America Has Just Destroyed a Great Empire

Yves here. One asset America has that most anti-globalists overlook is our legal and court system. The value of foreign exchange transactions due to investment flows was estimated by the Bank of International Settlements at 60 times that of transactions related to trade, although cross border capital flows collapse during financial crises.

Investors greatly prefer transacting though US institutions due to our well-settled precedents. Recall that multinationals investing in Russia as well as some Russian corporations, were often loath to invest directly. They would would go through Cyprus to be subject to English law and a court system run on UK lines. I’ve belatedly come to the view that the reason Cyprus banks blew up in 2013 and were not rescued was the power that be wanted to impede foreign investment in Russia.

That is not to say that US hegemony isn’t past its sell-by date, but that the idea that a new system will come into being soon is way way overdone. I’m of the Gramsci view:

The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.

By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is The Destiny of Civilization.

Herodotus (History, Book 1.53) tells the story of Croesus, king of Lydia c. 585-546 BC in what is now Western Turkey and the Ionian shore of the Mediterranean. Croesus conquered Ephesus, Miletus and neighboring Greek-speaking realms, obtaining tribute and booty that made him one of the richest rulers of his time. But these victories and wealth led to arrogance and hubris. Croesus turned his eyes eastward, ambitious to conquer Persia, ruled by Cyrus the Great.

Having endowed the region’s cosmopolitan Temple of Delphi with substantial silver and gold, Croesus asked its Oracle whether he would be successful in the conquest that he had planned. The Pythia priestess answered: “If you go to war against Persia, you will destroy a great empire.”

Croesus therefore set out to attack Persia c. 547 BC. Marching eastward, he attacked Persia’s vassal-state Phrygia. Cyrus mounted a Special Military Operation to drive Croesus back, defeating Croesus’s army, capturing him and taking the opportunity to seize Lydia’s gold to introduce his own Persian gold coinage. So Croesus did indeed destroy a great empire, but it was his own.

Fast-forward to today’s drive by the Biden administration to extend American military power against Russia and, behind it, China. The president asked for advice from today’s analogue to antiquity’s Delphi oracle: the CIA and its allied think tanks. Instead of warning against hubris, they encouraged the neocon dream that attacking Russia and China would consolidate its control of the world economy, achieving the End of History.

Having organized a coup d’état in Ukraine in 2014, the United States sent its NATO proxy army eastward, giving weapons to Ukraine to fight an ethnic war against its Russian-speaking population and turn Russia’s Crimean naval base into a NATO fortress. This Croesus-level ambition aimed at drawing Russia into combat and depleting its ability to defend itself, wrecking its economy in the process and destroying its ability to provide military support to China and other countries targeted as rivals by U.S. hegemony.

After eight years of provocation, a new military attack on Russian-speaking Ukrainians was conspicuously prepared to drive toward the Russian border in February 2022. Russia protected its fellow Russian-speakers from further ethnic violence by mounting its own Special Military Operation. The United States and its NATO allies immediately seized Russia’s foreign-exchange reserves held in Europe and North America, and demanded that all countries impose sanctions against importing Russian energy and grain, hoping that this would crash the ruble’s exchange rate. The Delphic State Department expected that this would cause Russian consumers to revolt and overthrow Vladimir Putin’s government, enabling U.S. maneuvering to install a client oligarchy like the one it had nurtured in the 1990s under President Yeltsin.

A byproduct of this confrontation with Russia was to lock in control over America’s Western European satellites. The aim of this intra-NATO jockeying was to foreclose Europe’s dream of profiting from closer trade and investment relations with Russia by exchanging its industrial manufactures for Russian raw materials. The United States derailed that prospect by blowing up the Nord Stream gas pipeline, cutting off Germany and other countries from access to low-priced Russian gas. That left Europe’s leading economy dependent on higher-cost U.S. Liquified Natural Gas (LNG).

In addition to having to subsidize domestic European gas to prevent widespread insolvency, a large proportion of German Leopard tanks, U.S. Patriot missiles and other NATO “wonder weapons” were destroyed in combat against the Russian army. It became clear that the U.S. strategy was not simply to “fight to the last Ukrainian,” but to fight to the last tank, missile and other weapon being deleted from NATO stocks.

This depletion of NATO’s arms was expected to create a vast replacement market to enrich America’s military-industrial complex. Its NATO customers are being told to increase their military spending to 3 or even 4 percent of GDP. But the weak performance of U.S. and German arms may have crashed this dream, along with Europe’s economies sinking into depression. And with German ‘s industrial economy deranged by the severing of its trade with Russia, German Finance Minister Christian Lindner told the Die Welt newspaper on June 16, 2023 that his country cannot afford to pay more money into the European Union budget, to which it has long been the largest contributor.

Without German exports supporting the euro’s exchange rate, the currency will come under pressure against the dollar as Europe buys LNG and NATO replenishes its depleted weaponry stocks by buying new arms from America. A lower exchange rate will squeeze the purchasing power of European labor, while lower social spending to pay for rearmament and provide gas subsidies threatens to plunge the continent into a depression.

A nationalist reaction against U.S. dominance is rising throughout European politics, and instead of America locking in its control over European policy, the United States may end up losing – not only in Europe but throughout the Global South. Instead of turning Russia’s “ruble to rubble” as President Biden promised, Russia’s balance of trade has soared and its gold supply has increased. So have the gold holdings of other countries whose governments are now aiming to de-dollarize their economies.

It is American diplomacy that is driving Eurasia and the Global South out of the U.S. orbit. America’s hubristic drive for unipolar world dominance could only have been dismantled so rapidly from within. The Biden-Blinken-Nuland administration has done what neither Vladimir Putin nor Chinese President Xi could have hoped to achieve in so short a period. Neither was prepared to throw down the gauntlet and create an alternative to the U.S.-centered world order. But U.S. sanctions against Russia, Iran, Venezuela and China have had the effect of protective tariff barriers to force self-sufficiency in what EU diplomat Josep Borrell calls the world “jungle” outside of the US/NATO “garden.”

Although the Global South and other countries have been complaining ever since the Bandung Conference of Non-Aligned Nations in 1955, they have lacked a critical mass to create a viable alternative. But their attention has now been focused by the U.S. confiscation of Russia’s official dollar reserves in NATO countries. That dispelled the thought of the dollar as a safe vehicle in which to hold international savings. The Bank of England’s earlier seizure of Venezuela’s gold reserves kept in London – promising to donate it to whatever unelected opponents of its socialist regime U.S. diplomats designate – shows how the euro as well as the dollar have been weaponized. And by the way, what ever happened to Libya’s gold reserves?

American diplomats avoid thinking about this scenario. They rely to the one unique advantage the United States has to offer. It may refrain from bombing them, from staging a color revolution to “Pinochet” them by the National Endowment for Democracy, or install a new “Yeltsin” giving the economy away to a client oligarchy.

But refraining from such behavior is all that America can offer. It has de-industrialized its own economy, and its idea of foreign investment is to carve out monopoly-rent seeking opportunities by concentrating technological monopolies and control of oil and grain trade in U.S. hands, as if this is economic efficiency, not rent-seeking.

What has occurred is a change in consciousness. We are seeing the Global Majority trying to create an independent and peacefully negotiated choice as to just what kind of an international order they want. Their aim is not merely to create alternatives to the use of dollars, but an entire new set of institutional alternatives to the IMF and World Bank, the SWIFT bank clearing system, the International Criminal Court and the entire array of institutions that U.S. diplomats have hijacked from the United Nations.

The upshot will be civilizational in scope. We are seeing not the End of History but a fresh alternative to neoliberal finance capitalism and its junk economics of privatization, class war against labor, and the idea that money and credit should be privatized in the hands of a narrow financial class instead of being a public utility to finance economic needs and rising living standards..

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  1. Eclair

    If you put it like that, Mr Hudson, well, yeah. Here we are, as Gramsci says, experiencing a variety of ‘morbid symptoms.’

    In our corner of southwestern New York State, normally a pastoral paradise (outside of our rotting city of Jamestown, deserted decades ago by the corporate furniture and textile manufacturers in search of more compliant labor and bigger profits. Thankfully we still have Cummins engines!) the smoke rolled in yesterday afternoon, blotting the sun and tickling sensitive lungs: Canada’s forests are still burning. )

    This morning, at 5 AM, air quality (thank you, benevolent government for your site, where we can track air quality and know when it becomes dangerous to breathe) was 163: hazardous for people with heart and lung disease, as well as children and teens. Almost two hours later, it has ballooned to 179 and what should be a beautiful June day has taken on the aspect of a smudged and grimy Kodachrome, where the color has leached out.

    A friend, returning yesterday from Oslo, has been stuck in NYC, as flights from there to Buffalo have been delayed or cancelled; east coast storms and, more ominously, problems with air traffic control staffing. We all remember the holiday debacles last winter. Glad the airline execs got their bonuses. Yay stock buybacks!

    Bridges, built in the 1930’s and 1950’s, are collapsing, some under the weight of freight trains which then dump their toxic contents into iconic rivers. Sorry about that, Yellowstone. And sorry about having to cut off the outlets for downstream drinking water. Others, like I-95 in Pennsylvania, just …. pancake … especially if a tanker truck crashes and explodes underneath.

    And, some freight trains simply fall off the tracks, especially the ones loaded with toxic chemicals. Which authorities ‘clean up’ by lighting on fire, in a ‘controlled burn.’ Here’s looking at you, East Palestine!

    I’m gonna stop here. Because reflecting on the ‘morbid symptoms’ has raised my heart rate, which means I have to breathe more polluted air. Heading down to the kitchen, where all the ingredients for a Corsi-Rosenthal box are assembled. Hope I got enough duct tape!!

    (And, if I am having trouble breathing, what about the pollinators? The birds? They are silent this morning.)

    1. Michaelmas

      It’s Yves who brought to bear the Gramsci line, not Dr Hudson.

      She may be right. Empires can take centuries to deflate (forex, the Ottoman). Alternatively, they can collapse overnight (the USSR). We shall see. Personally, I am now based elsewhere — though I still visit on business — and find my attitude about the world generally is much improved

      1. Eclair

        Yes, I realize that the Gramsci quote was from Yves’ intro to Hudson’s essay. I was not clear enough in writing my first sentence to validate Hudson’s thesis, and then skipping to the Gramsci quote. Nice that Yves has such a stalwart defender. :-)

        And, my Corsi-Rosanthal box is almost finishing!! Thanks to NC for talking about this ‘way back at the beginning of the Pandemic.

          1. Eclair

            Ah, gf. Do you paper a closet with layers of tinfoil, or use your car, or your extra-large microwave oven? And, if airtight, what provides your oxygen supply? Inquiring minds, and all that ….

        1. Cristobal

          If it is any consolation, Eclair, last night and today the smoke from the Canadian fires reached Cadiz, on the southwest coast of Spain. I still have contacts in NYS, my former home state, and regretably have to agree that things there have gone to hell, but not quite as bad as in some other places.

          More on-topic, I believe that Yves hit the nail on the head when she noted the decline of confidence in the American legal and financial (?) systems. No matter who you are or where you are, there is a need to have a trustworthy system of justice if people are to get along together, do bizniss. In the US court system today the judges more often dispense with justice than dispense justice. We are not the only ones to notice this.

          1. Eclair

            Cristobal, my condolences to Cadiz. Our son and family in Seattle have endured weeks of these smoke events for the past two summers. Their smoke came from fires in California, in Oregon, in Washington’s Cascade range, and from British Colombia. People are starting to notice that our counties are burning.

            And, re: the ‘recent’ decline of confidence in the American legal system. Well, it’s ‘the people who matter’ who are now losing confidence in the legal system. If you are Black, or brown, or poor, the American legal system has never been your friend.

  2. Joe Well

    Another massive victory by Russia over the US, really a US self-defeat: the COVID vaccines.

    Around the world, Russia practically gave away the Sputnik vaccine (even the name had propaganda value), while the US went the usual your-money-or-your-life route. This was even true in the Americas, even, to some extent, in Mexico!

    And then the US added insult to injury by forbidding recipients of the Sputnik shot, who, remember, couldn’t get US/UK vaccines even though they probably would have preferred them, from entering the US. This disproportionately affected the still US-government-leaning middle class.

    Vaccines had been perhaps the greatest US gift to humanity in the Cold War, inventing, manufacturing and distributing them, all while the Soviet Union seemed to be more interested in outer space. They won the technological space race, but how did the average person see any benefit from it? Now the roles have been reversed.

    1. hayek's heelbiter

      FYI Joe Well. The situation is more deplorable than you imagined. Somehow light has slipped through the cracks. How long before it is extinguished, I do not know.

      During the pandemic, I did not hear a single positive word about the Sputnik V vaccine, even though by description, as a DUAL adenovirus vector vaccine, a method used in labs for decades and currently in the Ebola virus vaccine, Sputnik V was going to be very effective against SARS Covid 19. Rather than being as restrictive as mRNA vaccines, theoretically Sputnik V should prove protective against future variants.

      As the pandemic went on, I stopped hearing even negative MSM press reports re Sputnik V. Eventually I didn’t even hear negative ones.

      Last week, out of curiosity, I googled Sputnik V efficacy and the following came up. How the
      article slipped by the censors, I haven’t a clue. To my knowledge, the National Institutes of Health: National Library of Medicine – National Center of Biotechnology is not known for being a comsymp.

      Sputnik V Effectiveness against Hospitalization with COVID-19 during Omicron Dominance,%E2%80%9395.2%25)%20%5B1%5D.

      The data we obtained indicate that the Omicron variant causes at least 90% of infections in the studied cohort. The effectiveness of protection against hospitalization with COVID-19 in our study was 85.9% (95% CI 83.0–88.0%) for those who received more than one dose [of Sputnik V]. It was 87.6% (95% CI 85.4–89.5%) and 97.0% (95% CI 95.9–97.8%) for those who received more than two or three doses. The effectiveness in cases of more severe forms was higher than for less severe ones. Thus, present study indicates the high protective efficacy of vaccination against hospitalization with COVID-19 in case of Omicron lineage.

      Alas, there’s nowhere in the UK or Western Europe where the Sputnik V vaccine was or is available.

      And a summary from another prestigious publication (I assume the cited article is paywalled):

      The three vaccines in use in the U.S.

      A New England Journal of Medicine (NEJM) study published in January 2023 focused on people 12 and older in North Carolina’s state vaccine registry data. It found bivalent vaccines from Pfizer and Moderna to be 58.7% effective against hospitalization compared to 25% for the monovalent ones that preceded them, and 61.8% effective against infection compared to 24.9% for the monovalent vaccine

      Ps. I was talking to a retired biochemist the other day, who was boasting about how he only believes in evidence-based research. Nevertheless, he categorically denied the claims of the first article, his thought being that that such positive results were probably due to flawed methodology.

      1. some guy

        The “comsymp” terminology became obsolete with the fall of the USSR. If one wants to accuse someone of “sympathy” and “support” for today’s RF, one could coin a word like ” Eastern Orthodoxsymp” I suppose.

        Anyway, the real problem is that CDC has become ” germsymp” and “plaguesymp” in its orientation and policies. So interesting that this article made it through the Let’er Rip Curtain.

        Perhaps Sputnik Vaccine Tourism will become a thing for people wanting to go to countries where the Sputnik Vaccine is available.

  3. Stephen

    I found this article very helpful as a summary of key developments and context.

    Agree fully with Professor Hudson that we are seeing a change that is civilisational in scope.

    However I share the point that Yves makes, if I have understood correctly. Getting to the new order will not be overnight and will be messy.

    If we think about European / western history (admittedly in very general broad brush terms) we can maybe find some clues. The decline of the Spanish Empire / system lasted from circa 1650 to 1715 or so. The eighteenth century up to 1815 was then dominated by Anglo French contests for supremacy (albeit with the intervening Dutch Golden Age) leading ultimately to the Vienna System. Britain’s own decline was then discerned by perceptive observers as early as the Great Exhibition of 1851 but our attempt to act as the hegemonic power only fully ended in the 1940s. The new “American System” was only in place fully from 1945, or even from 1990. All of these intervening periods were marked by wars that involved many countries: not just the ones competing for hegemony. My fear is that we are now seeing something similar.

  4. Michael Hudson

    My webmaster sent me a note and said that I need a closing sentence to tie the article together. Here’s what I’ve added:

    The irony is that America’s historical role has been that although it itself was not able to lead the world forward along these lines, its attempts to lock the world into an antithetical imperial system by conquering Russia on the plains of Ukraine and trying to isolate China’s technology from breaking the U.S. attempt at IT monopoly have been the great catalysts pushing the global majority along these lines.

    1. Rolf

      Dr Hudson, thank you: your text today makes for a nice 1-2 page summary of all that happened in the last decade in that part of the world.

      Just received my copy of Destiny of Civilization, and very much looking forward to it, having finished J Is For Junk Economics as well as Killing The Host. Thank you again for all your invaluable work and contributions.

      1. eg

        If you haven’t already done so, you might want to read And Forgive Them Their Debts since it’s the first in a trilogy that continues with The Destiny of Civilization

    2. .Tom

      I thought your article was very clear and had a good ending as it was. I had no quibbles or questions, as I often do, and can’t imagine what kind of hubris would demand editorial changes ;-)

      1. GramSci

        Agreed. I’ve complained about poor copy-editing in the past, but the post as originally written was clear, succinct and closed authoritatively.

  5. The Rev Kev

    The American story will be seen down the track as a self-created tragedy. Historians will say that they had it all but through the hubris of its leadership class, gutted and de-stabilized the country itself for profit and that this behaviour was reflected in it foreign policy. Historians usually say they empires are usually not overcome from foreign forces until there is a collapse of belief in the empire by the home country. So here is a description of the state of affairs in the US by Charles Ferguson in his 2012 book Predator Nation”-

    ‘Over the last thirty years, the United States has been taken over by an amoral financial oligarchy, and the American dream of opportunity, education, and upward mobility is now largely confined to the top few percent of the population. Federal policy is increasingly dictated by the wealthy, by the financial sector, and by powerful industries. These policies are implemented and praised by these groups’ willing servants, namely the increasingly bought-and-paid-for leadership of America’s political parties, academia, and lobbying industry.

    If allowed to continue, this process will turn the United States into a declining, unfair society with an impoverished, angry, uneducated population under the control of a small, ultrawealthy elite. Such a society would be not only immoral but also eventually unstable, dangerously ripe for religious and political extremism.

    Thus far, both political parties have been remarkably clever and effective in concealing this new reality. In fact, the two parties have formed an innovative kind of cartel—an arrangement I have termed America’s political duopoly, which I analyze in detail below. Both parties lie about the fact that they have each sold out to the financial sector and the wealthy. So far both have largely gotten away with the lie, helped in part by the enormous amount of money now spent on deceptive, manipulative political advertising. But that can’t last indefinitely; Americans are getting angry, and even when they’re misguided or poorly informed, people have a deep, visceral sense that they’re being screwed.

    The real challenge is figuring out how the United States can regain control of its future from its new oligarchy and restore its position as a prosperous, fair, well-educated nation. For if we don’t, the current pattern of great concentration of wealth and power will worsen, and we may face the steady immiseration of most of the American population.’

    This was written years before Trump and Clinton and the rest of the circus so I say that it is this same malevolent leadership class has taken to treat the rest of the world as they have their own people but they are not up to it which is why they are making such a hash of things as Doc Hudson has pointed out. It is in only our own timeline that we have a geriatric Joe Biden as president and a clown like Blinken as SecState so the rest of the world is moving on.

    1. JohnM_inMN

      From the last line, “…the current pattern of great concentration of wealth and power will worsen”…

      Reading this reminded me of a recent Breaking Points short in which Saagar references the NYT article below. An estimated $84 trillion in wealth is set to be transferred from the boomers to their heirs with relatively little tax liability – wealth obtained largely through stock market gains and real estate values.

      The beat goes on.

      1. Don


        It’s not about generations, skin colours, biological sex, sexual identities and preferences… it’s about class, about power.

        1. JohnM_inMN

          Perhaps I should have said “some boomers”, those with wealth that are ready to pass it on to their heirs, instead of “the boomers.” Otherwise, seems like a nitpick.

          1. Jeremy Grimm

            I think the nit is very small actually. Instead of “some boomers” you should amend that to the “very few very wealthy boomers”. That is at least approaching a size comparable to a nit. How do you imagine that $84 trillion in wealth is distributed?

          2. Yves Smith Post author

            This restructuring started with The Silent Generation and The Greatest Generation, and even earlier cohorts, people like Milton Friedman, Alan Greenspan, Jimmy Carter (the first big deregulator) and Ronald Reagan.

            1. spud

              correct. american markets were not the envy of the world prior to the new deal. they were looked upon as rather shaky. it was the new deal that turned those markets, regulatory regimes and courts into the envy of the world. W.W.II did not turn them into the envy, it was because truman and ike stuck with the new deal, and from truman onto nixon the new deal was expanded.

              than carter and reagan started to dismantle it, but it was bill clinton that almost gutted it, and with the assault on yugoslavia and the outright in public arguing over who was going to get the mineral mine, the assault on the only pharma plant in africa, the further expansion of the assault on iraq, and afghanistan, anyone could see where the u.s. was headed by the year 2000.

              that was also when it was apparent that bill clinton was instituting the assault on unionization in america.

              anyone who thought or ignored what bill clinton did, now is facing the fact that america has been de-industrialzed and simply cannot respond any way to a real industrial powerhouse except through terror, the dollar, theft and by proxy.

              and yet the nafta democrats blame the deplorable, the russians and the chinese, for the pickle they are in was all done by there own self actions.

              bill clinton represented the parasite class, a class that will kill its host, without any self awareness of what they are doing or have done.

              they simply have a quack think tank churn out reams of study showing them that they are on the right path, and the future is bright if they stick to that path.

    2. JCC

      Excellent book. I read it years ago and re-read it just last month. Mr. Ferguson nailed the situation well over 10 years ago and it continues to degrade along the lines of what he feared could happen.

    3. David in Friday Harbor

      In 2012 I attended Charles Ferguson’s book tour. My cherished copy of Predator Nation is inscribed.

      During his in-person talk, Ferguson was even less hopeful than the quoted passage. He hasn’t posted on his blog for nearly two years. I suspect that he — like me — has given up all hope for the American polity.

    4. Acacia

      Thanks for that quotation, Rev. Sadly, I must agree with your conclusions.

      For me, this also recalls analyses such as Michael Glennon’s National Security and Double Government (2015), with his distinction between the older Madisonian institutions and the newer Trumanite network that has usurped their power and authority. In some ways, Glennon’s reading resonates with Ferguson’s duopoly, in that the real locus of power is now elsewhere, i.e., in “an amoral financial oligarchy”, though I continue to wonder how we should apportion their influence. That is, how to map out the influence of the oligarchy or the Trumanite network…? My general thought — overly simplistic, no doubt — has been that the oligarchy wields more influence over the economy, while the security state is more invested in dictating foreign policy, though there also seems to be a lot of overlap (e.g., corporations like ADM seeking to expand in the Ukraine).

      Given the current state of affairs, I find Mancur Olson’s argument that only some kind of exogenous shock, such as war or a major economic crisis can compel the U.S. to change course (as if 2008, the Covid pandemic, and now playing nuclear footsie with Russia were not enough?).

      1. JBird4049

        >>>Given the current state of affairs, I find Mancur Olson’s argument that only some kind of exogenous shock, such as war or a major economic crisis can compel the U.S. to change course (as if 2008, the Covid pandemic, and now playing nuclear footsie with Russia were not enough?).

        The elites with their interlocking web of patronage and supporters is strongly insulated from these shocks especially from the average citizen. Eventually, if we are not killed first, their insulation will fail.

    5. Elvin Laton

      There is only one problem with the woe is me crowd; they fail to see that people with initiative and and strong work ethic still suceed in America. Life is not fair, and the world owes no one a living, but those who are too weak and/or debilitated.

  6. jefemt

    Great Empire? Isn’t that oxymoron?

    Humanity needs some profoundly different paradigms.

    1. Mikel

      Oxymorons and the “oxymoronic”:

      “EU diplomat Josep Borrell calls the world “jungle” outside of the US/NATO “garden.”

      Diplomat. Another word redefined and/or stripped of its meaning.

    2. lyman alpha blob

      You’ll have to take that up with the pythia – her words from 2500 years or so ago.

  7. Lex

    The problem with empires is the same as it ever was. Some like to set a time period for them in years, usually referencing Rome, but the number of years is historically contextual rather than formulaic. Rather, they all proceed in a fairly predictable cycle of foundation, expansion, maximum extent, erosion and collapse.

    They become self-perpetuating in that they’re initially very profitable for the imperial core. And to manage that profit the imperial bureaucracy forms. Problems arise when expansion becomes difficult or costly (as in the cost exceeds the profits), because an empire must expand. When it stops expanding it begins to die. By the time an empire reaches this point though, the imperial bureaucracy essentially controls the functions of government. Alternatives to imperial expansion become difficult or impossible to implement.

    If, like me, you’re American then you can place the “you are here” marker on your historical map. As Dr. Hudson has explained at length, the US is a financial empire. The military component is more like a mafia protection racket in that it is the threat more than the reality of capability. That has now been proven on the steppes of Ukraine.

    I find Yves’s prediction about the new unable to be born yet the most likely analysis. Partly because there is no apparent challenger to take the empire in conquest. Partly because the modern world is complex and messy, so it’s not really possible for another empire to take the crown.

    I’ll conclude this overly long comment with my opinion that empires rarely fall because of outside pressure. They fall because of internal contradictions and they fall when these internal contradictions become unsustainable. History usually records external pressure as the proximate cause, but that’s almost always an accident of history. Empires always face external threats and dispatch them … until they can’t. The moment that they can’t dispatch external threats is because of their internal contradictions. The US has far too many internal contradictions that are now boiling up. The imperial bureaucracy is primarily concerned with holding the lid on the pot as tightly as possible while it focuses on the external. We’ll see whether and how long the US can withstand its internal pressure buildup.

    1. Mad Albanian

      I would say that the collapse of the Ottoman Empire was mainly the doing of outside forces. Empires can deal with internal contradictions better than exterior pressures.

      1. Raymond Sim

        It has seemed very much the opposite to me. Can phenomena like Mameluke Egypt be attributed to outside pressures?

    2. Wukchumni

      Financially, the fall of the Roman Empire was eerily close to where we are now.

      Before the near complete debauching of the Denarius, it took 25 nearly pure silver Denarii to equal 1 nearly pure gold Aureus, a very similar rate to the 1795 to 1933 gold standard in our country, where it took 20 silver Dollars to equal nearly 1 troy ounce of pure gold.

      It went to around 3,000 Denarii to equal that same Aureus, so 120x in the Roman Empire versus our current near 100x.

      And it wasn’t as if things went to shit all of the sudden when high tech in the way of silver washing bronze coins to better look the part came along-it took 150+ years after for things to come a cropper, just as we didn’t fall apart in 1968* or 1971, when the emperors new clothing fit the greenback so well.

      *the real end of the silver standard. it being the last time the government honored the pledge on Silver Certificate banknotes by redeeming them for silver. It worked out with silver going up @ that point that each $ in SC notes were fetching around $2 per $, with coin dealers doing a lively trade in these buying from the public as ideally you wanted to accumulate a bunch so to redeem them big ugly looking ‘pure’ silver bars, and like any Cinderella story, said Silver Certs reverted back to being FRN’s after June 24th, and the feverish interest and trade in them died just like that.

  8. Rod

    Dr Hudson is clarifying in his analysis.
    Every policy backfire gets papered over by a compliant and owned media.
    imo-the idea of America Hegemony is an unknown thing among the common population.
    Felt but unidentifiable.
    Though anger/resentment/frustration/ignorance/and confusion can be experienced in so many daily activities.
    Life seems to be accelerating.
    And we are all ‘gunned’ up to boot—and no where a society needs to be in order to pull ourselves up by the bootstraps after the crack up.

  9. digi_owl

    Not just that US/UK has precedents settled, they have them settled in favor of corporations.

  10. muammar's ghost

    “And by the way, what ever happened to Libya’s gold reserves?”

    Yes, now that you mention it, I am curious about that as well. Where did they go?

    1. The Rev Kev

      Same could be said of the Ukraine’s gold reserves which were last seen being loaded aboard a transport plane the night after the Maidan.

  11. Susan the other

    Do all those financial settlements at the BIS indicate that above and beyond international trade payments there is way too much speculation going on? Not sure how to process that except to think the BIS is operating a global Ponzi scheme. Can a high volume of financial transaction settlements of everything at a loss be maintained? Sounds like part of plan to forestall a “soft landing” for the entire neoliberal paradigm. Interesting about Cyprus being used to prevent investment in Russia. And followed by the Germans talking about the Ruskies like they were the mongol mafia when the Germans had been very interested in doing business with Russia. So did we set off Cyprus and the GFC in order to slow Russia down? Also interesting is the argument between Yellen and Warren where Warren does not want local banks to be overrun by big “consolidated” banks. So chickens coming home? One question is, if we make peace with Russia will the empire crash faster or slower? I do think that the GND is the only way to go forward from here.

  12. some guy

    It may be that the “jungle dwellers” will turn their “jungle” into a Food Forest, and live happily ever after.

    Since the American elites have already decided to write America off as a “burn down” and plan to flee once it has burned all the way down and they have grabbed whatever insurance money they can grab for the ashes and rubble, one wonders if they then plan to all move personally to the Food Forest? Certainly Junior Bush has his family estate waiting in Paraguay against the day he or his descendants decide it is time to go there.

    Will the Food Foresters welcome the American Flight-Capital Elite into their Food Forest? Or will they shoot them dead on sight whenever they are spotted? ( For that matter, can we exterminate them from physical existence when they visibly execute their end-game of getting the fork out of Dodge?)

  13. Glen

    Well, you know what us Americans say:

    We had to destroy the empire in order to save it.

    And, having lived through much of the last forty years feeling at times like I was experiencing a slow motion train wreck in our country, all orchestrated by our American oligarchs, I now have a much better understanding of how that kind of stupidity happens.

  14. Synoia

    It seem the issue is clear, and lies at the foundation of US jurisprudence (passing the buck . Making an own goal appears impossible in American Football.. The same is not true in Soccer (Or football) over the rest of the globe.

    Because of the lack of an “own” goal” US sports, translates to the attitude of the US Government – we never make a mistake (bs) , because we can always change the rules, (aka change of policy) and because policy US policy that it can accommodate all manner of success, some of which made the results worse. (See Vietnam Afghanistan, Syria, Iraq, Libya, and the UK (Boris the Waffler).

    The solution is obvious. Enforce Soccer as the US replacement for “Throw Ball’, and learn what own “goal” means.

    ps Where Is the emjoy for tongue in cheek?

  15. ilsm

    can’t blame biden, this ukraine kerflufle is result of neither, iraq, afghanistan nor libya overcoming the angst from losing saigon in 1975.

    the us needs to prove it can take on the enemy at the end of long supply lines, with allies’ military built from fresh cloth, and politicians who have traits that would embarrass adolf hitler!

    seriously, sending near state of art usa weapons 6000 miles from their factories to be observed in use by usa’s future adversaries is technical suicide.

    sort of like flying f-35’s around syria so russia radar techs can get data.

  16. Jeremy Grimm

    When I bounce these two statements off each other:
    “Investors greatly prefer transacting though US institutions due to our well-settled precedents. Recall that multinationals investing in Russia as well as some Russian corporations, were often loath to invest directly.”
    — Yves
    “Their aim is not merely to create alternatives to the use of dollars, but an entire new set of institutional alternatives to the IMF and World Bank, the SWIFT bank clearing system, the International Criminal Court and the entire array of institutions that U.S. diplomats have hijacked from the United Nations.”
    — Hudson
    A question pops out … The u.s. has mature trading laws and mechanisms for making and clearing transactions, together with [currently] a relatively stable government and government policy toward business and trade, and a relatively stable and readily fungible [currently] trade currency. But the u.s. has made some unsettling confiscations of wealth held as dollars — undermining the perceived safety and stability of its currency, and banking system. Where do the BRICs stand on the u.s. push toward Globalization with its accompanying legal structures as detailed in the Investor-state dispute settlement (ISDS) and investment court system (ICS) trading laws and mechanisms? What about the visions of world government sketched in WEF dreams and the WTO?

    1. Yves Smith Post author

      I have a different issue with the idea of a grand new system. Any set of institutions like that requires that participating states cede sovereignity, and in particular agree to courts and judicial procedures that supercede national law. The US could implement such a system because it bestrode the non-USSR world after WWII and kept most major economies as vassal states by providing military “protection”.

      I don’t see how a multipolar system can square the desire for more national sovereignity with a international financial architecture. Look how weak the UN is. That’s a reflection of the limited desire of nations to cede authority to it.

      1. Jeremy Grimm

        Thank you. I prefer a peaceful multipolar world system with a world of nations instead of the world of Corporations and the widespread subjugation and exploitation of Humankind the u.s. seems intent on crafting. The book “The Dawn of Everything” by David Graeber and David Wengrow offers hope that a better world than that the forces controlling the u.s. had been building. A world run by and for the benefit of giant Corporations would have used up every last bit of resources as the Earth’s climate grew ever more hostile to Corporate Civilization. Corporate Civilization would have driven Humankind over a cliff.

        The near future as these changes in the world system evolve and the future for what remains of the u.s. Empire after the changes firm up appears a dangerous time. The forces controlling the u.s. have proven themselves irrational, uncompromising, and reckless. As for the remnants of the u.s. Empire after the Fall, the u.s. will live in a world with few friends, a country ravaged of many of its once abundant resources and capacities, including its energy resources fertile lands, and productive Industry. I cannot yet imagine what that will mean for me and children, and I have already given up on grandchildren.

    2. Acacia

      Where do the BRICs stand on the u.s. push toward Globalization with its accompanying legal structures …

      Join the SCO instead? Question: does the SCO also promote something like ISDS, but with “Chinese characteristics”?

      1. Yves Smith Post author

        The ISDS operates by having panels that deliberate in secret whose members have strong ties to big corps as the deciders. Their decisions override national law. No appeals. I don’t see how countries swallow this particularly since they know better by now.

      2. Polar Socialist

        Nope, both Russia and China have been, shall we say, reluctant to participate in Energy Charter Treaty pushed by the west precisely because of they perceive the parts about investor protection as arbitrary and likely destabilizing.

        So for now they prefer bilateral investment treaty arrangements, which while creating more heterogeneous investment landscape, is more flexible and allows governments some leverage in defining that landscape.

        Of course, energy is a critical resource to all countries, so it’s always political and smart countries want to keep under political control how and when it’s distributed, no matter what the market-religion says.

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