Michael Hudson interviewed by Margaret flowers, Clearing the Fog, March 29, 2022. https://popularresistance.org/michael-hudson-us-dollar-hegemony-ended-abruptly-last-wednesday/
Posted with Dr Hudson’s permission
Margaret Flowers: You’re listening to Clearing the FOG, speaking truth to expose the forces of greed, with Margaret Flowers. And now I turn to my guest, Michael Hudson. Michael is the president of the Institute for the Study of Long-term, Economic Trends, ISLET. He’s a Wall Street financial analyst and a distinguished research professor of Economics at the University of Missouri, in Kansas City. He’s also the author of numerous books and recently updated his book, “Super Imperialism: The economic strategy of American Empire.” Thank you for taking time to speak with me today, Michael.
Michael Hudson: Well, thanks for having me on Margaret.
MF: You’ve talked a lot and written a lot about dollar hegemony and what’s happening now with de-dollarization. Can you start out by explaining to my listeners what dollar hegemony is and how it has benefited the wealthy class in the United States?
MH: Dollar hegemony seems to be the position that has just ended as of this week very abruptly. Dollar hegemony was when America’s war in Vietnam and the military spending of the 1960s and 70s drove the United States off gold. The entire US balance of payments deficit was military spending, and it began to run down the gold supply. So, in 1971, President Nixon took the dollar off gold. Well, everybody thought America has been controlling the world economy since World War I by having most of the gold and by being the creditor to the world. And they thought what is going to happen now that the United States is running a deficit, instead of being a creditor.
Well, what happened was that, as I’ve described in Super Imperialism, when the United States went off gold, foreign central banks didn’t have anything to buy with their dollars that were flowing into their countries – again, mainly from the US military deficit but also from the investment takeovers. And they found that these dollars came in, the only thing they could do would be to recycle them to the United States. And what do central banks hold? They don’t buy property, usually, back then they didn’t. They buy Treasury bonds. And so, the United States would be spending dollars abroad and foreign central banks didn’t really have anything to do but send it right back to buy treasury bonds to finance not only the balance of payments deficit, but also the budget deficit that was largely military in character. So, dollar hegemony was the system where foreign central banks keep their monetary and international savings reserves in dollars and the dollars are used to finance the military bases around the world, almost eight hundred military bases surrounding them. So, basically central banks have to keep their savings by weaponizing them, by militarizing them, by lending them to the United States, to keep spending abroad.
This gave America a free ride. Imagine if you went to the grocery store and you just paid by giving them an IOU. And then the next week you want to buy more groceries and you give them another IOU. And they say, wait a minute, you have an IOU before and you say, well just use the IOU to pay the milk company that delivers, or the farmers that deliver. You can use this as your money and just you’ll as a customer, keep writing IOU’s and you never have to pay anything because your IOU is other people’s money. Well, that’s what dollar hegemony was, and it was a free ride. And it all ended last Wednesday when the United States grabbed Russia’s reserves having grabbed Afghanistan’s foreign reserves and Venezuela’s foreign reserves and those of other countries.
And all of a sudden, this means that other countries can no longer safely hold their reserves by sending their money back, depositing them in US banks or buying US Treasury Securities, or having other US investments because they could simply be grabbed as happened to Russia. So, all of a sudden this last week, you’re seeing the world economy fracture into two parts, a dollarized part and other countries that do not follow the neoliberal policies that the United States insists that its allies follow. We’re seeing the birth of a new dual World economy.
MF: Wow, there’s a lot to unpack there. So, are we seeing then other countries starting to disinvest in US dollars? You’ve written about how the treasury bonds that these central banks buy up have been basically funding our domestic economy. Are they starting to shed those bonds or what’s happening?
MH: No, they haven’t been funding our domestic economy because the Federal Reserve can create its own money to fund the domestic economy. We don’t need to borrow from foreign countries to fund our economy. We can print it ourselves. What the dollar hegemony does is fund the balance of payments deficit. It funds our spending in other economies, our spending abroad. It doesn’t help our economy, but it does help us get a free ride from other countries. The more dollars we spend in making a military base, all these military expenditures get turned over to the local Central Bank that turns and sends them back to the Federal Reserve or deposits them in US bank accounts. So, it’s the international free ride we get, not a domestic free ride.
MF: Okay. So are we seeing countries now, since this past week, starting to move their assets back to repatriate them because I know for Afghanistan, a big problem is that most of the government’s money was outside of the country and that has been used as a weapon against Afghanistan by seizing those assets and not allowing the Central Bank of Afghanistan to have them. Are we starting to see other countries repatriating their money and gold?
MH: Well, figures are only available at the end of each month, reported at the end of each month and then there’s a two-month delay, so we don’t have any idea what’s happening. But I’ve been talking to people all over the world in the last few days and the consensus is that everybody is now deciding the only place, certainly if you’re China or Russia or Kazakhstan or you’re in the Eurasian orbit, South Asia, East Asia, you realize, wait a minute, if all we have to do is something like Allende did in Chile or all we have to do is refuse to sell off our industry to American investors and they can treat us like they’ve treated Venezuela. So you can imagine that everybody’s watching this and there’s an expectation that as a result of the war in Ukraine, that’s really America’s NATO war, that this is going to create a balance-of-payments crisis throughout the whole Global South as their energy prices go up, oil prices soar, food prices are going to soar and this is going to make it impossible for them to pay their foreign debts unless they go without food and energy. Obviously, this is a political crisis. That is, the only result can be to split the world in two.
MF: You’ve been writing about this happening. You’ve written that the de-dollarization has been happening relatively quickly in recent years. So, are we now we’re now just seeing the end result of that? I mean, people said it could happen quickly. Is that exactly what we’re seeing right now?
MH: Yes, and nobody expected that it would happen this quickly. Nobody expected that it would be the United States itself that ends de-dollarization. People thought that, well, most of the sales of my book describing this super imperialism were bought by the Defense Department and they looked at it as a how -to-do-it book. And I was brought down to the White House and the Defense Department to explain to them how imperialism works.
I had expected that maybe China, Russia, and other countries would say, “We don’t want to give America free rides.” And yet it was the United States itself that broke all of this, by grabbing Russia’s reserves right after it grabbed Afghanistan’s and Venezuela’s reserves.
Nothing like this has happened in modern history, even in the 19th century wars. In the Crimean War in the mid-19th century, Russia, England and Germany, everybody kept paying the debts to the countries they were fighting against because the idea is that debts were sacrosanct. And now, all of a sudden, not only are debts are not sacrosanct, but countries can just grab foreign savings. I guess the problem began after the Shah of Iran fell and the United States grabbed Iran’s money and refused to let it pay its bond holders and started the whole war against Iran for trying to take control of its own oil resources. So, all of a sudden, the United States grabbing this has ended what everybody thought was an immutable morality.
MF: So that was in 1979 that the Shah fell in Iran and, and over the last number of decades, the United States has been increasingly using economic warfare against countries through what people call sanctions, but they’re actually, illegal unilateral coercive measures, has that been kind of driving and setting the stage for what is happening today?
MH: Yes, the International Monetary Fund has operated, basically, as an arm of the Defense Department. It’s been bailing out dictatorships, bailing out Ukraine, lending money to countries whose client oligarchies America wants to support, and not lending any money to countries that America doesn’t want to support, like Venezuela. So, its job is basically to promote neoliberal policies, and to insist that other countries balance their payments by undergoing a class war against labor.
The conditionality that the IMF insists upon for foreign borrowing is that countries devalue their currency and lower their wage rates and pass anti-labor legislation. Well, when you lower the currency’s exchange rate, what do you really lower? Food prices are set in dollars internationally, raw materials prices are, and prices for machinery and many goods. The only economic variable devalued is domestic labor (and domestic rents). The IMF has been using this kind of junk-economic free-trade policy as a means of keeping the wage rates in the Global South down. You could say it’s a financialization of an ultimately military conflict to promote neoliberal ideology.
MF: And you mentioned the lowering wages and things like that. And this is actually done because it’s favorable to US investors and US business, right? I mean, the World Bank actually has an index, the cost of doing business index, that helps inform large corporations about laws that countries pass that make them more favorable to businesses to come in.
MH: It’s even worse than that. The central aim of the World Bank is to prevent other countries from growing their own food. That is the prime directive. It will only make loans for countries to earn foreign currency and it has insisted ever since about 1950 that countries that borrow from it must shift their agriculture to plantation export crops to grow tropical crops that cannot be grown in the United States for environmental and weather reasons. And the countries must not grow their own food and must not undertake Land Reform or small family-based farming. So, it insisted on foreign-owned agribusiness in large plantation agriculture. And what that means is that countries that have borrowed for agricultural loans have not been loans to produce their own food. It’s been to compete with each other producing tropical export crops while being increasingly dependent on the United States for their food supplies, and for their grain. And that’s part of the corner they painted them into that is going to be creating such a world famine this summer.
MF: I definitely want to get into that as well as the energy situation and the climate crisis, but before we do that, I just want you to comment quickly on how this has also been driving countries to seek alternatives. The United States removed Russia from the SWIFT system, which is the international mechanism for doing trading and finance. It threatened China if they didn’t denounce what was happening with Russia and Ukraine to kick them out of the SWIFT system. So, this hubris of the United States is also kind of driving countries away to seek other alternatives, right?
MH: That’s the whole point. Well, fortunately they’ve been threatening to kick Russia out of SWIFT for the last two years. And so, Russia and China have been putting in place an alternative system. So, they almost pretty smoothly are shifting over to using their own currency with each other instead of using the dollar. And that’s part of what has ended the dollar standard and ended dollar hegemony.
If the way you have dollar hegemony is to have other countries deposit your money in your banks and handle their oil trade with each other by financing it in dollars, but all of a sudden you grab all their dollars and you don’t let them use US banks to pay for their oil and their trade with each other, then they’re going to shift to a different system. And that’s exactly what has ended the dollar hegemony, as you just pointed out.
MF: So, let’s get a little bit into where things are headed with this new situation, a rapidly changing situation. It may be hard to say what’s happening, but you talked about a food crisis this summer. Can you talk a little bit about more about that and does the conflict in Ukraine feed into that?
MH: Well, as President Putin and Lavrov have said, the fighting in Ukraine isn’t really over Ukraine at all. It’s a fight over what shape the world will take and whether the world will be unipolar or, as it now appears, multipolar. The US, for the last year before it began to escalate attacks on the Russian-speaking Ukraine, was trying to block Europe from, and especially Germany, from buying Russia gas and oil.
There are three pillars of American foreign policy that base American power. The first pillar is the oil industry. That’s the most powerful industry next to banking in the United States. And United States throughout the 20th century, along with Britain and France, have controlled the world oil trade.
That has benefited the United States in two ways. Number one, we are a major oil exporter because we have a big oil and gas industry. But, number two, our US companies control the foreign oil trade. So that if some country, say Chile or Venezuela, does something that the United States doesn’t like, like growing their own food or pursuing a socialist policy, the United States can simply cut off their oil and sanction them. Without oil, they don’t have energy to drive the cars or power their factories or drive their GDP.
So, the American war in Ukraine is really a war against Germany. Russia is not the enemy. Germany and Europe are the enemy and the United States made it very clear. This is a war to lock in our allies so they cannot trade with Russia. They cannot buy Russian oil. They must be dependent on American oil for which they will have to pay three or four times as much. They will have to be dependent on American liquefied natural gas for fertilizer. If they don’t buy American gas for fertilizer, and we don’t let them buy from Russia, then they cannot put fertilizer on the land and the crop yield will fall by about 50% without fertilizer.
So, the, the war in Ukraine was to make Russia look so bad by defending itself against the attacks by the Ukrainian right wing in the Russian-speaking areas that the US has said, look at how bad Russia is. You’ve got to forego buying oil and gas or grain or titanium or palladium or anything else from Russia.
And so, the effect of this war has been to lock the NATO countries into dependency on the United States because the great fear of the United States in the last few years is that as America is de-industrializing, these countries are looking to the part of the world that’s growing, China, Central Asia, Russia, South Asia. And the United States feared losing control of its satellites mainly in NATO, but also in South America. So, it sanctioned and blocked their ability to buy non-US energy. They’re blocking their ability to buy non-US food, blocking their ability to invest in or use their surplus to get prosperous by investing in China, Russia, or Eurasia.
So, this is basically a war of America to lock in its allies. Well, the result is that oil prices, now that you can’t get Russian oil, are going to go way, way up, and that is going to create a crisis for many of the Global South countries that are oil deficit countries. The fertilizer companies in Germany have already been closing down because they say, without Russian gas, we make our fertilizer out of gas, and if we can’t get Russian gas, we can’t produce the fertilizer that. So, world fertilizer prices are going way up.
Russia is the largest grain exporter. And now that grain exports are being blocked by the sanctions, the question is, what are North Africa and the Near East going to do that have been depending very largely on Russian grain exports? Their food prices are going to go way up.
You can imagine just from seeing what’s happening in the United States when gas prices go up here, food prices go up here, not only does it put a squeeze on individual family budgets, but throughout the world, it puts the squeeze on the balance of payments of other countries. And so, they’re desperate. How are they going to pay the higher prices unless they borrow even more money from US banks? And of course, that’s another arm of US policy. The US banks hope to make a killing in making loans at rising interest rates to third world countries.
And of course, arms exports. NATO in the last few days has agreed to make American arms exports to increase their purchase of arms. So, the stock market has been soaring in the last few days. They say this, the world famine, the world crisis is a bonanza for Wall Street. The oil company stocks are going way up, the military, industrial stocks, Boeing Raytheon way up, the bank stocks. This is America’s great power grab, and it realizes, when it can create a crisis and tell the Global South or poor countries your money or your life. This is how most of the great property grabs and conquests have been made throughout history.
MF: And just this week at the NATO meetings, President Biden basically said food prices are going to go up in the United States and Europe as a result of what’s happening. And that’s just the price we have to pay.
MH: Well, what he should have said, this is the price they have to pay us. That’s how the stock market took it. When he said this is the price we have to pay, this is the price consumers have to pay to the American oil companies, to the American Agricultural food distribution companies. It’s the price other countries have to pay to the United States.
This is to say to the rest of the world, you know, we’ve got you completely, I don’t know how to put it, what phrase to use, but you don’t have any choice, your money or your life. We’ve got you trapped. And he’s crowing over the fact that this resulting inflation is exactly what was intended by the war in Ukraine that has led to the isolation of Russia and other countries following a non-US policy.
MF: But more and more countries in Latin America, in Africa, are turning to countries like China for partnerships, for investment. Do you see a point coming where there is just this real shunning of the United States and turning to these alternatives?
MH: That is exactly what’s going to happen. What’s going to happen is, China’s investment is very different from US investment. US and European investment will give financial investments to countries at interest that the whole country is liable for to repay. China’s investment is taking place by means of the Belt and Road Initiative and direct capital investment in developing ports, infrastructure and railways. And instead of having a general financial claim against these countries, China has an equity claim, a property claim backed by the physical means of production that it puts in place.
Well, this summer, when countries say they cannot afford to pay their foreign debts, the United States has as a backup plan, okay, let’s write down everybody’s debts, government debts, to each other so that governments can pay the private bond holders and the banks. And they’re going to try to, essentially the US will forgive its debts so that Latin America can pay Chase Manhattan Bank and Citibank and the bondholders. And China is going to say, wait a minute, we don’t have any financial claim against these countries. We didn’t lend them dollars. We didn’t lend them our foreign currency at all. We built assets there and the assets are still in place. There’s no problem there.
So, the question is, whose debts are going to be written down to whom? And all of this is going to lead to, as you can imagine, destabilization. The United States is probably going to try to push regime change on countries that try to trade with China as it’s already threatened China with. And the more sanctions the United States imposes on Latin America, Africa and the Near East and South Asia, they will be creating a crisis, but the crisis will lead the rest of the world to treat the United States in the same way that Russia and China are treating the United States as just the enemy threatening the entire world with their neoliberal power grab. So, the United States in a way is isolating itself from the rest of the world by declaring war on it.
MF: And I think that’s not going to be good for us here at home in the United States. You’ve talked about the way that the current economy has been structured. You’ve also raised a lot of concern about the climate crisis. And of course, we have the recent IPCC report basically saying that we’re way behind in taking action to even adapt to the climate crisis or the warming that we’re going to be experiencing. So now in this new situation, how do you see that impacting the climate crisis?
MH: Here’s what Biden said, in effect: “We’re way behind in the pace of global warming.” American policy is based on increasing and accelerating global warming. That has been a central point of US policy ever since I joined the Hudson Institute in the 1970s. The United States is opposing any attempt at trying to prevent global warming because you can imagine what would happen if other countries go to solar energy and renewable energy. That will reduce their dependency on the US oil industry. If you look at American policy, it is being run basically by the oil industry to establish dependence of other countries on oil. Then obviously the last thing the United States is ever going to do is prevent global warming. So, if we’re behind in global warming, it’s that the sea level is not rising fast enough. The world is not getting hot fast enough not to lock in foreign reliance on America’s oil.
And I think you’ve seen what in the last few weeks, what President Biden has said, the fuel of the future is coal and oil. Right now, he’s in Poland. I think he’s suggesting that Polish coal, which is one of its major products, should be used in Europe instead of Russian gas. So, American foreign policy is based on the accelerated use of coal and oil, not renewable energy.
Now, that’s why I think the environmental movement should become an anti-war movement and the movement against this neoliberal dollar hegemony. You’re not going to avoid global warming unless you stop the dominance of American foreign policy by the oil industry.
MF: I think we’ve been seeing that shift over the last few years where the climate movement is starting to understand we can’t address this crisis without addressing the US military. So just in the last minutes that I have with you, what do you have to say to the listeners about where this is going for us materially as people living in the United States, a country that has been showing itself to be a failing state? The Covid-19 pandemic, I think, has really exposed that in so many ways, the financial insecurity that people are facing, housing, education, health care, all of the failures of the government to meet the basic needs of the people. How do you think that’s going to change with this new situation?
MH: Well, the United States has been getting a free ride internationally. So, much of the prosperity here has been the result of our not having to pay for our own military spending, not having to pay for many of the foreign investments that we’ve got that supply the US with low priced foreign raw materials. All that is being ended by President Biden’s policy, which, of course, the Republicans support just as much as the Democrats.
So, there’s really a political movement that is ending up impoverishing, I’d say, 99% of Americans. While the Federal Reserve saves the stock and bond market for the 1%, there’s going to be a huge squeeze that’s going to force, I think, most American families into debt leading to probably a close down of a lot of businesses just as you had the Covid crisis closing down a lot of businesses. You’re going to have the rising fuel prices, the rising food prices utterly force families into default and an inability to be self-supporting without either running into debt or selling their homes and becoming renters.
MF: And that’s a whole other problem with the buying up of the housing in the United States by these investment corporations so that they can then control those rent prices. It sounds like difficult days are ahead.
MH: Yes. Well, and nobody can really ,it’s really Uncharted Territory because nobody thought there was an alternative. The economic view was as Margaret Thatcher said, “There is no alternative.” Well, now, America’s forced the world to find its own alternative.
MF: Well, thank you for sharing that wisdom with me. I encourage people to continue to follow you and read your books and follow your writing. Where’s the best place to find you?
MH: I have a website: Michael-Hudson.com. And I’m on Patreon. I post my articles on the website and on Patreon.
MF: Well, thank you so much for taking time to speak with me today, and for the important work that you’re doing.
MH: Well, I’m awfully glad we had to talk about this, Margaret.
Saker and others,
Is there a reason why Putin continue to talk to European leaders and explain his actions?
Today he had a chat with German and Italian leaders and explained to them that payment for gas in Rubles is required because they confiscated Central bank’s assets
Isn’t this taken as sign of weakness?
What if he refuses to talk to them, what does he gain out if it anyway except the Western press stressing how Western leaders stressed to Putin the consequences of his actions after every phone call
Isn’t this clear to Russia that the whole west is baying for their blood.
Also read on RT that Europe will be given enough time to switch to Rubles so basically Russia stepped down from its earlier position of deadline?
https://www.rt.com/business/552976-russia-ruble-gas-time-adjustment/
No. Putin is really in a strong place here, and he is addressing them like the able and intelligent state leader he is.
The others are mediocrities. Putin sets the terms, and explains to these dumb ‘children’ what these mean.
I think that despite the huge mess, the others are still looking up to Putin to eventually tell them what to do.
Not talking, running to a corner and sucking your finger – that is weakness, plus immaturity, plus a whole lot more.
Putin is a genuine leader – none of the others are.
No matter what, eventually everyone follows the leader.
He do becuase diplomacy have existed all history.
That stupid cancellation ideology dominate in the west does not mean that dominate in healthy country.
Probably Putin is fine with talking with someone while totally disagreeing and don’t see problem in it.
Negotiating and talking to the opposition is a sign of weakness in the anglo west, but in other parts of the world it’s the norm.
Nice read, but they lost me, when they fell for that climate scam.
The so called climate crisis is just another way of a global ripp-off.
There’s no science, that could determine a men-made warming.
They talk about famine but don’t understand, what happens if, by any chance it would be possible, to drastically reduce CO2 in the atmosphere – the fertillity of farmland, the ability of the growth of plants, would shrink immensely.
This “climate scam” thingy is tiring. So, let’s say it’s a scam, for the sake of your argument. Then please do look at the literature on EROI (energy return on investment, Charles Hall et al… long track record going back to at least early 1980s – some guest blogposts on the Saker have mentioned this over the years, the latest a couple of months back if I remember correctly). You’ll see you’ll end up at the exact same point.
Much less discretionary energy expenditure. Basically, the age of profligate energy consumption is over, whether due to climate or energy constraints or both: going to Cyprus or Cancun to bask in the sun just because you can is over. Famine will happen, because the green revolution in agriculture post WWII – that enabled the global demographic explosion – was based on high EROI energy sources, which we don’t have anymore.
What prof Hudson is saying with respect to fossil full consumption and american imperialism being fused together essentially means the US cannot win, it’s fighting again the laws of thermodynamics. Globalisation is over, unless economically feasible fission becomes possible, but that’s still farfetched.
Russia is lucky to still have abundant conventional fossil fuels, and it’s making the most of its advantage at the moment. China is being clever about it, as usual: it’s building resilient infrastructures for transport to salvage international trade in Eurasia. Metal on metal (railroads) or maritime fret (the belt and road) are the most energy efficient means for long distance transport.
In North America, we have crumbling roads for F150 and SUV, and visionary leaders – just look at Biden squinting. The 99% will eat dirt.
@htyul
ever been to the http://www.ourfiniteworld.com blog? Everything you said is expounded by Gail.
and here’s a juicy morsel to sink ones teeth into from the late T. Boone Pickens as found in the Financial Post Tuesday June 17, 2008:
World crude production has Peaked: Pickens
Washington— World crude oil production has topped out at 85 million barrels per day even as demand keeps climbing, helping to drive a stunning surge in prices, billionaire oil investor T. Boone Pickens said on Tuesday.
“I do believe you have peaked out at 85 million million barrels a day globally,” Mr. Pickens, who heads BP Capital Hedge Fund with more than US$4billion under management, said during testimony to the Senate Energy and Natural Resources Committee.
The United States alone has been using 21 million barrels of the 85 million and producing about 7 of the 21, so if I could take a minute on this point, the demand is about 85 million barrels a day, and when the demand is greater than the supply, the price has to go up until it kills demand,” Mr. Pickens told lawmakers.
US Crude futures have risen by a third since the start of the year and more than sixfold since 2002 as surging demand from China and other developing nations outpaces new production.
Oil slipped on Tuesday, a day after touching a record high near 140 a barrel, but remained above US 133 a barrel.
Mr. Pickens, who announced a US $2 billion investment in wind energy earlier this year, told lawmakers during a hearing on renewable electricity that he expected “The price of oil will go up further.” Without alternatives, the cost of foreign oil will drain the United States of more resources, he said.
OUCH? Yes? and perhaps the why as well to Washingtons madness. I’d imagine there are those who aren’t sleeping very well at night?
The cracks are forming and getting bigger by the day on the frozen lake of our societies! And one word keeps popping up in my mind rationing!
@Gerry :)
Absolutely. It’s been a while I’ve looked at Gail’s blog, but that POV is so clear and its predictions are so spot on at every turn that it doesn’t feel necessary to get back to it once you get the point.
I’m also wondering if that’s the why to Washington’s madness. I’m not sure, for 2 main reasons:
1) if they did get it, they would understand that the FIRE sector-generated wealth on which that cabal relies as a class and individually probably cannot be handed down even to their own kids, it will dissipate quite fast and become meaningless in an energy constrained world. In other words, the superiority that they feel as a class and that enables them to justify all the shit they impose on the 99%, believing they will be and stay better off, is not sustainable. What is more sustainable is wealth from real productive economic activity, to a certain extent. But you have to build a well-functioning society to have that, with much lower class disparity. (the Chinese have spent the last two years limiting the scope and importance of the FIRE sector in their country, they are talking a lot about common prosperity… is there a link?) Maybe the masters in Washington are angling for a Madmax-style dystopia because power over others is more important to them than even their own standard of living, but again that doesn’t look very robust as a long term plan;
2) O&G in the US is from unconventional sources, with very low EROI. LNG exports to Europe further lower the EROI. From a thermodynamic point of view, it does not make sense to spend 1 unit of energy to extract 1 unit of usable energy – without even taking into account the energy required to maintain the energy extraction infrastructure, equipment and processes, or the rest of the productive economy! I find convincing the argument that unconventional O&G has worked to some extent in the US because they can just print money to finance it – but credit is available for unproductive activity only as long as the dollar is the reserve currency, and as prof Hudson is saying, that’s about to end. Without the dollar as the world reserve currency, the US stops producing O&G.
So all in all, I believe Washington’s behaviour is uninformed by these considerations.
I think you’re right about rationing. As a North American, I’m scared for the future of my kids. It looks brighter for Zone B. But so much rides on the current battle. If Russia caves in, down the toilet goes the Westphalian state model, and the globalist pan-national elite of the west wins.
Martyanov was reporting this morning that the Russian atlanticists are being sidelined. With the other recent exiles, Glazyev’s elevated role, maybe Russia will actually seize its advantage as a nation?
But then we go back to Washington’s madness: will they ever stop escalating? I was reading in Asiatimes (David Goldman) yesterday that Shoigu and Putin had just flown to 2 bunkers, so high was the threat of nuclear exchange… (BTW, I’m surprised I haven’t seen this fact picked up elsewhere, so it’s probably false)
awesome thank you.
By the way I work in the natural gas sector and Gail’s argument about affordability is spot on. It reached a climax this past week with many of the non elite workers jumping ship for other paying jobs because raises have been non existent. These are people who have the experience and knowledge and their loss will be sorely felt. Some friends lament the fact that they make less money today than when they first started with the company 10 years ago?
Cheers
They don’t want us dead because we eat too much- they want us dead because they fear us.
theres no evidence is something only a genuine illiterate would claim. JFC
Back when there were a choice of scams, global warming/new ice age I gave it some thought and eventually realised that the whole point of weather was to move energy from the equator to the poles, so all I really needed to watch was whether the ice was melting more, it is. https://www.youtube.com/watch?v=r1d472MwGiQ
Everyone is entitled to an opinion why but be assured if trends continue then the gulf stream will move into the arctic and the ice will be lost. In my opinion the rate of loss of arctic water and it’s replacement by atlantic water is increasing, atlantic water will always be warmer than what it displaces. A fair proxy for the loss are sea level changes on the eastern seaboard of the US, this is because the arctic waters are relatively inert compared to the earths rotation and for every degree they move south they have to be accelerated [physically by the coast] by around 16mph. There’s an animation ready to ‘start’ at this link which shows the atlantic penetration, be sure to note that this is salinity not temp. so nothing like as bad as it looks. http://bulletin.mercator-ocean.fr/en/permalink/PSY4/animation/3/20210524/20210730/2/2
I think the sea-level has risen something like 3 inches in the last 40 years, so I think we going to be ok.
Agreed, I quite reading and just did a quick skim of that, otherwise it was an excellent interview even without that content.
Climate Shlimate. It’s the Sun.
https://www.youtube.com/watch?v=p-dq3JbZdr4&list=PLHSoxioQtwZcqdt3LK6d66tMreI4gqIC-
Kolokol, nothing personal but I see too many comments on this issue overall. So, now I will let you know.
From the Mod Policy .. /moderation-policy/
16) One more: arguments about global warming. First, I take no position on that issue. Second, this is hugely controversial, which is fine, but also totally outside the scope of this blog. Simply put – whatever the merits of your position on climate change are, the Saker Blog is not the place to discuss them. So don’t. And yes, I am also officially banning this topic.
I love what this guy, and others like him, have to say. Why do they always have to bring up
that bogus global warming crap? Every thing else he says is spot on. But, if GW can be used
to end Uncle $hmuel’s hegemony, then use it.
I bet you still believe some hoaxes yourself. The climate one will perish with the dollar. The quota-system were supposed to become monetized.
The point that Micheal Hudson is trying to make here is we don’t really need to be distracted by the MSM narrative and or opposing narratives (clicki bait), we need to focus on the where the money actually goes and the alternative to that. They hate it when we think about that.
My question.
What is the best way forward for developing the architecture of mulit-polar system and how can people be apart of that?
A collapse (lack of trust) will favour the City Of London, and they are betting on that.
Major problem with the analysis – there is no climate crisis, no man made global warming.
The IPCC is central to the Empire of Lies.
Up to that point MH made sense, and was derailed by MF. Typical.
other than the climate change bollox, v good.
So basically all China and Russia et al have to do is form a coalition of the willing to trade among themselves and isolate the USA together with replacements for the IMF and the World Bank.
Probably nearly all there already.
Then change the internal structure of the system so that the people of each nation receive a fair and honest share of the fruits of their labour or the income from their nation’s natural resources. This might be the tricky bit.
These events of today will be often reviewed by historians in the future. Many problems that will arise from this coming crisis will have a positive outcome in the future.
The age of unilateral Western hegemony for all basic purposes is finished. What is needed from leaders of nations in the Global South is to not let this golden opportunity for self determination pass them by.
.
Why should the US take profit out of this and the South should suffer?
I think, capacity of American production of food and energy, is greatly exaggerated. They can’t neither supply Europe with gas, nor the world with food and with the $ going down the drains, this currency will buy nothing. The global South can get everything it needs from the Eurasian block by paying in their own currency or Rubel,Yuan,Rupies or whatever, plus they can redevelop their own agriculture.
The US doesn’t even have an industrial production, to speak of. This will decline the thread of its military over time, since it doesn’t run on worthless money-paper.
Great thinkers and synthesizers have the ability to make complex ideas seem simple. Hudson does that here.
One thing that crossed my mind when I read the part about China, for example, having equity in material assets rather than having financial assets, as the US regime does, is that the USA can start WW3 and destroy those assets.
Which is pretty well what they’re hell bent on anyway.
The only way the USA can seriously harm China is with nuclear weapons. (Apart from biological weapons, which it seems to have been using for some time already without the hoped-for destruction).
If the USA attacks China with nuclear weapons, both China and Russia will retaliate against the entire continental USA.
No doubt we will all die, immediately or after a few pain-wracked months or years.
But that has been on the cards ever since Trinity. I sometimes wonder whether, if by some miracle there are still humans a few centuries from now, their historians will teach that the worst man in history was Albert Einstein – who persuaded the US government to start the Manhattan Project.
FYI—
If choosing to listen to this interview on the audio link, it doesn’t begin until about 27:30 in.
1981, Wynne Godley says how he is openly opposed to free trade and the destructive aspect of it:
Question :
Let’s turn to some international questions. How do the problems of the UK economy — and your solutions to them — tie in with problems in the world economy?
Answer:
Well, the general answer is that I don’t think that free trade is the best way of organising international trade. The classical theory of international trade, which appears in text books and which is extremely influential in peoples’ minds, is based on a postulate of full employment.
If you assume full employment you can easily prove that free trade is mutually advantageous. But if you think, as I do, that full employment cannot be assumed, then it’s easy to make out a realistic case that free trade is extremely destructive to economies that are relatively unsuccessful.
Instead of making them more prosperous and better-off, it destroys them. I think this is a general proposition; it applies to the United Kingdom at the moment because it’s a relatively unsuccessful country, and I think it is beginning to apply to the United States, which is also becoming a relatively unsuccessful country.
Question:
When you say that you think that the free trade system is a bad system, how do you think it should be changed? It’s easy enough to say Britain should have import controls, but how do you see this in international terms?
Answer:
Well, the logical answer to the question which, as an academic, is what I am primarily called on to give, is quite clear to me. If all relatively unsuccessful countries protect in the way we suggest — using import controls to raise domestic output and not to strengthen their balance of payments — the system of protection can be generalised advantageously. But that assumes a high degree of international co-operation, and international co-operation of a new kind.
That was In 1981.
That’s the problem with liberal and right wing economic models they always ” assume” full employment.
But have never created full employment in nearly 50 years because interest rate targeting causes unemployment monopoly rent seeking.
This is also the problem with their equation of exchange:
MV = Py
Their assumption for y
” The economy automatically tends towards full employment and thus y (the existing volume of goods and services) is as large as it can be at any given moment (although it grows over time).
It’s fairy tale stuff that Conservatism and Republicans and the liberals depend on.
The truth in the real world with y
Is the economy can and does come to rest at less than full employment. Hence, while it is possible for y to be at its maximum, it most certainly does not have to be.
The always assume the economy is at full employment at all times. It is all ideological and not based on facts and why their models always cause an economic crises.
Why crises are more common ever since globalism and neoliberalism was introduced. Every few years they need bailed out by the state.
Sorry, but when I see someone push the global warming scam, then that person is completely dead to me. At the very best, this guy is a gatekeeper who tells you partial truths just so that he can get your trust so that he can lead you into the next scam. I have invested many many hours into studying global warming. And right from the beginning it was obvious that it is an obvious scam. Everyone who spends some time on studying the issue MUST come to the same conclusion. Everyone who claims that global warming is a real issue is either an idiot or a dirty liar.
Ferdl: Yeah… in addition to that, Margaret Flowers led the discussion with Hudson off with 10 minutes of “other concerning news from around the world” that included the National General Strike going on in India. But if you look into it, you find funding from the Gates Foundation, Soros and the NED pouring into that Indian “strike”. Thus, it has the nascent makings of another Euro-Maiden Color Revolution all over it, if Modi isn’t careful. And then U.S. deputy national security adviser for economics Daleep Singh lands in the middle of all of that to pressure Modi to sanction Russia? I have not gone into Flower’s history, but when Euro-Maidan was rebranded the “Revolution of Dignity” it isn’t too hard to imagine Flowers announcing similar support for it. And that turned out to be the trigger for the very thing she is concerned about now. (facepalm)
So, maybe Hudson has the same blind spots? If you are used to looking at the world through a Left-Right prism, as our elites keeping pushing us to do, you can’t spot the real struggle going on. It seems odd to me, given all the duplicity Hudson has seen, that he would not question the Climate Narrative, especially for all the stakes and money involved. Does he really think that all of the crooks running the US Deep State give a flying f_ck for the Earth’s climate? Within 3 days of the chemical attack in Syria, Kerry was pushing for a US war in Syria, and now Kerry is the US climate ambassador? C’mon man. (sigh)
When I run into people like Hudson (and Flowers), who appear so smart in one area, it just BAFFLES ME that they appear so naïve or ignorant in other areas. Are they gatekeepers or dupes? I can’t tell.
You are absolutely correct. I am very surprised at Dr. Hudson’s naive view of effects of climate change. The climate scam is lead by a group of rent seekers who are determined to solve a future problem which may not happen with tools which are untested and have no way of being validated. Not only that but in cases where they have tried to “fight climate change”, like Germany or the UK, by using renewable energy, it fails spectacularly when the wind doesn’t blow and the sun don’t shine…
Dr Hudson: What about America buying domestic goods from China? Will this be affected by the de-dollarization as foreign spending, and to what degree, or will this be unaffected as domestic dollar-printing commerce?
Why should China take $ in the future?
For the exceptional country, only the best will do – pay up in gold, cowboy.
>The current IRBO is supposedly a western system of international norms and institutions.
>The new international law-based system will emphasise multipolar cooperation
>The apparent, ongoing antagonism of geopolitics looks likely to maintain the East-West divide we are familiar with. However, what is now being framed as the multipolar order is, in reality, the multistakeholder order.
[link to unlimitedhangout.com (secure)]
In this article, we will explore the true nature of the international rules-based order (IRBO) and examine the forces that shape it. We will consider if the narratives we are commonly fed stack up.
It is widely accepted that the IRBO is undergoing disruptive change. That transformation is often reported as an eastward shift in the balance of power between nation states.
It is said that this new, emerging international order will be founded upon a global multipolar system of sovereign states and international law. This new system allegedly stands in opposition to the fading, western “rules-based” model.
This time, rather than relying upon western imperialism, the new international law-based system will emphasise multipolar cooperation, trade and respect for national sovereignty. It will instead be led by a Eurasian economic and technological power-block.
The apparent, ongoing antagonism of geopolitics looks likely to maintain the East-West divide we are familiar with. However, what is now being framed as the multipolar order is, in reality, the multistakeholder order.
As we shall discover, nation states are not the driving force behind the current restructuring of global governance. The geopolitical narratives we are given are frequently superficial.
Those leading the transformation have no allegiance to any nation state, only to their own globalist network and collective aspirations. In their hands, international law is no more of an impediment to their ambitions than a vague commitment to “rules.”
National governments are partners within this network formed of both state and non-state actors. Despite professed animosities, they have collaborated for decades to fashion the global governance complex that is now emerging.
No matter who is said to lead it, the IRBO is set to continue in a new form. As the post WWII system recedes, the framework being imposed to take its place is completely alien to the people who live in the former western, liberal democracies.
Thus, we too must be transformed if we are to accept the realignment. We are being conditioned to believe in the promise of the new IRBO and the global technocracy it is built upon.
America has a poet with a Nobel Prize in Literature. It is no surprise that within his works, one can find the perfect expression of the ‘Rules Based Order’.
“Look Out Kid!
It’s Something you Did!
You don’t know when
but you’re doing it again.”
— ‘Subterranean Homesick Blues’ by Bob Dylan
Anyone who’s grown up in America knows that the Rules Based Order very quickly comes down to an angry red face inches away from your face yelling “Its a Rule Because I Say So!”.
And its usually a pretty short trip to get there from ideals of Freedom and Democracy. Often, it can be accomplished with a single, one-syllable word ….. “Why?”
That’s the way Americans are treated within this land of freedom with the world’s largest prison population.
Russia will strengthen its geopolitical position and power by selling its energy resources and commodities in RUBLES. It has led De-Dollarization.
Russia had moved nearly 35% (all approximately) of its national reserves to euros, 5% to yen, 5% to British pound, with an assumption that per the rules they won’t be frozen. However, it was betrayed by the EU, UK, Japan,.. and they froze Russia’s reserves. It is good that Russia finally decided to price its gas in rubles. However, Russia isn’t showing a strong resolve.
Vladimir Putin is having conversations with the EU administrators without demanding them to unfreeze Russia’s reserves. Why isn’t Russia standing up for its $300 billion reserves? Why isn’t Russia asking for these reserves to be transferred to Gazprom Bank (Putin said the gas money be paid into Gazprom Bank)? Russia needs to take any euros it receives and confiscate them towards its reserve. Until the EU has paid all the reserve euros back, no gas to them. This is how Trump would negotiate. Putin’s has a strong hand, yet he isn’t playing hardball. Why?
If Russia is willing to take euros from the EU, an unfriendly entity, then Russia’s friends need to ask for a similar payment plan, where they pay in their respective national currencies. Is Russia going to have double standard and treat its friend unfairly?
Russia is at a critical juncture and needs to show leadership to gain credibility in defining the global order.
A question for you, Max. Do you think Russia would consider $300 billion well spent if it resulted in the dissolution of Nato, the deposition of the dollar as the world’s sole reserve currency, the ascendancy of the rouble as a de facto reserve currency, or any combination of these things?
Cesky,
Yes, however, it could achieve the same goal intelligently at a low cost. Does Russia care about its assets and particularly Russians?
Why has Russia been selling its resources in $, €, and £? We have been asking Russia to sell its goods in Rubles since 2010. Why did it take Russia so long to make this decision finally? How can a nation, neglect its own currency and its demand, while strengthening its foes currencies? Russia fueled its foes, invested their payments in their economies and thereby provided resources for free to its adversaries. How would one describe such a conduct?
Russia could have achieved a lot by using its Rubles intelligently. It should have sold its resources in Rubles and paid transit fees to Ukraine in Rubles. This would have anchored the EU and Ukraine to Russia, and thereby forced them towards cooperation with Russia. Just listen to Putin’s press meeting after the last June summit in Geneva, and one sees Russia in an alternate reality. Russia has to play the geopolitical game intelligently and can do much better. It has been performing poorly. Why?
Could somebody educate me on how it has to go into a global famine ? If the global south each goes to Russia and negotiate for a long term supply contract instead of going through the traditional international bourses managed and controlled by the zionist cartels. How hard in fact could that be done? Like all of a sudden Russia starts replacing the role of all those middlemen. My simple unrefined reasoning tells me by cutting off this layer of middlemen it might even lower further the cost of supplies at the end. Therefore, that “global” famine is not global at all, just like that oft quoted international community has nothing to do with humanity in general.
Thank you, Michael, for providing perspective. Don’t get too fixated on the military conflict. Economics, typically, is in the driver’s seat–counterintuitive big picture stuff that is never part of the mainstream discussion. Bossman–the Empire–doesn’t care too much about your ethnicity, your race, your sex, or your religion. He wants control and makes allies and enemies accordingly–and will turn on a dime if it is in his interest.
Any real environmental movement must be by definition an anti-war movement. War is the most destructive human activity to the environment. You can start with the picture of Saddam lighting Kuwait’s oilfields on fire. We had an early warning, mostly through Ukie BS, that nuclear power plants and wars are not a good mix. We’ve seen the various incidents of chemical releases. Even if its not deliberately targeted by a military desiring to create disease and death, bombardments of cities will tend to blow up key infrastructure leading to raw sewage in rivers and water pipes that no longer provide clean water.
But beyond that, military vehicles are not designed to be environmentally friendly. Jet airplanes are not good for the environment. Nobody has designed the Electric Tank yet. Big diesel engines are what I picture as the military.
Even in peacetime, the US military is a major polluter. In wartime, that gets far worse. The tempo goes up. Tanks move more often, trucks shuttle troops to a place, then supply them. The sortie rate of those fuel burning jets goes up, up, up. And this is even before the environmental damage of all of the explosions is taken into account.
And of course, if the military starts shooting off nukes, that’s the end of human society as we know it.
Any real environmentalist is always opposed to war, and will usually think this would be a much better planet if there was a lot less military stuff going on. A pro-war environmentalist is what Orwell named as ‘doublethink’.
The Central Bank of Russia has officially announced that, as of March 28, 2022, the Russian Rubble currency is BOUND to Gold. The rate is 5,000 Rubbles per gram of gold bullion.
Russia just wiped out about 30% of the value of the US Dollar, worldwide, when it comes to Gold Bullion.
Worse, because Russia will only sell its oil and gas in Rubbles, now fixed at 5,000 Rubbles per gram, anyone wishing to buy Oil or Gas will need to either pay in Rubbles or pay in Gold, and they won’t get the US Dollar value for the gold they tender as payment!
People around the world will be literally THROWING their money at the Rubble and DUMPING Dollars and EUROS to do it.
*What Russia just did is the financial equivalent of detonating a nuclear bomb.*
https://coercioncode.com/2022/03/29/russia-central-bank-announces-ruble-bound-to-gold-5000-rubles-per-gram/
In the scheme of things it looks like gold is going to play a much more significant role in our future economic arena. By gold i meant physical gold, not the funny gold trade papers. Washington will fight tooth over nail against widespread adoption of gold as trading vehicle for sure.
Is this true? I’ve been trying to read Russian news sites on a regular basis, using Yandex Translate, and I don’t recall seeing this on the main Russian news.
I also still hear of a Ruble/USD exchange rate, which I do not believe would exist on a currency that is directly tied to an amount of gold. Since the USD/Gold rate would still change, there would be an overall change between Ruble and USD due to the the fluctuation of the USD. But there would be no such thing as a market for trading Rubles when the Ruble is fixed to a set amount of gold.
So, does anyone have a major news website link to this, which would to be very major news.
No Rubles, no gas. No gas, no squeegee!
Watchers of American television know the reference.
Don’t think loss of the squeegee won’t have ramifications!
Such a thought provoking piece by Mr Hudson.
I feel so fortunate and unfortunate to be living and seeing all this unfold.
The Europeans (including Ukraine) are the biggest dummies in history.
May the world wake up and say no.
Once it does, the truth comes out in droves.
Once it does, the US will be demilitarized and heavily sanctioned.
When this happens, citizens will rebuild.
“It was the United States [Fed] itself that broke all of this [trust], by grabbing Russia’s reserves right after it grabbed Afghanistan’s and Venezuela’s [and Iran’s] reserves.”
The U$ Fed gives a new meaning to this old advice for crooks: Why rob a bank when you can own a bank.
Great insights into the underlying forces that shape the world. I found the explanation of how the west, through tools such as the IMF, the World Bank, keep the non-Western commodity / agri economies poor. One point I do not understand though is this: How is that resource/commodity based economies like Australia, New Zealand manage to raise their standard of living and maintain it, while similar economies such as Nigeria, Brazil, etc do not manage that? One answer that I can think of is that these countries allowed their labour costs and their exchange rates to rise. In that case, what stops the poorer commodity based economies from doing the same?
alo worth it
https://consortiumnews.com/2022/03/31/read-transcript-of-cn-live-ukraine-the-economic-fallout-with-richard-wolff-and-michael-hudson/
A question for the Americans on this chat board …..
How many of you have voted for Michael Hudson to be in charge of the American economy?
The option has been on the ballot. Mr. Hudson was an official economic adviser to at least one Democratic presidential campaign, with the obvious promise implied that he’d be given a high position in the administration if the candidate won the White House. IIRC, that was Kucinich, I believe in 2008. I also seem to recall that Hudson was close to Sanders’ campaigns, so I’d count either of those as well.
So, how many Americans on this chat walked into a voting booth and voted for either Rep. Kucinich or Sen. Sanders?
Me, I’ve voted for Michael Hudson to be in charge of the American economy at least 3 times. 4 if both Kucinich attempts count. Who has joined me? Who wishes that more had joined me and Michael Hudson had been given a prominent role in leading the American economy?
GREAT interview, thank you both very much. I TW’d about it, submitted it to rense.com for listing the link, submitted it to paulcraigroberts.org and chinauberalles.com for reading, and suggested China Uber Alles / China Watch Radio see if MH is interested in doing an interview on air on KSCO 2-4pm Th 1080am in Santa Cruz, you can stream their show and listen to archives at their web site. I think everyone should hear this content. Thanks again, Mike