“Dollar Hegemony Ended Last Wednesday”: Michael Hudson Interviewed by Margaret Flowers on Clearing the Fog

Yves here. This talk overlaps with the Michael Hudson interview we posted yesterday, and again focuses on the impact of US sanctions and Russian countersanctions on the position of the dollar and US economic power. This version is a bit more concise, which may be easier for sharing. And there’s a podcast, for those who prefer to listen. Enjoy!

Originally published at Popular Resistance

Review us on iTunes! Click here… Then click on “View in iTunes … Then click “Ratings and Reviews.”

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 theyhave 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 preventglobal 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.

Print Friendly, PDF & Email


  1. Jennifer

    ” The United States is opposing any attempt at trying to preventglobal 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. ”

    LOL! The opposite is true. It will increase dependancy on oil as Germany has shown us with it’s “green revolution”. Unless you are building nuclear you need oil more than ever with unreliable wind and solar. The best thing for the oil business is for more nations to adopt green policies. Worked well for Russia. Green energy policies are funding the war in Ukraine. Putin didn’t have the oil revenue until these were adopted.

      1. JEHR

        Solar and wind energy work very well if the energy supplied by sun and wind is stored in batteries. Going electrical (with batteries) is preferred to going nuclear because of the difficulty of storing nuclear waste.

        1. Michaelmas

          Solar and wind energy work very well if the energy supplied by sun and wind is stored in batteries.

          What is the necessary battery technology than can do this at the very large scale that would be required?

          I don’t think it currently exists. You are welcome to educate me. But the last time I looked, the likeliest candidate was Donald Sadoway’s molten-salt battery technology. Which (A) did not pan out and (B) would have been just as big, complex, and expensive as a molten-salt reactor if it had.

          …the difficulty of storing nuclear waste.

          The fact that you think there necessarily is such a thing as ‘nuclear waste’ shows you don’t understand nuclear.

          What American propaganda chose to start calling nuclear waste back in the 1970s is in fact partly-spent nuclear fuel. The once-through fuel cycle that the US led the world in adopting uses only 3 to 7 percent of the energy potential of the fuel, which is thenceforth called ‘waste.’

          It’s not. If we really worked the fuel cycle and reprocessed, we could extract the full energy potential.

          The US did not want this done because: –

          (A) Reprocessing capability is enriching capability for producing fissile material for nuclear bombs, and the US wished to prevent proliferation and, not incidentally, preserve its nuclear hegemony;

          (B) Reprocessing is very much more complicated and expensive, and the private-sector US energy corporations that did nuclear in the US absolutely did not wish to undertake that expense.

          Conversely, the French state-owned EDF does reprocess. The US did everything it could in the 1980s — again, not incidentally — to stop the French nuclear buildout then.

          1. vao

            If we really worked the fuel cycle and reprocessed, we could extract the full energy potential.

            Which is something that nobody does, not even EDF, not even the Russians — explaining those “if” and “could”.

            The facts, summarized from an inquiry by French reporters:

            1) Used fissile uranium consists of 1% plutonium, 95% depleted uranium, and 4% other elements.

            2) The 4% is useless and nasty waste; the 1% plutonium is separated and then mixed with enriched uranium to give MOX, used in some atomic power plants.

            3) The 95% depleted uranium is sent to Russia — since France cannot actually reprocess it.

            4) In Russia, depleted uranium is re-enriched — but only 10% of it can be reused; the rest becomes extremely depleted uranium, which nobody is interested in.

            5) Very theoretically, one could re-re-process extremely depleted uranium, mix it with plutonium, and thus obtain fissile fuel. In a technically cumbersome and economically unviable process. For 4th generation power plants that will at the earliest come on line in 2040.

            6) The result: all that extremely depleted uranium, supposedly a source of atomic energy, is for all practical purposes toxic waste that is stored away, somewhere is Siberia.

            As a comparison, about 6% of the mass of plastic packaging is actually recycled in countries like the UK. And from the 60 elements (including those so precious rare earth elements) used in a mobile phone, at the very most 10 (if one is not finicky about economic viability) can currently be extracted and reused from discarded devices.

            Given the sanctions, I wonder what will happen to the reprocessing of spent atomic fuel from the EU in Russia…

            1. Spacedog

              Fast reactors to use spent fuel and the depleted uranium are already in service, Russia has the BN 800 and China are building their 2nd CFR 600 fast reactor. Many other designs are waiting in the wings if we cared to make a regulatory model that didn’t tie them up in knots.

          2. René

            Hola…la producción de energía por fisión nuclear genera desechos radiactivos, algunos de ellos con muy larga vida de descomposición radioactiva y deben ser cuidadosamente almacenados y no arrojados al océano sin más. En los últimos 35 años se desarrolló la tecnología de reactores rápidos que en su funcionamiento crean Plutonio que es a su vez material fisionable pero siguen existiendo los residuos hasta que se alcance el dominio de la fusión nuclear (si se logra) y esta última no generaría residuos radioactivos

        2. Grumpy Engineer

          Yeah, until you start running out of lithium for batteries. Right now the world can only produce about 500 GHw of batteries per year. We probably need 100+ TWh of batteries (in the US alone) to sustain a 100% renewable grid through an extended period of unfavorable weather. This means we’d need at least 200 years of worldwide battery production for such an exercise. And that timeline would only grow as other countries and the automotive industry claimed significant chunks of that battery production.

          Per the article in today’s Links (https://www.theblaze.com/news/to-meet-its-clean-energy-goals-the-us-might-go-mining-in-the-rainforest), the US has a single lithium mine that provides less than 2% of worldwide production. Efforts are underway to open a second mine, but it’s mired in lawsuits: https://thenevadaindependent.com/article/thacker-pass-mine-project-case-remains-in-court-battle-amid-rift-in-opposition.

          1. RobertC

            And Biden’s response to those local concerns is Biden eyes using wartime powers for minerals needed in clean energy push President Joe Biden would use the Defense Production Act to help secure U.S. sources of critical minerals that are deemed key components of clean energy technology.

            The effort Biden is considering would not circumvent or speed up permitting and environmental reviews, one of the people familiar with the plan said, a likely nod to the fact that some Democrats and green groups are wary of expanding mining on U.S. soil.

            Instead, the actions would act almost as an investment vehicle, the person said. Adding minerals like nickel, lithium, graphite, manganese and cobalt to a list of covered materials under the Defense Production Act’s Title III program could help companies secure money from a fund designed to ensure the U.S. maintains an industrial base for wartime capabilities. Those dollars would finance feasibility studies along with productivity and safety improvements rather than directly buying minerals.

            We’ve seen this camel’s nose before.

          2. Ben Oldfield

            The real problem with lithium battery storage is that after 1,000 charge/discharge cycles they loose 20% of their capacity and it quickly gets worse . How long does your mobile battery last? This is true for other types of battery.

            Other sources of power include tidal, wave, gravity using very large weights, the most developed at present is water storage/turbine. If you want continuous solar power put it in space and beam the power back as microwaves

            With wind power you can spread out the turbines as the wind always blows some where in the USA.

            1. Spacedog

              The other issue is that wind and especially solar are very materials and energy intensive to build because they are so low energy density, so you need someone with access to lots of cheap energy to build them for you.

              I suspect we will find prices will be going up steeply, and China will be less willing to expend that energy to build them in the future.

          3. René

            Litio hay bastante en el mundo, luego está la opción del reciclaje, eólica, solar…funcionan y permiten desplazar a esas energías una parte de la demanda mundial, aumentando la durabilidad de las existencias en combustibles fósiles y con ello dando tiempo a las investigaciones y sus resultados en fusión nuclear…a la postre…privativa de los países altamente industrializados…

          4. George

            Take a look at vanadium flow batteries used by the Snohomish PUD in Washington state for storage. Vanadium is said to have infinite charging cycles.

      2. Skippy

        The issue I have with this entire tread is it premised on currant or increasing consumption rates of energy sans any increases in efficiency. At the end of the day the one critical aspect in mitigating AGW is less consumption e.g. decreased entropy.

        It matters not how you get the energy or how it negates emitting AGW chemicals, because all the other activity makes up for it or increases it.

        We need less stuff and everything needs to last longer all whilst moving the stuff that is in a bad place moving forward. The case of Lismore, NSW Australia is a classic case, so many floods in just the last 5 years and 2 in just less than a month e.g. there needs to be an entire paradigm shift.

    1. digi_owl

      Only unreliable in so far as the situation with these sources is that one need to buffer/store the output in a way that we are not used to from other sources (sans maybe hydropower). After all, Oil/gas, coal, nuclear, it is all different fuels for boiling water. So in effect we are still stuck in the steam age.

      That said, there are multiple ways that one can buffer the output of wind and solar. But none of them will be as “efficient” as putting dead biomatter into a natural pressure cooker for millions of years.

      Frankly if we want to sold the problem, we will have to wind the behavior clock back to before the T-Ford. Everything will have to be build for walking and subway/tram/train depending on how far from the core one desire to live.

      Long distance travel will once more have to happen by ship where trains can’t reach, and likely via combined ships that are primarily freight but with some passenger cabins (or maybe we will see a system where some containers are actually cabins).

      1. Michael

        …and cut military footprint worldwide by 50%.

        Hopefully it happens in my lifetime. DOD est 2053.

    2. CP

      If you’re getting a non zero amount of energy from wind/solar why would you need more oil? That doesn’t make sense at all.

      1. Grumpy Engineer

        Jennifer was sloppy with her language. Germany isn’t using any more oil, but they’re importing significantly more natural gas for power generation. There are two reasons for this. First, the Germans ramped down their domestic production in expectation of renewables taking over. Unfortunately, the roll-out of renewables was slower than planned, and the equipment has underperformed. This mismatch forced the Germans to import more gas.

        Additionally, the Germans prematurely retired several nuclear power stations, and the power that used to come from nuclear had to come from somewhere else. This was supposed to have been a giant, well-performing fleet of renewables, but that hasn’t materialized. The need for imported gas grew even higher.

        Germany’s mismanagement of the Energiewende has left them highly vulnerable to gas supply shocks. The following chart says it all: https://www.ceicdata.com/en/indicator/germany/natural-gas-imports.

  2. digi_owl

    The interaction between the central bank and the treasury of a nation is one that always hurt my head to contemplate. The only ones that benefit from it seems to be private banking. As in the central bank do not exist to be the bank of the nation, but to bail out the private banks when they overextend their gambling.

    1. The Rev Kev

      Would you believe that virtually the very first thing that was done after Libya was taken was that a central bank was formed? Strange thing to make a first priority by NATO-backed forces.

      1. digi_owl

        As i recall, Islam has some nasty words to say about Usury.

        Thus places like Iran (and Saudi-Arabia?) has all manner of workarounds in place to allow for lending without violating divine decrees.

        1. jsn

          We had those same nasty words until Pope Leo X needed a war loan from Jacob Fugger.

          To my mind, this marked the rebirth of the uniquely Roman sanctity of debt which in the ensuing 500 years displaced or overwrote every other faith in the West.

          As the rest of the world works around to matching our absolute faith in money, we seal our fate to burn the world. I wish it wasn’t so.

    2. eg

      The others who benefit are politicians who use the neoliberal fictions about “independent” central banks as cover to dodge accountability for the unemployment their inane policies cause.

  3. Matthew G. Saroff

    I’d love to see a deep dive on this subject through the lens of a hardcore MMT economist,

        1. Jeremy Grimm

          I believe Michael Hudson is a Marxist, but I view him as a new school Marxist moving Marxist theory forward into the 21st Century.

        2. Skippy

          Keynes is a – part of it – from the role of the government to administrate rather than just leaving everything to market forces, then again you have many others to include for the MMT perspective, Kalecki, Lerner, and a host of PKE sorts which at the end of the day talk about functional finance/economics and not sound stuff …

  4. Wukchumni

    It is about get interesting…

    Those Americans holding virtual $ denominated investments will be scurrying to the exits as Bretton Woods fades into rightful obscurity-looking for something real to put their loot in, and if you think the housing bubble has been quite something to watch since 9/11 (really the kick-off to it) you ain’t seen nothing yet…

    Imagine a tired 1964 3/2 SFH in LA worth $100 million by 2023?

    The 2nd most valuable real item in our lives is cars, expect a major bubble there too.

    A few sharpies will realize the pm’s are the place to be, but there won’t be much in the way of sellers, so they’ll go with the above 2 choices.

    1. eg

      Well, those “virtual $ denominated assets” ARE still backed by over 700 military installations around the world, not to mention the police and prisons at the pointy end of the US legal system.

      1. SocalJimObjects

        And yet the Russians are expecting to be paid in roubles. Apparently they didn’t get the memo about the 700 military installations or what have you.

  5. Mikel

    The only country I can think of that has had similiar economic hegemony in the last few centuries is Great Britain.

    Toward the end the article MH says:
    “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 business…”

    How is the Fed going to save the stock and bond market for the 1%?

    And is this a reference for US household 1% or global 1%?

    You’ve described business here and all over shutting down and various modes of collapse.

    Talk me down, and I’m not making racial commentary when I say that I wonder how much slavery would have to be involved. It’s not a slavery based on perceived race that I’m wondering about.

    Or is it going to be more akin to how Great Britain (or rather The City of London!) has moved in the world since what has been called the decline of the British Empire?

    Housing was mentioned in the end, but that isn’t the only thing to consider.

      1. Mikel

        What if the UK pushes the USA to move to the pound?
        Decades of writing about the collapse of the British Empire and the pound (GBP) is worth more than the dollar (USD) – on a straight trade for a dollar vs a pound.
        I don’t know that much about currency trading. But on the face of it, that’s apparent.

    1. Minsky

      “You’ve described business here and all over shutting down and various modes of collapse.

      Talk me down.”

      Well, for one, this is one of the less convincing aspects of Prof. Hudson’s analysis in recent years. He’s been talking of a ‘slow crash’ and ‘businesses shutting down everywhere’ since 2008. In that time, the US economy has reached ‘full employment’ multiple times. (once before the COVID recession and again after) Before the most recent hit from the COVID recession, per capita GDP had risen about $7k above where it was in 2008 and even with the damage done by COVID it is still $5k above where it was.

      If the US were really facing ‘collapse’, there ought to be persistent mass unemployment, declining economic output, lower average per capita GDP–and most of all, America’s largest companies (Google, Microsoft, Apple, etc.) should be losing ground rather than growing.

      So while the problems Prof. Hudson is pointing out should not be dismissed, as they clearly exist, you can take solace in the fact that his prognostications of ‘collapse’ have consistently failed to come true, and given that fact there are no grounds for proclaiming that they will inevitably come true.

      1. David in Santa Cruz

        There are three kinds of lies: Lies; Damned Lies; and Statistics. The myth of “Full Employment” is pure sleight-of-hand.

        I own properties in central California and on the Canadian border 1000 miles to the north. I travel by car extensively between these areas. What I see everywhere are millions of people who are not counted in government statistics calculating “employment” and “per capita GDP.”

        What I see are armies of: a) undocumented immigrants from Latin America; b) foreign visa workers from South and East Asia and Central Europe; c) homeless addicts living in permanent bidonvilles — everywhere I go. None of these peoples’ economic activity is being honestly accounted for by mainstream statistics.

        This is what a “slow collapse” looks like. I think that Hudson gets it right.

        1. eg

          Precisely. This “full employment” narrative needs to be killed with fire until a Federal Job Guarantee is implemented: only then will involuntary unemployment go to zero — for the first time in American history.

        2. Minsky

          For a middle-income nation of 300 million people to have two thirds of its labor force making above its minimum wage is hardly indicative of a societal implosion.

          It’s not as good as other, smaller first world social democracies with better safety nets, and there are things that could be done to make it better, but it’s still a cut above, say, Mexico or Venezuela. About a third of China, which Prof. Hudson touts as the ‘future’ of the global economy (in contrast to the West’s ‘dead end’) is in a similar position. (17% of Chinese living below the poverty line, another 15% hovering near it; about 2/3 safely above it)

          When compared to countries of similar size and income, the US is in decent shape in terms of standards of living. It could be better and it will have to navigate the tricky transition into post-hegemonic status, but it hardly exhibits the qualities of a state in collapse. I think a turn away from neoliberalism towards something more post-Keynesian would help, and I agree with Prof. Hudson and his colleague Prof. Steve Keen that if we had let the banks go under in 2008 and instituted a debt jubilee we’d be doing much, much better.

      2. Michaelmas

        Minsky: most of all, America’s largest companies (Google, Microsoft, Apple, etc.) should be losing ground rather than growing.

        Yes, although America’s largest companies — the tech companies, Google, Microsoft, Apple, etc. — are fully international and only nominally American, and have been headquartered in places like Ireland for tax purposes, and can quite easily swing free of their current nominal nationality. As, in a similar fashion, Shell — formerly Royal Dutch Shell — has done by moving to London recently.

        Don’t think the big tech companies haven’t thought about it, either.

      3. lance ringquist

        200 hundred million americans living in households cannot afford a $400.00 extra bill. you are ignoring reality.

      4. Mikel

        I don’t think the problems pointed out should be dismissed either.

        When the word “collapse” or terminology like it is used, different visions form in people’s heads.

        Shutting down so many businesses that 99% of the people in country are impoverished and yet somehow still saving the stock and bond market for the 1% bears a bit more explanation.
        If it’s possible, what that would look like is open to speculation.

      5. The Rev Kev

        Don’t forget that the American economy was going like gangbusters in 1929 – until all those background factors suddenly caught up with it.

      6. Michael.j

        Lies, damn lies, and statistics. There has been a lot of smoke and mirrors with the “employment rate”. Correct me if I’m worrying, but I recall Prez Obama fudging the employment calculation to make “full time employment” being qualified by two people passing a twenty dollar bill back and forth.

        1. Minsky

          Even if you argue that the stats are totally fabricated, the present environment is a case and point. It’s fairly clear at the moment that there’s a labor shortage going on. Businesses are having trouble filling vacant positions, and workers are holding out for better wages and benefits.

          In a failed state where businesses everywhere are closed, workers don’t do that. They don’t get to be picky because mass unemployment compels them to compete ruthlessly for a thin trickle of good paying jobs.

          So, again, while I think Prof. Hudson has certainly identified real headwinds the US faces–I don’t disagree that things like financialization and rising inequality have deleterious effects on its economy and need to be addressed, and the dollar’s ‘exorbitant privilege’ will not last forever–I think the constant talk of ‘collapse’ and ‘failed statehood’ is overblown.

      7. RonR

        How much of the US GDP is merely the churning of money, which really contributes nothing to society & gives a false result.

        1. skippy

          Firstly GDP was never intended to be some brass ring by which to measure success or failure by its original author, it was ideologically/politically elevated to that status, the author lamented it being twisted out of context e.g. a model for introspection and nothing more.

          Secondly GDP has no distribution vectors and as you note a country could have a high GDP, but have socially corrosive and debilitating inequality, then again its a bit of a two’fer as the mob gets vulgar the elite haves and its courtesans can use it to call for more authoritarian rule cuz of property rights.

    2. eg

      You already have mass indentureship via student loans, mortgages and other forms of FIRE sector parasitism. The distinction between this and slavery is becoming narrower all the time.

  6. The Rev Kev

    The only way this makes sense is if the US expected to win. In fact, they had to win. That or lose the whole magilla. With being faced by both China and Russia, they sought to attack Russia first – this year – as they reckoned it to be the more vulnerable. Maybe it will be China’s turn next year as the Republicans will win so many seats and they are the ones that have a dislike for China. With both powers brought down, smaller powers like India will have no choice but to go along with whatever Washington demands. And the seizure of assets? That will be the new norm in this rules-based world. If this sounds like there is no Plan B, it is because there isn’t. And as I said in a previous comment, this is a financial based group of nations attacking an industrial/commodities based group of nations. But I do not think that things will workout for the west here. If Russia had folded, then it may, possibly have worked. But Russia saw this correctly as an existential fight to the death for their country and are responding with their own plans. It will take months for their plans to work out but from what I see, they will be devastating.

    1. Pat

      Funny. Even for us non military types there are certain truisms that have sunk in. The obvious don’t get in a ground war in Afghanistan, proved to be true for many including us.,
      The other I know, you aren’t going to come out of a war with Russia based in or about Russia and win. Their history is filled with giants trying to conquer them and failing.

      I think we are going to prove that one true also. And it is a self inflicted wound.

    2. Minsky

      You’re kind of forgetting the part where Russia attacked Ukraine, though, before any manner of sanctions were put on the country.

      If this is an ‘existential fight to the death’, why did Russia give the West an excuse to levy sanctions? Ukraine was never a threat to it. Unless you’re suggesting the Ukrainians are going to somehow try to invade Russia. (LOL!)

      1. Judy Lovelace

        If you think there were no sanctions placed on Russia before they invaded Ukraine, then you clearly haven’t been paying any attention, LOL.

      2. britzklieg

        before any manner of sanctions were put on the country.

        you can not be serious. Russia was the most sanctioned state in history well before the “invasion.”

        1. Minsky

          Fine, replace ‘any manner of sanctions’ with ‘the current round of sanctions’ and make it ‘excuse to levy *more* sanctions’ rather than ‘excuse to levy sanctions.’

          You’re still passing over the part where Russia attacked Ukraine.

          The Rev Kev said ‘they sought to attack Russia–this year’.

          But ‘They’–i.e., the West–didn’t kick Russia out of SWIFT, start freezing the Russian central bank’s currency assets, etc., until Russia started its attack on Ukraine.

          Conflating a response to Russian revanchism with ‘seeking to attack Russia’ is disingenuous. That’s like saying the international community ‘sought to defame the United States’ after the US attacked Iraq. As if their criticism of the U.S. wasn’t in *response* to their invasion of Iraq.

        2. Henriux Miller

          Replying to britzklieg: I think Minsky is joking, of course. Or she/he is smoking the really good stuff…

          Regarding what you write, ‘Russia was the most sanctioned state in history well before the “invasion”’, I am not going to start counting the different sanctioning measures the USA and its allies have applied to different countries at different times, but I would dare to say that most likely Cuba (since 1959) and Iran (since 1979) (perhaps North Korea is on the same league?) are the countries suffering the highest number and intensity of sanctions even today, after all the USA-NATO camp has done to Russia.

          I am not sure about the Swift thing in terms of Iran and Cuba, but I know that for both of them the participation in the “global” banking system has been a perilous experience for decades. The Trump and Biden administrations have only tightened the sanctions against these two “rogue states”, until more recently the Biden people slightly changed the tune regarding Iran, because of oil, of course.

          The importance of Russia in the international arena makes the sanctions against them much more noticeable. And when the repercussions backfire and hurt the USA-NATO camp, these sanctions become an unavoidable and amplified topic, even for the western mainstream media.

          1. eg

            This is when the other shoe is going to drop — due to its strategic position with respect to real resources Russia will be the first case where the sanctioners will suffer as much or more than the sanctioned.

            It’s not for nothing that a plurality of the world’s population has declined to join the US sanctions regime — they need food, fuel and fertilizer at least as much as they need Washington’s approval …

      3. Amfortas the hippie

        Ukraine was to be a Forward Operating Base for Nato/USA…from at least as far back as Brizinski’s “Grand Chessboard”(where he said as much, quite openly)>
        Russia watched while Nato/USA put war materiel and troops and even missiles in the Baltics, the Balkans, Poland, and attempted to set up shop in the Stan Countries, essentially half encircling Russia…and then a color revolution in Ukraine(04) and then an actual Coup, with CIA/USAID(14)…all the while Russia has been saying, “don’t do that…makes us nervous”.
        this was the Red Line…and the “West” crossing it made Russia feel like they were literally in a corner…to them , this was an existential situation…resist, or die.
        the above meat of nut narrative is how i remember it(eidetic memory, here, sadly)…but it’s been all but scrubbed from the “western” MSM…such that my mom thinks i’m a trumper and get all my info from alex jones….when i merely remember stories in Reuters/CNN/the Economist/etc from even 6 months ago…let alone 20.
        this has been a long time coming…because the same hive of neocons have been infesting Foggy Bottom since the end of the Cold War, and they maintain a hardon for all things Russian(see: Portnoy’s Complaint,lol). When they are momentarily discredited, said neocons merely hide in the walls of the State Dept….and emerge when the spotlight inevitably moves on.

        my mom gets all her news from MSNBC…and from Daily KOs, when she’s feeling randy.
        hasn’t a clue who Victoria Nuland is…thinks Ukraine was a european democracy, until putin and his puppet trump ruined it…and simply will not believe that there are any Nazis in the world today, outside of the teaparty/trump wing of the GOP.
        i bit my tongue for 4 hours monday taking her to the eye doctor…while she parroted Maddow about how Putin will be dead in a month, and Russia will collapse even before that….essentially, taking the Russiagate/antiTrump narrative from 2015-2019 and substituting Putin for Trump.
        daily “bombshells”, etc
        of course, she believed trump was some kind of solomon grundy or lex luthor, with superpowers and stuff…she’s not a stupid woman, but she believes what she is exposed to all day every day…and people like Maddow earned her trust during Bush2.
        Mom has also been saying things about Putin for many years now…how he’s an imperialist with world domination in his sights…that he’s insane…and that him and his unaccountable military routinely perpetrate war crimes across the world,lol…
        (this is called “Projection”, btw…since it’s we who fit all 3 of those things)
        Orwell was a manual…as were the juicy bits of the Matrix.
        the vast majority of Usians live inside a narrative bubble, as the Machine intended.

        “We’ll know our disinformation program is complete when everything the American public believes is false.”

        William J. Casey,CIA director

        1. Minsky

          Give me a break. What ‘existential threat’ did Ukraine pose to Russia on or near Feb.24, 2022 that it didn’t pose ten years ago? There wasn’t even the slightest sign that the Ukrainians were planning on invading Russia.

          Everything you’re saying is just another version of what the neoconservatives said about Iraq. “Iraq was to be a Forward Operating Base for Radical Islam, it posed an existential threat”/”The US watched while Iraq fed radical Islamic groups war materiel and recruits”.

          And if Ukraine is nothing but a ‘puppet state’ that Russia is ‘liberating’ (just like the US ‘liberated’ those ‘poor Iraqis’) then it’s very strange that the Ukrainians are actually, um, *fighting* to defend it. One would think, if it’s all as you say, that the Ukrainians would welcome the Russians with open arms, and turn their fury on the Azov battalion.

          Watching critics of the neocons defend Putin as he pursues his own Eurasian version of neoconservatism and launches his own version of the Iraq War is really sad.

          1. Henriux Miller

            To put forward such a comparison and for it to make any sense at all, you would have to erase centuries of history, and the realities of geography and geopolitics intertwined with such history. You would have to be speaking of “abstract” nations—of countries placed against those green screens that they use in Hollywood for filming; in front of a very convenient and totally empty background that can be filled later with whatever you want to put in there—as opposed to the real places with real histories that Iraq, the USA, Ukraine, and Russia are.

          2. Altandmain

            Nuclear weapons.

            If Ukraine had joined NATO, there would be nuclear weapons along the Russian border.

            It would have been a worse than Cuban Missile Crisis. ICBMs can be intercepted if launched from the US. SLBMs can be too. Nuclear weapons that close to Moscow cannot.

          3. eg

            What is the proximity of the Ukrainian border to Moscow? How long would it take for SLBMs stationed at the former to hit the latter?

            Now do the same math for where those very same SLBMs would have to be stationed vis a vis Washington and get back to me as to whether the US would consider turnabout sufficiently “existential” or not.

            And that’s before Russia training an additional 5000 Canadian or Mexican soldiers every year for full interoperability with their armed forces and stationing them in Ontario or on the Rio Grande …

          4. Yves Smith Post author

            Oh, so the US should have sat pat during the Cuban missile crisis? Or do nothing if China started supporting Mexicans attacking American enclaves in Mexico. to the degree that there were mass departures (~ 1.5 million left Donbass for Russia and Belarus since 2014) and training and arming Mexican troops using Chinese military approaches, so that they’d be able to coordinate seamlessly with Chinese forces?

            You really have not been paying attention.

            1. NATO has been training and arming the Ukraine military since 2014. Biden just confirmed that.. Ukraine is already NATO-lite

            2. Russia had negotiated a solution with the separatists, Ukraine, with France and Germany involved (Minsk and Minsk 2). It never got done because Ukraine welched on its commitments, presumably at the instigation of the US

            3. Russia kept trying to negotiate with the US in 2021, but the US refused to respond to Russian proposals…..most importantly, refusing to give Russia security guarantees. That position amounts to saying the US thinks Russia should not exist. That is consistent with the recent Biden regime change non-gaffer.

            4. When the 2021 negotiations looked fatally stalled, Macron, then joined by Germany, tried to revive Minsk.

            5. On Feb 15, Zelensky repudiated Minsk.

            6. On Feb 17, at the Munich Security Conference, Zelensky said Ukraine wanted nukes. Kamala Harris was on the stage. There was no walkback over the next few days. BTW the Russian security guarantee of Ukraine was conditioned on no nukes.

            7. Various sources have suggested that Ukraine was planning a major attack on Donbass to start in mid-March. They were expected to do it US style, as in indifferent to infrastructure destruction and civilian deaths. That among other things would push yet more refugees into Russia.

      4. The Rev Kev

        ‘Unless you’re suggesting the Ukrainians are going to somehow try to invade Russia.’

        Late to reply here but I am sure that it did not escape your notice that the Donbass Republics evacuated all their women and children just before the war. The Ukraine was not going to invade Russia. They were going to obliterate the Donbass Republics – with the help of NATO. And others people here more eloquent then I here have given you all the information that you need to get an understanding of the situation. That invasion was set to take place in March so the Russian, as part of their operations, did a pre-emptive attack and bottled up that force. With the Ukrainian military degraded, they are now turning their attention to mopping up this invasion force.

    3. Susan the other

      I do agree that the Russians read the real-politic of the world more accurately than our neotwats. But all is still not well. If the Russians back their currency with gold it will draw away much of the stress and strain on the dollar to keep the world economy turning. That’s a good thing. But gold is just as big an illusion as an “IOU” from a militarized economy. A “Hegemon.” Imo, the thing that Russia has, more valuable than gold, is its willingness to deal with people on a cooperative basis. Gold might keep them from getting out over their skis – but gold is still fiat. Let me repeat that: gold is fiat too. We need to think about this long and hard. The only thing that is not fiat is human cooperation. Because you just can’t fake it. Human cooperation requires justice and flexibility and a dedication to the well being of everyone. It requires constant dialog. Human cooperation also does not require an “interest rate”. The Russians are good at dialog. We are not. We are just too complacent and arrogant. But maybe this will jolt us into finally becoming the people we should already have become – had it not been for interference by special interest.

  7. duffolonious

    Since she brings it up (in the podcast, not in the transcript) on the Minneapolis public school strike – it is nice that the strike is over, my kid’s first day back was yesterday after over 2 weeks off. Of note: charter schools were not on strike.

    While it’s over, talking with our son’s teacher, she has been forced out of meetings with the new principal at our elementary school. More of the PMC using “if you ask real questions on budget you can f*ck off” style tactics (similar to stuff read here on doctors in the pandemic).

    Also, MPD given a nice raise with back pay. So that’s *cough* nice *cough*.

  8. Dr. John Carpenter

    Thank you for this. I don’t think the seizure of Russian assets has really sunk in for a lot of USAins, if they’ve even thought about it at all. I’m no expert here, but I knew that was a turning point when it happened. So I appreciate the interview to put it in more context.

    There was an article I read 2016ish that I wish I’d bookmarked. It was the first thing I’d seen really talking about Russiagate (and this was very, very early into it.) The crux of it being, the whole anti-Russia ramp up was really about oil and who would control Europe (especially Germany) oil. The article has stuck with me and reading this interview, almost every line was an Aha! because of it.

  9. lance ringquist

    thank you mr. hudson, i forgot about carters money grab on iran. to me i saw 1993 as the year of americas demise as a super power. nafta was a signal by nafta billy clinton that wall street was to have carte blanch not only of america, but the world.

    but in 1995 when the peso collapsed, even those with the barest of cognitive skills could see that free trade would never work.

    and in just about every corner of the world, economies collapsed which enriched a few.

    instead the nafta democrats with their neo-con allies threw trillions of dollars of americas wealth, military power, our technology and standard of living trying to get the rube goldberg contraption to work, and after throwing all that away, it collapsed anyways in 2008, and every year its sinking ever further till today its a complete collapse.

    tapeworms are not strategic thinkers that’s for sure.

    1. Skippy

      Hay lance …

      Good stuff, but I would point out Bill Clinton was just the the public front house face of the neoliberalism he promoted, lest we forget the real culprits like Ruben et al. So its a bit lame too, on this blog, pin all these outcomes on little old Bill because the agency preceded him and the main agency/protagonists where working in the back drop.

      Lest we forget and then inform the commentary thingy … neoliberalism is just old wine in a new bottle …

      1. lance ringquist

        yet no one was able to full fill the reagan legacy but nafta billy clinton. if we do not dig into nafta billy clintons disastrous policies, then the people behind the curtain skate to create chaos and poverty once again.

        the war crime trails after WWII were not just to demonize hitler, the lead lawyers understood that little fish lead to big fish, which lead to ever bigger fish.

        not only did the face of the facsists get hung or imprisoned, but so did their advisors inside and outside of government, as well as the financeers.

        i think cromwell hung the king and others that were behind the curtain.

        so you cannot separate the disastrous polices, and ignore the people behind them.

        we have simply been way to kind to the criminal element that flourished because of nafta billy clinton.

        i am no trumper, but trump was right when he responded to hillarys attempted jab, trump responded but you let us.

        and i agree.

      2. lance ringquist

        rubin would have never been put into a position of power, if nafta billy clinton did not have the same beliefs, same with bomb’em albright, both were put into positions of power because they represented the beliefs of the person who put them there, nafta billy clinton.

        many of that type were put back into power also by empty suit hollowman obama.

        to let those types skate invites another president as progressive as FDR, nafta joe biden who is anything but.

        blinken and sullivan did not get their positions of power to do immense harm to the world, unless the person who put them there had the same beliefs.


        Biden Means What He Says

        so should we demonize rubin and let the one who put him there skate? no one voted for rubin outside of the u.s. government, but we did vote for nafta billy clinton.

        1. Skippy

          The salient point is to reject what he stands for with the understanding removing him does not remove those driving that agenda. Its not just a political party or leadership issue, it exists in academia/media, which then filters through society at large, private and public.

          1. lance ringquist

            the point is that if you do not demonize the people and their policies, americans will then elect the most progressive president since FDR. none other than nafta billy clintons right hand man.

            we must connect the disastrous policies to the smiley faces.

  10. John Mc

    Dr. Hudson,

    Thank you for this generous explanation, and serious analysis. I am grateful we have your insights to share and discuss. Could you discuss how the “digital dollar” and cryptocurrencies play into this strategy?

    I sometimes speculate that the cryptocurrencies are an intelligence platform creation (much like the internet), in that if the dollar, or US hegemony take too much of a battering, that there will be a shift away from the dollar to other cryptocurrencies – wiping out previous debt slates, but keeping the elite control and power over decision making in the FIRE, MIC, and Oil/Tech/Industrial sectors.


  11. C.O.

    This has been reminding me repeatedly of Book 1, Chapter 53 of Herodotus, which includes the famous Delphic and Amphiarus oracles’ response, “that if he should send an army against the Persians he would destroy a great empire.”

    That history rhyming thing again.

  12. KD

    I recognize the Michael Hudson believes there is some kind of master plan here, and while I respect him in general, my impression is that what we are dealing with is stupid, and when stupid is called out, stupid doubles down on bigger stupid. These folks are living in a Unipolar Dream.

  13. Skippy

    Mister Hudson how do you tell them … how oh how oh why … you had to run for it in Mexico because you dared to use the word ***forgive*** in the human context … and how that might effect future relationships with others …

    Then again who was it that suggested the human aspect of altruism had to be sacrificed on the alter of the market so it could price correctly and thus distribution be fatherly administrated …

  14. Sound of the Suburbs

    Neoliberalism is a global ideology.
    I’ve seen it as a great learning opportunity.
    Everyone was using the same economics, so everyone was making the same mistakes.
    Only a few out on the fringes have noticed.

    This has been a perfect opportunity to find out how the monetary system actually works.
    The financial crises are the time when the big advances can be made, and there have been plenty of those.
    These are the keys to unlock the secrets of the monetary system.

    Neoclassical economics is the economics of the Roaring Twenties, the Wall Street Crash and the Great Depression.
    Policymakers sooner or later use the economic growth model of the Roaring Twenties, oblivious to where this is leading.
    Japan had the financial crisis in 1991, and were left facing a Great Depression.
    We had the financial crisis in 2008, and were left facing a Great Depression.
    The Chinese have been using the economic growth model of the “Roaring Twenties” since 2008. Their problems are just beginning.

    This is the curious thing.
    The Americans have never understood the monetary system.
    Luckily the Americans had the Great Depression It cleared the slate, and allowed them to continue in the usual haphazard manner to which they have become accustomed.
    At 18 mins.
    They need to clear the slate again.
    Raising interest rates with all that debt in the economy could be a dangerous move, but they won’t know that.

    It was Michael Hudson that first understood the exorbitant privilege the US had by having the global reserve currency.
    Once he had explained it in Super Imperialism, others could see it .
    No one seems to really understand the monetary system in the US.

    Gradually this was forgotten again.
    They forgot how other countries financed their Government deficits and thought they needed to balance the budget.

    The zero sum nature of the monetary system is not understood.
    This is the US (46.30 mins.)
    The private sector going negative is the problem as you can see in the chart. This is when the financial crises occur.
    When the Government deficit covered the trade deficit they were fine, but then they tried to balance the budget
    As the Government goes positive, into Bill Clinton’s surplus, the private sector is going negative causing a financial crisis.
    The current account deficit/surplus, public deficit/surplus and private deficit/surplus are all tied together and sum to zero.

    What were those old rules of thumb they developed over the years by trial and error?
    Balanced government budgets AND balanced trade (current account)
    You can’t have one without the other, as the Americans have demonstrated so well.

    We (UK) run a current account deficit, so balancing the budget isn’t a good idea.
    The Germans can do it safely because they run a big trade (current account) surplus.
    The Germans put rules together that work for them because they run a big current account/trade surplus.
    They don’t realise why these rules won’t work in countries that run current account/trade deficits.

    No one really understands the monetary system.
    Only a few out on the fringes have taken advantage of neoliberal mistakes to understand the monetary system.

    1. Sound of the Suburbs

      Everyone was using the same economics, so everyone was making the same mistakes.
      The Chinese made the usual mistakes, and then worked out what caused them, which was very unusual.

      Davos 2018 – The Chinese know financial crises come from the private debt-to-GDP ratio and inflated asset prices
      The black swan flies in under our policymakers’ radar.
      They are looking at public debt and consumer price inflation, while the problems are developing in private debt and asset price inflation.
      The PBoC knew how to spot a Minsky Moment coming, unlike the FED, BoE, ECB and BoJ.

      A year later, and they had made further progress.
      Davos 2019 – The Chinese know bank lending needs to be directed into areas that grow the economy and that their earlier stimulus went into the wrong places.
      They had pumped bank credit into areas that don’t grow GDP, and the private debt-to-GDP had risen to a level they were on the verge of a financial crisis.
      Everyone does that with neoclassical economics, but they don’t usually see the financial crisis coming, like the US in 1929, Japan 1991 and US, UK and Euro-zone in 2008.

      Davos 2019 – The Chinese have now realised high housing costs eat into consumer spending and they wanted to increase internal consumption.
      They let real estate rip and have now realised why that wasn’t a good idea.
      No one realises you are better off with low housing costs when using neoclassical economics.

      1. Sound of the Suburbs

        The Chinese have identified the two strands.
        Have they found the link?

        I first knew China was in trouble when I read Steve Keen’s book “Can we Avoid Another Financial Crisis?”, page 97.
        Later announced by the BIS, and then the PBoC.
        People like Steve Keen and Richard Werner have been leading the way on this.
        MMT and Richard Koo will also help to understand the monetary system.

        The other strand has been followed by Michael Hudson, who has led the way here.
        What is the link between the two?

        What was classical economics like?
        There were three groups in the capitalist system in Ricardo’s world (and there still are).
        Workers / Employees
        Capitalists / Employers
        Rentiers / Landowners / Landlords / other skimmers, who are just skimming out of the system, not contributing to its success

        The unproductive group exists at the top of society, not the bottom.
        Later on we did bolt on a benefit system to help others that were struggling lower down the scale.

        Identifying the unproductive group at the top of society didn’t go down too well.
        They needed a new economics to hide the discoveries of the classical economists, neoclassical economics.

        Hiding rentier activity in the economy does have some surprising consequences.
        We got Ricardo’s Law of Comparative Advantage.
        What went missing?

        Ricardo was part of the new capitalist class, and the old landowning class were a huge problem with their rents that had to be paid both directly and through wages.
        “The interest of the landlords is always opposed to the interest of every other class in the community” Ricardo 1815 / Classical Economist
        What does our man on free trade, Ricardo, mean?

        Disposable income = wages – (taxes + the cost of living)
        Employees get their money from wages and the employers pay the cost of living through wages, reducing profit.
        Employees get less disposable income after the landlords rent has gone.
        Employers have to cover the landlord’s rents in wages reducing profit.
        Ricardo is just talking about housing costs, employees all rented in those days.
        Low housing costs work best for employers and employees.

        Any serious attempt to study the capitalist system always reveals the same inconvenient truth.
        Many at the top don’t create any wealth.
        That’s the problem.
        Confusing making money and creating wealth is the solution.
        Some pseudo economics was developed to perform this task, neoclassical economics.

        Rentiers make money, they don’t create wealth.
        Rentier activity in the economy has been hidden by confusing making money with creating wealth.

        Banks create money, not wealth, and so lie at the epicentre of the confusion.
        What you think is happening and what is actually happening are two very different things.
        Global policymakers have been finding out the hard way.

Comments are closed.