATO, the rest of the world is trying to break away; and the line of least resistance, for now, is to buy gold.
Well, the problem with buying gold, of course, is — in the past, countries would invest their foreign reserves in gold — Venezuela invested its reserves of gold, and it kept its reserves (as we’ve discussed before) in the Bank of [England], so that it could use these reserves as collateral when it borrowed money to intervene in the foreign-exchange market to try to stabilize its currency. That’s why countries kept their gold in either London or New York, where the major international foreign-exchange markets were.
But now, they can’t do this anymore. The Bank of England grabbed Venezuela’s gold, and it looks like the United States has grabbed Germany’s gold — and Germany’s an ally! A few years ago, Germany asked for its gold reserves to be returned from New York — [from] the Fed in New York’s basement — to Germany, for its central bank to hold itself. The United States said: Well, you know, this gold is very heavy. We’re going to have to find airplanes for that — and that’s the last that (in public) we’ve heard.
German reporters and journalists have been calling me to say: Do you know anything about what’s ever happened to this? They tell me that they’ve asked the German politicians about it. The politicians will not answer. Nobody can find out whether Germany’s got any of its gold back. And the United States is still holding onto this gold, and the rest of Europe’s gold.
So, holding gold only makes sense if you hold it in your own central banks, where the only way that it can be grabbed is for NATO to invade your country, seize the government, empty out your gold reserves and take it away — like they did in Libya, and other Middle Eastern countries. The problem that they’re really dealing with — the gold problem — is, how are we going to move beyond “gold isn’t a [practical] alternative?”
Well, the other line of least resistance that they’ve talked about is currency swaps: We’ll hold each other’s currencies (among the Global Majority). The problem with holding your currencies is, the currencies go up and down. And if you’re a creditor nation, like the United States was to Europe and the world in 1945 — and like China is today to many of the Belt-and-Road-Initiative countries that it deals with — how are you going to deal with the fact that the currency you’re holding is declining?
Russia has accumulated enormous holdings of Indian rupees that have been declining in value. And the last few days have seen the Trump administration go to Argentina, and they say: We know that you have been dealing with China very heavily, and you have a currency swap, and you owe them a lot of money; but this $40 billion that we’re giving you to support the peso long enough to get [Javier] Milei re-elected next week? In exchange for this, and our not pulling the plug on you, we want you to break all your relations to China; to not honor the currency swap; just to say, well, we’re just not going to pay you, China — what are you going to do about it?
So, currency swaps themselves are not a solution. And the BRICS currency is no solution, because in order to create a common currency among BRICS countries, it has to be like the United States creating a central bank, in which all of the American states and politicians are connected. For the EU, all of the countries had to create a political union because, if you have your own currency, who is going to get this currency? How will it be distributed? And how will various countries pay?
Until you have a political union among all the BRICS countries — which is not on the horizon, by any stretch of the imagination — you’re going to have to go back, and have the solution that John Maynard Keynes came up with in 1944, as an alternative to the U.S. designs for an International Monetary Fund: You create a new central bank, a collective central bank, that will manage the credits and debts among its member countries, in order to denominate their foreign exchange and currency swaps, to denominate these currency credits and debts in a common denominator based, basically, on the prices of their collective exports and relationships with each other. That’s the only logical solution.
I described the long debate over this in my book Super Imperialism. It took a lot of political maneuvering just for Keynes to come up with that. And of course, the United States said: No, we don’t want other countries to make any means of settlement among themselves. Any country’s settlement with any other country has to go through Washington, and the U.S. dollar.
And other countries — first of all, you had Britain surrendering to this; and the result was the loss of the British Empire and its currency reserves. Its colonies and countries using the pound were all transferred to the United States by 1950, and the pound collapsed in value, and Britain began its long deindustrialization. The rest of the European countries, once Britain had surrendered — well, there was nothing they could do but go along with it.
For the first time now, the world has gone back to 1944-1945, to create a kind of mutual foreign-bank relation to handle relations among currencies that is not run by NATO, the United States, and the Cold War. And the more gold goes up, the more you realize the inability so far for the other countries of the world to address, and solve, this problem.
NIMA ALKHORSHID: Richard, jump in.
RICHARD WOLFF: Yeah, let me put this in a context, but also to scare you.
The same logic that leads the Europeans to look gleefully at the $300 billion as a way to make it appear to their own people that the horrible mistake they made in going into a war like this — the enormous damage the war has done to their economy — to make it look as though they’re making, now, somebody else pay — which is really what this is about. It’s not enough money to change the basic layout of what’s going on. It sounds like an awful lot, and it’s a big chunk of money, but it is not adequate to alter the basic situation.
Number two: Let me scare you. China has (last time I looked) $750 billion worth of U.S. Treasury bills. What’s to prevent the United States from telling them that these are now toilet paper? We are not going to pay you the interest, and we’re not going to pay you the principal, and we’re going to deal with the rest of the world, henceforth. When we have to borrow for the American government, we will borrow from the rest of the world — end of conversation. Or, we’ll do it for half of the $750 billion.
What’s to prevent them? You know, this is crazy.
Here’s what we are watching: we are watching the end of the empire. These are the kinds of things that happen when the empire can no longer function. The United States is facing a fundamental contradiction: It cannot keep the world arrangements of the post-45 period, and fight Russia and China; and be involved in a war in Ukraine; and be gearing up to take the oil away from Venezuela — it can’t do it. That’s the problem. It can’t do it. It doesn’t want to admit it can’t do it, so it’s coming up with crazy stuff, stuff that makes no sense, other than as the end of an empire.
So, one of them is, we’re going to take — by the way, if I understand correctly, they’ve already taken the interest income from the $300 billion, and used it for the Ukraine war. Clearly, that great move didn’t change anything. And so, now, they want to take the principal. Of course, they do. You know, this is the same game. And what does it do? Everything that Michael just said, and a dozen more things.
Everybody is wondering where to keep their money now, because the empire, the emperor, is not in a position to do it anymore. The United States had said to the world: You can keep your money here because we are the safest place for anyone to keep any kind of wealth. We are the ones who will tax it the least. We are the ones who will threaten it the least. We don’t even have a socialist, or communist, party worthy of the name, in terms of its political power; so you don’t have to worry about that. We have a docile, unorganized labor force. You know, we offer you wonderful conditions. So please take a good portion of your wealth and bring it here — which gives us yet more power of an empire to give you the guarantees. You are, in fact, by locating your wealth here, funding our ability to guarantee that wealth.
That’s what an empire is. That’s what an empire does. That’s what the British did in the previous century. And now it can’t do it anymore.
Let me give you, what you wouldn’t perhaps see as, another sign. We are now executing people in boats on either side of the Western Hemisphere. We did it for a while in the Caribbean with the Venezuelans and the Caribbean [peoples]. And, now, I learned in the last two days, we’ve gone on the Pacific Ocean side, and we’ve done it again. We don’t arrest these people — no trial, no jury, no lawyers, no nothing. Summary execution — in the name of what? Of a war on drugs?
Friends, the United States has had an official war on drugs for at least the last seventy-five years. It proves unable to stop them. You can get all of these drugs anywhere in the United States — urban, rural, east, west, north, and south. We are not able to stop it.
Killing people summarily is an absurd thing for the upholder of values of law and order and, if I dare say so, a rules-based international order. What rule exactly is it? Killing people in boats?
If you arrest a person for the drug trade inside the United States, you do not kill them. Even if they are found guilty, you don’t kill them. We haven’t killed anybody in the drug trade for that crime in anyone’s memory.
Okay, so these are signs of an empire that cannot function. Of course, people are running to gold. It’s one of those things which — and I don’t believe it’s correct, but that’s another matter — but it’s a thing that people think is safer than those other alternatives. Well, what I hope people focus on is not whether it’s safer or not — In my judgment, it isn’t — but that, we can disagree. The important thing is they are running away from what is now, clearly — even though they dare not say so — a break in the behavior of an empire.
For the Europeans — look, they’ve even had a debate among themselves about it. Their lawyers are telling them: You are taking an incredible step here. Are you sure that it will not hurt Europe to have been the one to do it? Because wherever you’re wealthy, if it’s the Europeans that are doing it, then it’s Europe you’re going to be sure not to keep your wealth in. And this is something the Europeans, at a time when everyone admits their economies are in serious trouble — above all, the British, the French, and the Germans, and those are the major three in that part of the world —
You really want to, now, damage your standing as a place to hold wealth, which is where wealth has been held disproportionately for the last 500 years? This is bizarre. This is the end of the Western Empire.
Last point, before you go back [to Michael]. Part of the reason the BRICS have not developed their own currency, their own ability — which, by the way, all of these developments will provoke them to do, and to return to do, sooner rather than later. Michael is right about that —
But one of the reasons they haven’t done it, we have to keep in mind, because these are important points going on in the debates inside China: The spectacular growth of China in the last thirty-five years was itself, in part, dependent on the empire of the dollar. It was within that context that the Chinese found a way to grow faster than the United States; to become the manufacturing core of the world economy.
So, they are rightly worried — don’t make the transition out, before you are pretty damn clear that the benefits of doing so will outweigh the inevitable costs of not having what worked so well for you. There’s a joke that goes around in China about, you know, not cutting off from the United States while it is doing very useful things for the Chinese: in having the SWIFT system, in having the dollar as the universal exchange, even to the diminished degree that is now the case.
In other words, it’s the old dialectic, and we should be careful not to get caught on either side. And let me explain very quickly, then I’ll stop.
On the side of the United States is the following argument: China is only a superpower because it brought in private capitalists thirty years ago. After Mao died, and the end of the Cultural Revolution, you had a change, and in come foreign private capitalists — Japanese, European, American — and then the allowance for the Chinese themselves.
So, that’s one side of the dialectic. That happened — no question — and that was very important to Chinese growth — no question — but, at the same time, the Chinese government held on to the absolute dominant position in the Chinese economy. The government did, and the Communist Party within the government kept its power. And that is just as important a part of the growth and success of the Chinese economy. Otherwise, you can’t explain why China did so much better than any other country in the global south under the regime of American empire.
Alright, so the dialectic is the interplay between the public and the private sector. The reason they outperform the United States, is the United States doesn’t understand the dialectic, and is so caught up in its own ideology that it holds back the government from doing all kinds of things it needs the government to do. [The] Chinese don’t have that problem, and the Americans can’t see it.
So, the dialectical process now has shifted. It’s costing the West, every day. The war in Ukraine is a wonderful metaphor, despite everything. Every escalation, including the new sanctions on oil companies announced over the last twenty-four hours — like the F-16, like the Abrams tank, like the various missiles (like the Patriot system, like the HIMARS) — all of them — they didn’t work. They didn’t work. That’s why you have the escalation, at every step.
And if I were a betting person (I’m not, but if I were), I’d bet that all of this stuff, with sanctioning the oil companies, these are just ways for Mr. Trump to cut his losses. Ukraine is going down, and there will be — there already is — an enormous blame-game going on between Europeans and Americans. Who’s at fault? And so, yeah, sure, let’s sanction that, sure. The United States did its part. It’s not us. We did our part. It’s you, Europeans.
And the Europeans will say exactly the opposite.
And this game of blame will be yet another sign of an empire dissolving.
MICHAEL HUDSON: Nima, is it okay if I return to the monetary topic? International finance?
RICHARD WOLFF: Sure.
NIMA ALKHORSHID: Go ahead, Michael.
MICHAEL HUDSON: And yet, despite all of these things, the U.S. dollar has been going up. It’s certainly viewed as a safe haven for anybody. And why is it? How can the U.S. dollar be going up, while other central banks are moving out? Obviously, it’s private-sector money, and that means new credit creation. Private investors are moving their money into the dollar.
Well, this is exactly the strategy that the United States — way beyond Trump — has tried to put in place. It’s the strategy between Trump saying: Japan has to pay us $350 billion, or we will wreck their economy by blocking their trade with the United States; Korea has to pay us $350 billion, or we will block Korean exports of automobiles and computers and steel, other Korean exports, to the United States.
So, the United States has tried to make it a safe haven, despite the fact of all of the problems that we’ve been discussing — why it’s unsafe for central banks to hold their reserves here. The United States has the power of making it a safe haven, by the extent to which it can wreck other countries’ economies, by blocking them off for trade with the United States.
But there’s another reason. There’s a more positive reason. And this is what I think we really should be discussing in the time we have remaining.
Money has been coming into the United States because we’ve had an enormous real-estate bubble. A Ponzi scheme, virtually, has been financed, first of all, by the low interest rates — the Federal Reserve provides the banks with low interest, to lend to its customers for spending.
Well, what do central banks, and what do commercial banks, lend for? They don’t lend for goods and services. They don’t lend for people to buy consumer goods. And so, the effect of central bank credit isn’t on commodity prices. They lend for the purchase of assets already in place as collateral. That’s how banks have operated for the last thousand years. Eighty percent of the bank loans, as we’ve said before, are for real estate — and the effect of this bank-lending is to raise real estate prices.
More and more recently, you’ve had the banks lend an enormous amount of money, coupled with the Trump administration’s policies to create an enormous bubble in the stock market — well, Trump went to the Silicon Valley heads, and the biggest monopolies in America, and said: I want to build a billion-dollar East Wing of the White House. I want to make it bigger than the White House, and put in gold “Trump’s Ballroom,” so that people will look at me and my name, instead of at the White House. That’s going to cost maybe $250 billion. I want each of you to give me $25 billion. And in exchange, I promise I’m not going to impose anti-monopoly laws against Silicon Valley, or the oil industry, or all of the other monopolies. And I will promise to cut your taxes, so I’m only taxing labor, industry, agriculture — but not you financial guys.
And, of course, they went along with it. And so, Trump has been able, in order to get the money that he wants, to get other people to contribute to his political campaign, to buy his cryptocurrency, to make billions of dollars for himself — and, well, you can contribute to my campaign by buying my cryptocurrency, and that’ll push it up; you can contribute to my ballroom, to make my name immortal.
And the result is that he’s made the deal of making and permitting an enormous price inflation. He’s imposed tariffs on foreign imports so that this creates a price umbrella for American producers of similar goods, to say: Raise your domestic prices all you want, and blame it on the tariffs; and say, well, that’s pricing at the margin, and the margin is what we import.
So, you’ve had this enormous stock-market bubble. And it’s a Ponzi scheme, because a Ponzi scheme is where you have the economy borrowing so much money — to try to break even, if you’re a wage-earner — or to keep current on your debts, if you’re a corporate financial manager, that you lend the customers the money to pay —
There are a lot of homeowners that, all of a sudden, they’re finding, as a result of global warming and bad weather, that there’s massive flooding. And the insurance that they have to pay on their houses has gone up so much, that they cannot afford to pay their mortgage, and to pay their living costs, and pay this rising insurance. So, all of a sudden, their housing — in Miami and throughout Florida, and in the western states that are homes of hurricane and tornado areas — all of a sudden, this has become unavailable.
Well, the banks have gone to them [to] say: Well, we don’t want you to lose your home. Of course, you want to keep living there. Take out an equity loan — and the banks will lend the money — the equity loan — so that families can be able, instead of repaying their mortgage, they can simply keep on adding personal equity loans to the mortgage. They can pledge, and draw down, their retirement savings funds.
All of this money is going to increase asset prices. So, the real inflation that the United States has had, that has stabilized the dollar, is not the consumer price inflation that people are talking about — it’s the asset price inflation for stocks, bonds, and real estate.
And many of the banks today who have lent to automobile-buyers — you’re having default rates on auto loans go way up; default rates on real estate, way up. Well, the banks that are heavily exposed to these areas, that have said: Well, we make so much money in high-priced auto loans and high-risk loans, that we’ve decided to make loans to whomever will pay the highest interest — and the people who pay the highest interest are the most desperate.
And the result is that now these banks are insolvent — just like in 2009, most of the big Wall Street banks, and the systemically-important financial institutions, were insolvent. They were in negative equity: the debts that they owed to their depositors and their counterparties were higher than the value of their assets.
Well, that’s the danger that the United States is going to fall into today. And this is why so many of the professional investors — certainly the ones I know — that think, we can’t explain why the stock market is going up. There [are] higher profits — all of that’s true — but the whole economy is being hollowed out by debt.
All money creation is debt creation, because it’s credit creation. Money is a form of credit. And the question is: If the credit is used to either help people pay their debts, or to run into debt to buy stocks and bonds and real estate that they think will go up, then at some point, all of this debt becomes increasingly fragile, and has to collapse — and that’s what Hyman Minsky called the “Ponzi” phase of the financial instability cycle.
And the U.S. is coping with its financial instability and the dependency (that we’ve talked about for the last forty-five minutes), by essentially creating a Ponzi scheme that is also going to collapse.
So, the insecurity of central bank holdings, of their dollars in U.S. Treasury securities, is nothing compared to the insecurity of private investors — foreign investors, and also domestic investors — who have decided to try to participate in the stock market. Well, you don’t know when it’s going to stop. The only way you can know when a bubble is going to stop is when it begins to turn down.
And the market in U.S. stocks and bonds recently has been pushed, above all, by domestic American small investors, not big institutional investors — they’ve sold out, and are moving into long-term Treasuries, 10- to 30-year Treasuries, not short-term. They want to lock in the gains while they can.
It’s the small investors that have done this, because they somehow imagine that — they don’t believe that — there’s a boom, until it’s almost over. And also Canadian investors. I did a study to see foreign investment in the stock and bond markets. Canadian investors don’t like to buy stocks until they reach the top. They think, okay, now we see the trend, now we’ll buy. Then it goes way down, and, finally — when it gets near the bottom — they say, okay, we’ll sell, it looks like it’s a trend — and then it begins to go up again. Well, that’s what the small investors in America do.
So, the American economy is becoming just as exposed to all of this instability as foreign economies are. And so, the result is — I think we’ve used the word “desperation” before — that’s how the United States is flailing around. And it looks like, if there is a meeting between Trump and China, China is going to say: You know, maybe we should just go our own way. Yes, you’re going to prevent other countries, to ban any country’s exports to each other that do not use American computer language, American electronics, as the basis for it.
Well, this is going to drive other countries to say: Well, I guess we’ve lost the U.S. market. I guess we’ve lost the market of America’s satellites in Europe. I guess we’re going to have to have a new computer language, in order to trade with the world’s growing market — China and the rest of Asia. And so, these new sanctions that Trump’s team has been describing in the last day or two, are going to be driving other countries to a total break with the United States.
Well, if there’s a break in the United States, it’s not only a break in U.S. trade, it’s a break with their mutual investments, the loans and credits they have to each other. Each country will take whatever they have. It’ll be a clean slate. Nobody’s going to pay any of the debts to each other. It’s all grab — China will grab the American investments there; America will grab China’s, and Russia’s, investments here —
That’s where the Trump administration is leading, because it really believes that other countries can’t afford to lose the American market. And yet, if the American market is collapsing, because it’s all so debt-ridden and financialized, then why would other countries worry about losing the American market, if the price of holding it is to lose the Chinese, Asian, and Global-Majority market?
That’s the big choice that they’re having to make. And you can imagine that their choice is not that which the America-firsters imagine, in their collective narcissism, that other countries cannot survive without the United States’ leadership and control, at the price of absorbing all of their international surplus — for us, Americans — instead of for them. That’s the blind spot of this self-destructive American policy that, as Richard said at the end, is catalyzing other countries to create their own alternative, as an economic life and death issue.
NIMA ALKHORSHID: Richard, breaking news here. The Wall Street Journal reports that President Trump has pardoned Changpeng Zhou, the convicted founder of the cryptocurrency exchange Binance. The decision follows months of efforts by this guy to support Trump’s family cryptocurrency company. And he was pardoned by Donald Trump.
RICHARD WOLFF: Yeah, that part, there’s no end to — and for me, by the way, that’s another sign of a declining empire — its Emperor (you know, whoever it is) taking care of his cousin and his uncle; it’s the French leader famous for the phrase, “après moi, le déluge” — “after me comes the deluge:” it’s all over, and I’m going to grab as much as I can, before the flood comes and shakes it away.
But I want to pick up on the last point Michael makes. You know, he reminds us that Japan and South Korea have been told, you have to invest $350 billion. Ursula von der Leyen was told that the Europeans have to buy twice that much in U.S. energy in the years ahead; and invest $700 billion in the United States.
Well, I’ve got news. If the Europeans are willing to take the money from Europe, then I can assure you that before they go down, they will turn to the United States, whether Mr. Trump is president or not, and say: It’ll be a cold day in hell before you ever see any of that money. You made a demand on us, and we told you we’d give it to you. But the world has changed. You know, like we told the Russians it was safe to keep their money in London, or Western Europe, and, well, the conditions have changed.
That’s what we’re talking about. All bets are off.
There is a small correction. The dollar has not gone up. If you look at the dollar, from the time Mr. Trump becomes president (back in January) to today, it is significantly lower in value — at least, against the Euro, and a good bit of other currencies as well. I think Michael’s analysis stands. I think the reason it didn’t go much lower is not because wealth isn’t being withdrawn from the United States — it is, to gold, and to all many other things —
But I think the reason is the second part of what Michael said: You have a classic unsustainable inflation. And he’s quite right. It’s not the inflation of goods and services that they’ve kept under control; but the price of keeping that under control is an uncontrolled inflation in the asset markets and, above all, in real estate and the stock market.
People have done very well in the stock market. People are doing very well now in the stock market. That’s one of the reasons the ruling class in this country — even though it doesn’t like what Mr. Trump is doing — isn’t going to do anything about it because they’re the ones who own the shares, and their monthly statement is telling them he’s okay for them. He may be a disaster everywhere else, but he’s okay for them.
You know, the mass of people? No, the mass of people are going in a different direction. They’re about to elect a Muslim socialist mayor of New York City. They’re about to elect Catherine Connolly in Ireland as the new president of Ireland, whose perspective and whose positions are quite like those of Mr. [Zohran] Mamdani in New York — sometimes right down to the literal sameness. So, things are happening that are coming out of the movement from below — the absurdity of the French government, which Mr. [Emmanuel] Macron is no longer the real leader of; and Mr. [Keir] Starmer, likewise; and Mr. [Friedrich] Merz, soon. These are signs of diminution.
And the inflation in asset markets is nothing new. It is a very old business. That’s why we tell people a credit is good if it is used to be productive, so it produces the wealth that can justify, retroactively, the debt. You get that if you borrow to produce. You don’t get that if you borrow to bid up asset prices.
The joke then becomes — and we’ve had this in the United States, repeatedly, in the last hundred years: You have a borrowing binge. It bids up the price of real estate. As the price of real estate goes up, the owners of the real estate go back to the bank, and say: I have a much more valuable piece of land here. Let me borrow more money because you have the collateral. Oh, sure, here’s more money — which is then used to bid up the price. You understand? The loan bids up the collateral, which enables a bigger loan. There’s no end of this until, well, what?
Those two automobile loaning companies that collapsed over the last two or three weeks? And notice, not just that they collapsed, but the immediate news — extraordinary! Literally like what happened at the beginning of the collapse of the subprime mortgages back in 2007-2008. An immense debate between a small group who says: Uh-oh, this could be the beginning of the collapse — versus an army of responders saying: No, no, no, it’s different this time.
That’s exactly what we have each time. And, by the way, sometimes one of them is correct, sometimes the other one of them is correct.
The important thing is to see what we are seeing: Any one of a dozen phenomena could blow this out of the water.
If the Russians finish in Ukraine — the battle of the city of Pokrovsk, which is now in play, is the end, basically, of this war — Odessa and Kiev are all that’s left to be fought over, and it’s obvious where this is going.
Likewise, it’s obvious, to those who watch, that the sanctions on these two oil companies [Rosneft and Lukoil] is a symbolic act. It’s not a real, you know. It’s an irritant. If you look at the price of oil, which it’s supposed to drive down — the price of oil has been going down from the beginning of the war in Ukraine. If you look at the global oil price in the early part of 2022, and you look at it today, it’s a line that goes up and down; but it basically goes down, from roughly $120 a barrel, to roughly $60. That’s a tremendous cut — and that has not inhibited the Russians, at all. Right?
So, you have sanctions, and a global cut in the oil price — should have done Russia in, if you believed any of that story from the beginning — it never did. And this little addition isn’t going to do it either. The joke today — today — the price of oil went up two, three bucks a barrel, not down.
You know, it’s just extraordinary the way this is playing out, and the utter blindness of the West in terms of understanding its own position. No one knows how long it will take for the BRICS and the Chinese to develop their own equivalent. But I think, if I had to pick the most important thing that Michael told us, it’s his recognition — as he spun out the logic of his own argument just now — that the end result is the United States building a wall around itself. It is this self-isolation of the United States that’s underway.
We have seen tariffs imposed, but we have not yet seen retaliation. That’s coming. And no one knows how bad that will be. And all of it — Mr. Trump is busy, desperately trying to hold on, for example, to the Milei government in Argentina: giving them $20 to $40 (depending on how you count) billion dollars to keep their currency going; dropping the tariff against their beef, so that they can bring cheap meat into the country; freaking out the beef ranchers in several states, without which he can’t be president anymore.
He has to screw the cattle farmers in this country by bringing in the cheap beef. Why? To keep one of the few governments going that supports him. This is impossible.
And there’s a good chance — Mr. Milei, having gotten this total bribe — of the people of their country being told that they must vote for him or else they will lose all of these benefits —
So, talk about interfering in other people’s elections! Remember? That was Russiagate we were very upset about? That was nothing, compared to — you buy that entire country here, openly, publicly, with a threat: You don’t get the money, you don’t get the beef exports, unless we get a re-election of this particular candidate, who, the polls in Argentina show, is like Mr. Macron and Mr. Starmer: you know, hated; not loved, except by the extreme right wing there, which is too small to keep him going. So, for me, again, signs of a decrepit, desperate empire having a hard time holding on.
MICHAEL HUDSON: I want to pick up on just two topics that Richard’s brought up: Argentina and oil.
Obviously, after the election, Argentina cannot pay, not only the $40 million, but all of the other debt that it’s taken on from the International Monetary Fund. Milei will probably be voted out of power, and the IMF is going to say: We only lend money to American-backed dictators. We don’t lend money to left-wing groups that want to increase living standards. We only lend to our client countries.
So, Argentina cannot pay the debts. And the problem, that I should have mentioned before, is neither can almost all of the global south countries today. They cannot afford to pay the debts. If there is the break that we’ve discussed, the global south countries cannot pay the foreign-dollar debts they owe — not only to the U.S. and the official institutions like the IMF, but to bondholders.
There are going to be a lot of banks that are very heavily exposed to this break that we’re talking about. And the break, of the scale that we’ve talked about, the break of international trade and payments between the West and the Global Majority, is going to lead to many bank failures, too.
Also, Richard pointed, quite rightly, about oil. I didn’t mention that the most heavily exposed countries of all are Saudi Arabia and the Middle Eastern oil exporters. The deal that they made back in 1974 and ‘75 — and I was at the White House sitting in on these deals — was that they can charge whatever they want for their oil, but they have to invest all their oil-export earnings in the U.S. stock and bond markets — not buying control of U.S. companies, but stocks and bonds.
Well, all of this money is just as exposed as other countries are. And I think this is the explanation for why the oil prices have been going down. The Americans have strong-armed OPEC countries: You must reduce oil prices because we want to squeeze Russia’s foreign-exchange earnings that come very largely from its exports of oil and gas.
The Americans think of Russia as a gas station with atom bombs, not realizing that Russia now exports agriculture, and all sorts of other goods, besides oil and gas. So, Russia’s been doing just fine. It’s growing much more rapidly than the West.
But the U.S. has strong-armed OPEC into providing such a heavy supply of Near Eastern oil that this has driven down the prices. This is done largely to support America’s control of the Near East.
All of that is going to be called into question also. The whole political division of the world between the Middle East countries — literally in the middle between the East and the West — is going to be all up for grabs — all instability, all up for diplomatic maneuvering between China, Russia, and the BRICS countries, on the one hand; and the United States and its European satellites, on the other.
All of that is going to be enough to supply your show with a lot of audience for the next year or two, Nima.
NIMA ALKHORSHID: Yeah. Thank you so much. Richard, do you want to add something before wrapping up?
RICHARD WOLFF: No. No, I want to apologize [to] people: I don’t mean to beat the proverbial dead horse, with this “desperation” and “declining empire;” but I also want to justify that I keep returning to it because it is the context that is often missing in the discussions — so we don’t get lost in the weeds. Important as the details are, we need to periodically remind ourselves, and our audience, of how to see the larger picture within which — otherwise, we will be whipsawed by each day’s evolution.
You know, you take the president seriously, when he tells you that by going after Lukoil and Rosneft, he’s done this major — this is all really what folks used to call “smoke and mirrors” — you know, a game, a performance — that has really only to do with the fact that the Europeans know that it’s over in Ukraine, and that their program of demonizing Putin as the (sort of) way to cope with this loss isn’t doing the job. It’s not reviving their popularity; it is not recouping their economy; it is not squeezing out of the United States more support — none of it. Absolutely none of it.
And so, they are desperate. They really don’t know where, quite, to turn. And believe me, there are people — there must be — maybe I’m wrong, Michael knows this stuff better than I do — but there must be people in the White House with enough economics history in their head to be able to tell Mr. Trump, and the people who advise him, what the risks are of a stock market —
Even the financial press is full of articles — today, yesterday, last week — wondering whether the overpriced stock market is going to blow at any second. It’s not just left wingers, like Michael and me. People should understand, this is a widespread anxiety. When we say people are rushing to gold for safety, that’s what’s happening: they’re leaving the stock market — not enough yet to offset the built-in rising of the borrowing, and the asset inflation.
And the inflation you don’t see at the supermarket is because you do see it in the stock market. And beware, if it stops in the stock market, it might really take off in the goods market. And then where will the mass of Americans be?
NIMA ALKHORSHID: Since you’ve mentioned the situation with the White House, Richard, before wrapping up, here is the situation with Trump’s White House. Here is what he said about India:
REPORTER (CLIP): And, you know, you even mentioned that in a recent phone call with Prime Minister [Narendra] Modi, and that Modi had said his country would stop purchasing the Russian oil. But India said that they were not aware.
DONALD TRUMP (CLIP): Well, then they’re going to just keep paying a lot of tariffs. If they said that, but I don’t believe they said that. No, I spoke with Prime Minister Modi of India, and he said he’s not going to be doing the Russian oil thing.
REPORTER (CLIP): Well, why would India say that they’re not going to do that?
DONALD TRUMP (CLIP): I don’t know. But if they want to say that, then they’ll just continue to pay massive tariffs. And they don’t want to do that.
NIMA ALKHORSHID: The guy makes things up. [Laughs] How can you imagine that?
RICHARD WOLFF: Yeah, and he’s going to threaten the whole world with tariffs. It’s his answer, half the time, and with his assistants, it’s the answer all of the time. You know, this reminds me of a famous image. It’s the two guys in trench coats, entering the dry cleaner in some urban area of America, and explaining to the little owner of the dry-cleaning establishment: We’re here to pick up our weekly $200 protection fee. And the little owner turns to them and says: What are you talking about? What do I need protection from? And the two of them smile, and they say to him: You need it — from us. You have to pay so we don’t hurt you.
It’s really what Michael said a little bit earlier: You have to pay, or else we will hurt you.
Goldman Sachs released this last week their estimate of what the actual tariffs are that have been levied (so far) in the Trump regime, and what portion of them have been absorbed by the businesses, what portion passed on to consumers, and what portion hurting the original exporters. Here we go. Ready? The exporters have lost under 10% — that is, only 10% of the burden of the tariffs has actually fallen on the exporting country; 61% has fallen (if I remember the numbers) on American businesses; and the remainder on American consumers.
So, American businesses and American consumers have been whacked by the tariffs. The rest of the world, not so much. Not really anywhere near so much. And that’s before — as the Goldman people point out, correctly — that’s before we get the retaliation that is being planned, debated, and, hesitantly, brought forward in the rest of the world. At which point, the balance will shift.
And all they can discuss among themselves at Goldman is: Which is worse for the American economy? The damage to the business’s profits, or the damage to the consumer’s pocketbook? What a place to be, in looking at the effect of the “liberation,” as Mr. Trump called it.
NIMA ALKHORSHID: Thank you so much, Richard and Michael. Great pleasure, as always.
RICHARD WOLFF: Bye-bye.
NIMA ALKHORSHID: See you.
Discover why middle powers are transforming global economics through BRICS+ and how the “middle power trap” is reshaping international relations forever.
[Note: What is called ‘middle powers΅ we may know better as ‘nodes’ as in multipolar and multinodal system. I also leave a short note here from Radhika Desai on a future conversation that will take place: “I don’t think multipolarity is an ideology. It’s a development. As for what should be done to advance it further, Russia and China are supporting multilateralism and the UN Charter and the various Chinese initiatives such as the GDI, GSI etc.”].
Middle powers like Malaysia, Indonesia, Thailand, Vietnam, Saudi Arabia, Egypt, and Ethiopia are breaking barriers in the current global order by turning to BRICS+ as their preferred platform. This video explores how BRICS+ Analytics expert Yaroslav Lissovolik, a friend of the Think BRICS channel, reveals the middle power trap constraining these emerging economies in traditional institutions like the IMF, World Bank, and WTO.
Learn how BRICS+ offers an inclusive platform for middle powers seeking a stronger geopolitical voice and strategic partnerships. We examine Ethiopia’s consistent 6%+ growth rates from 2020-2025 and Vietnam’s 5%+ annual economic growth, demonstrating why these regional integration leaders are driving global south cooperation.
Discover how BRICS+ accommodates diverse developing economies through multipolarity, enabling trade diversification and South-South cooperation. The video explains how middle powers face constraints in current governance structures where advanced economies hold disproportionate voting shares, while smaller countries dilute their influence in organizations like the United Nations.
This analysis covers how BRICS+ creates opportunities for small dynamic economies like UAE, Qatar, Kuwait, Uruguay, and Singapore to form specialized platforms within the broader alliance. We explore regional integration arrangements and how middle powers are becoming vocal drivers of the transformation of emerging economies.
This video does not discuss specific development finance mechanisms, detailed New Development Bank operations, or comprehensive trade diversification statistics. We don’t cover individual BRICS+ application processes, bilateral agreements between member states, or governance reform timelines. The analysis excludes currency arrangements, infrastructure project specifics, or detailed economic policy comparisons between traditional institutions and BRICS+ alternatives for strategic partnerships development.
#BRICS #emergingeconomies #globaleconomy
00:00 – BRICS+ has transformed into a diverse alliance of developing and middle powers.
01:17 – Middle Powers are increasingly integrating through regional blocs like ASEAN and GCC.
02:20 – Middle powers like Vietnam are increasingly influential in the global economy.
03:30 – Middle powers are increasingly seeking cooperation within BRICS+ due to global economic limitations.
04:48 – Middle powers seek BRICS+ for better global representation and influence.
05:58 – Middle powers are fostering regional integration in the Global South through BRICS+.
07:13 – Small economies are exploring partnerships with BRICS+ for development cooperation.
08:34 – BRICS+ serves as an inclusive platform for developing economies’ global expression.
The US State Department’s talk about Hamas attacking residents is baseless lies.
The “israeli” occupation established chaos and does not like to see security in the Strip.
The “israeli” occupation incites against Hamas, and the US State Department adopts its lies.
We continue the search operation for the body of an “israeli” captive and are committed to the ceasefire agreement.
The mediators have a clear understanding of what is happening, and we informed them of our vision regarding the American accusations.
Postponing the opening of the Rafah crossing is a clear violation of the ceasefire agreement and a disregard for the efforts of the mediators.
The “israeli” occupation committed a series of violations of the ceasefire agreement.
There are promises from the mediators to compel the occupation to stop the violations and implement all terms of the agreement.
There is understanding from the American side and the mediators regarding the difficulties facing the delivery of the captives’ bodies.
Hamas has begun contacts with the Authority and the factions to formulate a national position that transcends thorny issues.
All Palestinian factions can reach a national approach during this sensitive period.
We cannot allow any party or power in the world to cancel a political force, including Hamas.
Those involved in war crimes in Gaza must be pursued and held accountable.
The occupation prevents the entry of advanced equipment and speaks of delaying the receipt of its bodies.
We pledged to the mediators to close the file of the occupation’s captives’ bodies despite the difficulties.
NIMA ALKHORSHID: Hi, everybody. Today is Thursday, October 16, 2025, and our friends, Richard Wolff and Michael Hudson, join us today. Welcome, Richard and Michael.
MICHAEL HUDSON: Good to be here.
RICHARD WOLFF: Hello.
NIMA ALKHORSHID: Richard, let’s start with you, and with the reports we had in the New York Times that Donald Trump and his administration have authorized the CIA to do some sort of covert operation in Venezuela to overthrow [President Nicolás] Maduro. And here is what we’ve learned from Republican Senator Rick Scott on Fox News:
RICK SCOTT, U.S. Senator, R-FL, Senate Armed Services Committee (CLIP): I think if Maduro’s smart he’s going to go ahead and move to Russia, or China, some place like that, because his days are numbered. You know, the public of Venezuela don’t want him. They rejected him in the last election. He stole the election. He’s a dictator, a drug cartel leader. So, his days are numbered. However they do it, I look forward to the day that he is no longer in Venezuela. It’ll be great for the world.
NIMA ALKHORSHID: What do you expect, Richard, from what’s going on?
RICHARD WOLFF: Well, the only interesting thing about Rick Scott — and let me tell you, it takes a lot of work to find an interesting thing about Rick Scott — but the only interesting thing about his remark was that little remark at the end: whatever it takes. Because that’s where we are.
And also, I like the way the television station juxtaposed the camera on him making the statement and, likewise, on the boat, somewhere in the Caribbean, that is being targeted by the missile.
I want to say here for the record: The United States is, therefore, engaged, by the president, with the approval of people like Mr. Scott, in being the police, the army, the judge, the jury, and the lawyer, for people it is executing. Those people were not arrested. Those people never had a chance to have a lawyer explain who they were, what they are. By the way, it’s not just Venezuelans. Today’s newspaper indicates that Colombians have also been killed in boats. So, who knows how widespread this is? Who knows how much we’re being told?
I want to also stress to people that being in the drug trade is not treated as a capital crime inside the United States. People are arrested for the drug traffic in this country every day. They are not executed. Those that are found guilty are subject to various kinds of imprisonment and punishment, but they are not executed. So, we arrest people in this country; we give them a lawyer; they have their day in court; they get a judgment; and they are not killed.
What are we doing in the rest of the world? We are showing the rest of the world a little bit — a junior version — of what the Israelis have done in Gaza. We’re killing people. We’re killing people who are alleged to be involved in a crime that we don’t kill people for in our own country. You know, I’ve been around a while. I don’t recall anyone being executed in the United States for drug traffic, ever. I may be wrong, there may be somebody who once was, but it is hardly ever done. So, what are we doing here?
We’re showing the world that we’re a tough guy. You know, that’s what the tariffs were: a big piece of theater, but it didn’t cost anyone’s life. Now, we’re saying we’re prepared — and we’re not only prepared to kill people — with no judge, no jury, no lawyer, no due process, none of the guarantees that we say we revere as intrinsic to the Constitution and the values of the United States — all out the window — that is a remarkable statement to make. And we don’t like Mr. —
Everybody who studies the drug traffic knows that the major problem of drugs comes from the Pacific side of the continent, not the Atlantic side; that there are loads of people involved who seem to be able to continue, with very little interference. Nor has the United States ever acknowledged, or admitted, that the problem begins with the fact that the United States is the world’s richest market for the drugs — the endpoint of the trade is mostly here — and that we could do a lot more here without violating our Constitution to deal with it, if we were — we’re not.
It’s another message to the rest of the world that the United States is going it alone, that the United States is isolated, that the United States is relying on military power because its economic and political reach is now so weak. You know, we start — at this point, when you behave like this, then things have to be called by their proper name, not by their polite name.
The people, the immigrants, who came to this country for a chance to do what immigrants have always come to this country for a chance to do, are now being hounded by a special police force, and detained in concentration camps — that’s what they are.
Let’s be clear. Let’s stop playing these silly games. We are killing people. We’re promising to overthrow governments in the worst replay of the ancient activity of the United States in Latin America, which is as old as the Monroe Doctrine — and let me remind you, that’s from the 1830s. What in the world do you expect, now? What are the countries in the BRICS going to think, given what Mr. Trump has said about them? Are they being overthrown by the CIA? Are we really back in that world?
Well, if we are, if we are using the CIA to go after the serious enemies, you know, enemies who can do something to the United States — Venezuela can’t. It’s too far away. It’s too poor. It’s too small. You’re picking on somebody — you know, it’s a little bit like the British fighting in Grenada, or the Falkland Islands — it’s a joke. So, assumedly, they’re going to go after the big guns, you know, Russia, China. So, the message to them is, that’s what the United States is now reduced to. Get ready for that.
And let me make a message to my fellow Americans. You are messing with an enemy now that is much richer, and much stronger, than they have ever been. Be very careful because you will likely not prevail. Let me remind you: The CIA was busy in Vietnam, before that war — it failed. And the war that came after it, after the failure of the CIA? That failed too. Ditto for Afghanistan. Ditto for Iraq. Ditto, now, for the Ukraine. Wow. Be careful. Be very careful what you are doing.
There is an alternative — whether it’s in the drug war, or any other conflict — and that is, you sit down with whomever else is involved — other countries, other enterprises — and you work something out: a deal that allows you not to be engaged in killing people and overthrowing them, because that is a game everyone can play. And now, more than ever in the history of the United States, the enemies that you are making by this behavior are strong, very strong.
So, this is now more dangerous than it has ever been, and it was never a good policy in the first place.
MICHAEL HUDSON: Well, Richard, if you try to work something out, then you’re treating other countries as equals. And the United States has rejected that very concept. The reason that it’s doing these assassinations and killings is for control. So, Trump has called Venezuela a narco-state, as if every Venezuelan is a drug dealer. And this is like [Benjamin] Netanyahu, as you pointed out, saying that every Gazan is a Hamas terrorist. So, the whole Caribbean belongs to the United States.
It’s not really about drugs at all. It’s about control. And I think — you’ve been describing — the United States has turned into a terrorist state. And it has been a terrorist state, since 1945, as a deliberate arm of foreign and domestic policy for what it calls “promoting democracy.” The former head of the CIA, [Mike] Pompeo, has said the CIA is like Murder, Inc.: He found out that they’ve been killing people all over the world, beginning with Patrice Lumumba in Africa; Aldo Moro in Italy, when Moro tried to achieve a rapprochement with Soviet Russia. You know what happened to Libya with [Muammar] Gaddafi. You know what happened in Chile with Salvador Allende, and the whole terrorist actions throughout Latin America that the CIA began.
So, this is already official U.S. policy — long before Trump. And I think that on a larger scale, the U.S. is backing terrorist groups, like ISIS and al-Qaeda, throughout the Middle East, in order to maintain control of Near Eastern oil; and at home, you have the FBI assassinating Martin Luther King [Jr.], Malcolm X, and many others. This is called “managed democracy.” You need assassinations to make sure that “democracy” works. That is, it works for the aim of enabling the United States to meddle, not only in foreign countries’ elections — to make sure that they don’t allow elections of leaders who follow policies adverse to those of the United States and its desire to control — but in the United States itself, the meddling [in] elections here.
These killings are merely the tip of the iceberg of America’s attempt to control foreign policy and politics, and domestic policy; and it does not accept the United Nations rules of non-interference in other nations’ affairs. That’s been the rule of international law ever since the 1648 Peace of Westphalia, saying you have to agree [that] every country and every state has its sovereign power. The United States rejects that.
The United States says: We alone have the sovereign power; and we use that sovereign power not only to control who will be the rulers and the ruling parties of these states, but what countries various states can deal with, and in what commodities they can deal with. We have the power, not only to impose sanctions on other countries, but to confiscate companies that are following trade policies that interfere with the United States demand for unipolar control.
This is being done under the slogan of “national security.” The United States government, the neocons specifically, feel insecure if they cannot control other governments, and international trade, and foreign investment, to make sure that the United States can decide who gets what, who trades what, and who owns what. It feels that if it doesn’t control this, it will no longer have the unipolar ability to decide what countries do. And that control is at the center of U.S. foreign policy.
I think you have to begin with that, and realize that these killings are simply — well, in the case of Venezuela, it’s killing the chickens to frighten the monkeys. What the United States is doing in shooting these Venezuelan fishermen (and also, I’m told, from Trinidad, fishermen), is saying: The Mediterranean is an American lake. We control the seas. We have no boundaries to what constitutes U.S. authority to control the world’s geography.
All of this is simply a reflection of a larger picture that the press, and many observers are just too embarrassed to come right out and say; but the neocons have already spelled it all out, that that’s the plan of U.S. diplomacy. You can use U.S. statements themselves for all of the evidence you need for that.
NIMA ALKHORSHID: Two citizens were killed from Trinidad and Tobago, Richard, in addition to what the Colombians were talking about.
Let me play a clip of the former director of the CIA talking about meddling in the elections in other countries.
LAURA INGRAHAM (CLIP): [Have we ever tried to] meddle in other countries’ elections?
JAMES WOOLSEY (CLIP): Oh, probably. But it was for the good of the system, in order to avoid the communists from taking over. For example, in Europe in ‘47, ‘48, ‘49, the Greeks and the Italians, we — CIA —
LAURA INGRAHAM (CLIP): We don’t do that now, though? We don’t mess around in other people’s elections, Jim?
JAMES WOOLSEY (CLIP): Well, [indeterminate vocalization]. Only for a very good cause.
LAURA INGRAHAM (CLIP): [Laughing] Can you do that? Do a Vine video on this former CIA director [vocalizing] —
JAMES WOOLSEY (CLIP): Only for a very good cause, in the interest of democracy.
LAURA INGRAHAM (CLIP): Alright. Thanks for being here.
NIMA ALKHORSHID: “Only for a very good cause.” [Laughing]
RICHARD WOLFF: Yeah, you know, it is very naive — and it’s no longer working. You know, the United States, when I was growing up here, going to the schools in the United States, where I’m born, and lived and worked all my life, we were told stories about what the United States stood for, and what it was. And all of that had to be kept secret — that’s why we have a secret CIA — because it clashes (what they do), with what we are told as a people. And that’s why it has to be kept secret.
But when things get difficult, it becomes harder and harder to keep a secret. Part of what we’re observing is that the secrets, you know, the word is out. Those fishermen who went out are now dead. They’re not coming home. And their widows and their children are talking. We’re in a connected world, and we hear about it. The world is different from what it was.
Let me give you another example. You don’t have a clip, perhaps, but the President of the United States, if I heard him correctly, has told one of the largest countries in Latin America — namely Argentina — that he will give their government $20 billion to stave off the collapse of their currency — if they vote for Mr. [Javier] Milei in the election coming up there. Okay. You know what that’s called? Interference in the election of another country. It’s literally — because the United States is wealthy and Argentina is not — it’s a bribe. It’s an attempt to say to the Argentinian voter: Look. If you vote for the one you don’t want, you’ll get all this money; and if you vote for someone else, because you prefer the other person, well, then I won’t give you this money. What? You know, legally, we don’t allow that in this country; although I understand Mr. [Elon] Musk was running around last November giving money to people in various states for voting, or something pretty close to it.
We are becoming desperate. It’s a word you hear me using on this program, elsewhere, when I talk. I believe you’re watching a government that is becoming desperate. These things that it is doing are not new. But what is new is that they’re being exposed almost — almost — as fast as they’re happening. More and more people around the world, more and more governments, are speaking up about it. Mr. Maduro isn’t the only one. There are plenty of others. If you talk to anyone from Cuba, you will hear a story of, I don’t know, I think twenty-five CIA efforts to either kill him [Fidel Castro] or overthrow his government, over the period of the Cuban Revolution, since 1959. You know, it’s all now more and more — and, given Latin America, it will circulate. This information, and all of this, will be known everywhere in Latin America, if it isn’t already.
MICHAEL HUDSON: I want to interject here. Trump just doubled the $20 billion and said he’s trying to round up private capital at $20 billion. After he made the statement that you quoted, he said, quote, if he [Milei] loses, we are not going to be generous with Argentina. The $20 million was spent to support Argentina’s exchange rate, and this has two purposes. Number one: It helps the flight capitalists, the wealthiest Argentinians — it’s an oligarchy in Argentina. Supporting the exchange rate enables them to move their money out of Argentina into foreign currencies. And they’ve run up a huge debt.
And Trump says: If you do not vote for the oligarchic candidate to continue doing this, now we’re going to insist, with the International Monetary Fund, that you repay this $20 billion (or $40 billion), plus the few hundred billion that the IMF has lent. Well, suppose that a non-right-wing dictatorship comes into power in Argentina? That’s when the IMF will say: We’ll clamp down and withdraw all the support for the capital flight — and, of course, the currency will plunge. It could be a 50%, 60%. Enormous plunge. That’s what the IMF does.
[Number two:] And so, when what it calls a left-wing dictatorship, meaning a country that elects a government that is not backed by the United States, its currency plunges and the inflation goes up, unemployment spreads, and the United States and the United Nations and the West say: You see? Socialism doesn’t work. Only the right-wing works. They [Argentina’s oligarchs] get the loans; they [the working tax-paying population] get the debt.
And of course, this debt is simply to enable the United States and the IMF and Europe to pull the plug and make sure, financially, as much as on war, that other countries cannot survive — unless they are subordinate to the United States.
RICHARD WOLFF: I also want to point out, just as a matter of history, that Argentina has an oligarchy that is among the greatest players of this game in the world. Argentina has borrowed money like almost no other country.
The last infusion that this extreme-right-wing government — which is the government of the oligarchs, who are in power, even when you had [Juan] Peron and you had [Néstor and Cristina] Kirchner, and the others — this government’s last infusion of cash to keep itself going — was $20 billion, in April of this year! So, we’re looking at, a few months later, another $20 billion, and yet another $20 —
The Argentinian oligarchs are laughing all the way to the bank, as America uses the taxpayer money of American citizens to enable them to convert their worthless (or about to be worthless) currency into dollars, to join the rest of the world in buying gold — because they haven’t the confidence in the dollar they used to have, either? So, they’re going to do a one-two jump: Get rid of the Argentinian [peso], get the dollar, use the dollar, buy the gold, and hold it somewhere in Europe — that’s what they’re going to do. It’s a farce, what we’re watching! An extreme-right-wing government, which has managed, in a very short number of months, to make itself hated — that’s why Mr. Trump is stepping in — because that right-wing government has shot itself in the foot and is about to be kicked out by the Argentinian people.
MICHAEL HUDSON: This is all part of the broader fight that’s happening in the world economy, to isolate, not only Argentina, but China, Russia, and the other countries. It’s part of a much bigger picture.
RICHARD WOLFF: But it shows you the level of desperation that is now governing all of this kind of behavior. I would like to believe (I mean that) that even the CIA director, giggling on the right-wing show that he appears on — that’s a right-wing woman, person, I forget her name right now, the clip that you just showed us — I’d like to believe that they, too, don’t really want to kill fishermen, or whatever those people were, in the boats. We obviously don’t know because there’s not a shred of evidence provided by the President who has now authorized at least five — if I’m keeping score correctly, five — such attacks. If they had some evidence — right? — they would show it because they don’t want to appear to be doing what they are clearly doing.
But when you’re desperate, you can’t afford it anymore. They have to have some “show.” They have to show how tough they are. That’s why we had the other bizarre (and maybe we can discuss it, the other bizarre) — the President of the United States tells us, yesterday, that India has agreed to stop buying Russian oil. He said that! And this morning, the Indian news reports coming out of India are that the government knows no such thing. There’s been no such conversation, and no such commitment.
I don’t know who to believe — and by the way, that’s what’s happening to most people: they don’t know who to believe anymore. It is so chaotic. But you’re not in good control. That’s not a sign that the United States — Michael is right: that’s what they want. But I’m right: it’s what they want, but don’t have anymore — and that makes you desperate.
NIMA ALKHORSHID: Yeah. Michael, the other point that Donald Trump was talking about is the case of India. He said that India promised him not to buy Russian oil, which was rejected later on by Indian officials. And not only that, Scott Bessent said that the Congress and the administration is ready to impose 500% tariffs on China, in case they decide to import Russian oil, and gas. Where are we going with the case of Russia, in your opinion?
MICHAEL HUDSON: Well, the real problem is not only isolating Russia, but isolating China. And that’s where all of the action has been recently. The United States is trying to decide just which countries are permitted to deal with other countries, and what they’re allowed to buy, and sell to these countries. And that’s an extension of the control that we’ve been talking about.
This is the neocon strategy. If you can’t have a U.S.-based “democracy” — a “democracy” means a country that has agreed to become a satellite of the United States (has nothing to do with the political system) — you can’t have a “democracy” (meaning a unipolar world), without the ability to make sure that you can control other countries’ elections and who they trade with.
Now, much more than the U.S. and Trump’s demands on India — that essentially means you’re going to try to block India’s foreign trade with the enormous 50% tariff that’s already put on — or the huge tariffs that you just mentioned on China (that means you block all trade with China) — this is going to essentially ensure, if it were applied, the most serious depression that you’ve had yet in the United States.
The kind of confrontation we’re talking about began a month ago with TikTok. Trump used the “national security” claim, that somehow TikTok is looking at what Americans like to watch; and if you discover that, then you can control the way they think, with the narrative.
And TikTok further violated the United States’ ban on free speech: it became a site for public discussion of politics.
So, you had many political people, views, treating it almost like X, or the other social media — and that included a criticism of genocide, and an insistence that the mass-killing was wrong. And that infuriated the United States. So Trump said: You have to sell TikTok to a group of billionaire Zionists — who will change the algorithm to prevent any discussion of the Middle East that is not in favor of Israel. There can be no use of the terms “Gaza” or the “Left Bank.” It’s “Judea and Samara” now. You have to control the dialogue and the discussion in order to shape what people think so that they will elect governments that are “democratic,” meaning governments that are controlled by the right-wing alliance between the neocons and the financial sector (the 1%, the deep state, the Americans).
So, you have that again: you have the neocons feeling insecure, if you could have TikTok permit personal opinions and analyses — and, especially, they were having photographs of the children that were killed in Gaza. They were having photographs — Israel has done [its] very best — targeted photographers and reporters for assassination — precisely to prevent this. They were targeting doctors for assassination, so that there would be no photographs of the destruction of the hospitals, the destruction of the babies.
Now, if the TikTok deal is permitted to go through, the United States will control all of the social media and prevent any discovery of this. That will enable the United States to shape “democratic” opinion to vote in the way that “managed democracies” are supposed to do.
I know you have a tape that is a wonderful tape that I want you to show, Nima, but I’d like to talk about what happened two days ago when Holland was the first country outside the United States to confiscate a Chinese company, on the grounds that China — it was producing computer chips for automobiles, in Holland, [in] what had been a subsidiary of Philips — and the United States said any company — passed a rule — any [company] with more than 50% Chinese ownership must be confiscated if it in any way affects “national security” — if it makes batteries, if it makes computer chips, if it does anything that we consider “national security.” I can go into that in detail if you want, but you probably want to shape the discussion first.
NIMA ALKHORSHID: Yeah, let me play the clip, Richard, that Michael mentioned. Scott Bessent talking about China:
SCOTT BESSENT (CLIP): No mistake. This is China versus the world. They have put these unacceptable export controls on the entire world. China is a command and control economy, and we and our allies will neither be commanded nor controlled. They are a state economy, and we are not going to let a group of bureaucrats in Beijing try to manage the global supply chain.
MICHAEL HUDSON: This is wonderful. Well, Trump said that, for the first time in history, nothing like this has ever occurred. And of course, it has occurred! It’s what the United States —
What China has done is, [it] passed a series of rules that were almost word for word the same rules that the United States had imposed on other countries dealing with China — for “national security.” China is finally doing to the United States exactly what the United States did to China.
The difference is that China doesn’t really need the United States, in the sense it doesn’t need U.S. exports, because the United States isn’t exporting anything that China really needs. And if it does need something, like replacement parts for Boeing airlines, then it’s going to avoid the fact that the United States has weaponized its foreign trade — so that it can stop the export of replacement parts for Boeing airlines, in the hope that the Boeing planes won’t be able to fly anymore and [that] China will have a problem — because China has indeed developed its own commercial airliner.
But the United States has told foreign countries, and the international transportation licensing authority: Don’t approve China. Only approve airplanes made by the United States and its satellites, like Airbus. Do not let any Chinese-made airplane land, because it doesn’t have official U.S. approval. This matches with the United States intention that we must control all of the airplane, and other, essentials.
I want to talk about what happened last week in Holland, when the Dutch confiscated the Chinese ownership of a company called Nexperia. The Financial Times has been focusing on this by saying, for the first time, Europe has, and especially Holland has, moved away from the whole idea of open investment, free trade, free investment, to say: All domestic investment is now controlled by the United States. Any foreign-owned firm, specifically a Chinese-owned firm, should be confiscated; and any Chinese firm that uses American exports as part of its products, its trade must be banned.
Well, the company that China bought was a company specializing in making batteries for automobiles because China has become the world leader in making batteries. The United States wants to prevent China’s leadership in batteries so that the United States can supply batteries that cost approximately ten times as much. The intention is to prevent Europe from using low-priced batteries designed by China, so that it cannot compete with American cars using American batteries.
So, you have this semiconductor company and battery company — with 12,500 employees all over the world, not only in Holland — and all of that has just been confiscated. It was sold to a Chinese conglomerate in 2017, and it was bought by a Chinese group, Wingtech, in 2019. And everything has been going fine, until the last few months when the U.S. State Department told Holland: You have to close down this Chinese company. We want to make sure that China cannot make any money in Europe, or any other “democracy” which we control.
So, the words that were used in your wonderful clip — a [command and] control economy — that’s what the United States is: that’s “democracy.” If you do not centralize control (and, essentially, be a police state) then you are not assuring the U.S. unipolar control of the world. And China has fought back.
But if you go into the details, I mean, this is an escalation, this confiscation of Chinese companies. The Financial Times wrote that “Wingtech is a landmark moment in Europe’s evolution, from one of the world’s most open trading blocks to increasingly preoccupied with economic security.” And the “economic security” is dominated, is defined, by the United States.
And just as the United States forced TikTok to be sold — either you sell at a giveaway price to the Americans, or we’re just going to close you down — it’s now using the same policy towards Europe. And China [has] essentially decided to fight back against all this. The court documents in the case that the Financial Times have been quoting is that The Hague (the government in Holland) was acting under pressure from the U.S. to back the control.
Well, look at what’s happening. Lenin had made a quip once; that capitalist countries would sell [the U.S.S.R.] the rope from which to hang them [attributed to Lenin], metaphorically speaking — meaning the arms. Well, China has no intention of selling the United States the military materials — rare earth metals, and other metals, and other tools — to destroy it in missiles. The United States said: We expect war with China as our existential enemy in the next two or three years. We must destroy China. Again and again, from Biden to Trump, and to Congress, there is an announcement: We intend to go to war. We’re preparing the way.
Well, of course, China’s blocked what you need to make the missiles, the rare earth magnets to make the missiles. China blocked what you need to make the computers to guide the missiles, and to spread your control of the internet, control of the public media platforms, really, to control the direction that the world’s moving in.
And China has watched what the United States did to Japan, with the Plaza Accords and the Louvre Accords that insisted that Japan raise its exchange rates, and essentially [brought] on its depression. And it’s watched America’s demands that Japan pay tribute of $350 billion to the United States, in order to have access to the U.S. market, even subject to the high U.S. tariffs. And China [has] watched the demand on Korea to pay just as large a $350 billion “choice.”
China has no intention of surrendering on these terms, and it has no intention of letting the United States have, what it says is, the new equivalent of controlling the world’s oil reserves; controlling the world’s food; controlling the world’s information technology; controlling the world’s computer technology (computer chip technology, the programming technology, the engraving of computer chips — the blocking of Dutch companies from selling computer chip engraving machinery to China).
China has realized that if the United States has a monopoly on computers, on missiles, on automotives, on military technology, it’s going to use this to attack China. And it’s taking moves to stop it. And Trump has said he’s willing to create a depression that will be like the 1930s in America. His threat to impose these multi-hundred-percent tariffs on Chinese goods means we are blocking all trade with China — that means with China technology.
Well, China has what the United States needs for its military domination. The United States doesn’t have anything that China needs. China will grow. The United States will move into a crisis. And, as Richard said, this is an act of desperation; but it’s a desperation that’s worth following, because 90% of the Americans are going to be downgraded in their standard of living, their wages, what they can afford; but the 1% of Americans, the Silicon Valley billionaires and the financial banks, will make a profit.
And what’s so amazing is that [on] today’s New York Times first page: “U.S. Banks Score Big Helping China Firms Go Global” — Well, you can imagine what’s going to happen. Who is going to win? Will American foreign policy be what the banks want — which is usually what foreign policy is all about for the United States? Or will it be what the neocons want? [Neocons:] We want war. We cannot have another country being independent from the United States. We cannot have a country of equals.
So, we’re back at what we talked about with Venezuela: You cannot negotiate with other countries and make a reasonable deal because that would be to treat them as equals; that would be to treat them as sovereign countries. There is only one sovereign nation: the United States. All other nations are to be treated as, or turned into, satellites for the United States. And I think that’s why Richard brought up what was happening in Argentina — to make sure that it’s locked into a satellite controlled by a client oligarchy in Argentina; just as you could say the same thing is happening in Europe.
RICHARD WOLFF: Let me comment a little bit about Scott Bessent (and I don’t mean to pick on him, although I’m not opposed to doing that either, but that’s not what I’m doing).
Watch the fuzziness of the way he speaks. So: We’re not going to allow bureaucrats in Beijing because they are a state economy —
This is a minister of finance whose boss just did the following: took a 10% ownership of the Intel Corporation; imposed a partnership of the U.S. government on AMD and NVIDIA; is busy taking other positions in American corporate governance — ownership. I mean, we are more of a state economy than we have ever been!
Tariffs are the biggest imposition of taxes any government of the United States has ever done. We are taxing everybody. The whole world is being affected by us because if you choose tariffs, it’s international. You’re taxing your own people, hugely. Look how proud Mr. Bessent was a few days ago, telling us that the tariffs have raised $60 billion already in their first x months. He’s proudly telling you what previous Republicans would have been horrified — they’re a party against taxes! No, now they’re a party for taxes.
Every government that has ever taken a bigger and bigger share of the economy has used “national security” as its rationale. That’s not new. That’s what Republicans used to make fun of. It’s really, it’s remarkable. He’s denouncing China for wanting to control the world. As Michael correctly says, China is demanding what the United States has always fought for, has acquired, and is now desperate because it’s losing it. It’s angry at China — for what? For wanting pretty much the same thing, if Mr. Bessent is right.
It used to be the argument, here in the United States, that a free-trade regime was the best protection against war, against hostility. People used to talk about the competing empires — British, French, German, Russian — before World War I, as the reason they destroyed each other. The League of Nations after World War I, and the United Nations after World War II, were created because countries that used “national security” to shape their economic policy ended up in war against each other. The whole point of these international organizations was to not have that happen again.
The United States’ withdrawal from the United Nations — which has been going on for twenty years — is also, as we should have seen before, a withdrawal from that whole project; and a return to being a national security state, in which the state and the leaders — the oligarchs of business — are becoming the same people. Remember who was sitting behind Mr. Trump when he was inaugurated? The ten billionaires from the leading few industries the country has. It was an advertisement for the merger of oligarchs and government, which is a hallmark of fascism — Italian fascism, German fascism, Japanese fascism, Spanish fascism — come on! We know these things.
The difference is that the United States is now not the dominant country. The G7 is not the dominant player in the world economy. And all the pretense, and all the fuzzy ideology of Mr. Bessent, who conveniently forgets that his government is now becoming more “statist” with each passing week, and therefore not different from “China,” but indeed rather more like “it” —
China is also not — because he should know better — it’s not a state economy. Half of it is private enterprise. People are critical of China’s claim that socialism has developed faster and further in the last forty years in China than any other system has developed; and they like to criticize that by saying, yes, yes, yes — but that’s because of the “private” sector.
Okay, if you want to make that argument (I think it’s stupid but, okay, if you want to make that argument), then you can’t turn around the next morning and refer to them as a “statist” economy. You’ve just explained that they are a “private” economy — and that’s why they’re so rich and big and powerful — richer than you are.
And let me remind you: In the contest before World War I of competing “national security” — economic nationalisms built around Europe and its colonies — nobody had an outstanding advantage of population.
But that’s not true, folks. The United States has 4.5% of the world’s people. China and the BRICS have 60% of the world’s people. What kind of a conflict are you imagining you’re going to be able to have? What are your chances? This is very stupid.
You ought to be working your rear-end off, trying to come up with a revived United Nations to work out a way for the G7 to function, and for the Chinese and their BRICS allies to function. The planet is big enough for both of them.
Or, are we going to descend into another world war, even knowing the disasters of the first two? And in case you’ve forgotten, World War I ended up with the Soviet Union. World War II ended up with the Soviet Union — plus China. You notice something? You know where World War III will likely end up? Yeah, yeah. It ought to make you stop, and think a little bit about what you are doing.
NIMA ALKHORSHID: Michael, go ahead.
MICHAEL HUDSON: Today’s international conflict between the NATO West and China is being fought over what kind of strategy the world will have. Given the inequality of population and size, the United States wants to be the only country that is able to wage war with the best armaments. It wants to be the only sovereign nation. All the other countries are to be turned into dependencies: trade dependencies, by weaponizing foreign trade; financial dependencies, by dollarization; and military dependencies. [It] is a precondition for their very survival. That’s the only way in which the United States can possibly achieve the strategy that you say can’t work.
Well, of course, it can’t work in the end because other countries are going to retaliate. But the essence of U.S. foreign policy is to cripple other countries’ ability to retaliate by things like controlling their oil supply, so they can’t survive, if they retaliate; by denying them ownership of and production of information technology — computer chips, basic electronic technology — and monopoly of the internet, if they don’t comply.
The United States says: Yes, of course, we know that there’s this inequality of population and productive power. We’ve deindustrialized, they have not deindustrialized, but we can win anyway — by the policies (that I’ve just developed) of total control, and the narrative that is needed to impose that control.
And I think the policy of targeted assassination, of killings — like you’ve seen, from Venezuela to Gaza — are all part of this demonstration of America’s willingness for total control, even to the point of preparing for the Near Eastern war against Iran, that many of Nima’s guests believe is imminent.
NIMA ALKHORSHID: Richard, you mentioned G7 and compared it to BRICS. And once (we know, once), Donald Trump said that Spain is part of BRICS. He was trying to lecture the reporters in the room, and he said Spain is part of BRICS. Here is his latest comment on BRICS:
TRUMP (CLIP): I told anybody who wants to be in BRICS, that’s fine, but we’re going to put tariffs on your nation. Everybody dropped out. They’re all dropping out of BRICS.
BRICS was an attack on the dollar. And I said, You want to play that game? I’m going to put tariffs on all of your product coming into the U.S. They said like I said, we’re dropping out of BRICS. And BRICS is, like, they don’t even talk about it anymore.
NIMA ALKHORSHID: Dropping out of BRICS? [Laughs]
RICHARD WOLFF: But, you know, it’s it is important to understand that if you have a leader who forever makes things up like this — everybody’s dropping out of BRICS —
You know, I pay a lot of attention to BRICS. I’d be very interested. Could that happen? Yes.
By the way, Argentina is the only example I know of. They did withdraw — with this fellow, Milei, who’s on his way out. He withdrew. They [Argentina] actually joined, and then they withdrew — because it happened in a very short period of time, between when they joined, and when Milei took them out — and that was an act of him, as an extreme-right-wing neoliberal person, which he proudly says of himself. It’s not a label I’m putting on him.
But when you have a president, like we do, who makes these casual comments — India has decided not to buy Russian oil — and turns out, no. And the BRICS are falling apart — no. Or I will put tariffs on them — as if that’s the end of the whole story. This is becoming pathological, sure, but it’s a pathology that has a place. It has an origin. It has a set of supports. It is to be taken seriously — he isn’t; but the fact that he has to talk like that is an interesting phenomenon, right? Most leaders don’t do that.
Why is it important for him to do it? It’s like asking the question that should have been asked when he first ran for office — and he descended the escalator in one of his buildings in New York City; and he made the famous comment that the Mexicans here are all rapists and killers, and which he had, of course — you have to ask: Why would a personality aspiring to be a politician say such crazy stuff? Because in our environment, there’s a need for it. He’s meeting a need. His instincts tell him — and he was right. Politically, there was a constituent out there that needed to beat up on immigrants. Mostly from Mexico, they come.
So, it was important. He’s meeting a need, and he discovered that there’s a whole community of people whose peculiar experience in the last thirty years has been to be — what? They are white male Christian union members who lost their jobs because corporations wanted to replace white Christian male union people — because they were the highest paid part of the working class. So they were the targets: Replace them, either with automation, or by moving your production to China. And so they were left to die in their cities across the Midwest and the South, to become MAGA, his support.
He understood without — you know, he doesn’t have the capacity, or the vocabulary, or the education, but he understood, instinctually, that there was a need out there to demonize Mexicans as immigrants. That’s why you now have this Christian fundamentalist community cheering on the concentration camps for immigrant children — which violates their Christian commitments. And somewhere they know that.
But they’re so needy — I want to get that across. Mr. Trump is needy for saying this. We should understand, because it’s important, what the need is, that this dismissal of the BRICS is about. And the need? The BRICS is overwhelming. The BRICS is the biggest danger he faces economically because it’s the option for China to behave in the way Michael has laid out.
Because they have the BRICS, and all that that means, they can now afford, finally, to be taking steps, like what they did in response to the action of Holland. If I were to make a guess about the decision to hold back the rare earths? Michael is right. The precipitate act was not the fees charged to the boats that are made in China, which the United States is doing, or the slippage here or there — it was that: that act of trying to literally organize the whole world economy to be focused against China; to take Chinese property, the way they took the $300 billion of Russian assets at the beginning of the Ukraine war.
Okay, now is the time. And my guess is it took a difficult, long debate inside China as to whether this was the moment to move. And it should be taken seriously because the Chinese are responding to a deep need they have in taking their action, just like Mr. Trump is responding to a deep need that comes out of the dilemmas of the United States.
MICHAEL HUDSON: Well, what Richards brought up is the fact that this international trade war finds its counterpart in the U.S. and international class war. It’s a war, not only of the U.S. to dominate other countries; but for the rentier class — the elites — to dominate labor, as its policies — by making revenue and wealth for itself, in the form of creditor claims, monopoly claims, and the capture, the privatization of government to prevent public social spending — all of this is going to impoverish the population. All of that goes hand in hand with the international class war to promote Thatcherism, privatization, financialization, and the whole economic philosophy that we’ve discussed so much in earlier episodes.
RICHARD WOLFF: And let me — a concluding thing: When you hear Mr. Trump and some of his lieutenants — as you are already hearing, and you will be hearing more — talk about how, even if it takes a depression, even if it takes mass suffering, this is a matter of the “national survival” and our “security” — you know what they’re gearing up for? It probably means they are getting the advice that the tariff game is leading us into a stagflationary situation, one way or another: a very troubling combination of 3% or more inflation, with a decline in our employment situation.
Jamie Dimon was quoted everywhere yesterday, talking about the collapse of two automobile companies, and saying, where there’s a few “cockroaches” — his word, not mine — there’s always lots more. What is that? That’s a statement that a credit crash is underway, or likely, or possible, with all that that has meant. Let me remind you of how the 2008 crisis got going. That, too, was a credit problem. That’s why it’s called the subprime mortgage crisis.
So, they’re getting ready to even carry their craziness to the point of a mass depressive recessionary onslaught, because they are convinced it’s the necessary price to pay — of course, always for the working class — to get them through the crisis they face, which is one of a world no longer willing to be the colonial territory; because that’s really what this is about: it’s a resurgence of colonialism.
It’s not an accident that Mr. Trump meanders about Greenland, or Canada, or Panama or, now, Venezuela. These are all imaginaries; but they’re logical, if the whole world is going to be controlled, because that’s the control that a metropolitan country used to have over its colonies. It’s the United States rehashing the end of the British Empire, hoping to reverse the flow of history.
Well, I am one of the masses of the world saying to the Americans: too little, too late, not available.
It’s like explaining to Israelis that settler colonialism was something that worked two centuries ago, but now? Doesn’t work anymore; puts you in an impossible situation.
MICHAEL HUDSON: Well, Richard, unemployment and economic collapse is not a price to be paid by the ruling elite.
It’s easier to make money and get wealth in a crash, than it is in slow growth. The crash is going to lead, as I think you pointed out, to many mortgage foreclosures. People are going to lose their homes, as they did after [President Barack] Obama’s bailouts in 2009. All of this led to a huge asset grab by the 1%. While home ownership declined in the United States, and GDP and wage levels for the 90% remained pretty stable, all of this wealth grew for the [1%]. Same thing in the world.
Well, when Trump withdrew support for the Agency for International Development [USAID], withdrew support for the United Nations health agencies and cultural and social-spending agencies, the intention was to create mass starvation and famine in the rest of the world — just like Trump’s attack on global warming to maintain the oil supremacy is causing rising sea levels — it’s going to create mass destruction.
All of this is viewed [by] the United States as a collateral benefit, not a collateral [damage]. You have to realize that when something like this happens, not everybody loses.
It will be a negative-sum game for the economy of nations, and the world as a whole, but very positive as a wealth grab by the 1%. And the United States is trying to make that the American 1%, not foreign 1%.
NIMA ALKHORSHID: Thank you so much, Richard and Michael. Bye-bye. Great pleasure, as always, talking to you.
RICHARD WOLFF: Talk to you again next week.
NIMA ALKHORSHID: Talk to you next week.
For us, because this was recorded on the 9th, it is a look back on what happened in this last week. These conflicts (Palestine, Ukraine) are not simply military conflicts. The narrative (a culture war) is what made us horrified during the peace plan circus, because we knew were were dealing with narrative, and not with truth.
“Well, this is a much longer lasting fight, and it goes beyond the military battlefield, and it’s how the world frames the thinking about what’s happening to it. And this is the deepest, and it’s even the most threatening battlefield over control of the narrative — the narrative of how to frame the issue — and what’s being taught in the schools, in the universities, and spread to the internet platforms and the mass media — that is now already come under the control of extremist Zionist hardliners. ”
NIMA ALKHORSHID: Hi, everybody. Today is Thursday, October 9th, 2025, and our dear friends, Michael Hudson and Richard Wolff, join us. Welcome back.
RICHARD WOLFF & MICHAEL HUDSON: Glad to be here.
NIMA ALKHORSHID: Since everybody’s talking about the Trump peace plan, I want to start with that. Michael, what’s your take on what is happening? You’ve sent me an email. You’ve mentioned that what has happened in Gaza is not Israel’s war, it’s NATO’s war. What’s your point in that?
MICHAEL HUDSON: Well, Trump told Fox News last night: The important thing is for people to love Israel again. I told Bibi that Israel cannot fight against the whole world.
And Netanyahu has been saying that this war goes far beyond simply between Gaza and Israel.
It’s really a fight, a ninth front. And that ninth front is: Who is going to control how Americans view international relations, the geopolitics of what’s happening? And I think if the military confrontation stopped, at least temporarily, then this conflict has now shifted to the political and the cultural battlefield. And I think we have to look at that.
This is turning out to be a much deeper and long-lasting conflict, and it goes beyond Palestine and Israel. To answer your question, the war in Gaza and the West Bank isn’t simply a military conflict between Israel and the Palestinians. Just like Russia isn’t simply in a military conflict with Ukraine, the Palestinians are not in a war with Israel, but with NATO led by the United States, and Britain, and Germany. And Israel’s strategy is — well, how do we keep the loyalty of the U.S., now that the opinion polls show that younger people are taking the side of the Palestinians, not Israel? What does that bode for continued American support for Israel?
Well, this is a much longer lasting fight, and it goes beyond the military battlefield, and it’s how the world frames the thinking about what’s happening to it. And this is the deepest, and it’s even the most threatening battlefield over control of the narrative — the narrative of how to frame the issue — and what’s being taught in the schools, in the universities, and spread to the internet platforms and the mass media — that is now already come under the control of extremist Zionist hardliners.
And that’s what the whole fight, over the last week, has been over TikTok. President Netanyahu has explained that Israel is at war with what he calls this ninth front: to control the United States. That’s the real war that’s happening. And this control isn’t to be established militarily, but by controlling the U.S. public opinion through, essentially, extremist Zionist billionaires, the Silicon Valley billionaires, who control the mass media. You’ve seen them take control of automatic intelligence to buy out TikTok, and redesign the algorithms of TikTok to replace the pictures that TikTok was showing about murdered Palestinian babies, all sorts of horrendous genocidal attacks. All this is going to be out.
And the new algorithm is blocking any discussion or any exposé of what Israel has been doing to Gaza and to the West Bank. And just like Israel has concentrated — the army has concentrated — on killing two groups of people: journalists — they must destroy any attempt to let the world know what they are doing — and doctors — the doctors must not heal the injured, especially the children who can grow up — and growing up with a memory of what’s happening to them.
And Israel says, if these children live, it is a threat to Judaism, because Israel is a Judaic state — meaning, as Alistair Crooke says — meaning a theocracy; and a theocracy has no room for anyone who is not a member of the Judaic state.
So, you’re having this war extending to the churches. You know, what are the churches going to say? Are they going to say this war of Israel against the Palestinians is part of the Bible — of the Lord backing Israel, as America’s ambassador to Israel has claimed, that he has to follow the Bible?
There’s a whole attempt to create this, not only a false, narrative, but by using the algorithms for all the main internet platforms — Facebook, Google, even X — if you try to use these platforms — and you can now expurgate or censor any discussion that is not reflecting an Israeli opinion — then you’re shaping public opinion. And if you can take over the news, like CBS News was just taken over by an ardent Zionist —
You’re turning the universities, who are preventing any student demonstrations in favor of peace — they say: If you want peace, and not fighting, then you’re antisemitic, we are expelling you — and if you’re a professor, who describes this ‘we will expel you,’ as Columbia University has done, other universities are doing —
This is a cultural war, and that’s what is being overshadowed by all of this military discussion. And since neither Richard nor I are military specialists, I think that that’s really what needs to be discussed on your site, because you have enough military people who are explaining the brutality of what’s happening.
NIMA ALKHORSHID: [muted, addressing Richard Wolff] … from a different angle, but you have your point. We talked about it before. Go ahead. Your take?
RICHARD WOLFF: Let me frame it slightly differently, but, I think, in a way that is complementary to what Michael has just said. Here’s my interpretation of what — translation should be a better word — translation of what Trump said on Fox News, that Michael cited. Here’s my translation. This is not what the president said, but here’s what I think lies behind the words he said: that he has come to the conclusion, with his advisors, that the tide has changed in the world; that Israel is now losing the hearts-and-minds campaign that it launched, and that it did, in that area, too little, and too late; and that it could not overwhelm what the reality was, of what they were doing to the Palestinians in Gaza for the last two years.
Okay. It’s too late. Whether you want to give the credit to the global critical media, whether we pin another medal on Greta Thunberg, I don’t know — but he’s losing. And I don’t think President Trump cares about it anyway.
But what his advisors have told him is that the tide is turning inside the United States. It is becoming politically impossible for him to continue the policies of Biden and Trump, of being 100% pro-Israel — more than half the people of Israel are, in terms of the war policy. It’s becoming dangerous. AIPAC, for all the money it spends, and all the influence it has, has not prevailed.
And he is telling Bibi: Listen, Jack, I can’t keep supporting you if, in my country, the opinion is shifting away from you. I’ve done as much as I can do. I’m bailing. You’ve got to now do — and then he says something which is ridiculous: You’ve got to make the world love you.
Well, I know what he means. He means that AIPAC has to do something to change the direction of American political opinion. And there, again, I would remind everyone: We are now a very few weeks away from an election, which the polls suggest is going to bring an anti-Israeli Muslim socialist into being the mayor of the largest city in the country. This is an extremely powerful message being sent. Even if he were to lose the election — it doesn’t look like that, but even if he were — look how far he has already come!
And if you follow it — which I’ve been doing, from the beginning of his effort, long before he became well-known — one of his key supporters was an organization called the Jewish Voice for Peace, which is a pro-Palestinian, anti-Israeli war, Jewish organization — in the city that has more Jews than any other in the United States. I mean, wow! What?
And I think they’re learning, and they’re very worried. Marjorie Taylor Greene has announced she’s voting with the Democrats because she can’t go along with the policy of undercutting Medicaid for poor people. Mr. [Thomas] Massie is relentlessly trying to get the Epstein files opened up. There’s serious speculation that the real reason they shut the government down had nothing to do with Medicaid, or anything else: it had to do with postponing the denouement of the Epstein files.
Okay, I don’t know whether these things are true or not, but if you put them all together, they suggest that Michael is right; that there’s a turning point here; that this issue, even the Israelis and the Americans now understand that the military action in Gaza has to stop — because it’s counterproductive, it is damaging. The whole point was to give them more security, and as the critics have told them, for years now: that’s not going to work. You’re making your situation more difficult.
And you’re seeing around the world, even among comedians — Jon Stewart, explaining to his audience that Netanyahu is the one threatening a global wave of antisemitism. What did he mean? Because of what you’re doing in Gaza, you crazy people, you are, in the name of preserving yourself, you’re killing yourself. And that allows me to say — and bear with me: Nothing — nothing — is more typical of declining empires than having their leaders do things which everyone shouts at them: Don’t do that! That makes your decline worse.
But they can’t hear it. They’re stuck in these ways of doing things. And I don’t know whether Netanyahu can hear any of this (either), but that’s my suspicion. Mr. Trump is realizing he’s going to have to choose, and it’s very clear who’s going to be sacrificed.
You know, the Germans did a Holocaust — they did a genocide — and they are suffering, to this day, with the reputation they have around the world for that. How it has all played out in a million people’s minds — you know, you don’t undo this quickly. Hitler is dead in 1945: Here we are, eighty years later, and we can still see — Germany inside the European Union. I mean, my family is part-French and part-German. I have lived the lifelong effects of all of this all my life. Even though I’m born in the United States — I’m an American, and all of that — I’m fully aware that that is alive and, well, in a thousand ways, Israel will take a very long time, if ever, to crawl out from under what it has done.
And Mr. Trump is now telling them: You’re going to lose me too, because I’m not going to sacrifice my political life — because AIPAC is not able to buy and control the narrative, the way Michael laid out. It used to — it was very good at it. We all admired, in our way, how it did it. But we all knew — if you think about it — it wouldn’t last forever. Well, ironically, the most aggressive effort to hold on to it — the Gaza destruction — is also the end of it.
MICHAEL HUDSON: Richard, a few months ago, Netanyahu said that the greatest enemy of Israel are the assimilationist Jews. This is relevant to [Zohran] Mamdani’s running for election. He said, because the assimilationist Jews want to be part of their own society, want to be part of their own economy, they don’t look to Israel — they don’t put Israel first. And if the American Jews will put America first, European Jews will put Europeans first — they are the enemy.
Well, one friend of mine the other day commented that it’s as if Netanyahu has read [George] Orwell’s 1984, and he took to heart his statement that those who control the present control the past, and those who control the past control the future. And so what Israel is trying to do is to reframe the whole past, and the whole history, of the settlement of Israel, from the very beginning — the Israeli Holocaust, the Nakba, the mass assassinations, the whole military history.
Well, as I mentioned: To establish all of this, you have to control the narrative. And it’s a historical narrative, it’s an ongoing news narrative — and it’s capped by what students are taught.
I want to discuss the economics of how this narrative came about — and I have some personal experience in this. Back in the 1970s, more than seven decades ago, I saw how the groundwork was being laid for the cultural war that was being prepared. I was a Wall Street economist, and some of my oldest friends were working for Drexel Burnham — that was the investment banking firm for corporate-raiding junk-bond takeovers.
I often met with them, and I addressed their board meetings sometimes, and a number of their managers told me that the most important thing to them in their life was Zionism. And Drexel [Burnham] was the investment banking firm that developed the junk bonds to take over companies, and turned them into financial vehicles to make capital gains. It was part of the whole transition from America’s industrial capitalism to predatory finance capitalism — by making buyout offers to take companies, to make them into financial vehicles.
And the main organizer, Michael Milken, went to jail for organizing insider-dealing with Drexel’s investors. And the important thing — it was spelled out to me — was that these investors were all Jewish, and they were more than Jewish — they were Zionists.
The financial details have been widely reported about all of this, but what is not recognized is that there was sort of a personal compact among all of these investors — that they were going to be made very rich by playing by new rules — that the “white-shoe” law firms, and investment companies, wouldn’t do — of making hostile takeovers, instead of friendly merger proposals. And the deal was, they were all expected to give a substantial portion of their earnings to the Zionist cause — and that went beyond AIPAC: it meant supporting the Zionist cause in many, many dimensions.
And a few decades later, I met with some of the former Drexel strategists who’d gone on to create firms of their own. And they applied this principle — that in order to join this corporate raiding — and we’re talking about these investors were the ones who took over Silicon Valley, and the internet stocks, and the information technology stocks — they focused on that from the beginning. They became multi-billionaires and, in the case of Larry Ellison, a trillionaire now — they were able to operate with a freedom of attacking the economy-at-large, that the traditional investment banks and companies, and law firms, didn’t.
Well, fast forward to the last decade or so: You have the largest investment firms, those of Silicon Valley — and these firms are all led by Zionists, working together with Israel and the Likud Party, as well as with AIPAC. They’re active in U.S. political campaigns. They’re using some of their billions of dollars to promote the Zionist cause.
And this attempt to shape American public opinion is centered in the financial sector, and, specifically, the financial control of the information technology sector, the main platforms for internet communication — everything that I was discussing earlier, where the information war is being fought, including the takeover of CBS News to promote Zionist positions; the takeover of networks here; the takeover of mass media publications; and the huge propaganda within the churches; especially the fundamentalist churches, to give this fake Christianity, based on the Scofield Bible and the idea that God told Israel: Kill all the non-Jews — so that you’ll have the end of history — and Jesus can come back and send all of us up to heaven, and everyone else to hell —
This is the craziness that has been sponsored, essentially, by the Israelis, pushing the gullible Christian churches to transform — you know, what people think of America as a Christian country is not something that either the traditional Catholics or most Protestant churches, as they existed before 1900, would even recognize today.
So, this is why Trump made the deal with China, forcing the sale of TikTok as part of this campaign — along with Facebook and X, and other platforms and media — to create the Zionist perspective.
And, you remember, Hitler created a fake history: As the world was wrecked by the debt problems of the 1920s and the 1930s, Hitler tried to blame it all on Jewish bankers. Well, the fact is that American banking and European banking was pretty antisemitic. And the origin of these international bankers — they were created by the Catholic Church, in the 13th century, to raise war loans to the kings who were loyal to the church and fighting religious wars and the crusades on its behalf — so there was this fake history.
And the fact is that the Jewish financial presence in the United States was not in banking. When I began to work for banks in the 1960s, there was a marked antisemitism there. They wouldn’t hire Jewish people. And one bank I worked for even hired a black employee before they would hire a Jew.
Well, how do you explain the Jewish presence? They were in the brokerage industry. They were in the stock industry, the investment banking industry — such as Drexel Burnham — not in banking at all. And it’s this reshaping of the investment banking industry that has cost billions, and I guess you could say trillions, of dollars. Part of this has been to make themselves tax-exempt, from paying anywhere near as high an income or wealth tax as 90% of the population has.
So, I think it’s appropriate to explain how the economic powerhouse of this propaganda attempt, that is not only shaping how Americans think of Israel, but [also] because the American internet companies and the associated Silicon Valley companies control the large firms that are active in Europe and Asia. What you’re having are these companies using algorithms and automatic intelligence to essentially act as a censorship that goes way beyond the United States, but over the entire world economy that uses Facebook and X, and all of these other internet — TikTok, now.
You’re having something that — it’s a fight, a global fight, to reshape history in a biased, extremist, Zionist way, a Cold War way, a neocon way, a right-wing, oligarchic way. You’re having the whole narrative become oligarchic, neocon, and Zionist. That’s really what is the context for the fight that we’re going to be seeing unfolding, probably for the next few years.
RICHARD WOLFF: It’s very, very useful to have this kind of history. Michael is exceptional in that, and he has been for a long time. The books he writes, the articles he writes, the take-back, they answer the question. Other people notice something. Michael asked the question: Why is it like that? Why, for example, would Jewish people be prominent in a particular industry, not in another industry? And, then, how does that help you explain why Silicon Valley should be peopled by the people that are there now, rather than the conventional banking? And he explains: because Jews were excluded from the historical banking, so they went somewhere else — and that that becomes part of the history.
Well, I want to do the same thing. Jews have been split — for as long as I’ve heard about any of this — between those who thought that there ought to be a homeland, quote, for Jews — a Zion, a place for them — and we all know what part of the reason must have been: that they were excluded almost everywhere else. Antisemitism, one way or another, could lead people to have the fantastic idea: Gee! If we were in a country that we controlled, maybe, finally, we wouldn’t be vulnerable to what has happened to us — in Spain with the Inquisition, in Germany with the Holocaust, and on and on and on; or in America, with the more polite forms of antisemitism that have long been here, and still remain.
And I want to remind people: Why did Jewish people go into financial issues? It used to be a critique, that finance — [Friedrich] Engels once wrote: Socialism can take a stupid form — his word — “stupid.” That’s when you think that the problem isn’t the capitalist, but the Jew. Antisemitism is the stupid-person socialism, was the way he articulated it.
Well, Jews were not allowed to be part of feudal Europe. They were not acceptable — neither as serf, nor as vassal, nor as lord. So, how are they going to live? They can’t live on the land, the way everybody else did in what was a rural economic system. So, they became the go-between. They became the merchant who didn’t have a piece of land, who moved from one place to another, buying cheap and selling dear — because that’s how you live if you’re a tradesperson.
Okay, so they become tradespeople, but there’s no mystery here. You don’t need the Bible to understand any of this. You need a little economic history to know exactly how it evolves.
But that takes me to the point — and perhaps, here, Michael and I disagree. I think he’s right in laying it out, but I think one side is now clearly losing, and it’s the side that used to be winning. In other words, we’re at a point where the former winners, the people who made the deal, the Zionist wing of the Jewish community — which was, by the way, always a minority, but an important one, but they had a lot of resources — they got their little country, they built it up — with the help of Jews outside, of course, and with the help of allies like the United States and Britain.
But it’s over. It’s over — not because this one or that one failed — because they’re part of the losers in the world economy today. That’s their problem. That’s Mr. Trump’s problem. If he didn’t have six other crises crashing down on him, he could give Mr. Bibi more. He can’t do it anymore. He just can’t. It’s too costly. And it has now turned into being costly to him politically. And since that’s all he has —
He brought three hundred generals and admirals to Washington a couple of weeks ago. He insulted them. He had a numbnuts defense minister tell them that they were fat, and not up-to-snuff. It’s outrageous what he did. You know, he’s so tone-deaf to do such a thing — Trump, likewise. They’re in trouble. That’s why they did that crazy thing, and then messed it up.
You know, if you have too many of these, it’s no longer the failure of this or that plan, or the mistaken strategic — no, no, you have to put it together. What is happening here? And he’s telling Mr. Netanyahu: Look. You’ve got to change the position of Israel in the world —
That’s going to be very hard for Israel. Why would you ask that of a country? Right? You’re asking, I mean, the moon — you can’t. Why would you be in a position to do that?
And he’s clearly pointing out whose job it is, this impossible job: It’s them, not me — I’m back. It’s a little bit like what he’s been telling the Europeans: You know, I’m not in this war in Ukraine, the way I was. You can do it. You better do it. But I’m not going to help you do it anymore, except peripherally.
That’s what he’s telling everybody. It’s because the United States cannot play the role it did. We are in this — pardon me — ass-backwards way, trying to tell the world, and ourselves, the empire is over, and we have to figure out a whole new narrative, strategy, system of alliances, security framework — whatever language you want. It’s over, and we’re in a new place. And we can’t militarize our way out of it.
MICHAEL HUDSON: Well, there goes Richard again. He’s being reasonable.
I don’t think Israel is reasonable. I’ve known these people. They are fanatics. I’ve worked with Netanyahu’s head of Mossad, his advisors — there is no way they will change. They are not going to be reasonable with the Palestinians. They are committed to exterminating them. The American Christians are committed to genocide. You’ve seen in the whole decision to get rid of Mr. [Charlie] Kirk, a month ago — he wanted to try to be a little more reasonable and reflect just exactly what Richard’s been saying — he was killed. Any refusal to go whole-hog with their program is met in the same way that Republican congressmen here in America are treated — expelled from the insider group, if they don’t go 100% with the extremism.
I think we’re dealing with an extremist ideology, with a religious fundamentalist conviction, that is not amenable to listening to reason. And Trump loves to make promises, and to say: Here’s a promise of peace.
Trump has no intention whatsoever of living up to his promise.
Just in today’s news, the Argentine peso is collapsing because Trump had promised $20 billion to [Javier] Milei in Argentina, and he hasn’t really done anything — just as he made promises to Russia to try to, at least, stabilize diplomacy. And in the last two days, you’ve had a Russian spokesman saying Trump has not followed through on a single promise he’s making. What you are seeing today is the euphoria of a promise that is going to be broken, just as soon as Israel goes to war with Iran. And you can imagine the aftermath of that.
But I want to continue the logic that I’m saying: What do you do if you’re an extremist? You have to be totalitarian when it comes to knowledge. And Trump has declared war in the universities in the United States, to treat student protesters opposing genocide — to expel them. And he’s following the example of the Zionist university donors who said they’re going to cut off all the funding, to Harvard and other prestige universities who don’t support a Zionist, specifically anti-Palestinian, position.
And I think the trauma that the Zionist strategists have in mind are the protests against the Vietnam War by American students — the Kent State killings, that killed the student protesters against the war. And that’s what led President Johnson to resign in 1968, and said he wasn’t going to run again because he couldn’t go anywhere in the United States without escaping through the service entrance of hotels, where nobody would yell: Hey, hey, LBJ, how many kids did you kill today?
All of this is in the mind when you think you don’t want the universities and the young people to take a position of supporting peace — because peace is assimilationism. To want peace is to deny that both the joint U.S. and Israeli control of Near Eastern oil and the whole Near/Middle East is at issue.
Well, last December, you had U.S. Senator Tom Cotton introduce a Senate bill that seeks to eliminate any federal use of the term “West Bank” — and instead substitute “Judea and Samaria.” And in Florida, you’ve had the governor try to insist that the textbooks used in the Florida schools rewrite history to use this different terminology. The terminology is sort of an identification as to whose/what language you’re going to use. And the House of Representatives has a bill saying that the government is going to remove all references to the West Bank from U.S. government discussions.
The fighting with Gaza may continue. So Israeli settlers are now redoubling their murder rampage against [Palestinians] on the West Bank. They’re burning their olive trees. They’re destroying their houses. They’re bombing all of their houses to drive them out. The war in the West Bank is now just as vicious as it was in Gaza, but there’s no military protection. And it is symptomatic of the control of the news that this has not been discussed anywhere, except on the internet.
Richard said at the beginning of the show that he doesn’t have the information, we don’t have access to the information. Richard, you and I have better information than President Trump has. We read the internet. We read the newspaper. We know what’s happening. Trump is surrounded by neocon Zionists, and despite the fact that he has the public relations perspective that you described, he has no understanding of the big picture that you and I, and I think most people who follow Nima’s channel, have. That’s what’s so striking in all of this.
RICHARD WOLFF: I think time will tell us how this is going to play out. I could be wrong. I could be wrong that it’s shifting against Israel and that this is symptomatic of that. But let me give you some more evidence that it might be shifting.
The British political system is now in a state of collapse. I mean, almost all points of view about Britain, inside and outside Britain, would agree. The Labour Party has lost pretty much all of the momentum it got from winning the last election, and putting [Keir] Starmer in the position of prime minister. The Conservative Party that ran Britain for most of the last thirty years is in its final death throes. It may disappear, it is so weak at this point in its existence. The polls are against it. Its leadership is fighting each other. It’s really a shadow. And an extreme right-wing reform party is probably the best positioned right now, if there were to be an election. And it is a minority party, with very little of a history, and a very strange man at the head.
But what’s clear is that the program of getting rid of a very popular Labour leader, Jeremy Corbyn, which was accomplished by Mr. Starmer, the guy who’s now in office, by pillorying Corbyn — by blaming him for being insufficiently vigilant against antisemitism, where the evidence was support of Palestine — that’s over. That’s a game you can play once, but you can never play it twice. It’s like the threat to commit suicide. You can play it really well once, but by the second time, it doesn’t have the punch it did before.
I want to remind everyone that a week ago there was a general strike in Italy. The whole country stopped — because the whole country went out, stopped working in solidarity with the dock workers’ union there, which had refused to load, or offload, Israeli cargo from any ship docking in the ports of Italy.
And a few days before that, you had mass movements across France on the 18th of September, on the 2nd of October, on the 10th of September — those three dates — and among all the flags of the millions who went into the streets of France were the Palestinian flags, that were obvious everywhere. It’s not just Mamdani in New York. There is a global turning against —
Look. It’s remarkable that it took this long, given how long the Israelis have done what they’ve done in Gaza, and the West Bank; and given the way they treated the Arabs, who, let’s remember, are half the population roughly of the country of Israel — so you have this split in the country, and all of that — it’s taken a god-awful long time! But I do believe we now have signs. Britain has recognized Palestine as a state. So have most of the other Europeans. Ireland did it long ago, but Spain, Italy — Germany, I believe, is about to do it, — France has done it. I mean, Israel’s isolation is virtually total.
You know, you even have conservatives running around the United States trying to explain to the American people that we’re pretty soon going to have ten billion people as the population of the earth. Half of them — five billion — are Muslim. You’ve got a problem here. And it’s becoming impossible to pretend otherwise. And all the money of the billionaires in Silicon Valley, and all the expertise that AIPAC has shown, are not enough. You can’t go against a historical shift — when its time is here. Michael may be right — it may not be here yet. I may be seeing things which, even in their aggregate, are not enough.
But, I haven’t thought so before, but I think so now. The communications I got over the last month, from both France and Italy, and also a little bit from Germany, show the Israeli issue — which in Germany has been very important because of their collective guilt and all of that — it doesn’t work anymore. The Alternativ für Deutschland [AfD], which is the right-wing inheritor of the Nazi past, is able to be what it is now, which is the largest single party eclipsing the Christian Democrats in Germany for the first time — and their position is unmistakable. It’s not being held back, as it used to be, by the legacy of their Holocaust. For the Israelis, this is all unspeakably bad news.
MICHAEL HUDSON: You’ve put your finger on the really important thing: What is the rest of the world going to do?
And some of my friends that are still associated with the Democratic Party have suggested imposing a litmus test–pledge on political candidates not to accept any campaign contributions from AIPAC, or other Zionist organization. And if they accept such funding, then the Democratic voters are called upon to reject them; and if they win the primaries, to refrain from voting for them — even if this perpetuates the Republican domination of Congress. You’ve got to get rid of the AIPAC-funded candidates reflecting Zionist interests.
And beyond electoral politics, you have the whole looming threat of the Supreme Court’s Citizens United ruling. And that is the modern travesty — this is as destructive as the Dred Scott ruling that led up to the Civil War. Congress has to pass an act prohibiting private contributions to political campaigns beyond some circumscribed limit, with penalties for bribery and corruption brought against such violators. That’s the only way that you can cut off the money that is supporting this rotten congressional neocon, pro-war, oligarchic, anti-labor position. And without such legislation, the United States and its political system are going to continue to be that of an oligarchy, not a democracy. And it’ll be an oligarchy controlled by an extremist minority of wealthy financial institutions, and the international neocons who are supported with them.
So ultimately, it’s going to be up to the U.S. And the same thing applies to Europe and other countries. It’s up to these other countries — outside of Israel — to lead the opposition to the genocide that’s occurring, and to the whole idea of ethnic nationalism and ethnic cleansing that you have in Ukraine against Russian speakers; in the Middle East by the American-supported al-Qaeda and ISIS head-chopper that is the head of it now; and by Israel itself in Gaza and the West Bank.
And if you recognize that Israel’s war against Gaza and Hamas is against the broadest principles of civilization, that have spent centuries developing the laws of war, the laws of international diplomacy, the laws of, basically, international relations, then you realize the travesty that’s occurring in overturning this whole century-long momentum of trying to establish basic civilized —
RICHARD WOLFF: Michael seems to have frozen. Let me pick up while we wait for him to come back.
NIMA ALKHORSHID: Richard. Since you’ve mentioned the case of Germany, here is the poll that they had in Germany. Three out of five voters believe that Israel’s action in Gaza can be called genocide. This is meaningful, as you’ve mentioned. Go ahead.
RICHARD WOLFF: Yes. But I want to underscore the notion of seeing as a symptom of a larger decline, a rejection, an active rejection of what used to be — at least official — norms of acceptable behavior. I understand. Secretly, those norms are violated by the secret services of many countries, all the time — I understand that, I’m not questioning that. And that’s a serious problem.
But it is another step when you do that openly and publicly.
And I think I want to point to something which might even be an argument against what I’m saying. I have watched, and I’m sure you have all seen it, over the last month, on at least four occasions that I’m aware of, the United States has decided to bomb and destroy boats in the Caribbean that are moving in the water near Venezuela. Each time we were told by the president that these boats were involved in the drug traffic and that persons on these boats were killed — and thereby prevented from completing whatever they were doing with the drugs. Okay, so we killed eleven, in one case, four, in another, and I forget the number of people on the other two boats.
Alright, in this situation, the president, who announced and authorized these acts, is functioning as the police, he’s functioning as the jury, he’s functioning as the judge, and he’s functioning as the executioner. In the United States, participation in drug traffic is not a capital crime. You don’t get killed for that, if you’re found guilty. You have to have a chance to see the evidence presented against you. You have to have a lawyer. You have to be able to question and challenge the evidence. Then it goes to a jury, and only if the jury decides unanimously to find you guilty, will you then be punished with the punishment, 99% of the time, being some sort of imprisonment. We don’t kill those people.
We kill in America — it’s bad enough — but we kill people, usually, if they have killed somebody. And there is no evidence — not even offered by the president, who showed no evidence of anything, but he didn’t show any evidence — that these people had killed anyone. This is extra — and no one in the official positions of the United States government — to my knowledge, I’m no expert — but I haven’t heard any outcry — after he did it the first time, he did it a second, third, and fourth time. This is, I mean, this is unbelievable.
This the official murdering of people with no evidence required, no procedure, no due process, no presumption of innocence until proven guilty. Nothing. And the ultimate penalty, execution? Am I the only one here finding this bizarre? Why would you do this? Forget whether it’s correct or not that these people were involved in drugs — I don’t know — but whether or not they were, why would you do this? Why would it be important not to have your Navy, which is down there, arrest these people? Okay. Board them. Check out, you know, bring them back and subject them to — Why wouldn’t you do that? Why would you kill them first?
And here is my answer, again. I am seeing — and I would love [it] to be argued that I’m wrong — I am seeing desperation. I see people getting together in a room. They have to do something. They have that mentality: We are losing something, we must act in a way that will, hopefully, gather support —
And you know, going to war, at least for a few weeks and months, does that for you. It’s awful, then, how it falls away, after a few months — and that’s been the American experience in Vietnam, in Afghanistan. Those wars were lost, in part, because the American people no longer supported them, the way they had in the beginning. Same is true in Iraq. But for a short time, you get a boost.
And you are now behaving? Look. All the laws of the world don’t allow one country to kill people in the boats of another country, and claim that they were involved in some transaction we don’t like — which we don’t even punish by capital punishment. It is extraordinary behavior, on the end of an extraordinary-behaving regime. So, I see a level of desperation, and I bring it up because I think it should be factored into how we look at all these other questions — because that hysteria, that desperation, is operative across the board.
NIMA ALKHORSHID: It seems that Michael has some sort of problem with his internet connection. Thank you so much, Richard, for being with us today. Great pleasure, as always.
RICHARD WOLFF: As always, and I look forward to talking with you again next week.
NIMA ALKHORSHID: See you. Bye-bye.
Le groupe palestinien Hamas a libéré ses sept premiers otages. Ils ont été remis à la Croix-Rouge de Gaza, rapporte
L’article Israël et le Hamas commencent leur échange de prisonniers est apparu en premier sur STRATPOL.
“Where are the profits. I don’t find them in any country.” This will explain why it is such a battle to change to a financial system that is fair. The US has lived and grew wealthy on the rest of the world for many years now. This is why the empire is scared as they will lose their exorbitant priviledge. Michael explains the basic fiction in the actual numbers. These studies are the ones that made him “the name that must not be spoken” in economic circles.
*** To understand the topic of this discussion, please read Michael’s Trade, Development and Foreign Debt.
2025.09.04
KARL FITZGERALD: All right. Welcome everyone, to another Patreon Q&A gathering with Michael Hudson, the Hudson Roundtable, where we’re lucky to be joined by Professor Michael Hudson, the world’s leading critic of neoliberalism, debt, and the need for a better finance system. So, Michael, welcome to the chat and welcome to all our Patreon supporters.
MICHAEL HUDSON: I like these meetings, and thank you for your support.
KARL FITZGERALD: And when we look at economics, you’ve been very critical of the fact that the balance of payments theory is barely taught at university. Could you give us an overview on why the balance of payments and a strong understanding of it is so important and perhaps how it’s been corrupted?
MICHAEL HUDSON: Well, I never said any such thing, Karl. There’s no balance of payments course that’s taught in any American university. And there hasn’t been since I taught in 1969. There’s no discussion of how the statistics are put to work. This discussion today will talk about how the trade statistics that you read about in the paper don’t have anything to do with the actual balance of trade as settled in money.
So, I want to tell you how I came to understand what’s wrong with the statistics and where it went wrong and why it went wrong. The first balance of payments study I did was with the Chase Manhattan Bank in 1965. And they asked me to look at the balance of payments of Argentina, Brazil, and Chile – and especially Chile – because that was where one of Chase’s clients, Anaconda, was nationalizing the copper mine that it had, Chuquicamata. And Citibank was the banker for Kennecott. They were turning their mines over to the Chilean government. And the question I was asked was, how does this affect the balance of payments?
The way to find out was to go to Chile’s National Bank and its balance of payments, the Balanzo reports in Spanish. And what I found was something wonderful. They had the nominal dollar volume of exports of copper to the United States. They then divided that into two categories: value retained abroad and what Chile got actually out of these exports. And I found out that what was retained abroad – Anaconda, Kennecott, and Cerro Copper was the third company – [they] would buy the copper from their mines owned and operated by the government, not by themselves. Chile would get the entire payment, presumably at the “producers price” for long-term contracts – the key was that the U.S. companies would be the designated buyers. Chile would not be in charge of WHO bought the copper.
But the [US companies] wouldn’t pay when they imported the copper. All of these transactions were held in dollars. And they did not reimburse Chile for the costs of production. These costs of production included the interest rate charges that they had, the exports of U.S. capital equipment to the mines to help them operate, the management fees that they had, and the cost of transportation. And I realized Chile only got a small proportion of the actual copper.
So the figure that was reported in the U.S. balance of payments of imports of copper didn’t actually mean that the United States paid in dollars for the copper.
Very shortly thereafter, I was asked to do a study of the balance of payments of the oil industry. I had to design an accounting format for all the major oil companies to send me their classified information about how they filled out the government statistics and to answer a couple of questions. What I found out was that, let’s say, for every $100 reported as U.S. oil imports, and this was one of the major features in the American trade deficit, only about 10 cents actually was paid abroad. That’s because the companies that were doing the importing, Exxon, Mobile, the usual companies, and all U.S. imports of oil were from U.S. affiliates.
So all of the accounting was done in the head office of these affiliates. And the treasurer for Standard Oil of New Jersey walked me through all of the statistics. He said when we import from Saudi Arabia or other countries, we subtract from the price that they get, our profits. We subtract all of the oil equipment that we send to Aramco, the local oil company. That oil equipment obviously is a charge against what they’re paid. We subtract the interest charges on this. We subtract the transportation charges. We subtract the management fees that we charge.
And after all of these fees are taken, including our profits, then there’s really not much that Saudi Arabia or the oil-exporting countries actually get because almost all of the oil that’s imported, 100%, is from foreign branches of the U.S. oil majors. And I say branches, not affiliates, because Aramco and the oil companies, branches abroad, were consolidated into the parent company’s balance sheet. They weren’t foreign affiliates. They were just literally consolidated, and it was all done in the accounting.
And I said I’ve got the statistics that all these companies supply for how much equipment they send abroad. What are their payments to American engineers – that they pay in dollars to the Americans that they send over there to supervise production. I see the interest payments. Where are the profits? And I don’t find them in any country. I looked in the Near East and they said the profits are at the very end. Here’s Europe, Asia, other countries, Africa. Here’s something called “International”. And I said, I thought everything is international? And they explained to me, international means it’s not really a country. It’s just a pretend state like Liberia or Panama. A real state has its own currency and its own taxation, but these are countries that use the dollar.
So we don’t have to worry at all about any exchange rate risk. I think, on my website, there’s a photocopy of the balance of payments of the U.S. oil industry in detail. And copies of this were put on the desk of every senator and every representative to get them exempt from President Johnson’s balance of payments controls that he imposed to help finance the Vietnam War.
Well, from that study, I turned to: let’s talk about the Vietnam War. And there were a number of things that I immediately saw in the balance of payments.
First of all, you think of the balance of payments as being the capital account and the trade account. Well, that’s not really the whole picture. Where is the government in all of this? I found that when you separated the government sector from the private sector, which you had to do, I was able to actually find out what are the balance of payments costs of military spending abroad and also of foreign aid. And the first study I did was the study of the statistics on foreign aid.
And in my book, Super Imperialism, you’ll find my chart on foreign aid. And you may have heard politicians talk about, I think Trump said, ‘we’re not going to send any more of our dollars abroad to foreign countries. We’re just going to cut that outflow. We’re going to stop foreign aid; it’s a drain’. And politicians have been saying that for 50 years.
What I found out was in the 1960s and early 70; not a single penny of foreign aid actually was paid in dollars abroad. Zero was paid abroad because Congress had passed a law saying that all foreign aid had to be spent in the United States. Foreign aid is not to aid foreign countries; it’s to aid the United States, but using foreign countries as a vehicle.
So there will be foreign aid in food, sending food exports. All of this grain is bought in the United States for dollars and then sent to the foreign countries. The government will make foreign aid to countries that owe dollar debts to the United States. It will lend them ostensibly the dollars to be credited to pay interest to the U.S. bankers and bondholders that these countries couldn’t otherwise afford. So foreign aid goes to the U.S. banks and the U.S. bondholders.
All of this remains in the United States, probably administered via the New York Federal Reserve. And I went right down the line. Every kind of subscription to the IMF and the World Bank, all of these items in foreign aid were all spent in the U.S. But it’s actually worse than that, because when the United States would give foreign aid to Egypt or other Middle Eastern countries, they would have to get a give back. It wasn’t Trump who invented this. And the give back was, we’ve given you dollar credits to meet payments to American suppliers, bankers and farmers.
But you have to give us an equal amount of your own domestic currency so that we can use it to support our spending locally in your country. We can use it for any nefarious purpose we want. And so the United States actually made money on its foreign aid.
Then finally I went to work for Arthur Anderson, and I said, I want to do what I’ve done for the U.S. oil industry and do a study for the whole U.S. economy. Let’s say how much of the U.S. trade and U.S. foreign investment actually involves payments and how much is simply imputed as if it were paid for. There’s a basic fiction underlying all of the U.S. balance of payments data and that of every other country and this fiction was to make it dovetail into the GDP statistics. It’s divided into the trade balance and the foreign investment balance.
So in the trade balance, you’ll have, for instance for oil, the entire cost of foreign nominal cost of the oil that the United States oil companies import from abroad as if this import money were paid to a foreign country. And then you go elsewhere in the balance sheet and you have the offsets for all of this. So the offsets that explain why there’s a zero net balance, which economists call a wash transaction. For instance, on the investment account, there will be disinvestment or investment of money in the oil industry.
On the export account, you’ll have the exports of machinery used in the mining of oil abroad. You’ll have payments to American labor that’s a service transaction, foreigners to the U.S. All of these payments that offset 100% of the oil imports are counted as if it was a cost. Same thing with foreign aid. Foreign aid is treated in the government’s account as if it were all going out.
And then the government used to publish something called Table 5 in the balance of payments reports that it did annually or quarterly in the survey of current business by the Commerce Department. And they would break out actual money paid abroad. And that’s where I got the statistics for how much money was actually spent abroad in foreign aid and how much money stayed in the United States, 100% of all of that.
It took me a year to separate the trade account, and I found out that America didn’t spend anywhere near the cost of its imports that it reported, but also the cost of its exports. Of course, most of its grain exports were paid in dollars, but a lot of its grain exports – other countries didn’t really pay dollars for them because there was a foreign aid outflow on the government account. That led me to say let’s separate the government account and foreign aid as opposed to military spending.
What I found out was on the actual payments involved in exports and imports, the U.S. balance of payments in terms of dollars and foreign currency back and forth was just exactly in balance from 1950 when I began the statistics right through 1964, or maybe could have been 68 when the statistics ended. The entire balance of payments deficit in terms of dollar outflows was on military accounts; not foreign aid, not trade account, not foreign investment abroad, as President Johnson had imagined erroneously.
So we were about to publish this. Arthur Anderson’s art department made very nice charts. And then my boss came to my office and he said we just got a very upsetting phone call. I’m afraid we’ve got to terminate your employment here. And I said, what happened? What did I do wrong?
Well, you didn’t do anything wrong, but Mr. McNamara – I think when he was head of the World Bank – he called the head of our company and said, if you publish this report, you will never get another contract from the U.S. government again. And we need the U.S. government contracts.
He said, I feel very bad about that. We’ll give you a present, you can take all of the slides, all of the pictures and the charts, and you can do whatever you want with them.
So, I took the chart to the NYU Business School, and they published a regular bulletin. It’s an academic publication, and they were overjoyed to get it. They published it as a triple issue of their bulletin, and it got quite a bit of notice in Wall Street financial circles; hardly any notice in the left-wing press or in the popular press, generally.
A few months later, the Federal Reserve Bulletin – there was a major review and I forget what publication it was – the Federal Reserve published a study of – I think it was in the American Economic Journal of American Economic Literature or something like that. It was saying, let’s look at all these publications by the NYU Business School. And it reviewed them all, and then it got to my report. It said the fact that Dr. Hudson finds that military spending is the root of the balance of payments deficit does not give confidence in his study.
And I thought, I’m using all the government figures. What happened? I talked to my class – one of my students worked for the Federal Reserve as one of their staff economists. He said let me give you a copy of an internal memo that we got. The internal memo said my figures were all right, but that we must not publicize it because that would spur the anti-war movement and that was against American foreign policy.
So that was yet another reason why I’m the name that must not be spoken in government statistics. It was against the U.S. interest to actually do a financial analysis of what are the actual effects on the dollar’s exchange rate in terms of the foreign exchange market, the demand for dollars versus the demand for foreign currencies to cover exports, foreign investment, trade, government transactions, and military.
The government did not want to highlight the fact that the weakness of the dollar and what had forced the dollar off gold, as I describe in Superimperialism, was because of military spending abroad. That was the only drain. There was no drain on the trade account, no drain on foreign investment account, and no drain on foreign aid. The entire downward pressure of the United States; the balance of payments deficit started with the Vietnam War – I’m sorry, with the Korean War – in 1950-1951, and got worse and worse and worse from there.
Later, one of the Wall Street firms asked me whether I could try to redo the study. And I thought, it took me an entire year of my life to do the study of the U.S. balance of payments. That’s how I ended up learning about the actual statistics. And if you wouldn’t actually do the actual statistics and see how they’re put together proverbially, how a sausage is made, you’ll see it’s not what you would expect. I wouldn’t have understood the difference between a financial analysis and an imputed analysis, something as if it were there.
And the idea of separating the trade account and investment account was to dovetail into the gross national product categories that were developed as part of the GDP that won the Nobel Prize. And I can understand the logic of the GDP, but they should have had two measures. Before the GDP, the government actually recorded the specific foreign exchange effect of U.S. exports and imports. All that was changed in order to fit into this hypothetical GDP account. And the problem with the GDP is not only wash transactions like this, there are all sorts of transactions in the national income account that don’t involve income at all.
For instance, one of the big contributors to GDP and national income in the United States is imputed homeowners’ rent. As many of you have seen rent charges going up and up and up very sharply in the United States, as you’ve had computerized advice to landlords as to how to raise prices – they all act as a monopoly to really squeeze the renters.
When the Bureau of Labor Statistics will go to the various households that it does as their test study – they’re in miniature to sort of blow up these statistics to a national level. And one of the questions they ask the household: if you’re a homeowner and if you had to pay rent to yourself, if you were the landlord and had to pay rent to yourself, how much would you rent out your home for? As you can imagine, more and more homeowners say we’re sure glad we bought our home, because if we wouldn’t have bought our home, we’d be paying this much more and this much more and this much more for rent every month.
The GDP says we’re counting rent as actual product. And so the GDP as a product has the increasing rental charge of paying for your home, or presumably a commercial property, as if it’s an actual product helping GDP grow instead of stifling GDP growth; deindustrializing the economy by charging so much that the homeowners and renters cannot afford to use their income to buy actual goods and services, as we’ve talked about before.
KARL FITZGERALD: Let’s head back towards balance of payments theory. Maybe we can do a special on GDP sometime because I know you’ve got a lot to say there. But what you’re essentially saying is that it is crucial that developing nations understand the balance of payment theory, particularly when the IMF and World Bank use current account deficits as a pressure point.
MICHAEL HUDSON: If they’re a raw materials exporter, then, of course, they understand this. And as I said, the model report that I found of all of the central banks that I looked at, and I’d walk the 50 feet to Chase Manhattan’s library, where they had the central bank reports of every country for every year, and, of course, Chile had to calculate for itself ‘what is our balance of payments actual situation?’ How much money do we actually get from our copper exports and our guano exports?
Gold exports were a result of copper refining; electrolytically, the gold falls to the bottom and you have the anode electrically collecting all of the copper. So countries that export raw materials have to make this calculation. They know about it. I don’t know whether the financial people who actually compile the balance of payments try to interact with the GDP people and say, wait a minute, how do we dovetail what we’re doing with a reality-based payments account for actual payments instead of imputed payments?
But they certainly know what they’re doing and they know that they don’t get all of the money from the raw materials that they make. So the problem is really in the industrialized nations, and especially the United States, which is on the opposite end of the spectrum, that doesn’t want to make it clear to foreign countries that you think that you’re getting rich exporting your copper and your cocoa and your oil and other raw materials.
But you’re not anywhere near as rich as you think you’re getting because you only get a little bit of this money for you, thanks to the fact that American companies own your natural resources, or English and Dutch and other European countries own your natural resources and you’re really not getting as rich as you think. If the United States actually published, or sponsored the publication, of a realistic financial analysis, this would show how many of the Global South countries are not developing.
The aim of the World Bank and the IMF is to prevent them from developing. You could say they’re malstructured or stifled, but certainly not developing. The purpose is to show that you can’t afford to pay your existing foreign debt to bondholders and bankers – unless you borrow the money to pay your debts.
In other words the foreign debt – Global south foreign debt scheme – is a Ponzi scheme. The United States and other governments, especially the IMF, will lend them the money. The International Monetary Fund just lent Argentina an enormous amount of money to pay its foreign bondholders because they said, you’re a Fascist country, you’re a Zionist country, of course, we’ll give you the money to pay the bondholders.
And by the way, tell your bondholders that we can’t do this forever. Let them use this money we’re lending you to get out of the Argentine economy and put their money in dollars or gold or hard currency. Our job is to subsidize capital flight by the client oligarchies in Argentina or other countries. To get their money out and to empty out their countries so that once Milei’s right-wing government is replaced by, presumably, a left-wing government, the left-wing government will be absolutely strapped for cash and will have to prevent devaluation by going to the IMF and say, if we devalue, then we’re going to have to lower the standard of living of our labor because our workers are going to have to pay much more for all of their imports, just like in the United States.
And the IMF will say if you, left-wing government, will act as a right-wing client dictatorship, of course we’ll lend you the money. That’s the international financial game. And that’s what you see if you do an actual financial analysis instead of the as-if hypothetical analysis. Wouldn’t it be nice if they actually earned all the money that they report on their export accounts?
KARL FITZGERALD: Danny Wheel writes in the comments: ‘We see the same thing here in Ecuador. Rubio got here last night, but the mines are being subsidized by the state, while people have to bring their own medicines to filthy public hospitals left to rot for privatization between the IMF and export economy, meaning we have no industry except extraction. Poverty is beyond comprehension, and violence is the biggest in the world. This is real. The things Michael is talking about affect real people. It’s a casino scam backed by the military of the U.S., but this is predominant all around the world, isn’t it? And nations need to understand what is happening.’
FRANK MOELLER: [I’ve been] listening [to] and read several books by Professor Hudson. He talked about surplus balance of payments in a recent podcast and I was wondering about surplus balance of payments and how they use that for housing, education, human capital development, healthcare. And if so, can we put a dollar value on that, per person or per capita, over there and how that’s distributed for those utilizations?
MICHAEL HUDSON: Well, you wouldn’t get that material from the balance of payments accounts. If you talk about medicine, I guess there would be medical supplies to foreign countries as an outflow of government foreign aid. And on the export credit side, you’d have exports of U.S. pharmaceuticals and also on transfer payments, payments to U.S. doctors or U.S. embassy personnel, or State Department personnel, or other individuals doing all these payments that are defrayed in the United States.
But they certainly don’t give these other countries dollars to spend. They only give dollars to Ukraine or Argentina or client dictatorships. They have a very tight-fisted control to make sure that other countries don’t actually receive dollars from the United States, but only U.S. firms and suppliers and creditors get these dollars. You can do the per capita, but that’s something else. It’s not something I’ve got into. That’s all domestic statistics you’d have to use.
KARL FITZGERALD: And Danny Wheel has a few questions coming through as well. Danny, do you want to come on screen and ask Michael some questions? It’s great to see some of our transcription team here; Ced and Kimberly do a great job for Michael.
And they’re there, don’t you worry. So Danny’s microphone is down. He’s asking about Social Security payments here somewhere. During the 60s, Social Security funds, we were told could never be touched for anything but Social Security. These funds were used for the war, as far as I know, and want to know if Michael can verify.
MICHAEL HUDSON: Of course, the fact is there are no funds there. As George W. Bush said, there’s no money there. All there is, is a promise by the United States government to pay for the Social Security contracts that they’ve signed. Social Security has run a surplus for many years.
The role of this surplus was to finance military spending and to finance the budget deficit. The budget deficit was financed not only by tax payments by the U.S., but by using Social Security as a tax. That money was paid to the government and the government used it for operations. And against this government’s use of it for operations, the government had a future liability, the liability to be paid to the Social Security recipients.
So, right now, the talk of the Republicans in Congress, which was really initiated by President Obama; Obama set out to work with the Republicans to mobilize the Democratic Party to abolish Social Security and have the Social Security funds available to be invested in the stock market. I think, in 2007, I wrote a cover story for Harper’s magazine tracing this. This was the plan that Obama had when he was trying to work with the Republicans to do just that. There’s zero money in the Social Security account. There is a liability of the U.S. government to pay Social Security.
But what the Republicans say was: if we pay Social Security, we can’t cut the taxes on the rich. Our economies run – industry and employment are just an overhead. The purpose of the U.S. economy is to generate money for the rentier 10%. It’s to generate money for the banks and the landlord. Forget the people. Let’s just take all the money away from them and give all to the 10%. Let’s just speed up where the whole economy is going over the long-term trend.
Obviously, I’m very annoyed at this, as you can tell, but the Republicans and Democrat leadership have agreed: let’s not pay American labor as much, this is the problem. Because the Americans are doing something that is very unpatriotic; they’re living longer. And the government says you’re living longer than we’d calculated. You’re supposed to die when you’re 75 years old, maybe 78 years old, and you’re not dying on schedule. And that means that we have to pay much more money. And if we pay you, we can’t pay our campaign contributors; the banks, the financial sector, the landlords, the monopolists, and the rentiers.
And that’s not good for the stock and bond market, which is really what the U.S. produces. You can see the hypocrisy here. And there’s so little discussion of the monetary and fiscal policy in this country, because once you look at it, you realize how totally biased and unfair the whole system is constructed to benefit the wealthiest; the creditors and rentier interests, not the actual wage earners. It’s terrible.
KARL FITZGERALD: Is there such a thing as a good current account deficit, where it’s funding something productive?
MICHAEL HUDSON: No, there’s no attempt at all to make any such calculation. I mean, what is productive? And even what is the current account? The current account surplus or deficit is, in principle, if you study trade theory, is supposed to be balanced by the capital account. So if you’re running an export surplus, that enables you to, on investment accounts and capital accounts, invest money abroad. Or if you invest money abroad, that provides dollars for foreign countries to run a trade deficit with you.
There’s this hypothetical balance between current and capital account. But where are the gunboats? Where does the military fit into all this? Is it a current account? Is it a capital account? This is fictitious to oversimplify and assume that the capital and the current accounts simply offset each other and the result is zero. It does work that way for the private sector, I found. That’s what my statistics showed. But the wildcard is the government military spending abroad.
KARL FITZGERALD: Diana DiRienzo asks, ‘does social security add to the deficit? When government spends domestically, they get more back in tax revenue than originally spent within a short time, don’t they? Also, can we see the data on how Social Security is running out of money? Reagan doubled the FECA to cover the baby boom requirements. And why can’t the government just pay Social Security without requiring FECA payments?’
MICHAEL HUDSON: Well, it’s not running out of money at all because there’s zero money there to begin with. There is no money there. And again, George W. Bush recognized that fact when he said it’s really just all hypothetical. When people say Social Security is running out of money, they say, we’re not able to give the tax cuts if we also pay social Security and health care to American workers.
Something has to give, and what’s going to give is Social Security so that we can cut the taxes. How are you going to use the government revenues compared to the government spending? And as we, MMTers have pointed out, and Stephanie Kelton has written about in a recent book, what’s left out of the account is not just government revenues and expenditure, it’s government money creation.
The Federal Reserve only creates money to give to banks to lend out to invest in stocks and bonds and real estate and gambling – such as derivatives. The Federal Reserve does not create money to be spent into the economy. That’s what the Treasury could do and what the Treasury did in the Civil War with greenbacks and other times. It’s how governments finance war.
But all of this is a pretense of seeming to come up with a plausible way of thinking to create a narrative that makes you think, according to that narrative, gee, the government doesn’t have enough money to pay Social Security if it cuts the taxes on the rich, if it goes to war and spends its money on the military. You’re seeing this very clearly in Europe right now. That’s what the whole political fight is with Merz and Germany and the others. They say we’re limited by the rules of the Euro and the European Union as to how much of a deficit we can run. The U.S. is not subject to any limit on the deficit; the Europeans can’t.
And so if the Europeans – the entire growth in European GDP is spent on military spending that’s now promised, as a contractual promise by the German and other European governments – if all of the equivalent of the growth of GDP is paid on the military, they say we’re going to have to cut back the subsidies we’re giving for consumers.
And this is what’s causing so many political problems in Britain for Starmer, for instance, saying, now the government says, since we’re spending so much money, giving to the Ukrainians to fight Russia, we’re not going to be able to give you the electricity subsidies that we were giving you before because we’re not any longer getting gas. We have to pay much more for our gas and oil than we had to before we broke off relations with Russia. You’re having Europe cut back social spending in order to become a militarized economy to sort of try to re-fight World War II, hoping for a different outcome this time around.
KARL FITZGERALD: It seems that over the arc of time since we’ve moved into the dollar hegemony era, the post-gold standard, that balance of payment theory and understanding has become even less understood, less important. Would you like to describe how that has played out?
MICHAEL HUDSON: Well, I think I just did.
The problem began with trying to dovetail it into GDP. Nobody really expected government military spending to play such a major role in the balance of payments and to create such a deficit. But certainly, I think, as I’ve mentioned many times before, including in this group, in the 1960s, every day around noon, we’d get together, the Federal Reserve would report on the Treasury’s holding of gold, and we’d watch how far the gold has gone down.
Every U.S. paper currency, the dollar bills you have in your pocket, and all the denominations had to be backed 25% by gold. And as the currency went up, as the economy expanded or inflated, the gold supply was going down. And we could see that, at some point, the government was going to run out of gold.
And the newspapers would be denouncing General de Gaulle for making a big thing about saying, we don’t like American military spending. We’re going to cash in all these dollars that America spends in Vietnam and Cambodia and Laos and Southeast Asia. These are French territories, and the French banks there send their dollars to Paris, and we cash them in for gold right away.
Well, Germany actually was cashing in even more dollars for gold than France was. If you talk about economic reality, it’s going to be different from the reality that people are told in the mainstream press. And it’s very difficult to maintain this fictitious narrative that people are being taught.
KARL FITZGERALD: So what about the classic twin deficits periods in the 1980s and how that contributed to sustained deficits?
MICHAEL HUDSON: What in the 1980s?
KARL FITZGERALD: The twin deficits period, the large fiscal gaps plus the strong dollar. How did that influence U.S. fiscal policy?
MICHAEL HUDSON: Well, once countries no longer could cash in the dollars that were being pumped into the economy for gold, the only choice that they had was to buy U.S. government securities. They had to; these were safe. This was before the government began to grab Russian money and Venezuelan money and any money of countries that it didn’t like.
It was the deficit spending from the military in the 1980s that pumped dollars into the economy that ended up in the hands of foreign central banks that invested this money in U.S. Treasury bonds and bills and notes to finance the budget deficit. So Americans didn’t have to – the government didn’t have to tax Americans. They just had to spend more military money abroad and let the foreign central banks buy the securities. Circular flow.
KARL FITZGERALD: Goodness me, it makes it so simple when you say it like that.
MICHAEL HUDSON: That’s why people don’t discuss it. It is simple. But how do you really make it so complicated that nobody’s going to discuss it? You get a whole different set of unrealistic categories. That’s what economics and the role of economists is for.
KARL FITZGERALD: And so Bernanke’s global saving glut view was built on that play that occurred through the 90s. Is it the same thing there?
MICHAEL HUDSON: Sure. The global savings glut was neoliberalism. They stopped regulating economies. They permitted monopolization. The savings, you could say it was a money creation glut. What were these savings? The banks would lend money to their major customers, homeowners and real estate sector, 80%. So the more money that the banks would create, it would push up real estate prices or corporate bond and stock prices.
You had the economy flooded with Federal Reserve money, and that created the biggest bond rally in history from the time of Paul Volcker in 1979 that brought down the Carter administration right down to just a few years ago with the zero interest rate policy. So it’s not a saving. The pretense, and this has gone back to the fictions of the late 19th century.
The idea that if you’re a billionaire, you’ve saved up your money. And the way that Böhm-Bawerk, Eugen von Bawerk, and the Austrian school said was, we have to realize that there’s a reason that interest charges are really a product, and the creditors play a very productive role in the economy. They make a sacrifice. Their sacrifice is abstinence. And by not spending their money on consumer goods and gratification, they defer their gratification to later. And that’s how you measure the interest rates.
And so all this money that the billionaires have is saved up by not consuming. Well, that led Marx to quip, gee, ‘I guess the Rothschilds must be the most abstinent family in Europe’. And do you think Donald Trump got his additional $5 billion that he made in the last few weeks through junk crypto currency? He didn’t save that money. That money was just sort of – it’s all created.
So the very idea of referring to savings, the vocabulary is all a euphemistic vocabulary to make it appear as if creditors and landlords and monopolists pay a productive role instead of the rent that they get being in the character of transfer payments, zero sum. What the landlords and bankers and monopolists get is a transfer of income from the consumers or the renters or the debtors to the creditors with no quid pro quo. And as John Stuart Mill said, and I’ve repeated often enough, landlords make their rent in their sleep. There’s nothing they do in providing a productive service.
So of course, you want to create an economic vocabulary that makes it appear as if the wealthy people get their fortunes by being productive instead of being parasitic. That’s what my book, J is for Junk Economics, is all about. Going over the vocabulary and that’s used, trying to demystify it.
KARL FITZGERALD: What about the U.S.’s exorbitant privilege? It’s almost as if a nation state has set up a system to create money in their sleep. And over the decades, the U.S. has earned higher returns on its foreign assets than it pays on its liabilities, as you spelled out in Super Imperialism. So is that really what this whole balance of payments interplay is all about with the dollar exchange?
MICHAEL HUDSON: Yes, in one word. You’ve expressed it very concisely, Karl.
KARL FITZGERALD: Okay. Well, I thought you’d have a rant to go on that one for us.
MICHAEL HUDSON: Well, you said it clearly; you don’t have to rant when it’s all so clear.
KARL FITZGERALD: Okay, can we get anyone to come on screen and ask some questions? I know this is all complicated material, but often it helps as we are all trying to grasp it.
MICHAEL HUDSON: Anything.
MICHAEL HUDSON: You know, we have a half hour to go.
MATT CONNORS: I have a question if no one else does.
KARL FITZGERALD: Go on, come on through.
MATT CONNORS: I’ll start by just expressing gratitude to Professor Hudson for his work. Immensely, immensely thankful. He has a way of pointing us in a direction that we’re not looking. I remember reading an essay shortly after the beginning of the recent Russia-Ukraine conflict, where he called it the third war against Germany by the U.S. And I thought I was so confused until I wasn’t. And you know, that’s extremely helpful.
Similarly, when people started getting so excited about the emergence of BRICS a couple years back, Professor Hudson was consistent in also sharing a little bit of enthusiasm, but pointing to the fact that they hadn’t come up with a system that really was going to let them leave the dollar behind. And I’d be interested in hearing his analysis of whether they’ve gotten better at that, whether that’s on the horizon. You know, it’s basically a specific question that’s within my bigger question of how much of this rigged system is still going to be standing after all the mistakes or missteps that current leaders in the West have been making.
MICHAEL HUDSON: Well, I did two shows on this week. In today’s Naked Capitalism, and on my website, I have my discussion with Glenn Diesen on this. And I just did an 11 o’clock a.m. interview today with Nima on Dialogue Works on this very topic. They have not yet put together a system of how they’re going to restructure their economies to make it something different. All that the countries have been doing really since 1955 has been to complain ever since the Bandung Conference. Isn’t the world unfair? But you have to go beyond saying, yes, the world’s unfair. What are we going to do about it?
And the solution has to be to change the whole tax policy around. That’s really what they have to do. Number one, they’re unable to pay their foreign dollar debts and foreign currency debts, without sacrificing their own economic growth. Number two, the BRICS countries and the Global South are faced with a problem. Foreign investors from the United States, England, and Europe own their raw materials, their oil, their mining, their forests, their plantations, and they extract rent. And these foreign companies that own raw materials extract raw material rents from the Global South countries and other countries today.
They’re playing the same role that landlords played in Britain and France and Europe in the early 19th century, charging ground rent for everybody. It’s a deadweight charge. It’s a transfer payment that classical economics set out to free economies from, to create a market that there was no economic rent that ended up in private hands. And Ricardo described value and price and rent theory in chapter 2 of his principles of political economy. He said land rent includes natural resource rents. He didn’t say monopoly rents, and he didn’t say financial returns, but at least he said raw materials.
He said it’s price without cost value. And his labor theory of value was designed to say: what part of the price system that we pay is not value? What price is it that is not really a necessary cost of production? If all the costs ultimately are resolvable into labor; land is provided by nature, raw monopolies are created by legal systems, and bank extraction of interest and financial charges is also an institutional creation, not part of necessary labor.
The whole doctrine of classical rent theory, from the Physiocrats to Adam Smith to John Stuart Mill to Marx, to Thorstein Veblen, was all about how do we bring the actual price structure in line with the actual cost of production so we don’t have any zero-sum transactions, any more free lunches, any more payments to a rentier class that makes money in its sleep. That was what was so revolutionary about industrial capitalism. It was evolving into socialism by freeing economies from the rent-extracting classes.
Well, then there was a whole anti-classical reaction, early 20th century. By World War I, you had the rentiers fight back. The banks and real estate interests join hands, saying there’s no such thing as economic rent. Everybody earns whatever they make and they have earned whatever fortunes that they have been able to accumulate.
We’ll call it saved up. Even though it wasn’t saved up, it was made in their sleep without their playing any role in saving at all. So you had the whole economic vocabulary designed to create a fictitious narrative of how economies work, and that fictitious narrative required negating the whole century of classical value, price, and rent theory that was designed to minimize rent. That’s a long answer to your question, but I’ve tried to provide the context for it.
MATT CONNORS: Thank you very much. I’m sorry. I have more questions, but I don’t want to hog air time here, so I’ll let other people go.
MICHAEL HUDSON: The questions are all a good question. I’m always glad to have it. I’ll let Karl decide what to do.
FRANK MOELLER: Okay. My question is: how does China subsidize education, healthcare, transportation, and communication so that they have competitive wages for their employees? Whereas in this country, we have exorbitant costs for insurance and education. There’s a $1.7 trillion student debt. It’s all financed through loans. How does China finance their education process and all these other attributes that society partakes in?
MICHAEL HUDSON: They have taken finance, money creation, and debt creation out of the private sector and made it a public utility. And instead of banks creating money just on their computer keyboards, the People’s Bank of China, the central bank, creates money. It’s as if the U.S. Treasury were simply printing banknotes to spend into the economy. So if you’re creating your own money, then the government creates the money and decides, what are we going to spend our money on?
We want to spend it on providing free education. We don’t want people to have to pay so much. We want to make sure that we can lower the cost of production. And we want to do just what an industrial capitalist economy would want to do. We want to minimize the cost of production to make our economy more competitive with other economies. And we make it more competitive by minimizing the cost of living that employers have to pay their wage earners. And we don’t want the employers in China, whether they’re public sector or private sector employers, to have to pay their wage earners money to just pay for education.
So China provides education freely. We don’t want the employees to have to spend their money on Obamacare to pay the big medical insurance conglomerates and the pharmaceutical companies. So we’ll provide medical care. This was good conservative economic policy in Britain in the 19th century when Benjamin Disraeli said, “Health and health care are all.” And that was what the Conservative Party was all about, making British labor more competitive by having public health minimize the cost that labor had to pay.
Well, the same thing with housing. China has not really followed through treating housing like it’s treated education and health care. And that’s been a problem that it’s now coming to realize is a problem. But it’s trying to do it. China does not have a banking sector that lends money to Chinese companies to buy out other Chinese companies and then borrow more money, once they bought out the company, to buy the company and then pay it out as a capital dividend to the stockholders or to buy its own stocks.
None of these financial shenanigans that make money by purely financial engineering in the United States are done in China. Their economy is designed as if by engineers, and most of the Central Committee has either an engineering background or a public administration background so that they can avoid treating their economy in the financialized, privatized way that the United States economy works.
MATT CONNORS: Thank you.
MICHAEL HUDSON: Does that make it clear?
FRANK MOELLER: Yes, it does. Thank you.
MICHELLE ROMINE: I just want to ask him, if the BRICS countries can arrange another alternative system at some point in time, will they then declare odious debt and nationalize their own resources back?
MICHAEL HUDSON: Well, they have to act together to do that. They can’t do it one by one because they could all be picked off and their foreign holdings could be grabbed just like Paul Singer tried to grab Argentina’s assets to pay bondholders. So it has to be done all together. And they have the perfect excuse to repudiate their debts now because Donald Trump’s tariffs have prevented them from earning the dollars to pay their bondholders. He’s closed the U.S. market to them. And if they can’t export to the U.S. market, there’s no way they can get the dollars to pay the foreign debts.
So they can join together and say, this is the Donald Trump debt holiday. This is it. He’s made it impossible. He’s destroyed the ability to pay the debts. We’re not going to sacrifice our growth and let the United States destroy it. Donald Trump’s policy is to say, we will create chaos for your economy, declare war on Russia and China and do to you what has happened in Ukraine.
They can say, we’ve chosen the path of civilization. And so you have a fight between civilization and what’s called, now, late stage barbarism.
MATT CONNORS: I’m going to jump in with a quick question. Michael started out talking about Chile in 1965, if my memory is working for a one and a half hour stretch here. Any thoughts on Chile’s ability to come back to the question of getting out from under the Pinochet constitution that they tried to rewrite and it failed? Did they learn from that? Or did other countries watching them learn from it? The idea that a foreign country can own all their raw material, their mines, and all that kind of thing was my understanding of what they were trying to do. Was that a one and done? And now they’re in even a weaker position to try something like that?
MICHAEL HUDSON: It’s a total mess down there. Pinochet introduced this rip-off system of pensions so that companies could simply invest – they’d pay pension money to the workers to be paid in their own stock, and then they’d organize the company that employed the workers as a subsidiary of the bank holding company. Companies were organized as what they called “grupos,” a holding company and the private company.
So that the Chilean company would go on and on, and then it would say, one day, we’ve just paid all the money in the treasury to ourselves. We’re broke. I’m sorry, we’ve wiped out all the pension debt. We have to go under. We’ve sent it all to our grupo, our bank head, and they’ve wiped out all the pensions. So I’ve been appalled at Chilean politics. I cannot understand why they’ve been so bad ever since I began to follow it in the 1960s. We were all watching President Frey and how he was mismanaging the economy.
Then Allende mismanaged the economy by this sort of vulgar Marxism that ignored the land question. Chile has the most serious land reform problem in Latin America. Vast plantations and the lowest farm productivity, yet it has the highest natural fertilizer resources in all of Latin America. Guano, that’s one of its major exports. It’s just an example as to how not to run an economy. And we’re all using that as, you know – Chile is the self-destructive, just utterly mishandled economy in Latin America. I don’t understand how they can flounder so badly. So, there’s no answer to half of your question. How do you explain why people are so incompetent?
KARL FITZGERALD: Okay, thanks, Matthew. We’re going to move on to Wendell, who has put his hand up. So, Wendell, do you want to come in?
WENDELL FITZGERALD: My favorite economist, which Michael knows about, is Henry George, who suggested that a full 100% tax be levied against unearned income from ownership of land and other monopolies.
MICHAEL HUDSON: Why do you say Henry – why not say Adam Smith? Why not say John Stuart Mill? You could run down the line with the economists. They were all saying that.
WENDELL FITZGERALD: Let’s have an actual free market. The way you get a free market in land is that you don’t let people keep the rent of land that they don’t actually create. The community creates that value. So let’s pay it to the people who actually create it. Marx, and I mean, Adam Smith and Ricardo, yeah, absolutely. Henry George.
MICHAEL HUDSON: Here’s the problem: George was a journalist 150 years ago. And now, all this rent is privatized not to a hereditary landlord class anymore, not to the class that he described, that George described so well in the Irish land question. The rent is paid to the banks. And I don’t think neither George nor any other economist of his time anticipated that. Yes, you have the free market mentioned in housing and real estate.
Anybody can buy a home or building by themselves. But almost everybody, in order to buy this property, has to borrow from a bank. And they compete with other borrowers to get the mortgage loan, to buy the home or the commercial building. They agree to pay the interest to the bank. And so most of the interest and the land rent in the American economy is paid to the banking system.
There’s no successor to George that is saying these things today. It ended up, it turned out, that the bankers threw all of their weight behind the real estate interests, realizing that whatever the government cut in taxes against the land would be free to pay the economic rent as interest to the banks. So the real question in every economy today is not whether the landlords or homeowners or the government will get the land rent. It’s whether the banks or the private landlords will get the rent.
The government obviously has not taxed the rent, and whatever the government has failed to collect ends up being paid to the banks. That’s the problem. That’s what financialization is. And that’s why the finance capitalism that’s occurred in the last century is so different from the outlook for industrial capitalism, as it seemed to Adam Smith, John Stuart Mill, and Henry George in 1879.
WENDELL FITZGERALD: So what’s the solution? I’m not disagreeing with you. What’s the solution that you propose? Is there a tax solution?
MICHAEL HUDSON: Yes, of course you have to tax the land. But today, if you tried to tax the land, it’s much more difficult than it was in George’s day, because if you tax the land, the land’s rent, the rent is already pledged to the banks to pay mortgage interest. The banking system will go under. Well, I’m all for that, quite frankly.
Yes, the banking system has to go under. You have to, in order to have the land tax that Henry George and Adam Smith and John Stuart Mill and Karl Marx all supported, you have to deprivatize banking and you have to wipe out all of the banking and creditor claims that are already, for 30 years in advance, claims on this land rent to be paid to them, not paid to the tax collector.
KARL FITZGERALD: Yeah. Can we, we’re trying to specialize on the balance of payments in this discussion. We often cover this topic. And we’ve only got a little bit of time. So Wendell, I hope you don’t mind if we move off our favorite topic. But yes, I’m interested, Michael, Frank’s question earlier about China. Is there a country anywhere where, in terms of trade theory, comparative advantage still rules? Where they do pursue…
MICHAEL HUDSON: Trick question. It never held. It was always my whole theory of trade development and foreign debt. The whole theory of comparative advantage was, if you read my book, it was all fictitious. It never worked. It never held.
KARL FITZGERALD: But China has had this huge trade surplus because they’ve had a comparative advantage in manufacturing. So, you know, how does trade policy work for them? They have this conundrum of having all these treasury bills, what are they going to actually do with them?
MICHAEL HUDSON: It doesn’t have a comparative advantage at all. It has an absolute advantage. There are certain costs in America and the world economy that are common. Every country, except the United States now, has to pay the same price for its copper, steel, and oil, and this makes absolute cost structures the key.
Ricardo’s theory of comparative advantage, to make a long story short, was to show that Portugal was the winner in trading with England and that the solution was that other countries should provide raw materials and depend on English manufacturers and monopolies. This was garbage, garbage from the beginning. And I go over that in my trade theory book.
But China does – of course, it has an advantage because it’s followed the original plan of the classical economists. You minimize economic rent overhead and you streamline the economy.
So there’s no parasitic private financial sector, no parasitic rentier class. And at least President Xi has said that housing is to live in, not to treat as an investment good. And I think they’re beginning to try to move in that direction these days.
What China has done is follow the logic of industrial capitalism. They call it socialism with Chinese characteristics. They could call it industrial capitalism with Chinese characteristics because it’s exactly what they’re following; the same path by which Britain and Germany and the United States organized their industrial takeoff.
KARL FITZGERALD: Well, until the last 10 or 15 years, where the FIRE sector, particularly the real estate sector, got power, got in control, and now we have all these ghost cities in China. So it’s sad to see that, even there, they’ve fallen victim to the rentier economy. We’re talking balance of payments, and I’m not sure we’ve talked about it today, but transfer pricing. What role does that play with multinationals using transfer pricing to write down their tax obligations in various nations?
MICHAEL HUDSON: It’s fictitious pricing. They organized a series of multinational shells and they made sure that – here’s how the oil industry did transfer pricing: all of the oil that was produced in the Middle East and other countries would be sold to a corporation in Liberia or Panama that had zero taxation. The Liberian and Panamanian affiliate of Standard Oil or Saccone or any other oil company would then resell this oil at a very high price to the refineries in the United States or in Europe.
And the price of the affiliate in this offshore banking enclave, these sorts of fictitious corporations, all of the profits would be made there; there was no profit given [due to ] the price they charged at the downstream end in countries that had an income tax. There was no income tax in Liberia or Panama. And under the tax treaty, a corporation can basically follow the tax rules of the conglomerate and can follow the tax rules of wherever its big trading company is located.
That’s why, when I asked the treasurer of Standard Oil, where are the profits made? And he answered, they’re made right here in my office. And he said, and I declare them to be made in Liberia or Panama because there’s no tax there.
And so we get the entire profit – and he could have said economic rent but that’s not how he thought – from oil, it was all paid to the parent company in New Jersey. And because it was all made in a fictitious country using the dollar currency that had no income tax, an offshore banking enclave, then they didn’t owe any profit tax to the United States. So that’s what transfer pricing was. The price that the trading affiliate in the offshore banking center sold its oil for, was so high that there were no profits to be made downstream in the refining and gas station distribution sector. Does that answer your question?
KARL FITZGERALD: It does. And it brings to mind, if there’s any one nation that has turned the balance of payments theory and understanding of economic rents to their advantage, it would be Singapore. Do you know much about Singapore and their Temasek holdings and how they use their capital account surplus to invest in other national utilities?
MICHAEL HUDSON: I really haven’t followed it. I haven’t had an occasion to follow it.
KARL FITZGERALD: So I must get you to look into it. Kimberly Mims, our friend, do you want to come on screen? We’re getting close to the end of today. Yes, she’s one of our backroom team here with the Michael Hudson crew. She’s asking about multinationals. Could you come on in, Kimberly.
KIMBERLY MIMS: I was interested in that issue of how this kind of circulation of the benefits, let’s say, stay within the U.S. frame and never really go out in some sort of fair and equitable way, right?
That’s what you’re kind of talking about. And you also briefly mentioned private-public partnerships, and that’s just a thing I see in this country as being without regulation all over the place. I mean, I see this in Chicago all over. It’s just out of control. And I don’t know what they are, quite frankly. Sometimes they call themselves centers. You don’t even know what they are literally as business models.
So it seems to be this way of prying open a kind of non-regulated space that is domestic as well as potentially international. And I’m wondering, does that have any play or do you see any way of looking at that, that would be profitable and constructive in terms of talking about balance of payments?
MICHAEL HUDSON: Well, the whole financial sector is highly exploitative. And as you point out, these private-public partnerships were really developed under Thatcher and even more so Tony Blair. And the idea is that all the profits go to the private owner and all the losses are absorbed by government. And the effect is to transfer money from the government.
The government subsidizes a company to ostensibly make losses and the losses take the form of high interest payments, managerial payments, and other largely fictitious financial charges and transfer payments to the financial managers. So again, we’re dealing with a fictitious economy. And most of the economy today, I guess you could say, is based on economic fictions with a fictitious cover story, a narrative to make it all appear as if all of this is earned and everybody has earned what they take and end up with by being productive or unproductive if you’re a laborer.
KARL FITZGERALD: Well, I’m trying to think of a way to wrap this up, Michael, because it’s been a complex conversation and one that we all need to study in further detail. I suppose with BRICS coming through, where do you think the future of balance of payments theory is going? And are these nations actually picking up on what you’re teaching about, or are they going to fall down the same hole, do you think?
MICHAEL HUDSON: There really isn’t any balance of payments theory because the whole discussion and the economic categories are as if all transactions involved actual monetary payments. And as I said, homeowners’ rent does not involve a payment. Imports of oil from American affiliates do not involve actual foreign exchange payments. So people really don’t discuss it.
The whole terminology and the categories that the economies use, such as GDP, I think, are not very helpful. What I’ve been writing about in the articles that I’ve done with Dirk Bezemer is recreating the GDP. Let’s net out of GDP. How much is the actual product and how much is the economic rent? Not a product, but a transfer payment. And you find that all the growth in America’s GDP is economic rent. It’s not a product. The product, the productive sector, is declining. That’s why America’s deindustrializing, that we’re in a rentier economy.
Well, you’re never going to have the Western economies lead in recreating the statistics for GDP in this way. They want to say, well, look at how powerful America is, look at our GDP. But that’s like you’re saying, look at how much this little kid weighs. He outweighs the others, but it’s all a tumor on his back. And so you could look at the GDP in America as a financial tumor.
The aim, I hope, that I would like to see in the BRICS countries is they avoid the financial tumor, the economic rent tumor, the landlord tumor, and the monopoly tumor. They avoid the whole thing, just as China said it was going to do at the very outset, and just as Adam Smith and the whole classical school of economists hoped that that would be what industrial capitalism would be.
But to do that, they have to go back to study the classical economists of the 19th century. I’m writing a book on that now, and it’s probably going to take another half year for me to finish it. But that’s exactly what I’m spending all of my efforts on at present.
KARL FITZGERALD: Well, thank you, Michael. This work is invaluable, and it’s so good to have some of our Patreon supporters here. They make…
MICHAEL HUDSON:
I’m really grateful to you all for joining. I mean, this is why I’m writing. The whole idea is not just to sit and write my own ideas, but to have them spread out. And I hope you can do everything you can to keep continuing the ideas and somehow radiating them. That’s the only way that you’re going to have these ideas spread because it’s not going to spread through the New York Times.
MATT CONNORS: That’s for sure.
KARL FITZGERALD: All right. Well, thank you, Michael. Thanks, everyone. We look forward to seeing you back here in three months’ time. We’ll see if anything at all has changed or whether these same trends of greed and rentierism continue. So let’s hope….
MICHAEL HUDSON: Spoiler alert, it’s going to be the same trend.
There are always new twists and turns. And I guess we had to today take a step back. It’s good that Karl asked me to focus on the balance of payments because that brought up all of how important the categories and the structure and the accounting format is and, ultimately, the tax and fiscal policy format.
KARL FITZGERALD: Well done, buddy. Excellent. All right. We’ll see you in a few months.
MATT CONNORS: Thank you, everyone.
MICHAEL HUDSON: Thank you.
KARL FITZGERALD: There’s cheers all around. Well done, buddy. Okay. See you all. Bye.
Who Plans the Economy?
RADHIKA DESAI: Hello and welcome to a new season of Geopolitical Economy Hour, the show that explores the fast-changing political and geopolitical economy of our time. We are beginning this new season with our 50th episode. I’m Radhika Desai, and joining me today is one of our regulars and favorites, indeed, the person with whom I inaugurated this show, Professor Michael Hudson. Welcome again, Michael.
MICHAEL HUDSON: Good to be back here.
RADHIKA DESAI: Great. Now, as we record this, the Federal Open Markets Committee of the U.S. Federal Reserve, whose decision set interest rates, has just finished its six-weekly meeting. And as some of you may know, they have agreed to decrease interest rates, the first decrease this year, by 25 basis points.
Not a big move, but the fact is the Federal Reserve has been the focus of a lot of controversy recently. And much of the controversy comes from Donald Trump. Anyone paying the slightest attention to the news these days cannot have failed to notice that Trump has a thing about the Federal Reserve, an itch, shall we say, one that he can’t help scratching.
He’s called Powell a numbskull and too late – which is to say he’s, according to Trump, always too late to lower interest rates – while demanding that Powell reduce interest rates. He undertook a theatrical visit to the renovations of the Federal Reserve’s Marriner Eccles building, disputing a difference of $300 million in costs in front of TV cameras, as if this few million dollars were consequential in a country whose debt is shooting north of 150% and 37 trillion US dollars.
It’s long been clear that he’s not going to renew the tenure of the current chair Jerome Powell and has already used the early retirement of one governor to place a loyalist on the board. And while he has recently named four candidates that he is considering for the position of chair, speculation rages far wider.
So some people are talking about more than 10 candidates. In yet another salvo at the Federal Reserve, Trump has, of course, tried to fire one of its governors, Lisa Cook, for cause he says, but so far he’s been unsuccessful with the most recent legal ruling, leaving her in place for today’s critical Federal Open Markets Committee meeting. So many questions arise from this.
While economists loyal to Trump have been publishing papers and writing commentaries on the Federal Reserve’s problematic easy money policies, Trump actually demands that the Federal Reserve keep monetary policy easy. So is there a coherent Trump administration policy towards the Federal Reserve? Secondly, while Trump wants the dollar to remain the world’s currency, he also seems determined to undermine the much doubted independence of the Federal Reserve.
So even as the easy money he wants certainly ensures that the Federal Reserve will not be able to rein in inflation, a standing threat to the dollar system. Inflation raises yet another question. While general inflation remains high – and it has gone up ahead of this meeting despite low energy prices – driven by high food prices, undoubtedly a result of Trump’s own tariffs, and core inflation – that is inflation discounting volatile food and energy prices – also remains high, Trump, on the one hand, continues to insist that he has brought down living costs, meanwhile ensuring that nothing that the Federal Reserve does will reduce it.
And then there’s the matter of cryptocurrency. With the passage of the Genius Act, a whole new set of assets, very dodgy assets, namely cryptocurrency, which any sane analyst would consider highly volatile, risky, and inherently speculative, have been given the imprimatur of government regulation.
This means that one way or another, these assets will enter the financial system and become one more thing in the everything bubble, taking the fragility of the U.S. financial system, which is already at breaking points, even closer to it. Any crash that now occurs can only consign the dollar system to the dustbin of history, as we’ve discussed so many times, Michael. So Michael, what’s your favorite drive about this morass of contradictions in which Trump is only further muddying with his attacks on the Federal Reserve? Go with whatever is on the top of your head because there’s so much to discuss. We can start anywhere.
MICHAEL HUDSON: Trump’s head is full of junk economics. He wants to depreciate the dollar. He wants the dollar’s exchange rate to go down because he imagines that this will make U.S. exports more competitive. As the dollar goes down, its price against European currencies and foreign currencies gets cheaper. The problem is America has been deindustrialized over the last 30 years, and there’s not that much to export.
And by lowering interest rates, what he’s actually doing is the exact opposite of what his Secretary Treasurer Scott Bessent, has done. It’s as if he wants to go back to the zero interest rate policy of making money by debt leveraging, by inflating the prices of stocks and bonds because you can borrow inexpensively from the banks and you can buy a stock whose dividends are higher or a bond whose rates are higher. He wants to make the economy safe for speculators again because they’re his constituency, after all.
Well, here’s the problem. The sane people on Wall Street, I guess the 1%, or people like you and me, are criticizing him from the point of view of what’s the independence of the Federal Reserve. If you have Donald Trump intervening in Federal Reserve policy, micromanaging under his imagination of how the Federal Reserve affects policy, or his pretense or cover story for serving his campaign contributors, then you’re going to have instability and probably inflation.
And of course, Trump pretends that he’s against inflation. But as you’ve just pointed out, tariffs are increasing inflation. And his vast, wonderful budget cuts (budget deficit), by slashing taxes on the wealthiest 10% and raising them on the bottom 90%, are going to inflate the economy. So he’s sort of overseeing instability.
And the question for many years – there’s been this mantra for the last century: the central bank has to be independent because central banks are responsible. And we all know that governments are irresponsible because they’re elected and they’re democratic and they want to spend money for welfare into the economy, and that’s inflationary. And they want full employment, and that’ll push up wages.
Instead the Fed’s job, ever since Paul Volcker, is to create enough unemployment to prevent wages from going up. What’s wrong with this picture, again, as you and I have discussed, is the Federal Reserve serves its member banks, the commercial banks. And if there’s any sector of the economy that’s more irresponsible, it’s the banking sector, because that’s what’s led to the financialization of the economy and the deindustrialization and the incredible debt overhead that we have today.
So there’s no reason to believe that the Federal Reserve is more responsible than the government. I’m not saying the government’s responsible because the same Wall Street billionaires that control the banks control the government itself. So you’re going to lose either way around. So the problem is: the Federal Reserve has taken over from Congress the management of the whole economy.
And as you and I have discussed, and I think you will today, trying to manage the economy just by affecting interest rates by buying and selling securities by open market operations is only one sliver of the economy and it misses the whole big picture, which is all about industrialization. how you organize what corporations are going to do with the revenue they get, are they going to buy the stock back their stock and push up stock prices and pay out dividends, or are they going to invest long term.
That’s really what it’s all about, and the Federal Reserve is not concerned with that at all. It’s just concerned about providing money to the banks and banks don’t lend money into the real economy, they lend money for stocks and bonds for financial speculation and you could look at the Federal Reserve as the implementer of the Ponzi scheme into which the United States economy has degenerated.
RADHIKA DESAI: Well, you’ve made so many different points so let’s just take them by turn. First of all, let’s take the whole issue of the so-called independence of the Federal Reserve. Now you know, at one level, in the post-Second World War period for the first several decades, it was actually assumed that monetary policy was just one of the instruments in the hands of governments, elected governments, to keep the economy going, etc., so it was not assumed that that central banks would have to be independent.
The independence of the central banks has become a mantra and has become this rule of thumb, this principle that cannot be violated, only in the age of financialization. So when you said, Michael, a couple of things that already suggested this, which is that what the Federal Reserve has done over the last several decades is essentially inflate asset bubbles.
It has essentially lent money primarily to financial institutions, not so that the financial institutions will invest in the real economy. That possibility has already been thrown out of the window by the Federal Reserve in its role as the regulator of the financial sector, essentially because for decades, going back to certainly the early 80s, if not earlier, every time there has been any kind of a regulatory problem, the default position has always been to deregulate, not to re-regulate.
We can discuss that further, but there has been deregulation. The Federal Reserve essentially lends money to banks, which then use it for asset price inflation and so on. The easy money policy, particularly since the early part of this century, has been instrumental; first in blowing the housing and credit bubbles, which burst in 2008, and now in blowing up this everything bubble we are in.
So essentially the independence of the Federal Reserve, what it actually amounts to, the so-called independence of the Federal Reserve effectively means regulatory capture. That is to say, the regulator becomes captured by those it is supposed to regulate. It’s like essentially asking the fox to defend the chicken coop. It’s not going to happen. So, essentially, that’s why financial interests have been in the lead.
You said something else that’s really interesting, and that is that in recent decades there has not been any serious fiscal policy. What there has been is only monetary policy posing as the only form of management of the government. And in my own writing, in my geopolitical economy, where I track the financial policies and the monetary policies of the Federal Reserve, particularly in relation to the dollar system but also in relation to the management of the U.S. economy, what I discovered is that, certainly by the Clinton administration, if not earlier, there was basically no serious fiscal policy. The only fiscal policy was that Republican administrations would always reduce taxes on big corporations.
Then Democratic administrations would come in; they would not touch it but they would engage in fiscal consolidation, essentially by cutting social services and so on, which Republican administrations also did. And then the next Republican administration comes in and reduces taxes further. So, essentially, what this has also done, of course, is vastly increase the debt mountain of the United States. Because while you are cutting social services to some extent, it’s not nearly enough to account for the revenue you are foregoing by giving corporations big tax cuts.
So for the last many decades, what we have had in terms of economic management was simply monetary policy. And this really began with Alan Greenspan, and that’s why Alan Greenspan was himself called the maestro, as though he was, as a kind of superstar conductor, conducting the orchestra that was the U.S. economy with the slightest movements of his little baton.
But of course, in reality, what you had was essentially a situation in which they gave up trying to manage the U.S. economy. They gave up trying to preserve the productive character of the U.S. economy. They, in fact, encouraged things like outsourcing, financialization, etc. So they have essentially destroyed the U.S. economy, made it an economy based on consumption, etc. So, in all of these ways, what you’ve seen is that monetary policy has displaced any fiscal policy and thereby hangs many other threads.
MICHAEL HUDSON: They’ve not only deregulated monetary policy, they’ve deregulated crime. President Obama appointed Eric Holder as Attorney General, and Holder said, it’s true that there was an enormous crime wave that’s led to the financial crisis; junk mortgage lending, the banks have falsified mortgage statements, the appraisers have falsified them, the brokers have falsified them, there have been billions of dollars, and we have a choice.
As a result of this financial fraud, the mortgages of about 8 million American families are way overpriced beyond the ability to pay. What are we going to do? Well, we have a choice: either we can write down the debts, as President Obama had promised, to the reasonable, realistic value of their houses and enable these families to be saved from the exploitation of the banks, or we can prosecute the bankers and throw them in jail.
But there’s a problem with that. These bankers, most of them, are married with children, and their children and wives are innocent. And it would be wrong to hurt their innocence because if you look at the value of the life and the family happiness of a multi-billionaire, 10 billionaires are worth the 8 million Hispanic and black and other families that we’re expropriating.
So we’re not going to punish anybody. In fact, what we’re going to do is turn to the Federal Reserve and say, make sure that, although the banks are insolvent because they’ve lent much more money than the debtors can pay, we’re going to create the largest financial boom in history, the largest bond market boom in history, by slashing interest rates from the current highs all the way down to less than 1%, which is going to enormously increase the capitalization of bonds and stocks.
And so Obama appointed Federal Reserve Chairman Ben Bernanke as Fed chairman, and then Janet Yellen. And their job was to prevent the banks from writing down the debt to what could be paid and, say, our job is to not to stabilize consumer prices, but to make sure that we stabilize and prevent asset prices for stocks and bonds and real estate from going down. Because if the economy is so highly leveraged and banks have lent out so much money relative to their capital reserves, if prices go down even a little bit, one or two percent, you’ve wiped out the equity of the largest bank customers, the largest speculators, and the banks themselves will go under.
And so the head of the Federal Reserve Deposit Insurance Corporation said, you know there’s one really crooked, incompetent bank; that’s Citibank. It’s so reckless that we’ve got to foreclose on it. And Obama’s Treasury Secretary, Tim Geithner, said, no, no, my job is to save Citibank. You know, they’re the people who put me in power. And hey, Mr. Obama, they have put you in power through Clinton’s Treasury Secretary. So you have the banks running the justice system and the prosecution system, as well as the financial system.
And the common aim of all of them is to make sure that the banks will not lose money by writing down the debt that you’ve just described as growing. If you don’t write down the debt and it accrues interest and is growing and growing and growing, then you have to create more and more and more money at lower and lower interest rates to carry this higher debt. That’s what a Ponzi scheme is.
You need new entrants into the scheme to provide the money to bail out the early investors, or the whole scheme fails. That’s what the United States economy has turned into, and that’s what the independence of the Federal Reserve means. Don’t let anyone, or the prosecution system, or laws against fraud, or even common sense, interfere with creating an economy that makes money by financial speculation, not by industrial investment. We’re not an industrial economy anymore.
RADHIKA DESAI: Well, exactly. And you know what, Michael, Look at this. We’ve shown this chart before, but this is the chart of the Federal Reserve’s balance sheet. As you know, it went from under a trillion dollars to about $2 trillion in the aftermath of the 2008 financial crisis. And then, with a series of rounds of quantitative easing, it went up to above $4 trillion.
And then, with the pandemic, it went up to $9 trillion. So, what is all this? This is essentially the Federal Reserve itself entering the market of various speculative assets. The Federal Reserve itself has become essentially an agent to preserve the value of the speculative assets of the various bankers and what have you. And there’s another thing, what’s really interesting insofar as the stock market is supposed to be democratic and so on – allow everybody to make money.
Well, another thing that’s happening, in addition to what you were just saying, is that actually the number of publicly listed companies is shrinking. More and more companies are owned by private equity, which is essentially elite clubs of investors who have inside knowledge about what can turn a profit and what can’t turn a profit. Knowledge which they refuse to make public and so that they can privately, as members of this club, benefit from these lucrative investments and not allow the ordinary investor, the retail investor, to come in.
That’s another really fascinating thing that has been happening. And now, of course, the Trump administration is allowing even greater kinds of forms of club-like behavior. So, the few companies that remain publicly listed, Trump has recently suggested that their reporting responsibilities – they should no longer be held to quarterly reports. They can go down to semi-annual reports once in six months.
So this again restricts the amount of information that is available for the retail investor. In so many ways, the Ponzi character of this system, in which essentially there’s a pecking order in which the rich continue to get rich, while ordinary people have no purchase on the system. And as far as things like pension funds are concerned, they are typically the bodies whose enormous amounts of money that they have forms essential “throw weight” in the financial system. It is used as “throw weight.” But, of course, whenever there is any gain, they gain the least, and whenever there is any loss, they lose the most.
MICHAEL HUDSON: Could you put that chart up again? I want to show it actually shows a radical unprecedented development of the Federal Reserve. You see at the very beginning of the chart that flat line. Yes, that flat line goes back a century, just as flat as it is then. And that flat line is how central banks all over the world have acted for a century. They intervene to buy and sell government bonds overnight in the short term, simply to affect interest rates up and down.
There is no long-term accumulation. What happened when you had the jump in 2008 that you show, and the jump that continued all the way through that period, is for the first time, the Federal Reserve began to be a huge investor itself. It bought enough stocks and bonds, not only government bonds, but corporate bonds, not only corporate bonds, but junk bonds, to push up their prices.
And so you have an enormous inflow of money not to be spent on goods and services, as you’re taught in school, but to buy stocks and bonds. The Fed creates money to inflate asset prices. It creates money for stocks and bonds and real estate purchases, not for consumer spending at all. This whole idea of Fed money creation that affects consumer prices is just a fiction. When you look at that chart, you realize what they really create money for. And that was revolutionary.
RADHIKA DESAI: Absolutely. Michael, one of the things we want to discuss, is exactly what the Trump administration wants out of the Federal Reserve. Trump himself has said such contradictory things. On the one hand, he says that he wants the dollar to be strong and the dollar system to work, etc. And of course, it was expected early on when Trump started announcing his tariffs, that tariffs were going to increase the value of the dollar.
But what you’ve seen here, from the time Trump has taken office, the value of the dollar has gone down consistently. Some say that it has lost some 10% of its value, and this is one chart which shows the ups and downs. And here’s another one, which just shows essentially the broad dollar index, which again reaches a peak in January 2025 and since then has been in decline.
So the dollar has just continued to decline. And of course, everybody who doesn’t like Trump says that it is Trump’s fault. But I think that the situation is much more complicated. Part of the reason the dollar is declining is because of inflation. Now, mind you, tariffs have contributed to inflation, but inflation was going up even before Trump took office. And at the same time, the Federal Reserve finds it very difficult to deal with this inflation because the only way in which the Federal Reserve will permit itself to deal with inflation is by raising interest rates. But if it raises interest rates much more than it has already done, then it is in serious danger of pricking all the asset bubbles, the so-called everything bubble. Again, here is the chart of the federal funds rate going back to 1955. This is the Volcker peak.
But the Federal Reserve can’t do a Volcker anymore because, back then, when Volcker increased interest rates, he didn’t have to worry about asset bubbles, which would burst. Whereas what we see here, for example, is a series of interest rate increases, which were essentially forced on the Federal Reserve because the dollar was going down. So it had to restore the value of the dollar.
So they started increasing interest rates and the moment they went slightly beyond 5%, that triggered all those processes that led to the crash of the North Atlantic financial bubble, so to speak. So it led to the North Atlantic financial crisis. And similarly, we see again here today that we are already at that point of just a little over 5%, which is why, although inflation remains high, the Federal Reserve daren’t raise interest rates more.
Indeed, now what they are doing, in fact, is they are bringing it down. Now, Trump says that the Federal Reserve doesn’t want to decrease interest rates, and that Trump is advocating for decreasing interest rates. But you know what? The Federal Reserve, Jerome Powell, and most of the Federal Market Committee would like nothing more than to decrease interest rates because they want asset inflation to continue.
But they have been forced to at least keep interest rates as high as they are, at which they have come over the last two or three years, because inflation is not going away. The Federal Reserve is caught in a bind; that’s why they are keeping up this higher for longer. In a certain sense, I suppose what I’m trying to say is that Trump just wants to look like the person who caused interest rates to decrease and as though they care about the real economy. But, of course, what Jerome Powell, as well as Trump, what they all care about merely, is the continuing inflation of asset bubbles.
MICHAEL HUDSON: That’s right.
RADHIKA DESAI: And then the other thing that I would add to that is that; the independence of the Federal Reserve, which is allegedly in question – Scott Besant, the Treasury Secretary, recently published this article, in which he criticizes the easy money policies of the past. Now he may want to criticize it, but the fact of the matter is Trump wants the continuation of these easy-money policies.
I think that the real effect, whether it’s intended or otherwise, of interventions like Scott Besant’s – this article is being much talked about – will be essentially to establish that the Federal Reserve has never been truly independent. And if today the Trump administration appears as though it is infringing on the independence of the Federal Reserve, this is no different from what happened in the past. In one sense, that’s true, because all monetary policy is political, and the independence of the Federal Reserve, as we’ve already said, is only to leave the regulation of the financial sector in the hands of the financial sector. So, and that’s a silver political action [Please clarify]. The point is that he is basically establishing a new norm where Federal Reserve policy is political. And I think the only purpose of making it political is to give Trump the credit for keeping interest rates low.
MICHAEL HUDSON: The article that Besson wrote is really – I’m very happy with it. It’s made wonderful, wonderful points, such as we’ve made for many years. And he called the title of the article: The Fed’s New Gain of Function Monetary Policy. Gain of function is the term that was used for the coronavirus that’s come out and a pandemic. And he’s treating Federal Reserve policy as a pandemic.
And the gain in function has been a mutation of Federal Reserve policy, which we’ve just discussed, in saving the financial debt overhead of the economy, not the economy itself. And he goes to a long discussion of how the effect of making money financially, as you pointed out earlier, the leading financial sector investors are multi-tens of billionaires, and their way of making money is to deindustrialize the economy, not to industrialize it. And I think we’ve shown before the growth of wealth in the economy.
Here’s the wealth of the bottom 50%. The bottom 20% has actually gone down. All of the growth in the wealth of the American economy, all this growth has been in the form of stock, bond, and real estate held by the 10%. It’s the 10% that hold the vast majority, over 75%, of the stock market and the bond market. The 90% people, except maybe via their retirement funds, don’t have bonds and stocks. Only a very minimum compared to the super wealthy. And the beneficiaries of this asset price inflation thus have been the very top of the economic pyramid. And they’ve used this increasing financial wealth to increase their control of the election process by contributing to campaigns.
Now that you’ve deregulated the political campaign contributions in America, as well as the banks, and they’ve essentially bought control. And so the Federal Reserve celebrates this as success. They said, we’ve created wealth, but almost all the wealth they’ve created, 90%, has been to the wealthiest 10%, not for the economy as a whole. And if most wealth takes the form of financial claims on debtors; mortgages, bank loans, corporate bonds, and government bonds, then the creation of wealth on the asset side of the balance sheet means the creation of debt on the liability side of the balance sheet.
And the wealthiest 10% have the assets; the 90% have the debt. And the effect has been to polarize the economy. And I think Besant deserves credit for pointing out that this has been the whole effect of the Federal Reserve asset price inflation. It’s been inequality and unemployment and deindustrialization, the exact opposite of what textbooks imagine; that the financial sector is only an intermediary, it doesn’t have any effect on the economy. It just reflects that it’s the driving shaper of the economy. And it’s been misshaping it all throughout the United States and Europe and the Western economies in general.
RADHIKA DESAI: Let me say that all the truths that Scott Besant has spoken in his article are no different from the truths that Trump had to speak in order to get elected. Remember, it’s been my argument for a long time that Trump discovered one thing, which is that you can no longer win elections by telling people that their economy is doing very well.
He told them the truth; it’s not doing well. We agree with that, but, of course, Trump told them the truth only in order to get elected and, of course, he thenmixed that with lies, for example the fact that he said to them that the economy is not doing well because of trade and because of immigrants and so on. All of those things were, of course, lies, so Trump has just a different package of truth and lies.
In Scott Bessent’s new package of truth and lies, I think the key point you have to understand is that he is only telling the truth about the inequality generated by the Federal Reserve not so that this will put a stop to it, because of course he himself would favor, as his president would favor, lower interest rates. What is going to be the effect of lower interest rates? The effect of lower interest rates will be to further inflate asset bubbles and to postpone the moment of reckoning. Let me just share a really interesting chart that I found. This is a chart of the major asset markets in the United States. You can see here there are equities, residential real estate, treasury securities, commercial real estate, farmland, and so on.
Now, what you see here on this chart is the average annual growth from 1997 to 2004. They are not small but they are not huge. But then you look at the growth just between 2023 Q4 to 2024 Q4. Within just one year, these asset markets, some of them like the equity market and so on, have been growing massively. Whereas all the other asset markets have grown less. And the commercial real estate market has actually shrunk to some extent.
So what is really interesting here is that now, in a sense, a crash will be coming because all these markets are already slowing their growth. The equity market is going up without any support. It’s going up and up, but what is it climbing on? It’s getting high on something else because, as we know, the entire stock market is being taken up by the Magnificent 7 and a few other such stocks. And most of the Magnificent Seven inflation in the prices of the equities has been because of the hype around AI. And it is increasingly dawning on people that the astronomical investments being made in the name of AI are not going to be lucrative. They are already not yielding stuff.
So a crash will be coming. But the point is that, in the meantime, they want to continue to have low interest rates. So Besant might complain about the easy money policy. Maybe they will not engage in quantitative easing and so on. But they will keep interest rates low. The point is that he wants to say that Federal Reserve policy has always been political, and he wants to say, therefore, that we are going to politicize it. And once that happens, then Trump will do what has been done in the past, which is to justify low interest rates in the name of economic growth, when, in fact, he wants low interest rates in order to keep asset prices up.
MICHAEL HUDSON: I agree. That’s exactly what’s been happening. People act as if the growth of wealth and the growth of the 10% are what the economy is all about. And for the Federal Reserve, that’s what the economy is all about, because that’s its constituency, because the wealthiest 10% are the customers for the bank loans. And the Federal Reserve is created to be managed and run by its member banks. So you have a closed circle.
And as long as Congress remains inactive and is unwilling to do anything except to cut taxes even more, to run an even larger budget deficit that adds to the effect, you can have Trump make the argument that if we don’t lower the interest rate, imagine how much of the government debt’s interest rate – the budget is going to have to be spent on interest to the bondholders.
And this is already almost as large as our military spending. This is going to create a crisis. We’re going to have to cut social security and cut Medicare, but there’s a solution to that because we can privatize social security and put it all into the stock and bond market to keep the Ponzi scheme going.
RADHIKA DESAI: I’m just showing exactly what you’re talking about Michael, which is that the yield on treasuries both one year and 30 years, so very short term and very long term, has been going up and they are now at fairly high rates. This is really, also quite interesting and they are adding to the debt, the deficit, etc., which will continue to grow because the Trump administration is committed to cutting taxes for rich people, etc.
Another point that I just wanted to make, but essentially what is happening now is that the idea that the Federal Reserve should be independent is being buried and now we will have a new type of rhetoric, which will continue the same policies of inflating asset bubbles. They were not going to revive the American economy, just as the tariffs are not going to revive it, nor will low interest rates revive the American economy, as I’ve already said at the beginning.
The insertion of cryptocurrency has simply added a new asset whose value can be inflated, on the basis of which a small number of rich people can make money while the rest of the economy suffers. And this is going to continue.
MICHAEL HUDSON: Well, the real point you’re making: it’s the government that needs to be made independent from the financial sector. That’s the real independence we’re talking about. And that’s the problem. Under America’s two-party system, you can only have two parties. There’s such a tangle of laws that there’s no way of having an alternative to the Republican-Democratic duopoly. And so Congress itself is no more independent than the Federal Reserve is from Wall Street.
And the result has been to shift economic policy, meaning economic planning, to the financial sector. Out of Washington into the financial sectors, Wall Street, and also the Chicago Mercantile Exchange. And so the result of all that is the financialization of the economy and a loss of what used to be the whole dynamic of industrial capitalism and the whole idea of industrial democracy.
If Wall Street’s in control, this means not a market free of government planning and centralization. Financial planning is more centralized than government planning. That’s why Trump’s been firing all of the government regulatory agencies. With no regulatory agencies, there’s nothing to prevent the financial sector from becoming the economy’s central planner. And that’s what’s happened in a nutshell to the US economy
RADHIKA DESAI: So what you’re saying is that we will have a centrally planned economy, except that it will not be planned in the interests of ordinary people, it will be planned in the interests of a small number of very rich people, the Elon Musks of this world. And this is so true. I suppose what we’ve really said is that the rhetoric about the independence of the Federal Reserve has always been a way of keeping Federal Reserve policy away from democratic influence.
The idea being that, of course, as long as you have some kind of democracy then at least you can elect a government which can politically try to control the Federal Reserve, to bend its policy in the direction that will help ordinary people, that will create a productive economy, etc. But, of course, what you’re adding to this is that, of course, the existing democratically elected governments of the last many decades, and still today, are simply themselves in the pockets of the financial sector.
So there’s no way the elected government is going to control the Federal Reserve in a way that will benefit ordinary people. The point is not that the Federal Reserve is not independent, it’s not factually independent anyway. The problem is that it is under the control of the wrong interests. And if ordinary people in the United States want to take control over the destiny of their country, they are going to have to elect a government that is not part of this duopoly, that will actually represent the interests of ordinary people.
And then, yes, there will be no need for an independent Federal Reserve. The government will essentially bend monetary policy. A popularly elected government acting in the popular interest will bend monetary policy in the direction that it needs to go in order to create a productive, equal, socially just economy. And, of course, an ecologically sustainable economy.
MICHAEL HUDSON: I think you’re quite right. A democracy, unlike an oligarchy, would centralize financial management in the hands of the Treasury, which is a public, elected political agency, not a central bank. The United States didn’t have a central bank until 1913. The problem is that the Treasury itself is mismanaging the economy because it was run by basically bullionists, by gold bugs. And whenever the Treasury would raise a surplus, like for tariffs, the tariffs had to be paid in bullion, gold and silver bullion, not by bank credit.
And there was such an antagonism towards banks in the United States from colonial times, from the beginning of the Republic to the 1880s, with the whole silver, gold crisis, crucified on a cross of gold, that Americans didn’t want the banks to create money. And there was such a shortage of actual credit that an economy needs that, in an act of desperation, the Republicans and Democrats got together and said, we need bank credit. We can’t have these libertarian nuts, bullionists, at the Treasury tie our hands. That was the story of how the Federal Reserve was created in the first place.
RADHIKA DESAI: There was that, but I think there were also some other things. The fact of the matter is that the United States dollar was not acceptable around the world because it didn’t have a central bank, whose function it would be to stabilize the value of the dollar. And of course, in the recent years, in the post-Second World War period, partly because the United States government has been committed to keeping the dollar as the world’s money, what you’ve actually seen is a systematic overvaluation of the U.S. dollar, which has then been a disaster for American industry.
It has been central to the deindustrialization of the United States. But nevertheless, my point is that the Federal Reserve was also necessary because otherwise your currency would never be acceptable. Before the Federal Reserve was created, the international transactions of the American government and other corporations were being handled via JP Morgan and handled in pounds sterling, which was kind of interesting.
There was another thing, which is that when you had banking crises, and there was a big banking crisis in 1907, there was no lender of last resort. So they had to create one. So there were many reasons. But yes, the fact is that you had to create a Federal Reserve in order to perform these functions.
MICHAEL HUDSON: Yes, but at least at that time, the lender of resort, when it did lend money to banks to avoid insolvency, it charged a penalty rate. That was the essence of management. And now the Federal Reserve gives a subsidized rate, just the opposite of what happened over a century ago.
RADHIKA DESAI: Exactly. Well, Michael, it’s been a wonderful conversation. Unless you have any further things to add, maybe we should wind it up for now. Okay, great. Thanks. Bye.
The US has already decided on nuclear war – Hudson.
This is certainly not comfortable to listen to. The question today, is who is first? Iran or Venezuela? Col Wilkerson sees what is happening now clearly.
First objective: Preservation of Bibi Netanyahu’s coalition and Bibi Netanyahu.
Second objective: Keeping the United States from causing him to do something he does not want to do wrt Gaza, Syria, Lebanon and elsewhere.
We’re going to war Nima!
Nima cut in a discussion that he had with Michael Hudson and Richard Wolff (not posted yet as I am waiting for the transcript) where Michael says in no uncertain terms that a decision for nuclear war has been made.
La Russie et l’Ukraine ont procédé à un échange de prisonniers de guerre à raison de 185 pour 185. L’information
L’article La Russie et l’Ukraine procèdent à un échange de prisonniers au format 185 contre 185 est apparu en premier sur STRATPOL.
Tucker Carlson is not our normal reading or listening around here, but there was something really interesting in what is a sincere effort in his monologue to explain specific issues. He does a good job of explaining, or instead asking the questions, of the US relationship with Zionist-israel. But more interesting is this:
“A growing global bloc is uniting against America. Our future is in peril.”
This is an issue that the US Americans need to start understanding. This growing global bloc is not uniting against the US. It is uniting to prevent the US from uniting against the rest of the world. The US has a choice, but so far, we only see that they are not making a choice, except for the one of more war, more coercion, more exceptionalism, and desperate attempts at world rulership. That is what this ‘growing global bloc’ will no longer tolerate, and we will defend ourselves. It is a subtle focus change, but if no one gets it up north in the Big Babylon where the barbarians roam, there is little hope that this corner of the world will ever mature out of adolescence. It is such a US American habit, to immediately replace the inner fear with ‘it is the other guy’s fault’ … the other guy is uniting against us. It seems as if Tucker wants to leave the impression that if the US can rectify its relationship with Zionist-Israel, something will change for them. I have found no understanding that suggests the two entities are one, and that the problem is deeper than just correcting a relationship.
Sachs talks sense as usual.
The interview is here: https://tuckercarlson.com/speeding-toward-world-war-3
After listening to Tucker Carlson, some detox is necessary.
Sony Thăng
@nxt888
·
America could not erase Vietnam.
So it shattered Cambodia and Laos instead.
It could not erase Cuba.
So it strangled Nicaragua and El Salvador.
It could not erase Iran.
So it fed Iraq until both nations bled.
It could not erase Russia.
So it burned Ukraine and bled Europe.
It could not erase China.
So it armed Taiwan and set fire to its doorstep.
The empire’s logic is simple:
If it cannot kill you directly,
It will drown you in someone else’s war,
Or light the flames on your own border.
NIMA ALKHORSHID: Hi everybody. Today is Thursday, September 18, 2025, and our friends Michael Hudson and Richard Wolff are back with us. Welcome back.
RICHARD WOLFF: Glad to be here.
NIMA ALKHORSHID: Michael, you told me that you watched my talk with Scott Ritter about the defense budget, and all of that. What’s your point on that?
MICHAEL HUDSON: Well, he picked up on my point that I’ve been making fifty years ago, that there’s a great difference between the balance of payments effect of America’s military spending and other countries.
Ever since the Korean War broke out in 1950, the entire balance of payments deficit for the United States, from the 50s, 60s, and the 70s, has been military spending abroad. The private sector trade and investment are exactly in balance over all these years. I published all of these statistics first for Arthur Andersen and then in my book Super Imperialism. And immediately, when my book Super Imperialism came out, Herman Kahn hired me for the Hudson Institute and said the largest buyers of the book were the State Department and the military — the CIA and the military. Immediately, the military gave a contract to the Hudson Institute for me to explain how going off the gold standard essentially enabled the United States to fund its balance-of-payments deficit, meaning its military spending abroad, by pumping dollars into the global economy and having these dollars end up in foreign central banks and be recycled.
Well, what that means is that America’s whole military spending for the last fifty years depends upon the dollarization system in other countries, using dollars as their monetary reserves in place of gold, and instead of their own currencies. That means that, as they move away from the dollars, there’s no way that the United States can finance its eight hundred military bases abroad and its military spending. Russia doesn’t have this problem. The military generals don’t study the balance of payments. And many of them are right-wingers that have a sort of crude monetarist Chicago School neoliberal view of money, without understanding that money is debt. And, specifically, monetary reserves are not only America’s treasury debt, but the monetization of America’s military spending.
Now, what Scott pointed out is that Russia doesn’t have this problem. China doesn’t have this problem because they’re not trying to create a foreign empire. They’re not trying to put military bases in other countries where they have to somehow spend their domestic currency, and buying local currencies, to do whatever military operations do there. So they don’t have the constraints that the United States have. And that’s what’s essentially leading the United States to say: we’re not only at war with Russia and China militarily, we’re at war with them financially. We don’t want the BRICS — China, Russia, Iran, and their other countries — to have an alternative of not using the dollar so that the dollars that we spend abroad for all these military operations are going to be somehow recycled to the United States.
That’s why you’re having Trump try to browbeat India, Japan, Korea, and Europe into somehow promising to recycle all the dollars to the United States. Why is he doing this? It’s not simply to pay tariffs so that the Treasury will have more money and can cut taxes on the wealthy even more. It’s so that the dollar will not be forced down so that there will be a huge inflow to support the dollar, basically, despite Trump’s hope of devaluing the dollar slightly, slowly downwards — as if that’s going to make American exports more competitive. The whole fight over the dollar isn’t really about U.S. exports being more competitive because the United States doesn’t have much industry to export. It’s really about the balance of payments, which is primarily military in character — not the trade deficit, not the investment deficit.
The government used to realize that. But again, Trump and his team just think of sort of running a protection racket: Either you spend your money to the United States — $350 billion from you, Japan, you promise to send here to invest — another $350 billion from you, Korea — or we’re just going to raise tariffs and deny you the U.S. market. The American strategy — and it’s a military strategy as well as an economic strategy — imagines that other countries need the American market, and they don’t have a choice but to support the dollar, and by supporting the dollar, supporting America’s ability to wage war and have military operations abroad.
They don’t realize that this is the whole thing. And yet this protection racket has essentially overplayed its hand. And last week, Korea said: Wait a minute. You just told Japan to pay you $350 billion, and you get all the profits from what they spend in — you get 90% of the profits and give us 10% — if there are any profits at all, you know, from the way you arrange it with your Hollywood-Pentagon bookkeeping.
You need America’s market; we can deny it, and that’s chaos for you.
Well, it’s not really chaos. They tried the same thing with China last week, and China protested and said — I’m sorry, they tried it with Korea last week — Korea protested and they said: We’re not Japan. We don’t have $350 billion. We’re much smaller. And you’re blocking our automobile exports from the U.S. market. We just can’t pay.
And then, Howard Lutnick, the Commerce Secretary, said: The Koreans either accept the deal, or pay the tariffs. Black and white: pay the tariffs, or accept the deal.
Well, yesterday, Korea’s foreign minister went to China. And there’s not a word in the paper about what they’re discussing. But you can just imagine. Korea realizes that Trump is going to insist: We need your money to continue our military spending abroad and to finance our budget deficit. We’re going to close the market to you. And Korea finally is saying, well — for Hyundai and for Samsung, all of its computer industries — what if we don’t have the U.S. market? Do we have a Plan B? And I suspect they’re talking about China. And they’re talking to China. And they’re saying, well, you know, if we walk away from the U.S. market, we’ll walk away from that factory in Georgia. Obviously, there’s such a reaction in Korea that we can’t afford it. If we walk away, can you figure out a way that we can work our industrial capacity in partnership with you as part of your Chinese new prosperity sphere?
And by the way, if we do that, will you help back us up when we tell the Americans to leave their military bases here? We don’t want their military bases if they’re going to hold us up and essentially declare: We’re treating you like a defeated power. Like we defeated you in 1951. There’s never really been an end to the Korean War. We’re still fighting you, just like we’re still fighting World War II against Japan. You don’t have a choice.
If Korea and Japan, and India all make a choice to say, well, we cannot afford access to the U.S. market on these terms. We can use the $350 billion — or Japan can use the same amount — we can use that $350 billion to subsidize our own industry and keep our employment and support our workforce, while we transition radical change, from orienting our trade with the United States and Europe, to orienting it with our new Asian partners.
That’s what it all is. And that commercial balance-of-payments consideration is a fundamental military consideration at the root. And that’s what really frightens the United States. It was the Vietnam War that forced the United States off gold in 1971. Its spending in Vietnam depleted the gold stock by spending so many dollars abroad that General de Gaulle, in France, and Germany, just cashed them in for gold. And America finally just stopped the drain.
Well, now it’s other countries that are preventing the United States from solving this drain problem by saying we’re not going to accept any dollars that are just the monetization of your military spending to surround us with military bases. We’re going to stop the financial bloodstream that’s funding your whole new Cold War. And this goes beyond the investment in missiles and the investment in boats. Other countries are not going to fight a war by invading any other country. And America cannot control another country, not even Ukraine, without troops invading it. And the cost of a military invasion, an infantry invasion, is very different from the domestic cost of sending missiles. China and Russia, Iran have no intention or ability to mount an army to send into other countries. All they have is missiles, basically. And that’s what the next few years of war are going to be all about.
NIMA ALKHORSHID: Yeah. Go ahead, Richard.
RICHARD WOLFF: Okay, another way of saying this is that the United States cannot afford the empire. The problem is, it can’t do it. In the early decades after World War II, the balance of payments — correct me if I’m wrong, Michael — saw export surplus from the United States, generating the capital and the money with which then to finance the seven or eight hundred bases around the world. And so you had the rest of the world dependent on exports from the United States, having to pay for them in the money that was then used to subordinate them militarily to keep this game going.
By the 1970s, this game was over because the Germans, the Japanese, and the Europeans had recovered from the war, as we knew they would. That’s what they were doing in the decades from 1945 to 1975. In that thirty-year period, the United States lost its preeminent position in the world economy as an exporter. It would either have had to stop because it could no longer finance its military adventures abroad by its export surplus, or it would have had to do what Michael so nicely described. It would have to have found another way, another way, and the dollarization making all oil contracts denominated in dollars — and hyping the threat of the Soviet Union, which the Europeans are copying today because they don’t know any other politics — this enabled them to then create the deficit program. They would make the United States a net importer, switch its own production out of the country, no longer needing these exports, no longer being able to afford them (they weren’t profitable enough to produce in the United States), and you replaced all the workers, either with machinery and with automation, or by exporting the jobs.
So, your end result was the story Michael just told. You could continue to finance your global military adventures, but now you finance them by means of imposing, if you like, on the world the need to hold reserves for their currency because the agreed relationship among currencies was gone. That’s what we had coming out of the Bretton Woods, and that’s what we ended when Nixon took us off the gold standard in 1971. So then, you have Michael’s story.
But let me do something we don’t do enough of. Let me tell you a little bit on this program about the limits to all of this. In order to sustain, now, when you have no exports and when the ability of the United States to import is shrinking every day, because the mass of our people is simply too poor — I mean, the statistic came out this week that the top 10% (if I have it right), the top 10% of the income distribution accounts for 50% of the consumer demand in our society. Alright, that’s another way of saying that the bottom 90% are piss poor. They can’t afford anything. Right?
Well, given that we depend on imports, that’s not a good basis for the future. We’re not running; we’re not going to be able to run the kinds of deficits that we used to. That’s my guess, at this point. Alright, what then is going to sustain the story Michael told? How are we going to pay for all of those bases? We don’t have the exports to do it, and we’re not running the kinds of deficits, nor is the rest of the world eager to accumulate dollars in the way that they were before — and that was true before BRICS became important. The decline of the dollar as a reserve currency is at least thirty years old. The Chinese once had $1.2 trillion. They have $750 billion. I know these are big numbers, but that’s a big decline. It’s not surprising, but it’s a big decline.
So for me, I’m beginning to wonder, how long can you keep this up? And when you add the degree to which military payments in this country are a Keynesian support of aggregate demand in our society, then you see he can’t afford a military, but he can’t afford not to have the military. And I suspect that’s the reason why Mr. Trump, who comes into office promising to stop the endless wars, has neither stopped them, nor has he been able to avoid proliferating more war. He attacked Iran, and he’s busily now provoking Venezuela, and taking extraordinary steps to do it. And giving carte blanche to Mr. [Benjamin] Netanyahu is extraordinary.
You know, we wonder, why would the government do these extraordinary things? And in a way, Michael’s story gives the beginning of an answer: that there’s more going on here than macro-management. That’s important. And there’s more going on than the balance of payments. That’s important. There’s also managing the military — the budget and the activity — when you’re so badly out of whack, you can’t beat the Russians in Ukraine. That’s what’s obvious. It’s obvious to the whole world. They can’t let go. What’s the matter here? Even in Vietnam, they understood: we’ve been defeated. And the Americans withdrew, and the Communist Party of Vietnam took over, and has remained the government ever since. That’s thirty-five years ago, right? That is extraordinary. What is it now? Maybe more than that. Fifty years ago.
Then they were defeated in Afghanistan, and they withdrew. Mr. Biden, in the end, did what the previous presidents couldn’t dare do, which is to say: this is hopeless. And so they’re losing. You know, Harper’s Magazine just came out this last week, and on the front page is the lead story of the magazine, which — here’s the title: Why does the American Military Keep Losing All the Wars? Wow, you’re now even able to ask, in a public way, the forbidden question. And if the rest of the world is worried about the United States economically, we have to remember it was also worried about it militarily, and that danger is receding, as we see what’s going on in the world. The desperation inside the United States, the fascistic turn that we are assaulted with every day is a reflection of all of these dead ends confronting the people who run this system.
MICHAEL HUDSON: Richard, there’s a common denominator that links the dynamics you’ve just meant, and that’s oil and foreign investment in oil. Much of the build-up of the reason that there was a gold inflow to the United States from 1945 to 1950 when the Korea War broke out was not simply U.S. exports, it was the sale of oil by the American oil industry that was in control of the world’s oil. And for the last hundred years — and I’ve made this point before on our show, Nima — the cornerstone of America’s control of money, and the balance of payments and military coercion, has been oil, along with food and agriculture, because if you have the ability to monopolize oil, you have the ability to cut off other countries’ industrial potential — just like depriving Germany and Europe of Russian oil and gas has ended Germany’s and Europe’s industrial potential.
Now, that explains a number of things that you’ve seen recently. Not only has America continued to do everything that it can to isolate foreign purchases of Russian oil — the same thing with Iranian oil, it’s tightened all of the sanctions against it. And the reason that Iran was overthrown in [1953] was largely because it wanted to nationalize the oil and the Americans and British together — it was a British-Iranian oil company at that time — felt they were losing control of the oil leverage.
Well, fast forward to today, you’re seeing in the nightly news, every night here has been taking off with Venezuela. Why Venezuela? It’s not really drugs. Just like Israel claims that all Palestinians are Hamas, the United States claims that all Venezuelans — their fishermen, their population — are drug dealers. Well, the reason that the news leads off with blowing up a fishing boat every night, or another boat that has no seeming connection to drug dealing at all, is the United States is trying to create a narrative that this fight against Venezuela is a fight against drugs.
It’s a fight not only to regain control of Venezuelan oil, but, more specifically, to prevent China’s recent negotiations with Venezuela to invest in developing Venezuela’s enormous oil reserves under Lake Maracaibo. And imagine what the United States is worried about. Not only is China making itself independent of America’s allies’ supply and control of the oil industry from Russia, but now China can get its oil from Venezuela itself; and the fight in the Middle East, using the alliance of Israel with the Wahhabi jihadists, to create a disaster, there is to prepare the war for controlling Iraqi, Syrian, and, most of all, Iranian oil.
The United States still dreams of reestablishing its diplomatic, economic, political, and military control of other countries by controlling oil and food — that’s the other basic means of control: that America can impose sanctions on its food exports to starve other countries into submission to its policy, as it tried to do against Mao after the 1945 revolution, until Canada broke the blockade.
Well, right now, you’re seeing China voluntarily shift its imports for soybeans away from the United States to Brazil, to buy its soybeans there. And China has, until this year, accounted for 50% of all soybean production in the United States — and it’s 70% of soybean production in the case of North Dakota. All of a sudden, there’s zero demand from China for soybeans. And yet you have a perfect storm for American agriculture. You have the corn and soybean crop — a bumper crop this year because of the extreme weather — all of this crop is piling up. There’s nowhere to sell it. They don’t have enough storage capacity to put the soybeans and corn in silos. There’s a huge market now in big plastic bags to begin storing them in. This is a disaster, and the farmers are pressuring Trump to say, you know, you’ve got to be able to reestablish our market next year. We’ve been dependent on soybeans, and what can we shift to? We can’t shift to corn. People are not buying our agricultural exports anymore.
So not only has America lost its ability to use food, like it’s used oil, to starve other countries, denying them American exports, but it’s lost its agricultural sector. And the result is that land prices are collapsing in North Dakota and other areas. They’re falling because the farmers are not able to meet their debts. For the last 150 years, all of the financial crises in America, Europe, and the Northern Hemisphere have occurred in the autumn, in September and October. And there’s a reason for that. It was called the autumnal drain. It’s when farmers would have to borrow the money to move the crops to sell them for markets. Well, right now, that autumnal drain threatened to lead to a break in the chain of payments. Insolvencies, arrears, bankruptcies, and foreclosures, that’s what they’re talking about now in the American Northwest and Midwest: foreclosures on agricultural land that doesn’t have a customer. And there’s nothing that Trump can do about this now because the shift is irreversible.
Now that China is making a deal with Brazil, saying we cannot rely on America’s soybean exports any longer because Trump has weaponized every element of foreign trade. He’s weaponized the oil trade. He’s weaponized the agricultural food trade to try to make other countries dependent enough to shake them down for his protection racket. Well, we don’t need the American market. Thank heavens we have you in Brazil! So, the Brazilian farmers are reorganizing, replanting their agriculture, to shift into soybeans. Once they do this, if Trump goes back and tells China, okay, you know, you can depend on us again for our soybean exports, China is going to say, well, wait a minute, we’re not going to double-cross Brazil, where we’ve just made an agreement to trade with them and to trade in our own currency, not trade in dollars, but trade in our currency. Once we’ve made this shift, and the whole national economy (Brazil) has been shifting to dependence on our market, we’re not going to turn on a dime, like you do in the United States, and just say, okay, we’re going to change and have a new market.
A change is irreversible. You can imagine how the threat of America losing the ability to use food — soybeans, grain, wheat — and oil because of the moves by China and other countries to become alternative suppliers to the United States means that America’s lost the two leading elements, not only of its exports, but of foreign investments in oil and farmland that American investors have controlled. They’ve lost the ability to support the dollar. And by not supporting the dollar, it means not providing the foreign exchange that the United States needs in order to maintain its military presence abroad, that remains as heavy a drain today as it was during the Vietnam War that forced the dollar off gold to begin with.
So, when you put the military strategy and imperial strategy in the context of the balance of payments, you find the great constraint that confronts the United States. And that’s what my book Super Imperialism was all about. And as I said, the major audience was not foreign readers wanting to fight against imperialism. It was the Defense Department, State Department, and CIA that used it as a how-to-do-it book: this is how you have to look at the context of America’s military and non-military diplomacy.
NIMA ALKHORSHID: Richard, before going to your comment, one other aspect of what Michael said is Donald Trump imposing tariffs on steel and aluminum that raise industrial costs, destroy jobs, and weaken America’s manufacturing capabilities.
RICHARD WOLFF: Yes, and that’s a perfect segue. I want to take us to a slightly different aspect of this problem. It has now become clear, with each passing day — and Michael has given us the context — what the purpose is, on the one hand, of raising tariffs and, on the other hand, of using them as bargaining chips to get other countries to agree to invest money in the United States.
For example, in the last two or three days, there has been a flurry of statements coming out of England because Trump is visiting England, Britain, and big boasting of huge amounts of money — hundreds of billions of dollars that the British are going to invest in the United States, and vice versa — okay, a very interesting story. But let’s take a look at what the reality is. Number one: The purpose of the tariffs was to do something that now the country is desperate to do. I want to underscore this because I don’t think it’s very well understood: We are watching a Republican president leading a Republican party that, for a hundred years, has been the carrier of the notion that taxing is bad and the government shouldn’t tax anybody, that we are in favor of private enterprise, not state enterprise, and the government should not — blah, blah, blah, blah. And what is he doing? Imposing an enormous tax on the American economy. That’s what tariffs are: they are a tax.
So, we should wonder what would make ideologically driven conservative business people who hate to pay taxes, who have been supporting the Republican Party for a century to keep their taxes down, and have had that work well for them — why would they suddenly reverse everything and impose an enormous tax? Answer: they’re desperate. They have no other way to go. Their borrowing is out of control — let’s remember, in 1970, the total debts of the United States were a few hundred billion dollars. Today, it’s $37 trillion. That’s an increase that dwarfs production and prices — nothing goes like that. We have borrowed crazy. Why? Because we had already reached difficulties, that meant the government, to finance itself, couldn’t tax the rich who controlled politics and wouldn’t permit it, and had pushed the tax burden onto the mass of people so much that by the 60s and 70s we had tax revolts: that’s what they were called — in California, all over the United States.
And then began the solution. When the politicians cannot dare tax their donors, and can no longer tax the people, what do they do? They borrow, as if it were a magic alternative. And who do they borrow from? The corporations and the rich who lend the government the money they did not have to pay in taxes. This is “Schweinerei,” the Germans would say. This is pure fakery.
But now we get to where we are today. We’ve borrowed so much playing this absurd game. We got the rest of the world to get in on this, holding their wealth in the form of U.S. treasuries, and so on, that we have gotten to the point which was already reached under the short tenure of Elizabeth Truss in England, where the capital markets say: We’re not lending to you anymore. You’re not a reliable borrower. You have gone so far in your borrowing that we can see you’re getting close to that political point where your own people will not allow their taxes to be used to pay interest on debt, rather than to feed their children. And in that game, it’s the creditor who loses. We don’t want to lose.
Alright, so what is the U.S. going to do? Tariff. It will, in fact, put a tax; it’ll put it on businesses — because most of the tariffs are paid by businesses that import into the United States — and they will say to those businesses: It’s your job, you have to pay for this. It’s your job to figure out whether you can squeeze the foreigners to lower their price to offset the tariff, or you squeeze the American consumer via inflation, and solve the problem that way. But we, the government, are no longer squeezing the masses. You (irony: you, the business community), are doing it through inflation. That’s the effort.
Now you understand why Mr. Trump is eager to do the tariffs, but because they are resisted and because they are not generating anywhere near enough money to deal with this problem, he has the second half of it: He’ll bargain away the tariff that wasn’t doing the job anyway if you promise to move capital into the United States. Hence, Michael is quite right. It’s a protection racket: You have to help us because we are a flailing, declining empire, and the only way we can continue to protect you — that’s what they say to the Europeans — you’ve got to help us. You’ve got to give us all this money.
Keir Starmer, yesterday, in a spectacle as pathetic as any I’ve ever seen, boasts that the United States has committed to investing [$]150, or maybe even [$]250 — it’s a little fuzzy, [the] numbers — of money over the next ten years in Britain. And he says with real pride: it’s going to produce, we hope, 7,900 jobs.
So, I looked at the statistics. What’s the job story in England between August of 2024 and August of this year? They lost 127,000 jobs. He’s boasting of something that can’t offset even 10% of the decline of the British Empire — and it’s coming over ten years! That’s an admission of failure that’s been dressed up as an achievement.
Last point. If the rest of the world — to quote Michael — is being charged an entrance fee to sell their stuff in the United States — and that’s what a tariff is, you got to pay this if you’re going to sell stuff in the United States — that’s hurting the exporters around the world because their market is going to shrink. That’s elementary. They’re screaming bloody murder to their governments, who are therefore desperate to give them something to support this craziness that’s hurting them. And what do they give them? They give them these announcements: The United States will invest, if we invest in the United States. And that’s the bigger story. Suppose that works? Suppose that these leaders in Europe and beyond do, in fact, deliver hundreds of billions of dollars of capital investment in the United States? Frankly, I don’t see it. I see the United States becoming less attractive as a place to make investments, with [the passing of] each day.
But let’s assume I’m wrong; the money comes. Then, in those countries, austerity is already being imposed on the people in every one of the European countries. Now, only the rate of doing that is different, not the phenomenon. In that country, it will be possible for the radical left opposition — and for that matter, perhaps also the right opposition — to say what we would say here: We have leaders who have arranged that the money that might have been invested to create jobs in our country has, instead, been shipped over to that other country. And why? Because it has been smacking us with tariffs.
This is impossible. You will not survive politically when that is the program that you are effectively running.
MICHAEL HUDSON: Well, Richard, let me give a particular example of the point that you just made that ties that together. I think an example can sort of walk the audience through. Your first point was the tariffs are a tax on consumers. Quite right. Well, what does America import that affects the farmers? Let’s go back to the farm example, because that’s where everything converges, more or less. America imports an enormous amount of fertilizer, including from Russia, but it also imports farm machinery. And one of the problems is that the collapse of the soybean market means a collapse of the income and the ability to buy new farm machinery for companies, like John Deere and Company — that has just laid off, I think, over 1,000 or 2,000 workers because the farmers don’t have enough money to buy new harvesting equipment. They’re trying to buy old harvesting equipment.
Much of this harvesting equipment is not only produced here by John Deere, but it’s produced in Germany. And America also imports harvesting equipment from Deere’s rival companies, also in Germany. Well, all of a sudden, they find their costs are going way up, as a result of the inability to get energy and steel. So, they are exporting, trying to supply the market here with the products that they produce in Germany.
And imagine the surprise that these companies suddenly have, that are saying this is a threat to their making any profits at all this year on their imports, because not only is the United States charging the 15% tariff on imports from Europe, but it’s saying you are liable for the 50% tariffs because you’re making your machinery out of steel, and out of aluminum — and we’re trying to support the American steel industry, and the aluminum industry, because that’s the only labor union that I can get that actually is going along with my pretense that my policies for the wealthiest 10% are really the policies for labor. I need to make a narrative symbolic act. And so, my symbolic act is going to sacrifice an all-American industry that makes its products out of steel and aluminum.
Well, you can imagine what this crazy political ploy has done. It means that Deere and Company, and other German exporters, all of a sudden, find that when they’re trying to provide the harvesting equipment that American agriculture needs, all of a sudden, the price has gone way, way up. And you pointed out, well, can they get around this by investing in the United States? Well, if they invest in the United States, they’re still going to have to import many of the parts that they use from other countries, because America doesn’t have the supply chain that’s necessary for all of the different things that go into harvesting equipment, just like automobiles. All of that, these tariffs have stifled the profitability of imports by companies, by raising the price so high that, as you say, either the companies absorb the cost, in which case they don’t make profits, and yet having a corporation is all about making a profit.
So, there’s a limit to what you can do. They’ll just stop producing, as Deere has stopped producing in some of its plants; or they pass it on to consumers, and the consumers are squeezed. The farmers are squeezed because not only is farm income going way down, as a result of Trump’s crazy weaponization of agricultural exports — when there is an alternative now that did not exist in the 1940s — but they’re broke and they can’t afford to borrow from the banks because the banks say: Well, you know, what are you going to pledge as collateral? Your collateral is your farmland, and the farmland prices are going down, and you’re already fully mortgaged.
By the way, Treasury Secretary [Scott] Bessent earns $1 million a year in rent for one of his landed properties in North Dakota, that’s used largely for producing all of this. This was accused of being a conflict of interest by Congress, and he has to sell this land by mid-December into a collapsing market. Well, you can imagine how happy he is. At least the Federal Reserve cut its interest rates the other day.
And the newspapers all said: Gee, with interest rates going down half a percent, that’s going to lower the mortgage rates for housing and for equipment purchases. But that’s a fantasy. Short-term rates went down yesterday — yes, by a quarter percent — long-term rates went up, because they said this is going to be inflationary. For the short term, you could lower the interest rates, but we’re not going to buy long-term bonds because living in the short run is going to lead to a huge inflation, just as you described, Richard — the inflation from cutting taxes on the rich, and stifling the rest of the economy by tariffs, and all of the other things that Trump’s doing — ending government support of all of the social programs and the medical programs and the educational programs that it’s been doing. You’re finding the American economy is turning into something just like you’ve described in the German and European economies. It’s almost economic suicide, except they don’t know that it’s suicide. There’s a narrative that’s being created of junk economics that pretends that all of this is going to work out. And it’s a cover story, trying to cover up the actual dynamics at work, which we’ve been talking about for the last hour.
RICHARD WOLFF: I also think — you know, I don’t want to over-push it, but I do think that there is a self-delusion going on here — that the top 10% of the people play the stock market, they own the most of the shares, they are the CEOs, they’re related to them, and all of that; and for them, they hold on to a lot of their wealth. It’s the other 90%. And that’s why you get more and more of that old notion of a split economy, you know, that 10% of us live in a world of fancy restaurants and plenty of food, and all the rest; and the rest of us are the ones that are traumatized every time we go to the grocery store by what we can no longer afford.
Here’s a statistic to think about. Compared to the year 2020 — so five years ago — the price of beef in the United States has risen by more than 50%. You know, hamburgers are like a basic part of an American diet, at least for those people who can afford meat. Think about what it means that the cost of the hamburger has gone up 50%, more or less, since the year 2020. You’re seeing a division, which explains our politics, but it’s a division that I don’t think is sustainable — neither by the ideology here, which keeps promising that this situation will continue, even though the foundation of it, as we’re trying to show, is harder and harder. And I see some of these policies as a kind of wild Trump-type — if I can use the football metaphor — of the Hail Mary pass. You’re going to attack Iran? Maybe you can win. Maybe Iran disappears. Maybe the West can snatch all of the oil in Iran — and blah, blah. Until the Russians point out, you know, we have a deal with the Iranians. If you really come here, we’re going to have to fight with you. And one thing we can assure you, you’ll never get that oil.
What do we do?
Well, we go and fight against Mr. [Nicolas] Maduro, who can’t defend himself, at least not in the conventional sense. And we keep provoking, you know. We become judge, jury, and executioner of the hapless Venezuelans who take a boat ride 1,000 miles from the United States and get incinerated, with the whole thing being handled by the President — with no evidence at all that these people were doing something illegal for which even the punishment isn’t execution, and yet they were executed for the crime for which that’s not the punishment that’s legally — I mean, okay, these are fairly desperate acts.
And hoping that the Israelis will somehow be able to pull the rabbit out of the hat of the Middle East and become an acceptable dominant power? Really, you have got to believe in lots of magic to line up your policies in that way.
MICHAEL HUDSON: You mentioned how the American economy is being squeezed by these, and a desperate thing. Part of the desperation is when you cut your policies into segments and not look at the interactions. One of the big factors in rising prices that Americans have to pay, in addition to the food that you’ve just mentioned, and the hamburgers, is electricity. And that’s gone way up, largely because Trump is pandering to his MAGA crazies, who insist that there’s no such thing as global warming. So again, Trump said: If we’re going to put all of our faith in controlling the world of the oil industry, I’m going to support the oil industry, and my MAGA base, by saying, stop all of the investment that we’re doing in wind power and solar power. So, he’s withdrawn the American government support for wind power, which had been increasing it, and he’s also ending the support for solar power because China has a great scientific advantage in producing solar power.
And the result is that opposing — global warming is a big factor in disrupting the economy, but also Trump’s support for trying to increase the artificial intelligence monopoly is projected as being largely responsible for an enormous increase in electrical usage. This is going to raise electrical prices. And already, the electric utilities in this country are raising their prices because one of the Trump policies — to please his 1% constituents, which we didn’t mention — is the electric subsidies that he’s been giving. It costs basically ten years to go through all of the public filings that you have to do, in order to get a new electric utility built to supply the energy for not only the rising computer and artificial intelligence industry, but for just the normal growth in electric utility, that’s especially coming from air conditioning to cope with global warming that’s increasing because Trump has withdrawn from the Paris Agreement and all the other agreements to try to stop global warming. Everything he’s doing is to exacerbate the cost-squeeze and the shortfall of things we need.
Well, electricity doesn’t play much of a role in the Consumer Price Index. Neither does rent: that’s not much in the Consumer Price Index. Or health care. All these things that are squeezing the budgets of the Americans that you just described are excluded from the statistics that the government’s talking about — thinking if you just don’t describe them, maybe we can convince people of our cover story.
And it’s as much of a fantasy as the American hot war against Russia, saying, well, we’re really winning in Ukraine because Russia’s economy is falling apart. It’s not falling apart because it’s a self-sufficient economy. It produces all of its own needs, instead of becoming import-dependent, thanks largely to the American sanctions that it’s imposed. By imposing sanctions on the rest of the world, America has enabled other countries to respond out of the need to become independent of the U.S. market.
So Trump has essentially created a situation where the rest of the world is independent. And as Trump copes with this, by making even more demands that are unrealizable in practice, the more he’s isolating the American and European NATO countries and their allies from the whole rest of the world. So, we’re seeing all of the convergence of all of these bad policies to support special interests — to support the oil industry, to support Wall Street, to support the banking industry, to support labor unions that support Trump — all of this is basically falling apart. And it’s causing the American economy to fall apart, slowly — a slow crash, but a crash that cannot be reversed without a radical change, not only in the economy, but in the whole Constitution, and the whole way in which the legal system and political system are responsible for this mess.
RICHARD WOLFF: And last irony: As you can no longer blame the immigrants — since you’ve effectively stopped the inflow and reversed it to an outflow — you must find a new comparable scapegoat. And if you watch the internal closing-down of criticism that extends even to late-night comedians, you can see that building up the domestic left becomes the new scapegoat to justify why all of those things done by ICE to the immigrants didn’t work. There’s no huge resurgence of investment here. Not at all. There’s no resurgence of manufacturing. Not at all. It’s all smoke and mirrors and scapegoating, because that’s the sum total of where his first eight months have gotten him.
NIMA ALKHORSHID: Yeah. Thank you so much, Richard and Michael, for being with us today. Great pleasure, as always.
RICHARD WOLFF: Talk to you again next week.
NIMA ALKHORSHID: Yeah, thank you.
Le 25 septembre, un tribunal de Paris a rendu son verdict dans l’affaire du possible financement par le régime libyen
L’article La France condamne Sarkozy à de la prison ferme est apparu en premier sur STRATPOL.
MICHAEL HUDSON: In our minds, there’s a different set of books. There’s one set of books for the majority of the world population. The German history books, the French history books, and the American, the English history books have all been rewritten in a more and more extreme distortion of what actually happened.
GLENN DIESEN: Hi everyone and welcome back. I’m very pleased today to be joined again by Michael Hudson, professor of political economy, to discuss US economic coercion against allies. So welcome back to the program.
MICHAEL HUDSON: It’s good to be back Glenn.
GLENN DIESEN: So there is this interesting development. I mean my thesis is that in the unipolar era, states that followed the US would be rewarded, and those who did not could be punished – because there were no alternatives. Now in the multipolar order, the game appears to change – at least the rules of the game. That is, opponents of the United States, and also neutral states who don’t want to ally too closely, have the option of diversifying their economic partnerships, and thus any effort to pressure them simply results in an incentive to diversify more – away from the United States.
In other words the US doesn’t really have that much advantage as we see vis-à-vis China or Russia. In contrast, I think we see allies of the US who are worried about the rise of other great powers and have hitched their wagons completely to the US. They seem more prepared to sacrifice even their own economic interests to preserve the US’s leading position, but also their own ties and connections with the US. This puts the US in a very favorable position. It can take advantage of this subordination of allies. The US can then also sever them from other centers of powers to extract – be it political security or economic concessions.
So, I guess my point is: it seems that the U.S. has an advantage in having an economic war against allies. And it’s through this that I found an article of yours I recently read very interesting. You compare some of the things the United States is doing today to the policies of Britain and France in the 19th century. I was wondering if you could flesh out your arguments.
MICHAEL HUDSON: Well, I want to take issue from the start with your use of the word opponents of the United States. I guess you’re referring to the BRICS, China, Russia, Iran, and the other countries that are meeting. In all of their announcements that their presidents and representatives made at these meetings, there wasn’t a word about the United States as an opponent, or in fact, there was no mention of the United States at all. They look at themselves as being under attack by the United States, much as the United States is indeed treating Europe. They’re not trying to retaliate against the United States; they’re trying to defend themselves against Trump’s demands that he’s making on these countries.
And the demands he’s making are the same for the BRICS as they are for Britain, for the European countries, for Japan. And in fact, right now, in Korea, you have discussions. Even Korea, one of the U.S. allies that the United States would like to drain, is standing up. The United States threatened Korea, like Japan, saying, if you don’t lend $350 billion to the United States to be handled by me, President Trump, to decide how to spend it (and you’ll get 10% of the earnings, if there are any, and we get 90%) – If you don’t do that, we’re going to raise tariffs on you and create a crisis. And you’ll have unemployment, and that’ll lead voters to vote against you. And, you know, we’ll create a crisis.
Just the other day, the U.S. Commerce Secretary, Howard Lutnik, told the Koreans bluntly, quoted in yesterday’s Financial Times: “The Japanese signed a contract, $350 billion. The Koreans either accept the deal or pay the tariffs, black and white. Pay the tariffs or accept the deal.”
Well, that’s just what he’s told Europe. The question is, what makes Europe different from the BRICS countries that are trying to make an alternative, saying, “Well, all right; Trump is threatening to deprive our export industries of access to the United States market. If we agree to his demands, it’s going to cost us more money to just pay tribute to the United States in what’s really a protection racket. ‘Either pay us money and accept our import duties and our demands for you to dismantle your industry and invest here, or we’ll raise tariffs and cause a crisis for you.’” Same demand is made all over.
And you asked, why is the United States making, you know, this demand on Europe specifically? The demand’s exactly the same. Europe is giving up – won’t say Europe, certainly not its voters, but the European leaders, basically NATO leaders. In the EU, foreign ministers have made a decision that they’d rather live in the short run, like politicians do, and not have destruction of their industry than live in the long run. They have a choice. The choice was made before 2022 when they essentially agreed to blow up the North Sea pipeline – or let the United States blow it up– and depend completely on the U.S. for oil. They said, “Well, at least we can depend on the United States”. That’s what Ursula von der Leyen said. “We can depend on the United States.”
And yet Trump has made it clear, most recently yesterday in Britain, when he said: If you do any move that is at the cost of American industry, for instance, in information technology, imposing minimum taxes against U.S. information technology companies, like Europe’s doing, I, we, will simply raise tariffs on you. Trump can raise tariffs, and of course, Europe has already tried to stand up to this, but von der Leyen, who was doing the negotiation, never even tried to fight back. She said: Well, at least we can depend on Trump never to change his mind or change the deal. At least we have certainty.
Well, that’s crazy. There was no certainty at all. And so Europe doesn’t have it. Europe had two choices. The choice before 2022 was to have a balanced and basically independent economy as long as its industrial economy was symbiotic with Russia as a raw material supplier of oil, gas, fertilizer, and other basic materials. The advantage of this for Europe was that Europe, Russia, and China and the BRICS are the growing part of the world economy. The U.S. is a shrinking part of the EU economy. Trump’s policies are actually destroying U.S. agriculture, U.S. industry. It’s making the United States uninvestable. Companies are closing down now. The profits are going down because of the [cost of] imports, especially on steel and aluminum. So you think, why on earth would Europe agree to tie its long-term fortunes to the United States and lose its domestic self-sufficiency and self-reliance (that it had as long as it had free access, open access, to Russian raw materials and energy) to energy that costs five or six times as much.
Once this independence is lost, it loses the option that the BRICS countries have taken by saying, “Well, we’re willing to lose the U.S. market because that’s a shrinking market over time. There will be a cost in the short term, but that cost is less than having to pay $350 billion in the shakedown fee to the United States just to keep our short-term market open. The U.S. market is not worth $350 billion, either to Japan or Korea. Each of these countries could have paid $350,000 to subsidize their own exporters so that they could afford to cope with the tariffs. They didn’t do it. Japan just surrendered.
Korea right now is refusing to surrender. And yesterday, its foreign minister team was in China trying to say: “Isn’t there some way that we could… Suppose we lose the American market. We’re faced with a demand that we can’t possibly meet. We may walk away from them. What deal could we make with you and your Asian neighbors in order for us to have our own self-reliant, individual geographic system of self-sufficiency so that we’re immune from the kind of threats that the United States is making?
Well, Europe has not made itself immune from these threats. Part of this is military. Again and again, the leaders of Germany and France, as well as Britain, have said, well, we need America’s support in case Russia mounts a land invasion and is willing to sacrifice 20 million of its soldiers trying to march across Europe to the British Isles. Well, this is crazy. This is a parallel universe threat. It has no basis in reality because no country, no industrial country in today’s world, can afford a military infantry invasion of any other country. Because not only would masses of soldiers die, but such a country, if it tried to impose a draft, would be thrown out of office right away.
So you have Europe’s policymakers essentially acting on behalf of NATO, which is controlled by the United States instead of on behalf of their own voters. And you have the public relations polls showing that the voters don’t want war in Ukraine. The voters don’t want their social spending in Europe to be cut back in order to spend the limited budgets on military instead of on domestic things.
So it’s not a question of the United States focusing its demands on the BRICS. Its demands are across the board. They’re the same for every country. Either we’ll close off our markets or you have to pay us money not to disrupt your economy and cause at least temporary short-term chaos. Other countries are protecting themselves from chaos. Britain is not protecting itself from chaos. That’s the basic problem that I see.
GLENN DIESEN: Well, I think a lot of it is tied, as you suggested, to the war in Ukraine, because when the Cold War came to an end, the Europeans became less dependent on the U.S. as a security provider (given that the Cold War was finished). We saw that the main objectives in Europe were that of autonomy. They were speaking of using collective bargaining power to have an economic position that would make them an equal to the United States. The Europeans, even immediately in 1992, as the Soviet Union had just collapsed a month or two thereafter, began to discuss how we can develop our own military. Obviously, there was no threat, but this was also an effort to have more autonomy. They wanted their own foreign policy and to pursue this as well; that is, a collective EU foreign policy. So this is what you can do when the dominant state can’t convert security dependence into economic loyalty.
But what you’ve seen since the Ukraine war, though, when the external threats appear and the security dependence becomes evident, it’s quite predictable that the dominant power, the security provider, will then seek to extract economic and political concessions from its vassals or protectorates. And so I don’t know, from my perspective, this has been a key argument of mine since NATO started the conflict in Ukraine with the coup in 2014: Europe is putting itself in a very vulnerable position because the US, you know, it keeps saying friends and allies, which is nice and well. I mean, we are close and we should be close, but states behave like states. And when you make yourself excessively dependent on another state, it will seek to have some material benefits from this. But you mentioned that the conquest of Europe as it is…
MICHAEL HUDSON: Before you go on, you used the word security provider. That’s quite a euphemism. The United States is imposing unparalleled insecurity on Europe because you have Germany and France and Britain offering to provide long-range missiles to Ukraine in order to use against Russia and to launch against Russia, especially Moscow and St. (And the U.S., the European leaders, say, like Starmer yesterday, they want to bomb Russia) Petersburg – that are in range of these missiles that are to be sent. Well, both President Putin and Foreign Minister Lavrov have said: if a foreign missile is launched by Ukraine against Russia, we realize that our fight is not against Ukraine. Our fight is against NATO. This is a war between NATO and Russia. And if a bomb comes from a German manufactory, then we’re going to bomb the source. We’re going to bomb Germany, at least the factory in Germany, maybe the power plants that supply energy to this factory. Same thing in France, same thing in Britain.
Now, the question is: once you have intercontinental missiles flying from Russia, Russia doesn’t need atomic weapons. It has a much broader range of weapons than NATO countries have. And these weapons are not atomic. And the NATO countries themselves are pretty much out of weaponry. They’ve given them all to Ukraine and to Israel. And any thought of actually engaging in war, it is such a fantasy that it would be like Bambi meets Goliath. Russia would respond very quickly. And the result is because of the belligerence of von der Leyen and the Estonian assistant Kellas, this is putting Europe in insecurity and in great military danger.
There’s no danger at all from an armed military infantry invasion. And without a military invasion, you can’t control and gain control over another country. That’s what Russia is doing now in Ukraine. And you see the enormous problems that it has, even in Ukraine. What countries can do in the democratic form of war is by missiles, simply to destroy the other countries. Wars, the modern post-World War II, a modern type of war, is mutual destruction by missile, by air, whether it’s from submarines or land-based missiles. That’s the kind of war and hence insecurity that Europe is going to have.
So not only is Europe’s plan to sort of have a bastardized Keynesianism and military Keynesianism of, well, let’s spend our money on military industry, and that will maybe create the employment that we’ve lost in our civilian industry as a result of having to depend on American gas and oil instead of Russian gas and oil. But it’s going to threaten the actual existence of the European countries. Russia has made it clear that it has no interest in taking over Europe. It wants to be simply left alone. And Europe is obeying the United States, not simply in these tariff demands and the givebacks that Trump is making, but in a much deeper connection of following the U.S. Cold War, now increasingly hot war, leadership. That’s what’s essentially bankrupting Europe. It’s joined a new military axis that is in no way militarily capable of taking on Russia. And I think your military guests on your show have made this very clear over the last few months.
And the question is: why is it that Europe’s leaders, political leaders who are in charge of committing Europe, able to make this choice on behalf of their whole nations in the face of the public’s voters saying, you know, we want Europe to stand up for itself, to be more nationalistic. And if the social democratic and Christian parties are the pro-war military parties that are basically accepting our dependence on the United States and are giving up our hopes for growth by trade with Asia, Central Asia, South Asia, North Asia, East Asia, then we’re going to support a nationalistic opposition when there are elections.
Well, unfortunately, there are no full national elections coming up, either for Germany or for France shortly or for England. And so you see the problem that Europe is stuck with – a U.S. client leadership, not its own leadership. And this U.S.centered leadership is backed by a U.S. centered neoliberal mass media, the press, the television. The whole context, the whole narrative of economic development is twisted in Europe. They actually think that Ukraine has a chance to win, according to Starmer and Mertz and Macron. And there’s no chance of it winning. They think that the war is somehow leading to a Russian collapse. But Russia is self-sufficient. There’s no way that Russia can collapse from foreign sanctions any more than China or its allies can collapse from American sanctions because they’re self-sufficient.
Europe had this self-sufficiency before. It’s given it all up in exchange for dependency, not realizing that the cost of dependency, when you have an American leader such as Donald Trump acting on behalf of American large businesses and monopolies, and most of all, the military-industrial complex, is going to make demands that basically bankrupt Europe and reverse its GDP growth, reverse its living standards and impose austerity on it.
GLENN DIESEN: Well, the problem though is that when political leadership doesn’t pursue its basic economic national interests and subordinates itself in the way the Europeans are, you would expect a vacuum to emerge that is being filled by actors who would actually pursue national interest. And this is the problem because if you have leaders subordinating themselves, they might actually end up killing democracy as well because they will want to seek to prevent that vacuum to be filled by people who actually respond to public interest.
So in Germany you have IFD, which is now the most popular political party, and they want to restore the peace with Russia. But they label them an extremist organization. They’re discussing banning it. In France, I guess the closest you would have would be Le Pen, but she was arrested. As everyone knows, the presidential election in Romania went the wrong way, so they just cancelled the result.
And I was reading Politico today, actually; they’re having an election in the Czech Republic, and they might get a new prime minister. But Andrei Bavi is the one who is leading the polls. They might block him from being allowed to be prime minister because, and Politico cites one of the two major reasons is, he has an ambiguous relationship with NATO. He is not clearly supportive. But we did this to Ukraine too. When Zelensky won on that peace platform back in 2019, which 73% of Ukrainians voted for, many of the NATO countries’ financed NGOs drew a red line and essentially threatened Zelensky to abandon this idea. He wasn’t allowed to talk peace with Russia without having NATO in the room. So you have this when you have a political elite which doesn’t pursue national interest and they prevent anyone from filling the vacuum left behind by their incompetence. You’re going to kill democracy at some point, though.
MICHAEL HUDSON: That’s what has happened not only regarding Russia, but regarding Israel. If you make the claim that you’re against Nazism; if you make the claim that you’re against treating any national ethnic religion as being physically subhuman and a different species; if you say that everybody’s a human being; we’re the same species, you can’t have genocide, that’s a crime in Germany because you’re saying that the Palestinians are human beings. That’s a crime in Germany because the Palestinians, well, I don’t have to explain that. If you say in Ukraine that the Slavs, the Russian speakers, are not subhumans, that’s a crime. You’re having a resurgence of Nazism sweeping across Europe, centered in Germany as it was before.
And the result is that all of Europe has joined with Germany to say, let’s refight World War II in the belief that they can win this time. And I think part of this illusion is a whole generation of Europeans has grown up not only on American movies, but on a false idea of who fought World War II. The two main fighters of World War II were Russia, which lost 22 million people, and China, which lost 18 million people. This is far more than the Westerners, the Europeans and Americans, lost. It was the Russians who broke the Wehrmacht strength, and it was China that broke Japan’s strength that began in 1931 with Japan’s takeover of Manchuria.
The Europeans imagine that somehow they, really the Americans won World War II. And all the Americans did was pretty much put them on rations. It charged for the effort. They came in at the end. They very quickly ended World War II in Japan by using the atom bomb in Japan before the Russians had a chance to drive the Japanese out and lead to a communist domination of Japan. The same thing happened in Western Europe. The Americans delayed and delayed and delayed. The Americans wanted the European war to continue as long as it could, as long as it was killing Russians and Japanese.
This is how the Russian historians see the war. It’s how Chinese historians see the war. That’s not how the Europeans see the war. They think, well, we beat Russia before with American help. We can do it again with American help. In this way, just as we carved up the Near East after World War II and Africa between France, Germany, France, England, and the United States, we can do it all again. There’s this myth that has somehow created a false narrative guiding how Europeans think about what they can achieve in the future. And it’s a false narrative that is almost suicidally self-deceptive.
GLENN DIESEN: Well, on that fact, and it has to be stressed, is a fact that the Russians and the Chinese, or more correctly, the Soviets and the Chinese, were the ones who did the heavy burden, carried the heavy burden in terms of defeating fascism. But recently you have Kaja Kalas, the EU foreign policy chief, mocking it, saying, “Oh, these Chinese and Russians, they’re claiming that they defeated fascism. Oh, they don’t read books over there.” I’m not sure, I think she watches a lot of movies, perhaps, as well, thinking maybe World War II was won by Tom Hanks. I’m not sure where her information comes from, but she even mocked the idea in front of the camera that this was the case.
MICHAEL HUDSON: In our minds, there’s a different set of books. There’s one set of books for the majority of the world population. The German history books, the French history books, and the American, the English history books have all been rewritten in a more and more extreme distortion of what actually happened.
GLENN DIESEN: But there’s been polls over the decades since World War II from France and other countries where they ask, you know: who cared the greatest? Well, who more or less did the most to liberate France and save Europe from fascism? Immediately after World War II in France, I think it’s like 85, 90% who said, well, obviously it was the Soviets. Then you see through the decades of powerful propaganda, it ends up now, the most recent one, with a tiny minority. I think it’s like 18 or 21% who believed it’s the Soviet Union who did the most to defeat Nazi Germany.
So propaganda works. You just tell the same stories over and over again, and after a while, people buy it. And now we’re told that, well, World War II was actually caused by both the fascist and the Soviet Union. And it was the freedom and loving states of the West that beat fascism. I mean, it’s quite an extraordinary tale.
MICHAEL HUDSON: Well, that’s a false way of framing it. Was Europe saved from fascism? If you look at Europe today, it was not saved from fascism. If Europe was saved; it was for Fascism. Fascism was rescued by the United States almost immediately. The United States immediately hired the main Nazi bureaucracy and put them to work fighting the left wing. You had Operation Galatio in Italy. You have the terrorism organized by the CIA and American foreign policy. And the United States hired the Ukrainian fascists, the Nazis, to organize a Ukrainian nationalist movement. The United States saved fascism from being defeated by Europe.
Fascism was America’s response to socialism and a working class movement. Aldo Morrow was killed in Italy. European politicians were killed, just as Lumumba was killed in Africa, and Pinochet killed Allende in Chile. You had political assassination. You have a whole extension through America’s National Endowment for Democracy of creating non-governmental organizations that have acted as funding processes to bring what you can only call fascist leaders to Europe. Mertz is a fascist. There’s no other word for it. And you could say, the same as Kallas; you could say, the same as von der Leyen with her Nazi background family.
Was Europe saved for fascism? And if so, why is there a resurgence of fascism today – of supporting ethnic genocide in countries that the United States declares is necessary for its control of various regions of the world? This is really the fight. You’re quite right in pointing to the crackdown on civil rights, on free speech. That’s fascism. You’re seeing the same kind of takeover in the United States in the last week or so, just by Donald Trump – imposing a new epoch of McCarthyism, like the 1950s – attacking what he calls the left as if somehow the left was in charge of assassinating Charlie Kirk.
You’re having something political occur from Europe to the United States that I don’t think anyone at the end of World War II, in the whole optimism of that time, was believing – that because they defeated Germany and Italy, they defeated fascism. The fact is that this brought back the class war between American dominance and oligarchy – and socialism, to put labels on it. And that fight has gone on. There’s this ongoing fight against socialism and against democracy.
The movement of Europe has not been towards democracy. It’s been away from it. It’s been towards dependence on an increasingly undemocratic imperialism and even dictatorship by U.S. neocons and neoliberals that are trying to push for a refight of World War II – against Russia and China this time. And just as they (Russia and China) won, they were able to end up defeating fascism, whether it’s German or Japanese, in World War II. The same thing would happen today, but the fight is going to be much more violent and fought by missiles, not by infantry.
GLENN DIESEN: Yeah, this idea that the U.S. wouldn’t have worked or supported fascists, that this was only an anti fascist alliance, is kind of interesting because – I just looked it up here– a quote by Harry Truman before he took the presidency said, “If we see that Germany is winning, we ought to help Russia. And if Russia is winning, we ought to help Germany.” In that way, let them kill as many as possible. And towards the end of the Second World War, we also had the British who then developed this plan called Operation Unthinkable, developed in May of 1945 when the war was coming to an end, which entailed not just the US and Britain, but also using what remained of the fascist army to attack, do a surprise attack on the Soviet Union immediately after the common victory. But you know, give this 80 years of Hollywood, and we have a very different story. I did want to shift a bit back towards the economic conquest, if you will, of allies, because we mentioned the Europeans, but the U.S. also has some, I guess, loyal allies in East Asia. I’m thinking of Korea, Japan, and Taiwan, each of them also have strong, well, let’s call it security dependence on the United States. How is the US trying to, I guess, put a squeeze on these, well, two countries and one island, let’s say?
MICHAEL HUDSON: Well, again, the word “security dependence” is a euphemism. It’s Orwellian doublethink. Japan has talked about rearming, and it’s even talking about perhaps becoming an atomic power again. If Japan rearms, this is going to immediately lead China to defend itself. Japan’s already met a devastating loss in World War II. There’s no way in which Japan can be a real military threat to anyone. Certainly, the North Koreans, like the South Koreans, have no love for Japan at all because of its brutal occupation of Korea for so many generations. There’s almost a hatred of Japan there via the Liberal Democratic Party being installed by the United States as America’s compact with the Japanese Yakuzas, the criminals.
MacArthur in Japan and the U.S. State Department made deals with the criminals to go and beat up, attack the socialist demonstrations. There was a chance of socialism in Japan after World War II, a reaction by the Japanese. The American alternative was to make Japan basically a largely criminalized mafia-like oligarchy controlled by the LDP. Well, the recent elections now are for the first time threatening to dethrone the pro-U.S. Liberal Democratic Party and put in a more nationalist party. All nationalism means, it doesn’t mean the Japanese nationalism of the 1930s, military style. It means independence from the United States. The aim is not to put Japan at risk of any kind of war again.
Well, again, Japan is host of the U.S. military bases. A few weeks ago, you had China’s great military demonstration very explicitly showing missiles that they pointed out: This missile can hit Guam, America’s military outpost in the West, the Pacific. It can hit the other Japanese military outposts. So it’s not that Japan’s risking its security. The same thing with Taiwan. There’s a very heavy Taiwanese investment in mainland China. There already is a kind of economic symbiosis between the two countries, but the United States is trying to drive a wedge in that.
The Chinese have said, you know, if for any reason you’re able to co-opt the Taiwanese leaders in the way that you’ve co-opted, say, the European leaders, we’re going to hit down very hard. And it’ll be no contest. Your naval fleet are just sitting ducks. Your naval power that helped win World War II is no longer an active military tool because we can wipe them out in one day. The entire Navy. Navies are obsolete as the tool for control which they were for so many centuries when Britain had the greatest Navy in the world. The whole idea of navies for Britain was to deal with economic development around the seacoast. That was because Britain was promoting foreign trade and inter-commercial interdependence among countries.
Well, China has tried to counteract this whole McKinley type strategy of controlling the periphery of continents by trade. China is developing internal connections through the Belt and Road Initiative with railways, pipelines, highways, all sorts of interconnections. So the whole vehicles of foreign trade are now becoming more inland and domestic. What that does is create domestic regional spheres of influence and self-dependency to become independent.
The effects of the United States demands, that it’s made on everyone from Europe to Asia to Latin America, are so overreaching that they’ve created a reaction against the whole last two centuries of liberalism that saw foreign trade and interconnections as a, I won’t say a rules-based order, but an economic order of stability. You have these interconnections now being weaponized. Trump has weaponized foreign trade, both foreign access to the U.S. market for European and other exporters, and the ability to import basic needs that the United States controls, headed by oil and also agriculture, and now by high technology electronics, trying to create, trying to weaponize all this trade to create a form of dependency that the United States can use as a demand: We will destabilize your economy if you don’t give in to our demands.
The real reason, going back to your first question again – why is the United States treating Europe that way and trying to treat the BRICS countries the same way? That’s because the United States is no longer industrialized. It’s deindustrialized. It’s made all this growth of wealth since 2008, the junk mortgage crisis, the stock, bond, and real estate markets. It’s financial wealth. It’s not the wealth of real production. It’s not the wealth of living standards. Living standards have not risen for more than half of Americans since 2008. It’s all been so concentrated in the wealthiest 10% that the wealthiest 10% of Americans are responsible for 50% of all the growth in consumption goods.
But of course, the consumption goods of the wealthy, wealthiest 10%, are not the same kind of consumer goods that the bottom 90% buy– food and basic needs. They’re luxuries, they’re Andy Warhol etchings, and they’re trophies and Italian fashions. All of this was, way back in the 17th century, 18th century, was being debated and realizing that the financial sector does not really behave like an industrial sector.
We’re seeing a whole transformation in the dynamics of what capitalism is all about, what economies are all about. Well, you and I have talked about that before – all of that has a political dimension. The political dimension means that if America is to avoid an even deeper squeeze on its living standards today, it has to get support from other countries – to get from them the wealth and the imports and the money and the subsidies to keep its economy going that its domestic economy can no longer provide.
So the United States has lost its ability to be self-sufficient, and its response to Europe is to destroy Europe’s ability to be economically and commercially and financially self-sufficient. While the BRICS, Asia, now in conjunction with the Global South, Africa, parts of Latin America, are putting their own self-sufficiency as a chief economic aim so that they will not become subject to the U.S. browbeating and extortion and the threats of disrupting their economies. If you insulate your economy from the United States, there’s nothing it can do to you to impose sanctions or to raise tariffs or to weaponize its import and export trade and financial trade.
GLENN DIESEN: Well, this is why the whole U.S. led alliance system has changed so fundamentally. Because after World War II, the United States actually had some extremely generous trade agreements with frontline states, be it Germany or all the Europeans for that sake, or South Korea, Taiwan, Japan. So it’s just in this era… All countries are now faced with a dilemma as the US is seeking to extract concessions. That is, either they fall into the demands, but by doing so, of course, they have to sever themselves off from other countries and then isolate themselves more, make themselves more dependent on the US, or they seek full autonomy by actually diversifying. But then they have to lean more into BRICS, SEA and similar institutions. But there’s not that many middle grounds anymore. I think that’s why the US overreach with India was so spectacular, because the assumption was they could make Europeans out of them in terms of their cutting themselves off from all other centers of power, subordinating themselves to the US and signing whatever they put in front of them. It turned out that they had to go the other way.
But the fact that Modi had to go to China kind of pointed out, from my perspective, this dilemma that there is no middle ground anymore. Either you have to subordinate yourself or you have to protect yourself by diversifying, but then you have to lean into the multipolar institutions. So it’s a fascinating time. It’s an interesting social experiment as well for that sake. I’m not sure if you have any final thoughts before we wrap up.
MICHAEL HUDSON: Only the countries that America defeated in World War II have turned into surrender monkeys. Japan has become an abject victim of the Stockholm Syndrome. And of course, Germany. They’re the two countries that have given in. And the other great opponent of the United States in World War II was, of course, Britain. The British loan of 1944 and the trade agreements that you just mentioned that were favorable to other countries were aimed specifically at breaking up the British Empire. By opening international markets, they ended British imperial preference. That meant that all of the foreign exchange, the earnings made by India and Argentina and other global south raw materials exporters, were no longer required to be spent within the British Empire, but could be spent anywhere.
Well, Britain’s economy was destroyed, and so that meant free to be spent in the United States. Trade agreements were made, it’s true, with Germany, with European countries. Of course, the United States favored the trade there because the European companies were being bought out by American multinational firms. What was supported above all in Europe were the international firms. That’s exactly what the fight is this week, in the last month, by Trump against England and the EU. Today’s Financial Times has a whole wonderful article: Britain must stand up to U.S. pressure on tech rules. This is about the digital services tax of Europe.
Europe at least is trying to impose a digital services tax on American technology firms because they’ve been able to use Hollywood accounting to avoid having to pay income taxes there. And Trump has told England, Britain, if you try to stand up to us and impose your digital services tax on American companies or try to limit what my contributors in Silicon Valley want to do, we’re going to raise tariffs on you again, despite the agreement we made last spring.
Well, if he can say it to Britain, he can certainly say it to the EU. He made it very clear to the EU that if anything the EU does that is at the cost of American firms, as long as these multinationals contribute to Trump’s Republican campaign and his personal campaign and invest personally in his cryptocurrency scams and the other scams, he’ll just squeeze these, tighten the screws onbthese countries. So that’s basically what’s been happening there. I guess that’s my final thought.
Europe has succumbed to giving all of the diplomatic, trade, commercial, and financial initiative to U.S. planners who are not making open-ended trade and financial agreements that benefit all countries. But as Trump said, the United States has to be the winner in any deal that it’s making with foreign countries. And that’s why the United States is not making international deals anymore. Trump says, we’re going to make deals on a country-by-country basis. We’re going to divide and conquer. It worked for Britain for a couple of centuries. It’ll work for us. And as long as we can play different countries against each other, and it’s us, the U.S. economy versus much smaller individual economies, they’d rather hang separately. As long as we can make them willing to hang separately instead of hanging together, then we’ve won the diplomatic fight for control.
GLENN DIESEN: Yeah, well, I think the fault of the Europeans is that they think they should just wait out Trump as if this is only about Trump. I mean, I think he’s quite extreme and radical in his approach in terms of recognizing a problem and seeking to solve it. But I think the alternatives, well, the Bidens of the world, wouldn’t necessarily go in a very different direction. Of course, it might be a bit milder, but the overarching problem isn’t, I mean, we tend to focus on personalities, but what is the end stage? I mean, how else is this ex-capitalist system, being so exhausted – what else is it going to do? I mean the U.S.– if it can’t compete anymore. It’s losing the technological lead; it’s drowning in debt; there are massive economic inequalities fueling social and political problems. I mean, one sees that this has reached the end of the line. There are no more ways to deal with the coming financial crisis. You can’t put the interest rate down or up. As either it’s going to collapse the dollar or it’s going to make the debt repayment unmanageable.
So, it is a brick wall, it seems. I think Trump deals with this in a, let’s say, a very authoritarian way. But the idea that we can just go back to the way things were, I think this is quite delusional. It’s wishful thinking.
MICHAEL HUDSON: Well, that’s the whole problem, Glenn. You put your finger on it. The way things were, the way things are today is not how they were in 1945. There was still an active left wing in Europe. There was a chance of Europe going socialist in a mixed economy. And certainly, the British Labour Party in the 1940s was progressive like that. There were progressive movements throughout Europe. All of that was counteracted by the United States to prevent that.
And you had the old European moneyed aristocracy fighting against this, pushing essentially for neoliberalism, for a dismantling of government strong enough to regulate the financial oligarchies that were emerging and making fortunes on a mutual interdependency with American multinational firms and multinational investments. And the whole world economy was restructured in U.S.-centric lines that have led to this problem.
So in order for Europe to prosper again, it needs to rethink the whole direction of history. And of course, that’s what you and I have been talking about for the last few months. They have to reinvent the economic wheel to analyze: how do we create a mixed economy that’s going to promote growth, rising living standards, and industry instead of creating financial fortunes American style that’s leading to our deindustrialization, just as it’s led to America’s deindustrialization. How do we end up avoiding looking like the United States? What is China doing right in its takeoff that really is following the very policies that made Britain and Germany and the United States industrial powers in the late 19th century?
GLENN DIESEN: Well, that’s an interesting part when they, the way that China’s capitalism is defined as managed capitalism, all these strange words, which, but if you look at it, it’s very, very similar to the industrial capitalism of the U.S. itself in the 19th century. But yes, Michael Hudson, as always, thank you so much for sharing your insights. And I will leave a link to your blog in the description as well. So thank you again.
MICHAEL HUDSON: Thank you very much, Glenn, for the compliments.
Excerpt from Michael’s short discussion on the modern history of balance of trade:
Other countries are preventing the US from solving its problem of draining money. They say; We will not accept any dollars that are just the monetization of your military spending to surround us with military bases. We’re going to stop the financial bloodstream that is funding your whole new cold war.
This goes beyond only investment in missiles and boats. Other countries are not going to fight a war by invading and America cannot control another country, not even Ukraine, without troops invading it. Missiles is what the next few years of war is going to be all about.
A big Picture Discussion. The big Moment is in. What’s happening is a geopolitical realignment … and the whole theme of this meeting of the Shanghai Cooperation Organization was global governance.
GLENN DIESEN: Hi everyone and welcome back. We are joined today by Michael Hudson, one of the world’s great political economists, to discuss the development of a multipolar international economic system indeed being built as we speak in China. So welcome back to the program.
MICHAEL HUDSON: Well, thanks for having me. So many things are happening right now.
GLENN DIESEN: Yeah, it’s incredible how fast the developments are coming. If you want to see how extraordinary this is in a relatively short period of time, look over the past three decades.
You remember, at the end of the Cold War, the main foreign policy objective of Russia was to integrate with the West to have a common European home or greater Europe. Then, of course, over the past few decades, NATO expansionism began to push Russia closer and closer to China instead. And after 2014, it really abandoned Greater Europe in favor of what it calls Greater Eurasia.
Trump, when he came to power, seemed to recognize this mistake. Almost paraphrasing Henry Kissinger, he said that this was a huge mistake to push Russia into the arms of China. However, then we’ve seen that colossal foreign policy mistake being done: all these threats, tariffs and secondary sanctions against India, now pushing India also towards not just China but Russia.
So we now see that we’re all meeting in the Shanghai Cooperation Organization meeting in China and forming new partnerships. So it’s really extraordinary. I was wondering how you read this whole situation.
MICHAEL HUDSON: The interesting thing is that Trump has represented really the deep state in declaring war against the whole rest of the world. The only war that he’s really won is against his own allies, against Europe, Korea, and Japan. He’s driven the rest of the world together. It is this actual neocon warlike belligerence that has somehow unified the rest of the world to take the steps that they’re taking right now, just about a half year after Trump took power.
What’s happening is a geopolitical realignment, as you pointed out. And the whole theme of this meeting of the Shanghai Cooperation Organization was global governance. That is what President Xi was saying. And it’s not just the governance of the SCO countries. It’s for all of the countries that have been driven out of the U.S. orbit.
The catalyst for all this that set the stage was Trump’s tariffs against India. India’s Prime Minister Modi spent an hour riding in a limousine with President Trump and discussing relations between India and Russia. And Trump basically told India, we’re going to block off the American market for you, and that’s going to create chaos in your economy if you don’t stop importing oil and energy from Russia.
Well, what Modi said and explained to the audience was that India’s trade in oil is much more important for its economy than its trade with the United States. Getting oil to power its industry, its whole economy, and to make money in trading with the balance of payments is more important than producing low-wage textile labor and other labor. The labor that the United States companies had hoped to use India as a counterweight to China, whereby they say, we don’t need Chinese labor to make iPhones and other products; we can use Indian labor. All of that is ended.
Right after the SCO meetings, we’re going to be leading right into the bigger meetings of BRICS. And the Indian Prime Minister Modi is going to be the head of BRICS for the next year because it’s India’s turn to become the host of BRICS, and they’ll be meeting in India.
Just a month before these meetings, everybody was worrying that India was the weak part of, the weak link in, BRICS because it was, in a way, very much like Turkey. It was trying to play both the U.S. world and the China-BRICS world both ways.
Trump has closed off the option of siding with the United States, despite the fact that so many Indian billionaires or wealthy businesses are tied to the United States. Modi has realized that the future of India’s economy lies with Russia, China, Iran, and the rest of the BRICS region. All of that was sort of the setting for all of this.
And what was made clear, the whole theme of the speeches by Putin and Xi and the others is that we are now 80 years since World War II ended, and the United States had pretty much a free hand in designing the international economic order, the International Monetary Fund, the World Bank, the World Trade Organization, and the Cold War, all on its own terms. These terms promised to be multilateral, and they promised to be the terms that underlay the United Nations Charter. Above all, multipolarity, equal treatment of other countries, not selective tariffs, not sanctions against some countries being told who you can trade with, who you can invest with, and what you have to do. And all of this has been violated at an accelerating rate by the United States neocons in their Cold War.
President Xi was the host of these meetings, then they moved to Beijing for the big military parade, I guess, later today in China. This is them saying, we are now going to pick up where 1945 was supposed to lead to an alternative to fascism or Nazism or the militarism of Japan. President Xi was pointing to China’s role in defeating Japan, Russia’s role in defeating Germany and the Axis, and the great sacrifices they made.
Despite the fact that, in their [China’s etc.] narrative, they really won the war against the Axis powers, it was the United States that designed the post-war world. The United States, which hired as many Nazi scientists and Nazi politicians as they could in Operation Paperclip – hired them to fight communism in Latin America, in Europe, and other countries – hired their scientists, Wernher von Braun, et cetera, for the U.S. space program. It was the United States that somehow didn’t really end World War II.
Now you have in Germany, Chancellor Merz saying, we’re going to re-fight World War II. And this time, the German army is going to beat the Russian army. This is really the setting that has consolidated the BRICS countries.
The result is that there is a global fracture that’s occurring, but it’s different from all of the attempts to do that really for the last 70 years.
In 1954, the non-aligned nations got together in Bandung, Indonesia, and said: We need a fairer and more equitable order that lets us develop and doesn’t stifle our development with foreign debt, with free trade, with preventing us from protecting and subsidizing our own industry. But they really couldn’t do anything about it because they were too small acting by themselves. The non-aligned nations could not go it alone, even together, because they didn’t have the critical mass.
What’s changed all this since the 1990s, obviously, has been China. Now China can be the core of this critical mass, largely because of its financial policies, its foreign exchange reserves, its economic power, its export power, and its technological power. And this has enabled, for the first time, countries outside of the U.S. and European orbit – I think we’ve discussed this before – to create an alternative.
These meetings at the SCO that are going to be followed by the BRICS meetings in a week or so are all about spelling out exactly how they’re going to restructure this new economic order. And they’re powerful enough to do it this time.
It’s obvious that trade is going to be a key in this. The United States is trying to weaponize foreign trade by saying we can force you to follow our political directives, like isolating Russia and China and joining the U.S. Cold War against them by blocking off your access to the United States market. Well, that’s weaponizing it; it’s saying, we can cause chaos to you if you don’t follow our advice.
The alternative to this, as I think all of the speakers spelled out in Tianjin, was to trade among each other. If we don’t trade with the United States, we’ll give up the U.S. market. In fact, India has no choice but to give up the U.S. market if Trump’s tariffs are allowed to stand against India. They’ll trade with themselves.
That’s what’s become the underlying frame for discussing all of the economic and financial and related changes. It’s a civilizational fight to restructure the whole means of foreign trade and finance. It’s going to de-dollarize that.
President Putin pointed out how much more efficient China’s means of trading among themselves in their own domestic currency was than having Russia buy dollars to pay China, for China then to convert the dollars back into its own currency. All of this foreign exchange and the charges for it no longer have to be borne, quite apart from the fact that the United States has weaponized international finance by expelling Russia, China and other countries from SWIFT, the bank clearing operation.
Everything that Trump has done to isolate other countries financially, commercially, in trade, and militarily, has had just the opposite effect. It’s driven them together.
All that the SCO and BRICS countries and global majority had to do was: well, if we’re going to act together as a unit, how are we going to set the rules of trade, the rules of finance, so that it’s something that will be multilateral, a word that kept coming up, and fair? How do we de-dollarize so that the United States can’t grab our foreign exchange, as it grabbed Russia’s $300 billion, or gold, as the Bank of England grabbed Venezuela’s gold supply or others?
You’re having this global fracture spelled out in the way of saying, well, it’s not so much that we’re creating a new type of civilization. We’re picking up civilization, where it was interrupted by the United States Cold War that has transformed finance and trade, in violation of all of the United Nations principles that we were promised at the end of World War II would be subsidized and supported by the United States. That’s basically the framework that has occurred.
GLENN DIESEN: I just read that this morning China and Russia signed an agreement finally on the Power of Siberia 2 massive gas pipeline. Now, it is not gas from the gas fields in the Asian parts of Russia which is being exported. This is from the Yamal Peninsula in the Russian Arctic. And this is a massive amount of gas which will go to China.
This was previously intended to be exported to Europe through primarily the Nord Stream and Nord Stream 2 pipelines to Germany. As we know, these pipelines were destroyed. They initially tried to blame the Russians, but then they had to walk this back. Now they’re trying to blame the Ukrainians. But I think most people would assume that the US had something to do with this.
But this is just a huge, huge development because it really cements Russia’s pivot from Europe, which it has dreamed of since Gorbachev’s concept of a common European home, all the way to 2014. And then, in 2022, it began to abandon it completely.
But now, all of this gas, which was supposed to fuel all these European industries for decades to come, will now instead go to China.
I’m just wondering what future historians will say, because the Europeans are still celebrating that they liberated themselves from Russian gas. They don’t have any alternatives, except much, much more, many times more expensive American gas, which might not even be available in the future. It is amazing to see what is happening.
MICHAEL HUDSON: But anyway, there’s no really reversing this because it’s irreversible. Once you make a huge investment like this, you’re not going to say, oh, you know, we wanted at one point to be a European nation.
We thought of ourselves as European, but we’re not going to somehow tear down this pipeline and build a new one to Europe.
Putin has made it clear that the break with Europe and especially Germany is going to take many decades to be restored. Russia has come to terms with the fact that probably there’s not going to be a reopening of the Nord Stream pipeline to Europe. There could be, but it’s up to Europe. And Europe has really been locked into the U.S. orbit. It’s as if the whole effect of this [new] Cold War, the whole Trump strategy against Russia and China has been to lock Europe into dependence on the United States for liquefied natural gas and especially for one of the bases of its balance of payments, military arms sales.
Modi had complained that actually Trump had announced that he had brought pressure on India to buy more American arms. And he’d criticized India for buying Russian weapons. And I don’t think Modi came right out and said, well, our weapons work and your weapons don’t, as we’ve been watching the war in Ukraine unfold. He didn’t say anything, but it’s obvious the fact that the United States has lost India as a major purchaser of its very expensive aircraft and missiles and other military and industrial complex arms.
This is a blow to the United States, but it’s locked in Europe to American arms purchases. And the whole Trump tariff deals with Europe have just created such a surrender of the European economy to the United States, locking itself in, denying itself the choice of trading with the BRICS countries, that the Asian countries that are the most rapidly growing economies in the world. You’re having political revolution in Europe, saying, we’ve got to get rid of the ruling parties. We’ve got to have nationalist parties.
As you and I have discussed here before, it’s amazing that all of this is still occurring almost entirely on the right wing of the spectrum, not the left wing of the spectrum for nationalism. But at a certain point, Sahra Wagenknecht’s party in Germany and other parties in Britain are going to replace the neocon U.S. parties.
But as you said, the irreversible break has already occurred. There’s nothing really that can happen to Europe.
The whole identity and structure of how the world is going, most of the world is going to be following the rules decided by China, Russia, India, the BRICS, and the global majority. And they’re going to leave not only the United States isolated, but Europe isolated with it. And in view of the fact that, in the last few days, von der Leyen and Germany and the EU have announced their intent to supply missiles to Ukraine and attack Russia… This is just locking in the irreversibility of isolating Western Europe from the rest of Eurasia.
GLENN DIESEN: I want to ask about the treatment of India because it just seems to be so out of place.
Just for context, for me, the critical point was a decade ago. Indeed, I wrote a book a decade ago called Russia’s Geoeconomic Strategy for Greater Eurasia, because 2014 was such a pivotal year. That is, we saw the same time as the West backed this coup in Ukraine, which killed Russia’s hope for a common Europe.
This happened around the same time as the Chinese were launching their Belt and Road Initiative by land and sea, the same time that the Chinese were launching this Asian Infrastructure Investment Bank, the same time they were launching China 2025 to develop leadership in key technologies. So you saw the format for new technologies, industries, transportation corridors, banks, and different currencies all coming out at the same time in China as they [the west] toppled this government in Ukraine.
For me, it was just amazing because for the first time you had a country like China, which had both the capabilities and the preparedness to challenge the US-centric economic system. And this was the time to kill Russia’s dream of being able to integrate with the West. I mean it was… it was kind of extraordinary. If you wanted to sabotage yourself, this is kind of what you would do. And which is why I think the past decade was kind of predictable in many ways.
We’ve seen Russia and China kind of leading this Eurasian front in order to develop an alternative economic system. But India was always the wild card because they have a bit of a difficult relationship with China. And of course, they can – not always, but it’s possible that they can – be used by the United States. Indeed, whenever there are some tensions between China and India, there’s a little bit of excitement in the media, that now maybe they will fall in line and join the anti-China bloc.
But these kinds of threats against India, I just can’t understand. And it doesn’t appear that Washington’s walking it back. Only today I was watching Navarro make some speeches telling India: you’re not allowed to buy Russian energy or you shouldn’t buy Russian arms. And, you know, we like Modi, but this is unacceptable.
I’ve been on several Indian TV shows about politics. And they’re all just amazed. Some think it’s hilarious; others are angry. It’s just, they can’t believe this is real. Why should Washington dictate to India whom it can trade with? It seems absurd, but when you listen to people like Navarro, it’s like the most natural thing.
How do you explain this treatment of India? Because this could have been America’s best friend. It’s quite extraordinary.
MICHAEL HUDSON: Well, you use the word unacceptable, and that’s what’s so ironic. It shows that the United States didn’t have any accurate calculation of the costs and benefits of what it was doing.
Think of what the word unacceptable meant. (When the United States says, we won’t accept it.) George Bernard Shaw had a story that he was at a party, and some woman came up to him, who was, I think, a yogi. She returned from India and said to him very proudly, I accept the world. And George Bernard Shaw said to her, well, madame, you don’t really have a choice, do you? Well, that’s the situation with the United States. When it says it won’t accept the inevitable, this doesn’t have much effect on reality at all. It’s like King Canute trying to stop the ocean and stop the tides from coming in. It has no effect at all.
Most policymakers – in, I think, all of the statements from the beginning of NATO’s war in Ukraine to this week or even today – say that Trump’s strength and his power over the other countries that’s enabled him to announce his Liberation Day tariffs is that other countries need the American market because the disruption is going to be so great that the alternative to joining as allies with the United States is chaos.
Well, obviously, in Beijing and Moscow and now New Delhi, they’ve decided: it turns out that our ability to accept a disruption in trade is much better than America’s and Europe’s ability to accept it. That it’s not that hard to replace the American market for these countries.
China has already shifted its soybean demand away from the United States 100% to Brazil. The result is that soybean prices are now collapsing in the United States. The agricultural sector, which has been a key political sector in the United States ever since the 1930s, is really suffering as a result of the losing the Chinese market and now other countries that are allied with the BRICS.
China, Russia, India, and other countries of the global majority are able to restructure trade among themselves. There’s obviously going to be a short-term cost. There are going to be layoffs. I’m sure that there are many textile companies in India that all of a sudden have had to stop. It may be that today’s ruling by the Supreme Court that Trump’s tariffs are illegal may give hope that, gee, maybe these tariffs will have to be canceled. That’s not going to have any effect at all because you have both the Republicans and the Democrats in Congress completely supporting what Trump is doing. They’ve supported the war against China.
So this is not going to lead other countries to say, now we can open our factories again and begin exporting to the U.S. because it’ll all be over once there’s a vote in Congress. Does Congress support America’s war against China? They all do. Certainly, the politicians support it.
The American public doesn’t. The polls that are taken show the public wants the same things that President Xi wants and that President Putin wants. They want peace, they want normal trade and prosperity. That’s not what the senators and representatives in Congress of the U.S. want. They want the Cold War, they want poverty, they want inflation, they want a declining dollar. It’s the politicians that are destroying the economy, not either the voters or the business community that’s going to be losing from all this.
That’s what’s so amazing in all of this, that the United States is not really acting in its own self-interest. And, apparently, it’s because the CIA and the National Security Council and the Council of Economic Advisors and all of the economists in the government have miscalculated the costs and benefits that are at stake in restructuring this world order.
They cannot acknowledge for ideological reasons why China and its allied countries are pulling ahead. They can’t acknowledge that a socialist market economy works better than a financialized belligerent economy that’s running a chronic balance of payments deficit and a government debt as a result of its Cold War. They can’t acknowledge that.
GLENN DIESEN: Well, a lot of the deals which are being made, are primarily economic.
I keep making the point that India wouldn’t want to join anything that would be seen as a group against America because their main idea is they want to be able to diversify their ties and trade with everyone. So it’s not a grouping against America, but it’s a grouping protecting themselves from America. That is, if Washington weren’t going against India, India would be much more cautious.
But now, what can they really do? I don’t think they would have ever subordinated themselves or capitulated to the demands of Washington. But even if they would, what would have been the rewards? We’ve seen the Europeans do it. They signed any deal Trump put in front of them. Even though the EU said it was a horrible trade deal, they signed it nonetheless.
They sat like good schoolboys in front of his desk. They did everything that was asked, hoping that obedience would be rewarded, but it wasn’t. All they did was cut themselves off from Russia, China, Iran, and now possibly India in the future, too. And it’s not actually rewarded. It just makes them more dependent on the U.S., which then weakens their hand even more.
So, you know, it would be a kind of foolish assumption to believe that the Indians will go down the same path.
MICHAEL HUDSON: Well, neither President Xi nor President Putin in their speeches made any reference to the United States at all. There was no reference. They’re not expressly describing what they’re doing as opposing the United States in Europe. They’re simply ignoring it. They’re supporting each other.
What they’re talking about is: let’s revive the principles that underlay the United Nations: multipolarity, treatment of equals, and no interference in other countries’ affairs. Let’s decide what is an ideal world order that we can all join as part of a win-win situation and not permit any of our member countries to weaponize foreign trade, to weaponize international finance, and to settle our differences on the battlefield instead of by negotiation. They’ve simply ignored the United States.
So it’s not that India or any other country that’s joining it is aligning itself against the United States. They’re saying we’re following the basic principles that we think are the principles of civilization itself. And these principles of civilization that have not only been written into United Nations law, but the whole Treaty of Westphalia in 1648 of equality among nations, non-interference with other countries, internal affairs, no regime change or covert assassinations of heads of state, none of this.
All they’re talking about is what a wonderful world we’re trying to create. And if other countries don’t want to join it – obviously, the United States and Europe won’t want to join it – they’re just part of another world. They’re outside of civilization, outside of the rule of law. And again and again, President Xi and President Putin talked about an international law binding all against the U.S. rules-based order. They use that fairly often. And these rules that sort of capped the United States efforts in all this.
You can just see what the United States has become a model of what the global majority is going to avoid. This global confrontation: Trump’s demand that European companies, Japanese and Korean companies, relocate their automobiles and computers and other major industries to the United States, or they permit U.S. companies to control their leading emerging technologies without having to declare taxable income, without having to pay taxes, such as even the European countries were trying to prevent American companies from doing. The United States foreign policy is based on how we can cause chaos in other countries and hurt their economies so that they’ll have to side with us.
Normally, if you’re going to injure and fight against another country, that’s not a way to get them to depend upon you unless you’re ruling by fear and by compulsion. And the whole framing of the future of the SCO and BRICS, as their speakers have announced, is going to be that it’s voluntary because people want mutual gain, not the zero-sum game that Donald Trump sees. U.S. relations will have to be bilateral, country by country, and America has to be the winner, other countries have to be the loser. He said that in his speeches and writings on the internet again and again and again.
So, in a way, Trump has spelled out exactly everything that Asia and the global majority want to avoid. And this helps them write up the rules that are going to prevent any country who’s a member of them from being able to do again [what the US does].
In that sense, maybe he should win the Nobel Prize. He’s accelerated and catalyzed this creation of a fair and ideal peaceful world. It just doesn’t apply to the United States and Europe.
GLENN DIESEN: Yeah, the same thought struck me, though, that there might be some peace prize, an unintentional one awarded for bringing together all these countries. For example, India and China, who have all these tensions, are now seeing the need to overcome some of these problems in order to create new economic alternatives.
What I find fascinating, though, is a lot of this could have been predicted. Indeed, it was predicted in good time. For example, in the scholarly work of people like John Ruggie, who wrote back in the 1980s how you would expect the international economic system to develop.
He was making the point back then that when there is a huge amount of economic power concentrated in the hegemon, such as the United States, it would have the ability to act as a benign hegemon because simply because it would be in its incentive to deliver a collective good for the international system, that is, to have the rest of the international system trusting its administrative control over the international economy.
So, the United States would be able to say, here is your access to key technologies and industries, which are reliable. You have access to transportation corridors under the US Navy’s control, which won’t be disrupted. You have access to the reserve currency, we can all trade with the dollar, your access to global finance, and all of this architecture is under US control. It’s an incentive for the US to keep this open and liberal so the rest of the world can access it. This kind of would be the foundation of an international economic system, which would be considered a benign hegemon. Other countries would trust it; they would be more or less comfortable under US leadership.
However, he also made the point then that when the hegemon is in decline, this would no longer work because then the hegemon would likely use its administrative control over the international economy to prevent the rise of rivals.
For example, China: the US cut off its access to technologies and industries. It stops Iranian access to transportation corridors and seizes its tankers. It confiscates gold, bans countries from accessing banks and currencies, and suddenly the whole economic system is weaponized and now trust is gone. This will only amplify the need for alternatives. This is where we now are.
The United States is apparently pursuing some tributary economy where others have to pay tribute or find a way of extracting industrial power or other wealth from other countries. It’s just very short-term and destructive, and so much trust is being lost. But what I want to get to is, a lot of these deals which are being signed now in China are economic in nature. It’s supposed to form a new international system. But what are the key principles and the way you see it in this system? Because it definitely will not be the rules-based international order, which is not international, not rules-based, and not orderly either.
So what are they actually going for?
MICHAEL HUDSON: I’d written what you just described up already in my book, Global Fracture, in 1978. And I think these rules have been spelled out.
You mentioned transport. Russia’s Prime Minister Lavrov has described recently in a speech just last month the need “to establish foreign trade mechanisms that the West will be unable to control, such as transport corridors, alternative payment systems, and supply chains.” As an example, he cited how the United States has paralyzed the World Trade Organization by refusing to permit a third judge so that there can’t be a three-judge panel for all of this.
The United States only has an ability to block other countries from taking moves. For instance, the U.S. veto single-handedly has blocked the United Nations from denouncing Israel. And you can just follow the results of the U.S. veto power. The United States will not join any organization in which it does not have veto power because it says, that’s letting other countries control our economy.
Well, no country is going to have that kind of veto power in the global majority countries. That turns out to have been the Achilles heel of the United Nations, the ability of the U.S. to block things… and simply corruption, the way that it’s corrupted the International Atomic Energy Agency by having Rafael Grossi turn over all of Iran’s atomic energy sites and scientists’ names to Israel to assassinate and to bomb. I mean, Lavrov mentioned a whole bunch of it.
As you just pointed out, the world is not to be governed any longer by the unilateral U.S. rules that are subject to desperation. The U.S. is acting in desperation, trying to stop everything. And President Putin described this already in 2022. He was laying the groundwork for what we’re seeing flowering today. He said Western countries have been saying for centuries that they’re bringing freedom and democracy to other nations, yet the unipolar world is inherently anti-democratic and unfree. It is false and hypocritical through and through.
Well, that’s about as direct a statement as you can have, and you can see how many people outside the United States have said, the last three years from 2022 to today have just borne that out. We’ve got to have an alternative. And that’s really the point.
This is the first time that they’ve been really pushed into spelling out just what the rules of an alternative are. They can’t simply say, we’re going to break from the United States and go it alone. They have to say, what are the rules by which we go it alone? How are we going to set rules to shape how we trade in a fair way with each other and how we finance this foreign trade?
China has announced that it’s going to set up a bank that will be able to extend credit to countries that are running deficits with China or paying for China’s investment in these countries to develop the Belt and Road Initiative and the Transportation Initiative that is going to enable them all to produce for each other’s markets instead of for the U.S. and European markets.
GLENN DIESEN: My last question is, this is a very different economic system. Of course, traditionally we only see liberal economic systems function under the British hegemon in the 19th century, and then the American hegemon in the 20th. That doesn’t mean that there haven’t been any alternatives. It’s not that long since the Industrial Revolution and the introduction of capitalism and all that. But in this multipolar system, what are the opportunities as well as the challenges of creating a stable economic system?
MICHAEL HUDSON: Well, what’s so ironic is that what China is doing in its socialist market economy is exactly what the classical economists outlined as the development strategy of industrial capitalism in Britain, France, Germany, and other countries in the early 19th century.
It has a mixed economy, which is exactly where the European economies said, we’re going to get rid of all of the monopolies that were created in the feudal Middle Ages to enable kings to raise the money to pay their creditors for the war debts that they took on to fight each other. We’re going to make these public entities so that instead of being monopolies, they can supply basic services, health, education, transportation, and communications, at a subsidized rate to lower the economy’s cost of doing business.
That’s what China’s doing, that it’s following the mixed economy. Where China has gone further than the classical economists of the 19th century went is that it’s really controlled finance as a public utility. The creation of money and credit is run by the People’s Bank of China, and it creates credit for purposes of direct tangible capital investment to increase production and to fund investment that will raise living standards, not to make money financially.
The whole structure that you’re going to see in the SCO, the BRICS countries, and the global majority is going to be to use banking and finance. Not to fund takeovers of property, not to essentially create credit (especially in real estate) and create real estate bubbles or stock market bubbles or run the economy as a Ponzi scheme. Not the creation of financial wealth in the hands of a narrowing financial sector at the very top of the economic pyramid, whose product is debt, getting the rest of the population into debt for itself and getting monopolies that extract interest, monopoly rent, and all the financial overhead that characterizes the West. But to actually use credit creation and the economic surplus to plow back into overall national production.
That’s the way that we’re really moving, into what are described now as the new rules of civilization, but they’re the very rules of civilization that followed naturally from the Industrial Revolution, from the question of how Britain (and European countries) are going to industrialize and make Britain the workshop of the world.
Well, we’re going to lower the cost of production, we’re going to get rid of the rent overhead, we’re going to get rid of the landed aristocracy and its demands for ground rent, we’re going to get rid of the monopolies and make them into public utilities. And we’re going to do what Germany and Central Europe were doing, we’re going to redesign banking so that it’s actually going to finance industry, not just finance war debts and predatory debt without regard for the economy’s ability to pay and to carry these debts.
GLENN DIESEN: I know that, on the face of it, it’s almost obligatory for anyone in the West that we should all interpret these developments as something negative, given that this represents a massive power shift from the West to the East. Of course, there’s something to be said about that.
On the other hand, it has to also be recognized that the system which these countries are seeking to decouple from seems to have reached the end of the line. That is, as you mentioned, our economies have become excessively financialized. They’re simply not that competitive anymore. The debt has grown to such crazy levels, it’s not sustainable. Trust in this economic system is faltering.
The amount of economic inequality has built up, it’s given rise to an oligarchy, which is being very destructive, not just for society, but also for politics, for democracy to function. And as you suggested as well, the addiction to the forever wars. It’s reaching the end of the line, it seems.
So at this point in time, it’s strange to me that we have this almost instinctive hostility towards these alternatives emerging. But again, the alternative to what is being done in places such as the Shanghai Cooperation Organization is not to go back to the 1990s or the 1950s. This is already exhausted. It’s gone. I’m a bit confused by this hostility. I saw the German media, the Bild wrote this morning that this was the summit of tyranny or the villains, you know, of rogue nations. It’s just a very strange way of framing these massive historical developments taking place now in the present time.
MICHAEL HUDSON: It’s a class war against socialism, it’s a class war against labor, it’s a Thatcherite/Reaganomics demand for privatization.
Just in the last hour that we’ve been talking, Glenn, the US stock market is down. The Treasury bond prices are falling as long-term interest rates are rising. Gold prices have just gone over $3500 an ounce, 100 times their 1971 price.
You’re seeing the fact that what the West calls democracy is an oligarchy. What it’s attacking as autocracy is a society such as China that aims at raising living standards and preventing the kind of economic polarization between the financial class and the rest of the economy, the indebted economy at large that you’re having in the West.
The West for the last century has been following an anti-classical reaction, a fight against the whole ideals of classical economics and of a mixed economy, to essentially fight against government control. It’s a fight by the rentier interests, a fight by the banks backing the landlord class and the monopoly class against all of the reforms that you saw flowering in the 19th century before World War I. All this counter-revolution has now ended up tying the United States and Europe in a knot and blocking its development.
It’s the rest of the countries that are picking up the development and the trajectory that civilization was going in on the eve of World War I before this whole last century as a long detour of U.S. and European dominance under an increasingly unfair, polarized financial oligarchy. That’s the big picture in my view.
GLENN DIESEN: There’s a lot of depth to what’s happening now. I just wish it deserved some proper discourse in the West. I think it’s just depressing to me that the only way they can refer to what’s happening in China now is a summit of dictators who hate the West and hate freedom and democracy. It’s very intellectually bankrupt, but there we are. Anyway, Michael Hudson, thank you so much for your time, and I hope you can come back on soon.
MICHAEL HUDSON: I love these discussions. They’re the big picture. Thank you for having me.
The economic and financial war against allies and recreation of colonialism. Somebody else must pay! There is hardly any coverge in the US press of these issues.
[Note: Kindly pay attention, friends and colleagues. This needs to be widely distributed.]
Most discussion of the past week’s SCO and BRICS meetings understandably have focused on the rising strength of their multilateral alternative to America’s attempt to impose its unipolar world control under its own rules calling for other countries’ subordination to U.S. demands to concentrate all the gains from trade and international investment in its own hands. China, Russia and India have established their ability to create an alternative to this control.
But that has by no means diminished the basic U.S. ideal of control. It simply has led U.S. strategists to be realistic enough to narrow the scope of this control to focus on subjecting its own allies in Europe, Korea, Japan and Australia.
Trump’s over-reaching attempt to control India’s economy quickly drove that nation out of the orbit of U.S. diplomatic dominance. (There is still substantial neoliberal support for India to join in the Atlanticist dream.) The question now is whether such demands will have a similar effect on driving other allies out of this U.S. orbit.
And the subsidiary question is whether U.S. success in enforcing this control will have the effect of economically weakening its European, East Asian and English-speaking allies to the point where their ability to remain viable contributors is fatally crippled and will lead to a nationalist reaction to de-dollarize their own economies
The most obvious basket case is Europe, especially the most pro-U.S. members Germany, France and Britain whose public opinion polls show their populations strongly rejecting their current pro-U.S. puppet leaders.
The most immediate breaking point is the EU’s open-ended submission to U.S. demands considerably beyond what was expected in the abject surrender by EU policy head van der Lehen to Trump’s tariff threats. She had explained her surrender as being worth it for Europe because at least it provided an environment of certainty. But there can be no uncertainty where Trump’s diplomacy is concerned.
He has pulled a fast trick out of his hat by sharply raising tariffs above the promised 15% base, by dissolving that promise into his broader 50% tariff rates on imported steel and aluminum. These tariffs were to promote U.S. employment (and hence labor union support) in these two basic materials inputs despite raising costs for all U.S. manufacturers using these metals in their own products. That in itself was a crazy reversal of the basic principle of tariff policy: import low-priced raw materials to provide a cost subsidy for the high value-added products of industry. Trump put narrow political symbolism over national self-interest.
What nobody anticipated was that the Commerce Department would apply these 50% steel and aluminum tariffs to European and other foreign industrial imports of motors, tools and agricultural and construction equipment. The Wall Street Journal quotes the head of Germany’s Mechanical Engineering Industry Association (VDMA), Bertram Kawlath, as warning that machinery accounts for some 30% of Germany’s exports to the United States, creating so serious an “existential crisis” for its industrialists that European Parliament may not approve Trump’s July tariff dictates.
A company producing agricultural harvesting machinery, the Krone Group, laid off a hundred employees and is reported to be redirecting its exports already being shipped to the United States. The German affiliate of the John Deere has been similarly affected, as 20% of its exports are reported as being sold in the United States. The Germans are said to be insisting on the same 15% U.S. tariff limit that Trump extended to pharmaceuticals, semiconductors and lumber imports.
The effect has been to promote nationalist parties gaining support to replace the pro-U.S. Atlanticist parties committed to participating in America’s war against Russia and China, and even picking up the costs of fighting in Ukraine, the Baltic Sea and other areas bordering on Russia as well as extending “Atlantic” protection to mischief making in the China Sea.
U.S. foreign policy has also imposed strains on Korea and Japan. Having demanded that Korea’s automobile company Hyundai shift production to the United States by investing in a $30 billion factory in Georgia, the immigration service descended on the plant under construction and deported some 475 employes (of whom 300 were reported to be Korean) who had been hired to provide the specialized labor.
Hyundai explained that the workers were highly trained and under the direction of contractors that the company had used in Korea in order to complete the construction speedily and indeed to avoid the problem of having to deal with the lack of vocational education in the United States to supply such labor – not to mention the price differential from using Korean labor familiar with work on such projects. An official at the Korea International Trade Association accused U.S. policy of imposing an “impossible position” by sending such labor back to Korea by denying it the kind of working-visa arrangement that was granted to Australia. For many years Korea had sought to get equal treatment with such white immigrants and with Singapore, but was consistently turned down, although the immigration was permitted informally – until September 5, in what turned out to be a long-planned attack by armed ICE troops arresting the immigrants in other manacles.
Hyundai and other foreign firms have discovered that investments they make in the United States provides America First administrations to use them as hostages, setting and changing the terms of their investment at will, knowing that the foreign investors are hardly prepared to simply walk away and lose their costly investments.
But countries are being browbeat to make such investments as part of the financial shakedown policy that Trump has adopted: To avoid having U.S. tariffs raised against Korea’s automotive imports from 15% to 25%, Korea had to spend tens of billions of dollars to shift production to the United States. The threat was to crash Korean export income (and hence employment and earnings) if it did not surrender to Trump’s terms – with no military conflict being necessary to impose this trade-peace treaty.
Trump used a similar bait-and-switch shakedown policy against Japan, threatening to create commercial chaos in its economy by imposing steep tariffs on its trade with the United States if it did not pay $550 billion in protection money for Trump to invest in projects of his own choice, keeping 90% of the profits for himself after Japan was reimbursed for its capital advance. The Japanese version of the original agreement indicated that the profits would be split 50/50, but the U.S. drafted a final version saying that that split would only govern the initial reimbursement of investment by Japan, not the profits.
Such was Japan’s desperation – and abject surrender to U.S. demands, German-style – that it accepted Trump’s tariff deal of “only” charging Japanese esports 15% instead of 25% – the same deal that he had made with Korea. Japan was given only 45 days to pay up. The resulting slush fund was a political godsend to Trump, who is now able to use it as bait for his leading campaign contributors and supporters, while using the more than half a trillion dollars to help finance his budget’s tax giveaway to the wealthiest Americans.
Trump also demanded a kickback on Japanese investment in U.S. steel production by Nippon Steel’s $15 billion purchase of U.S. Steel. The U.S. Government received a free golden share of the company’s stock to ensure U.S. control over the company’s operations
In the wake of the recent SCO and BRICS meetings, it seems u unlikely that countries not already closely allied with U.S. control would make any such deals as Germany, Korea and Japan have done so far in 2025. These deals serve as object lessons highlighting the contrast between the U.S.-allied West and the rest of the world.
Alaister Crooke on Monday, September 8, described how “The default psychological mode of the West will be defensively antagonistic. … To acknowledge China, Russia or India as having ‘detached’ from the ‘Rules-based Order’ and constructed a separated non-western sphere clearly implies accepting the end of western global hegemony. And it means accepting too, that the hegemonic era as a whole is over. The U.S. and European ruling strata are categorically not in the mood for this.”
It obviously is not over for America’s relationship with its NATO and other new Cold War allies. But it is limited to them, and Trump is seeking to extend the U.S. sphere of control to the Western Hemisphere as a whole – not only Latin America and Canada, but Greenland as well. The effort needed to lock in their dependency and withstand what one would expect to be nationalistic reactions against such subservience seems to have led U.S. policy to turn away from the conflict with its declared enemies Russia, China and Iran at least for the time being.
The great question is whether these abused allies will at some point seek to choose a different set of alliances.
Eurasia’s Re-alignment in the face of Late Stage Barbarism
The Shanghai Cooperation Organization’s meetings in China last week (September 2 and 3) took a remarkable step forward in defining how the world will be dividing into two great blocks as Global Majority countries seek to free their economies not only from Donald Trump’s tariff chaos, but from the U.S.-sponsored increasingly Hot War attempts to impose unipolar control on the entire world’s economy by isolating countries seeking to resist this control with trade and monetary chaos as well as direct military confrontation.
The SCO meetings became a pragmatic forum to define the basic principles that are to replace other countries’ trade, monetary and military independence from U.S. with mutual trade and investment among themselves, increasingly isolated from reliance on U.S. markets for their exports, U.S. credit for their domestic economies, and U.S. dollars for trade and investment transactions among themselves.
The principles announced by China’s President Xi, Russian President Putin and other SCO members set the stage for spelling out in detail the principle of a new international economic order along the lines that were promised 80 years ago at the end of World War II but have been twisted beyond all recognition into what Asian and other Global Majority countries hope will have been just a long detour in history away from the basic rules of civilization and its international diplomacy, trade and finance.
It really should not be surprising that not a word of these principles or their motivation has appeared in the mainstream Western press. The New York Times depicted the meetings in China as a plan of aggression against the United States, not as a response to U.S. acts. President Donald Trump summarized this attitude most succinctly in a Truth Social post: “President Xi, Please give my warmest regards to Vladimir Putin, and Kim Jong Un, as you conspire against The United States of America.”
U.S. press coverage of the SCO meetings in China presents a foreshortened perspective that reminds me of the famous Hokusai etching of a close-up tree in the foreground completely overshadowing the distant city in the background. Whatever the international topic is, it’s all about the United States. The basic model is a foreign government’s adversity toward the United States, with no mention of such policies being a defensive response against U.S. belligerence toward the foreigner.
The press treatment of the SCO meetings and its geopolitical discussions has a remarkable similarity with its treatment of NATO’s war against Russia in Ukraine. Both events are seen as if they are all about the United States (and its allies), not about China, Russia, India, Central Asian and other countries acting to promote their own attempts to create orderly and mutually beneficial trade and investment. Just as the war in Ukraine is depicted as a Russian invasion (with no mention of its defense against NATO’s attack on Russia’s own security), the SCO meetings in Tianjin and Beijing meetings were depicted as confrontational scheming against the West, as if the meetings were about the United States and Europe.
On September 3 the German Chancellor, Friedrich Merz, called Putin perhaps the most serious war criminal of our time, as it was Russia that attacked innocent Ukraine, not vice versa from the 2015 coup onward. As Putin commented on Merz’s accusation: “we do not assume that any new dominant states should appear. Everyone should be on an equal footing.”
The military parade in Beijing that followed the meetings was a reminder to the world that the international agreements that created the United Nations and other organizations at the end of World War II were supposed to end fascism and introduce a fair and equitable world order based on the United Nations’ principles. To depict this frame of the meetings as a threat to the West is to deny that it is the West itself that has abandoned and indeed reversed the seemingly multilateral principles promised in 1944-1945.
The U.S. and European treatment of the SCO meetings as shaped entirely by antipathy toward the West is not merely an expression of Western narcissism. It was a deliberately censorial policy of not discussing the ways in which an alternative to U.S.-sponsored neoliberal economic order are being developed. NATO head Mark Rutte made it clear that there was to be no thought that there even was such a thing as a policy by countries to create an alternative and more productive economic order when he complained that Putin was getting too much attention. That meant not to discuss what really has happened in the last few days in China – and how it is a landmark in introducing a new economic order, but not one that includes the West.
President Putin explained in a press conference that confrontation was not at all the focus. The speeches and press conferences spelled out the details of what was necessary to consolidating relations among themselves. Specifically, how will Asia and the Global South simply go their own way, with minimum contact and exposure to the West’s economic and military aggressive behavior.
The only military confrontation that is threatened is by NATO, from Ukraine to the Baltic Sea, Syria, Gaza, the China Sea, Venezuela and North Africa. But the real threat is the West’s neoliberal financialization and privatization, Thatcherism and Reaganomics. The SCO and BRICS (as are now being discussed in follow-up meetings) want to avoid the falling living standards and economies as the West deindustrializes. They want rising living standards and productivity. This attempt to create an alternative, more productive plan of economic development is what isn’t being discussed in the West.
This great split is best epitomized by the Power of Siberia 2 pipeline. This gas was planned to go to Europe, feeding into Nordstream 1. That has all ended. Siberian gas will now go to Mongolia and China. It powered European industry in the past; now it will do the same for China and Mongolia, leaving Europe to depend on U.S. LNG exports and declining North Sea supplies at much higher prices.
Some geopolitical upshots of the SCO meetings
The contrast between the successful consolidation of SCO/BRICS trade, investment and payments arrangements and the U.S. destabilization makes it difficult for countries to try and join both the US/NATO bloc and the BRICS/Global South countries. The pressure is especially strong on Turkey, the Emirates and Saudi Arabia. They are observers of BRICS, and the Arab countries are especially financially exposed to the dollar and also host U.S. military bases. (India has blocked Azerbaijan from joining.)
Two dynamics are at work.
On the one hand, the BRICS and Global Majority are trying to defend themselves against US/NATO economic aggression, and to de-dollarize their economies so as to minimize trade dependence on the U.S. market. That saves them from the U.S. weaponizing its foreign trade and monetary system from blocking their access to supply chains that have been put in place, and thereby disrupting their economies.
The other dynamic is that the U.S. economy is becoming less attractive as it polarizes, shrinks and de-dollarizes as a result of its financialization and rising debt overhead. It is becoming inflationary, subject to a debt-leveraged financial bubble that is at increasing risk of sudden collapse.
This basic moral contrast catalyzes the contrast of economic systems and policy between oligarchic privatized and financialized markets (neoliberalism) and industrial socialist economies. This socialism is the logical extension of the dynamic of early industrial capitalism, seeking to rationalize production and minimize waste and unnecessary costs imposed by rent-seeking classes demanding income without playing a productive role – landlords, monopolists and the financial sector.
The great problem, of course, is that the Americans want to blow up the world if they can’t control it and dominate all other countries. Alistair Crooke recently warned that the Evangelical Christian movement sees this as an opportunity for a conflagration that will see Jesus return and convert the world to Christian jihadism. The term “late stage barbarism” is now being used throughout much of the internet for the ethnic supremacy fanaticism ranging from Wahabi jihadists and al Qaeda breakoffs through Gaza and the West Bank to the Ukrainian neo-Nazi revival (with its echoes in Germany’s hatred of Russia) not seen since the Nazism of the 1930s and ‘40s, denying that their opponents are fellow human beings. As an alternative to the SCO, BRICS, and Global Majority, this defines the depth of the split in today’s geopolitical alignment.
I”m sure that client oligarchies throughout BRICS will try to hold on to as many of their privileges (that is, economic rents) as possible.
That is why the key ultimately will be tax policy.
All that member countries can do at the beginning is insulate their monetary and balance-of-payments relations with each other, along with mutual investment. (Already I see China apparently driving a hard deal with Russian oil.)
So the real “new civilization” is a way’s off. But US and its European satellite policy is a great catalyst for speeding up the discussion.
What is the whole idea of SCO, BRICS and Global South and what was discussed?
Michael: How to become independent of the West .. how do we NOT get involved in their business. “We don’t want to fight with you, we want to get rid of you!”.
The US, the West is in Late Stage Barbarism.
NIMA ALKHORSHID: Hi, everybody. Today is Thursday, August 21, 2025, and our friends Richard Wolff and Michael Hudson are back with us. Welcome back.
RICHARD WOLFF: Glad to be here.
NIMA ALKHORSHID: Michael, I want to start with you. You believe that the outcome of those two meetings between the United States and Russia, then Europeans coming to the United States together with Zelensky, somehow shows that Trump is pushing NATO into new proxy wars after Ukraine collapsed. What’s your logic? What’s your understanding of that?
MICHAEL HUDSON: Well, part of the logic is the fact that everybody seemed so harmonious when the meetings in Washington ended. And the mainstream media said, look how Europe has capitulated to the United States. Trump said, I want peace in Ukraine and peace with Russia. And, basically, Trump’s position is to forget Ukraine. The war in Ukraine is over. We know what’s going to happen. Russia is going to take over. There’s nothing that Zelensky or that the European countries can do by giving arms that is going to prevent Russia’s victory. So let’s forget that.
Of course, we will support Zelensky in trying to have his troops. He’s called up apparently the Azov Battalion themselves to actually go to the front and fight and be decimated. Let him fight and bother Russia and Ukraine as much as possible. But let’s talk about what we really want. We really still hate Russia. I hate Russia as much as you do, Trump said, but we’re not going to beat Russia in Ukraine. So let’s talk about where we can beat Russia.
Well, we can begin to trouble it, we’ve already shown, we can trouble it in the Baltic. We can sabotage its tankers. We can block Russia’s Baltic tanker trade. We can bother Russia in Azerbaijan and Armenia. We can build that road to not only threaten Russia, as Azerbaijan is already pretty much broken with Russia, but we can threaten Iran also, the whole Russian-Iranian mutual support. We can threaten Russia in Syria by backing Netanyahu’s takeover of and alliance with the al-Qaeda al-Nusra Wahhabi terrorists there to prepare to attack Russia and Iran, Russia from the south, so we can beat Russia in Syria. We can look all over the world where we can destabilize not only Russia, but also the BRICS.
And that’s where we have a chance to really build up and open new fronts against Russia, make it fight on a number of fronts. And I think the Europeans said, oh, are we relieved? We thought you wanted peace. And I think Trump said, look, forget it. The reason that I’m making such a big stink about wanting the peace prize and calling the former head of NATO, who’s now Norway’s finance minister, and saying, Do you think I can get the peace prize?
He wants to make it appear as if he’s a man of peace when actually he’s worked with the deep state to plan a whole war, not only against Russia and Iran, but against the BRICS as well. There’s talk now of him planning an attack on Venezuela, sending in the special forces to kidnap or kill Maduro. He said, well, you know, just in case there’s a chance of winning the peace prize, what do you have to do to win it? You have to be like Kissinger. Kissinger sent in attackers to murder Allende and put in the fascist Pinochet government.
Well, Trump’s going to send in attackers to kidnap or murder Maduro and put in a U.S. proxy right-wing government and spread that throughout Latin America. You’re already having the Bolivia elections moving to the right. I think Trump has planned to follow the neocons in the CIA and the National Security Agency and the military right down the line. But he wants to sort of prevent the rest of the world from realizing that we’ve really got to organize and this is really going to be a war. He’s trying to deaden their realization as to what he’s really trying to do.
And everything that he’s done is the opposite of anyone who wants peace. It’s trying to prepare as strong a case for what he looks at as the final battle. And by the final battle, I think he’s bought the neocon argument that, well, we are losing the empire. We are losing our influence. And given that, if our influence is going to wane, then the sooner we go to war, the less costly it will be. Because the longer we wait to go to war, the longer we have peace, the more China, Russia, Iran, the BRICS, the global majority is going to gain power.
So what Trump was able to convince the Europeans of was: okay, we’re not going to give up Ukraine. Of course, we’re going to try to stabilize our control. We’re going to insist on, well, we have to support Ukraine’s security. Well, what does security mean for the United States? It means the ability to totally control a puppet government.
If you don’t control a puppet government, you feel insecure. If you don’t have the power to destroy it, you feel insecure, just like Netanyahu feels insecure if he can’t exterminate the Palestinians. To America and Zelensky, Russian-speaking Ukraine is Ukraine’s Gaza. It’s exactly the same feeling of hatred that he’s tried to spur there. And you could say that he has this same antagonism; it’s almost a religious fight of supporting American values and autocracy, the ability to control the rest of the world.
This is the last time there’s any chance of doing it. And if we don’t fight now, we’re certainly going to lose a fight if we fight labor. So I think that Russia immediately understood this two days ago when it bombed Odessa’s oil export, oil refineries and export facilities. These were the export facilities owned by Azerbaijan to export Azerbaijani oil to the rest of the world. I think this accounted for maybe 25% of Azerbaijan’s foreign trade. So Russia immediately saw this and the fact that it is now focusing on fighting against Azerbaijan.
I don’t know what it’s going to do in Syria. I think that the Russians and the Americans understand what’s happening. I don’t see any discussion in the media. And even some of your guests are optimistic that maybe Putin really does want to go down in history as the Prince of Peace instead of the War Devil.
NIMA ALKHORSHID: Richard, coming to you, here is what Scott Bessent said about the case of Ukraine.
[clip starts]
Scott Bessent said, “Trump is very vigilant. Right now, we are selling arms to the Europeans, who are then selling them on to the Ukrainians. And President Trump’s taking a 10% markup on the arms. So maybe that 10% will cover the cost of the air cover.”
[clip ends]
NIMA ALKHORSHID: Yeah. I was wondering, what is your take on the two meetings? The first with Russia, then in the United States with Europeans coming, it’s somehow amazing. I don’t know if you saw the pictures that we had from Washington. Here is Donald Trump. Compare this to, I don’t know if you remember, Richard, those pictures from 2016 or 2017, where Donald Trump was sitting at a table and everybody was above him and trying to, you know, somehow attack him or talk to him.
And then this picture is totally different. It shows how European leaders are somehow so desperate in their sort of manner toward the U.S. president. What’s going on? What’s your take on what has happened, Richard?
RICHARD WOLFF: Well, it’s interesting. I come at it a little bit differently from Michael, but I suspect that if we have the time, we can figure out how the two points of view might, in fact, be consistent with each other. So let me respond. I begin with Scott Bessent. And all I can say is I’m sure his mother is very taken with him, but for the rest of us, not so much. I mean, that is embarrassing.
Almost every time he speaks, it is embarrassing. I have no idea half the time where he’s coming from. His fealty to Mr. Trump ranges from disgusting to pathetic, but beyond that, I wouldn’t know what to say. To look at the arrangement between the United States and Europe and to focus the attention on the 10% markup in the movement of the weapons, I mean, that is looking at an enormous tableau, and you’re at one infinitesimally unimportant dimension, and that’s what you’re going to talk about. It really, you have to take a step back.
And you’re right, Nima, you’re right to look at the different pictures of the Europeans relative to Mr. Trump then and now, because that’s Mr. Bessent, too. What’s important here is the subordination of Europe. This is the end of Europe’s maybe 500 years since the Renaissance, where Europe could be the center of the world through its colonial takeover of the rest of the world, through its early development of capitalism, through its early period of industrialization. When it could be said, it was in the lead in some sense. And perhaps it wasn’t the only part of the world then. I don’t know much about what was going on in China that many centuries ago, et cetera.
But for much of the world, this was the power, the center, the wealth. And now look at it. It’s like a group of children from the kindergarten being taken by their teacher to the big man’s building, the White House, where they are gathered in the chairs to orate or to listen to the blather that comes out of Mr. Trump. I mean, I know what they secretly think of him because they have said that in many interviews in their own country.
I follow some of those in France and Germany. I know what leaders, including those sitting there, have said about him. And there they are like puppies. For me, historically, that is the most important. And I know we may not have time today to talk about it, but if you look at the trade agreement that has been reached between Mr. Trump and von der Leyen and the Europeans, the Americans have imposed basically a 15% across-the-board tariff that all Europeans will have to basically submit to. And in exchange, the Europeans took away whatever tariffs they had so that the United States has virtually carte blanche.
By the way, that’s not enough to accomplish very much. But in terms of economics, and certainly in the short run, it is enough to show that the colonial country has become the colony and the colony has become the colonizer. Britain and Europe are now minor players in a game orchestrated by Mr. Trump and the United States. And the irony of it all is that the United States is doing this, as Michael correctly says, because the empire is going down.
They don’t want to spend the money. They want to take advantage of those they control to impose the costs of a declining empire on them so that they have to commit to investing in the United States. They have to commit to buying liquid natural gas and other energy products from the United States. They have to open up their fishing and agriculture to American products, which is an important business, and so on.
And so it’s wonderful. You have to do all these things because we’re running short of money. And the irony is that Mr. Bessent knows that. He kind of gets that. And for someone like him, this is an achievement. And the way you see it is he focuses on the 10% markup…what? You know, only a person who’s doing the nickel-and-dime counting…
I find it in the history of Europe, the humiliation. And I believe, and I know my belief is partly based on hope. I understand that. But of course, let me remind everyone, that’s true of everybody else also. I’m just admitting it. My hope is that the European people will be disgusted by what they’re watching and that you will see inside the European countries on the left and on the right a desire not to be dragged into this subordination.
Let me remind everyone, including the Europeans, if the United States can do what it is now doing, why do you imagine that the next president will not do more of this? Because you’re telling the Americans, here’s a way to ease your problems. Put them on us. How are the Europeans going to sustain their social welfare program? Western Europe’s welfare for its people is way ahead of what the United States does. They were able to afford that because they had no military outlays. The United States took care of that.
It was a wonderful arrangement to give a military Keynesian boost to the United States, which needed it, since we never got out of the depression. World War II got us out, and the warfare budget has sustained us ever since. So we took care of that for Europe so they could use the money they would have had to spend on military to give their people health care, free education, and all the other benefits that they get and that Americans don’t know about because it would be very difficult to get away with not giving it to Americans if they did.
Okay, now what’s going to happen in Europe now if they’re not getting these benefits, if they have to pay all kinds of costs, if they have all kinds of adjustments to make, they’re going to cut their welfare. So they’re already busy doing it. They’re going to keep cutting their welfare.
Well, here are two things. In Germany, as Michael, I believe, pointed out last week, the polling shows that the Alternative für Deutschland now gets a bigger polling result than the Christian Democratic Party, which used to be the dominant party in Germany, sometimes in partnership with the Social Democrats. But nowadays, the Social Democrats have largely collapsed. So the Alternative, that’s the right wing saying, we don’t want to be in this position. In France, it’s the left wing. The right wing is there and has importance, but the left-wing is where the action is.
The left wing is the largest faction in the parliament, and they have just declared, and I’m following this real closely: the bloc en tout – let’s blockade everything is the slogan in english. And on September 10th, they are going into the streets of Paris, Lyon, Marseille, Nice, all the major parts of France to shut the country down. And boy, they’ve shown with their yellow jackets, they’ve shown with their history going back to the French Revolution: don’t push these people too far because they have in them a gene that seems lacking in the rest of us of mobilizing their people.
I would add, therefore, it is an empire going down and it is taking extraordinary steps. If we want to give Mr. Trump credit for recognizing that the war in Ukraine was a vast amount of money was wasted over three years, okay. But meanwhile, what the other things they’re doing, whether they’re neocons or not, these are minor. This is not going to work.
Fooling around with Azerbaijan, you got to be kidding. What are you going to accomplish by murdering Mr. Maduro? I mean, really, these are the desperate acts of a declining empire, and they will be seen that way. Look, I suspect, just my own vision from it, that much of the Azerbaijan noise, and Michael’s right about looking at it, or in Syria or in Venezuela, or if they renew the Taiwan noise once the Ukraine thing is put to sleep, these are indeed typical Washingtonian punches. But to me, they look like a desperate effort to maintain the theater of American imperialism once the reality is no longer available.
Their problem, which they know, is China and the BRICS. And those places are growing way faster than the United States is. They grew faster throughout the Ukraine war. I want to remind people: China’s economic growth per year is in the 5% range, American growth per year: half that, if that. And India’s is even faster. Russia grew faster during the war than it had been growing before, and grew faster than any European country, including the United States. You’re losing. You’re losing left, right, and center.
And much of these efforts, indeed, I would argue the Ukraine war itself is a demonstration they can’t do it. And I think that’s a crisis for Europe that we’re not appreciating. All those people sitting around the desk that you just showed us of Mr. Trump in the Oval Office. These are the leaders who were born into – grew their entire careers as the American ally, as the allies of the United States, the subordinate allies, the ones who had been defeated in World War II, emerged from it ruined if they were on the winning side, ruined if they were on the losing side. The United States is dominant, and they’re going to rebuild Europe, as it’s all over for them.
They are desperate people, desperate in terms of their own careers, desperate in terms of their own worldview. They picked the wrong horse and it’s too late to get off. So they’re going to ride him as long as he’s still standing. They will continue the war in Ukraine forever if they have to look at them. That’s how they talk. They see no defeat. They see Russia keeps moving X kilometers to the West. They don’t see it. It is an extraordinary display of weakness. And the theater around it shouldn’t obscure that.
NIMA ALKHORSHID: Go ahead, Michael.
MICHAEL HUDSON: Richard, we always end up in agreement. I think that the European response has gone beyond disgust. They are now afraid. There is a wonderful editorial in today’s Financial Times, an op-ed by Professor Schock, saying that the new arena, the most important arena between the United States and Europe is, and really the rest of the world, has to do with artificial intelligence.
She says that America’s policy, especially under Trump, has been to weaponize any form of trade into a form of threatening to make your trading partner dependent on you. And in the past, America has been doing precisely this with oil and with grain exports, willing to turn off the taps and turn off the food and to start to isolate, to put sanctions on and isolate other nations and starve them out or cut off their energy if they don’t obey. Schock says that the new weaponization of American foreign trade, specifically against Europe, because that’s what she’s writing for the Financial Times, is artificial intelligence.
She says that one of the focal points of this agreement that America has been pressuring Europe to sign is that they do not follow through on their plans to regulate artificial intelligence, the computerized internet, the cloud, and all of these things. They leave, they remain dependent on the United States for the algorithms, the way that the whole artificial intelligence system is programmed in such a way as to lock in users. And it locks in users by the fact that as the system spreads and becomes more widely used, the cost of creating an alternative system is larger and larger and larger.
And that if Europe does not prevent the American domination of AI now and tries to assert its own ability in AI, in chip making, and basically in the way in which the artificial intelligence system is structured, the logic system of it – I’m not a computer specialist, so I can’t get into the details – but she gets into the details and says that essentially the U.S. can impose a garbage in, garbage out system on the rest of the world.
She doesn’t call it that. She calls it just building in the algorithm in a way that reflects American values and policy. And in the process, she says, Trump is turning America into an autocracy, not a democracy. And its mode of control of Europe is in the new growth industry, replacing oil, replacing food. Now that other countries have alternative sources of oil and are producing their own food, the one thing that is up for grabs is artificial intelligence. And I think it’s the magic seven AI stocks that have been accounting for 80% of the value of the increase in stock exchange prices in the United States. This economic arena is very important.
Also, you make the important point: what about where the opposition is in Europe? Well, let’s imagine, going back to Monday’s meeting, if Trump really had wanted to show up Europe, imagine if he had said, well, I know that many of you leaders now are carryovers from past elections, but you got to realize in the next election, we’re going to have the Alternative für Deutschland replace Merz. We’re going to have the French left replace Macron. And in England, one would expect Starmer and the collapsing Labour Party will be replaced either by Corbyn on the left or an alliance between Corbyn and the nationalist party, the Brexit leader over there.
He would have had them and say, let’s all get in the same room and see what they have. And you’d have these other groups all saying, well, we’re against the war with Russia. We’re against the war in Ukraine. But Trump didn’t do that. And that’s because they would also have been against his requirement to say, yes, I’ll go along with you. We’ll expand the Cold War. We’ll fight Russia. But you have to follow our leadership in this economic growth industry, the artificial intelligence.
And it’s a wonderful editorial on all of this saying that by weaponizing technology, by weaponizing any area of foreign trade in which the United States can establish dependency on other countries, that indicates a policy of preventing other countries from creating an alternative. And that’s what America’s definition of security is. Security is preventing other countries from having an alternative. Then they can feel secure.
So that’s what they mean by security for Ukraine. There’s no alternative to American control of a puppet government. So you have to have a puppet government. But that military idea of security is exactly the same economically. You can’t have any independent technology capable of becoming a rival.
Well, what doesn’t this include? This may or may not work for Europe, but it certainly isn’t going to work for China, which is already forging ahead in artificial intelligence and computerization and chipmaking and the whole sphere of technological breakthroughs, including rare-earth magnets and all of the high technology, including hypersonic missile development. America is behind in all of this. And its question is: what part of the world do we have the power to prevent that part of the world from having an alternative? It’s trying to lock in Europe. Europe today, tomorrow, BRICS. And that means the world.
So through all of this, I think America has told Europe, don’t worry, we’ll do it together, but together under American hegemony. And that ‘together’ will be turned against somehow through trying to establish a critical mass of artificial intelligence. Through a way of programming that will try to pry away other countries, global south countries, other BRICS countries, from China. And by having their own independent AI system that presumably Europe would ultimately have to adopt. If China and its neighboring Asian countries can create their own artificial intelligence system and prevent backdoors from being imposed, then the United States will end up completely isolated. And isolated means without its export markets to create its balance of payments and to posit its trade balance by the technology services.
And you can already see this in the fight over Intel and the fight to prevent blocking out NVIDIA from exporting more to China. America says you can export all you want. We want a backdoor location controller so at a certain flick of the switch, we can disable every NVIDIA switch in China, paralyze their machines, and turn off all of their computers if they use your chips. So China has just moved to block NVIDIA’s export of chips until it can secure itself to make sure that there’s no back door.
But how do you do this? It takes so long to go through the millions of commands that are built into the chip that how do you know they haven’t put in this geolocator and the on-off switch that can enable them to paralyze China very much like Germany sabotaged the Iranian refiners, the centrifuges, and blew them all up by putting in a secret control there. That’s what America wants to do with AI for the rest of the world.
And it’s become so apparent that it’s insisted on this. It has insisted on doing this for Britain and for continental Europe as well. This is the most immediate arena of the parallel fight to the military rivalry and fight that’s going on.
RICHARD WOLFF: Yeah, you could see that already earlier. Remember, arresting the daughter of the Chinese gentleman, CEO of Huawei Corporation, when she was in Canada, and forcing the Canadians to arrest her. And I mean, hysterical anxiety about what you just said: that the Chinese had the capacity already then, and that’s many years ago now, already then to do this kind of warfare. I don’t want to beat the dead horse but I want to make it clear: the scariest part of what Michael has outlined for us is the part that says that this is the strategy of the United States. But then the really crucial part is: that strategy is being frustrated by an equivalent opposite strategy in China and the BRICS.
Okay, that means that the United States confronts a situation where it either has to act militarily now or risk losing this contest. And if it loses it, well, then the game is over and the military won’t solve your problem. But they might try it. And you know, the irony there is that then gives the American left its opening.
Here’s what happens: the American left becomes a movement. It’s, of course, not there yet, to say the least, but it becomes a movement that says the best thing for the United States is not a confrontation with China, which costs us too much in the way of lost quality of life in this country, given the risk that we’re going to lose, that China is just too much bigger. And with the BRICS, it’s ridiculous how much bigger they are. And that bigness is in the end going to overwhelm us. Therefore, stop it now.
Change the policy, work out a live and let live deal with China as the alternative to the confrontation. It’s a little bit like saying, and if we go in that direction, we will be saying: you had a chance in April of the year 2022 when you sat down in, if I remember correctly, Istanbul, and you worked out most of a deal that would have ended the Ukraine war weeks after it began, you would have had a better deal for Ukraine, much better than what you’re going to get now. You lost it. You’re now embarking.
This becomes the mantra. You’re embarking on the same losing proposition in your struggle with China. Only it’ll be longer and more costly and with greater risk than was involved. Learn from Ukraine. Don’t do it again. Right now in the United States, that position would get an enormous number of people supporting it, left, right, and center.
MICHAEL HUDSON: That’s why they’re trying to make sure that elections can still be financed. I want to add one thing. What really gives Asia and China the advantage, a total winning advantage over the West in AI? It’s open source. Everything China is doing and AI is open source. That makes it impossible to put back doors in. It makes it impossible to sabotage chips. America cannot win in a fair competition.
It can only win by sabotage, bribery, assassination, and by playing dirty. But in a fair play with everything’s open, sort of the equivalent of free trade, it cannot win. That’s the dilemma that Trump and the neocons have in common. And I think you should look at Trump, really as the neocon leader for all of this, because he’s willing to do explicitly what other neocons never thought they could possibly get away with.
And Trump is able to play the Christian card, saying God is telling him to do all of this, and he’s found religion, and he talks about what he has to do to go to heaven. I don’t think any of the neocons who were not that kind of Christian ever would have conceived that being a winning ploy to produce MAGA behind them. But the purpose of all of this flimflam is to prevent open source, prevent free trade, and prevent other countries from making a choice.
That’s what national security is: preventing other countries from making a choice other than to subordinate themselves to the United States and to sacrifice their own growth to pay their foreign debts to the United States, to rely on the United States for its military support for locking in their military arms systems, their Air Force, their ships, American airplanes, ships, and guns requiring replacement parts and continual fix-ups by the United States. Without replacement parts, it’s as if the United States militarily has the ability to flip a switch and just turn off the ability for foreign supersonic airplanes, fighters, ships, and submarines to operate. You could apply this system of “how do we turn off and disable other countries” right across the board.
So while the global majority thinks, how can we provide means of technology raising living standards for the rest of the world? America says, how can we sabotage this effect? That’s all that they can do to delay the decline of the American demand for control. They can’t prevent it in the end. They can delay it, and that’s all they’re playing for. It’s a short-run game, but it’s the short-run game that is the center of politics and financial markets.
NIMA ALKHORSHID: Richard, before coming to you, here is what Scott Bessent said in terms of what the nature of the economic ties between Russia and China and India is – how dependent they have become during the war in Ukraine.
[clip starts]
Scott Bessent said, “China importing it is suboptimal. But if you go back and look pre-22, pre-invasion, 13% of China’s oil was already coming from Russia. Now it’s 16%. So China has a diversified input of their oil. If you go back and look now, I believe India had less than 1% of their oil, 1%, and now I believe it’s up to 42%. So India is just profiteering. They are just profiteering. They are reselling. They made 16 billion in excess profits, some of the richest families in India.”
[clip ends]
NIMA ALKHORSHID: So yeah, they’re reselling to whom? To Europeans. Two days ago, Richard, there was a meeting in which the foreign minister of China went to India to talk with Modi, and Modi posted on his X account. He said that the situation between the ties between India and China are improving like never before. I think Donald Trump is doing everything to unify. He’s just achieving something that nobody could have ever achieved in terms of what’s going on in BRICS.
RICHARD WOLFF: Well, for me, what I see is the relentless march of the decline of the American Empire. It is in the interest of India to get discounted oil because the Russians give them a very good price. They’re just doing business. The Russians can’t sell oil and gas in Europe. That was a European decision and an American decision. Close the market, bring Russia to its knees by depriving it of its export markets.
The Russians turned to the Indians, with whom they had long trading relations and military relations anyway, and gave them a price they couldn’t believe. And of course, the Indians… What is it you want? India isn’t in Europe. India is not interested in the fight between East and West over Ukraine. India is interested in developing its economy, which is the number one demand upon the government by its people. And getting cheap energy from Russia is a way to do it.
I remember listening to the very able foreign minister from India now, who’s very, very good, looking incredulous at the newsmen asking him: why is India buying oil from Russia? He said, you know the answer. Why did Germany buy oil from Russia? Why did Europe buy oil? What are you asking us? You want us to take sides in a war we had nothing to do with? Well, we’re not required to take sides in a war we had nothing to do with. You don’t take sides in your country in wars, you have nothing to do with. So, what is there? There are no answers to these questions.
And there are no answers because of what’s going on. And I think that’s why China and India are discovering that they have lots of interests in common. They always did, right? India was a colonial property. China never was, but was almost. And so, they have a great deal in common. Britain has been a problem for both of them. They all know that, et cetera, et cetera, et cetera. And they all know that they would be better off if they were less dependent on the West and more dependent on others, like one another. I mean, of course, they should expand exports and imports between them.
They are the two biggest countries on this planet. They are desirable markets for each other. They ought to be developing their countries in a coordinated way because it will be a faster growth for both of them rather than being oriented to the West, which intrudes its interests on their exchanges. By the way, they know that. They talk about it, they’re aware of it. Economists I know at the university in New Delhi, they have debates about this.
By the way, they have radical economists in a way that American universities don’t tolerate. So, they actually could get a diversity of points of view. Americans celebrate it, but don’t have it. They don’t make such a big deal of it because they have it. And so, they are able to build on diverse perspectives, many of which agree, left, right, and center, that, of course, their relationship to China has to develop. And the cheap energy from Russia makes that easier, makes it quicker, gives them a boost because they become an important manufacturing country.
I mean, India is not where China is and won’t be for a while, but it is becoming important, so it needs energy. It’s a developing country. It needs a lot of energy. Russia is in a position to provide. The idea that India, to satisfy Britain and the West, would sacrifice its own growth development is preposterous. That it should even occur to a journalist just shows you how lost those journalists are in their country of origin and the mentality of the colonial mind. It is pathetic.
Of course, Mr. Bessent, you know, he can’t spell colony, so he won’t bring that to bear in his thinking. He will look at numbers like, gee, India is making a lot of money. Notice him again. He was fascinated with the 10% markup on weapons. Now he’s fascinated by the fact that discounted oil from Russia is making families in India rich. Of course it is. But again, that is the least important dimension. But for Mr. Bessent, it’s what he wants to talk about in the 30 seconds he has on national television. You’re talking here about a true mental midget.
MICHAEL HUDSON: I want to add the balance of payments dimension to this Indian-Russian trade. You pointed out that the families are getting rich because Russian oil is less expensive to India than foreign oil. But the most important feature of this is that the payments are denominated in their own currencies. Well, the result is that Russia’s accumulated a very large volume of Indian currencies and probably more than it needs, but it’s still willing to do this to establish the principle of trading in their own currencies instead of in the dollars.
Well, that’s spread throughout the whole world. You’ve had China especially leading all of this, and one result is that as a result of China’s holding foreign currencies that it receives in payment for its exports, its dollar holdings have fallen to the lowest level in 20 years to about $750 billion. So it’s lowering dollars. Now, just imagine what would happen if America really does attack Venezuela. That is a sign that this is the first step: today Venezuela, tomorrow the BRICS. You can imagine the BRICS countries accelerating their flight out of the dollar.
They said, well, how did America start this whole war with Venezuela? It confiscated Venezuela’s whole investments in the United States held by the government, by the oil company, in the oil distribution that it had here. And it told its puppet Britain, the Bank of England, to confiscate China’s gold and give it to Mr. Guiadó, whom America designated as the president. Well, for the rest of the BRICS, this is in the forefront of their memory. They say, okay, we know the buildup of the escalation procedure. And if they’ve already gone military in Venezuela, we can expect them to begin financially eating away at us.
You’re going to have an acceleration away from the dollar. Well, Trump is happy with that because he thinks the lower dollar value is going to help American industrialization, but it’s not going to. But I think that that is basically the key to all this. And along with that, I want to point out that, since we’re talking about the balance of payments, which I always end up talking about, you’re having the effect of capital movements, hot money, and financial flows in determining the price of the dollar. The headlines every day in the United States financial press have been that Trump wants to fire the Federal Reserve Chairman to force the Fed to lower the interest rates.
Well, CNBC announced on Tuesday something very interesting. Trump has invested $100 million of his own money in buying municipal bonds and corporate bonds. Well, he’s bought these bonds yielding fairly high interest rates. And if he succeeds in replacing the head of the Fed or arm-twisting him into lower interest rates, this is going to create an enormous capital gain for Trump. It can double from 100 million to 200 million. So you have Trump putting his personal fortune behind this manipulation of U.S. foreign policy. And you can believe that for him, with his foreshortened view, his personal fortune comes first, American strategy the second.
And in Trump’s case, they tend to converge in all of this. So you’re having an American financial war against the rest of the world, saying we’re going to lower the dollar’s value. That means if you hold U.S. dollars in your foreign reserves, as we lower the interest rates here, these dollars are going to be worth less and less and less in your own currency. So your private banks, your central banks, and your corporations that hold dollar balances are all going to show a loss in their profit and loss statements and their net worth statements. And this financial maneuvering is trying to impair the financial resilience of other countries. And that’s a dimension that is left out of discussion because the balance of payments analysis is not a topic taught in American universities, much less discussed in the public press.
RICHARD WOLFF: Yeah, and just a footnote: if Russia is accumulating rupees, you know, Indian currency out of the oil exports to India, well, here’s one thing you can be sure the Russian central bank is figuring out: it would be interesting to use those rupees to stimulate the production in India of goods that Russia would otherwise have to produce itself, or even worse, might have to import from Western Europe or the United States. They won’t have to. They can build on India. In other words, it allows the BRICS to help each other by opening up the channels for currency movements among them.
So rupees go to Russia for oil and then from Russia back to India for exports, or maybe not. Maybe the rupees will be accepted by the Chinese to pay for things they export to Russia because the Chinese know they can use them to buy who knows what from India, thereby recreating what made all the other currencies, including the dollar, become bigger than wherever they started. And this is part of the BRICS replacing America in the empire story.
And it’s relentless, and it is much more powerful than anything they can do in Azerbaijan or Venezuela or Syria. That may look good and may make a good headline here. Michael’s right about that, but it is not stopping in the same way that the Ukraine war did not stop all the things that led up to that war. They’re right, continuing. The war started, the war developed, and now the war is ending. And the other processes we’ve been talking about, they march on.
MICHAEL HUDSON: Wonderful, Richard. So now they can call us Modi’s puppets.
RICHARD WOLFF: Yes. It would work, except in America, given our level of reporting. Nobody knows who Modi is.
MICHAEL HUDSON: That’s our advantage.
NIMA ALKHORSHID: Yes. Yeah, we’re going to be pro-India. They’re going to call us pro-India. Thank you so much, Richard and Michael, for being with us today. Great pleasure, as always.
MICHAEL HUDSON: And a good discussion.
NIMA ALKHORSHID: Thank you.
With Nima on Dialogue Works, plus notes from Michael Hudson.
Michael added a note as the transcript for this video will take some time. Enjoy!
US Monopoly in AI strategy 2025
Any country’s trade with the United States can be weaponized by turning it into a dependency relationship.
For many years this is how U.S. strategists used its dominance of grain exports and the world oil trade as a weapon, by threatening to starve China out in its attempt to prevent Mao’s revolution (the sanctions were broken by Canada) and oil exports (by blocking other countries’ option of having an alternative in Russian oil or Iraqi and Syrian oil not controlled by U.S. puppet regimes
In the more technological arena, the United States used arms exports as a similar lever to impose dependency relationships. Purchases of U.S. aircraft, submarines, ships, and other weaponry require almost constant repairs and replacement parts. The United States can turn off the tap to countries using U.S. arms for military purposes not approved by the United States.
The key arena in establishing U.S. technological advantage has become AI. Europe realizes that if Trump succeeds in blocking Europe’s ability to regulate AI, it will lock Europe into reliance on America’s AI and internet platform leaders – and chip makers, and hence U.S. computers and other products in which U.S. national security strategists can assert geo-locators and kill switches.
China recognizes this threat and has recently decided against relying on Nvidia chips in fear of such kill switches being installed.
China’s counter-strategy – and that of Asia and the BRICS as a whole – is to make its AI and related informational technology open source. That prevents (so I’m told) the opportunity to impose backdoors such as geo-locators, kill switches, and spycraft.
Europe recognizes this strategy and is trying to prevent becoming locked into U.S. high-technology sources. This was clearly spelled out in an op-ed by Marietje Schaake in “Beware America’s AI colonialism,” Financial Times (August 21, 2025):
President Donald Trump’s trade wars are teaching the world a harsh lesson: dependencies get weaponised. In the White House’s view, international trade is zero-sum. With his AI Action Plan promising “unchallenged” technological dominance, a further ambition is clear. Will the rest of the world recognise that embracing US artificial intelligence offers Trump an even more potent tool for coercion?
Since his “liberation day” tariffs, the Trump administration has undertaken an aggressive campaign to exact concessions from America’s trading partners. Decades of trade integration mean there is no easy path back to square one. Dependencies run deep and alternative markets, supply chains and flows of goods and services take time to develop.
With AI, there is not yet such global entanglement. So why would any country voluntarily hand more leverage to the White House?
AI is an ideological project for the Trump administration and the AI Action Plan lays out a clear blueprint for US technological hegemony. Its pillars focus on supercharging domestic AI development and adoption, aiming to yield economic benefits and prevent “woke” model use. This is the architecture it hopes the world will embrace.
More than previous technologies, AI systems create uniquely vulnerable dependencies. Algorithms are not transparent and can be manipulated to bias outputs — whether challenging antitrust rules or supporting protectionism. With a significant set of US tech chief executives pledging allegiance to this administration, the synergy between political and corporate agendas is clear. AI companies have even deployed team members in the US armed forces.
The weaponisation possibilities are extensive. Take the Cloud Act, which forces the disclosure of foreign data by domestic cloud providers, whose services dominate worldwide.
It is easy to see how tech can become an even greater bargaining chip in US foreign policy. As with steel or pharmaceuticals, Trump’s White House can simply impose a tariff on AI services or critical elements of the supply chain.
The administration is already pushing the EU to weaken its Digital Services Act and considered leveraging tariffs to force a change to the UK’s online safety laws earlier this year.
What makes AI dependency particularly dangerous is its opacity. Unlike trade in physical goods, AI decisionmaking processes are often black boxes, making subtle manipulation nearly impossible to detect. These systems become deeply embedded in critical processes, with high replacement costs. Many countries already have significant dependencies on US tech companies. Add AI and powerful lock-in effects would intensify. The rapid pace of its evolution makes it difficult for alternative suppliers to maintain competitive alternatives, adding chokepoint effects. With the integration of such technologies in infrastructure, defence and security systems, the stakes are high.
The Trump administration frames the AI race as a competition between democratic and authoritarian models. Yet this obscures a troubling reality: the gap between US and Chinese approaches to technological control is narrowing. Governance grows more authoritarian by the day in Trump’s America, with political interventions reaching individual company levels.
The window for convincing American partners to embrace “full stack” AI exports (where US companies sell access to platforms instead of products) is closing. Governments are learning from their trade war mistakes and investing in sovereign alternatives in the hope of avoiding critical dependencies. Ensuring transparency and security requirements and building in contractual protections against service termination might help in the short term, but coalitions with like-minded democracies to foster alternative AI ecosystems free from unilateral US policy change will be more sustainable.
The choice facing world leaders is not between US or Chinese AI dominance but between technological sovereignty and digital colonialism. Each trade confrontation should teach potential partners that today’s commercial relationships can become tomorrow’s coercive leverage.
Trade wars show how far the Trump administration is willing to go. The AI Action Plan offers the president the means to make that vision more vast and more permanent.
The rest of the world should think twice before volunteering to take part.
In Short Form: America will continue to export financial colonialism abroad — and deepen economic feudalism at home.
Economist Michael Hudson warns that the U.S. has morphed into a “free lunch economy,” where wealth flows not from production but from unearned rents and financial gains. Wall Street landlords like Blackstone buy up homes, driving rents higher while families face stagnant wages and rising debt. What was once industrial capitalism has become finance capitalism, hollowing out the economy and enriching a rentier elite. The result is growing inequality at home and financial colonialism abroad.
The United States prides itself on being the land of opportunity, but its economy has been quietly transformed into something closer to a rentier feeding ground. The “free lunch economy” sees a system where wealth is siphoned not by producing value, but by extracting unearned income — rents, fees, and financial gains made in one’s sleep.
Wall Street firms like Blackstone now own hundreds of thousands of homes across the country, turning what was once the American dream of homeownership into a landlord’s empire. As rents soar and homelessness explodes, private equity celebrates “passive income” as if it were innovation, while working families face rising costs and stagnant wages.
This isn’t industrial capitalism, where profits once came from organizing production and employing labor. It is finance capitalism — an economy dominated by debt, speculation, and monopoly control. The wealthiest Americans have successfully shifted the tax base away from themselves, while inflating housing and healthcare costs that drain workers’ paychecks.
Milton Friedman once declared “there is no such thing as a free lunch.” Yet modern U.S. capitalism is built on exactly that: a free lunch for the landlord, the monopolist, and the banker, funded by the indebtedness of everyone else. Meanwhile, nations like China that keep banking and credit in the public sphere are outpacing the West in real, productive growth.
The “free lunch economy” is not sustainable. It hollows out the industrial base, fuels inequality, and locks society into dependency on the very rentier class the classical economists once fought to abolish. As Hudson argues, unless this system is confronted, America will continue to export financial colonialism abroad — and deepen economic feudalism at home.
Trump’s upcoming meeting with Zelensky to turn the tables on NATO
On Monday, August 18, Zelensky is coming to the White House. He has been prepped by his main anti-Russia sponsors, Merz, Starmer and Macron (along with von der Leyen and Finland’s president) in hope of using his popularity with Congressional Cold Warriors to deter Trump from accepting the reality of NATO’s attack on Russia using Ukraine as the arena willing to force the population to a fight to the last Ukrainian (excepting the neo-Nazi Azov battalion that prefers to let farm boys do the fighting).
Here’s what Trump can do to quite simply de-tooth the NATO contingent.
He is absolutely correct in insisting on meeting alone with Zelensky first. He can simply ask Zelensky to explain to him just what happened when Boris Johnson came to Kiev to talk him out of signing the Minsk agreement with Russia that would have avoided the ensuing war with Russia.
What did Johnson tell Zelensky that led him to agree? Did Johnson say what the aim of rejecting the agreement would be – and proceeding to prepare an attack on Russia on the eve of February 2022?
Was the stated aim indeed to weaken Russia? What did he believe would be the result? Would the Russian economy collapse from actually fighting in Ukraine? Did he believe that Russia’s population would oppose its soldiers dying in war, and replace Putin with a NATO- and oligarch-friendly regime?
Having established that Russia was indeed responding to a NATO attack – not the aggressor itself – Trump can then hold a mini meeting with Zelensky in front of reporters. He can explain what Zelensky has explained. (I assume that Zelensky will have no option other than to confirm what Putin and Lavroff explained to Trump in Alaska.)
He can ask Zelensky whether he is surprised at his army’s collapse and casualties. If Zelensky continues to claim that Ukraine is winning against Russian troops, Trump can ask his cabinet members whether that is the CIA and NSA’s understanding of reality.
Trump will conclude that instead of following the European plan to keep attacking Russia, he wants to go to the root causes and cure not only the fighting in Ukraine but the entire Cold War antagonism toward Russia.
He can speak of U.S. investment opportunities. On Friday while he was in Alaska, Exxon was negotiating an oil deal with Russian officials. Russia can offer to buy U.S. equipment and materials to help rebuild the former eastern provinces of Ukraine that its nationalists attacked, and which now must be rebuilt. That is, if Brussels releases the $300 billion plus interest that it has illegally confiscated.
NOW, having set the stage with a realistic sense of context and proportion, he can go into the closed meeting with the Euro-thugs. They presumably will have been waiting somewhere in the White House and heard what Zelensky and Trump have agreed on, but may perhaps have been kept busy and isolated.
Trump can NOW ask them for their story – and confront them with what he has been told by Zelensky, which either will confirm what Trump was told by the Russian contingent in Alaska, or try to brazen it out.
Either way, Trump has them trapped, taking a pro-war stance in contrast to trump’s Nobel-prize hopes to depict himself as the Prince of Peace and the resulting prosperity from saving America from the cost of further NATO spending. Henceforth Europe will be on its own. If it insists on fighting, it can buy arms from the United States. But Trump will say that there is no military cause for armament, given Russia’s lack of interest in pursuing trade and investment with Western Europe as it turns eastward.
He can let von der Leyen or others hang themselves with their recommendations, and say that this is what divides his Republican policy from that of Biden, and from Obama before him who sponsored the regime change in the Maidan coup of 2025.
Trump can point to the criminal proceedings against Obama and also Biden officials in the FBI and CIA who organized the Russiagate scandal.
This strategy seems obvious to me. Will it be obvious to Trump?
Moscou a renvoyé 84 militaires à Kiev et en a reçu autant de la part de l’Ukraine. À Istanbul, la
L’article Moscou et Kiev procèdent à un échange a minima de 84/84 prisonniers est apparu en premier sur STRATPOL.
Alaska Breakdown Looming
It looks like Trump has just announced that the Alaska meeting will be hostile and he is rejecting all Russian demands. He has threatened to walk away in the first two minutes if Russia does not agree to a cease fire on Ukraine’s terms. His intention is to threaten Russia with more U.S. blustering that poses no real threat to Russia, but will (he hopes) solidify his support from the Donor Class, CIA and EU Russia-haters.
It is literally impossible for Trump to make any peace deal with Russia. First of all, he cannot control Europe, and Starmer, Macron and Merz have announced that they are going to fight Russia regardless of what Trump might want.
Second, Ukraine’s Azov battalion and related neo-Nazi nationalists insist that they will continue to fight – if not overtly, then by constant sabotage. Ditto the CIA alongside MI6.
And Trump’s neocon coterie is pressing the third rail: ny treaty settlement needs Congressional approval. Trump is no more in charge of Congress than the is of the CIA. It’s they that are running him.
So why is Putin attending, now that the original hints of reasonability by Trump has been summarily rejected, according to the Wednesday afternoon New York Times and WSJ reports of his statements? Trump has reverted to calling Russia the aggressor, as if it rather than Ukraine is bombing civilians. It is clear that he is incorrigible.
The last few days has seen Trump accelerate its military confrontation with Russia. The EU has announced a trillion-euro arms buildup against Russia’s threat to send 10 million troops to occupy it – as if countries still fought by armies occupying enemies instead of just bombing them.
The only way to salvage this meeting is not to talk about Ukraine at all, but about NATO/Russian relations and possible negotiation of a new atomic arms control treaty.
All that I can imagine Putin saying are two things. First of all, of course Russia wants Ukraine at the table to end the war. He hopes that by the end of the year his troops will establish a new Ukrainian government that will be able to sign the armistice, creating a New Ukraine with a new constitution. He’ll tell Trump that he is trying to end the war as quickly as possible.
Putin may bring up Armenia and Azerbaijan and ask the US to withdraw its intrusion, unless he wants a repeat of the Kennedy/Khruschev showdown with Russia putting atomic missiles in Cuba. The sphere-of-influence principle will come up – as it did in the Monroe Doctrine, which promised that the United States would not intervene in European affairs if European kingdoms stayed out of the Western Hemisphere.
Finally, Putin can say that in view of the fact that they can’t agree not to continue the US/NATO attack on Russia (and China and Iran and the entire rest of the world), at least they should agree that even in the absence of an arms treaty, they won’t bomb each other. The United States is free to sell all the arms and missiles it wants to Germany and other bellicose NATO countries. But once these arms are bought by Europe, Russia will treat any attack on its territory (including its extension into former Ukraine) as an attack by the country supplying the arms – and will feel free to bomb the hell out of it.
Putin can quip to Trump that this is the most peace-oriented thing that the United States can do: avoid a direct US/Russian exchange of bombs. “You can have Europe,” Putin can say. “It has nothing that we need or want.” Just leave us alone and stay out of our way, and you’ll have your US-Russia peace.”
It will be interesting to see how Trump depicts this as a great victory.
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