It is my immense privilege and honor to submit to you my interview with Michael Hudson, whom I consider to be the best economist in the West.
The Saker: We hear that the Ukraine will have to declare a default, but that it will probably be a “technical” default as opposed to an official one. Some say that the decision of the Rada to allow Iatseniuk to chose whom to pay is already such a “technical default”. Is there such thing as a “technical default” and, if yes, how would it be different in terms of consequences for the Ukraine for a “regular” default?
Michael Hudson: A default is a default. The attempted euphemism of “technical” default came up with regard to the Greek debt in 2012 at the G8 meetings. Geithner and Obama lobbied the IMF and ECB shamelessly to bail out Greece, simply so that it could pay bondholders, because U.S. banks had issued credit default insurance (CDS) against Greek bonds and were on the hook for a big loss if a default occurred. The ECB suggested euphemizing default as a “voluntary renegotiation,” asking banks and other bondholders to agree to write down the debt.
But according to the international bondholders’ organization – the International Swaps and Derivatives Association (ISDA) – credit defaults can be triggered if a debt restructuring is agreed between “a governmental authority and a sufficient number of holders of such obligation to bind all holders,” making it mandatory. According to the ISDA’s definitions: “The listed events are: reduction in the rate of interest or amount of principal payable (which would include a ‘haircut’); deferral of payment of interest or principal (which would include an extension of maturity of an outstanding obligation); subordination of the obligation; and change in the currency of payment to a currency that is not legal tender in a G7 country or a AAA-rated OECD country.”
That sounds pretty clear. Getting the ISDA to classify the bond swap as a “credit event” enables holdouts to collect default insurance from their counterparties. There is little such insurance here, but bondholders can then move to seize government property abroad. This is what Paul Singer’s vulture fund has done with Argentina, writing new international law that will apply to Ukraine.
Under London debt laws (where Russia’s debt is registered), Parliament would have to designate Ukraine as a HIPC country (such as the African countries Singer has gone after) to block creditor behavior. I don’t see Parliament doing this for Ukraine, as its poverty is self-imposed by warfare.
If the IMF were to claim that Russia’s $3 billion loan is not official, this would rewrite international law and mean that loans from Sovereign Wealth funds of any nation (OPEC, Norway, China, etc.) have no international protection. Such a double standard would fracture the world’s debt markets along New Cold War lines – with financial warfare replacing military warfare. I doubt that the world is ready for this “nuclear” financial option.
The Saker: The Rada has also passed a law allowing the government to seize Russian assets in the Ukraine. I am not sure if these are Russian state or Russian private/corporate assets. What would be the economic and legal consequences from such seizures of assets if the government goes ahead with this plan? Could Russia take retaliatory measures against the Ukraine or appeal to an international court?
Michael Hudson: That would be so radical a step that it is beyond civil law. If Ukraine did this while still receiving IMF, U.S. and Canadian lending, its creditors could be held as responsible. Morally that is. The question is, what courts? It’s true that Israel draws this ethnic exception with Arabs – but does Ukraine want to use that as its legal justification?
When Cuba or other Latin American countries sought to buy out U.S. investments at the declared book value. The result was always attempted military coups. It would be an act of war. Russia could demand reparations, of course – but from whom? Could it seize Western assets of countries backing the Kiev junta? Could it respond by nationalizing German and French holdings, and watch the ensuing outcry with amusement?
The Saker: The Ukrainian government has gone out of its way to cut as many economic ties with Russia as possible. The Donbass has been bombed out and completely alienated, all defense contracts with Russia have also been canceled, Russian companies are excluded from bidding on contracts in the Ukraine, Russia has been declared an “aggressor country”, etc. This means that for the time being the Ukraine wants to be 100% dependent on the West. Do you believe that the West (USA+EU+IMF+WB+etc.) has the will and the means to continue to lend money to the Ukraine or to support the current regime in power? Can the US government simply print dollars and send them to Poroshenko or are there material limits on how much the West can do to support the current regime? What will happen to the Ukraine if the West cannot support it, how bad do you expect the economic crisis to be?
Michael Hudson: The “West” is not in the charity business. Its firms do not want to lose money, and the EU Constitution bans the European Central Bank and European taxpayers from financing foreign governments. They buy government bonds only from banks – and few banks hold Ukrainian bonds!
Future Ukrainian governments could repudiate economic transactions under the junta in the same way that the Allies cancelled Germany’s internal debts in 1947/48 in the currency reform – on the logic that most debts were owed to former Nazis. The present Ukrainian kleptocracy is not a very safe umbrella to sponsor privatization selloffs and other economic transactions with the West, despite George Soros’s hopes to acquire its land and infrastructure. Even Ukraine’s debt to the IMF and other international agencies may be rejected as “odious debts” that financed a government at war against its own population.
The Saker: It is generally accepted that the recession of the Russian economy has rather little to do with the sanctions imposed against her, and that it is mostly the result of the fall in oil prices. Do you believe that this was a coincidence, or the the US and the Saudis jointly conspire to drop the price of oil like what was done in the late 1980s to crash the Soviet Union? Where do you see the price of oil going in the short to mid term future and do you expect the Ruble to rise again?
Michael Hudson: I don’t think the fall in oil prices was a conspiracy to hurt the Soviet Union. Many models have shown the role of financial speculation in driving up oil prices (and those of other minerals, as speculators turned to commodities to do what they had been doing with stocks and bonds for years). The Saudis had their own objectives, in trying to crush foreign competition, including shale oil.
I don’t see the price of oil rising much, because Europe’s economy is being turned into a dead zone, and debt deflation is also shrinking U.S. economic growth.
For the ruble to rise in value, Russia would need to re-industrialize. The neoliberal revolution after 1991 was indeed intended to dismantle post-Soviet industry, to pull it up by its roots. H.I.I.D. and A.I.D. operatives bought out Russian companies playing a key potential military role and dismantled them.
To re-industrialize, Russia needs to lower its costs of living, headed by housing. It needs to do what the United States actually did to subsidize its industry and also its agriculture: heavy public subsidy by picking up “external” costs, supplying agricultural extension and research services, price supports, etc.
Perhaps Putin can convince the leading oligarchs to “pull up the ladder.” They may keep their wealth, but will agree to an economic rent tax to prevent new giveaways and unearned income from burdening the Russian economy. This will fall heavily on the companies that foreign investors have bought, ending the drain of dividends.
The Saker: The most painful sanction against Russia was the denial of credit to Russian companies. Could the Russians simply begin borrowing from, say, Chinese banks or are there objective reasons which prevent Russia from doing so? Is Russia dependent on western banks and, if yes, for how long? Could Russia disengage herself from the western markets and chose to turn to Asia, Latin America and Africa instead?
Michael Hudson: Russia obviously needs to free itself entirely from Western banks. More important, it doesn’t need their credit. (Look at how China built up its economy without foreign bank credit!) Russia needs a real central bank to finance government deficits, and a public bank to extend credit on concessionary terms. The government can create credit on its computer keyboards in the same way that commercial banks do on their keyboards. That is how the Soviet Union functioned for many decades, after all.
There is no need whatever for Western or Russian banks to finance public budget deficits. There are plenty of Modern Monetary Theorists (MMT) who can explain how Russia might do this. It is the only way to minimize the cost of doing business.
If private-sector (Western, BRICS or even domestic Russian) financial charges are built into the cost of living (housing) and doing business, it will be difficult for Russia to be competitive. It needs to do what the U.S., Germany and China have done. Every successful economy in history has been a mixed economy. Instead, Russia swung from one extreme to an even worse one – from a statist economy to an extreme Ayn Rand/Hayek/Chicago School economy in 1991, with disastrous consequences – as if there were no knowledge of Western financial history or, for that matter, Volume III of Marx’s Capital and Theories of Surplus Value. The most effective response would be proactive credit creation to subsidize reindustrialization and agricultural modernization.
The Saker: How do you assess the performance of the Russian Central Bank to the combined drop in oil prices and US+EU sanctions. Many, including myself, were very critical of the measures taken, yet Russia has fared much better than expected and some are even predicting a return to growth before the end of the year. Did Elvira Nabiullina and her colleagues take the right decisions in letting the Ruble freely float?
Michael Hudson: Russia let the ruble float because the alternative would have been for foreign speculators to gang up Soros-style and loot Russia’s central bank reserves in a financial poker game. Foreign banks would have created enough credit to engage in naked short selling to manipulate markets and make a killing. Russia is not adept at this game, partly because Russia’s monetary authorities have been brainwashed by neoliberal ideology, without realizing its anti-socialist, anti-labor, pro-bank and pro-rentier sponsorship.
The Saker: Amongst the various proposals circulated in Russia two have been particularly strongly supported: the nationalization of “independent” Central Bank and its subordination to the Russian government and the creation of a fully convertible Ruble backed by the Russian gold (some suggest backing the Ruble by “energy”, i,e, oil and gas). What do you think of these proposals?
Michael Hudson: An “independent” central bank (such as the European Central Bank) means one that is controlled by private bankers, preventing governments from financing their own spending and obliging them – and the economy at large – to rely on private interest-bearing commercial bank credit.
Russia needs a real central bank serving government objectives – to re-industrialize the economy, and to rebuild it without the heavy financial overhead that has inflated housing costs, infrastructure costs, education costs and the cost of living in the West.
Gold can indeed be a part of this system – to settle international payments imbalances, not to back domestic currency. It became clear by the 1960s that no country can participate in a gold exchange standard and wage war. The gold drain is what forced the U.S. dollar off gold in 1971 – as a direct result of U.S. military spending, which was responsible for the entire U.S. balance-of-payments deficit.
Without gold, the world’s central banks shifted to U.S. Treasury bills – government IOUs issued to finance the budget deficit that was largely military in nature. This meant that global monetary reserves monetized U.S. military spending to surround these countries and destabilize them if they tried to withdraw from the system. (That is what my book Super Imperialism is all about.)
The easiest way to stop U.S. military adventurism is to restore gold and free the world from having to use a militarized U.S. Treasury-bill standard as their monetary base.
The Saker: If you had the undivided attention and support of Vladimir Putin, Dmitry Medvedev, Anton Siluanov and Elvira Nabiullina – what advice would you give them?
Michael Hudson: They need to see how the neoliberal advice given by HIID and the World Bank after 1991 crippled their economy’s ability to compete. Privatization raises the cost of living and doing business. The U.S., Germany and other successfully industrialized economies rose to world power by heavy public infrastructure investment to hold down the price of basic needs: health care, education, pensions, transportation, communications, power, water and so forth.
Their economists during the 19th and early 20th century explained how government taxes levied on economic rent – land rent, natural resource rent and monopoly rent (including financial charges by banks) – would not raise prices, but would be paid out of economic rent. By contrast, taxing labor and even non-monopoly profits does add to the cost of living and doing business. Russia was persuaded to untax itsresource rents and monopoly rents, to leave more for bankers to obtain and, in due course, for U.S. and European investors to obtain – at the expense of the Russian tax collector.
If Russian leaders in 1990 would have read Volumes II and III of Marx’s Capital and his review of Theories of Surplus Value, they would have seen how much of what critics of industrial capitalism wanted to get rid of were carry-overs from feudalism.
The missing item in today’s economic reforms is what classical economics focused on, from the French Physiocrats through Adam Smith, John Stuart Mill to Marx and his contemporaries: freeing industrial economies from the rentier carry-overs of European feudalism. The focus of classical value and price theory was to free economies from economic rent, defined as unearned income simply resulting from privilege: absentee land rent, mineral and natural resource rent, monopoly rent, and financial interest. The aim should be to prevent rent-extracting activities – defined as purely predatory transfer payments, an economically unproductive zero-sum activity.
The classical labor theory of value aimed at isolating those forms of income (land rent, monopoly rent and interest) that were socially unnecessary, and simply were legacies of past privilege. The halfway alternative was to tax land rent and monopoly rent (Henry George, et al.). The socialist alternative was to take natural rent-producing sectors into the public domain.
Europe did this with the major public utilities – transportation, communications, the post office, and also education, public health and pensions. The United States privatized these sectors, but created regulatory commissions to keep prices in line with basic cost-value. (To be sure, regulatory capture always was a problem, especially when it came to railroad charges.)
The Saker: Russia and China have embarked on what I believe is something unique in history: two ex empires which have taken the political decision to become mutually dependent on each other, in fact creating symbiotic relationship. For example, China has basically decided to become fully dependent on Russia for energy and for military equipment. Russia, in turn, is hoping that the Chinese economy will allow Russia to diversify and grow. I would argue that they are in many ways perfectly complementary to each other. Do you agree with this assessment and how would you evaluate the potential of the economic/financial collaboration of these two super-powers? Could Russia and China together, along with the BRICS and SCO create a new, dollar-free and independent economy and market?
Michaek Hudson: Two main dynamics are paramount. First of all, in making trade, investment and monetary arrangements, it’s important to be secure that they will be long-term. America has provided this long-term security for Russia and China, by making clear that it is opposing the rising power both of Russia and China (as well as Iran or any other potential player).
That is the second dynamic: America’s “divide and conquer” strategy seeks to pick off one potential rival after another. By joining forces with each other – and by extending the Shanghai Cooperation Organization to include Iran and other countries – this obliges the United States to wage a war on at least two fronts if it moves against either Russia or China. So their long-term relationship is mutual security against the only likely aggressor.
Capital investment in pipelines requires a long pay-off period, so it can’t be made subject to foreign diplomatic interference, as Russian gas sales to Europe are prone to. Europe seems quite willing to be left out in the cold, by electing politicians that simply are bought off by U.S. money.
That’s the unspoken key to U.S. diplomacy: simply bribe politicians, journalists, publishers and others. As long as the U.S. Treasury can print money without limit, as long as the world’s central banks are willing to absorb these dollarized IOUs by buying U.S. Treasury bonds to finance American military spending to encircle them, America is free of the balance-of-payments and foreign debt constraint that limits other countries’ military spending.
To counter this, Russia, China and other countries should develop an alternative monetary and payments system to the U.S. dollar, a financial system to replace U.S. banks, and ultimately their own bank clearing through an alternative to SWIFT.
If they succeed in this, U.S. neoconservatives will have overplayed their hand – and ironically will have become a force for world peace, by uniting the rest of the world’s economies, trade, financial and even defensive military systems to protect themselves from the U.S. threat. If they succeed, this threat will recede – but the U.S. withdrawal probably will not be a pretty sight, nor will the collapse of its financial system. The rest of the world will have to protect itself from the backwash, blaming foreigners.
The Saker: For all the dire predictions about the future of the dollar, the US continues to create dollars out of thin air, countries worldwide continue to use the Dollar for trade, the US debt is still raising, the poor become poorer, the rich richer and nothing seems to change even though in its foreign policy the US goes from one failure to another. How long can his continue? Is there an objective limit after which this system cannot continue? Can you foresee any event which will force the USA to give up being an Empire and become a “regular” country like so many other ex-empires in the past?
Michael Hudson: There is no objective limit to how long Dollar Dependency, Debt Deflation and Debt Peonage can continue, unless victims fight back successfully. Rome’s creditor oligarchy gave way to the Dark Ages for nearly a millennium.
Dollar Hegemony will be phased out as an alternative vehicle to hold international reserves is developed. That is the aim of the new BRICS bank and monetary clearing system. What now is needed is a complementary tax system and strategy of public investment and subsidy.
Rather than an “event” leading U.S. neocons to give up their aims, the process is likely to mirror the Western economies’ slow crash.
The Saker: China and the US a clearly on a political and even military collision course. Yet, many say that China and the USA are too deeply dependent on each other to ever have a real conflict. Are the USA and China really in a symbiotic relationship or can China somehow disengage from the US markets without creating a collapse for the Chinese economy?
Michael Hudson: There is no real dependency, because both China and the United States aim at being economically and militarily independent, so as not to fall into subservience. The U.S. aim, of course, is to make other countries financially dependent on it, and also militarily dependent. That is why it needs to keep stoking warfare – as a kind of protection racket, to extort financial, trade and investment tribute and deeper dependency in its trading “partners.”
China and America do have a mutual trade and investment relationship. But it is not “symbiotic,” because it can be ended at any time without really threatening either party’s solvency and survival.
China is already shifting its production away from export markets to the domestic market. And in terms of monetary policy, it is sponsoring economic complementarity with the other BRICS members, Iran, South American and African countries.
The Saker: When you say “China and America do have a mutual trade and investment relationship. But it is not “symbiotic,” because it can be ended at any time without really threatening either party’s solvency and survival” could you please explain why you don’t think that if, say, the US and China had to sever their economic ties (Walmart & Co.) that would not severely hurt both economies? Is Walmart not crucial for the low-income sector of the US economy and to keep inflation low and is the income generated by these “Walmart-ties” not crucial for China?
Michael Hudson: What China has been supplying to Walmart can now be sold to its thriving internal market. China doesn’t need more dollars. Indeed, the more dollars it gets, the only thing it can safely do with them is lend them to the U.S. Treasury, funding the military’s “Asia Pivot” to encircle China. (That’s how the U.S. Treasury-bill standard has replaced the gold standard.)
Walmart, on the other hand, remains dependent on its Chinese suppliers. Its purchasing agents leave much less profit for the Chinese than they can get in their own market and in other Asian markets.
The Saker: The western capitalist model and its formula for globalization are coming under critique not only from Russia and China, but from many other countries in the world. Some say that China has developed an alternative model of state capitalism. In Latin America, “Bolivarian Socialism” is on the rise and in the Middle-East the Islamic Republic of Iran is also offering a different socio-economic model. How do you see the future of the capitalist system, with its globalization, banking and finance model, etc. Do you see a viable alternative emerging or is the “Washington Consensus” still the only game in town?
Michael Hudson: Classical economics was a doctrine of how to industrialize and become more competitive – and at the same time, more fair – by bringing prices in line with actual, socially necessary costs of production. The resulting doctrine (with Marx and Thorstein Veblen being the last great classical economists) was largely a guide to what to avoid: special privilege, unearned income, unproductive overhead.
The aim was to create a circular flow model of national income distinguishing real wealth from mere overhead. The idea was to strip away what was unnecessary – what Marx called the “excrescences” of post-feudal society that remained embedded in the industrial economies of his day. When the great classical economists spoke of a “free market,” they meant a market free from rentier classes, free from monopolies and above all free from predatory bank credit.
Of course, we know now that Marx was too optimistic. He described the destiny of industrial capitalism as being to liberate economies from the rentiers. But World War I changed the momentum of Western civilization. The rentiers fought back – the Austrian School, von Mises and Hayek, fascism and the University of Chicago’s ideologues redefined “free markets” to mean markets free for rentiers, free from government taxation of land and natural resources, free from public price regulation and oversight. The Reform Era was called “the road to serfdom” – and in its place, the post-classical neoliberals promoted today’s road to debt peonage.
Today’s Cold War may be viewed in its intellectual aspects as an attempt to prevent countries outside of the United States from realizing that (contra Thatcher) there is an alternative, and acting on it. The struggle is for the economy’s brain and understanding on the part of governments. Only a strong government has the power to achieve the reforms at which 19th century reformers failed to achieve.
The alternative is what happened as Rome collapsed into serfdom and feudalism.
The Saker: What are, in your opinion, the main consequences of the numerious US foreign policy failures for the US economy?
Michael Hudson: U.S. strategists often liken their geopolitical diplomacy to a chessboard. This may have a geographic sense of space – where is the oil, where are other mineral resources, which countries are getting strong enough to be independent – but the resulting diplomacy is nothing like a chess game at all. At least, not the way the United States plays the game.
But in chess, both sides move. The idea is to think ahead and anticipate the opponent’s strategy. Most grand masters study their opponents’ games and are familiar with their tactics and objectives when they sit down to play.
No such bilateralism characterizes U.S. policy. Back in the 1940s and ‘50s, the State Department was emptied out of China experts by Senator Joe McCarthy. The purge was conducted on the principle that most people who knew much about China, did so because they were sympathetic with it, and probably with Communism.
The inner contradiction here was that without understanding China’s policy aims and how it intended to achieve them, U.S. diplomats were operating in the dark. Naturally they floundered.
Fast-forward to today. As U.S. State Department neocon Douglas Feith noted, anyone familiar with Arab history is viewed as suspect, on the grounds that they must be sympathetic. So U.S. support for Saudi Arabian oil oligarchs goes hand in hand with Zionist anti-Arabism. When Feith interviewed an experienced Pentagon Arabist, Patrick Lang, for a job in Iraq after the invasion, Feith asked: “Is it really true that you really know the Arabs this well, and that you speak Arabic this well? Is that really true?” Lang said, yes it was. “That’s too bad” said Feith.  There was no room for someone with an ounce of sympathy for “those people.” Lang didn’t get the job.
So it’s hardly surprising that American unilateralism is conducted in a kind of political vacuum. (“We make our own reality.”) The result is hubris leaving to the inevitable fall. It’s like conducting foreign policy while wearing a blindfold.
The main failure of U.S. foreign policy is thus that of classical tragedy: a tragic flaw that brings about precisely the opposite effect from what is intended. Or as Marx put it, “internal contradictions” and irony.
The answer to your question depends on what you mean by “US policy.” What may be a disaster for the U.S. economy may not be a disaster for the special interests that have gained control of this policy. U.S. politicians are not so much elected by voters as bid for by their campaign contributors. The financial weight of Wall Street and, behind it, the oil industry as well as the real estate sector and the military-industrial complex has benefited the 1%? It’s been a success for them – at least in the sense of U.S. policy reflecting what the 1% want. It’s been a failure for the 99%, of course. And these days, the 1% may be so short-sighted that their aims may bring about the opposite of what they intend. This would include America’s Near Eastern failure to understand the dynamics of Islamic societies.
If by “failures” you mean the damage that has been done, I would rank the most serious one to be America’s opposition to secular governments in the Islamic lands, leading to the most extremist, literalist readings of Islam, capped by Saudi Wahabism.
The fatal turn began in 1953 with the U.S. overthrow of Iran’s Mossedegh government. The intention was simply to protect British and American oil, not to back Islamic extremism. But supporting the Shah in a Latin American-style dictatorship left only one practical venue for opposition: the Islamic mosques and other religions centers. Khomeini led the fight for freedom against the Shah’s dictatorship, torture chambers and subservience to U.S. foreign policy.
In Afghanistan, of course, the U.S. created Al Qaeda and backed Bin Laden to fight against the secular regime backed by Soviet Russia. The subsequent history of U.S. involvement in Iraq, Syria, Lebanon and elsewhere in the Near East has been one of supporting Saudi Wahabism. And it’s been a disaster from any point of view.
Anthropologists have decried the blind spot of American policy to the ethnic and religious divisions at work – not only the obvious antagonism between Shi’ite and Sunni Moslems, but between the pastoral nomadism that was the context for Wahabi extremism and anti-feminist doctrine. The Near East has been dominated by sheikdoms for the past four thousand years. But U.S. policy lumps all Islam together, missing these divisions.
Being a democracy, America can no longer afford a land war. No democratic country can. So the only military option that is practically available is to bomb and destroy. That has been U.S. policy from the Near East to the former Soviet sphere, from Latin America to Africa in supporting dictators that will follow U.S. foreign policy and that of its mining companies, oil companies and other multinationals.
U.S. foreign policy is simply “Do what we say, privatize and sell to U.S. buyers, and permit them to avoid paying taxes by transfer pricing and financialization gimmicks, or we will destroy you like we did Libya, Iraq, Syria et al.”
The result is to unify foreign countries into a resistance, obliging them to create an alternative path to U.S. financial hegemony. If America had pursued a policy of mutual benefit, other countries probably would have let America make money from them, as part of a mutual gain. But the U.S. stance is to grab everything, not share. This selfishness is what is most self-defeating ultimately.
- Katy Burne, “ISDA: Greek Debt Restructuring Triggers CDS Payouts,” Wall Street Journal, March 9, 2012. ↑
- Steve Clemons, “Pat Lang & Lawrence Wilkerson Share Nightmare Encounters with Feith, Wolfowitz, and Tenet,” http://washingtonnote.com/pat_lang_lawren/ , citing Jeff Stein, Congressional Quarterly, ↑
Nice interview, but he had a little slip here:
“I don’t think the fall in oil prices was a conspiracy to hurt the Soviet Union.“
Michael and I are referring to the drop in oil price in the 1980s, not the current one.
Here is what was said regarding the declining oil price of last year….
The Saker: It is generally accepted that the recession of the Russian economy has rather little to do with the sanctions imposed against her, and that it is mostly the result of the fall in oil prices. Do you believe that this was a coincidence, or the the US and the Saudis jointly conspire to drop the price of oil like what was done in the late 1980s to crash the Soviet Union? Where do you see the price of oil going in the short to mid term future and do you expect the Ruble to rise again?
Michael Hudson: I don’t think the fall in oil prices was a conspiracy to hurt the Soviet Union. Many models have shown the role of financial speculation in driving up oil prices (and those of other minerals, as speculators turned to commodities to do what they had been doing with stocks and bonds for years). The Saudis had their own objectives, in trying to crush foreign competition, including shale oil.
The way I read this segment the 1980’s were referenced to explain what happened last year, “…. like what was done in the 1980’s to crash the Soviet Union?” Michael Hudson does not answer by talking about the past, but the present, “The Saudis had their own objectives, in trying to crush foreign competition, including shale oil.”
Since shale oil was not even a viable alternative for oil production in the 1980’s because the technology of horizontal drilling and hydro-fracturing did not exist, one can only conclude that Hudson speaks about the present situation. If there was no conspiracy to damage Russia, then Russia became collateral damage in the Saudi’s effort to eliminate competition. Also, it is difficult to imaging the US banksters and politicians would trow the billions of dollar shale industry under the bus just to hurt Russia. That would be criminally insane.
Nah, nevermind the above bit – I was reading too fast…
this interview justifies ur intro of Mr.Hudson
“Michael Hudson: An “independent” central bank (such as the European Central Bank) means one that is controlled by private bankers, preventing governments from financing their own spending and obliging them – and the economy at large – to rely on private interest-bearing commercial bank credit.
Russia needs a real central bank serving government objectives – to re-industrialize the economy, and to rebuild it without the heavy financial overhead that has inflated housing costs, infrastructure costs, education costs and the cost of living in the West.”
He formulated this very badly, so it can easily be misunderstood.
Of course no central bank is controlled by any private bankers, rather the opposite. Regarding the system as such, indeed loans can be made only via private banks, thus in that sense he is right. But that is not related to the central banks, but simply to the current international system based on Bretton Woods and the dollar being the reserve currency in the last few decades.
Within the current system, central banks can not give loans to industry or the people etc., thus these are forced to go the way of commercial banks. It is a problem that exists in almost every country within the system. Being that Russia so far respects all those treaties and laws, they are a victim of this too.
There are solutions to this, like for example in Germany. The KfW (https://www.kfw.de/PDF/Download-Center/Konzernthemen/KfW-im-Überblick/GP_2014_deutsch_112014_final-2.pdf) is a separate entity designed to do just that – give loans directly to the people/industry with much better conditions and circumventing the commercial banks system. Most Germans financed their houses with this in recent decades for example. Russia already talks about something like this and may very well implement it in some way soon.
On China, it’s not as rosy as he thinks. Half of the chinese industry and economy literally belongs to the USA. So far they invested about 16-18 trillions in China. Also most of the dollar holdings in China are due to these entities owning american debts. Not easy at all to get out of there and it would certainly wreck both of their economies instantly if not done gradually and carefully. Thankfully it looks like China is good at this game and will eventually get out of it, but it is a slow and painful process.
Proof for the above – just go through the annual financial statements (CAFR) of all the major american banks, funds, municipalities, state governments etc. up to the FED and the government itself – you can find all of those holdings listed there in painful detail. I did bother proving it myself and chewed through thousands of pages in those reports myself, because I simply didn’t believe it at first. To put it simple, the current state of things is that the US still owns a too big piece of the chinese economy.
Good book on this topic: http://www.businessinsider.com/new-book-the-american-phoenix-by-diana-choyleva-suggests-america-will-dominate-china-in-the-coming-years-2011-10?IR=T
Her conclusions are totally false and pro-american IMO, but she does chew through the numbers etc. showing the current state of affairs. Just avoid her interpretation and only use the data.
Oh and a big thanks to Mr. Hudson for mentioning the truth about the fascist so-called “austrian school”, which is a wet dream of the neocons and “shakers” world-wide. That’s also why they push it so hard in so many venues.
“Of course no central bank is controlled by any private bankers, rather the opposite.” – T2015
If it were opposite than the government would issue money interest free, for domestic productive purposes, this is not what occurs. Instead the private bankers collect interest on the money issued. Why would a free government do such a thing? Why would there be a need for a ‘bondage’ market if governments simply created the liquidity for the economy itself? Why does someone have to buy the ‘debt’? Why must money be debt at all?
To suggest that the banking elite do not control policy because legally speaking the government can (hypothetically in some Disneyesque universe) exert power over them is terribly misleading. You stated yourself in a previous comment that private banks create most of the money in the economy as it is, which is true, but why have these private banks been given the mandate to do so (create debt money)? And why have none of these banks had their charters revoked after being caught issuing fraudulent securities, and in many cases rigging futures and currency markets as they constitutionally should be? Where is this government authority you speak of?
Yes, legally the government has the power to revoke charters, dictate central bank policy, but they do no such thing, and have failed to do so (within the Federal Reserve System which includes the Bank for International Settlements) for over a century. In REALITY, the laws may exist, but if they are never exercised than are they really laws at all? If a policy exists but is never enforced, and everyone knows it is never enforced, is it in fact even a real policy? In the strict sense it is, because it may be enforced at a future time, but in the reality of the world in which real people make decisions the policy has no bearing whatsoever, none.
Money does not have to be debt, and humans need not be bonded to the whims of speculative markets and inflationary bubbles.
It’s simple – the goverments ARE the criminals and the enemies of their people.
Central banks were all created per stroke of a pen and it’s clear who the boss is.
The govs are “privately owmed” nowadays so that’s the actual culprit.
If you say, the government is the criminal and enemy to its people, but the actual culprit is that the government is privately owned, than you are agreeing that the private shareholders that own the government are in fact the culprit.
Than what exactly did you mean when you wrote:
“Of course no central bank is controlled by any private bankers, rather the opposite.”
And who are the shareholders that own the government? Is it not those who control the money? Those with the charter to make money as debt? Isn’t it government debt that is leaving people destitute? Why is the government in debt? Because they are borrowing? Why would they do that?
Why would government borrow when it could create?
So the fact of the matter is that yes, there are private bankers that run the central bank, and through the central banking apparatus of the Federal Reserve System and the BIS, they manage the international banking complex, and through that complex control legislation through their paid for congress and senate.
Who has more power in this situation? The government who is beholden to the bankers? Or private bankers who write the legislation?
Your semantics are just you trying to be as intelligent as you think you are.
My point is, all of that is ILLEGAL on paper and our governments are simply little criminals working for the bigger mafia in the background. Noone “owns” the government on paper, but purely via force, extrotion, bribery, blackmail…
Effectively it is as you say, but that does not make it legal. Fact is, all those constructs, including “private” are not private at all but belong to the state, which effectively but illegally is controlled by the oligarchs etc.
If we had a working judicial system, all of that could be brought down in an instant and all of those funny debts and shady constructs could be wiped out without any consequences for the actual, real physical economy or the people . If done right, that is.
It would also be more correct to say that the central bank and the gov run all the “private” banks, while themselves being ran by the oligarchs and globalist-monetarists of the empire.
“Why would government borrow when it could create?”
Because then the people could not be enslaved under this rotten system.
A theoretical free government working for the good of the people would do just what you propose.
Because then the people could not be enslaved under this rotten system.
Wait, how does the government borrowing its money enslave the people? As the Bible says, “The borrower is slave to the lender.” If the government is borrowing, then it is the slave.
What you seem to forget is that the banker gangsters’ “force, extrotion, bribery, blackmail” was originally coming from outside the US government [and in cases like Mossad, some still is].
For instance, when Congress refused to renew the charter for the 1st Bank of the US, one of the Fed’s predecessor’s, the War of 1812 started about five months later. The war ended in 1813; however, in 1814, the country did a U-turn and agreed to charter the 2nd Bank of the US.
“The treasury, lacking confidence in the country, delivered itself bound hand and foot to bold and bankrupt adventurers and bankers pretending to have money, whom it could have crushed at any moment… These jugglers were at the feet of government… We are now without any common measure of value of property, and private fortunes are up or down at the will of the worst of our citizens.”
~ President Thomas Jefferson, 1815
Thousands of Americans killed, the White House burned down, and similar thuggery was what got the country to take the bank back, and who do you think put England up to that?
Oh and I’ve yet to see anything like a “free government” anywhere on this planet today. That’s a thing of a long-gone past.
The government certainly does have the authority, but being that they’re all owned by whatever lobby groups and foreign interests (illegally, mind you!) they will never do it, period.
Also what you call “private banks” or commercial banks are like 90% owned by the governments, the majority by the US government. That’s the most important thing to understand in this whole discussion. “Private” is a fantasy used for diversion and obfuscation.
As said, just check the annual financial reports of the governmental funds, pension/social funds, institutions from local to federal, the central banks themselves etc. In that “whom will Putin and Lavrov talk to” thread I posted several excerpts from those reports to get you going. Fact is, way more than half of the world economy is owned by such US-bred entities.
“Also what you call “private banks” or commercial banks are like 90% owned by the governments, the majority by the US government.” – T2015
No they are private, they simply funnel money to themselves through the auspice of their government host. If by government you mean the Federal Reserve than you are wrong again, the Federal Reserve is an independent body from the government that is privately owned and works in the interests of its interest bearing owners deposits. You think its a charity?
Again – the FED is nothing but a department of the government and nothing about it is private in any way. The Congress created it, the Congress owns it and the Congress could end it today. Also the directors are appointed by the government and the FED gives their profits to the treasury (in the order of some 70 bio. per anno as of late).
I gave you all the links to actual laws and documents, so please stop [redacted] repeating that red herring and go read it yourself. Private stock is limited to $20k in non-transferrable bonds and the banks MUST put their assets under the FED control. So prey tell, how do these enslaved entities “own” the FED? The opposite is the case!
FED was invented to control all banking and the banks are forced by law to join the FED system, otherwise they won’t get a license. It’s that simple.
It’s the way for the oligarchs controlling the gov to control all banking and to kill off all the potential competition. [redacted]
Let’s keep it polite and friendly, people.
One more thing: please try to learn and understand the difference between “independent” and “private”. Independent simply means that someone appointed by the gov runs the daily business and nothing more. You do not expect the president himself to run the post office or the social security, so why the hell would you expect him to run the FED from the white house? That would be ridiculous. It’s simple outsourcing and nothing more.
Sorry again, but the ‘Federal Reserve’ is a private bank. It has shareholders, what part of that don’t you understand? It is owned by private banks, period. It also interfaces with the government in an intricate way (its attached to the government like a parasite) because it takes on government debt through its facility from the member banks, and the banks use their new reserves as collateral for ever more loan creation (debt money), the very same banks that own shares in the Federal Reserve. Its a ‘virtuous’ circle, and its all about earning interest for private banks and their INDIVIDUAL shareholders. And you bolded ‘appointed’, because it was somehow significant to you? You just said above:
“No one “owns” the government on paper, but purely via force, extrotion, bribery, blackmail…”- T2105
So appointed has some significance because some president via force, coercion, bribery, or blackmail, is told what to do, for a fictional scenario of having appointed someone, as if this means the Federal Reserve somehow answers to the president or congress? The whole appointment is a fictional drama to fool naive settlers like yourself, as are the congressional meetings with the Fed.
If you think the shareholders of the Federal Reserve and 20k are in anyway related to reality than please, we all choose our illusions I suppose. The real purpose of those shareholder positions is to settle policy, private policy – the Fed dictates policy to the government – and through that policy the entire global banking complex is arranged.
” It has shareholders, what part of that don’t you understand? It is owned by private banks, period.”
Sorry but that is wrong. Since you put out the claim, I dare you to prove it – show me where you got that from.
The actual shareholders are the 12 regional banks that all belong to the state. All the other “shareholders” are with the limitation to $20k non-transferrable as mentioned above.
So please provide the source, then we can discuss further.
As said, effectively your view is correct, but legally it is wrong. In the end we are agruing over technicalities and semantics, but these are unfortunately very important in legal terms.
Oh and since I’m now obviously the sole person here that gets slapped for using harsh language and insults , please adhere to the same standards. I’m neither a “settler” nor naive.
“this means the Federal Reserve somehow answers to the president or congress?”
Of course they do. That’s exactly what their CAFR is for, it’s a full yearly audit available online. read for yourself:
The only problem is that most people don’t even know that these exist nor do they understand them, even if they should bother reading them.
“The purge was conducted on the principle that most people who knew much about China, did so because they were sympathetic with it, and probably with Communism.
The inner contradiction here was that without understanding China’s policy aims and how it intended to achieve them, U.S. diplomats were operating in the dark. Naturally they floundered.”
This brilliant observation by Michael Hudson is true not only about US vs China and can be used to explain failures of all other systems run by ideologues so I agree with your assessment of the central banking terminology.
One point is new, the $20k limit has moved to a percentage, but that’s a marginal difference. Here’s the quote from the current version of the FED-act:
“The capital stock of each Federal reserve bank shall be divided into shares of $100 each. The outstanding capital stock shall be increased from time to time as member banks increase their capital stock and surplus or as additional banks become members, and may be decreased as member banks reduce their capital stock or surplus or cease to be members. Shares of the capital stock of Federal reserve banks owned by member banks shall not be transferred or hypothecated. When a member bank increases its capital stock or surplus, it shall thereupon subscribe for an additional amount of capital stock of the Federal reserve bank of its district equal to 6 per centum of the said increase, one-half of said subscription to be paid in the manner hereinbefore provided for original subscription, and one-half subject to call of the Board of Governors of the Federal Reserve System. A bank applying for stock in a Federal reserve bank at any time after the organization thereof must subscribe for an amount of the capital stock of the Federal reserve bank equal to 6 per centum of the paid-up capital stock and surplus of said applicant bank, paying therefor its par value plus one-half of 1 per centum a month from the period of the last dividend. When a member bank reduces its capital stock or surplus it shall surrender a proportionate amount of its holdings in the capital stock of said Federal Reserve bank. Any member bank which holds capital stock of a Federal Reserve bank in excess of the amount required on the basis of 6 per centum of its paid-up capital stock and surplus shall surrender such excess stock. When a member bank voluntarily liquidates it shall surrender all of its holdings of the capital stock of said Federal Reserve bank and be released from its stock subscription not previously called. In any such case the shares surrendered shall be canceled and the member bank shall receive in payment therefor, under regulations to be prescribed by the Board of Governors of the Federal Reserve System, a sum equal to its cash-paid subscriptions on the shares surrendered and one-half of 1 per centum a month from the period of the last dividend not to exceed the book value thereof, less any liability of such member bank to the Federal Reserve bank.”
Which should make it clear to anyone who the boss is.
Angelo, my friend, why waste time arguing with one who does not understand first and foremost what is money. Secondly, the Individual does not accept, it appears, the fact that the Federal Reserve is not Federal, that is not a part of the federal government. Instead it is a consortium of 12 private banks owned and controlled by private interests. I would suggest that those interested in the entire subject of money, banking and the de facto control of those spend some time digesting the content provided by The American Monetary Institute and the writings of Dr. Joseph Huber and Michael Kumhoff. Money issued and spent directly into the economy by the Sovereign, the elimination of the Fed as it is comprised currently and the end of fractional reserve lending by private banking institutions is the first and most important step towards reforms that ultimately serve the public rather than private good.
“On China, it not as rosy as he thinks. Half of the chinese industry and economy literally belongs to the USA. So far they invested about 16-18 trillions in China.”
There is no way that the US owns half of China’s economy. Because China’s state-owned enterprises (SOEs) are at least half, so the US can at most have a small fraction, maybe 20%. Probably much less than that, because of China’s foreign ownership laws.
(The US may have invested $16 to $18 trillion in China, but how much of that has been withdrawn?)
Furthermore, if the US starts playing dirty (dirtier than it has been doing already, I mean), China can simply nationalize all US holdings. Of course, the US can retaliate in kind. But since the US stands to lose much more in this scuffle (by at least an order of magnitude), China is again in good shape. There is simply very little the US can do to China without some major pain to itself.
” But since the US stands to lose much more in this scuffle (by at least an order of magnitude), China is again in good shape. ”
Well spotted. Notice how the difference of attitudes between US and EU about the anti Russia sanctions correlate with the investment levels of both.
What is actually the investment level of the US in Russia? I have no infos about this so far.
some trade numbers from about year ago.
Those trade numbers are helpful, but I’d be very interested in actual investments, in terms of ownership and stocks.
As someone who has worked with the Kreditanstanlt fuer Wiederaufbau (KfW) to finance the reactivation and modernization of a small hydro-electric power plant, I would like to elaborate a little more on that institutions role.
The KfW is there to help move forward important policies by the German government. When Germany decided to advance the introduction of renewable energy the KfW received the mandate to finance renewable energy projects under extremely favorable conditions.
The same applies to Germany’s policy to make all homes more energy efficient. The KfW did not and does not finance Germans to buy their homes on special credit terms. However, it finances modernization projects that include energy efficient windows, insulation of exterior walls and attic insulation, swapping inefficient and polluting oil and coal heating for fuel cells and wood pellet heating, etc, etc.
Thus, the concept of a banking institution like the KfW is ideal to promote policies that, if left to the “open” market, would take forever to be implemented.
Earlier today, this was confirmed when Reuters reported that, as expected, the US will announce on Wednesday plans for a new military base in Iraq’s Anbar province and the deployment of around 400 additional U.S. trainers to help Iraqi forces in the fight against Islamic State, citing an unnamed U.S. official.
A base which puts not only Syria, but Damascus within easy reach once the Assad regime is overthrown, an outcome which now seems to be just a matter of time.
Yep. Assad never got those S-300 systems and Iran never will.
Please both of you read something that is based in reality not some western propaganda.
Go to home page for more news and if you go through comment there will be other sites on Syria.
Syria has S-300 that have been update and are controlled by Russian troops, Iran will get them by yrs end but like all weapons of this type Russian troops come with them.
S 300’s are useless against ground forces.
The Russians also didn’t send submarines and ICBMs or frigates and carriers.
Please take the time to go through some post at Ziads to learn about ground forces.
Yes S-300 are air only that is why there will never be a dead air space trick around Syria besides Russia has planes arriving daily as does Iran.
Since you take to take the time to inform yourself here way not try something new. I won’t be back after this.
Marvelous interview, Saker. Many important chunks of knowledge, insight and expertise from Mr. Hudson.
We are in a Feudal Age for certain.
And we see the passage out and into the future liberty with Russian and China leading the restructure of the global systems of economy, trade and development.
Eurasia is the project toward peace. It has begun. Pipelines and rail lines and SCO, AIIB, and wise leaders abound in Eurasia. There is more harmony among the major religions there. There are ancient and seasoned civilizations there. And the natural resources and wealth to accomplish the project are there.
The key will be to impress the Hegemon any war would be total. Then the greedy 1% and maniacal .1% will know the game has truly changed.
Thank you, Michael Hudson.
….and supply trucks;
….and all those shiny new Toyota pickups with mounted 50-cal guns;
So shocking, shocking I tell you, to see Erdogan is all in on this.
And were ISIS’ supply lines solely confined within Syrian and Iraqi territory, then surely both Syrian and Iraqi forces would utilize their one advantage – air power – to cut front line ISIS fighters from the source of their supplies. But this is not happening and there is a good reason why.
Very good article there, but not complete.
Syria can not use their airpower right now, due to the murricans and co. flying there and the turkish air defense used to shoot down syrian planes when they get near the entry points from Turkey. That was one of the reason to station all those Patriot systems in Turkey near the syrian border.
Also the murricans are straight out air-lifting supplies directly to the terrorists or bombing the Iraqi army, which was recently often documented in Iraqi press for example.
Michael Hudson obviously dislikes Hayek and von Mises, however they would probably agree with him on many points. Both Hayek and von Mises strongly oppose ultra-low interest rates which have given rise to the nouveau-riche rentier who accumulates assets with debt.
Also, the main problem with privatisation in ex-USSR was due to state assets being grossly under-valued (thanks to Yeltsin and US bankers). The oligarchs were able to accumulate valuable assets with very little money and cheap debt.
Draga moja bivsa zemljakinjo, Mises i Hajek su dali bazu za hitlerovu Njemacku i tvrdim da nisi uopste dobro razumela njihove knjige i posledice njihovih ideja. Isto kao ono sto ova izdajica Ron Paul prodaje, to bi bio sistem koji bi pretvorio nas svet u totalitarni feudalizam najgore vrste, gde bi narod umirao od gladi kau u najcrnjim vizijama Orwell-a i Huxley-a, dok se vladajuci kupaju u medu i mleku u svom odvojenom svetu. Molim te informisi se bolje i ne podrzavaj nase neprijatelje i njihovu otrovnu ideologiju.
P.S. ekavski je ekstra za tebe, posto sam bosanac…
[TR:My dear former zemljakinjo, Mises and Hayek have provided the basis for Hitler’s Germany and hard to not at all well understood the consequences of their books and their ideas. Same as what this traitor Ron Paul sold, it would be a system that would turn our world into a totalitarian feudalism of the worst kind, where the people dying of hunger couch in the darkest visions of Orwell and Huxley, while ruling bathed in honey and milk in his separate world. Please Inform better and keep supporting our enemies and their poisonous ideology.
P.S. ekavian extra for you, as I bosanac …]
Ok sorry, I’ll translate:
“My dear ex-compatriot, Mises and Hayek created the basis for the fascist economy in Hitler’s Germany for examp0le. I believe that you have not fully understood the their writings and the consequences of that policy. It’s the same ideology that the traitor Ron Paul is selling, that would be a system that would turn our world into total feudalism of the worst sort, where people would die of hunger like in the darkest visions of Orwell and Huxley, while the rulers would bath in milk and honey. Please inform yourself more thoroughly and do not support our enemies and their poisonous ideology.”
What I’m saying (and it is a well-known fact in relevant circles) is that their ideology is the definition of fascism/oligarchism, as defined by Mussolini himself.
Oh and “ekavski” is a local serbian dialect or rather just accent, which is a bit different in Bosnia, though the difference is marginal.
Every totalitarian system hijacks an economic theory to justify their actions. Right now the USA and their client state EU, have hijacked Keynesianism. Previously bolsheviks hijacked Marx. Did Hitler hijack von Mises? I don’t know.
What I do know is that right now, Hayek and von Mises are powerful antidotes to the current fascists for the following reasons following :
1. They advocate SOUND MONEY i.e. gold and silver backed currencies, return to gold standard.
2. They are anti “big brother” surveillance and warfare state (they also oppose the welfare state due to their belief that charity and wealth redistribution should not be handled by the state, which places them to the right of the political spectrum).
3. They abhor taxpayer funded banker bail-outs, and ultra-low interest rate which has created the current bubble economy and the tremendous gap between the working class and the “rentier class”.
Ask yourself, would USA be able to launch all these wars of aggression and colour revolutions if they reverted to the gold standard?
Thanks for writing in Ekakvski. I have discovered that speaking the same language is not a guarantee of similar perspective. Many of my compatriots are currently suffering from a severe form of Stockholm syndrome, which is manifested by an irrational wish to join the EU and NATO. When you say ” do not support our enemies and their poisonous ideology”, it makes me wonder, who do you consider are the real fascists here? Are we truly on the same side?
Oh and one more thing: why the bitterness against Ron Paul?
He has consistently criticised US foreign policy, has launched “end the fed” and “audit the fed” initiatives.
When Clinton launched his “humanitarian bombing” over Belgrade, the media lynch mob was screaming for Serbian blood, Yeltsin and Kozyrev looked the other way, that’s when Ron Paul stood up in congress to ask for an end to the war against Serbia.
T2015, please remind us, why should we hate this man?
Ron Paul is just acting like a “nice guy” to deceive people, sweet-talking the gullible into their own suicide. He never did anything at all of substance. His “audit the fed” was just bullshitting and would have actually reduced the ability to audit the fed in reality, making it voluntary.
The fed is being audited yearly and I already posted links to the full annual audits which are available on their webpage. In the US, every incorporated entity is obliged to produce full(!) audits and make them public, all the way up the congress, treasury and the government itself. To put it simple, he is hiding that fact and only tried to doctor on the partial audit for the GAO, which is in itself irrelevant to the whole topic.
As for ending the fed, see above on Mises. Without the central banks, there would be no control over private banks whatsoever and the banks would rule supreme.
He is one of the dirtiest liers and deceivers ever, quite simple. Please read these articles for in-depth info:
Here’s the current full annual audit of the FED, proving that RP is a liar.
And this is the actual and relevant audit submitted to the Congress, not the (by design) partial audit for the GAO that Ron Paul talks about in his fraudulent proposals, while completely obfuscating the real one, that has always been there and still is.
One more question to you: what happened to the over $40 million from the 2008 Ron Paul campaign?
What about the next one, that he simply dropped?
Think about that too.
Gold is not “sound money” in any regard. Just think about who owns the majority of it – the very same players. THEY are selling and pushing this meme. Also in the past it was all tried and there is overwhelming proof that it simply does not work – it produces worse bubbles than fiat money. Also there is not enough of it for a growing and dynamic economy, nor can it flow as needed.
Mises and co. are against any sort of regulations and basically would give oligarchs unlimited rule with no involvement of the state whatsoever. Just think of the times of J. P. Morgan and co.- that’s what you would get. That is the very core of fascism, just a continuation of feudalism, but even worse.
They don’t oppose the welfare state but they simply want the poor and weak to lay down and die. Think about the implications of their politics and how it would end up for the weak, poor, old and disabled people. Especially those who have no family to support them.
Yes we are on the same side. As said, Mises was the basis of nazi economics. You know those guys that gassed many thousands of their own poor and disabled as “useless eaters”.
Their theory sounds nice superficially, but they all keep quiet about the other side of the coin. Thankfully there are people like Hudson here who see through it and many others who still know it from actual history.
Please do some further research on that other side of their ideology and I’m quite sure you will eventually come to the same conclusions. As you said, Keynes ideas got totally perverted but IMO he was by far the greatest financial genius ever. It’s a shame that the current system is still being ironically called “keynsian”, since it represents the exact opposite of what he taught and wanted. Read his early works and turn off the prejudice, it’s an eye-opener.
Puno pozdrava :)
1. They advocate SOUND MONEY i.e. gold and silver backed currencies, return to gold standard.
You do realize that before the banker gangsters had the Fed and the Petrodollar, they had the gold standard, right? Plutocrats tend to be the people with control over most of the gold.
… they also oppose the welfare state due to their belief that charity and wealth redistribution should not be handled by the state…
So, this vital aspect of the people’s commonwealth should be handled by…? As Goldman Sachs CEO Alexander Dielius bluntly put it, “Banks do not have an obligation to promote the public good.”
Ask yourself, would USA be able to launch all these wars of aggression and colour revolutions if they reverted to the gold standard?
It was working for the British for a while…
i think what we mostly see in the actual world are not systems of economics as formulated in their theories but the simplistic corruptions upon those theories.
What you’re saying about fair pricing for privatization does happen in the reverse case, when government nationalizes an industry, or a local authority seizes property through eminent domain, and is obliged to pay fair market value for it. But I’ve never seen it happen the other way round.
The only privatization I’ve seen in my lifetime has been arranged by government as policy, and consists of selling off national assets at “bargain” prices. The test is when shares in the newly privatized industry or property immediately start paying dividends and going up in value. Then you know it was undervalued at the transfer.
And as you say, cheap credit and disguised subsidies play a role too. It’s a social theft arranged between conspirators. Any theoretical possibilities of “greater efficiency” are destroyed by the underlying theft that operates in its name.
Ironically there is such a case – the only successful endeavour of Ron Paul in his whole career.
“To authorize the Administrator of General Services to convey a parcel of real property in Galveston, Texas, to the Galveston Historical Foundation.”
The Washington Post described the passing of this bill like this:
The passage of H.R. 2121 (above), in fall 2009, unfolded without drama. It allowed for the sale of a customhouse in Galveston, Tex. The House debate took two minutes, and the vote took eight seconds. The ayes had it.
So Ron Paul’s ONE success story as a Congressman is that he got some federal land conveyed to a historical society in his home district of Galvesten, Texas, at fair market value.”
Great interview Saker,thank you for doing it. I enjoyed it so much because he re-enforced economic development ideas that I’ve studied for years.But my limited economic comprehension abilities have made me wonder if they were right.Studying peoples and nation’s histories is much easier :).He was able to breakdown and easily explain points in ways I never could have done.
Thank You very much Saker and MH and will pass around to see if it will open up some closed minds on who runs Amerika.
Mr. Saker, once again your excellent interview with Mr. Hudson captures one of the underpinnings of America’s flawed relationship with the rest of the world. Great job!
I have committed many times on other alternative news websites that United States foreign policy adheres to the 3 “B” doctrine: bribing, bullying and bombing. It is a hegemonic plan of short vision and superficial substance for enriching the elitists at the expense of the people.
I believe President Putin, foreign minister Lavrov, chief of staff Sergei Ivanov, etc. and others in the Russian Federation government have a carefully crafted strategy to: protect the sovereignty of Russia and her people, to stabilize the currency and its exchange value in the domestic and global economic marketplace, to foster and share common interests while maintaining her unique identity and to revitalize and promote the rich and historic culture of the many ethnicities that bind her together. Russia will stand with other countries as one of the great nations whose learned suffering is a painful reminder to all to guard against the darkness of evil which never ceases to tempt, to scheme and to ultimately usurp by fiat and force, the very freedom and thought of the human soul.
You speak negatively that the US “creates dollars out of thin air.” Well, the US, and every single other country in the world that is not pegged to the dollar, “creates money out of thin air.” It is the way fiat currency works! All dollars in existence come from computer entries, as Hudson points out. They are created like the numbers on a scoreboard. The “deficit” is the only way dollars get into an economy. Gov’t “debt” is settled the same way: by computer entries. It is not a problem in itself. No gov’t sovereign in its currency can “run out” of money. The dangers come in in other ways. As always, it is a question of abuse of power and greed.
The danger in fiat money is when the quantities issued are at variance with the actual productivity or productive capacity of an economy. Zimbabwe can issue all the money it wishes, but no one is interested in selling them anything for their currency because Zimbabwe produces nothing. It has no real economy. The other great danger in the US, besides excessive casino-like production of dollars is that their economy has been “hollowed out”, as Paul Craig Roberts has pointed out.Here are the largest corps. as of 2011: Walmart, ExxonMobil, Chevron, ConocoPhillips, Fannie Mae, General Electric, Berkshire Hathaway, General Motors, Ford Motor Company, Hewlett-Packard, AT&T, Cargill, McKesson Corporation, Bank of America, Federal Home Loan Mortgage Corporation, Apple Inc., Verizon, JPMorgan Chase, and Cardinal Health. Note the prominent place of the banks. Then oil. Then Iphones and such, and cars. Cargill is agribiz. The undue prominence of the essentially parasitical financial industry (FIRE) sector is a big theme in Hudson’s writings. The Pentagon is also big business. All destructive activity. Bombs add nothing to the world but pain and chaos. A third danger in the US is that the population is debt ridden. It all floats on an ocean of credit. Essentially a slave economy.
Another misconception is that the gov’t “pays” for things through taxes. If you think this through you’ll see that is nonsense. The gov’t is the issuer of the currency. The consumers, and the various States are users of the currency. They need to engage in productive activity or else issue debt instruments like bonds to “get” dollars. The gov’t doesn’t need to earn dollars, it issues them. This is the great difference between “nomisma” and specie-backed currency. Taxes have an entirely different function in modern fiat money–a function which .0001 percent of the public and their politicians understand, unfortunately. The US gov’t issues bonds, but they have a very particular function as well in its central banking system. They don’t do this to “get” dollars.
For more info, go to neweconomicperspectives.org, and to http://bilbo.economicoutlook.net/blog/
Hudson belongs to this intellectual group.
This article has a good outline of modern money theory: http://itsthepeoplesmoney.blogspot.mx/2015/06/you-know-you-understand-modern-money.html.
This booklet is superb: http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf
So, that tiny piece of paper [a bank’s IOU] with the number $100 stamped onto it, is really worth 100 dollars?
2008’s ‘too big to fail’ set the tone…, and we’re all still riding on its waves… The banksters rule and we just bicker amongst ourselves.
Plan well executed.
Yes. It is.
It’s value is not decided by the issuing bank. Buyers and Sellers of goods and services decide the value when they do a transaction. They are by definition, always right.
Hello Spanish Saker, that’s a must to translate and to publish.
“Being a democracy, America can no longer afford a land war. No democratic country can.”
Michael Hudson is a brilliant man? He may be. Does he understand economics, or politics? He certainly knows how to slip in very important misinformation.
Dictionary.com defines democracy as: “A system of government in which power is vested in the people, who rule either directly or through freely elected representatives.”
This definition is close enough to what we were taught in grade school. Let us examine it.
1. In America (the United States – thereof), power is not vested in the people. A huge economic clue may be found by recalling “The Great Bailout,” titled as the “Emergency Economic Stabilization Act of 2008,” which transferred $13 Trillion to the nation’s wealthiest families. The whole nation was looted. Paul and Kucinich, who led the opposition, were overwhelmed by the rubber stamp bought Congress (who were cheered on by Obomber and Bush).
2. American politicians are bought and paid for employees of the wealthiest Oligarchs. Some of these Oligarchs do not reside in America. Years ago, Ralph Nader was asked if there were (among 535 elected members of Congress) any Congressmen who were not under the control of wealthy vested interests, Nader named two, Ron Paul, and Dennis Kucinich. Smiling, he said there might be one more.
3. The American Representatives are not freely elected. They are purchased and placed in office through the operation of a farcical electoral charade. Indeed, Kucinich had his electoral district redistricted out of existence. He had no opportunity to freely be elected. No un corrupt Americans have that opportunity.
On the other Hand!
Numerous other nations do enjoy the practice of Democracy. Russia is one. England, Belgium, Holland, and several other European nations are. Venezuela, Ecuador, and most of the South American nations are. The Democratic Republic of Donetz is. I’m not sure about Luhansk. India is. Pakistan is. Lebanon is. There are more who are. And many who aren’t.
Most of the Democratic nations are far from smoothly operating Democratic Republics. But they are. And they are trying. The pressures from the imperialist nations distort and damage their political processes.
One cannot separate political science from economics, and vice versa.
Hudson concedes the Democracy label to the American genocidal imperialist government, while not mentioning Russia. He fails to mention the St. Petersburg Soviet of 1905, the Constituent Assembly of 1917, and many other efforts by Russians to construct a Democratic Republic. Solzhenitsyn had some views in this area.
Hudson leans upon Djugashvili’s (Stalin) approach to Democracy and human freedom, while ignoring, or diminishing the efforts of the Novorussian Citizens, and the Russian people of Crimea and the rest of their nation. Democracy is not an insult. It is a VISION of human freedom. Obomber, Hilary Clinton, and Bush 3, and their twin political gangs (dems & repubs) do not have that vision.
Hudson belittles the efforts of the true Democrats. He turns history on its head; because!!! If America is a “democracy,” just what the hell is Russia? There are standards for Democracy. America fails in all aspects. If Hudson believes Russia is a Dictatorship, let him say so. Which is which? Or, are they both the same?
Hudson concludes: “America can no longer afford a land war.” Say What! These imperialist terrorists are affording – a land war, dozens of land wars, even financing other’s land wars, all over the planet. America finances Tel Aviv’s (Israel) economy, the Ukraine’s military, and its own. America spends as much on weapons of mass destruction as the rest of the world combined. And the $$$ to do this is rolling off the printing presses at a huge rate. War in Europe is raging at an ever accelerating rate. Most of the eastern European balkanized principalities are being armed and prepared, and given their orders.
I am willing to communicate with Mr. Hudson on these issues. I do not insist on this, just offering.
In America there are no short cuts. We have the responsibility to restore our Democratic Republic, assassinated in “The Coup d’etat in Dallas on November 22, 1963. We have never been the same since. We have not been a democracy in over half a century. I, and the world miss the heady optimistic days of the early 60’s, when we were young and confident of the future, and we had a brilliant young President. He was no saint; but he was ours. And because he was ours, he was murdered.
For the Democratic Republics!
For the Anarchist Collective!
Hudson’s point is simple enough. A democracy, even a debauched one, simply couldn’t raise the manpower needed to go to war in Eurasia. Nor could a democratic invader’s domestic politics tolerate the attrition its army would necessarily suffer.
Hitler’s >200 divisions weren’t enough. Do you really think NATO could raise an army that big? How about when it lost 3/4 of it? Politicians fear lampposts.
Here’s my view… Their attempt to raise Russia as a compelling threat has failed. The Goebbelian “just tell the people they’re under attack” gambit didn’t work. The people shrugged. They aren’t buying it. Kerry’s been put out to pasture, there’s no Plan B except “Bring on The Nuland”.
The comparison that I can make is of a wife that’s pissed off at her husband and he refuses to engage in histrionics. Some of us know where this insanity leads.
A democracy, even a debauched one, simply couldn’t raise the manpower needed to go to war in Eurasia. Nor could a democratic invader’s domestic politics tolerate the attrition its army would necessarily suffer.
The US, like all bankster-controlled countries, is more of a plutocracy than a democracy. And even if someone sticks with the flimsy “democracy” moniker, there are ways of “fixing” that.
Their attempt to raise Russia as a compelling threat has failed.
Of course the attempt failed – Russia didn’t actually invade Ukraine. Having Novorussians killed to push Russia into “starting” the war was probably the plan all along; that’s what the banksters did in the last world war. They didn’t even even try another false-flag attack on Americans yet, so saying that the Banking Empire will never galvanize enough racket warriors to fight for them is unfounded.
First of all thanks for this most interesting perspective by your Guest : I agree that Russia must create its own State run Central Bank and I also agree that the Russian Govt. must subsidize its agricultural domain along with its own Industrialization based upon the needs of the Country .The question mark that remains is how to deal with the oligarchs that in essence manifest the same disease that has plagued countries for so long . The simple fact of having to pay rentier tax to maintain a Freeloader Status and way of life should be abolished .As far as Foreign investments go ,they are no more and no less a window of opportunity to flood the market of a Sovereign Country with Fiat paper money that has ‘NO’ value . Why would anyone accept a ‘basically’ useless piece of paper for something tangible . This piece of paper is what actually robs the Russians of their natural resources and proliferates the disease .
“Fiat paper money that has ‘NO’ value”
Please send all the fiat money you have to Saker and lets see if he can find some way to do something with it.
blue, glad you posted here, and are encouraging donations to our host. And I appreciate the pecuniary irony. However, Bergolts does have a point in that paper money generally has no ENDURING value, or, more precisely, the first Federal Reserve one dollar notes issued in 1913 could each singly purchase 20 cups of coffee at 5 cents a cup in those days when a dollar was a dollar, but now get you just over half a Starbucks “Tall” (the smallest). A 97% devaluation in 100 years. The call that “monetary stabilization”.
Even our friend Rurik, the Austrian School self-described author and devotee had a point on that score. Otherwise, the Austrian School would never get anywhere with anyone. They have to be right about something, part of the time, after all, to be able to recruit small minded gripers and complainers who can’t mature out of their Libertarian diapers.
However, the point Bergolts is making is more fundamental and worthwhile making: Nations and people should fear sudden and accelerated debasement of fiat currencies irresponsibly managed. China is nervous about its huge accumulation of dollar foreign reserves and with good reason, and it is altering course, carefully and deliberately to avoid being left hold the bag, so to speak.Ditto many others. America’s Bubble Economy and the looming end of the Ponzi schemes of the London and Wall St after all, are exactly what deployed Nuland to Ukraine, as one of just many scores of similar crimes against humanity by these counterfeiting liars and killers in recent years, as they seek to tear whole regoins of the world apart and loot them to cover up their own bancruptcy a few more years.
You had a point in your argument with Rurik that there is not nearly enough gold to back all the paper money in the world, but the role of monetary gold is not to back every piece of paper 100%. It’s role is to settle trade imbalances (like Hudson says, if I recall my reading of the interview early this morning..) among nations to prevent what Nixon said would “only be temporary” in 1971. Bullshit. The purpose of bull-ion in reserve is to inspire the confidence that bull-shit destroys. That’s all. Just don’t worship it and make golden calves out of it, either. Wealth is increases in productivity, whose source is immaterial products of the human mind. Ideas discoveries, technologies applied to agriculture, industry, transportation and even education and health (producing nothing material, but further aiding the longevity and quality of the principal fount of all wealth, the mind. But if savings derived from a lifetime of creative contributions are debased, that is theft, for sure.
Myself, I found the interview of great value and felt Uncle Bob pretty much expressed the same thoughts I had, when there were only a handful of posts here.
Then I read your post and Peter J’s (sorry Peter, I had the same reaction as Erebus) and had to add something besides an “I agree/” after each of those posts.
“You had a point in your argument with Rurik that there is not nearly enough gold to back all the paper money in the world, but the role of monetary gold is not to back every piece of paper 100%. It’s role is to settle trade imbalances…” – mind and soul
I always get a kick out of the “there isn’t enough gold” argument, its all a matter of price. When the Ponzi collapses you’ll need to have some noble shiny stuff (white and/or yellow) or you may find yourself destitute. In every monetary collapse in history gold has proved its worth, we are now in the largest bubble the world has ever seen, the bond bubble. How will you protect yourself?
Why is China building ‘ghost’ cities? They are building out infrastructure now for future migrations, because the future will prove a much more challenging environment to build out on such a scale. Why is china accumulating so much gold? Because it will be MUCH harder to acquire in the future. Why is China inking very long term energy deals with Russia and Africa? Because energy will become much more sought after, and much more expensive. Why is China buying up arable land at an insatiable pace? Because arable land is shrinking at a shocking rate.
China is an old civilization. Watch closely what they do in the coming years.
A country having gold for international use is much different than you having some in your basement.
Suppose the economy and dollar collapses? Who will buy your gold, and at what discount price? After all — what choice would have? So I’m rich and you are desperate and starving, and instead of offering you $5,000 dollars (which feed you a month then), I’ll offer you $1,000 — take it or leave it. How many people do you know who would be rich enough to buy it?
A similar game can be played even in international markets too, however, and especially when the geopolitics and military situations have gone crazy. All the gold in the world won’t do you any good if my military is 10 times the size of yours — because I’d be able to take whatever I want from you.
The value of gold is an abstraction, and a matter of a market which can be controlled.
Gold is almost fiat money too — you can’t eat it, and it limited industrial use even. What gives it its value? People thinking it’s valuable. Recall the way silver prices went up and down in a bubble when Hunts were playing games.
Why is the dollar, or any fiat money worth anything? Because people think it is, and governments demand taxes be paid with it. (But… see below) But you can’t pay taxes with gold — first you have to sell it for fiat dollars. The question of what makes anything valuable to people is complicated, of course.
Now — lets say the island of Ubongostan suddenly discovers a zillion tons of gold is what holds it up out of the sea, and they start digging it up. The price of gold collapses, and Unbongostan is not allowed to buy and own the world. That’s politics, and manipulation of price, but also showing that value of gold is nearly as abstract as value of fiat. Aluminum is cheap now, with hydroelectric power used to process it, but once it was worth more than gold.
The real wealth of the world includes all the materials and production and all the things people find useful and desirable. And that tangible wealth also is fixed, in that it can’t be suddenly increased (until we get Star Trek style synthesizers).
But… what else makes fiat money valuable? It’s liquidity and ease of use, even with computerized accounting. Don’t try to spend a gold coin at Walmart — they wouldn’t know what to do with it. And if you wanted to buy a car with it, even if the dealer was willing he would have to look up the current price of gold and authorization from the boss (some level boss), and figure out where and how he could then sell it to get dollars. Gold may have some use in international transfers to settle foreign debt, but then the fluctuating value and questions of transfer of the physical gold (not plated tungsten!) needs to worked out (will you really trust that the gold supposedly in a NY bank vault is there and reserved only for your transaction? and not to send some to Germany?).
Money is a legal abstraction; gold is a metal and commodity. The two should not be confused. If you need more money to satisfy the needs of the economy, that’s doable; if you need more gold you can’t make it out of lead or find it anywhere.
“But you can’t pay taxes with gold — first you have to sell it for fiat dollars. The question of what makes anything valuable to people is complicated, of course.” – blue
You did indeed just pay your taxes with gold, you sold your gold and converted it into whatever form the government wanted. Its like a farmer saying, “this wheat harvest is going to pay for the tractor”. Because he has to convert the wheat into whatever form of money is needed to pay a particular obligation, still does not equate to, “you can’t pay your taxes with wheat!” Yes, the farmer just did (well, a tractor in this instance), he even said, “this wheat is going to pay for the tractor”, he knew even before he sold the wheat how much it would pay for. The real value was the wheat, the paper was just a note, the note might as well had said ‘100 bushels of wheat at todays price’.
So yes, gold is a commodity, and yes, so is aluminum, but there is a very important scientific detail you are leaving out of your ‘money thesis’. Only noble metals will not break down over time, they corrode so slowly (gold almost not at all) that they are essentially immortal. This is the primary historical/scientific fact for golds place in every advanced society in human history, spanning continents and hemispheres. Gold has special properties, the way this fact is cast aside to me is very strange, since for something to hold value over time, must it not be indestructible?
It is for this reason that gold will always be with humanity.
As the bond market begins to turn over, gold is just hitting a production peak world wide, in a market that already suffers yearly deficits, so unless we DO find some large deposits of gold soon, the price is bound to go much higher.
As governments collapse under the weight of their own debts, private equity will move into position like a vulture, privatizing assets for pennies on the dollar. Private money will grow while governments shrink, except in those governments that chose to exert full control over their monetary policy (money issuance).
name fixed Mod-KK
blue on June 11, 2015 · at 7:08 am UTC
“But you can’t pay taxes with gold — …
You did indeed just pay your taxes with gold, you sold your gold and converted it into whatever form the government wanted.
(You put my name instead of yours in the header.)
You didn’t pay with gold, or wheat, or anything else — but with dollars, as the government insists on. Whatever commodity you sell, you have to get dollars to pay taxes. This is about currency, not a commodity market. There are reasons the government insists on dollars (or whatever fiat a country uses): first, it isn’t going to get into sales of commodities, but more than that by requiring taxes are paid in legal government tender it guarantees a demand for it, and can hold control over it and the economy. It can issue more dollars and spend dollars to stimulate the economy and increase employment and production, or it can tax more and destroy more dollars to cool inflation if there is too much liquidity. Monetary policies depend on dollars being the basis of the economy.
To raise or lower taxes means official government actions, but if the government took gold for taxes then then neither the government nor the taxpayers would know how much taxes they had to pay in real value ahead of time because the price or value of gold constantly fluctuates.
While prices of commodities may fluctuate the nominal value of the dollar doesn’t — it’s always worth exactly one dollar, just as one inch is always one inch regardless of how tall the corn grows that year. Money is the measure of value, like inches are of length and pounds are of weight. We are long past trying to measure length by so many barleycorns or lengths of aking’s actual foot.
Fiat money is qualitatively more indestructible than gold because it’s a legal abstraction.
Now, if you want to arange things so that you really can pay taxes or buy tractors with wheat or chickens or gold, then you are trading in a barter system, with all the inherent problems of barter — and maybe the guy with the tractor doesn’t want you wheat, and then you are out of luck.
Thanks for the clarification -I as wondering if you’d gone ‘Hegelian’.
Or just plain schizo. :)
“Now, if you want to arange things so that you really can pay taxes or buy tractors with wheat or chickens or gold, then you are trading in a barter system, with all the inherent problems of barter — and maybe the guy with the tractor doesn’t want you wheat, and then you are out of luck.” – blue
Sorry blue, I don’t remember ever putting your name in the header (though it was very late here when I wrote it)….maybe the moderator can change it? done
I understand that you need to convert the commodity into the accepted currency (I admitted as much), my point is that you can ‘eat’ gold in the same sense that you can ‘eat’ paper money, I never hear people say, “well you can’t eat paper money”, even if neither is physically eatable.
You also can’t pay your taxes with labour, but the real value is in the labour, not the note, the note is simply an IOU that was given to you in return for your labour. The currency itself has no intrinsic value whatsoever, it is a very flexible note (IOU) that fluctuates just like anything else that is traded (currencies trade like any other instrument through FX). It has no ‘fixed’ price as you suggest, in fact it is the complete opposite.
Gold because its nobility and indestructibility is used by government for balance of trade because it carries no counter party risk, and is accepted globally, despite the fact that its price relative to any given currency fluctuates, it CANNOT be debased.
The suggestion that paper money is non destructible because its an abstraction is a bit of a stretch, both physically and in terms of the currency itself, most currencies last 50-80 years before they are destroyed by hyperinflation or are replaced by government default, or devalued by 80% or more. You say a dollar is still worth a dollar no matter, but its obvious that what the dollar purchases decreases at a fluctuating rate, what we call inflation eats the value, and no matter how much taxation or interest rates might increase the temporary value of that dollar, over time the currency is always debased, historically speaking.
I’m not suggesting a barter system at all, I am merely pointing out the fact that as long as there have been economies there has been gold, it has value not merely because we think it has value, but because in the case of government negligence, or currency debasement (which always occurs) gold is a hedge. Gold is a hedge against government malfeasance because its outside the fiat universe and during currency resets gold is always looked to as the safe haven, that is why central banks hold it. Gold is beholden to no one government.
Paper money is a receipt of exchange so we don’t have to carry around 100 tons of wheat for a tractor, but it was the wheat that put those IOU’s in the farmers hand. Producers are creating wealth because they produce, if no one produced the paper money would be worthless, there would be nothing to purchase.
If a new currency is being issued anywhere at any time, buy gold at the current price in that particular currency and wait 70 years to determine which held its purchasing power. I’ll put my wealth into gold every time. As a store of value gold is superior to paper money, this is a historical indisputable fact. Yes there are periods of price volatility, but the longer the duration the more surely will gold prove its worth as an asset of stability which carries no counter party risk (risk of default, debasement).
Gold, and some other commodities, can be useful as a hedge against inflation — but remember that inflation is problem caused mostly by banksters and manipulation instead of actual shifts in availabity of products. Yet, over the years, the plutocracy has ended up with most of the fiat money and most of the gold (and most of other forms of wealth, so that problem is not what money is based on but the political economics of the system.
One can argue for or against using gold, or something else (such as land, water, copper, rare collectables, gems, art, etc., as a store of value, but these are not money and have no legal status as such. There have been economies where there was no gold — when some area and people had no access to it, or where it was not used as exchange.
As for stability of tangible wealth, a mix of things valued is better than any one thing. When gold was discovered in the Yukon there was lenety of it in the area, and the prices of food and goods shot up as measured in gold — while the value of food was still in food that could be eaten, and clothes as to how they were worn. If all the gold in the world vanished there would still be an economy.
If you want stable money then you need stable government, a stable economy, and a fair and open financial system — and there is no substituting for that by having money able to be exchanged by the government for some quantity of metal. Gold can be manipulated, speculated on, and bubble and crash just as silver did for the Hunt brothers. Look at how the price of gold in dollars had gone up and down over the last few decades at http://www.lenntech.com/prices/gold.htm or http://zengold.com/uk/inflation-adjusted-gold-price/ or http://www.nma.org/pdf/gold/his_gold_prices.pdf .
Suppose you want to hire some to work for you in a long term job. Do you want to renegotiate the pay package every month as gold goes up and down, and as you would have to adjust what you need to pay your suppliers? How could handle paying pensions when you don’t now what gold would be worth in 20 or 30 years? And how would the worker decide what he would need in gold to retire in 30 years?
The problems of inflation, deflation, and wealth transfer from poor to rich are not caused by nor can be cured by basing money on gold or not.
Now, assume Germany had its wealth based on two things — the value of gold and the value of cats (which are very valuable, after all). But then they decide that Germans are allergic to cats so they sell them to Russia for gold. Cats become so popular in Russia that the price of them doubles, in relation to gold, so with a world economy based on gold, with a limited quantity, the money based on gold become such that less money is need to buy gold than to buy cats, and Germany’s economy falters — while the Germans get mad at Frau Merkel and throw her in the Rhine. But Russian economy booms as they breed more cats of higher value. Germany is stuck with cheap gold and no cats. Meanwhile Nations which have no gold but lots of cats are happy, but those with gold but no cats are in trouble. Soon the places with cats take over the world (all you bases are belong to us).
It works out like this regardless of what money is based on — oil, metals, wheat…
And what of industrial production? What of the US going down as it’s transferred to countries with cheap labor? And where high tech production isn’t worth what it was because people can’t afford to buy the industrial products as the world economy falters?
The economy needs to be regulated through monetary and fiscal policies, and targeted taxes, subsidies, and projects to keep it stable — regulated by people who are honest and know what they are doing — not haphazardly by however much of a single commodity a place or a class has. Or how much power it has — as in those places with lots of gold but where powerful countries come in and take it from them through force and fraud. There is no intelligent or managerial control in that system, feedback loops and systems are all messed up, and law is degraded. When Nixon declared the US would no longer convert dollars to gold that wasn’t about the value of gold, but of hegemonic power. When FDR criminalized citizens holding gold and silver bullion that wasn’t about the price but the power of the state.
I understand what you are saying blue, and I agree in general, but I’m not saying gold is an inflation hedge, but rather a systemic failure hedge. It is the global reset asset by default, our opinion of whether gold is valuable or not is moot, it is used by central banks for a reason, one only need to look at the historical record, its plain to see.
That gold and silver futures are manipulated makes it no different than any other asset class in the globalized theft economy (including currencies), however manipulation can only be short term in any asset, with peaks and troughs happening relatively quickly. No market can be 100% controlled 100% of the time, it simply cannot happen.
When I assess gold and silver I look in decades, not years. In 1916 gold traded for approx. $19.50 US, and silver traded at approx .50 cents US. Those prices held very steady for decades, the move in the monetary base and the increase in government debt began to explode in the 70’s when the US closed the gold window. As government debt has accumulated since then so has risk, as government defaults increase so has golds price. There is a direct relation to government debt levels (sovereign risk) and the gold price.
What the world now faces however is a bond crisis, where sovereign debt has grown to such a level that defaults have become a real concern, this is the very environment where you want to own gold. During times of government stability there is little to no risk value so gold just sits there, being ho-hum, however given the level of sovereign risk that now exists this is THE time in history where you want to own the noble metals, when government fiscal creditworthiness is called into question.
Your analogy with cats was a bit much for me, I just skimmed it, I like to deal with the reality as it is, no one will be using cats for exchange in the foreseeable future. However central bank purchases of gold have risen over the decade even as the futures market has declined, and more governments are announcing gold repatriation, why do you think they are doing this?
I’m not suggesting, nor do I think I ever suggested that gold should be the foundation of the economic system, I always find it interesting how people project these ideas based on the theme being discussed. There are grey areas of complexity, it seems everyone wishes to simplify things to black and white terms all the time.
Also, when government begins to clamp down on precious metals that is a big red flashing sign to buy, because it means they are going to either default or devalue, they are thus moving in on the arbitrage market to control people from profiting. The noble metals will always be with us, they will not always be the best investment (times of stability), but they are currently the best investment to protect against government deterioration.
“All the gold in the world won’t do you any good if my military is 10 times the size of yours — because I’d be able to take whatever I want from you.” – blue
Gold is not a magical power! If you are being invaded by a much larger and powerful army they will gladly take your gold, in fact they’ll probably ask where that is first.
“I’m not suggesting, nor do I think I ever suggested that gold should be the foundation of the economic system”
OK — although that’s what started this exchange concerning gold, we may be in substantial agreement.
Now there are storms coming in to attack my computer, and it’s past nap time, so I’ll have to let this rest for a time. :)
One important point I overlooked, especially with inflation, is that throwing away and blowing up a big portion of an economy on wars and military spending can’t help but be very destructive not only to the targets of aggression but to the economy of those making war. Wealth going up in smoke (and blood).
Mind and Soul : Thanks for your comment its appreciated. I wish to add a few more thoughts to this subject ,but I will present it in a point form format for convenience .
1: The globalization paradigm is being directed by the elites, it doesn’t really matter whether they are based, in Washington ,London ,Zurich or elsewhere .I believe that they don’t hold allegiance to any Country .
2. Since the outset of ‘free trade ‘ Nafta being just one example- the ultimate purpose was to dismantle the structures ‘manufacturing base, agriculture, etc. ‘ of the Countries involved in order to weaken the self-sufficiency and therefore the sovereignty of these targeted States . The jobs are off-shored not only to increase the profit margins but more specifically to render the target countries dependant on foreign based markets ,yet ultimately these Multi-National foreign companies are owned by the same crooks that promoted the off-shoring to begin with. So it doesn’t really matter whether the US economy takes a beating and high unemployment is the result.
3. Since the US dollar is the reserve currency and the majority of all that is traded is based (relative ) to the greenback .The manipulation of foreign currencies will continue unimpeded. This has been obvious since the creation of the petrodollar ,where the Vultures act like ‘middlemen’ and reap free money every time that a transaction is made . This profit margin is then used to further weaken any resistance to the ‘racket’ .Actually from the Vultures point of view the resistance is another method to increase their profit margins (MIC) and sent a mortal threat to any other dissenters.
4. It is irrelevant whether the US is in debt to the tune of 10 Trillion or 50 Trillion dollars .As long as they are the reserve currency they can continue printing money at leisure .In essence what they have become is the Central Bank of Planet Earth .Yet this is a calculated risk because the True Debt does not originate from a monopoly money bank but from Mother Nature herself .
5. The economists model of a growth based economy (especially the quarterly reports) is a Malthusian trap in itself .The creation of growth cycles and the formations of ‘bubbles’ is node star pointing directly to Easter Island. Any junior economist can (and they do ) apply and demand this predatory growth cycle only to find out that ten years after the good times the problems still exist. Now say that you have 5 million unemployed in country Z and the ‘growth cycle’ is implemented . There will be an immediate demand for labour ,housing ,parking lots and Wal-Marts .Boy will meet girl (they both have money ) they get married have two or three kids and then the bubble bursts and now there are 8 million unemployed ,the Natural Environment and her gifts have been depleted and badly stressed and then the entire brain dead cycle is repeated .
6. Target countries are in the Vultures gun sight for several reasons . The obvious reason is for the natural resources ,yet they still demand slave labour which mostly originate from the exploited countries .Target countries are sent into turmoil in order to destroy any semblance of unity and development (racism at its finest) a good example is Africa.
7. Russia has absolutely no desire in becoming a vulture capitalist pillaging ground .Russia has the natural resources and the land mass to exploit massive ‘growth’ which the vultures are envious to control for ‘their’ benefit.
8. Russia can benefit from the sanctions by internalizing their production for the needs of the country without having foreign freeloaders profiting from Her. This would also stress out the Western induced ‘growth paradigm’ and weaken the reliance on the US dollar because ultimately debt is not owed to a bunch of Crooks that print money ,but from the resources which are derived from Gaia .
9. Russia can adopt a new equitable system whereby taking care of her needs first and trading the ‘surplus’ later would strengthen Her Sovereignty.
10. If Russia takes advantage of the sanctions regime imposed upon her She may well face a Labour Shortage in the future .
Since it has no value, you may send me all your paper money. I’ll pay the postage. You may also empty the worthless digital money in your bank accounts and convert it into paper, and send that to me as well–or if you prefer you can transfer those worthless digits to my bank account directly. I find that most merchants will accept the paper and the existence of the digital money via bank cards, but if you consider it worthless, I will take it off your hands. Glad to be of help.
“Has NO value…”
One of the three positive traits that provide the worth of money is its ability to be “a store of value,” which is explained in every Econ 101 text. This is the fundamental problem with fiat currency as it lacks the ability to store value because its eventually watered down to having zero value–debasing the currency is its name. Just look at what the value of US coinage is now versus the years when it contained a valuable mineral–silver or copper– http://www.coinflation.com/ Use the link to see what the metal dollar is actually worth then compare that with what it replaced–the silver dollar. It should be easy to grasp why the rush to amass land and resources having inherent value–cash is essentially worthless in the longrun.
Clearly, most of the commentators haven’t read Dr Hudson’s essential “Superimperialism,” either the original or the recently published update. I highly recommend it be read. Afterwards, please visit his website and read the last 5 or so years worth of articles and watch his interviews, http://michael-hudson.com/
Great interview. Hits all the high points across Economic, Geo-political and Social planes and shows how & where they intersect clearly and concisely.
Much thanks to both of you for the time and effort. 1st class.
“That’s the unspoken key to U.S. diplomacy: simply bribe politicians, journalists, publishers and others”
There is one other “key”, and that is their ability to blackmail those they can’t buy. The USA’s massive investment in surveillance is not only to keep tabs on domestic troublemakers, but to get “the goods” on all politicians and others in a position to facilitate the American/NATO agenda. They have profiled anyone and everyone that may prove to be useful at some time, complete with a record of their internet activity, sexual preferences, all that juicy stuff. Very effective.
And if they can’t get anything on them, sideline their careers or arrange an accident, so an uncompromising politician sees a bridge abutment before he ever sees power.
I think that’s why they were so pissed when Yeltsin abdicated in favor of Putin. They didn’t see it coming and I can imagine somebody at State saying “Who? Get me his file” and then “$hit. What am I supposed to do with this? There’s nothing here.”
For more from Michael Hudson, see this: https://youtu.be/4E-EoOkLF_g US
antagonizing Russia in Ukraine: Michael Hudson
In a rational world, he would be one of the president’s economic advisers, if we had a rational world!
Michael Hudson is basing much of his remarks that the war in Ukraine is self-imposed, even though it was instigated by Russia criminally. Putin and Russia should be charged in International Court. Russia’s attacks on Ukraine are so heinous and unforgivable, they would never be able to repay Ukraine. What Michael Hudson does not understand is the real history of Russian aggression in Ukraine, not that which is twisted by the Russians. The land in the east which the terrorists are currently occupying belonged to Ukrainians, was stolen by Stalin who killed the landowners, and parcelled much of the land to new Russian settlers during collectivization. For those with property, collectivization meant forfeiting land up to the collective farms and selling most of the harvest to the state at minimal prices set by the state itself. For those that resisted, as my grandfather did, were killed by Russian agents, with my grandmother and aunts, left homeless, and my father and his brother sent to Siberia to a labour camp. I don’t understand why there are a number of experts such as Michael Hudson, Glenn Greenwald, Max Keiser, Noam Chomsky, and others who criticize US incessantly and yet defend criminal Russian authorities who have intentionally polarized Ukraine, EU & US for political self-serving purposes. This ‘us vs. them’ mentality is antithetical to what Hudson, et. al contend they stand up for. Although I initially admired their work I now find that because of their biases and lack of knowledge of history, they are unable to think critically and write objectively.
Although I understand your position I think you have conflated Russia with the Soviet Union and this has led to a misconception of the situation. What happened in the Ukraine under Stalin, and as unfortunate as the whole episode was, is however not the present. The on the ground situation right now is that innocent people, not terrorists, are being pummeled by heavy weapons by an attacking force that is intentionally destroying residential areas.
The coup in the Ukraine was not instigated by Russia, in what way do you see Russia being responsible? Many in the easternmost part of the country did not feel comfortable with the new Kiev rulers, and they initially sought their own way in the face of what appeared to be, and is increasingly becoming obvious, a fascist government. Why did Poroshenko choose bombs over dialogue?
What has Putin done that he should be charged by an international court? Has he violated the rights of anyone in particular?
OK let’s look at history with facts, not just a narrative. Please explain to me with some details, what you think is the real history……… you say
“…For those that resisted, [..collectivisation..] as my grandfather did, were killed by Russian agents, with my grandmother and aunts, left homeless, and my father and his brother sent to Siberia to a labour camp…”
Collectivisation in Ukraine was started from 1930 to 1936. Children were not sent to labour camps, so your father must have been at least 14, making him between 91 and 97 years old today (and making you approx 55 to 65 years yourself). He would have been 20 – 24 at the start of the war, old enough for military service. Did he serve? where? how/when did he get home? or did he immediately emigrate? who did you learn the history from?
“…The land in the east which the terrorists are currently occupying belonged to Ukrainians, was stolen by Stalin …”
What Ukrainians? or, put another way, if you want to blame anyone in any way Russian, take it back a bit further. That area (Donbass) first came under Russian political control under Catherine the Great around 1770. Previously as an outpost of the Ottoman empire it was settled (sparsely ) by Turkic people; Catherine encouraged German migration to the area, as well as migration of Ukrainians and Russians.
So there were a lot of Russians there FROM THEN, ie from the same time as there got to be a lot of Ukrainians. It was NOT a “Ukrainian” area until Stalin replaced them with Russians in the 1930’s, as your story goes. Most of western Ukraine was under Austrian or Polish rule during all this. There was no independent Ukraine anything like in its present borders except for a few months a few times after WW1.
Many of today’s residents in Donbass have family roots in the area going back these 200+ years. They LIVE THERE, and have every right to live there. They are not terrorists. They protested against the new government in Kiev, which responded by sending tanks and fighter planes to their cities to bomb them. ….. not invading soldiers, but old people, women, children, who LIVE THERE. THAT is how the war started. How do you figure it is Russia instigated it? Russia made Kiev bomb the cities, did it?
Now if you consider it AGGRESSION to keep living where your forefathers lived, you need write a new dictionary.
Do you think it heinous that Russia HELPS those people a little? maybe with guns we don’t know for sure, but certainly with huge amounts of food, water, electricity, which THEIR GOVERNMENT has deliberately cut them off from. Helping them is criminal, is it? What do you think of Kiev getting millions worth of weapons from the USA and Canada? which have NO REASON TO BE THERE AT ALL?
If you could explain some of that, I’d be very grateful.
Great response.We seem to be seeing more pro-junta nationalists visiting here lately.One other point about Donbass.At the time of the revolution the majority in the area was made up of two groups.Russian loyal Cossacks.That considered themselves “Rus”.And were totally loyal to the Russian state,no matter which dialect they spoke (as today mostly).And the non-Cossack Slavs,mixed between West and East “Russians” that had been allowed to immigrate to the area, mostly after the 1860’s with the end of serfdom.As Donbass grew industrially, workers immigrated from all over to take jobs in the developing mines and factories.And the cities,and many rural areas began to take on the ethnic shape they have today.At no time could Donbass have been considered part of a “Ukraine” until it was awarded to that republic by the Soviets.The very Soviets that today’s Ukrainian fascists love to hate on and blame for all their problems.The very Soviets who left Ukraine as the richest of the Soviet Republics at independence.It remained so until the Ukrainians themselves destroyed all the industries established by the Soviet Union in that republic.
Outstanding replies, Kat Kan and Uncle Bob–Brava & Bravo!!
Yes, the replies of the Nazis have become more sophisticated and are clearly done using teams as in this case.
@ Mary ‘Stalin stole land from Ukrainian landowners’
History is a tricky and often divisive business but it was more like this:
In collectivization, land was taken from kulaks/landowners, given to poor peasants made to join collective farms. Nationality did not play a role and was not even easily defined-it was rather place of birth, religion, class (kulak-bedniak etc) and dialects–the latter all mixed up.
Buzina conveyed a story when a large group of conscripts from central Ukraine in WW 1 time could not identify their nationality, opting for malorossian, khokhol, Ukrainian in about equal proportions (with very few responding to Ukrainian alone).
Ukrainian mova and identity was promoted by educated Western-leaning nationalists like Grushevskii, starting end of 19-early 20 th century, and may be hard to find prior to Taras Shevchenko;- but Shevchenko may not know he is Ukrainian himself .
That was taken over by bolsheviks, who had Ukrainization policy in place, requiring two languages in schools and for bureaucracy; spreading of literary mova has a lot to do with those polcies of bolsheviks
Indeed these were grievous wrongs, Mary, and should not be forgotten, just as the terrors instigated by the Nazi regime cannot be forgotten by those whose forebears suffered them. Injustice has a cruel face indeed and war only serves to make it seem to be the face of a nation. But it is not; you yourself know it is not, having the pride in your country to have survived these atrocities.
The thing is that not only you but also vast numbers of Russians also suffered under that regime. Many died in the same Siberian camps – Russians as well. Read Solzhenitsyn. Those were terrible times, and a world war only magnified the sufferings. If you can realize that Putin is a child of the same sufferings you went through, I think you would have a better understanding.
what an amazing interview. Its long…I’m going to have to print it and read it carefully,.
I think the questions are just barely understandable for laypeople. Especially if they’re new to the economics talk of Alternative Media. I’m not too new so can understand it sort of. But for all people with a degree in economics, its a great article.
Very good interview, which proves that Michael Hudson views are rational and realistic.
My thanks to both Michael Hudson and the Saker.
“The easiest way to stop U.S. military adventurism is to restore gold and free the world from having to use a militarized U.S. Treasury-bill standard as their monetary base.”
I don’t believe the second half of that claim. Gold is a commodity whose price can be manipulated. In my opinion the best approach is to use a basket of currencies and raw materials as a monetary base.
“For example, China has basically decided to become fully dependent on Russia for energy and for military equipment.  I would argue that they are in many ways perfectly complementary to each other.”
China diversified its sources of energy. It did not choose to become dependent on Russia. And even its pipelines towards Russia are situated so that they can easily switch to Central Asia.
Also, I don’t see them as “perfectly complementary”. China would love to further expand its own arms industry and even now it is a major arms exporter. And China’s industrial exports are a threat to efforts to re-industrialize Russia.
“Gold is a commodity whose price can be manipulated.” FALSE. You have to distinguish between PHYSICAL gold and PAPER gold (i.e. forwards/futures/derivatives, etc). It’s the paper price of gold that is reported in the media, not the physical price. You must distinguish between the two. Physical gold cannot be printed, unlike paper gold.
Reverting now to past gold standard world system:
Gold pays Credit but not vice versa. Banker Credit rides on top of Gold in a 100:1 ratio (at leaset!), hence fractional reserve. Domestic banks are linked up via reserve channels, and tend to use Treasuries instead of Gold to settle their imbalance. International trade imbalance is consumated in Gold.
The first statement will not be discussed by money powers. Shhhhh. During depressions, in order to cancel debts, gold and other real physical assets transfer to pay the former credit. Yet, the credit was issued from nothing upon debtors signature. This is why credit power is so important to money powers. Shhh. Credit is supposed to be redeemed with Gold, but that was always a lie. Con men lie, and con is short for confidence game. Con men assume fiat, or faith powers, and said faith really belongs to common law.
The credit is out of alignment at 100:1. Gold recently mined or loose in money supply soon finds its way to “paying for former credit” during depression harvest phases.
How are depressions created? Usury on credit insures that loans created must be paid back with more than principle. This “more” must be exogenous to banking system, and usually comes through Keynsian deficit spending, thus putting public on the debt hook. Without deficit spending, somebody has to cancel private debts e.g. go bust in order to leave their former credit in the supply.
Mercantilism was excess exports in order to grab other countries gold. That gold then paid “credit” needs of private banking, which made public feel secure, because public was trained and hypnotized to think shiny metal was money. This hypnotic suggestion exists to today.
Lots of problems with old gold systems, which also included exchange rate differences between silver/gold. These problems cycled man into poverty, war, booms and busts.
The highest form of money is a division of the law. Even the old credit riding on Gold fractional reserve system assumed law and force; but assuming this law/force power was part of the con.
Today’s system is also a con, just a different form of same money power game. That is, to own oligarchial control and rents on society.
“It’s the paper price of gold that is reported in the media, not the physical price. You must distinguish between the two.’
Oh, and what is the difference between the two, in currency terms, at the bullion store? In my experience, a trivial amount.
With coins of course, i’ve seen premiums as high as 15%, but that’s a different animal.
“…at the bullion store?”
do you really think central banks, hedgefunds, etc. conduct physical gold transactions at the “bullion store”? Yeah, you really know your stuff….
Sorry to let facts get in the way of a good fairytail, but physical gold premiums are more than a “trivial amount”.
The theory that there’s a big disconnect between the pricing of physical and paper gold is an old saw. I first heard it 20 yrs ago or more from shell shocked goldbugs, but it probably dates back to the creation of the paper markets. From what I can tell, it’s horse hockey.
I suggest you look up the answers to the following questions:
– How much did Univ of Texas pay when they purchased 664,300 oz (21MT)?
– How much did India pay when it bought 200MT from the IMF?
– What price do the various Euro Central Banks, and the ECB itself, use when they periodically value the Gold in their reserves? (It’s the first line in their statements, so it’s easy to find)
Hint: India and UT paid almost exactly what I would have paid at the time for a few bars at one of my local bullion stores, and likewise the Euro banks value their gold reserves at the then current market price.
So, do you have any evidence for your rather exotic claim, or not? If you have, please be so kind as to share it with us as readily as you share your various misunderstandings.
And seeing as you insist on being supercilious, I’ll point out that until you present your evidence, your claim that ““Gold is a commodity whose price can be manipulated.” (is) FALSE.” seems to fly in the face of investigations into price fixing at the LBMA. The close of the London Gold Fix after a century of manipulation is another contra-indicator.
Perhaps you’d consider the idea that the paper markets were created primarily to
manipulatemanage, the price of physical gold.
Anon on June 13, 2015 · at 9:40 am UTC was me.
When you’re on a mobile device, the Name field is off-screen.
“The Soviet economic miracle” by Valentine Katassonov in Spanish for “Cultura Proletaria”:
Very interesting analysis of the economic model of Stalin and the reasons / blame for their destruction. To learn, to question things and to think …
Note 5.- Valentine Iúrievitch Katassonov (n.1950), as mentioned in another article published here, is not Marxist nor materialistic in the philosophical field. However, the objectivity of their approach, despite being insufficient in several aspects and the specific objections raised, is a valuable contribution to the establishment of historical truth. This text comes a compilation of eight articles published by the author throughout the month of February 2014 portal http://www.km.ru. (N. Ed.)
I would love to translate some interesting snippets, but I am myself with a broken elbow (skating accident )and write with one hand today.
Guys, try to translate the essay with a translator or so and do not forget the notes below, where, in note 5, Russian readers can find a link to the serie of eight articles of the author, which I guess will be as interesting or more as this one.
BTW, in the site http://www.km.ru there is a joke section. Could someone translate this joke for me?
and some more about sanctions
” President Vladimir Putin said Wednesday on his visit to Italy that he hopes that sanctions-related restrictions will be lifted sooner or later as they hurt Russia’s cooperation with other countries.
But Russia, which banned nearly 90 EU officials from entering the country last month, may also consider some retaliation. A source close to Russia’s foreign ministry told Interfax on Monday that Russia always responds to sanctions and won’t “turn the other cheek” to let the West hit it.:
Dear The Saker,
Thank you for this interview – very interesting.
The US farm lobby is to oppose tipp if no gmo’s allowed into EU just highlights some of the points above on the US mentality:
Thank you for this broad and far reaching interview to both Michael Hudson and Saker. In these confusing times it is helpful to be given a glimpse of what may be some relief from the downward spiral we have been in for so very long – at least long in terms of individual lifetimes.
I was very interested to read the point about a kind of independent track possible for both China and the US – independent from the trade imbalance that has caused jobs to migrate from this country as goods poured in from that country. Mr. Hudson makes the point that China is building towards redirecting its goods towards its own population. This reminds me of a similar goal expressed by Putin early on in the sanctions regime now operating. He took it as a positive challenge, Russia being the large country with potential to grow as it is.
I should think that once this process is established there would be no recourse for the US other than to do the same. Not having apparently made provision for such a drastic change, it would be lagging behind for some time to come, and surely that would affect oligarchical security. There would be no lack of priorities here at home – suddenly making things would be in vogue once again. Workers might regain some clout. Consumers might be called citizens instead.
It must be why the US powers are so desperate to launch these offensive trade deals, in order that such a withdrawal of the China trade be offset by a new hegemony within the diminishing empire, at home rather than abroad. That attempt to set new punitive rules seems to be directed to the continuing subjugation of work forces as the jobs come home and we are to start making our own stuff again, under their rules. Consumers shall remain consumers, and they shall consume what we the oligarchs say they can consume. It seems a desperate attempt, and one that is bound to fail if history is any template.
Interesting times indeed.
Julianna–Dr Hudson has provided advice to many of the nations being assaulted by IMF and EU “Austerity,” and this advice he publishes on his website, which I find invaluable, http://michael-hudson.com/
Here’s the url for Dr Hudson’s website’s very rich store of material,http://michael-hudson.com/
Thanks for the excellent interview. The commentary was also very entertaining. Many are living in a fog regarding the FED. I suggest those arguing about its role read William Greider’s outstanding “Secrets of the Temple.” Those lucky enough to live in Kansas City, MO could even attend his classes or drop by his university office for a visit to enquire. He also has many videos available through YouTube. Within the Outlaw Empire, few know of Thorstein Veblen, yet he’s one of the top all time economists. People must act themselves why and at the same time ask themselves what else of importance about US History’s been swept under the carpet because the truths are beyond inconvenient.
Dr Hudson’s prescription: To avoid the Outlaw Empire’s hegemony, Nations must ally in one or several blocs and create a wholly alternative world system–especially banking and commerce–that embargoes the Empire and perhaps its vassals–the UK most certainly. Will such actions lead to a shooting war well beyond what’s already occurring? Perhaps. Much depends on the body politic within the Metropole.
Also check http://neweconomicperspectives.org/ for Hudson and others in MMT.
Thank you so much Saker,for sharing this interview.It provides much confirming information on the US actions from it’s standpoint towards other nations.
sorry, reading the comment section for the first time there…a few days late…I can’t believe how many comments are by T2015…like the whole first part of this thread is completely dominated by one guy….I don’t even think its his fault, but how does this look to a newcomer here ? Is there any way to fix this ? Its really bizarre,.
Wow, good to see this interview generated a lot of comments.
Prof. Stephen Keen, David Graeber, Ellen Brown, Max Keiser, and many others consider Prof. Hudson to be the most accurate and compelling economist in the US, if not the entire English-speaking world. He is my favorite economist as well.
Some of the comments reflect some ignorance of Hudson’s points. I have many of his books and have followed his work for years. I recommend folks start by reading one of his earlier books (has an updated edition) Super Imperialism. The first edition was from 1973 I believe. If you read that book now you will be blown away how accurate he was those many years ago.
Prof. Keen cites Hudson in his Debunking Economics as one of only a handful of professional economists to predict the financial meltdown of 08.
Thanks to the Saker for interviewing him.
While Professor Hudson is an admirable person and one economist who understands how the system works, it is my belief that he doesn’t quite get the whole picture. Hudson is stuck at the nation state level when the upper echelon operates at not just this level but also at a world level. In order for world governance to be brought forward the old world order of nation states and the Bretton Woods Agreements needs to fade and the upper echelon of humanity is acting to bring this new system into play. The “one world bank” has now assembled and brought the Asian community into the play and is set to move when the timing is right. WWI and II testifies to these ends as a new major orchestrated economic downturn may be the catalyst for the next action phase?
Hudson is so spot on with his indictment of Western Banking and the system of parasitic corporatism. and yet his interpretations of Austrian Economics are so upside down and rife with misstatements that he’s either completely misunderstood whatever he’s read — or he’s engaged in a deliberate campaign to undermine its credibility by piling falsehood upon falsehood.
Absolutely NOTHING in Austrian Theory supports the rent-seeking classes. Rather, it’s rife with criticisms of it through and through. What Austrian theory points out is the the uncomfortable reality (to those who believe in noble interventionism) is that the Rent Seeking types are bedfellows with government and politicians. The looters cannot exist in their oligopolies without the protection of the state, and the very nature of the state and the power it confiscates from the People is always collected by the political elite. Same with state-run fiat currency monopolies: they ALWAYS become tools of the elite who use it to loot the rest of us.
As for statements that Austrians see no use for government, this is an overstatement. Government should serve the purpose of protecting the liberty of those who would choose to violate it, and derivatives thereof. Contract enforcement, protection of one’s right to consent, etc.
It’s so odd, because Hudson sees things so clearly, yet is completely out of kilter on this subject.
Your understanding of Hudson’s “confusion” is spot on.
Michael Hudson, a self-avowed Marxist economist who debuted with Chase Manhattan Bank, is an erudite shill for Wall Street. Ref. https://thedailycoin.org/2019/07/10/looking-at-the-imf-and-world-bank-through-the-eyes-of-a-wall-street-economist/