Michael Hudson - Changes in

Superimperialism
Michael Hudson - Changes in Superimperialism: The Position of the USA and China in our Global Economic System

Nearly 50 years after the original publication of "Superimperialism", Michael Hudson revisits how the lucrative dollar-based economic system
that the US set up after WWII has evolved with the rise of China and the Covid-19 pandemic. What financial weapons is the US likely to use,
and does China's de-dollarisation protect it from such attacks? The book provides a detailed analysis of how the US has used its economic
might to control international relations. The book is complicated, but essentially documents how after WWII the US held an unprecedented
amount of the world's gold reserves (50%). These reserves were depleted with the incursion into Korea, and subsequent involvement in Viet
Nam, requiring the US to abandon the "gold standard" for valuing world currencies. A failure that proved itself valuable, pushing the US to
develop multiple strategies that today allow it to make other countries pay for its military dominance. Michael Hudson is Professor of
Economics at the University of Missouri-Kansas, former balance of payment economist at Chase Manhattan, political consultant, and has
written on many topics relating to the history of debt and the international financial system.

0:00 Introduction 2:16 Talk 40:13 Q&A

welcome to the first event of the oxfordeconomic society for this academicfor this
for this year 2021 um i'm oscarthe current president of our society andi'm glad to
welcome you back for anotherterm of exciting discussionsalthough we were
hoping last term to beback in person by januaryuh due to the worsening curve in
19thsituation the uk our events this termare going to remain online so thateveryone
at home can still participateuh a new year calls for new resolutionsand our society's
resolution for 2021is to increase the diversity of economictopics distressedto give
you an idea we'll be hosting apresentation ondecolonizing economics and its role
inemerging markets by dr ingridclavendren the executive board member
ofdiversifyingdecolonizing economics we'll be hostingprofessor randall raya strong
proponent of the muchdistressed modern monetary theorywho was also as i just
discoveredprofessor at the university of missourikansas citylike our guest today um
we'll also behosting a presentation on the youngstrollers initiative run by
theinstitute of new economic thinkingat oxford a community some of you
willdefinitely be interested inuh joining that brings together morethan fifteen
thousand young economistsuh from around the world finally we'llbe organizinga
moderate discussion with the ft'schief economics commentator martin wolfand
many other events of course to startus off we are proud to host
michaelhudsondistinguished research professor ofeconomics at the university of
missourikansas cityand former balance of famous economistat chase manhattanand
an economic advisor to governmentsworldwide including icelandlatvia china on
finance and tax lawnow nearly 50 years after the originalpublication ofsuper
imperialism professor hudson willbe discussingchanges in super imperialism
theposition of the usa and china in ourglobal economic systemhow has the rise of
china and the proven19 pandemic affected the usa's capacityto control financial
flows and how willthe usa modify its behavior as a resultthe talk will last 45
minutes with 15minutes of questions at the endmake sure to send in your
questionsthroughout the talk through ourpigeonhole pagethe link should be in the
description ofthis event if you would like to re-watchour events they'll be posted to
ouryoutube channel afterwardsthank you for joining us professorhudson well it's
good to be here thankyou for inviting me especiallysince you mentioned people
that i'veknown for a long timerandy ray uh both of us are now at thelevy institute
also and uhworking in other places martin wolf umi've been the reason that i'm uh
writinganew version of super imperialism is iwas asked to by chinauh and i
thought well as long as theywant to bring out a new translationand uh basically an
updating of my bookon super imperialismuh i might as well do it in english tooso i
bought the rights back from plutoand in about two or three months i willbe
reissuing theuh english language edition and thecontext isthat the strategy for
detailerizationtoday by chinarussia other countries uh the discussis basically how
do you make analternative to an internationalfinancial orderthat really was
designed from thebeginning to benefit the united statesin its own self-interest uh
this issuewas discussed after world war oneuh when uh the
internationalintergovernmental break uhdebt system broke down into allied
debtsand uh german reparationsit was discussed again at the 1930s uhwhen the
united statessort of scuttled the london economicconference of 1933and it was
especially discussed in 1945uh in december in parliament in thehouse of
commonswhen the british parliamentarians werediscussinguh do we want to accept
the terms of thebritish loanuh that uh of which ended up uh3.75 billion u.s
dollarswritten down from what keynes had wantedor do we want to go it aloneand
uh it was the conservative uhempire uh uh pro-empire people thatwanted to reject
the loanuh churchill wanted at least to abstainandnot approve it butthere was no
alternative and again andagain uhboth in 1945 again in 1971when there was the
america moved offgolduh in every case uh the alternativeseemed to be anarchyuh
and that was what the u.s strategywas based oneither you accept u.s rules in
thebeginning creditor rulesand after 1971 debtor rules uhuh that favored the united
states and uhessentially gave it control of the worldeconomyor you have to go it
alone and riskanarchywell britain was not able to go it alonein 1945and the
parliament i did not include theparliamentary discussionin the first version of
superimperialismbut i've includeduh that discussion in the new version uhthat i'm
doing because i think it wasvery clear britain saidlook at the united states uh
basicallywants to uhabsorb the uh british empireand the sterling area into the
dollararea on its own termsand leave us almost brokeand what can we do about it
they allsaiduh we see what's happening we see thatthe united states is treatingus its
ally in world war ii as adefeated partythey came right out and said that but wedon't
have an alternativebecause we can't go alone we have torely on the united statesso
i'm going to review what the u.sstrategy is andwhat's led to the uh to the changes
uhover timeuh the dollar supremacy was establishedafter world war oneby
america's creditor position uhevery uh something very novel happeneduh afteruh
uh the world war one in everyuh previous uh war uhfor instance uh the napoleonic
wars andthe earlier warsengland had been involved with uh thethe allies had
forgiven all of theirmutual debtsat the end of the war there wassomething that uh
the british calledshared sacrifice and the idea was okaywe're going to have a clean
slate afterthe warby the way this goes all the way back tobabylonia in theuh in the
second millennium bcthroughout historyall the uh there had been a
debtcancellation uhthere was no carryover uh of debts ordebts uhafter the uh the
victory uhwas achieved because the idea was thatif you leave war debts in
placethat's going to bankrupt the allies thatyou had during the war and it's
alsogoing to bankruptthe defeated countries and leave them nochoiceexcept to
fight back uh the laws ofhammurabi showed thisuh his whole uh dynasty showed
this mymy book on forgive them their debts is awhole historyof debt cancellations
and uh thispractice but the united states uhbroke this uh practice after world
warone and saidthe uh the debts have to be paidthe amazing thing is that europe
wentalong with itand the reason was that it had apro-creditorideology it believed in
the sanctity ofdebtsand was not going to uh question thatbecause there was a
guiding assumptionwhich is erroneousthat all debts somehow can be paiduh if only
countries will uh eitherdevalueor uh transform their economy oras it turned out
imposed austerity wellkeynes had a longuh debate uh with uh theuh anti-germans
uh with jacques roofof uh france and with uh uh theamericans and swedish uholin
brittle owen and he said there's nowaythat uh deader countries like the alliesor
germany can pay their debts to thecreditorunless the creditor is willing to buytheir
exports to provide them with theforeign exchangeuh to pay uh that date that debate
uhobviously he won in reality but uh thathis that assumption was rejected by
theunited statesand that assumption continues to berejectedby the international
monetary fund todayuh the junkeconomics that was brought in afterworld war
oneto consolidate the american position tosay of course you can paysimply destroy
your economy and let ustake you overand sell out all of your uh industry andraw
materials out to usand that will enable you to pay uh thiswas the american
demandand as and creditor demands uh havealways beenuh essentially you have to
be well areyou willingto destroy your economy in order to payyour betsuh kane
said this was crazy and he wasrightbut uh europe went along with it andsaid yes we
are willing to destroy oureconomywe are willing to have world war iibecause
rather than questionthe assumption that all the debts haveto be paiduh so uh what
keynes pointed out wasthat there was a distinction between thetransfer thebudget
problem in other words uh taxingthe economy to raise asurplus and german marx
or britishsterlinguh and the transfer problem the abilityto paywell what happened
was that the alliessaidwell if america is going to insist thatwe pay we're not going
to wreck oureconomieswe're going to make germany payreparations and as you all
know theresult was to bankrupt germany cause ahyperinflation therethat was only
solved by uh germanyessentially borrowing the money from theunited
statesgerman municipalities uh would borrow uhthe money uh in in dollars for
localspendinguse the dollars to turn over to theright spot to pay uh the bank of
englandand the bank of franceto pay their dollar debts to the unitedstates and that
was a circular flowit could only be kept down by thefederal reserve makinginterest
rates very low here in theunited states toto uh promote a uh uh outflowof foreign
investment but those lowinterest rates also created a stockmarket boomthat crashed
in 1939 uh in the endthe inter-allied debts had to becanceled had to be uhhave a
moratorium uh along with uhgerman reparations andthe system broke down uh
there was anattempt to uhreconstruct the economy at the londoneconomic
conference of1933 but roosevelt scuttled that andsaidyou know we're going to go it
alone andever said he said the basic principle ofamerican foreign policyis no other
country can tell us what todowe can tell other countries what to dobut they cannot
tell us what to do andwe will not joinany agreement in which we don't have aveto
powerthat gives us essentially control ofthe world bank the internationalmonetary
fund uh or the veto power inthe united nationsand any uh international
organizationthat the united statesuh will join so the question is how didthis uh
supremacy uhbe uh established all over againas world war one world war uh two
cameto a closewell in 1944 and 1945 america madeplans for the post-war economy
and itsaid well uhin order to have full employment in theunited stateswe have to
have an export-based industryandnow that we've destroyed germany andjapan our
major enemyis the united kingdom and it was veryclear thatamerica's enemy
immediately on theendingof world war ii was not russia not thesoviet unionbut
england uh and it developed astrategy that was designedto uh essentially bankrupt
england uhwith a british loanto force england to accept uh to endimperial
preferenceto break up its empire to make it tofreethe about 10 billion pounds of
sterlingfor spending not in england uh as blockcurrency as the british board of
tradeexpected but to uh spend it in theunited states soengland was stripped of all of
theblocked currencystripped of the currency area strippedof the empirethat became
absorbed into the dollararea and the reason uh in theparliamentarians and the house
of lordssaid well we know that we're bankruptingbut the alternative is to goalone
and we can't really make uhuh an alternative kane said well ofcourse you could
create your owncurrency areauh a blo and trading area with uh indiauh canada uh
other countries butuh uh that would involve a greatshrinking andand uh at the time
uh they allbelieved still that there had to be somemeans of settling international
paymentson creditor terms with gold and theunited statesuh had most of the gold in
1945. uh thebritish understood very clearlythat uh the uh what seemed to be
thegoldexchange standard for countries uhsettled their balance of
paymentsdeficitsin gold was really the dollar standardbecause the dollar was
defined in termsof goldand uh what seemed to be a gold standardwas actuallythe
dollar standard and in fact thearrangements were soone-sided that america created
in 1945that by 1950 it actually had drawnanother five billion dollars worth
ofmonetary goldinto the united states uh out of europeuh there was athe refugee
flight of gold in the 1930swas followed by uh a post-war flight outof europe as
they saideurope is america's strategy is tobankrupt europeit's going to win let's
move our moneyinto the united stateswell by the time of theuh korean war in 1950
1951 uhthe united the america's balance ofpayments deficitchanged abruptly uh
from 1951onwards through the 1960s and 1970sthe entire u.s balance of
paymentsdeficit was militaryuh at first this deficit was welcomedby europe and by
other countries becausefinallythe united states was providing the restof the world
with dollarsand uh that it needed to grow thedollars becameuh the basis of its
uhcentral bank uh reserves uh along uhwith golduh some of the dollars were
cashed intogold especially byuh france and by germany uh even moreso all of a
sudden it was america'smilitary spendingthe the private sector in the
unitedstateswas exactly in balance uhall of the deficit was milita ongovernment
accountand on government account it wasentirely militaryamerican foreign aid
actually made moneyuh in balance of payments termsso uh war spending uhmo uh
moved in now in the 1960swhen i was working at the chasemanhattan bank every
fridayuh the federal reserve would publish uhstatisticson the gold cover and all of
the papercurrencyin the united states had to be back 25percent bydollars every uh
friday we would look atwhat is the gold cover how much over the25 percentdoes
america have in free gold touh sell to uh uh settle thethe military deficit from
spending insoutheast asia in the vietnam waruh and other uh military
operationsthroughout the worldand uh it was very obvious already inthe mid
60sthat the united states at some point uhwouldrun out of gold if it continued
itsmilitary spendingwell that led uh chase manhattan's uhuh chairman of the board
george championto opposethe vietnam war saying it's fiscallyirresponsibleit was
the uh business community and theright wingin the united states that
opposedamerica's foreign warnothing not the labor movement the labormovement
was for the warbecause it was causing an inflation itwas helping wage it was uhuh
rising wages the golden age ofamerican labor was a the 1960s and 1970sresulting
from uh the balance ofpayments deficitit was the business community uh
thatopposed the waruh not david rockefeller when he tookover from george
championuh because rockefeller wanted to sort ofdo the right thingand uh he sort
of followed what thetreasury uhass chase to do but the other uhcountries uhuh uh
followed follow other uh wallstreet peoplesort of followed suit uh already in
themid 60s the united states facedhow are we going to avoid the balance
ofpayments deficitand uh the solution was uh to makeamerica to make america the
haven forthe criminal capital in the worldand uh the state department uh people
uhsomebody from the state departmentjoined chase manhattanuh chase was asked
to set up enclaveaffiliates in the uh caribbeanto essentially attract the uh
thecriminal capital of the world theyas they told explained it to me we wantto be
the new switzerlandthey said the most liquid people in theworld are the criminal
class the drugdealerswe want the drug dealer money we wantthe criminal money
because that'suh it's liquid they have nowhere to golet's make america safeuh uh
for the uh the flight capitalistsfor the kleptocrats for the crooked uhuhheads of state
of uh the world or uhputting their moneydon't have them put them in switzerlandto
push up the swiss dollarhave them uh uh put in uh the branchesuh wall street banks
that then would uhtake this uh money in victorin the uh caribbean uh tax
evasionand uh uh offshore banking centerenclavesand then would send the money
tothe head offices and the federal reserveevery three months would
publishstatistics on federal head office bankliabilities to their branches in
thecaribbeanand panama and liberia uh and othercountries that were used as
uhthese tax avoidance uh centers so wewere following that quite closelywell
despite trying to uh suchstratagemsthe united states as you all know wentoff gold
inaugust of 1971 and at the timeuh it worried what on earth is going tohappen
nowuh are we going to lose the creditorposition that has enabled us to dictateuh the
trade rules and the financialrules uhand and political diplomacy of the worldand
when they went off gold well uh in1972a year after we went off goldi my super
imperialism was publishedsayingwait a minute america is in an evenstronger
nowposition now that it's a deficit it'snot having to part with goldbut what are other
countries going to dohoware foreign central banks going to holdtheir international
reservesthere's only one currency that they canhold and that's the u.s dollaruh so
the uh the fearof the uh of wall street and the u.sgovernmentthat the dollar would
be devalued as aresult of its military spendingdidn't materialize because
foreigncentral bankswere in a quandary if they did notrecycle the dollarsthat they
received from the america'sbalance of payments deficitthen uh they their
currencies would goupand that would hurt their exportinterests and from the
americanpoint of view uh when central banks uhrecycled the dollars into uh
treasurybond holdings because foreign centralbanksat that time were not uh
creatingsovereign wealth fundsthey would only invest in officialgovernment
securitiesuh the america's balance of paymentsdeficitfinanced its domestic budget
deficit souh the re the response to my book onsuper imperialismwas not primarily
from the left but fromuh the government uh the defensedepartment i went to work
for the hudsoninstitute with herman khanand uh immediately we got a
contractfrom the defense departmentto explain to them how superior how
theimperialism was workinguh i didn't want to call the book superimperialism i
wanted to call it monetaryimperialism but uh the publisher thoughtdifferentlyuh so
the most of the copies were soldin washingtonuh to the defense department the
statedepartment and the ciaand herman khan brought me numeroustimes down to
the white house to discussthisuh and the americans made it very clearthat uh for
instance when opecuh raised quadrupled at soil prices uhin 1973 and fourafter
america quadrupled its uh grainpricesuh the uh uh americans uh uh kissingerand
the state departmentand treasury told them that if they didnot they could charge
whatever theywanted for the oilbut whatever they charged they had torecycleinto
u.s financial markets mainlyinto government bonds but also theycould buyu.s
stocks in u.s corporate bonds butthey couldn't buy majority ownership ofany big
american industryamerican had to be control of itsindustry butif saudi arabia and
the arab countriesuh we're told you can buy all the stocksthrough the stock market
you wantand i think one of the saudi arabianking bought a million shares of
everycompany on the dow jones industrialaverageuh so you had a recycling and
the moredollarsthat americans spent abroad on itsmilitary deficitthe more uh
money was flowing into thestock marketand into the bond market to
financeamerica's budget deficitso uh the uh the whatthe american government had
achieved byits creditor statusbefore 1971 it achieved by its debtorstatusafter 1971
and once again uh it told therest of the worldwell what's the alternative
thealternatives energyuh essentially it used its uh threats ofthreatening the world
that uh presidentjohnsonuh insisted that uh europe give uhamerica uh special uh
uhtrade favoritism uh special uhadvantages and uh the rest of the worldfelt that it
had to go alonguh and succeed uh with all of thisso uh at the time there was a
discussionwellwhat are the advantages of gold uhherman khanactually uh wanted
uh he was a monetaryuh uh right winger uhand believed that gold should be
uhreintroduced into the internationalmonetary system andhe and i went down and
gave apresentation to the us treasurysaying gold is a peaceful medal becauseit's a
constraint on the balance ofpaymentsif countries had to pay their balance
ofpayments deficitin gold then they would not be ableto afford the balance of
payments costsofhaving four of going to war uh andthat was pretty much uh uh
accepted andthat was why the united statesbasically the response we got was
that'swhy we're not expuh going back to gold we want to be ableto go to war and
we want there tothe only alternative uh to hold uhcentral bank reserves was the
unitedstates dollarwell uh the united states also arrangedthe world bankuh and the
international monetary fundto favor the us economy specificallyuh in the world
bank uh it would onlymakeforeign currency loans to othercountries uhit sent out
missions uh to foreigncountries to say what does the countryneedand uh almost
every mission said uh whatcountrieswhat uh latin america africa and thenear east
needsuh is not foreign currency it needsdomestic currencyfor agricultural
development uh you havethe latifundia problemin latin america the the uhunited
nations came out with twowonderful reportson the need for land reform
throughoutthe third worlduh in order to grow domestic food uh theworld bankuh
was absolutely set againstother countries becoming foodindependent uhthe uh the
head the most important headsof the world bankwere former uh secretaries of
defenselikemac and america uh john mccloyuh a whole you can look through who
theheads werethe americans said that any foreigncountry wanting to grow its own
foodinstead of depending on u.s grainexports was counted as anact of war and
would be overthrown uhand that was the reasonuh explicit reason why the united
statesestablisheddick military dictatorships and clientoligarchies in latin americathe
world bank did promote uh plantationagricultureuh but the plantation agriculture
wasfor export cropsuh to compete with each other other uhexporting countriesto
lower the price of export cropof tropical crops that could not begrown in the united
statesbut these countries were not supposed togrow their ownuh food supply uh
other rules uhthrough the world bank were essentiallyuh you have to useuh it
became a huge marketnot only for americanuh firms to build dams et ceteraum i
was told that uh the world bankperson in charge of designing dams hadbeen a
chronic bedwetteras a child sort of acting and acting itall outbut it also got
countries in debt andonce countries were in debt they wereforced into the
international monetaryfunduh that uh said basically you uh inorder to pay your
debtsyou have to engage in a vicious classwar against the laboruh you have to
lower wages uh becausethe only variablein world trade contrary to what's taughtin
the textbooksuh there's a common world trade and rawmaterialsall countries pay
the same price forcopper machineryuh and other materials there's a commonworld
price for oilthere's a common world price for capitalgoods uhuh the one variable
inforeign exchange is the price of laborso uh the uh imf said wellif you just uh uh
fight you you've gotto prevent unionizationyou've got to prevent uh any kind of
uhpro-laborwork you've got your only way of payingdebts isto polarize your
economy and impoverishyour labor forcethis is exactly what uh the uhopponents of
keynes it said in the 1920suh trying to and you saw the result ingermanyuh the
same thing was saiduh imposed on the third world countrieswhich is whyuh until a
few years ago uh all thecountries of the world tried to getfree of uh the imf
conditionalitieswhich were uh the terms on which the imfwould lend moneyand the
imf became uh it you shouldessentiallythink of the imf as a small office in uhthe
basement of the pentagonuh deciding what uh countries do we wantto give
supportwhat countries are following policiesthat the united states do not want
andwe want to wreckand uh uh the uh that explains why theimf will give uh loans
to completelyuncredit worthy countriessuch as argentina under the dictators uhor
the ukraine that has no visiblemeans of paying off the debt well theloans to
ukraineuh the loans to greece uh uhrecently uh that ended up bankrupting uhit uh
the loans to uhyet again to argentina has uh createda uh very it'sdemoralized uh the
imf staff when theysaid wait a minute every forecast wemakeshows that the debts
can't be paid andthe imf continues to make themso the imf has become a pariah
amonguh competent financial analyststhroughout the worlduh and the united states
is still tryingto force countries into the imf as ameansof controlling them saying
either youengage ina a pro-american uh war against laborand neoliberalismor the
alternative is wreckagewell uh finally uhthe ironically what's uh changed all
ofthisis the united states uh cold waruh against uh russia and china and theunited
stateshas begun as you know to imposesanctions on the russiauh the russian and
other post-sovieteconomies on chinaso what uh the united states has done isdriven
them into a position where theonly defensethat they can do is indeed to do
whatbritain couldnot do in 1945 but to createa uh alternative economic order with
itsown rulesand so for the last five years or sochina russia other countries
arediscussing how to de-dollarize theireconomyand what do they want to do well
theysay well the first thing we have to dowe don't want to hold our
internationalreserves and loansto the us government because if we holddollarsin
our uh foreign reserves thenthese dot we are going to finance theunited states
military deficitbuilding its 800 military bases allaround usto try to force us uh
threaten usmilitarilyif we withdraw from this internationalfinancial systembased on
the us dollars free lunch thatthe dollar canuh dollars can be spent uh at
infinitumwithout any constraint mainly onmilitary policies that we don't
agreewithwith uh economic policies that quitefrankly areuh right-wing anti-labor
policiesthat we don't agree with and we're goingto take the lead with the uhin
creating a new grouping of chinarussia iran uh the shanghai
cooperationorganization base members uh basicallyuh to create this and uhthey're
trying to do what uh the worlduhbegan to talk about doing in 1933at the london uh
economic conference howdo we makea fair system well keynes had uhoutlined and
uhhis plans for uh uh bretton woods in1944uh his alternative of the bancor uh
hesaid there should be a central bankthat can make loans to uh create moneyto
enable deficit countries to pay sothat if they're running a balance ofpayments
deficit they don't have toimpose austerityuh which is not going to help them topay
austerityand anti-labor policies never enablea country actually to pay the debt
itmakes them less able to pay the debtand even more dependent on now thecreditor
countriesso uh the uh the chinese and russiansare discussing todayhow do we
create a currency a centralbank that will help usactually develop uh and we'll
useinternational reservesto promote the industrialization and theupgrading of
laborand public uh infrastructure investmentinsteadof uh the u.s demand of
privatized uhinfrastructure development and whatchina and russiahave found out
very quickly is whatseems to bean economic rivalry between america andchinauh
and other countries is not aa not really an anti-china rivalry assuchit's not it's a
conflict of economicsystemsthe conflict is between neoliberalisma financialized
world order that uhwants to privatize all infrastructureand create monopoly rents
for uhtransportation education uh healthcarelike occurs in the united states
uhinstead of having these basicuh uh investmentsin the public domain to be be
subsidizedand provided at minimum cost so aquestionat issues is what what kind
of economyis the world going to have will it be aneoliberal economya privatized
economy thatcherizeduh reaganized and thatcherized andfinancializedorganized by
uh central planning in wallstreetor is the government going to planchina and russia
do not want acentralizedplan planned economy anywhere near ascentralized as the
united states ispromotingwith wall street in the united statesthe center of economic
planningis is been shifted from washingtonto wall street uh uh financialinstitutions
andand banks and banks create credit not tocreate new means of production not
tobuild new factoriesand plant and equipment uh but toessentiallyuh extend credit
against assetsalready in place eighty percent of bankloans in the united states and
inenglandare mortgage loans for real estateagainst real estate that's already inplacei
think three percent of mortgage loansare for new constructionuh as long as uh
these loans are alreadycollateralized with uhpromises to buy apartments etc so uh
thequestion is what kind of financialsystemare you going to have to uh back upuh a
central banking systemand credit creation is credit going tobea public uh
infrastructureuh enterprise as it is in chinauh where the bank of china is able to
uhdecide who is going to get the debts uha public bank is not going to
makecorporate takeover loansis not going to make loans to corporateraidersuh it's
going to make loans to actuallyuhcr increase the tangible economynot to take it
over and turnpublic infrastructure the educationsystem healthcaretransportation
communications into rentextractionso we're having today finally a revivalof the
kind of debate that all ofclassical economics was about in the19th centuryin the
19th adam smith jon stewart milluh down up through marxand alfred marshall
were how do weminimizeuh unearned income as economic rent wellat that timethe
kind of economic rent they weretrying to minimizewas real estate rent and the idea
was toget rid of the hereditary landlord classthat was looked at as a form of
overheadwell in today's economythe main round to years are financialthere's not a
landlord class anymorebecause uh two-thirds of americans owntheir own homei
think the home ownership rates arelarger in uhcontinental europe uh and england
soyou don't have a hereditary landlordclass extract living offa land rent what you
do have is afinancial classthat's emerged after world war one in away thatuh uh
essentially they have become thenewuh central planners uh the newconcentration
of wealthengaged in a new kind of economic warthat's not only against laborbut is
against government to appropriategovernment property by financializing itgetting
governments into debt and havinggovernment sell off the publicinfrastructurethat's
happening in america by the wayat the state and local levelfor indebted cities and
states like newyork uhuh and also to essentially financializethe economy uhhow
how does china and russia avoid itseconomyuh becoming financialized uh how
does itavoid it's a a financialized economyfrom becoming a high cost economyand
thereby losing its internationaltradeadvantage so uh what's it uh stake inin
dedolorization is how do you createuh analternative economy to a
financializeddollarized economy uh that is going totry to minimize the cost of
living andminimize the cost of doing businessinstead of a high-cost economyuh as
is occurring in the united stateswell uh thethe answer they have is to some
extentthere's going to beuh gold as a means of settlement butmost of alluh china
russia iranother countries are going to mutuallyholdeach other's trading currencies
uh andthey're replacingthe dollars with gold and with eachother's currenciesthat
essentially is uh the final uhresponse today that the world could havetakenafter
world war one and didn't and couldhave taken after world warii if it would have
followed keynes'spolicies and didn'twell finally with uh the help of uhuh of uh
donald trump uh isolatingamerica isolating china uh and russiait's uh created a
whole uh independentblockuh and helped them do what wasunthinkablein the past
that's what ii think i've used up the 45 minutesgreat thank you very much um well
we'vegot some questions coming inuh first of all start off start us offwith
umyesterday uh was it two days ago joebiden was inaugurated making him
the46thpresident of the united states um whatare your expectations regarding
hisstance on china we've had him talk a lotabout democracy as a guiding
foreignpolicy principleto distinguish between what is good andwhat is bad for the
usum which measures is he likely to whatwhat measures are likely to be
advancedumused to advance the usa's interests willbe tariff sanctionsuh or could
we even see maybe likemilitary buildup and embargoeswell the question is what
are the usinterests uhthe u.s uh again and again in the 1920sthe 1930s and today
the us governmentinterests areopposite of u.s industrial interestsopposite of
u.seconomic interests so just because thebiden administrationhas an emotional
hatred of russiauh does not mean that's in the usinterests just because the
bidenadministrationsaid on second thought we're not goingto join the uhuh the uh
iran agreements becausewe're going to talk to israel first andbiden said
yesterdaywe will uh no blinken his uh secretaryof state saidwe will not do anything
without uhisrael's uhapproval regarding iran uh uh biden alsosaidwe will not do
anything uh about uhsolving the world uh uh uhuh uh more global warmingthat the
oil industry doesn't likebecause uhbasically the interests of the unitedstates what's
called that arethe uh interests of the campaigncontributorsuh here we have citizens
united where uhthe campaign contributorsuh basically dominate the policy and
notthe votersuh the voters were american voters werenot given a choice in this
electionuh biden uh did not do well in theprimaries anduh kamala kamala harris
had one percentof the primary votethe americans rejected biden rejected uhharris
they reject donald trump whatthey want is basicallya bernie sanders type policy all
of thepolls say what american interests wantarethey want what you have in europe
uhthey wantpublic uh healthcare you know universaluh healthcare they don't want
to have topay 18 percent of america's gdpfor uh medical uh insurance and
medicalexpenses becausethere's no way they can compete americanindustryand
compete in markets and americanlabor be employed in export industrieshaving uh
uh the health care monopoliesthat are protected by uh successiveadministrationsthe
american public didn't want uhthe obama administration to evict 10million
american familiesand uh it looks like the bidenadministration is going to
outdoobama and the biden basically says we'regoing to evict another 10
millionamerican families i canwhat obama did i can do more and uhso many
families have not been able topay the rentor even pay the mortgage if they've
beenunemployed or if their income isuh reduced because of the corona virusuh
they're going to be a hugewave of uh evictions in the unitedstatesthat will be even
larger than the obamaevictionsand again uh the uh obama evictionsuh were
targeted mainly against blackand hispanicswho were the victims of the junk
uhmortgage loansuh biden has made a point ofuh appointing many black uhwomen
and men uh to administer positionsso is a cover story for the fact thathis policiesare
going to be just as viciouslyanti-blackand anti-minority and anti-hispanic isuh the
obama administration's workand uh they found that as long as youcan have identity
politicsat front and center uh you can dowhatever you wanteconomically to crush
the very peoplethat you pretend to berepresenting in identity politics so uhthe
american economyis uh i don't nobody can see really anywayin which it can
recover the stock marketcan recover becauseall of the federal reserve credit uh
andquantitative easinghas been going into into uh supportingstocks and
bondsincluding junk bonds sheila bear wrote awonderfuluh wall street journal
editorial uh onthatand uh but the the underlying economyis shrinking rapidly only
while thestock market's going upthat's what the american economists calla k-
shaped recoveryup for the one percent down for the 99percentokay um i'm going to
ask her one morequestion on the china topic and thentalk a bit more about
historical thingsyou mentionedum so china has been building up anetwork of
support and trade dealsto drive its expansion you mentionedsome of the policiesum
it's also been growing its presencein the u.n system and even puttingtogether
alternative internationalorganizations like theum asian infrastructure investment
bankumis there a line that the us would nottolerate china crossing after which
theu.s would start devoting much largerresources andspending to contain china or
is the u.salready at full powerwhat can the united the united states ismuscle-
bounduh despite its huge uh militaryuh budget it can't field an armyit can uh it has
a foreign legionuh isis for instance is part of itsforeign legionuh uh you uh the
europeannato is part of its foreign legion butamerican uh therethere's no way
american can ever have aland war again so you can neverinvade and conquer a
country uh with auh military uh army all america has isthe atom bombuh and that's
muscle bound so the choiceisuh it cannot go to uh wage any kind ofwarexcept
atomic war uh it's there'snothing in betweenso uh i think russia and china know
thatanduh russia at least has taken uh steps toprotect itselfand said well if the
united states wantsatomic war it'll be what will be wipedout but it'll be wiped out
too and uheurope will be wiped out i thinkprobably the first exchange would beuh
to wipe out uh england and europe tosay look you know we don't want to go towar
with you andreally blow up the world america let'sjust show you what we can
dolet's blow up england and europe uh soat least you won't haveuh your uh your
colonies uh uhthere but if america persistedit would be the end of the world
willamerica really do thatthere was worried that donald trumpwould do that so he
could go down inhistory asthe man who destroyed civilization but idon't think
uhother people are going to do thatright um okay um sort of movingnow into some
of the historical thingsyou mentioned um for example in the 19thcenturyuh the
most powerful european empire wasthe british empire umand so i'm trying to draw
parallels herebetween the british and the americansum did the uk establish such a
currencydominance similar to the one the u.s hastodayum did it use similar
methods to the usto establish its dominance for examplecreating international
organizations inwhich it had an institutional advantageorfor example through the
control of keyenergy depositsuh england thought that it wasestablishing a
currencydominance with the the sterling area inother words it would spend money
abroadother uh countries uh would save theirmoney in sterlingbut uh all during the
1930s uhuh the surpluses earned byindia uh and by other members of thesterling
areawere basically kept uh in london andpaid to englandbut then england ran a
deficit with theunited states so the benefit theultimately the benefit of
englishengland's sterling area empire thefinancial benefit was allspent to the united
states already inthe 1930s you can look upthe balance of payments articles uh
onthatuh in the uh in 1945uh as i mentioned uh england thoughtwell we have 10
billion pounds ofuh all the savings of argentina and uhuh india countries that have
beenproviding the raw materials for worldwarthat we fought world war ii now uh
thisis going to be a demandfor uh english exports and we can uhwe can uh
essentiallyuh recover by employing our labor tomake exportsbut uh with the the
terms of the britishloanssaid no no you have to open up thesterling area and let
these countriesuh cancel their contracts with englandthe england they had long
five-yearfour-yearfive-year capital purchase contractsfromindia argentina and uh
we can cancelthem alland buy from the united states andengland went along with
thatso the uh the attempt to create acurrency areawas smashed by the united states
nowthat it is always uhever since the 19th century uh inamerica had always looked
at england asthe great rivaluh not the soviet union uh but uh thecold war in the
19th centurywas against uh england and uh you couldthe whole fight for
protectionism in theunited states uhwent so far is to create state collegesand
universitiesthat would teach an alternative to angletoanglo-centered uh economics
andanglophile economics and there was afeeling in the late 19th century ofamerica
was creating a new civilizationand it's not going to be the religiousbased
uhunscientific uh civilization of uheuropeit's going to be a new secularcivilization
hereand uh so that that feeling ofa new civilization in america is what uhled
americans to think well wewill never let other countries tell uswhat to do because
they're part ofthe decadent old world and we're the newworldwe're going to have
our make our ownrulesright umwould it then be so you also discussedbretton
woodsum would it be beneficial to recreate imean very hypothetically here but
wouldit be beneficial to recreate a systemsimilar to the brennanwoods onetoday i
think a key question that likeunderlies thatis that um does the country that runssuch
a systemreaper benefit from running such asystem or are they just constrainedso
would there be an interest for chinato set up such a system they uh realizethat they
cannot set up anysystem in which the united states is amember because the united
states willinsist on veto powerand if it has veto power then they can'tdothe conflict
of economic systems that isaid uh britain woodswas designed uh one-sidedly to
give allthe benefit to the united states and tomake other countriesdependent on the
u.s economy on u.sexportslargely of agriculture but also industryand also on the u.s
dollarobviously that's not going to be done bedone uhthe the agreement that is
beingdevelopedon an ad hoc spontaneous basisuh between china russia and
uhneighboring countriesis uh an own system of internationalpayments that will be
based onmutual benefit on holding of eachother's currenciesof of of uh preventing
anyuh payment surplus uh countryand it could be china uh if the
paymentsurpluscountry uh has ended up with so muchcredit and a creditor
positionvis-a-vis debtors the new system willnot impoverish the debtorsthe imf
system was designed toimpoverish debtorsthe i the purpose of the imf was to
makeother countries poorand dependent on the united states sothey could neveruh
be a military and in the discussionof uh the british loan for instance andin the
1930suh the discussion in the london economicconference was yesuh we're
bankrupting europe but if wegive europe moneyif we uh give it enough money to
avoidausterity you're just going to spend themoney on the on militarythat was said
by uh the americans uhagain in state department uh and thewhite houseagain and
again and again especially byraymond mollywho was basically in charge
ofpresident roosevelt's uh foreign policytowards europeuh that that was the aimof
uh the imf and uh the question is howdo you create an international
financialsystemdesigned to promote prosperity not uhausterityuh the bretton woods
is for austerityfor everybody except the united statesthat will have a free ride that is
outforeverthe uh their the question that uh i'minvolved with in the work i'm doing
inchinaum with other countries is how do we crcreate a system based on
prosperityinstead of austeritywith mutual uh support uh betweencreditors and
debtorswithout the kind of financial antagonismthat has been built into the
international financial systemever since world war onewe've got to uh and financial
reforminvolves tax reform as well how do weend up taxing economic rentuh
instead of letting the rentiers takeover societythat after all is what
classicaleconomics is all abouthow do we revive that classical economicuh fight
rightum final question um these austerity andanti-labor policies which the
imfimposes on countries of the global southand not only that these seem to be
allbewell known practices from from whatyou've discussed before the imf
wascreated did the imf invent anything newum in addition in the 19th century
waspredatory lending something common orwas direct invasion always the go-
tomethod for sub-junior territoryuh the 19th century was really thegolden age of
industrial capitalismnow uh countries wanted to invest inuh make a profit they
didn't want toinvest it to dismantlean existing industry because therewasn't much
industry to dismantlethey wanted to make profit by creatingindustry uhthere was a
lot of investment ininfrastructure and it almost always lostmoneyuh and for
instance there was recently acriticism of china sayingdoesn't china know that the
panama canalwent bankrupt again and againthat all the uh investments and
canalsand the railroadsthat they all went uh broke again andagain well of course
china knows that uhthe idea is uh that uh you you makeuh uh investment not to
make a profiton basic uh large infrastructure likethe ninththe 19th century was
basicallyinterstate lending umintergovernmental lending uh publicsector lending
that's where the moneywas madeand uh the 20th century was really uhthe
financialization is ondismantling the industry that's alreadyin placenot lending to
create industry to make aprofit it's ait's asset stripping it's not profitseekingright
okay thank you very much umfor joining us today um we haveuh our next event
will be on the 29thof january um and we look forward toseeing you all thenum
thank you very much professor hudsongood to be herethanksEnglish (auto-
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