Why Shinzo Abe Was Assassinated: Towards a ‘United States of Europe’ and a League of Nations

February 06, 2023

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By Cynthia Chung

As already discussed in my paper “Is Japan Willing to Cut its Own Throat in Sacrifice to the U.S. Pivot to Asia?”, to which this paper is a follow-up, Japan has become the ticking time bomb for the world economy.

This is not an unexpected outcome for Japan but has been in the works for the last 50 years as a policy outlook of the Trilateral Commission (though is not limited to this institution). It is in fact the League of Nations’ vision that has been on the wish list of those who began WWI in hopes that the world would accept a one world government of regionalisations in service to an empire. It is what orchestrated the Great Depression to again attempt an implementation of a League of Nations outlook through the rise of a “National Socialist” brand of fascism seen in Italy and Germany (which would not have been possible without an economic crisis). And it was what launched a Second World War in a desperate attempt to forcefully implement such a vision onto the world (for more this refer here and here.)

It has always been about obtaining a League of Nations organization for the world and those who have called themselves democrats have often found themselves in the same room as those who called themselves fascists in order to see such a vision through.

As Count Richard Coudenhove-Kalergi, the father of Pan-Europeanism (who happened to also be pro-fascist), wrote in his 1943 autobiography “A Crusade for Pan-Europe”:

The Anti-Fascists hated Hitler…yet they…paved the way to his successes. For these anti-Fascists succeeded in transforming Mussolini, Hitler’s strongest enemy during the years of 1933 and 1934, into Hitler’s strongest ally. I don’t blame the Italian and Spanish anti-Fascists for their brave and very natural fight against their ruthless political enemies. But I blame the democratic politicians, especially in France…they treated Mussolini as an ally of Hitler till he became one.”

According to Kalergi, and many other ‘elites’ of similar pedigree, it was an inevitability that a fascist Pan-European rule should occur, and Kalergi expressed his clear disdain for anti-fascist and democratic resistance to this ‘inevitability’. From Kalergi’s standpoint, because of the anti-fascist and democratic resistance to a more ‘peaceful’ transference to fascism, they had created a situation where fascism would have to be imposed on them with violent force. It was a tragedy in the eyes of Kalergi that could have been avoided if these countries had simply accepted fascism on ‘democratic’ terms.

Count Richard Coudenhove-Kalergi would write in his other autobiography “An Idea Conquers the World”:

The use of mass hypnotism for propaganda purposes is most successful at times of crisis. When National Socialism made its bid for power, millions of Germans had been thrown completely off their balance: middle-class families had sunk to the level of the proletariat, whilst working-class families were without work. The Third Reich became the last hope for the stranded, of those who had lost their social status, and of those rootless beings who were seeking a new basis for an existence that had become meaningless…

The economic background of the Hitler movement becomes apparent when one recalls that Hitler’s two revolutions coincided with Germany’s two great economic crises: the inflation of 1923 and the recession of the early 1930s, with its wave of unemployment. During the six intervening years, which were relatively prosperous for Germany, the Hitler movement was virtually non-existent.” [emphasis added]

The father of Pan-Europeanism and spiritual father of the European Union, Count Richard Coudenhove-Kalergi, often spoke well of Austrian and Italian fascism and even Catholic fascism, and thus the above quote by him takes on another layer of eeriness. Kalergi acknowledges that Hitler’s rise would not have been possible if there had not been two periods of extreme economic crisis for Germany. The question is, were these crises organic in their occurrence or rather engineered?

In Kalergi’s 1954 autobiography “An Idea Conquers the World,” he writes: “there is not doubt that Hitler’s popularity rested mainly on the fanatical struggle which he waged against the Versailles Treaty.”

If we look at the political ecosystem Kalergi was navigating in, we get some hints to such a question, which included such men as Max Warburg, Baron Louis Rothschild, Herbert Hoover, Secretary of State Frank Kellogg, Owen D. Young, Bernard Baruch, Walter Lippmann, Colonel House, General Tasker Bliss, Hamilton Fish Armstrong, Thomas Lamont, Justice Hughes. All of these men are named by Kalergi directly as his support base in the United States in his autobiography. They were adamantly supportive of Kalergi’s Pan-Europeanism, aka a “United States of Europe,” were staunch supporters of a League of Nations vision and were architects within the Paris Peace Conference (1919-1920) which was responsible for the Treaty of Versailles which launched Germany into its first wave of extreme economic crisis. (For more on this story refer here.)

In my previous paper, “Is Japan Willing to Cut its Own Throat in Sacrifice to the U.S. Pivot to Asia?” I discussed how this is the very goal of the Trilateral Commission, to create economic crises in order to push through extreme structural reforms.

Financial analyst and historian Alex Krainer writes:

The [Trilateral] commission was co-founded in July of 1973 by David Rockefeller, Zbigniew Brzezinski and a group of American, European and Japanese bankers, public officials and academics including Alan Greenspan and Paul Volcker. It was set up to foster close cooperation among nations that constituted the three-block architecture of today’s western empire. That ‘close cooperation’ was intended as the very foundation of the empire’s ‘three block agenda,’ as formulated by the stewards of the undead British Empire.”

Its formation would be organised by Britain’s hand in America, the Council on Foreign Relations (CFR), (aka: the offspring of the Royal Institute for International Affairs, the leading think tank for the British Crown).

On Nov 9th, 1978, Trilateral Commission member Paul Volcker (Federal Reserve Chairman from 1979-1987) would affirm at a lecture delivered at Warwick University in England: “A controlled disintegration in the world economy is a legitimate object for the 1980s.” This is also the ideology that has shaped Milton Friedman’s “Shock Therapy”.

In 1975 the CFR launched a public study of global policy titled the 1980’s Project. The general theme was “controlled disintegration” of the world economy, and the report did not attempt to hide the famine, social chaos, and death its policy would bring upon most of the world’s population.

This is precisely what Japan has been undergoing, and which economist Richard Werner demonstrated in his book Princes of Yen, to which a documentary by the same name was made. That Japan’s economy was put through a manufactured bubble in order to create an economic crisis that would then justify the need for extreme structural reform.

We will now briefly discuss how the United States, the Tiger Economies and Europe have also been put through the same process of manufactured economic crises and what this means for the world today, what has been the consequence for Europe in following a “United States of Europe” model and how does the one world government model of a League of Nations differ from the multipolar framework made up of sovereign nation states. I will conclude this paper with remarks on why Shinzo Abe was assassinated.

Colonialism 2.0: The Asian Economic Crisis of the Tiger Economies

Japan was not the only high-performance economy in Asia that in the 1990s found itself in the deepest recession since the Great Depression. In 1997, the currencies of the Southeast Asian Tiger Economies could not maintain a fixed exchange rate with the U.S. dollar. They collapsed by between 60-80% within a year.

The causes for this crash went as far back as 1993. In that year, the Asian Tiger Economies – South Korea, Thailand, Indonesia – implemented a policy of aggressive deregulation of their capital accounts and the establishment of international banking facilities, which enabled the corporate and banking sectors to borrow liberally from abroad, the first time in the postwar era that borrowers could do so. In reality, there was no need for the Asian Tiger Economies to borrow money from abroad. All the money necessary for domestic investment could be created at home.

The Princes of Yen documentary remarks:

Indeed the pressure to liberalise capital flows came from outside. Since the early 1990s, the IMF, the World Trade Organization and the U.S. Treasury had been lobbying these countries to allow domestic firms to borrow from abroad. They argued that neoclassical economics had proven that free markets and free capital movement increased economic growth.

Once the capital accounts had been deregulated, the central banks set about creating irresistible incentives for domestic firms to borrow from abroad by making it more expensive to borrow in their own domestic currencies than it was to borrow in U.S. dollars.

The central banks emphasised in their public statements that they would maintain fixed exchange rates with the U.S. dollar, so that borrowers did not have to worry about paying back more in their domestic currencies than they had originally borrowed. Banks were ordered to increase lending. But they were faced with less loan demand from the productive sectors of the economy, because these firms had been given incentives to borrow from abroad instead. They therefore had to resort to increasing their lending to higher-risk borrowers.

Imports began to shrink, because the central banks had agreed to peg their currencies to the U.S. dollar. The economies became less competitive, but their current-account balance was maintained due to the foreign issued loans, which count as exports in the balance-of-payments statistics. When speculators began to sell the Thai baht, the Korean won and the Indonesian rupee, the respective central banks responded with futile attempts to maintain the peg until they had squandered virtually all of their foreign exchange reserves. This gave foreign lenders ample opportunity to withdraw their money at the overvalued exchange rates.

The central banks knew that if the countries ran out of foreign exchange reserves, they would have to call in the IMF to avoid default. And once the IMF came in, the central banks knew what this Washington-based institution would demand, for its demands in such cases had been the same for the previous three decades: the central banks would be made independent [and subservient to the IMF diktat].

On the 16th of July the Thai Finance Minister took a plane to Tokyo to ask Japan for a bailout. At the time Japan had USD $213 billion in foreign exchange reserves, more than the total resources of the IMF. They were willing to help but Washington stopped Japan’s initiative. Any solution to the emerging Asian Crisis had to come from Washington via the IMF.

After two months of speculative attacks the Thai government floated the baht.

The IMF to date has promised almost $120 billion USD to the embattled economies of Thailand, Indonesia and South Korea. Immediately upon arrival in the crisis-stricken countries, the IMF teams set up offices inside the central banks, from where they dictated what amounted to terms of surrender. The IMF demanded a string of policies, including curbs on central bank and bank credit creation, major legal changes and sharp rises in interest rates. As interest rates rose, high risk borrowers began to default on their loans.

Burdened with large amounts of bad debts, the banking systems of Thailand, Korea, and Indonesia were virtually bankrupt. Even otherwise healthy firms started to suffer from the widening credit crunch. Corporate bankruptcies soared. Unemployment rose to the highest levels since the 1930s.”

The IMF knew well what the consequences of its policies would be. In the Korean case, they even had detailed but undisclosed studies prepared, that had calculated just how many Korean companies would go bankrupt if interest rates were to rise by five percentage points. The IMF’s first agreement with Korea demanded a rise of exactly five percentage points in interest rates.

Richard Werner stated in an interview: “The IMF policies are clearly not aimed at creating economic recoveries in the Asian countries. They pursue quite a different agenda and that is to change the economic, political and social systems in those countries. In fact, the IMF deals prevent the countries concerned, like Korea, Thailand, to reflate.”

Interviewer: “Interesting. So you’re saying it’s making the crisis worse and you’re suggesting that the IMF has a hidden agenda?

Richard Werner responded: “Well, it’s not very hidden this agenda because the IMF quite clearly demands that the Asian countries concerned have to change the laws so that foreign interests can buy anything from banks to land. And in fact, the banking systems can only be recapitalised, according to the IMF deals, by using foreign money which is not necessary at all, because as long as these countries have central banks, they could just print money and recapitalise the banking systems. You don’t need foreign money for that. So the agenda is clearly to crack open Asia for foreign interests.”

The IMF demanded that troubled banks not be bailed out, but instead closed down and sold off cheaply as distressed assets, often to large U.S. investment banks. In most cases the IMF-dictated-letters-of-intent explicitly stated that the banks had to be sold to foreign investors.

In Asia, government organised bailouts to keep ailing financial institutions alive were not allowed. But when a similar crisis struck back home in America a year later, the very same institutions reacted differently.

The Princes of Yen documentary remarks:

The Connecticut based hedge fund Long-Term Capital Management, which accepted as clients only high-net-worth individual investors and institutions, had leveraged its $5 billion USD in client capital, by more than 25 times, borrowing more than $100 billion USD from the world’s banks. When its losses had threatened to undermine the banks that had lent to it, with the possibility of a systemic banking crisis that would endanger the U.S. financial system and economy, the Federal Reserve organised a cartel-like bailout by leaning on Wall Street and international banks to contribute funds so that it could avoid default.

Why would the United States make demands on foreign nations in the name of the free market, when it has no intention of enforcing the same rules within its own borders?

The examples of the Japanese and Asian crises illustrate how crises can be engineered to facilitate the redistribution of economic ownership, and to implement legal, structural and political change.”

The reason why the Asian banks were forbidden to be saved, was so there could be a foreign buy-out of these Asian economies. Who needed the British East-India Co. when you now had the IMF ensuring the empire’s colonial objectives?

The IMF and Trilateral Commission’s “not so Hidden” Agenda

The IMF has clearly set its sights on a western banking take-over of Asia, but what was the “agenda” for Europe and the United States who were located within this sphere of influence? Were they destined to benefit from the plunders of the empire?

The short answer to this, which should be evident by now, is no.

The manufactured crises in the United States and Europe were to further centralise power amongst an ever smaller grouping and clearly not for the benefit of the people, or shall we say subjects of the land, who happen to be living in these regions.

Europe has particularly done a number on itself due to its adherence to a “United States of Europe” vision. Countries within the Euro currency bloc had forfeited their right to a national currency and handed this power to the European Central Bank (ECB), the most powerful and secretive of all central banks.

Under such a system, no European country has control over its own economy and is completely exposed to whatever the ECB decides.

Richard Werner remarked: “They [ECB] have to focus more on credit creation rather than interest rates. The ECB has a lot to learn from its past mistakes, because basically I don’t think it really watched credit creation carefully enough. Where in Spain, Ireland, we had massive credit expansion, under the watch of the ECB, interest rates are of course the same in the Eurozone, but the quantity of credit cycle is very different…There is one interest rate for the whole euro area but in 2002 the ECB told the Bundesbank [central bank of Germany] to reduce its credit creation by the biggest amount in its history and told the Irish central bank to print as much money as if there was no tomorrow. What do you expect is going to happen? Same interest rate. Is it the same growth? No. Recession in Germany, boom in Ireland. Which variable tells you that? Credit creation.”

From 2004 under the ECB’s watch, bank credit growth in Ireland, Greece, Portugal and Spain increased by over 20% per annum and property prices sky-rocketed. When bank credit fell, property prices collapsed, developers went bankrupt and the banking systems of Ireland, Portugal, Spain and Greece became insolvent.

The Princes of Yen documentary remarks:

The ECB could have prevented these bubbles just as it could have ended the ensuing banking and economic crises. But it refused to do so until major political concessions had been made, such as the transfer of fiscal and budgeting powers from each sovereign state to the European Union.

In both Spain and Greece, youth unemployment has been pushed up to 50%, forcing many youths to seek employment abroad. The deliberations of the ECB’s decision-making bodies are secret. The mere attempt at influencing the ECB, for instance through democratic debate and discussion, is forbidden according to the Maastricht Treaty.

The ECB is an international organisation that is above and outside the laws of jurisdictions of any individual nation. Its senior staff carry diplomatic passports and the files and documents inside the European Central Bank cannot be searched or impounded by any police force or public prosecutor.

The European Commission, an unelected group whose aim is to build a ‘United States of Europe,’ with all the trappings of a unified state has an interest in weaking individual governments and the influence of the democratic parliaments of Europe. It turns out that the evidence for central-bank independence that was relied upon in the Maastricht Treaty derived from a single study that was commissioned by none other than the European Commission itself.”

The Fascist Roots of the ‘United States of Europe’

On February 15th, 1930, Churchill published in The Saturday Evening an articled titled “The United States of Europe,” where he wrote:[1]

“…The resuscitation of the Pan-European idea is largely identified with Count Coudenhove-Kalergi…The League of Nations, from which the United States have so imprudently – considering their vast and increasing interests – absented themselves, has perforce become in fact, if not in form, primarily a European institution. Count Coudenhove-Kalergi proposes to concentrate European forces, interests and sentiments in a single branch which, if it grew, would become the trunk itself, and thus acquire obvious predominance. For think how mighty Europe is, but for its divisions! Let Russia slide back, as Count Kalergi proposes, and as it is already so largely a fact, into Asia. Let the British Empire, excluded in his plan, realize its own world-spread ideal, even so, the mass of Europe, once united, once federalized or partially federalized, once continentally self-conscious-Europe, with its African and Asiatic possessions and plantations, would constitute an organism beyond compare.” [emphasis added]

In Count Richard Coudenhove-Kalergi’s “An Idea Conquers the World” he writes:

I discovered to my surprise that the feeling of European consciousness had first shown itself during the Crusades. After the fall of the Roman Empire the Crusades represented the most vigorous display of European solidarity. For a time, feuds between kings, princes and cities were submerged in a common cause…Finally, in 1834, Mazzini founded Young Europe, a movement designed to coordinate all existing revolutionary movements with a view to building up a new and united Europe on a basis of nationalism and democracy.” [emphasis added]

Interestingly Kalergi would write that Giuseppe Mazzini who Kalergi considered the most modern organizer towards a “united Europe on a basis of nationalism and democracy” was also considered the forerunner of fascism in Italy. Kalergi writes:[2]

Fascism at that time [in Italy] had not yet broken with parliamentarism and democracy. The new Italian government was a government of coalition; it respected the principle of constitutional monarchy, pretending only to give it new vigor and authority. It appealed to the heroic instincts of youth, to the spirit of sacrifice and of idealism. It tried to restore the respect for religious values and the glorious traditions of ancient Rome. It hailed the memory of Mazzini as a forerunner of Fascism.” [emphasis added]

The theme of the Crusaders would be central to Kalergi’s idea for a Pan-Europe, to which he even incorporated the symbol of the Crusaders within his flag for the Pan-European cause.

In his 1943 autobiography, Kalergi further expands on his theme of the Crusader of Pan-Europe:[3]

I chose the sign of the red cross superimposed on a golden sun as the emblem of our movement. The red cross, which had been the flag of the medieval crusaders, seemed the oldest known symbol of supra-national European brotherhood. In more recent times it has also gained recognition as a symbol of international relief work. The sun was chosen to represent the achievements of European culture in helping to illuminate the world. Thus, Hellenism and Christianity – the cross of Christ and the sun of Apollo – figured side by side as the twin enduring pillars of European civilization.” [emphasis added]

This idea of a “United States of Europe”, Kalergi’s “Pan-Europe” vision was a clever and dishonest play on words. The United States had originally existed in the form of 13 colonies beholden to the British Empire. However, when the United States maneuvered for independence from the British Empire by organizing itself into a sovereign nation state, the founding fathers unified the new republic around a system of Hamiltonian banking. This innovation in political economy converted unpayable debts into a new system of federal credit, enacted federal protectionism to favor local industrial growth and vectored the banks around investments which improved the General Welfare.

Thus, the United States was able to form one currency and a national bank to facilitate trade which upheld the economic sovereignty of the newly created nation.

This Hamiltonian economic organization in turn influenced German economist Friedrich List’s “The National System of Political Economy” which led to the Zollverein. Germany at the time was also divided into regions like the United States (Germany had never really been a nation up until this point) and the Zollverein allowed for Germany to begin establishing itself as a sovereign nation state for the first time in history. Friedrich List had directly referred to the Hamiltonian economic system as his inspiration for Germany. This system had also influenced Sun Yat-sen the father of the Republic of China in his “The Three Principles of the People” which was a direct reference to Lincoln/Henry C. Carey’s economic program which itself was a continuation of Alexander Hamilton’s economic principles. This was also revived in the form of American pro-Lincoln economists in Japan who helped organize the industrial growth program begun with the Meiji Restoration.

This is what the multi-polar framework is continuing, the defense and growth of sovereign nation-states. Yes, there is regional cooperation. You need regional cooperation for big infrastructure projects, such as rail, that will involve numerous nations. But regional cooperation should not be confused with a League of Nations vision and we can easily tell the difference between the two in terms of what is actually being proposed politically and economically. I will be writing a paper in the near future to address this subject more directly but for now I would refer the reader here for more on this.

In the case of the League of Nations, Pan-Europe, United States of Europe etc. etc. vision, it was the very opposite. It was to take power away from the sovereign nation-state framework and transform nations into vassal states subservient to systems of empire. That is, the “United States of Europe” was a dishonest and misleading reference to the original 13 American colonies. It was dishonest because instead of promoting further national economic sovereignty, the nations within Europe were expected to remove their sovereignty and be beholden to a centralised control through a European Union (centralised political power) and European Central Bank (centralised economic power) and NATO (centralised military power). No country within Europe would have control over their political, economic or military destiny within such a stranglehold.

In order for the League of Nations vision to take-over, sovereign nation-states would have to be dismantled. For more on this story refer to my book “The Empire on Which the Black Sun Never Set.”

What the American and European economic crises have taught us is that the tax-payer will be made to pay for the increasing centralised take-over of what were once sovereign economies in order to empower a very small grouping of people, as the rights and welfare of average citizens are increasingly viewed as irrelevant.

Why Shinzo Abe was Assassinated

Former Prime Minister of Japan Shinzo Abe was assassinated July 8th, 2022, and though no longer in the position of Prime Minister of Japan at the time of his assassination (having served from 2006-2007 and 2012- September 16, 2020) he was the longest serving prime minister in Japanese history and continued to exert major influence on policy-shaping within Japan.

News of Abe’s assassination was received around the world with an admixture of very strong emotion from both extremes. Some were horrified by his death and praised what he had done for Japan as something almost saintly. Others ecstatically celebrated his death, thinking no possible good could come from him due to his attempts to revive the dark side of Japan’s imperial past and his public displays of tribute to the Japanese fascists from WWII. When the news was still fresh and the frenzy of confusion at its peak, many even blamed China for the orchestration of Abe’s death, thinking they were clearly the ones to benefit from such an act.

It is true that Abe had a very dangerous and destructive mission to restore Japan to its status as an imperialistic empire. He was a corrupt insider who pushed for the dangerous privatization of the Japanese government and increased the gap between the wealthy and middle-class citizens. However, it is also too simplistic as to celebrate his death as an absolute triumph. As we can clearly see seven months after Abe’s assassination, Japan has not become more peaceful and ready for dialogue with its eastern partners but rather has become much more bellicose and stauncher in its cooperation with the increasingly war frenzied western demands. Japan has also greatly severed motion towards greater economic and political cooperation with Russia and China, which was still moving forward when Abe was alive.

It is also interesting to note that Abe was assassinated weeks before Pelosi’s Circus Tour to Taiwan. Although Pelosi’s provocation did not amount to any military confrontation, we cannot say that that was not its intention, nor that things could have played out very differently in terms of a military confrontation between China and the United States.

The reader should be reminded that in 2014, Japan had changed or “reinterpreted” its constitution which gave more powers to the Japan Self-Defense Forces, allowing them to “defend other allies” in case of war being declared upon them. The United States, of course, fully supported the move.

This “reinterpretation” of Japan’s constitution effectively entered it into NATO.

In December 2022, Japan announced a new national security strategy. This new strategy would double defense spending. Japan also plans to invest in counter-strike capabilities, including buying U.S. Tomahawk cruise missiles and developing its own weapons systems.

It was precisely Abe’s grand vision of Japan returning to its “glory” days as an empire that was problematic for the League of Nations vision, for if Japan saw itself on par with other great empires, or perhaps even greater, it meant that it did not ultimately intend to bend the knee. That is, Abe was not willing to sell off Japan as a satrapy, however, that was exactly what the western diktat was essentially demanding of Japan. Under this western diktat Japan was being ordered to accept its fate to collapse economically and sink into desperation, become increasingly militaristic and extremist and lead a kamikaze charge into a war with China and Russia which would lead to the ruination of the Japanese civilization. It does not look like Abe was going to go along with that stark vision for Japan.

Emanuel Pastreich wrote an insightful paper titled “The Assassination of Archduke Shinzo Abe,” one could simply just read the title and it says it all. [The article is also under the title “When the Globalists Crossed the Rubicon: the Assassination of Shinzo Abe”]

Pastreich writes: “[Abe]…was already the longest serving prime minister in Japanese history, and had plans for a third bid as prime minister, when he was struck down.

Needless to say, the powers behind the World Economic Forum do not want national leaders like Abe, even if they conform with the global agenda, because they are capable of organizing resistance within the nation state.

…In the case of Russia, Abe successfully negotiated a complex peace treaty with Russia in 2019 that would have normalized relations and solved the dispute concerning the Northern Territories (the Kuril Islands in Russian). He was able to secure energy contracts for Japanese firms and to find investment opportunities in Russia even as Washington ramped up the pressure on Tokyo for sanctions.

The journalist Tanaka Sakai notes that Abe was not banned from entering Russia after the Russian government banned all other representatives of the Japanese government from entry.

Abe also engaged China seriously, solidifying long-term institutional ties, and pursuing free trade agreement negotiations that reached a breakthrough in the fifteenth round of talks (April 9-12, 2019). Abe had ready access to leading Chinese politicians and he was considered by them to be reliable and predictable, even though his rhetoric was harshly anti-Chinese.

The critical event that likely triggered the process leading to Abe’s assassination was the NATO summit in Madrid (June 28-30).

The NATO summit was a moment when the hidden players behind the scenes laid down the law for the new global order. NATO is on a fast track to evolve beyond an alliance to defend Europe and to become an unaccountable military power, working with the Global Economic Forum, the billionaires and the bankers around the world, as a ‘world army,’ functioning much as the British East India Company did in another era.

The decision to invite to the NATO summit the leaders of Japan, South Korea, Australia and New Zealand was a critical part of this NATO transformation.

These four nations were invited to join in an unprecedented level of integration in security, including intelligence sharing (outsourcing to big tech multinationals), the use of advanced weapons systems (that must be administrated by the personnel of multinationals like Lockheed Martin), joint exercises (that set a precedent for an oppressive decision-making process), and other ‘collaborative’ approaches that undermine the chain of command within the nation state.

When Kishida returned to Tokyo on July first, there can be no doubt that one of his first meetings was with Abe. Kishida explained to Abe the impossible conditions that the Biden administration had demanded of Japan.

The White House, by the way, is now entirely the tool of globalists like Victoria Nuland (Under Secretary of State for Political Affairs) and others trained by the Bush clan.

The demands made of Japan were suicidal in nature. Japan was to increase economic sanctions on Russia, to prepare for possible war with Russia, and to prepare for a war with China. Japan’s military, intelligence and diplomatic functions were to be transferred to the emerging blob of private contractors gathering for the feast around NATO.

We do not know what Abe did during the week before his death. Most likely he launched into a sophisticated political play, using of all his assets in Washington D.C., Beijing, and Moscow—as well as in Jerusalem, Berlin, and London, to come up with a multi-tiered response that would give the world the impression that Japan was behind Biden all the way, while Japan sought out a détente with China and Russia through the back door.”

Let us be honest here, since the hot mess should be rather plain for everyone to see at this point; those who are in the position of pushing the IMF, NATO, World Economic Forum’s disastrous policies are not the brains in the room. The embarrassment of less than two-month former UK Prime Minister Liz Truss, who did not even know Russian territory from Ukrainian territory, responding that she would never recognise Rostov and Voronezh as Russian, is just one of too many examples that are occurring on an almost daily basis. These are the perfect tools for such insane policies for this very reason, they do not understand what outcome they are ultimately pushing. They are absolutely clueless and thus expendable as the card-board cut-outs that they are.

The reality of the situation is that no nation is expected to survive this stand-off.

It is not about the western bloc against the eastern bloc. It is about the ruination of all nations and the formation of one empire, or if you prefer the wording, one world government. Again, this is the League of Nations vision that has been the wet dream of a very small grouping since the First World War.

It is not about western democracy or liberalism or western value systems. It is about, and has only ever been about the reinstitution of systems of empire. This is what the First World War was about, this was what the Second World War was about and it is what the Third World War is about.

Interestingly, we again see Germany and Japan positioned next to the trip-wire that is ready to launch the globe into another full-blown world war. And guess what will be the fate of those two countries, Germany and Japan, who’s automaton ‘leadership’ so foolishly think of themselves as included within the ‘elite’ grouping who will somehow survive after setting the world on fire, as they so foolishly made the mistake of thinking during the Second World War. They will see once again how expendable their people, their civilization are to this ‘elite’ grouping they so desperately want to be accepted by.

One thing is for certain since Abe’s assassination. Japan is moving ever more rapidly forward on a very dangerous path that threatens it to be once again on the wrong side of history. The question is, are Germany and Japan so foolish as to make the same mistake twice, for they should not assume they will survive such a reckoning a second time.

The author can be reached at cynthiachung.substack.com.

  1. Coudenhove-Kalergi, Richard. (1943) Crusade for Pan-Europe: Autobiography of a Man and a Movement. G.P. Putnam’s Sons, New York, pg. 198-200. 
  2. Coudenhove-Kalergi, Richard. (1943) Crusade for Pan-Europe: Autobiography of a Man and a Movement. G.P. Putnam’s Sons, New York, pg. 78. 
  3. Coudenhove-Kalergi, Richard. (1954) An Idea Conquers the World. Purcell & Sons Ltd., Great Britain, pg. 98.

NATO warns that Putin’s MASSIVE attack is happening now, send weapons | Redacted with Clayton Morris

February 03, 2023

Desperate actions

January 31, 2023

Source

by Hugo Dionísio

Something is changing on Mount Olympus and it is leaving in tatters the union of tendencies connected to the U.S.-state falconry. To understand and predict the actions of the political elite that commands, through their transnational mandataries, our destinies, implies knowing what one of the most important US defense think tanks reflects and publishes. This research leads us to an entity that rarely appears in the “informative” moments of the North Atlantic press: the RAND Corporation.

RAND’s best-known moment with regard to the conflict in Eastern Europe is signaled by the publication of the report “Extending Russia – Competing from Advantageous Ground”. This report contains the entire menu of malfeasance that, in the claims made public and repeated by the US power summit, would lead to a fulminating defeat of the political, economic, and military power of the Russian Federation.

The analysis expressed publicly, by the various political actors, was that the Russian Federation was nothing more than “a gasoline bomb with nuclear weapons,” a “paper tiger” with a GDP equal to that of Holland, and a people gagged by a “mad dictator” who remained in power only through “authoritarianism” and “repression”.

Based on an analysis whose information seemed to substantiate such political positions, the RAND report advocated a type of intervention, some of which were well reported – others not so well reported – in the official press. This was the case with the attempted “colored” revolutions made in CIA in Belarus, Kazakhstan, and the Central Asian countries, which, together with Georgia and Moldova, would probably be “promoted” and “supported” to the condition of an actual Ukraine. The Russian Federation, having to meet all the fires, some because they would become proxy armies (like Ukraine), others turned into bases of destabilizing operations launched by the CIA, would eventually “extend” itself until it broke into pieces and collapsed, putting an end to the current threat. Even without this partition, a point could always be reached where, after the destruction of the incumbent political power, a more docile “regime” would be installed, pointing to a more “advantageous position on the ground.”

Given to be known only in 2019, we are forced to note that this strategy had long been in preparation, especially since the Russian president lost hope that he could count on a Western “partnership” and announce the end of the unipolar world. Fact is, the report has a logical connection with the 2018 National Defense Strategy (US national defense strategy).

At any rate, this strategy points to the “Yugoslavization” of the Russian Federation. The truth is that the constant itinerary of this work has been followed almost scrupulously by the U.S. security and defense establishment: “colored” revolutions; states transformed into proxy armies; communication and disinformation campaigns; destabilization and sabotage operations; economic sanctions and embargoes. A menu of fulminating “democratic” activities on the rise!

And why is it important to talk about this today? It is important because in the last few days a new paper from the RAND corporation was published, but this time in reverse, a study entitled “Avoiding a Long War U.S. Policy and the Trajectory of the Russia-Ukraine Conflict.”

If the previous works pointed to the goals that Anthony Blinken, Biden, Nuland and Kirby have so often trumpeted, namely, a long-lasting conflict that would exhaust Russian energies so that the obstacle could be removed by force if necessary, the study published this time points to the realization of a cost-benefit ratio between the costs and risks resulting from a long war with Moscow and the benefits that the U.S. can derive from a trajectory that is expected to escalate and could result in a direct confrontation.

Something has changed and in what ways. First it was triumphalism and threat destruction, now a long conflict brings risks and costs that prevent the US from focusing on more pressing priorities. Where do we stand? At first it was intended, precisely, a long-lasting conflict… Now, not only does it carry costs and risks, but it seems to be Russia itself that is more comfortable with the foreseeable extension of the conflict in time, to the point of appointing Gerasimov as commander-in-chief of the armed forces, envisaging more than one theater of operations simultaneously (RAND pointed to the bilateral Polish possibility).

According to the site http://www.moonofalabama.org , one of the best sources on US foreign policy, the publication of this study does not come by chance, but after an attempt by the US Chief of Staff, Mark Milley, to promote an internal debate on possible peace negotiations with Biden. Having lost the battle in the White House, and unable to persuade Biden, as he only listens to Nuland, Blinken and Sullivan (the hawks on duty), he opted for the public display of his claim, calling for the start of negotiations first and, perhaps, leading to the publication of this study later.

The problem is, as Tyler Durden writes in one of today’s best opinion sites http://www.zerohedge.com , in his article “The most egregious Mistake”, going back and reversing the direction of US policy in this matter is simply not an option. The White House has taken the entire West in such a direction and speed of triumphalism, arrogance and “egregious” imbecility that there is no going back or reversal possible without a total defeat of the official narrative and the consequent eternal shame. Hence, these efforts by Mark Miller should result in very little, except the deepening of internal fractures, which may be positive. The fact is, there are already people who intend to step out of this path to the abyss.

Now, unlike the various writings on the subject, which tend to explain the impossibility of reversing the direction of the current suicidal strategy, with the sectarianism of the official narrative, which only offers certainties and unequivocal results, according to which, initially, this strategy did not result from a necessity but from a choice, translated into the so-called “egregious error”, I, personally, tend to consider that it was not an “error”, nor even less a choice, but rather, an act of desperation.

The alternative – American – narrative to the official current says that the outlined strategy represented an existential threat for Russia, but not for the United States. For the US, it would be possible to take other paths than that of creating this conflict.

In my view, this is a condescending position that devalues the feelings of urgency that resulted from the catastrophic analysis (never made public) that many have probably made of the state of American hegemony. The fact is that while the US has spent 8 trillion dollars on the war on terror, channeling all its diplomatic, economic and military efforts into it… What have Russia and China done?

While the U.S. used the pretext of terrorism (which they themselves have so often fomented and used as a weapon against political opponents – Syria, for example) to dominate the world’s largest oil reserves (in the Middle East), sidelining other natural resources, which today are important (such as lithium, for example), China developed its infrastructure, industry, army and, above all, its international trade platform, today known as the Belt and Road Initiative. During this period, the global south was able to experience a new form of “soft power”, which instead of demanding privatizations, dollarization of the economy, and reformulation of the political system in the manner that was most convenient, of which the IMF and the World Bank were the proxies on duty, the integration into the BRI only requires that the projects facilitate trade between countries (hence the infrastructure). In exchange for natural resources, these countries – instead of Western corporations and “investment” translated into the purchase of public companies – receive schools, hospitals, 4G and 5G networks, ports, airports, bridges, and the bigger and more challenging the better.

Not even the propaganda of the “debt trap”, well known to the IMF and the association treaties with the USA, prevented more than 120 countries from joining this network. Meanwhile and in the same period of time, Russia was able to get back on its feet from the neoliberal nightmare of the 1990s, recovering its industry and, above all, its self-esteem and national pride. A mortal sin in the eyes of the white house. Eurasian integration (EUEA), international cooperation (BRICS) and infrastructure (INSTC) projects have been made that circumvent US influence across the seas, which helps shield the economies of the countries involved.

While this multipolar world was being born in the beards of the most arrogant and sectarian hawks, the military industrial complex focused its attentions on the war on terror. Our news reports at the time, instead of Ukraine, began and ended with suicide bombings and time bombs. Until…

When information about this world began to emerge in the form of hard data, panic began to set in. It was around the time of 2017/18. Of course, from my perspective, this panic cannot be confessed. Its externalization began to emerge through Euromaidan, pressure and destabilization on less aligned Latin American nations, with the arrest of Lula da Silva and other national leaders with whose policies the white house was not comfortable. Gradually we saw U.S. foreign policy shift back toward dominance of natural resources and markets and less toward terrorism. They even “abandoned” the Middle East, leaving only the Zionist and Kurdish watchdogs. It was the time of the news that opened and closed with Venezuela.

However, this reversal of course already denoted, in my opinion, a kind of race against time. Time that had to be won.

Faced with the continuous loss of ground, we have reached the time of Covid (which according to many is a White House “card”, provoked or opportunistic, we shall see in due time) and the construction of a military strategy that has been elected as the last of the means – far from being remote – to “contain” China, recently classified as an “existential threat”. The confrontation in the Pacific would pass through the creation of an Eastern NATO, baptized AUKUS. In this strategy, the obstacles that could tip the balance in favor of the enemy had to be removed. That obstacle is the Russian Federation. The conclusion of a true strategic alliance between the Russian Federation and China shows that the leaders of these two countries no longer have any illusions about the real intentions of the United States. The more they are together, the greater their protection and the greater the threat to the United States.

This is where the “Ukrainian” option comes in! The strategy of extending Russia until it left was not an option. It was a desperate action. Absolutely! And why?

I say this not only because of what I mentioned earlier and the urgency that the elite leaders of the Transnational Corporations (the backbone of the U.S. Empire) must have felt at the information that was reaching them. At this stage, it must be said that the “failure” of the Chinese strategy played a part in this desperation. For the corporate elite who control the political power in the US, the economic “opening” of China would certainly lead (I don’t know what science they based their opinion on) to the destruction of the Communist Party’s power and the installation of a neo-liberal type government. Hong Kong will have already been a forced step, as these folks believed that the process would be more or less “natural”, resulting in a “USSR” type collapse, this time in China. But no… By around 2018 it was already being said in the white house that they would have to learn to live with China as it was. There would be no new “Tiananmen” in sight.

For the transnational corporate elite there is no cooperation. There is domination. After all, that is the fuel and the adrenaline of empire. Anyone’s. But back to Eastern Europe, why do I say that the Ukrainian choice was desperate?

First it was forced. And it was forced because it resulted from the failure of people like Navalny and other neoliberal puppets, who should have been able to produce an attrition of United Russia’s power. The preferred option is always the one that involves the internal deconstruction and submission of the adversary. Failing this, the only option left is the military one. The military is the component in which the United States still considers itself superior.

The RAND report pointed to a set of “tasks” that should be accomplished in order to achieve the goal of “extending Russia” and thus achieve a “more advantageous position on the ground. Has that desideratum been achieved? No, not by a long shot.

First, the “color” revolutions in Belarus and Kazakhstan failed. Not only did they fail to remove their respective rulers, they worsened their situation on the ground by strengthening Russia’s power over those countries (the respective governments “saved” by it). Second, they failed the sanctions from 2014 onward by not destroying the Russian economy. Worse, they gave the country an ability to live with the West’s sanctions. The sanctions were “the” development opportunity, the missing pretext to move from an economy based solely on resource extraction, to an industrial, in some cases cutting-edge and full-cycle economy, i.e., with key sectors sovereign and shielded against sabotage maneuvers, from the outside. Third, Georgia did not take the bait and set itself up as a proxy army, failing the plan of creating several battlefronts. Out of all this the Russian Federation came out stronger.

While the outward discourse, for ideological and strategic reasons, continued to be that of the “fuel station,” the actions denoted only desperation. The very instrumentalization of the Minsk agreements, agreements sanctioned by the UN, as a way to gain time to arm Ukraine, totally discredited the West in the eyes of the global south. Anyone who deceives like this, a country like Russia, by relying on a process like the Minsk one, is capable of anything.

The fact that they managed to “convince” a country to sacrifice itself for the sake of the power of another, basing this “convincing” on the establishment of a neo-Nazi doctrine, recovering Bandera (directly responsible for the death of millions of Poles, Ukrainians and Jews), based on xenophobia, racial and cultural hatred, leading that country to a coup d’état perpetrated by forces comparable to the SS, and making all these people look like martyrs and heroes, and even removing the Azov battalion from the list of extremist organizations… It was another stab in the back of the confidence of a world composed of nations whose memories have not yet been erased and who know what bad things fascism and Nazism brought them. This same world also knows the decisive contribution that the USSR – and Russia, for that matter – made in the 20th century to the defeat of colonialism and to the national liberation of the majority of humanity.

It was also about liberation from the clutches of Western imperialism and colonialism. From the same West that used plunder as a moment of primitive appropriation of wealth, that allowed it to first achieve development, and then used it to further subjugate the plundered. No, this world no longer trusts the West. This world is not the same world that the corporate media claims to be with Zelinsky.

The official discourse denied all this reality and sold an illusion, according to which, Ukraine, with the help of the powerful NATO, would win, without appeal or aggravation, a war of attrition against Russia. Of course, the victory would be so resounding that the attrition would not even begin, for at the first sanctions, power would fall to the street. Even the thousands of Russian agents the CIA has in its pocket weren’t able to pull it off. Power not only fell but strengthened, demonstrating that the proud nation that, being harried from without, turns on itself is yet to be born. RAND’s assumptions kept getting further and further from being true.

According to the imbecility resulting from the superiority complex of Western elites, a country with 3% of global GDP would not stand a chance against the mighty G7/NATO/US. Which says a lot about the GDP method as a way of characterizing an economy. As “old man” Marx explained, only labor produces wealth and only the transformation of matter into something with use value translates that wealth. This is the “real economy” of which Martyanov speaks so much. Unlike the speculative and ultra-financialized economy of the West, Russia has a real economy, which produces things with use value. With “real” use value, without which we cannot live, unlike an iPhone or a Chanel perfume. In fact, the global south has been gradually discovering that it has the resources, the technology and the wealth to have a real economy. And it doesn’t need the West for that. It is the West that cannot live without the global south, not the other way around. The global south has figured it out, and so has the US.

Seeing this, and watching the deplorable spectacle that is the constant confiscation of sovereign amounts deposited in dollars or euros, which the West, at the behest of the US, steals so much, today we are witnessing a movement away from the dollar…

In this, too, we have much despair, such as the process that led to the “installation” of a Guaido in Venezuela or the successive attempts at a “colored” revolution in Iran. In both cases, the two countries saw their reservations “frozen” in the G7/NATO/EU space. If this move by itself had already put many countries on their guard, since it was no longer only the “communist” Cuba and the People’s Republic of Korea, this time, the freezing and intended confiscation of Russian reserves clearly pushed the panic button. Any country, regardless of size, if it does not accept submission, is subject to confiscation of everything it has in currencies of the collective West.

The result? The result is BRICS+ and the basket of currencies, the proposal for a Latin American currency between Brazil and Argentina, the return to gold, cryptoyuan and the multiplication of exchanges in national currencies, as is already happening between the Eurasian countries, Iran, China, India, Turkey and Russia, recently joined by Pakistan, or the case of Saudi Arabia and China. The challenge seems to be simple: escape the “cursed” currencies, but without appearing to do so urgently, lest everything fall into place.

This result was obvious and has been predicted so many times over the past decade. Even in unsuspecting channels from the point of view of neoliberal ideology like Bloomberg or Politico. But not even these warnings have deterred the suicidal arrogance and prepotency that results from 500 years of Western racial supremacy.

Today, after Annalena Berbock confirmed to us that we have been dragged into a war, without any democratic background discussion and public reflection, except for endless hours of “slava Ukraini” propaganda in the corporate media; such a war also starts from an underestimation of the military and industrial capabilities of the Russian federation itself. If we read the report made by the Congress a couple of years ago about the military capabilities of the Russian Federation, we would see that the general conclusion was something like: a lot of weapons, but unsophisticated, with precision problems and outdated in relation to the U.S. But this is not the story told by the more than 7,500 tanks shot down, the more than 300 planes, more than 200 helicopters and, most important of all, the hundreds of thousands of lives lost, mainly of soldiers (Zaluzhny reportedly told the Pentagon that there were 232,000, CIA sources say 305,000, and Chinese intelligence is already talking about 500,000 to 680,000). Whether it is the smallest or the smallest, especially when compared to the Russian losses, it gives us a catastrophic idea of the disproportion of forces. We are indeed witnessing a process of demilitarization and denazification.

With this background, the sending of tanks was discussed, in another episode of “wonder weapons”. But this time, and after the others did not have the desired effect, the US no longer wants to throw more arms sales deals on the back burner, as happened with the “wonderful” HIMAR or M777. Send their Abrahms tanks there and soon the number of sales would drop. So, let the Germans send their Panzer-Gepard there. Sholz didn’t want to? When I heard him say that he would only send them if… I immediately thought, “he still hasn’t received the non-refusable request from Biden and friends”. It didn’t take a day for pictures of the tanks to appear on their way to Poland, even before the public announcement. This is the Germany of today: a cluster of Teutonic identity riders mounted on unicorns, wearing pink armor, and holding sunflowers instead of swords. How sad!

Be that as it may, a spring campaign is being prepared in which, to defend the USA, another 100,000 forcibly recruited Ukrainian soldiers will be sacrificed in the name of Bandera (the videos of people being caught in the streets, in shopping malls, hiding from the police… are multiplying at breakneck speed)!

Having already guaranteed the defeat of the offensive (come on… a country like FR would rather sacrifice millions of its best children than submit to some Western empire), the US is already preparing for the next desperate maneuver. Playing Taiwan, Japan and South Korea. Meanwhile follow the so far frustrated attempts at “colored” revolution (the others are learning how to disarm the CIA’s NGO army), to get more candidates for the post of “ukraine” in the pacific.

The RAND study points precisely to this “priority”. One more that will lead to actions whose prerequisites are not verified and, therefore, doomed to failure. But as someone, from the US, said some time ago: “there are no more good options”. Only the desperate ones. It reminds one of the last days of the Reich with its search for the “wonder weapons”.

But if the rest of the world has already seen the scenes of the next chapters, here in NATO territory, the corporate media is still in delusional mode, according to which, the world is a US backyard and the collective West is the civilizational reference… It’s like the cliché “Ukraine is winning the war”.

It will be my pleasure to watch a whole crowd of newsmen, analysts, politologists, and other charlatans doing the pin-up… and saying “no one saw this coming”!

Isn’t that what they always do? In a sign of desperation?

And some people still believe in them!

Hugo Dionísio’s Telegram:

https://t.me/canalfactual

Pakistan is facing a hybrid war

January 24, 2023

Source

by Zamir Ahmed Awan 

It is believed that the world is changing rapidly, technology has been improving at an accelerated speed, geopolitics is also changing, new alliances are emerging, and trade pattern has been transformed, and so on. But, one thing is not changed – the suffering of humankind. Human beings are still killed and forced to flee from their homes, and countries and poverty have grown. In addition to natural disasters, human-made disasters are even geared up.

Economic sanctions, narrative war, media war, etc., all are modes of hybrid war. The cold war may have been replaced by the Hybrid war, but, the mentality remained the same. Any country on the left side of the US is facing a hybrid war. Either, it is Russia, China, North Korea, Iran, or any other country, is facing similar challenges of hybrid war.

It is a matter of highly significant that we must understand the concept of hybrid war. Many scholars, researchers, and intellectuals are studying it around the globe, many conferences and seminars are being conducted worldwide and plenty of literature is available.

Pakistan is a typical case of hybrid war and facing it for a couple of decades. On the economic front coercion at the hands of International Financial Institutions (IFIs) to the war of narratives by the arch-rival: India, as revealed by the European watchdog DisInfoLab through the Indian Chronicles, to the physical penetration of the agents to create sabotage and terrorism in Balochistan and Karachi; Pakistan has faced it all. Media is in full swing to spread fake news, fabricate stories and distort Pakistan’s narrative. Unfortunately, the media is controlled by the West and over-engaged against Pakistan. Social media is also playing its dirty role too. The worst phenomenon is that many writers used Western literature as a source of information, which is totally wrong and biased against Pakistan. Pakistan could not develop its own authentic source of information yet.

The Chinese sage, Sun Tzu is also gets quoted extensively in the context of the hybrid mannerism of warfare in contemporary wars. Some 2500 years ago, he had prophesied that the supreme acme of skill is to win the war without fighting. Breaking the will of the people of the target state would be the real victory instead of destroying them. Sun Tzu insisted that capturing the enemy forces intact so that those could be used later on. What Chinese wisdom since ancient times!

Pakistan has immensely suffered at the hands of IFIs by accepting unacceptable demands of raising the interest rates, devaluation of the currency, removal of subsidies, increasing the cost of living, inflation, and price hike, which pushed the nation into severe poverty.

A New Instrument of Hybrid War dilated upon the impact of economic stress on Pakistan due to the hybrid war imposed by India. India’s External Affairs Minister Jai Shankar (Hindustan Times), admitted that the “BJP Government led by Narendra Modi ensured that Pakistan remained on the Grey List of the FATF is due to us, Pakistan is under the lens of FATF, and it was kept in the Grey List. We have been successful in Pressurizing Pakistan and the fact Pakistan’s behavior has changed because of the pressure put by India.”

Further, at least four aspects were deployed against Pakistan to hurt its economy under the ambit of hybrid warfare: International Monetary Fund (IMF), FATF, China-Pakistan Economic Corridor (CPEC), and Karachi turmoil. It is viewed that “the best strategy of the enemy is to erode the economic strength of the targeted country.” Karachi, the economic hub and lifeline was systematically destroyed to choke Pakistan’s economy and make it dependent on international institutions. It is extremely worried about the present economic situation of the country and attributed the same to a concerted effort by the enemy under the umbrella of hybrid warfare.

On the Narratives Warfare front, in the evolved environment where social media plays a dominant role in shaping opinion, the most important thing is to construct a narrative that is appealing and attractive enough to bring change in people’s thinking. The significance of a workable narrative that is proactive in its essence and based on sound footing aimed at unsettling the opponent’s objectives. Understanding narrative warfare is a necessary precondition for both comprehensive state policy and an informed public debate on issues, particularly security.

At the moment, Pakistan is not only facing the risks of a possible default but also going through the highest inflation within the region as compared to Afghanistan, India, and Bangladesh. Obviously, it appears as if Pakistan has not been able to convince the donor agencies and the friendly countries to assist them at this difficult time, perhaps due to a weak narrative about its efforts toward peace and progress in Afghanistan. This is certainly very alarming because no country has suffered more than Pakistan in its efforts to promote peace and stability in Afghanistan.

Unfortunately, by design, Pakistan is being pushed to a stage where we may be asked to choose between food and nukes. It seems the evil designs worked very well. It happened with Ukraine too, at the time of getting independence from the former USSR, it was a nuke state with an abundance of nuking weapons, nuke capabilities, nuke laboratories, nuke factories, and an abundance of nuke scientists. But was pushed into an economic crisis and then offered financial assistance in return for denuclearization. Its nukes were shifted, factories closed, research abandoned, nuke human resources dismantled, and turned into a state where they could not gain nukes in the future.

Recently, IMF has asked Sri Lanka to cut the size of its military up to half, and Egypt to cut its Army by one-third. It is not sure, what will be IMF conditions to Pakistan in the next stage. God for bid, if Pakistan is asked to cut its Army, its security may be compromised as India is an aggressive and traditional rival of Pakistan. Since independence, India has not accepted Pakistan from the core of its heart and always trying to damage and destroy it. Especially, since PM Narendra Modi has hijacked power in India his extremist policies are more aggressive and a permanent security threat not only t Pakistan but to its all neighbors. India has disputes with all its neighbors, including Bangladesh, Bhutan, China, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka.

The US is supporting India to counter China and wanted all its neighbors to accept Indian supremacy. Pakistan is facing huge pressure from the US to accept Indian hegemony.

Current political and economic instability is dangerous and may lead to disasters. There might be internal or external conspiracies, but, it is the people of Pakistan, who should stand up and take the right decisions. Our fate cannot be in the hands of a few internal or external conspirators. It is time, for the whole nation to unite and think smartly, formulate a comprehensive policy to confront the challenges being faced. Early elections and a government with a heavy mandate can take bold measures. The current PDM is more engaged in politics of power and taking steps to counter PTI only. Their energies are wasted on non-productive issues and less effort is on national issues. The new government, backed by the public may rescue the nation.

Author: Prof. Engr. Zamir Ahmed Awan, Founding Chair GSRRA, Sinologist (ex-Diplomat), Editor, Analyst, and Non-Resident Fellow of CCG (Center for China and Globalization). (E-mail: awanzamir@yahoo.com).

Lebanon’s Middle Class Vanishes as Economy Collapses

Posted by INTERNATIONALIST 360° 

Jennifer Holleis

Following years of political and economic crises, Lebanon’s population structure has changed, and not for the better. Experts believe that the structural inequality will only widen in future.

Lebanon’s capital Beirut has turned into a city of contrasts. Expensive cars park before popular restaurants and bars, while people of all ages rummage through bins for something edible.

“Also, more and more people are begging in the streets, mainly children but also elderly people,” Anna Fleischer, head of the German Heinrich Böll Foundation’s office in Beirut, told DW. While it is hard to tell the nationality, “it can be assumed that there are many Syrian refugees, but also Lebanese,” she added.

Years of political instability in combination with an ongoing economic crisis — exacerbated by the COVID-19 pandemic and the Port of Beirut blast in August 2020 —  have brought the country close to collapse.

Lebanon ranks not only “among the most severe crises globally since the mid-19th century,” according to the World Bank, but it is also likely that “an unprecedented institutional vacuum will further delay any agreement on crisis resolution and critical reform ratification, deepening the woes of the Lebanese people,” the World Bank report says.

Vanishing middle class, rising hunger

Following years of massive economic contraction, in combination with a 95% devalution of its currency, the Lebanese middle class has practically vanished. In March 2020, the World Bank devalued Lebanon to a lower-middle income country.

“A person that is earning 1,500,000 Lebanese pounds used to have an equivalent of $1,000 before the crisis, and now it is equivalent to less than $200,” Hussein Cheaito, a development economist at The Policy Initiative, a Beirut-based research center, told DW.

In a recent publication on rising hunger and poverty in Lebanon by Human Rights Watch (HRW), Lena Simet stated that “millions of people in Lebanon have been pushed into poverty and have cut back on food.” The senior economic justice researcher at HRW pointed to worrying trends of food insecurity in the lowest bracket of earners.

Similarly, a September report on food insecurity in the Middle East by the indepedent research network Arab Barometer found that nearly half of all citizens in Lebanon stated that they ran out of food before they had money to buy more.

Extreme wealth inequality

Meanwhile, there are no indications for change, and the tax system is not helping the overall situation in Lebanon.

“The taxation system in Lebanon is highly regressive, which means that there is no wealth tax code, and corporate taxes are amongst the lowest in the world compared to all OECD averages,” Hussein Cheaito told DW.

The beneficiaries of the taxation system are those of the “political class and their business connections, because this 1% owns more than 70% of the national income,” Cheaito said. This, in turn, leaves a very small percentage of wealth to the rest of the society,” he claims.

Furthermore, those who earn their wages in Lebanese pounds, or receive support via charity organizations, suffer from another disadvantage. Banks only offer limited cash withdrawals in US dollars to those who have US dollars in their accounts.

Some Lebanese took to the streets in August 2022 to denounce the depreciation of the Lebanese currency due to the country’s political and economic crisis.Image: Dario Sabaghi/DW

Also, for the past 20 years, Lebanese banks have kept the pegged exchange rate of $1 to 1,500 Lebanese pounds. This, however, will be updated to $1 to 15,000 pounds on February 1. Even though this is 10 times more than before, it is still far from the actually used exchange rate on the black market. The current rate ist 50,000 pounds to the dollar.

On the other hand, for those, who work for international companies or have other means of accessing dollars, life has become relatively cheap, which also explains the thriving cocktail bars and fully booked restaurants.

Dollarization of the economy

“The reality today is that one of the most important sources of income for families are remittances from family members who live abroad,” Lynn Zovighian, the co-founder and managing director of The Zovighian Partnership, a family-owned social investment platform that develops research-led socio-economic interventions, told DW.

“The collapsed private sector, and expected contraction of the public sector, is driving rising unemployment numbers,” she said, adding that “Lebanon is also going through a de facto dollarization of its economy, but not by law or policy. This is happening with no price controls or penalties against financial abuse,” the Beirut-based Zovighian said.

Meanwhile, talks between the Lebanese government and the International Monetary Fund (IMF) have led to a staff-level agreement for a program worth about $3 billion over the next 46 months. However, a financial recovery plan to protect the most vulnerable in society, was not included.

“Three billion dollars will be barely enough to get the country back on its feet, given the size of the losses in the financial sector, which are at least $70 billion,” Chaeito said.

Moreover, the IMF agreement highlighted that, given the weak state of the Lebanese government and the public sector, Lebanon should focus on state-owned enterprises and the privatization of social and public services, Chaeito told DW.

Macro-economic stabilization

“What are the guarantees that private companies won’t actually engage in price hikes and further inflation, which we’ve seen in Latin America? This could mean that only the ultra-rich will be able to access services,” the analyst said.

He regards macroeconomic stabilization as the only solution to save the country from collapse and with it, the majority of the population.

“I refer to the redistribution of losses in the financial sector, ensuring that we have a clear financial recovery plan that primarily protects the smallest of depositors and people who have a middle or low income,” Hussein Chaeito said, adding that “their wealth has to be recapitalized, without this it will be impossible to really see the income gap being reduced.”

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What prompted the urgent, secretive summit in Abu Dhabi?

January 20 2023

Photo Credit: The Cradle

Key Arab heads of state convened this week for an emergency meeting that excluded the Saudis and Kuwaitis. The likely hot topics under discussion were Egypt’s economic collapse and Israel’s aggressive escalations.

By Abdel Bari Atwan

On 18 January, the United Arab Emirates hastily arranged a consultative summit in Abu Dhabi, which included the leaders of four member states of the Gulf Cooperation Council (GCC).

Heads of state of the Sultanate of Oman, Qatar, Bahrain, and the UAE attended the urgent summit, along with Egyptian President Abdel Fattah Al-Sisi and Jordan’s King Abdullah II.

The absence of Crown Prince Mohammed bin Salman (MbS), the de facto ruler of the Kingdom of Saudi Arabia, and either Kuwaiti Emir Nawaf al-Ahmad or his Crown Prince Mishaal al-Ahmad was noted with some surprise. No official statements or press leaks have yet emerged to explain the omission of the two GCC leaders or their high-level representatives from the urgent consultations.

This surprise summit came on the heels of a tripartite meeting in Cairo on 17 January, which included President Sisi, King Abdullah, and Palestinian President Mahmoud Abbas.

Directly afterward, the Jordanian monarch flew to Abu Dhabi carrying a message for Emirati Emir Mohammed bin Zayed (MbZ) that prompted him to immediately convene a summit the next day.

What was so urgent to necessitate an emergency meeting of Arab leaders? Why did the top Saudi and Kuwait leaders give the  summit a miss? There are several possibilities behind this swift convening of key Arab leaders in Abu Dhabi.

First, is the rapid deterioration of Egypt’s economy after the decline of the Egyptian pound to its lowest levels in history (32 pounds to the US dollar). Spiraling inflation rates, harsh conditions imposed by the International Monetary Fund (IMF) – most notably the floating of the national currency and a heavy reduction of private contracting and trade companies affiliated with the Egyptian army – have added sharply to the economy’s downward turn.

There are reports that the IMF has asked GCC countries to provide $40 billion in immediate aid to Egypt, otherwise the state’s collapse is imminent and inevitable.

Second, are the dangerous policies currently under consideration by the right-wing government of Israel’s new Prime Minister Benjamin Netanyahu. These include, most notably, threats to storm the Al-Aqsa Mosque in Jerusalem, the practical abolition of Jordan’s Hashemite Custodianship over Jerusalem, the illegal annexation of the West Bank, and the deportation of hundreds of thousands of its Palestinian residents to Jordan.

Third, former Qatari Prime Minister Sheikh Hamad bin Jassim, warned his neighbors a few days ago on Twitter of an imminent US-Israeli aggression against Iran that could fundamentally shake the security and stability of the Gulf.

The risk of economic collapse facing Egypt was perhaps the most important and urgent factor on the summit agenda. Financial assistance from the Gulf – once a reliable source of emergency aid – has completely stopped. Even if it continues, funds will no longer arrive in the form of non-refundable grants and unconditional deposits, as in years past.

That approach to funding has changed as Saudi Finance Minister Mohammed bin Jadaan made clear in his speech at the World Economic Forum in Davos, Switzerland on 18 January. In previous statements, Egypt’s President Sisi has confirmed his country’s financial woes by revealing that Gulf states have stopped their aid completely.

The absence of the Emir of Kuwait from the consultative summit may be understandable in this context – if, in fact, Egypt’s economy was the top of the summit’s agenda. The Kuwaiti National Assembly (parliament) has adopted a decision to prevent his government from providing a single dollar in aid to Egypt.

Gulf states have provided Egypt with $92 billion since the ‘Arab Uprisings’ began to tear through the region in January 2011.

Currently, Kuwait’s own internal governmental crisis, in addition to the deterioration of its relationship with Cairo over its deportation of Egyptian workers, can explain the emir’s absence. What is not understood so far, is why Saudi’s MbS was a no-show in Abu Dhabi.

While Emirati leader MbZ’s warm and friendly reception of his Qatari counterpart Tamim bin Hamad al-Thani raised hopes of easing bilateral tensions, news leaks suggested that Saudi-Emirati relations are in their own state of crisis – based on growing differences over the Yemeni war and other regional issues. Perhaps this crisis is what led to a thaw in Qatari-Emirati relations.

In addition, Egyptian-Saudi relations have collapsed to an state unprecedented for years. A report last month by US media outlet Axios revealed that Egyptian authorities have halted practical procedures in their transfer of the strategic Tiran and Sanafir islands to Saudi sovereignty. Egyptian official media has also launched a fierce attack on the Saudi-owned “MBC Egypt” channel and its presenter Amr Adib, accusing him of working for the Saudis amid fears the station will stop broadcasting from Egypt.

Besides the economic aspects, the differences, squabbles, and fluctuating relations between the countries of this axis, there are other issues of significant gravity that may have been addressed at the Abu Dhabi summit.

A key topic may have been the ambitions of Netanyahu’s unprecedentedly right-wing Israeli government – notably its prevention of Jordan’s ambassador from visiting Jerusalem’s Al-Aqsa Mosque, as a first step to abolish the Hashemite Custodianship over the ancient city.

While the failure to invite Palestinian President Abbas to the Abu Dhabi summit (there is an Emirati veto against it) may suggest otherwise, Jordan – currently under US and Israeli pressure to participate in the second Negev summit in Morocco – and its monarch may have pressed this issue in Abu Dhabi.

Gulf states that have normalized relations or opened communications with Israel would have been asked to use their influence to de-escalate these pressures. The ramifications of continued Israeli aggressions in Jerusalem and the West Bank are a direct threat to Jordan’s security and stability.

Interestingly, all the states represented at the Abu Dhabi summit – with the exception of the Sultanate of Oman and Qatar – have signed normalization agreements with Israel. The absent Saudis and Kuwaitis, have notably not yet joined that club.

Details of the Abu Dhabi emergency summit of heads of states have not yet emerged, but the days ahead could provide some answers. Will billions flow to Egypt to extract the country from its financial crisis? Or will the Arab House remain the same? We will have to wait to see.

The views expressed in this article do not necessarily reflect those of The Cradle.

نصرالله: خطوة إلى الوراء… خطوتان إلى الأمام في المواصفات الرئاسية

 الجمعة 20 كانون الثاني 2023

ناصر قنديل

ــ برغم التوضيحات المتكررة التي قدّمها الأمين العام لحزب الله السيد حسن نصرالله حول عدم حاجة المقاومة لرئيس يحميها أو رئيس يغطيها، وحول أن القصد من رئيس لا يطعن المقاومة في ظهرها ليس الحرص على المقاومة التي تعرف كيف تحمي نفسها من التآمر والطعن، بقدر الحرص على البلد الذي سيضعه خيار الرئيس الطاعن للمقاومة في دائرة الخطر، ويعرّض سلمه الأهلي للاهتزاز، بمحاولته لوضع مقدرات الدولة في مواجهة المقاومة، بقي البعض يردّد مقولة إن المطلوب رئيس يحمي البلد لا رئيساً يحمي المقاومة، فقرر السيد نصرالله التراجع خطوة الى الوراء، ويقول بمعزل عن طعن المقاومة وعدم طعنها في المواصفات الرئاسية تعالوا لنبحث معاً أي رئيس نريد؟

ــ بدأ السيد نصرالله جوابه على سؤال حول ما إذا كنا في قلب الانهيار، وما إذا كنا نتحمل ست سنوات رئاسية عنوانها استمرار الحال على ما هو عليه، ليقول إن لبنان يحتاج الى رئيس لأنه لا يستطيع تحمّل المزيد من الانهيار والتدهور، ولأن مدخل كل مواجهة للانهيار هو مؤسسات الدولة التي يبدأ تفعيلها من انتخاب رئيس جديد للجمهورية يليه تشكيل حكومة جديدة، لرسم السياسات واتخاذ الخطوات باتجاه يضمن الخروج من الانهيار ووضع لبنان على سكة الحل. والرئيس الذي يشكل انتخابه تمديداً للشلل في مواجهة المخاطر الداهمة التي تزحف بلبنان نحو الأسوأ، يعني رصاصة الرحمة على لبنان واللبنانيين، لأن لبنان لا يحتمل هذا الشلل لستة شهور، فكيف يتحمل ست سنوات؟

ــ قدّم السيد نصرالله في الجواب على أي رئيس نريد من أجل الخروج من الانهيار، نسختين من السيناريوات المطلوبة رئاسياً، النسخة الأولى هي سيناريو ما يتعرّض له لبنان من دعوات للسير بسياسات يتداولها خصوم المقاومة تحت شعار دعوتهم لمواصفات الرئيس الجديد، وهي رئيس يقبله الغرب وعلى رأسه الأميركي باعتباره الفريق الذي يمسك بالمعادلات المالية الدولية وعبر كسب رضاه تنفتح أمام لبنان أبواب الحلول المالية، ورئيس يرضى عنه العرب وفي طليعتهم الخليج وفي مقدّمته السعودية، لأنهم مَن يملك المال ولبنان يحتاج إلى المساعدات، وغضب السعودية ومن خلفها الخليج على لبنان حرمه من هذه الأموال، ورئيس إن لم يذهب للسلام مع كيان الاحتلال وصولا للتطبيع فعلى الأقل رئيس لا يعرّض لبنان لامتحانات التوتر مع الكيان، ورئيس يؤمن بالعمل مع صندوق النقد الدولي الذي يملك وحده الوصفة السحرية التي تفتح أمام لبنان أبواب المؤسسات الدولية المالية والجهات المانحة، ورغم كون كل هذه المواصفات تنتخي بوصفة الابتعاد عن المقاومة وتصل إلى وضع رأسها على طاولة المساومة؛ وهو ما سبق وقصده السيد نصرالله باختصار مواصفاته الرئاسية برئيس لا يطعن المقاومة في ظهرها، قرّر السيد نصرالله تجاوز ذلك ومناقشة الفرضية بعيداً عن المقاومة وظهرها، فالتفت إلى الجغرافيا القريبة حيث تقدّم مصر مثالاً لا يمكن تخيّل قدرة لبنان على مضاهاته في ترجمة هذه الطلبات. فمهما فعل لبنان لن يبلغ منزلة مصر في الاقتراب من الغرب وأميركا خصوصاً، ومهما فعل لبنان لن يصل إلى مكانة مصر الخليجية والسعودية خصوصاً، ومهما فعل لبنان فلن يصل في تبريد الصراع مع كيان الاحتلال الى ما فعلته مصر عبر اتفاقيات كامب ديفيد، ومصر سبّاقة في تنفيذ وصفات صندوق النقد الدولي، ليخلص للقول خذوا العبرة من مصر وهي تنهار، ونريد رئيساً يجنبنا هذا الانهيار، أي ملك شجاعة القول لا لدعاة هذه الوصفات البائسة التي لا تُغني ولا تُسمن عن جوع، ولا تأتي إلا بالخراب.

ــ انتقل السيد نصرالله الى النسخة الثانية من السيناريو، وهي أنه مقابل الضغط والحصار من الجانب الأميركي وتداعياته العربية والخليجية، هناك دول لم يستطع الأميركي إلزامها بالامتناع عن تقديم الدعم للبنان، سواء بتقديم الهبات والمساعدات كحال هبة الفيول الإيرانية، أو تقديم العروض الاستثمارية التي لا تكلف الدولة قرشاً للنهوض بقطاعات حيوية في أي خطة نهوض اقتصادية، سواء قطاع الكهرباء أو قطاع النفط أو قطاعات النقل، وأهمها العروض الروسية والصينية. وهنا طريق الضغط الأميركي هو لبنان وليس الجهات المانحة أو المستثمرة، ولبنان يحتاج رئيساً شجاعاً يقبل المساعدات ويفتح الطريق أمام الاستثمارات، ولا يخضع لدفتر الشروط الأميركي.

ــ الرئيس السيادي هو الذي يملك شجاعة اتخاذ الموقف بقياس المصلحة الوطنية، لا بقياس المطلوب الممنوع خارجياً، ولذلك فإن التمسك بالسعي لإيصال رئيس بهذه المواصفات يستدعي عدم التهاون مع محاولات الضغط لفرض المجيء برئيس «كيف ما كان» لأن رئيس الـ «كيف ما كان» هو رئيس تعميق الانهيار وتسريع السقوط.

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Sayyed Nasrallah: We Want a President Who Does Not Flutter with One US Blow! (Videos)

January 19, 2023

Hezbollah Secretary General Sayyed Hasan Nasrallah in a speech delivered on Thursday, January 19, 2023.

Batoul Wehbe

Confident and relaxed he seemed with intermittent jokes levelled sporadically, indulging audience and attendees at once. Hezbollah Secretary General Sayyed Hasan Nasrallah delivered a speech today (January 19, 2023), his third since the beginning of the new year.

Marking 30th years on the establishment of the Consultative Center for Studies and Documentation, which had the lion’s share in his speech, Sayyed Nasrallah tackled several local and regional issues.

Hezbollah Secretary General Sayyed Hasan Nasrallah in a speech delivered on Thursday, January 19, 2023.

His eminence began his speech by extending sincerest gratitude to “my esteemed brothers who have shouldered the responsibility of overseeing this center, as well as to all the brothers and sisters who have dedicated themselves to this center’s operation over the course of three decades,” believing that achievements were the result of ‘blessed collective efforts.’

“Hezbollah has been concerned with the livelihood of its people for the past 30 years, despite its significant involvement in resistance and the various challenges that existed at the time. Hezbollah has, from its inception, and continues to maintain a steadfast commitment to basing its operations on a foundation of scientific and technical expertise,” Hezbollah’s leader said.

“The Consultative Center has consistently served as the go-to resource for guidance and direction for our leadership, units, and diverse departments within Hezbollah. We have made it clear to our brothers that it is their duty to accurately represent our organization to the outside world, regardless of any challenges or unfavourable circumstances that may arise, rather than presenting a skewed or idealized version that may be more palatable,” he added.

Additionally, Sayyed Nasrallah said, the objective of this center is to provide insightful and constructive recommendations, perspectives, and alternatives that are grounded in the vast wealth of human and humanitarian experiences that have come before us. “It is essential that we tap into the wealth of knowledge and expertise that exists within our community, by leveraging the intellectual and specialized capabilities of all individuals within it, in order to achieve our goals.”

He went on to say that Hezbollah in its efforts to find solutions for development, advancement and problem-solving, always strives to explore the full range of possibilities within the resources and capabilities that are readily available to it.

“The Consultative Center for Studies and Documentation serves as the vital link between us and the diverse pool of intellectual and visionary resources that we rely on to guide our actions. From the outset, our aim for this center was to establish it as an intellectually rigorous, analytical, evaluative, and visionary entity that is deeply engaged and attuned to the realities of the current situation on the ground,” Sayyed Nasrallah indicated.

“As the leadership of Hezbollah evaluated the name of the center that was to be established as a public and inclusive entity, catering to all segments of society, We selected a more general name in order to ease work and communication. The outputs produced by the center were always heavily invested in and utilized by Hezbollah, its institutions, and its affiliated organizations.”

“Who stands behind the Loyalty to Resistance parliamentary bloc in many studies, discussions, and observations?” Sayyed Nasrallah wondered, then he answered: It’s the Consultative Center.

Economic Crisis in Lebanon Deepening

Turning to the Lebanese set of crises, Sayyed Nasrallah said: No one argues that the economic situation is perplexing in Lebanon, this matter is not exceptional for Lebanon. Rather, there are many countries threatened with collapse

“It is not permissible for us to despair, although there are attempts to spread hopelessness in the country, this is a perilous matter. It is not permissible to remain in a state of confusion, as was the case in the past years, and somewhere the competent authority must take the initiative to develop a vision to address the economic situation. On this basis, plans and programs can be drawn up based on a complete and elaborate vision.”

“Corruption was rooted deep in the state long time ago, if each sect presented its best thoughts and expertise to assume administrative responsibilities in the state, we would not have reached this stage. One of the most important causes of the crisis is the misconception of the economic vision in the 1990s and some corrupt and deceitful economic policies. Our positions on them were clear in Parliament, the first of which was the debt policy,” Hezbollah’s S.G. affirmed.

A more serious matter, Sayyed Nasrallah warned, was disrupting the production and making quick profits. “Thus, our economy has turned into a fragile one,” he said.

“Also, among the reasons are sectarian quotas, absence of sustainable development, repercussions of internal wars, reconstruction, and displacement file,” he added.

Lebanon under US Siege 

Concerning the US blockade against Lebanon, Sayyed Nasrallah said: It is unfortunate that some people suggest that the blockade on Lebanon is not in place, as it is not only implemented by placing a battleship off the Lebanese coast, but also through the actions and attitudes of the American administration towards the Lebanese authority. The blockade is implemented through a variety of means, including preventing external assistance, grants, and loans from reaching Lebanon, as well as blocking the Lebanese government from accepting donations and investments, and from addressing the issue of Syrian refugees.

“Returning to the vision that has been adopted by misguided policies, particularly that the region is moving towards resolving the conflict with the Zionist entity, that led us to the status co nowadays.”

Sayyed Nasrallah also delved into the fact that the economic situation is being employed as means to normalize ties with the Zionist entity. In this regard, Sayyed Nasrallah warned that whoever wants to put in place new economic policies must not build a vision at the expense of a settlement in the region, assuring that there is no two-state solution, especially in light of the new corrupt and terrorist government in ‘Israel’.

“There is no settlement with Syria, too. What happened in Syria is one of the attempts to come up with a political regime that gives the Golan Heights to the Zionist entity.”

He also insisted on working on an economy plan that provides food security and does not rely on foreign aid and assistance.

“The situation in the region is heading towards more tension: No settlements, no peace, and all of this will be reflected in our region,” Sayyed Nasrallah said.

“One of the means for strength is the issue of oil and gas, as it is a huge wealth in the sea of Lebanon,” His eminence said, assuring that today, the European decision is decisive to dispense with Russian gas, as its priority is the Mediterranean wealth, because costs are lower. Therefore, he said, we have to search for companies to benefit from our national wealth.

“We definitely have oil in our land, and our facts say that politics have forced it to stop, and the same is true in Palestine and Syria, as there is exploration and extraction of oil near our borders.”

Abounding Strengths in Lebanon 

Other than security with Sayyed Nasrallah enumerated as a strength to the country, he said that expatriates are also one of its main strengths, calling them “the most important financial source for the livelihood of the Lebanese.”

“There are great hopes and points of strength. Lebanese are able to rise, they need the will, the right plan, and seriousness in action. Expatriates are exposed today to danger, harassment, and aggression by the USA through putting merchants and rich personalities on sanctions lists on unjust charges. This needs a follow-up by the state, which unfortunately ‘does nothing’,” he said.

Ending up the part of economic blockade, Sayyed Nasrallah once again called on Lebanon to ‘look to the East’: “We must have the courage and willingness to sacrifice in the face of sanctions and in accepting donations, and we must have the audacity to say to the Chinese, “Go ahead.” Why are countries in the world allowed to invest with China while Lebanon is forbidden from doing so?”

Referring to the refugees file, Sayyed Nasrallah said: “We need courage in dealing with the Syrian displaced file, and stop the racism accusations. This is a crisis from which all the Lebanese suffer, and we can find a decent solution for them.”

Many people speculate that if Lebanon says it is outside the conflict with “Israel”, then everything will be resolved, his eminence noted. “I invite you to observe the situation in Egypt, the first country that made peace with the Israeli enemy,” he said, referring to the economic crisis that Egypt is suffering from despite its normalization of ties with the Zionist entity.

“Egypt has the best relations with the US and Saudi Arabia, and it is with the International Monetary Fund. What situation is Egypt in?” Sayyed Nasrallah wondered.

It’s worth noting that Egypt’s external debt is expected to bypass $200 billion by early next year, an almost 400 percent increase since 2016.

In a report issued yesterday, the Financial Times said that last year, Cairo was forced to go to the IMF for the fourth time in six years. Even before that $3bn loan was secured in October, Egypt was the fund’s second biggest debtor after Argentina.

Strong, Independent President

In this context, Hezbollah’s secretary general warned that the next six years are crucial for Lebanon. “If we continue in the same way, the country is on the verge of collapse.”

To this level, Sayyed Nasrallah sarcastically said “We want a president who, if the Americans blow on him, wouldn’t flutter from the Baabda Palace to the Mediterranean,” hinting at a strong president who’s able to withstand US pressure.

“We want a brave president who is ready for sacrifice and who is not concerned with the American threats,” he said in other words, pledging patience among people as though Lebanon needs a president with a certain calibre.

Since President Michel Aoun left the Baabda Palace in October 30, 11 parliamentary sessions have been held to elect a new president, but none bore fruit due to lack of consensus.

Source: Al-Manar English Website

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By the numbers: The de-dollarization of global trade

Data suggests that US dollar reserves in central banks are dwindling, as is the influence of the US on the world economy. This presents a unique opportunity for regional currencies and alternative payment systems to enter the vacuum.

January 13 2023

Photo Credit: The Cradle

By F.M. Shakil

The imposition of US trade restrictions and sanctions against a number of nations, including Russia, Iran, Cuba, North Korea, Iraq, and Syria have been politically ineffectual and have backfired against western economies. As a result, the US dollar has been losing its role as a major currency for the settlement of international business claims.

Because they do not adhere to the policies of the US and other western powers, over 24 countries have been the target of unilateral or partial trade sanctions. These limitations, nevertheless, have turned out to be detrimental to the economies of the Group of Seven (G7) nations and have begun to impact the US dollar’s hegemony in world trade.

In its space, a “new global commercial bloc” has risen to the fore, while alternatives to the western SWIFT banking messaging system for cross-border payments have also been created.

Geopolitical analyst Andrew Korybko tells The Cradle that the west’s extraordinary penalties and seizure of Russian assets abroad broke faith in the western-centric paradigm of globalization, which had been declining for years but had nonetheless managed to maintain the world standard.

“Rising multipolar countries sped up their plans for de-dollarization and diversification away from the western-centric model of globalization in favor of a more democratic, egalitarian, and just one – centered on non-western countries in response to these economic and financial disturbances,” he adds.

Dwindling dollar reserves  

The International Monetary Fund (IMF) recorded a decline in central bank holdings of US dollar reserves during the fourth quarter of 2020—which went from 71 percent to 59 percent—reflecting the US dollar’s waning influence on the world economy.

And it continues to worsen: Evidence of this can be seen in the fact that the bank’s holdings of dollar claims have decreased from $7 trillion in 2021 to $6.4 trillion at the end of March 2022.

According to the Currency Composition of Official Foreign Exchange Reserves (COFER) report by the IMF, the percentage of US dollars in central bank reserves has decreased by 12 percent since 1999, while the percentage of other currencies, particularly the Chinese yuan, have shown an increasing trend with a 9 percent rise during this period.

The study contends that the role of the dollar is waning due to competition from other currencies held by the bankers’ banks for international transactions – including the introduction of the euro – and reveals that this will have an impact on both the currency and bond markets if dollar reserves continue to shrink.

Alternative currencies and trade routes

To boost global commerce and Indian exports, the Reserve Bank of India (RBI) devised in July last year a rupee-settlement mechanism to fend off pressure on the Indian currency in the wake of Russia’s invasion of Ukraine and US-EU sanctions.

India has recently concluded agreements for currency exchanges of $75.4 billion with the UAE, Japan, and various South Asian nations. New Delhi has also informed South Korea and Turkey of its non-dollar-mediated exchange rates for each country’s currency. Currently, Turkey conducts business utilizing the national currencies of China (yuan) and Russia (ruble).

Iran has also proposed to the Shanghai Cooperation Organization (SCO) a euro-like SCO currency for trade among the Eurasian bloc to check the weaponization of the US dollar-dominated global financial system.

Mehdi Safari, Iran’s deputy foreign minister for economic diplomacy, informed the media earlier in June last year that the SCO received the proposal nearly two months ago.

“They must use multilateral institutions like BRICS and the SCO to this aim – and related ones, such as currency pools and potentially even the establishment of a new currency whose rate is based on a basket of their currencies, to mitigate the effects of trade-related restrictions,” Korybko remarked.

The International North-South Transport Corridor (INSTC) is being revived as a “sanctions-busting” project by Russia and Iran. The INSTC garnered renewed interest following the “sanctions from hell” imposed by the west on Moscow. Russia is now finalizing regulations that will allow Iranian ships free navigation along the Volga and Don rivers.

The INSTC was planned as a 7,200 km long multimodal transportation network including sea, road, and rail lines to carry freight between Russia, Central Asia, and the Caspian regions.

Ruble-Yuan Payment System

On 30 December, 2022, Russian President Vladimir Putin and his Chinese counterpart Xi Jinping held a video conference in which Putin reported that bilateral trade between the two countries had reached an all-time high with a 25 percent growth rate and that trade volumes were on track to reach $200 billion by next year, despite western sanctions and a hostile external environment.

Putin stated that there had been a “substantial growth in trade volumes” between January and November 2022, resulting in a 36 percent increase in trade to $6 billion. It is likely that the $200 billion bilateral trade target, if achieved by next year, will be conducted in Russian rubles and Chinese yuan, even though the details of the bilateral trade settlement were not specified in the video conference broadcast.

This is because Moscow and Beijing have already set up a cross-border interbank payment network similar to SWIFT, increased their gold purchases to give their currencies more stability, and signed agreements to swap national currencies in several regional and bilateral deals.

In addition, both Russia and China appear to have anticipated a potential US seizure of their financial assets, and in 2014 they collaborated on energy-centered treaties to strengthen their strategic trade links.

In 2017, the ruble-yuan “payment against payment” system was implemented along China’s Belt and Road Initiative (BRI). In 2019, the two countries signed an agreement to replace the dollar with national currencies in cross-border transactions and converted their $25 billion worth of trade to yuan (RMB) and rubles.

Independence from the dollar

This shift decreased their mutual reliance on the dollar, and currently, just over half of Russia’s exports are settled in US dollars, down from 80 percent in 2013. The bulk of trade between Russia and China is now conducted in local currencies.

Xinjiang in western China has also established itself as a key cross-border settlement center between China and Central Asia, making it a major financial hub in the region. Cumulative cross-border yuan settlement handled in Xinjiang exceeded 100 billion yuan ($14 billion) as early as 2013 and reached 260 billion yuan in 2018.

According to analyst Korybko, significant progress has been made in reducing reliance on the US dollar in international trade, but there is still much work to be done. He notes that the US is not likely to simply accept the challenges to its financial hegemony and is more likely to act to defend it.

“For this reason, it is expected that the US will try to enlist the support of key players by offering them preferential trade deals or the promise of such deals, while simultaneously stoking tensions between Russia, China, India, and Iran through information warfare and possibly threatening to tighten its secondary sanctions regime as ‘deterrence’.”

Eurasian Economic Union

Russia has been working to establish currency swap agreements with a number of trading partners, comprising the five-member Eurasian Economic Union (EEU), which includes Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan.

These agreements have enabled the Russian Federation to conduct over 70 percent of its trade in rubles and other regional currencies. With a population of 183 million and a GDP over $2.2 trillion, the EEU poses a formidable challenge to western hegemony over global financial transactions.

Iran and the EEU have recently concluded negotiations on the conditions of a free trade agreement covering over 7,500 categories of goods. When the next Iranian year begins on 21 March, 2023, a market with a potential size of 700 billion dollars will become available for Iranian goods and services.

BRICS is driving de-dollarization

The trend towards de-dollarization in international trade, particularly among the BRICS nations, has gained significant momentum in recent years – together they represent 41 percent of the world’s population, 24 percent of its GDP, and 16 percent of its commerce

In 2015, the BRICS New Development Bank, recommended the use of national currencies in trade. Four years later, the bank provided 25 percent of its $15 billion in financial assistance in local currencies, and plans to increase this to 50 percent in the coming years.

This shift towards de-dollarization is an important step for emerging economies as they seek to assert their role in the global economic system and reduce their reliance on the US dollar. While the adoption of de-dollarization may present some challenges and uncertainties, it is an important step towards a more diverse and balanced global economy.

The views expressed in this article do not necessarily reflect those of The Cradle.

The collective West might be losing the war with Eurasia

November 10, 2022

Source

by Francis Lee

‘’You can’t always get what you want.’’
Courtesy of the Rolling Stones

This aptly sums up the Eurozone/East-Asian/US relationship: In short US hegemony. Suffice it to say that – of all people, Leon Trotsky writing in, (War – In the International 1933) – opined … ‘’That prior to WW2 the US was Europe’s debtor but now Europe was relegated to the background. The United States is the principal factory, the principal depot and the Central Bank of the world.’’

US Ascendency in the 20th Century.

This much was self-evident, and true enough, but in any case, America’s hegemony over Europe long pre-dated WW2 and actually later grew larger with the addition of ex Eastern European states which had been formerly part of the Soviet sphere of influence. Western Europe had willy-nilly long since been subordinated to the USA. A while later (1946) the Americans gave the British short shrift reminding them that they would have to adjust to the post-war realities and take the medicine – the American loan, as Michael Hudson explains.

‘’In effect the Sterling Area was to be absorbed into the Dollar Area, which would be extended throughout the world. Britain was to remain in a weak position in which it found itself at the end of WW2, with barely any free monetary reserves and dependent on dollar borrowings to meet its current obligations. The United States would gain access to Britain’s pre-war markets in Latin America, Africa, the Middle East and Far East. This first loan on the post-war agenda – which President Truman announced in forwarding it to Congress would set the course of American and British economic relations for many years to come. Truman was well aware of the change of fortunes for the UK, for the Anglo-American Loan Agreement spelled the end of Britain as a great power.’’(1)

Sometime later and under the changed geopolitical and economic conditions President Richard Nixon and his economist acolytes placed their chief diplomat, Henry Kissinger, in charge of arrangements to put in place a policy to keep the Europeans subordinate and while they were at it to simultaneously endeavor to put a limit on Japanese expansion.

Then came the big game-changer: Gold was officially delinked from the US$ in August 1971. Nixon’s currency reforms – were designed among various other decisions and also generally aimed at European and Japanese interests. It should be noted that Japan did not play any political role at all but simply followed in America’s wake, as she invariably did in economic and even political matters since.

This unilateral decision by the Americans to deprive paper money from convertibility into gold was enough to tip the Europeans into disorder and turbulence. For all their protestations of loyalty in Europe, the leaders of each country feverishly groped for an outcome that answered their own interests. However still licking their wounds, and for all their weakness, the Europeans still constituted a new and serious – although declining – rival for God’s own People, American capitalism-imperialism, which says a lot about how far the former had slid down the slippery-slope.

Nixon conferred the job of curbing his ‘partners’ newly aroused appetites and steering them towards their own backyard to his man (and enforcer) Henry Kissinger. Kissinger was to read the riot act and inform these uppity Euro-elites that it was the US which was taking centre stage whilst the Europeans were just the supporting artists. Kissinger didn’t mince words with his global minions.

‘’The US has global interests and global responsibilities ‘’ the enforcer-strategist declared, ‘’Our allies have regional interests’’. Having thus put the Europeans in their place, Kissinger acknowledged that the US interests diverged ‘’with the new weight and strength of our allies …’’ But he firmly advised these allies: ‘’ That the gradual accumulation of sometimes petty, sometimes major economic disputes must be ended … A new equilibrium must be achieved in trade and monetary relations.’ Then he called upon the leaders of both Europe and Japan to subordinate their economic interests to these political considerations, organized and directed, of course, by the USA. Under the pressure of these scarcely veiled American threats, the Europeans were meant not just to bury the hatchet over a potential trade-war, but were in addition, and above all, expected to share the ballooning costs of global hegemony.’’ (2) In the popular vernacular of the time, Kissinger ‘socked it’ to the Europeans.

Suffice it to say the Europeans and, a fortiori, both the Japanese and South Koreans had since become thoroughly Americanized and house-trained. Most pathetically in the case of Japan’s geographical position which successfully made it into a long-term prisoner of the United States. The success of Japan’s industrial development and export drive so impressive at the time of comparison with competition with Europe and the United States, did not in any way guarantee that it would move into a hegemonic position. Investment in Japan’s trade surplus in the US always struck the reader as being rather overvalued and in a somewhat geopolitical weak position. Japan, economic giant, political pigmy.

Certainly, the East Asian producers and to a lesser degree the EU are still in a position of American dominance, both politically and strategically, to the United States. And most everyone knows this. In point of fact:

‘’The US economy lives like a parasite on its ‘partners’ in the global system, with virtually no national savings of its own. The World produces whilst North America consumes. The advantage of the United States is that of a predator whose deficit is covered by what others agree or are forced to contribute. Washington uses various means to make up for its deficiencies: for example, repeated violations of the principles of liberalism, arms exports, and the hunting down of oil super-profits (which involves the periodic felling of the producers: one of the real motives of the real war in Central Asia and Iraq). But the fact is that the bulk of the American deficit is covered by capital inputs from Europe and Japan, (and even) China and the global South including rich oil-producing countries and comprador classes from all regions, including the poorest, in the Third World – to which should be added the debt-service levy that is imposed on nearly every country in the periphery of the global system. The American super-power depends from day to day on the flow of capital which sustains the parasitism of its economy and society. The vulnerability of the US therefore represents a serious danger to the American project. (3)

It should be understood that the American possession of the US$ can enable them to simply finance their imports by issuing US paper dollars, or US Treasuries – not gold. That job goes to the man at the gold window of the Fed, who will simply give you more ‘paper assets’ -Treasuries and dollar bills – when you trade in your surplus dollars or gold. A neat trick, and very successful. This ‘exorbitant privilege’ as was articulated by the French politician Valery Giscard D’Estaing was a rent-free arrangement between the US and its ‘allies’ (sic).

This ‘long century’ has been a period of a long-term geo-political dominance by the Atlanticist bloc led by the United States and its global institutions – the International Monetary Fund (IMF) and World Bank (WB) which has been a fait accompli. These two institutions were initially set up during the Bretton Woods Conference in 1944, principally by the US but with the UK in tow. These two world economic pillars were to serve as vehicles to open up trade and financial markets to US exporters, and to enable US investors to buy control of natural resources and industry. This set the rules for Europe and other regions to subsequently join these two institutions, leaving no practical alternative means of organizing world trade and investment. The World Bank’s policies included opposing land reform and organizing loans mainly to create infrastructure linked largely to exports, not to create self-sufficiency. The aim was to lock in foreign dependency on US farm exports and other essentials.

The role of the IMF has been to all intents and purposes a financial vehicle – which due to its organizational structure and an inbuilt voting system which guarantees a majority on every occasion – has been a stranglehold of voting power over its allies and also is able to withhold credits from recalcitrant countries. Dollar credit is used as a lever to indebt foreign countries and force them to adopt ‘’free market’’ deregulation and tax policies which serve US interests.

‘’The broadest step in this strategy of underdevelopment is to use IMF pressure to turn public infrastructure into privatized monopolies by forcing their sell-off to raise money to settle trade and balance of payments deficits. (4) This was broadly in step with the classical phase of imperialism (1800-1950) based upon the division between industrialized cores and non-industrialized peripheries and a related tendency to reduce the latter to a colonial or semi-colonial status, and (5) the post-war phase (1950-1980) involved the victory of national liberation movements – China, Vietnam – in south east Asia and the middle-east – still ongoing – enabled the peripheries to impose a revision of the old asymmetrical terms of the global system and to enter into the industrial age. This period of negotiated globalization was exceptional, and it is interesting to note that the world then experienced growth that was the strongest known in history as well as the least uneven in terms of the distribution of what was produced and distributed

But whisper it softly there has occurred a slow geopolitical burn which is now not easily snuffed out and which goes from strength to strength. This emerging bloc of independent Eurasian states led in the main by Russia and China and organized in the BRICS (Brazil-Russia-China-India-SouthAfrica) and Shanghai Corporation Organization (SCO) represent an alternative system to the glaring global level of inequality and stands out like a beacon of light against the parasitism and orthodoxies of laissez-faire extractive capitalism/imperialism.

In more general terms Michael Hudson lays out a precis of a choice between the two alternatives. As follows:

‘’Finance capitalism is de-industrializing the US economy and that of its allied NATO satellites. The Destiny of Civilization explains that the resulting international diplomacy is not a competition for markets (as the Western Economies are already deindustrializing as a byproduct of financialization and capital’s war against wage labour), nor a conflict between democratic freedom and authoritarianism, but rather a conflict of economic systems juxtaposing the rentier economics of debt-deflation and austerity to socialist state-subsidized growth protecting the 99% by keeping the 1% in check.’’ (6)

APPENDIX

I would go further into the work of Freidrich Engels in his description of ‘Condition of the Working Class in England 1844’. Where he writes his journey particularly in Manchester in the north of England as well as other cities.

‘’A horde of ragged women and children swarm about here, as filthy as the swine, they thrive upon the garbage heaps and in the puddles. In short, the whole rookery (slum housing) furnishes such a hateful and repulsive spectacle as can hardly be equaled in the worst court of the Irk. The sub-human race that lives in these ruinous cottages, behind broken windows, mended with oilskin, sprung doors, and rotten door posts, or in the dark, wet, cellars, in measureless filth and stench, in this atmosphere penned in as if with a purpose, this race must have nearly reached the lowest stage of humanity … But what must one think when he hears in at each of these pens, containing at most 2 rooms, a garret and perhaps a cellar, where on the average twenty human beings live; that in the whole region for which 120 persons one usually inaccessible privy (toilet); and that in spite of all the preaching’s of the physicians, and also in spite of the wretched conditions into which the cholera epidemic which plunged the sanitary police …

Engels goes on and on until it becomes virtually impossible and painful to read further. Yet this is the condition of those poor wretches in today’s third world who live among the conditions in Bangladesh or the Cameroons or Bolivia or Liberia, or Senegal! Or wherever. The World has a long way to go.

(1) Super-Imperialism – Michael Hudson – Quoted in Gardner Ibid. p.208

(2) The text of Kissinger’s speech on US relations in Europe was published in the New York Times – 24/04/1973

(3) Beyond US Hegemony – 2006 – Samir Amin – p.12

(4) The Destiny of Civilization 2022– Michael Hudson – p.53

(5) Ibid. – Samir Amin 2006 – p.12

(6) The Destiny of Civilization – Michael Hudson – p.283.

The Real Progressive interview of Michael Hudson (with transcript!)

November 08, 2022

RP Live with Michael Hudson: The Destiny of Civilization

Real Progressive webinar Sept 2022

Graphical user interface, text Description automatically generated

Intro

[00:00:06] Luke Parcher: All right. For those who might not know me, I’m Luke Parcher, I’m a student and activist. I volunteer with Real Progressives. I’m on our leadership team and I also do a show on Sundays covering politics and current events, and I do some interviews throughout the week and things which you guys can find on Real Progress in Action.

I want to quickly talk about Real Progressives. If you’re interested in learning more about us, you can go to realprogressives.org. We have articles, content, podcasts, all sorts of things. And if you’re interested in helping us out, we are a nonprofit. You can go to realprogressives.org/donate. I also want to plug our founder and CEO, Steve Grumbine’s shows. He does the Rogue Scholar on YouTube on Real Progress in Action. He also does the Macro N Cheese podcast, where you can find our guest today, Michael Hudson, as one of many fantastic guests on that podcast.

So without further ado, I’d like to introduce our guest today. Michael is an economist, a professor of economics at the University of Missouri, Kansas City. He’s also a researcher at the Levy Institute at Bard College. He’s a former Wall Street analyst, political consultant, and commentator and author. Michael, thank you so much for taking the time.

[00:01:06] Michael Hudson: Well, thanks for inviting me.

Question | Luke Parcher

[00:01:08] Luke Parcher: I wanted to kick things off for the first question. The title of your book is The Destiny of Civilization: Finance Capitalism, Industrial Capitalism, or Socialism.

Can you just explain how you came to such an all-encompassing title?

[00:01:20] Michael Hudson: Well, the world economy is now fracturing between two parts, the United States and Europe is the dollarized part. And this Western neoliberal unit is driving Eurasia and most of the Global South into a separate group. The conflict really is between finance capitalism in the United States and Europe against other countries – China, Russia, Iran, India – that are following the more traditional ethic and strategy of industrial capitalism.

The question is: how are countries going to be economically planned? Because every economy is planned by somebody. In the United States, the central planning has been taken out of the hands of government and put in Wall Street. In the City of London. A very rightwing philosophy. In other countries, there is a mixed economy – China and the rest of Eurasia – and their objective of planning and money creation and credit is to create industrial capital to create the means of production.

Obviously, also environmental cleanup now, not merely the means of production but an overall economic system, not simply to make fictitious capital, finance capital, without any reference to the industrial capital base, the earning of labor and industry together.

So there are two economic philosophies and I began the book by contrasting the dynamics of industrial capitalism with finance capitalism. And industrial capitalism in the United States, Germany, England, and every country where it took off, was to promote a public investment in basic infrastructure monopolies in transportation, communication, education, healthcare.

The idea is that if the government would provide these basic services and basic human rights at subsidized rates – or freely, as in the case of education and healthcare – then employers would not have to pay labor a high enough basic wage to make labor pay for healthcare – as in the United States where 18% of GDP is for healthcare – or to pay for education, the 1.7 trillion that goes for student debt in the United States, not mentioning the education that is not debt-financed.

Finance capitalism basically sought to break away all of the public infrastructure. Most financial fortunes and financial fortunes in history were made just in the way that Zola had described, by prying thefts from the public domain.

But the financial capitalism doesn’t say… You don’t have to steal it; you actually make it your policy, giving away the financial domain in the way that President Yeltsin gave away all of Russia’s natural resources, public utilities, electric companies, anything that yields an economic rent that can be just easy income without any investment. And you financialize it.

You’ve had, for the last – really since the 1980s, but even since World War 1 – this movement to prevent industrial economies from being low cost. But the objective of finance capitalism, contrary to what’s taught in the textbooks, is to make economies high cost, to raise the cost every year.

That actually is the explicit policy of the Federal Reserve in the United States. Turn over the central planning to the banking system to essentially inflate the price of housing, with government guaranteed mortgages, up to the point where buying a home is federally guaranteed up to absorbing 43% of the borrower’s income.

Well, you take that 43%, you take the wage withholding for social security and healthcare, you take the taxes; the domestic market shrinks and shrinks. And the finance capital strategy is exactly what it is in the United States today, in Europe. Shift all of the money away from the profits of industrial capital that are reinvested in making new means of production. To expand capital into a shrinking economy where the financial sector intrudes more and more into the economy of production and consumption and shrinks the economy.

The rest of the book all spells out how this transformation from industrial capitalism to finance capitalism occurred and how the fight between the United States and Russia, China, Iraq, Iran, and India – it’s really a conflict of economic systems. There’s no rivalry because they’re not trying to do the same thing. The objectives of the U.S. and Europe are completely different from the economic objectives of Eurasia. It’s a war of economic systems. And that’s why the United States is trying to prevent other countries from following the same path to industrial prosperity that made the United States, Germany and other countries originally rich.

So you have on the one hand a high productivity, high standard of living economy that used to be in the West and is now in Eurasia, as opposed to an economy of austerity planned by the IMF and central banks, as you’re finding in Europe.

Question | Virginia Cotts

[00:06:38] Luke Parcher: Fantastic. Thank you for that. First here we have Virginia Cotts, one of the people helping us backstage, has a question – if Virginia wants to come on screen and ask.

[00:06:47] Virginia Cotts: Michael, I’m not an economist. Can you explain debt deflation – but also how debt siphons money away from the real economy.

I once heard you say that the finance sector is the overhead of the real economy. I think these questions are related? If you could explain that.

[00:07:09] Michael Hudson: Well, the classic discussion of debt deflation was in Volume 3 of Capital, by Marx. And Marx said that debts tend to grow by compound interest.

He gave a citation of everybody from Martin Luther onwards about how any interest rate is a doubling time, it doubles in a given number of years. And it grows exponentially in an up-curve, like X equals Y squared. But the economy grows in the shape of an S-curve; it tapers off.

And one of the reasons that it tapers off in the business cycle is that as the cycle gains momentum, people go further and further into debt. And if you have to pay debt to a banker, if you have to pay student loans, if you have to pay credit card debt, if you have to pay mortgages on rising house prices, then the money you pay to the banker is not available to be spent on goods and services.

So as you have the debt ratio growing in every economy, that crowds out the ability to spend your income on goods and services. So right now many graduate students – you graduate from school, you have a student debt, and you have to live at home with your parents because you can’t get a mortgage to buy a house because the banks say, “Well, you’re already paying so much of your income for student debt that you don’t have any money left over to buy a mortgage, so you can’t buy a mortgage.”

Right now, you’re having the debt-ridden American economy being squeezed. More and more money is paid, not only for debt, but also for other overhead, like healthcare and various monopoly services that are not available to buy goods and services.

Debt deflation is when the growth of debt exceeds the rate of growth of the economy. And that’s true of every economy. The most sophisticated mathematical models that I’ve seen were the ones that were taught to every student in Babylon in 1750 BC.

We have the models that they were told. They say, how fast does a debt at the going rate of interest, at 20%, double? Well, it’s five years. How long does it take to redouble? Well, that’s 10 years. How long to quadruple? Well, that’s 15 years. You see how fast it is. They also would have students calculate the growth of a herd of sheep for instance, and it would all taper off. And when Assyriologists began to translate these cuneiform tablets, they thought, well, this must be an actual report of how the herd actually grew.

But then they found out that the Sumerians already in the third millennium had quadratic equations and very sophisticated mathematics. The mathematics that they used 5,000 years ago were far in advance of what the National Bureau of Economic Research uses.

The National Bureau here is officially in charge of explaining when there’s a recession, when there’s a boom, and explaining the business cycle. The basic theory was outlined and traced by Joseph Schumpeter. It’s a sign curve going up and down regularly, up and down. And the whole philosophy of the National Bureau is a right wing anti-government philosophy saying the economy has automatic stabilizers.

It can never get out of balance because the free market is always going to prevent any kind of chronic downturn. If you have a boom, well, prices will rise and that will cut into profits and that’ll slow investment. And that’ll means that wages will fall until it’s more profitable to begin employing labor again. And you’ll have a recovery, and things go on and on and on, like a sign curve, at a given frequency, forever and ever.

Well, what this deliberately leaves out of account, deliberately expurgates, is the fact that every recovery in the United States and every other Western economy since 1945, has occurred with a rising level of debt. And as debt grows each time, each recovery has been slower. And the reason it’s slower is because as the volume of debt rises, this leaves less and less income available to spend on goods and services. And so, the so-called recovery is weaker until finally it grinds to a halt.

Well, Ricardo anticipated something like that in 1817 in his Principles of Political Economy. He said: well, look at what’s going to happen to land rent. If we don’t prevent the landlords from being the planners of the economy, then the more and more population increases, the price of food will rise, the rents to the landlords will rise more and more until the entire economic surplus is paid for rent and there won’t be any opportunities available to industrial employers. And Marx said, well, this was the Armageddon of capitalism.

In Ricardo’s day, people didn’t borrow to buy housing. It was still hereditary landlords. If your ancestors conquered England and killed enough Englishmen to become aristocrats, you’d inherit it and you didn’t have to borrow. But now that real estate has been democratized in the United States, England and Europe, you have to go into debt in order to buy a house.

And the largest amount of debt in every economy is for real estate, which accounts for 80% of bank loans in the United States and England. Essentially, if you want to buy a house you go to a bank they’ll calculate — well, here’s the rental value of that house. The winner, if you’re trying to bid for a house or an apartment against somebody else, the winner is the buyer who promises to pay the most for the property by taking out a bank loan that absorbs most of the rent as interest. So today, the rent that Ricardo said was going to drive industrial capitalism to a halt, is turned into interest. So it’s the rise in interest that is the Armageddon of industrial capitalism driving the economy to a halt.

I chart most of these in my book Killing the Host, where I give a history of compound interest. But basically the Western economies are all subject to debt deflation today.

And that’s why they’re shrinking. And living standards here are not rising and the economy is not growing, in contrast to China, Russia, Iran, India, and the other countries that don’t have this kind of financial sector doing their planning.

Question | Luke Parcher

[00:13:47] Luke Parcher: I was hoping you could expand on a point you actually mentioned just before we went live, distinguishing between different kinds of debt and which kinds of debt are parasitic and need to be rid of and which ones do not. Can you just quickly distinguish between different types of debt?

[00:14:00] Michael Hudson: Well, in textbooks that students read, corporations will borrow from a bank and they will use this borrowing to build a factory, and to buy machinery, and to produce something.

And the profits will be paid – shared 50/50 or so – with the creditor. So a productive debt is debt which, actually, enables the creditor to repay the loan with the interest and still keep something for himself. Banks don’t lend money to build factories. The stock market does that. The money the banks lend is unproductive debt.

Unproductive debt is when the debt doesn’t enable you to earn more money to pay the creditor. In an unproductive debt, you have to earn the money elsewhere and take money that you may earn as wages or profits and pay the bank. And it’s your loss. It’s a zero sum game, not a positive sum game.

Now this distinction between productive and unproductive debt was built into Sumerian and Babylonian laws. Only unproductive debts were canceled under the Jubilee year the rulers announced. Their word was, andurarum and, the Hebrew, cognate was deror and that was the word used for the Jubilee year.

It meant the rural debts – that when there was a crop failure, and the borrower could not pay the advance of the land rent and the other means of production. Obviously, if the borrower couldn’t repay because there was a crop failure, or a drought, or a disease, or a flood, then the debts were wiped out because that debt did not enable anyone to repay.

And if you didn’t cancel the debt, then the poor cultivator would be forced into a debt bondage to the creditor. And if he did that, then his labor would belong to the creditor and he couldn’t serve in the army. He couldn’t go to work on building public infrastructure. The business debts were all left in place. Debt denominated in silver were left in place and not canceled. The debts denominated in grain were canceled.

Well, in the 12th and 13th century, crusades flooded Europe with money. The Christian Church saw that commerce was reviving. You needed credit. The church theorists said, okay, there’s a productive debt. You’ll make loans to a merchant to trade. He’ll have the money to repay you, that’s productive. But, a debt to a consumer who can’t, is usury. And so ancient languages had no words to distinguish interest from usury.

But the churchmen said, okay, usury is unproductive debt. Interest is a productive debt. Those two words, those were the original meanings of the distinction between interest and usury. That’s been eradicated today when everything is considered productive and part of the free market. And, if it makes the billionaire class rich, it’s productive. That’s basically the thing today.

And the only debts that are supposed to be canceled are debts that the financial sector owns. The banks don’t have to pay the billionaires. Only people with less than a billion dollars have to pay debt. The poorer you are, the more debt you have to pay. They’ve reversed the whole last thousand years of Christian morality as the church has become privatized and financialized.

Question | L Lewis

[00:17:21] Luke Parcher: Fantastic. We have a question here in the chat. This is from L Lewis. It says China has opted for industrialization and the U.S. corporate class clearly has not. Why is the U.S. so belligerent if it doesn’t even want an industrial system?

[00:17:35] Michael Hudson: Because it doesn’t want any other country to have an industrial system. Just like the West fought against communism threatening a new social system after the 1917 revolution, America’s terrified that if China can succeed by following the exact same policy that the United States got rich on in the late 19th century, then they might try to make America rich. And, oh my God, if they do that then there’s no more free lunch for the billionaires.

This is life and death for the billionaires. They make their money by exploiting the economy without producing. The Chinese billionaires make their money by producing and exploiting the economy. But they also produce a lot. And then they have to give up much of what they exploit. So the United States doesn’t want there to be any success in any country achieving prosperity in a way that doesn’t siphon off all of the income to the 1%.

Question | Andy Kennedy

[00:18:28] Luke Parcher: And we have a question here from Andy Kennedy.

[00:18:32] Andy Kennedy: Michael, I believe that you coined the phrase monetary hegemony. I believe it was in Super Imperialism, a book that you wrote a while back. But I think that’s something that a lot of people really have a hard time grasping what that even means. Can you talk a little bit about how the U.S. dollar hegemony has been a large part of why the U.S. became de-industrialized.

[00:19:01] Michael Hudson: Well, that is what my book, Super Imperialism, was all about, that I published in 1972. Dollar hegemony really began in 1972. Hegemony is a word that I can never really work into conversation very easily. It was actually Henry Liu that emphasized that term. He’s a friend of mine and we were colleagues for many years. The dollar hegemony means the United States can issue dollar bonds, IOUs, and it never has to repay them. If we run a balance of payments deficit in the United States, the dollars end up in the foreign central banks. Most of the U.S. balance of payments deficits since the Korean war have been for military spending.

While America is spending money on creating military bases all over the world, these countries will end up with the dollars that we spend to build the bases and buy off client oligarchies. And these dollars are turned over to the local central bank for domestic currency. And the central bank is going to say, “What do we do with the dollars?” Well, they will tend to hold the dollars in the form of buying a U.S. Treasury bond because central banks aren’t supposed to take risks.

So they will essentially buy the Treasury bonds and the United States has no intention of ever paying the Treasury bonds. How is it going to pay? It was paying in gold until 1971. So when the United States would spend money in Vietnam, the dollars that were spent in Southeast Asia, in Japan, in other countries, would be sent from Vietnam to their head office in Paris.

And General de Gaulle would say, “Well, here are these dollars. Now give us gold.” And the U.S. gold stock was going down and down and down. The American strategists worried that this was going to really hurt the country’s ability to dominate the world. So when they went off gold in 1971, everybody thought that this was going to end American financial leadership.

Instead, it was a great increase. It created dollar hegemony because there was nothing for foreign central banks to hold their reserves in except U.S. Treasury bills, Treasury bonds. In other words, Treasury IOUs. So the more money that America would spend abroad in a balance of payments deficit, this money would end up being recycled to the United States in the form of Treasury securities. And so it was actually the balance of payments deficit by military spending that helped finance the U.S. domestic budget deficit. Other countries really didn’t have an alternative. And so when the United States took the lead in creating the Eurozone, it made sure that the Eurozone would never make the Euro an alternative currency to the U.S. dollar because it limited the Eurozone’s ability to run a budget deficit to just 3% of GDP.

Well, what that means is that when Europe goes into a recession and needs to increase government spending like the United States does when it’s in a recession, or like the United States is doing today, running a budget deficit way in excess of 3% of the GDP, Europe is not. So there are not enough Euro bonds by the central bank to ever become a rival for the United States dollar.

Well, all of this is now being changed by Russia and China that they have discussed for the last few years. “In order to stop U.S. hegemony, we have to avoid financing our own military encirclement by lending to the U.S. Treasury that turns it over to the military industrial complex and Pentagon to build bases here.So we’re going to have an alternative to the U.S. dollar.”

Well, they were talking about it – Russia, China, other countries – really for five years. And amazingly enough, the end of dollar hegemony occurred last year when the United States itself said if any country pursues a policy that we don’t like, we can grab all of the dollar reserves that they hold in the United States.

We can grab all of the Treasury bonds they hold. We can just take them. All the bank deposits they have, we can grab. They grabbed that of Venezuela first. They grabbed that of Iran. They grabbed that of Afghanistan. And then they grabbed the $300 billion of Russia. So now the United States has told any country, if you do anything that we don’t like, if you do not let our companies buy control of your economy, or if you try to sue one of our oil companies that pollutes your land, we will grab all of your money and you’ll be isolated.

Well, this ends other countries’ ability to finance the American empire anymore. Other countries are terrified now. If they’re all saying “Let’s not denominate our trade in dollars. Let’s not use the dollars. Let’s use each other’s currencies. We will finance other governments’ treasuries.”

And these treasuries that they’re financing – between China, Russia, Iran, India, and their neighboring countries – are loans to help their treasuries build infrastructure and internal improvements to actually increase the economy growing. Well, the United States itself has brought this about by all the sanctions that it’s imposing. It’s an example of the self-defeating character of the U.S. strategists.

Fortunately, none of them understand how an economy actually works anymore than they understand how military strategy really works. So we’re having armchair amateurs essentially ending a whole system that was giving America a free lunch for the last 50 years.

Question | Jordan S

[00:24:54] Luke Parcher: So we have one here in the chat from Jordan Soreff. He asks, how do you see the interaction between major shareholders of large financial institutions and major shareholders of industrial enterprises? Do you see a lot of common ownership between these kinds of institutions? And if so, wouldn’t they collaborate in order to avoid starving industrial enterprises of access to credit and guarantee some basic form of growth, not only for financial institutions, but also for industrial enterprises.

[00:25:20] Michael Hudson: Not at all. They’re collaborating in destroying the industrial sector. They collaborate in turning industrial corporations into financial firms. and when you turn the management of a corporation away from the engineers and turn it over to the chief financial officer, the chief financial officer says, “Our job is not to increase our industrial production. Our job is to increase the stock’s price. And we can maximize the stock’s price by, instead of spending on research and development that’ll take years to pay off, we can spend our income on buying the shares.”

92% of the profits of the Fortune 500 are spent on share buybacks and dividend payouts, not on new investment. Once you financialize an industrial corporation, you’re trying to make money by financial engineering, not industrial engineering. And you do this by essentially using your income to buy up the share price. This is short term – and finance lives in the short term. The reason finance has no interest in building up industrial power is that that takes years and years to actually plan a factory, plan the production. You have to develop a whole marketing system.

How are we going to sell the product once we produce it? How are we going to distribute it? It takes a lot of planning. It’s beyond the ability of the financiers. You don’t need brains to be a financier. All you need is greed. And you really don’t need a business school. All you need is greed.

And greed is short term. I want it now. Greed is not long term planning. And so, you have a completely different mentality of a financial corporate leader, as opposed to an industrial leader. Someone like, let’s say, Henry Ford, or like the old type of industrial leaders that would try to increase the overall profits to expand production more and more. Today the objective is to shrink production more and more.

Question | Jonathan Kadmon

[00:27:18] Luke Parcher: And we have a question here from Jonathan.

[00:27:21] Jonathan Kadmon: There’s a concept you mentioned in the book that’s also very near and dear to my heart. The commodification of essential goods and services, and extortionist incentives that come when you…

[00:27:32] Michael Hudson: Is that the title of a book?

[00:27:33] Jonathan Kadmon: No, it’s definitely a theme you touch on a bunch of times in your book.

[00:27:37] Michael Hudson: Oh, okay.

[00:27:37] Jonathan Kadmon: And I was hoping you could talk a little bit about how the hostage situation created by commodifying things like housing, healthcare, food, transportation, fuel, things like that – that people need rather than want – is used to extract rents and siphon wealth out of the productive economy to service the wealth demand of the FIRE sector [Finance, Insurance, Real Estate]

[00:28:00] Michael Hudson: Well, the free trade ideology that backs monopolies says that all markets are a function of choice. But the way to control a market is not to give the consumers a choice. And when you say hostage, what that means is people don’t have a choice between whether to eat or to pay a bank.

If they have to buy food or if they have to buy medical care, they have to pay whatever the going price is. Anatole France said that the rich person was as free as the poor person to sleep under the bridge when he didn’t have a house. So the objective of rent seeking is to essentially create a situation where people have no alternative but to buy the service or the good that you’re producing.

If they have no alternative, then you can charge whatever you want. This is the case with most public infrastructure. If you want to mail a letter, you have to pay whatever the going postage is, or whatever parcel service costs. Well, this is why, for about a thousand years leading up to the late 20th century, all governments kept basic services in the public domain – the post office, education, healthcare. You don’t want to privatize them and leave them to the market because if you leave them to the market, then it really isn’t a matter of choice at all.

It’s a matter of letting a monopolist take something that everybody needs, no matter what the price, and charge as much as the market will bear. And that’s a rent-seeking monopoly. That basically is the philosophy that Margaret Thatcher, Ronald Reagan, and the free marketers developed since the 1980s, when you had a privatization of basic needs, especially in housing. And the most important utility that’s been privatized of course has been money and credit creation – the banking system. What has enabled China to avoid the financialization that’s occurred in the United States is because the Central Bank of China is run by the government, not by a financial oligarchy of bankers that get together to run the credit system for their own benefit. But if the government treats money as a public utility, everybody needs money, everybody needs credit, and the government will provide the credit as needed for the economy to grow.

And if the economy has a slowdown, or if a company runs into a financial problem, if you’re the government as a creditor, you can write down the debt. In the United States, if you’ve made loans to a company like General Electric and all of a sudden it can’t pay, the company either goes bankrupt or begins to sell off its assets piece by piece to other people and you have industry being turned into gentrified luxury housing.

So the same thing with healthcare. If you privatize healthcare, everybody needs to go to the hospital. Everybody needs doctor care. If you privatize it then in the United States, 18% of your GDP is going to go to healthcare. The objective is to make healthcare as inefficient and cheap as possible to maximize the profits of the health insurance companies. And the sicker you get, the more money they make.

Also, by the way, the sicker you get, the more GDP goes up. GDP goes up because you have to spend more money healing yourself. So, that’s, a growing part of the American GDP – along with rent and debt service and interest. Well, if you keep healthcare in the public sector, the public sector is going to try to actually keep people healthy instead of sick. And they’re trying to minimize the expense of getting sick so that you leave more money in the hands of households to spend on the real economy of production and consumption, not on giving money to the monopolies.

But in the United States the main utility beside money that’s been privatized is government. Under the Citizens United ruling, the government is now really up for sale and auctioned off to the highest campaign contributors. In the Democratic Party, for instance, every Democratic representative has to raise a given amount of money from campaign contributors to give to the Democrat National Committee.

So whoever can raise the most money gets to be the committee heads. Well, you’ll have the pharmaceuticals industry giving a lot of money to some representative they want to be head of the health committee. You’ll have the bankers giving money to whoever they want to be the head of the banking committee and so on. So, the function of government itself once it’s privatized is to make money for the donor class, which basically is the financial class and the monopoly class that finance creates. Banks have always been the mother of monopolies and the financial sector’s largest business market is in creating monopolies. So, you have basically the privatization of monopolies.

And the monopoly rent of these monopolies is used for paying interest to the banks that finance the corporate raiders, or whoever wants to take over and buy these monopoly privileges.

Question | Luke Parcher

[00:33:14] Luke Parcher: We have a question here from Paul Birtwell. Paul, go ahead.

[00:33:18] Paul B: Hi, Dr. Hudson. Could you briefly touch on the concept of economic rent and unearned income as well as how the establishment became established by conquering Europe, privatizing the commons all the way up through colonialism, and how they use all these little privileges through copyrights, patents, formula, and it’s not really through effort or innovation, but it’s through rake off.

I remember you in an interview, I’m paraphrasing, saying something like: For the crime of being conquered, the 99% and all of the descendants are obligated to take care of the 1% and all of their descendants into perpetuity.

But it would be great if you could touch on those historical elements because most folks think, “Hey, these folks that are really rich are smarter, they worked harder.” And as we know, it’s not based on effort or individual contribution but rather just milking society.

[00:34:16] Michael Hudson: Well, it’s very hard to answer that question very briefly in a question and answer. I’ve written two chapters of the Destiny of Civilization describing exactly what you’ve asked: economic rent. All classical economics – from Adam Smith through Ricardo, John Stuart Mill, Marx, Alfred Marshall – was all about value and price theory in order to segregate how much of the price is not reflected by a real cost of production. Economic rent is unnecessary income.

Economic rent is what you’re able to charge more than just the cost of producing goods and service with a profit. It’s “What is a free lunch?” And the free marketers say, “There’s no such thing as a free lunch.” That’s what Milton Friedman said. But a rentier economy is all about a free lunch. The concept of economic rent in the 19th century was aimed at landlords because they inherited the land. The land does not have a cost of production. And yet, if you have an ownership right to the land, a privilege of legal ownership of the land, you have a legal boundary and you can charge rent without any effort of your own.

John Stuart Mill said economic rent is what landlords make in their sleep. They don’t have to make a productive effort. Well, actually a theory of rent went way back to the churchmen in the 13th century describing what is a fair return to bankers. The economy needs credit, all economies work on credit, traders need credit. They need the money exchange from one currency to another. The value of banking services is the cost of living, the cost of doing business, the cost to have a certain lifestyle that’s becoming of a banker.

But everything that’s over and above normal living prosperity and costs is called usury. That’s not a valid cost. And so that was deemed illegal already in the 13th century. Well, Ricardo in the 19th century used the landlords as the main rent recipients of the hereditary landed aristocracy. Rent is what a landlord would get just for the ownership privilege of having a land. And so if you go out and buy a house today and the price of land goes up because the city will increase bus service or a transportation service. For instance, in New York City, a few years ago, they extended and built the Second Avenue subway that went uptown, along Second Avenue. Real estate prices all soared for real estate on Second Avenue. That was a free lunch.

The landlords didn’t do anything at all to increase the real estate rents that they were charging. Rents went way up. If you lived on Second Avenue or First Avenue, even Third Avenue, you had to pay much higher rent because you no longer had to walk half a mile to get to the Lexington subway that was very overcrowded. You could have the nice uncrowded, Second Avenue subway.

And yet, this rent increased not by the expenditure of any cost. It was rent without value. It was the price of housing without cost value. So rent is the unnecessary element of price over and above what it actually costs to produce something. And rentier income is the income that is unnecessary.

To actually pay a industrialist for building a factory… industrialists would be happy with making the normal rate of profit. But if you have a special technology monopoly like the drug companies, then you can make super-profits. So rents are super-profits, basically. That’s the difference. Anyway, that’s to your question.

Question | Roxanne D

[00:37:58] Luke Parcher: Right on. We have, a question here from Roxanne Devereaux. She says, if you’ve answered this, maybe just elaborate on your answer, but in a perfect world where government actually served the people, what would a debt jubilee look like and how could it reverberate through society?

Most examples I’m familiar with happened before the industrial revolution.

[00:38:14] Michael Hudson: Well, the best example is the German financial miracle of 1947, 1948, the allied monetary reform. All internal debts were canceled except for people’s bank accounts up to a given amount and except for the money that employers owed their employees.

And the reason is that most of the wealth, most of the bank deposits, most of the creditors’ claims, were by the Nazis. And the American occupation said, well, we don’t want the Nazis to get rich. So the good thing about canceling debts is you cancel the savings of bad guys. In 1947 it was the Nazis; today it’s the 1%.

If you cancel the debts that I’ve said should be canceled – the sort of bad debts that are not necessarily production – then you cancel all of this vast accumulation of savings by the 1%. For instance, if you cancel student debts, that would free income for spending on democracy.

If you cancel all the debts that US banks owe to the offshore banking centers in the Caribbean, Panama, Liberia. All of this is flight capital. This is criminal capital. Cancel out all the debt of criminal capital and fraud. When Greece was running into its financial crisis seven years ago, Greece owed 50 billion euros of debt that it was trying to write down.

And the IMF produced a list called the Lagarde List that had deposits of Greek crooks and tax evaders in Switzerland were $50 billion. That 50 billion could have been wiped out. One of the first debt cancellations that went wrong was in Sparta in the third century, BC, under Agis and Cleomenes. When they canceled the debts, the people who wanted to cancel the debts were people who’d bought land on credit and they wanted their debt.

They wanted to own the land free and clear and cancel the mortgages. So some debts you don’t want to write down. If you were to write down mortgage debts, Donald Trump and real estate speculators would be the richest people in the country. So you don’t want to write down their debts.

Their debts will remain on the books. But if they were written down, well, first of all then, their debts are the banking systems assets. So Citibank would be even more insolvent than it is already and the banks would go under. They would be taken over by the public sector because if you have the mortgage debt wiped out, there’s still economic rent. Because people are willing to pay more money for a well-situated property that would, uh, in place of the banks getting the rental value as mortgage debt, the government would get the same rental value in the form of a land tax. That was what classical economics was all about. That was Adam Smith. That was John Stuart Mill. That was the whole reform movement of the late 19th century. So you want to cancel the bad debts, but you don’t want to make debtors who are just speculators rich in the process.

You want to make sure that you only cancel the bad debts and you don’t create a new rentier class. The idea is to look at the economy as a system and see what should the government receive as economic rent. And it can decide what is it going to receive for healthcare. The government… if the government took over the healthcare industry, it probably would not charge the prices that healthcare charges today. It would charge less. Same thing for housing. If housing were run like England ran its council housing before Margaret Thatcher, it would be very low. In Germany, Germany pays only 10% of its average family income for rent, not 30 or 40% as in the case of the United States.

That’s what used to make Germany, until last month, so competitive an economy. So, you’d restructure the economy so that it would only have debts that were socially necessary to keep the economy operating. Debts will begin to grow all over again.

Debts will always begin to grow over and over again. If you don’t ban interest, you permit debts to grow, but when they get so problematic that they threaten economic growth, then you have to write them down to a level where they will no longer prevent economic growth from occurring as they’re doing today.

Question | Doug G

[00:42:45] Luke Parcher: So we have one from Doug Greer here. He says many people seem to confuse the lessons of MMT with the super imperialism of the US dollar being the reserve currency of the world. Is the ability to create dollars to finance domestic needs of the US, like healthcare and infrastructure, dependent on the US dollar being the reserve currency?

Can you clarify?

[00:43:05] Michael Hudson: They’re completely separate. Any country can use its credit creation, either by the central bank or by commercial banks, to create credit. It doesn’t have to be linked to the balance of payments, except that if a country’s running a balance of payments deficit its currency will fall, unless it can balance the payments somehow.

So they are different questions.

Question | Fabiano D

[00:43:30] Luke Parcher: We have one from Fabiano D. Being that politicians, therefore government, are in the pockets of the rentier class, how do you think we could get rid of such rentier influence in order to implement socially oriented policies?

[00:43:43] Michael Hudson: That has never happened without a revolution. That’s the problem. How do you get rid of them? Well, I don’t see any way for the United States to get rid of them. It took a revolution in China. It took a revolution in Russia. That’s the problem right there.

You did have the beginning of a peaceful revolution in England in the 19th century and, leading to a constitutional crisis in 1909 and 1910, when the House of Commons actually passed the land tax and the House of Lords, being the landed aristocracy, canceled it. That caused a crisis.

And the upshot was the House of Lords was never, again, going to be able to negate a revenue act passed by the House of Commons. So that was actually a peaceful resolution of a constitutional crisis. Then World War I came and changed everything. But today I don’t see that kind of a peaceful resolution occurring in the United States.

They’re not going to repeal the Citizens United act, and, from what it looks like to me, the economy is going to get more and more highly squeezed and more polarized between the 1% and the 99%. I would say it’s a class war except finance isn’t really a class because everybody is a creditor as well as a debtor in some sense or another. So it’s really a financial dynamic against the rest of the economy. One of the points that Marx made in Volume 3 of Capital was that finance grows by purely mathematical laws of its own, having no relation to the growth of the economy. It’s an autonomous economic system.

And I think that autonomous economic system is independent of the government here and yet, unless you have a study of economics as an economic system – understanding what’s causing the polarization and the poverty in the United States – you’re not going to be able to have a reform movement to change the system.

The role of economics departments is to dumb down the understanding of the economy. You’re not going to have any kind of a peaceful reform movement here.

Question | Cristina

[00:45:47] Luke Parcher: We have a question here from Cristina who asks, what are the steps we can take to fix the housing crisis? Kind of a broad question, but if you have any policy prescriptions there, that would be great.

[00:45:57] Michael Hudson: There’s very little that individuals can do. The 19th century dealt with this question increasingly. And their solution was if you have a calculation of the land rent, as opposed to what it costs to build a building – we all know that if you build a building the contractor and the builder or developer have to make a profit, but if the government will tax the land rent, then it will not be available to the banks to charge as interest.

So, if you tax the land rent, then the land rent is not going to be capitalized into a bank loan, and housing prices will be kept down to the actual cost of construction plus normal profits. And as housing becomes more desirable, or as the economy becomes more profitable, or as cities build more Second Avenue subways and the rental value goes up, the taxes will go up. That will prevent this increased rent from taking a financial form and will simply be the source of a government revenue. It requires a tax system to tax away the economic rent, so that housing does not reflect the speculation and the economic rent that is caused by the privatization that’s been occurring. Especially since 2008.

Question | Tim

[00:47:11] Luke Parcher: So this one is from Tim. Tim says one argument against de-dollarization is the liquidity and stability of the US dollar. For example, oil is based in dollars and many OPEC countries have their currencies pegged to the dollar, such that they benefit from a strong dollar. At this age, the transition into trade in local currency pairs against these advantages of dollar as reserve currency.

[00:47:32] Michael Hudson: Well, that’s exactly what this last weekend’s Shanghai cooperation meetings were all about. Any country that holds its central bank reserves in dollars has a stake and in wanting to lose the money. China has the largest dollar holdings of any government and its currency has gone down and down and down.

China’s willing to take a loss on this by moving out of the dollars. The solution is, as both President Xi and President Putin pointed out, we’re going to move out of the dollar so we don’t have a stake in the dollar. It can go up or down. It is not going to bother us. They’re not buying or selling to us anymore.

Anyway, they’re sanctioning us. So let’s go with what president Biden wants. He says, you go your way, we’ll go our way. Fine. Let’s go our own ways and use each other’s currency, and that way, it won’t matter. So, it won’t matter to them. If moving out of the dollar means that there’s less demand for the dollars and it goes down, what they’re gaining is freedom.

So, this is the price of their economic liberty from dollar diplomacy.

[00:48:34] Luke Parcher: We have another question here from Virginia Cotts.

Question | Virginia Cotts

[00:48:36] Virginia Cotts: Michael, I feel like we have… some people have a lot of nostalgia for the post World War II social democracies of Europe. I can’t remember if it was in your book or in an interview you described Thatcher’s process of privatizing in England. Could you talk about that? Because I didn’t know a lot of that.

[00:49:00] Michael Hudson: Well, Margaret Thatcher said that her greatest contribution was Tony Blair. And Tony Blair was an opportunist who got enough support from the United States to move the British Labour party to the right of the Conservative Party and do what Margaret Thatcher never could have done. By even privatizing the railroads, by being more viciously anti-labor, the social democratic parties in every country have been so pushed by what the CIA called “the mighty Wurlitzer of public opinion” – meaning bribes to the politicians – that they’ve financed the campaigns of neoliberals to pretend to be pro-labor, to pretend to be socialist, while actually they’re the far right wing of the political spectrum. I won’t call them fascist. But let’s just say there’s nothing the fascists would not like in the social democratic parties. So, here you have the most right wing parties in Europe are the social democratic parties. Way to the right.

I guess the most right wing neofascist party is, of course, the Greens in Germany that are the pro-war party. And anti-labor. But basically, there is no longer a real labor party representing the interests of labor. They’ve all been co-opted by demagogues. The social democratic parties in a way have been like the peace parties.

The first thing that every peace party does when there’s a war is they’re at the head of the pro-war patriotism parade. That was what Trotsky noted about World War One. The peace parties jumped on the bandwagon in Germany, Austria, England, America. Social democratic parties have done the same thing when there’s a neoliberal right wing corporatist financialization. They’ve all been persuaded to do it.

The equivalent was like what the Clintons did to the United States since the 1990s. In the United States, the Democratic Party is the far right wing party now. And I guess when I answered the question about what can Americans do to help the housing crisis… You cannot solve the housing crisis until you end the Democratic Party. You cannot solve the labor problem without ending the Democratic Party. Because that is the party of Wall Street. That is the party of the 1%. Its function is to make sure that there cannot be any left wing opposition to block the Republican Party’s program.

What Bill Clinton did, the Republicans never could have done. Backing Alan Greenspan and the right wingers in getting rid of the acts preventing banks from owning insurance companies and brokerage houses. Getting rid of the Glass Steagall Act. And no Republican could have done anything as viciously anti-black and anti-Hispanic as President Obama, whose policies are basically identical with those of the Ku Klux Klan.

Obama’s role was essentially to reverse the attempt by blacks and hispanics to become homeowners. His objective was to replace black home ownership and hispanic home ownership with ownership by private capital companies. His role in 2009 was to bail out the banks – the fraudulent banks that had written the junk mortgages – and to keep the junk mortgages on the hook to evict almost 10 million American families. And not fine the banks, not throw a single crooked banker in jail. This ended the hopes of the low income Americans – and especially the minorities – to have housing.

If you say, what can we do about housing? Well, if you’re black or Hispanic, you must avoid the Democratic Party like the plague. And you must come to terms with the fact that it was Obama that was the most anti-black president of the 20th century, except of course for Woodrow Wilson. The damage that he’s done has not been widely recognized here.

And, he has put in place a Democratic Party leadership that is so anti-labor, so white racist. and so pro-Wall Street that I don’t think it is reformable.

Question | Luke Parcher

[00:53:18] Luke Parcher: And just to build on what you were just talking about there, Michael, I’m kind of stunned by the extent to which people buy into the partisan false dichotomy in this country and seem to think there are all these massive differences between the parties.

And that obviously is an issue-by-issue thing, but I’m curious where you think that buy-in comes from and how we might be able to cut into it. The fear mongering about Trump is I think overstating the differences between Trump and Biden on these issues. Can you talk a little bit about that?

[00:53:43] Michael Hudson: Yes. The Republican Party’s role is to say to Wall Street, “Yes, please.” And the Democratic Party’s policy is to say “Yes, thank you.” But that’s basically it. You’ll notice, like in Ohio, the Democratic National Committee is backing a right-winger who is going to play the role of West Virginia Senator Manchin or Arizona’s Sinema. The Democrats want to make sure that it has enough Republicans running as Democrats, that if there’s ever a danger of promoting a bill that is good for the working class or the racial minorities or ethnic minorities, that you’ll have the Republicans running as Democrat to cancel it, to play the role.

There’ll always be many senators right behind Manchin and Sinema in the wings to prevent the Democrats from doing anything that does not serve the short-term immediate interests of their Wall Street bankers… Backers.

Question | Bruce W

[00:54:39] Luke Parcher: Rotating villain is a very real concept for sure. We have a question here from Bruce Wall who asks, which of the public banking and monetary reform movements do you support, if any? I have in mind Public Banking Institute, American Monetary Institute, the Alliance of Just Money, Christine Desan’s Just Money. What about figures like Robert Hockett?

[00:54:58] Michael Hudson: Well, I’m on the board of directors of the Public Banking Institute. Steve Zarlenga was a good friend of mine.

I was at all of his early conferences. So they both have very good ideas. And… I’m blocking out the name. Who’s the head of the public banking?

[00:55:15] Virginia Cotts: That’s not Ellen Brown, is it?

[00:55:17] Michael Hudson: Yeah. Ellen Brown. Ellen would be all in favor of many of the things I’ve talked about, but she doesn’t think that a debt cancellation is politically feasible right now. And of course, she’s right. So she’s said that, well, public banks can provide the model for what could be. The result of what happens if Obama would have let Citibank go bankrupt.

The Republican head of the FDIC [Federal Deposit Insurance Corporation] urged that Citibank, being run by crooks… but, Obama put an even bigger crook in charge. Geithner, who was working for his banker Robert Rubin, basically did not let Citibank go bankrupt because that would’ve wiped out the stockholders.

And as Sheila Bair, the head of FDIC, said, well, it was all about the bond holders. And Sheila said, if Citigroup would’ve gone under, then that meant the government would’ve had the biggest bank in the country, and it could actually run a commercial bank along making good loans instead of making loans to corporate raiders. Instead of making crooked mortgage loans and fake loans, it could actually make loans to help the economy grow. Well, she’s quite right. That would’ve been a good idea.

So she’s concentrated.on public banks for what they can do. And she said, at least by having a public bank, you’ll keep the deposits of the public sector – the government, the state agencies, and hopefully the local city agencies – in the public domain, out of the hands of, the commercial bankers and Wall Street, so that you can use the money for a good purpose.

So, I’m all in favor of what she’s doing. Steve Zarlenga at American monetary Institute was for the hundred percent reserve plan that was proposed in the 1930s. And that is, commercial banks would actually be reduced to the status of savings banks.

A hundred percent reserves. Could not create credit. They could only make loans from deposits. Of course, if they had a productive loan made, the government, the Treasury, would act as the depositor – simply increase the deposits in the bank to enable them to make productive loans.

And that also, in principle, is a very good idea. That’s why I supported that. And of course that was the program that was introduced by Dennis Kusinich in his presidential run. I was Kusinich’s economic advisor. So those are the two groups that I’m most familiar with and the most in favor of.

Question | Rasha 

[00:57:41] Luke Parcher: We have a question here from Rasha. What role does defining money play in shaping the economy? How do you define money? Is it a record of value transferred between economic actors or is it a commodity? If you agree that money is a record of value transferred between two or more economic actors, isn’t it possible to create money on demand by any two or more economic actors in a decentralized manner, as opposed to central private banks providing there is a scientific formula by which value of goods and services is assigned.

[00:58:10] Michael Hudson: Oh, my God. I can’t even begin to answer that. The jargon is so misleading. Money has nothing to do with value. Money is debt. That’s the opposite of value. It’s a transfer of debt among people, it’s not a transfer of value. You’re using a very right wing, quite frankly, a fascist economic terminology, maybe without meaning to. But it’s not value, it’s debt created out of thin air. It’s credit.

When you go into a bank and you take out a loan the bank doesn’t say let me see how much money I have on deposit to lend you. They will just write you a loan. They’ll create a bank deposit and in exchange you’ll give them an IOU. It’s debt, loans, that create deposits, not the other way around. Anyone who talks about money and value, you want to stop talking to them immediately. Because you know that it’s just going to be patter talk for propaganda.

Question | Tom

[00:59:03] Luke Parcher: So we have one here from Tom. Tom asks: all prices of all things for sale are not rising. Therefore, the term inflation is not what we are experiencing. For example, the market is working. Money is moving from those without oil to those with oil.

Why does no trained economist understand and label this a normal market redistribution period or some term listed in textbooks for reference? And why is the concept called inflation, which scares unknowing economists and today’s consumers who needlessly suffer from money famine, so poorly taught and so poorly understood?

[00:59:33] Michael Hudson: The question is so bizarre, I cannot answer it. It’s just how do you, how do you answer a swamp and straighten out what they’re saying to give them an answer? It’s a swamp. I can’t answer that.

[00:59:42] Luke Parcher: I suppose in general, what would you prescribe the price increases that we’ve seen today to?

[00:59:47] Michael Hudson: Very largely monopoly positions. The reason oil prices are going up is not because there’s an oil shortage. It’s because the oil companies find an excuse to use the newspaper reports that there will be an oil shortage at some point to raise the prices right now. Adam Tooze wrote a good article a few days ago, comparing the inflation in Europe to the inflation in the United States. In Europe, the price inflation is almost exclusively for energy and for oil and gas derivatives. In the United States, the inflation is much broader – it’s over the whole course.

Again, you want to look at the economy as a system. You don’t want to reduce everything to one-dimensional “here’s the price level”. You want to look at the multi-layered economy. What are the cost prices? What are the economic rents? What are the monopoly prices? What’s the tax system? You have to look at the economy as a system, not in a one-dimensional way. So, I can’t untangle all of the jumble any clearer than that.

Question | Paul B

[01:00:55] Luke Parcher: We have one here from Paul Birtwell again. Could Dr. Hudson touch on and acknowledge the validity of MMT? What do you think is the importance of MMT and how does it apply to this discussion?

[01:01:04] Michael Hudson: Well, I was on the faculty of the UMKC, which is MMT center for many years. I’m all in favor of MMT. The point of MMT is that just as banks create endogenous credit on their own computers, the government can create credit. The government doesn’t have to borrow money from the 1% or from bond holders in order to spend it; the government can simply print it as it did under the greenbacks.

The government can create its own credit. And there’s nothing wrong with running a budget deficit because a budget deficit does not have to be paid by taxpayers paying taxes. A government deficit can be funded by simply creating the money on your own computer – not by taxes. That’s the point that Stephanie Kelton has been making again and again in what she writes.

And that really is the essence of MMT. But of course the leading exponent of MMT was Donald.Trump, when he said deficits don’t matter, we can just create whatever we want. And I think, Vice President Cheney also said we can spend whatever we want. It doesn’t matter. George Bush said, you know, it’s all really fictitious anyway; we can do it.

The difference between Donald Trump and the Republicans and the MMTers is, we want the government to run deficits to actually spend into the economy. We do not want deficits to be run for $9 trillion to subsidize quantitative easing for the 1% to promote real estate prices and stock and bond prices.

We want them to actually employ workers and to promote full employment. So the difference is that the MMTers are basically in favor of tangible economic growth, not creating money bad MMT of Cheney and Donald Trump style.

Question | Luke Parcher

[01:02:51] Luke Parcher: Can you talk a little bit about how the IMF [International Monetary Fund] and financialization have contributed to what’s going on right now in Ukraine? I know that’s a little bit broad, but if you could tie in what we’ve been talking about here to the situation in Ukraine.

[01:03:02] Michael Hudson: The IMF’s job is to make sure that the economy is impoverished and that all the money that it gives is to support the currency – to enable the kleptocrats, Kolomoyskyi and others, to take the Ukrainian currency they have and transfer it into dollars and pound sterling at a high exchange rate.

So they will lend Ukraine the dollars – essentially to support the hryvnia, however you pronounce its currency – and enable the kleptocrats to make money and then pull the rug out from under them if any alternatives to the Nazis take power. They want.to make sure that, once the kleptocrats have emptied out the economy, they can let the economy collapse.

They’re of course backing the new labor law president Zelensky has pushed, abolishing labor unions, abolishing the rights of labor to negotiate, and making basically the most fascist labor law in any country’s history. So the role of the IMF is to support client oligarchy, to get their money out of a country before there is a possibility of a leftwing government coming in, and then to deny all credit and organize a currency raid on the leftwing government, to say, “You see, socialism doesn’t work”.

The IMF is one of the institutions that is the arm of American hegemony, preventing economic growth occurring outside of the United States. Essentially the IMF is a… it’s a small office in the basement of the Pentagon, run by the neocons, to make sure that other countries cannot have any policy that would not let American firms come in and buy their raw materials and their natural resources and their monopolies.

So, think of the IMF as a tool of the military, but much more right wing than any general would dare to be.

[01:04:55] Luke Parcher: Thank you so much, Michael. We really appreciate you taking the time today.

I also, once again, want to remind people to please go to realprogressives.org to learn more about us, or find our podcasts and articles, including again, Michael, as a guest on Macro N Cheese. With that, we will go ahead and call it a discussion here. Virginia, did you have anything you wanted to add?

[01:05:12] Virginia Cotts: Yes. I wanted to ask Michael where people can find his work.

[01:05:17] Michael Hudson: Well, Amazon, I guess, is the easiest place to go. It’s all available there.

On my website, michael-hudson.com. And you can go to that and join me on Patreon. I do have a Patreon group, and if you’re a contributor at a given level, then you get to talk to me directly every few months.

[01:05:36] Virginia Cotts: Well, we can all use support. Real Progressives also has a Patreon. So, support us all, please.

I just want to say, Michael, you wrote an article with the greatest title I’ve ever seen, which was something like the US Defeats Germany for the Third Time in a Century. I just thought that was such a perfect title. I think you wrote it right when the Ukraine war was beginning.

[01:06:02] Michael Hudson: Right. It was apparent what was going to happen at the very beginning. And I’m amazed that nobody else was writing about that. I’m not very good on military analysis. I can follow what Andrei Raevsky at the Saker says, and Moon of Alabama, and Andrei Martyanov. The one thing I can tell about military operations is the balance of payments aspects and how it all is spelled out.

[01:06:24] Virginia Cotts: Well… and you talked about how the three main sectors benefited.

[01:06:30] Michael Hudson: Yes. Oil is the key to American diplomacy. And I guess if we’re talking about American hegemony, it comes from America’s control of the oil trade. That was one of the reasons that America wanted to isolate first Venezuela, and then Russia, because if the only source of oil are companies controlled by the American oil majors, then…

Every economy needs energy to grow. And in every economy since the beginning of the industrial revolution, there’s a connection between the growth of GDP and energy use per capita. So I talk about the monopoly rent and the victim economy. If you can control oil then you can control, basically, the world economy.

That has been a key to the American policy. The Americans realized that if Europe cannot buy Russian oil anymore, or Venezuelan oil, then it’ll have to spend 10 times as much buying American liquified natural gas. This means the sanctions against Russia have ended German industrial supremacy. It has ended the German steel industry. It has ended German heavy industry.

They’re now going to be dependent thoroughly on the United States. And the euro is going to become a weakening satellite currency of the US dollar as a result of killing off the German economic and industrial leadership of the European economy, along with that of Italy and France.

[01:07:53] Virginia Cotts: Oh, thank you. I hope we didn’t abuse your generosity with your time.

[01:07:59] Michael Hudson: No. I assume if I said anything controversial, you’ll just take it out.

[01:08:03] Virginia Cotts: Oh, no, we like it. We will actually clip it and plaster it all over the internet.

[01:08:12] Luke Parcher: Oh… [laughs]

[01:08:13] Virginia Cotts: Michael Hudson isn’t controversial, is he?

[01:08:18] Luke Parcher: Well, you certainly don’t mince words, and we very much appreciate that about you. Michael, thanks again for giving us so much time today. And I want to give a brief shout out to Jonathan Kadmon, Andy Kennedy, and Virginia Cotts, who’ve been helping behind the scenes today to make this happen.

Thanks to all involved. Great.

[01:08:31] Michael Hudson: Thanks for having me. I liked the discussion.

US Diplomat: Collapse Will Enhance Reconstructing Lebanon Free of Hezbollah

November 8, 2022

Assistant Secretary of State for Near Eastern Affairs Barbara Leaf

Source: Al-Manar English Website

In continuation of the US intervention and siege policy in Lebanon, Washington portrayed a pessimistic image of the upcoming period Lebanese destiny.

Assistant Secretary of State for Near Eastern Affairs, Barbara Leaf, said the Lebanese will have to bear more pain before their country sees a new government.

She criticized Lebanon for not sealing a $3 billion loan deal with the International Monetary Fund, saying that Lebanon’s gas exploration is years’ worth of work and that there is no money in Lebanon’s banks, making the loan a necessity. Meanwhile, she failed to mention that the IMF loan was to come into effect only if Lebanon met certain conditions, which Lebanon rejects.

“Things will have to get worse before the public pressure mounts in such a way” that parliament selects a new president, Leaf said at an event hosted by the Wilson Center in Washington DC.

Leaf, Washington’s top Middle East diplomat, said “I can see scenarios where there is disintegration…where there is just an unraveling.”
She made her comments at the time Lebanon is left with a presidential vacuum after former President Michel Aoun’s term ended last Monday. The country grapples with a tough economic crisis, which was to a great extent caused by U.S. sanctions on Lebanon.

Leaf noted that Lebanon’s collapse will enhance reconstruction of the nation free of Hezbollah, adding that Lebanese security forces may lose control of the situation in the country.

Washington and the chaos in Lebanon… Predictions or plans?

Algeria’s economy one of the fastest growing, in continuous recovery

Oct 282022

Source: Al Mayadeen English

By Ahmad Karakira 

Despite the repercussions of the difficult global crisis that are still looming over the global economy, Algeria was able to control economic indices over the past three years.

The IMF highlighted that Algeria’s GDP growth rate is the fastest in the Western Mediterranean region.

The World Bank, in early October, indicated that developing oil exporters, including Algeria, are expected to witness an economic growth of 4.1% this year and 2.7% in 2023.

The International Monetary Fund (IMF) also forecasted that the growth rate of Algeria’s Gross Domestic Product (GDP) will score 4.7% at the end of 2022, one of the fastest-growing rates in the world.

Based on its forecasts for global economic growth rates, the IMF published last week an interactive map that divides growth rates into five descending categories, from fastest to slowest, in which Algiers was placed in the second category.

It topped the Maghreb region economies in terms of growth, compared to Morocco (0.8%), Tunisia (2.2%), Libya (-18.5%), and Mauritania (4%).

The IMF highlighted that Algeria’s GDP growth rate is also the fastest in the Western Mediterranean region, which includes Italy (3.2%), France (2.5%), and Spain (4.3%).

The United Nation’s financial agency had expected in its recent report that Algeria’s economy will be one of the fastest-growing Arab economies in 2022.

The IMF placed Algeria among the six Arab economies that will record the highest growth rates in the mentioned period, despite the effects of the global economic slowdown, in light of the continuing crisis of the war in Ukraine and the Covid-19 pandemic.

According to the IMF’s World Economic Outlook, Algiers is set to achieve a growth rate of 4.7% by the end of the current year, ranking second in North Africa after Egypt (6.6%).

In an exclusive interview for Al Mayadeen English, Ezz El Din Dedan, an Algerian economics specialist, said that despite the repercussions of the difficult global crisis that are still hanging over the global economy, Algeria “was able to control economic indices over the past three years, despite the collapse of energy prices.”

Dedan pointed out that “with the recent recovery of oil and energy prices globally amid the war in Ukraine, there is a significant increase in Algeria’s foreign exchange earnings, and this is what gives the country a margin of greater financial movement in economic decision-making.”

Dedan added that the Algerian government presented figures on the high levels of foreign exchange available in Algeria with expectations of reaching 56 billion dollars by the end of 2022 and a trade surplus of about 18 billion dollars.

According to the economics specialist, “These figures have not been recorded in Algeria for almost 10 years, since the beginning of the oil price plunge in 2014.”

Historical rise in non-hydrocarbon exports

Despite depending on oil revenues from the hard currency by 98%, Dedan said, Algeria “has sought to diversify its economy through a set of measures that have been taken over the past years, yielding a historical rise in non-hydrocarbon exports, where Algeria was able to increase these exports from 4.7 billion dollars last year to 5 billion dollars until the end of last September.”

Algeria, a reliable energy supplier

In a related context, the Algerian state hydrocarbons firm, Sonatrach, expects the total level of gas and oil exports to reach 50 billion dollars by the end of this year.

Algerian Prime Minister Aimene Benabderrahmane pointed out that Sonatrach had put in place an “accelerated program” to bump up output.

Algiers has helped Europe diversify its energy supplies by pumping more gas to Italy, which, in July, signed a deal to import billions more cubic meters via an undersea pipeline from the North African coast.

The North African capital has seen a series of high-profile visitors in recent months seeking to boost energy exports, as Europe struggles to replace Russian supplies.

European Council President, Charles Michel, said in September during a visit to Algeria that the North African country is a “reliable energy supplier.”

In August, French President Emmanuel Macron welcomed moves by Algiers to help “diversify” Europe’s gas supplies, and in July, Italy’s Eni, US major Occidental, France’s Total, and Sonatrach signed a $4 billion oil and gas production-sharing contract that Algerian President Abdelmadjid Tebboune said would provide Italy with “significant volumes of natural gas.”

In addition, Algerian Energy Minister Mohamed Arkab had indicated at an energy summit in Algiers that his country was examining the possibility of laying high-voltage cables under the Mediterranean to export electricity to Europe and that Algeria hopes to produce as much as 50% of its electricity from renewable sources by 2035.

It is noteworthy that before the Ukraine war, Algeria provided the European Union with some 11% of its gas needs, against 47% provided by Russia.

First non-European country to introduce unemployment grant

Asked about whether Algeria’s current economic growth will help decrease the 15% unemployment rate in Algeria, economics specialist Ezz El Din Dedan clarified that “there are relative estimates regarding unemployment in Algeria. About 60% of the composition of the Algerian economy is based on Algerians that work in the black market.”

Dedan explained that the official figures do not represent the true proportion of the working class in Algeria as “most of the Algerian youth prefer not to declare their work, and the figures provided by the National Statistics Authority do not include young people who prefer to work in the black market.”

According to the Algerian specialist, “It is certain that unemployment rates in Algeria were not updated for two years, but there are some measures taken during the past months, such as the unemployment grant approved by the Algerian authorities,” highlighting that Algeria is the first African country to launch this grant of about $100 (£73) a month for unemployed youth, especially university students.

Algerian President Abdelmadjid Tebboune announced in February that the government will introduce in March unemployment benefits for jobseekers aged between 19 and 40, noting that there are over 600,000 unemployed people in Algeria.

Tebboune said Algeria was the first non-European country to introduce such a benefit.

Read more: Sonatrach discovers 3 new oil, gas fields in Algeria

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A Strange Thing Happened … with the development of a New Order

August 15, 2022

Source

By Francis Lee

‘’The best-known definition of financialization is that it involves the increasing role of financial motives, financial markets, financial actors, and financial institutions in the operation of domestic and international economies.’’ (1)

A picture containing indoor, floor, ceiling, metal Description automatically generated

In this dungeon – All that glitters is gold. Bank of England Gold Vault

The massive shift in the global system of industry and finance which had been based upon the Bretton Woods institutions – viz., the IMF (International Monetary Fund) the World Bank (previously known as the International Bank for Reconstruction and Development and the International Development Agency) which carried on regardless at the ending of the gold standard in 1971. Both the World Bank and IMF were based in Washington. Additionally, another Bretton Woods Institution – The General Agreement on Tariffs and Trade, was to become the World Trade Organization (WTO) in January 1995.

It was generally understood by all the actors that the objective was for firms to engage in the economy in order to produce goods and services with a view to further investment, growth, and profitability. This was the consensus of the time and raison d’etre of capitalism. However, this political unanimity began to change, quite fundamentally.

The massive shift as mentioned above was a step toward delinking the US$ with gold, when the US government guaranteed to exchange US$ for gold at the fixed rate of $35 per ounce. This effectively placed all the world’s currencies onto a gold standard backed by the US gold at Fort Knox. Many governments came to accept US$ as gold deposit certificates and chose to hold their international foreign exchange reserves in dollars rather than in gold.

The system worked reasonably well for more than 20 years until it became widely evident that the United States was creating far more dollars to finance its heavy military operations, firstly in Korea and then Indochina, and this combined with the domestic social spending which were part of Johnson’s Democratic party enmeshed in the ‘Great Society’ monetary splurge. What happened next was entirely predictable. Overseas holders of US$ began to take their dollars to the Fed’s bank window, but the Fed could not give them anything in return other than US Treasuries which are just a form of paper money! It was a French politician, Valery Giscard D’Estaing, who drew attention to this American ‘exorbitant privilege’. Pretty soon all the gold was beginning to fly out of Fort Knox to Europe and the Far East. The US government had to do something in order to stem the outward flow. On August 15, 1971, President Richard Nixon declared that the US would no longer redeem dollars on demand for gold. The dollar was ultimately nothing other than a piece of high-grade paper with a number and some intricate artwork issued by the US government. The world’s currencies were no longer linked to anything of real value and shared expectations that others would accept them in exchange for real goods and services.

It was a fantastic (and lucky) stroke for the Americans to pull this off. But this financial coup seemed like the opening shot in a long goodbye to the existing economic and political order. A strange thing was happening indeed. In the words of the Irish poet, W.B.Yeats, ‘All changed, changed utterly. A terrible beauty is born.’ From the poem, ‘Easter 1916.’

A Terrible Beauty

Capitalism was clearly morphing into a different animal with a new financial-economic structure which emerged from the old-style capitalist mode; the old order of production and consumption in a traditional capitalist economy which was occasioned by the production of tangible wealth, as opposed extractive or more tangibly extracted ‘wealth’. Businesses once focused almost exclusively on producing the goods and services for which they had a competitive advantage, but in the economic conditions of the present time they became likely as much if not focused more on their share price, their dividends regime, and in addition, to their interest rates.

A new class and a new system were clearly emerging, if not actually fully emerged. At the present time a tiny minority of people and corporate interests across the world are accumulating vast wealth and power from rental income not only from housing and land but from a range of other assets natural and created. Rentiers of all kinds are an unparalleled ascendancy, and the neo-liberal state is only too keen to oblige their greed.

The rentier class derive their income from ownership or control of assets that are scarce or artificially made scarce. Most familiar is rental income from land, property, mineral exploitation, or financial investments, but other sources have grown, pari passu. These include the income lenders again from debt interest; income from ownership of ‘intellectual property’ (patents, copyrights, brands, and trademarks); capital gains from investments, ‘above normal’ company profits (when a firm has a dominant market position that allows it to charge higher prices or dictate terms); income from government subsidies; and income from financial and other intermediaries derived from third party transactions. A political and economic structure began to emerge in the 1980’s. Once more quoting Yeats, ‘All has changed, changed utterly. A Terrible beauty is born.’ That terrible beauty is Neoliberalism. (2)

‘’Today’s corporations have become thoroughly financialized, with some looking more like banks than productive enterprises. This financialization of non-financial corporations has involved the transfer of societies resources from the employees to the share/stock’s shareholders. This transfer of wealth has resulted both from changes in the political and economic foundations of the global economy from the rise of a new ideology, which holds that corporations sole aim should be to maximize profitability via increasing returns to shareholders. Both ideas and power relations have to change to create any lasting economic change – and the 1980s was a period of transition of both.’’ (3)

Yes, those old enough of us who can remember the 1980s, a strange period of counter-revolution and – die Zeitgeist – yuppies, private equity, Thatcher and Reagan, The Big Bang, The Eurodollar market, Milton Friedman, and the Chicago School of Economics, ‘Greed is Good.’ Privatisation was all the rage. Heady stuff, but like all similar periods of ersatz golden ages the recent versions have crashed into the truths of economic realities. Like, you don’t get something for nothing, or booms lead to busts, or asset price inflation is not the same as growth. In order however … ‘’to maintain the semblance of vitality, western capitalism has become increasingly dependent on expanding levels of debt and of the expansion of the level of fictitious capital. This latter category is made up of financial assets which are only symbols of value, not real values.’’ (4)

Yes, indeed, company shares-stocks that are traded like goods and services do not in the same way embody value. They are tokens which represent part ownership of a company and the potential distribution of future profits in the form of dividends. The paper or electronic certificate itself is not a genuine value that can create more value. Rising share/stock prices are often presented as evidence of a healthy economy, but the amount money a share/stock charges hands says nothing definitive about the value of the company’s assets or about its productive capacity. On the contrary, it is when real capital stagnates that the amount of fictitious capital tends to expand.

The years roughly between the late 1970s to the present economic impasse have been unprecedented since the emerging and increasing instability of the present debacle of the 2020s. Prior to this each successive wave of crises followed a wave of credit bubbles, when the indebtedness of similarly placed group and groups of borrowers increased at a two of three times higher than the interest rate for three, four or more years which produced a series of credit bubbles in addition. These historical blow-outs have in fact become even more intractable and destructive with the passing of time. Something seems seriously amiss with the system’s dysfunctionalities which have become quite visibly failing. The economic situation in a country after several years of bubble-like behaviour resembles that of a young person on a bicycle – the rider needs to maintain the forward momentum of the bicycle, or it will become unstable. During the initial mania, asset prices will decline immediately after they stop increasing – there is no plateau or middle ground. The decline in the prices of some assets leads to a concern that asset prices will decline further and that the financial system will experience distress. The rush to sell these assets becomes self-fulfilling and so precipitous that it resembles a panic. The prices of commodities – houses, buildings, land, shares/stocks bonds – crash to levels that are just 30 or 40 percent of their prices at the peak. Bankruptcies surge, economic activity slows, and unemployment increases.

The features of these manias are never identical and yet there is a similar pattern. The increase in the prices of real estate and commodities or stocks is associated with euphoria; household wealth increases as does spending. There is a sense of ‘we have never had it so good.’ Then the asset prices peak and then begin to decline. The following implosion of the bubble leads to a decline in the prices of commodities, stocks, and real estate. Some financial crises were preceded by a rapid increase in the indebtedness of one or several groups of borrowers rather than by a rapid increase in the price of an asset or security. These deep-going changes in the world’s global economy were accompanied by political ramifications of a very significant order.

The economic shocks of the post-war period gave rise to the political shocks which if anything were more visible than what was apparent in the economies of the advanced world. Since 1945 everything had after the post-war reconstruction been regarded as L’Age Dor, (Golden Age) as the French had called it. This was a period from the early 1950s characterized by high levels of growth, low and falling unemployment, rising level wages and investment, where in the UK we were informed that ‘we had never had it so good’’ as the Conservative government proudly boasted. The Labour party had held the reins of government from 1945-1951. But things began to change during the 1970s, namely that the political/economic pivot changed definitively in the late 70s and early 80s. The Thatcher/Reagan duo grabbed the bull by the horns and established the new order.

This political/economic dispensation was to last from the early 1980s and through to what was to be the supposed blossoming of the Clinton years of growth and enrichment, the apex of the Anglo-American moment. To be sure: “Pippa’s Song.’’ See Below.

The year’s at the spring,
And day’s at the morn;
Morning’s at seven;
The hill-side’s dew-pearl’d;
The lark’s on the wing;
The snail’s on the thorn;
God’s in His heaven –
All’s right with the world!

Robert Browning (1812-1889)

Yes, if only it could always be like this. But of course, it seldom or never is, as was to be witnessed in due course.

Consolidation of the New Order

Margaret Thatcher and Ronald Reagan. Dynamic Duo!

The intellectual theorists of the new order – the Mount Perelin Society – an emergent think-tank and intellectual movement behind the Thatcher-Reagan populism. In a both internally coherent framework and an ideology used to promote the power of the owners of capital in general and finance capital in particular. The work of Hayek, Von Mises, and others constituted a serious intellectual exercise grounded in a particular set of values (including Milton Friedman albeit a junior member) namely, a commitment to human freedom, defined by control over one’s property. The fact that this justified for shrinking the size of the state, removing capital controls, and reducing taxes is what led several prominent international financiers (George Soros comes to mind for some reason) to cover a large portion of the costs for the first meeting. So, the party (in terms of both political activity and organization) was calling nearly all the shots.

Another significant event has been the intellectual collapse of Labour and Social-Democratic parties in Europe and possibly even included the left-wing of the US Democratic Party and Bernie Sanders. These were clearly the most significant political events in both Europe and North America during the 1980s. We can list them – all late converts to the neo-liberal paradigm – in France (PS Party Socialist France) (Germany SPD) (Greece PASOK) (Spain PODEMOS) (UK Labour Party) the list goes on. Moreover, having given up on any notion of socialism and equality, these ex-parties metamorphosed into centre-right outfits indistinguishable from the militant conservatives. The leaders of these counterrevolutions were the ineffable bought duo – Bill Clinton and Tony Blair.

The privatization programme was to sweep all before it including on a massive scale the expropriation of public land with little analysis or oversight. The programme of what was once the public sector and which had included, the National Health Service, Education, Transport, Road and Rail, Electricity, Water … was a policy based upon ideological rather than practical considerations; moreover, the list was extensive. Perhaps an example of this policy was education, particularly higher education which was provided and subsidized by educational opportunities in the elite universities. As a British national I was subsidized by generous government grant in 1979/82. I then finished my higher education as a post-graduate in 1986 – again free of charge. It is of course inconceivable that I would have been able to do this today.

The economic system – that is to say the present financialized system prevalent in the Western world – seems to be reaching its crisis point. Quack remedies for the ailing western economic structures, include Central Bank Digital Currencies, CBDCs, and/or the black hole of ever-increasing debt, which apparently will be overcome by issuing more debt (sic) and which are touted as a ‘solution’ to an intensifying structural problem, but which merely intensify the crisis.

According to Marx: ‘’In France and England, the bourgeoisie had conquered political power. Thenceforth, the class-struggle, practically as well as theoretically, took on more and more outspoken and threatening forms. It sounded the death-knell of scientific bourgeois economy. It was thenceforth no longer a question, whether this theorem or that was true, but whether it was useful to capital or harmful, expedient, or inexpedient, politically dangerous, or not. In place of disinterested inquirers, there were prize fighters; in place of genuine scientific research, the bad conscience and evil intent of the apologetic.’’ (Capital, Volume 1, Afterword to the Second German Edition – London 1873).

The present deep economic crisis is, at bottom, a class issue. The residual elements of the old aristocracy survived the initial assault of the political economists of the 17/18/19th centuries who included Adam Smith (1723-1790), David Ricardo (1772-1823), John Stuart Mill (1806-1873), Karl Marx (1818-1883)/(Friedrich Engels (1820-1895). The ruling class saw the above group as being an assemblage of dangerous radicals who posed an alarming threat to the social and political order. Thus, from their perspective the powers-that-be saw fit to enlist a group of academics called the ‘marginalists’ in 1870. These were the counter-revolutionary mathematicians and included Leon Walras (Frenchman) William Stanley Jevons (Englishman) and Carl Menger (German). Whether or not the repudiation of classical political economy achieved by this counter-group was sustainable is a moot point (see above). But suffice it to say these gentlemen were the ideological foot-soldiers, or, in Marx’s words ‘hired Prize Fighters’ for the rentier classes. Unfortunately, their frozen economic theories survived to the present day and continue to dominate school and university curricula and represent the timeless (and tedious) axioms of micro-economics.

I’ll leave the last word to Michael Hudson.

‘’Real estate, stocks and bonds constitute the bulk of wealth in today’s economies, because most wealth is obtained by rent-seeking – land rent, monopoly rent, and financial charges for special privileges – and even more by capitalizing rentier revenues into financialized assets, all supported by tax favoritism. In contrast to industrial capitalism’s drive to minimize rentier charges to create a lower cost economy with less overhead costs, finance capitalism increases this burden. Regardless of how financiers and billionaire rentier make their fortunes, this rise in rentier wealth is counted as an addition to GDP, subtracted as an exploitive transfer payment …Much as the land and England’s Commons were privatized in the Enclosure movements from 15th to 19th centuries by a combination of force, legal stealth and corruption, today’s post-1980 privatization wave aims at appropriating basic public infrastructure to create opportunities for charging monopoly rent, along with bank lending to privatizers. Privatization and financialization tend to go together – at the economies expense.’’ (5)

Italy: La Lotta Continua! (Ongoing Struggle)

NOTES:

(1) Stolen: How to save the world from financialization by Grace Blakeley. (2) The Corruption of Capitalism – Guy Standing – (Ibid. p. 3)

(3) Grace Blakeley – (Ibid. p.62)

(4) Creative Destruction – Phillip Mullan – (p.22)

(5) The Destiny of Civilization – Michael Hudson – (p.25)

More

The Post-Oslo Social Economy: An Analysis

August 12, 2022

Israeli Prime Minister Yitzhak Rabin, US President Bill Clinton, and PLO Chairman Yasser Arafat at the signing of the Oslo Accord. (Photo: Vince Musi, via Wikimedia Commons)

By Omar Zahzah

“It’s classic Fanon, if you think about it,” Palestinian writer Yara Hawari, Senior Analyst of Al-Shabaka: The Palestinian Policy Network,  remarked in 2018 about the 25th anniversary Oslo Accords.

“It’s like, Let’s create this class of people that are going to maintain the security of the oppressed or the natives, so that we don’t have to do it.”

The “class” Hawari refers to here is the Palestinian Authority, that repressive, native informant apparatus whose incarceration and brutalization of its own people and total obedience to the Zionist colonial state was institutionalized through the passage of the Oslo Accords in 1993. Hawari relates the formation of the PA to the underdeveloped national middle-class Fanon describes in “The Pitfalls of National Consciousness,” a class that maintains its material integrity and interests by preserving neo-colonial relations and collaborations with the colonial power.

Palestinian activist Jamal Juma explains that through the Accords, the PA made it so that Palestinian livelihoods would be controlled by organizations including the World Bank and the International Monetary Fund, and that the division of the West Bank into areas A, B, and C is ultimately guided by a larger strategy of total annexation. 

An expansive exploration of the former subject, Toufic Haddad’s Palestine, Ltd. demonstrates how Western donor states and financial institutions used the Oslo Accords as a test-case in the exploration of national and governmental forms of arrangement that could be most agreeable to neoliberal capitalist ventures—an insight that suggests how Palestine operates as a “lab” in ways other than the more familiar discussion of the Zionist state honing the weaponry, crowd-control and surveillance tactics that it will eventually export to other nations and corporations upon Palestinian bodies and territories.

Yet as crucial as these insights are, they are tied to the material components of the Oslo Accords’ disastrous impacts.

I believe it’s also important to discuss other, more abstract components of the Accords’ destructiveness—components that are not even limited to Palestine alone. Such an undertaking is important, as every attempt to diagnose the true colonial character of our condition brings us one step closer to a potentially liberated–and liberatory–consciousness.

Emotional and Mental Reproduction

The physical character of colonial projects may reproduce itself emotionally and mentally, both within the collective morale of the colonized as well as in the minds and hearts of individuals among colonized populations. Thus, it takes no great leap of the imagination to consider that the physical and political fragmentation wrought by the Oslo Accords—the arrogant and arbitrary declaration that a future Palestinian state would only concern those Palestinians presently within colonized and militarily occupied Palestinian territory; the abandonment of the liberation struggle; the creation of a corrupt Palestinian bourgeoisie elite that would profit directly off of oppressing and exploiting its own people–have also reinscribed themselves within the individual Palestinian psyche.

It also stands to reason that such a reinscription would have profound effects not only upon individual Palestinian morale, but the activism (and here I deploy this term intentionally) that followed in the wake of the Oslo Accords.

My subject of analysis is a particular type of activism (again, used here to describe a mindset and various forms of prioritization) that values the individual reputation, ego, “brand,” politics, over, or at the complete exclusion of, the larger liberation struggle as well as the need for mutual and collective struggle among our people. One person or organization becomes the default representative of the Palestinian cause, and rather than seeing others involved in the same struggle as comrades, all become competitors in a cheap struggle for “authenticity.” 

Collectivity shifts from a strength to a liability, as the plurality of voices and approaches so integral to the health of any veritable liberation movement becomes crowded out by the cultural lure of being the default Palestinian voice, the Palestinian activist, the Palestinian intellectual, and so on, as opposed to one among many.

Anti-colonial criticality becomes redirected towards liberal policy analysis and so-called “thought leadership” that takes for granted and even benefits from the perseverance of structures and systems that need to be destroyed rather than sustained. But even a more critical posture is not necessarily indicative of having transcended this status quo, as being the most radical presence can become commodified as its own, cynical show of competition.  

It is no longer the Palestinian struggle that is engaged, in its entirety and contradictions, but a sanitized version that is repackaged and sold to a target audience. The fragmentation imposed upon our struggle by our colonizers and the so-called leadership among our people that willfully collaborate with them for their own personal gain is restaged in this competition, and fragmentation itself becomes incentivized rather than challenged.

All oppositional forces, from our colonizers to their imperialist allies, would like nothing more than for us to remain scattered, to remain fragmented, so it is natural that we would find ourselves in systems and situations where attacking one another as a way of building ourselves up is encouraged, however indirectly.

What is Meant By Social Economy

An “economy” typically implies a system of relation and exchange. Thus to refer to the phenomenon in question as a “social economy” might seem a strange choice of words. But through this formulation we are considering the ways in which social relations themselves are conditioned by economic processes—the way, for example, personal and professional relationships become distorted by capitalistic notions of profit, productivity, and artificial scarcity, or how neoliberal belief systems encourage a “buffet” style approach to issues of oppression that says holding a marginalized identity in and of itself entails liberatory intentions (Mahmoud Abbas should be a sufficient enough refutation of this regressive political tendency.)

In our example, political work becomes imperceptibly overtaken by for-profit incentives of competition, false scarcity, and exclusion, and a cause that is at heart a collective struggle for anti-colonial liberation becomes nothing more than a means of self-promotion and advancement. To the extent that rampant NGOization both in Palestine and internationally diverts liberation-focused efforts to reformist ones sharply limited by strings-attached funding and siphons the intellect and creativity of organizers into bureaucratic demands such as fundraising and donor relationship building, we cannot ignore the interplay between compromised institutions, predatory economic subjugation, and political mercurialness.

Good Faith and the Unconscious

However, while such engagement may at times be informed by a willful disregard, our experiences suggest that such a state of affairs is more likely to be reinforced unconsciously. Thus, even in the most intense moments of seeming competition and disagreement, the possibility of good faith should always be presumed.

One imperfect yet nevertheless amelioratory practice given this state of affairs is to insist upon intentional and conscientious distinctions between the grassroots and non-profit spheres. To be sure, there is overlap, but to consciously present non-profits as the grassroots would ultimately water down grassroots work with the demands, limitations, and restrictions of non-profit bureaucracy. 

In the interim to the complete dissolution to the non-profit system, one important approach is to navigate non-profit spaces with an awareness of these material distinctions and always ask oneself (and one’s organization(s)) how best to utilize the resources and networks of the non-profit milieu to amplify the grassroots without restriction whenever possible. 

It would be a far simpler task if the Oslo Accords had resulted in a generation of self-interested activists and organizations competitively profiting off of their Palestinian “brands,” for better or worse, but this is not what I’m arguing. The reality is murkier, and more difficult to define, but ultimately what I’m suggesting is that various factors, including the overemphasis on the individual within settler-colonial/capitalist US nationalist ethos, as well as the myriad forms of fragmentation inflicted upon us through the Oslo Accords, are themselves internalized and re-staged within US activist scenes, but often at the level of general instinct and impression. 

Various social and symbolic norms make it so that certain actions and attitudes are simply felt to come more naturally than others. This is the case with capitalism in general, which presents a complete distortion of social relations and attachments as so-called “reality,” “nature,” “society,” and so on. Our colonial condition, while in some ways more particular, nevertheless operates with similar effect: the horizon of possibility is increasingly depleted by shrinking borders and an abdication of responsibility and dedication to the struggle.

The Way(s) Forward

There is no one set “solution” to such a state of affairs, but as individualism and competition are the scourges, approaches that center collaboration and mutual uplift obviously should be prioritized. To that extent, continually engaging in (and presuming) good faith from others—with the exception of crossing red lines about Zionism and normalization—should be standardized. But even when it comes to these red lines, it is crucial to be able to name exhaustive standards for Zionism and normalization, as well as to establish and maintain cultures of principled political commitment.

At this point, it ought to be far from politically controversial to say that the Zionist entity has no right to exist, should never have existed and in fact, should not exist even now; that Palestinians have the right to all forms of resistance until total return and liberation, and that all of the Zionist entity is, in fact, occupied Palestine, an alien construction upon stolen land and lives that needs to be destroyed in the lead-up to comprehensive Palestinian liberation and reparations.

Explicitly naming competitions and turf wars as reflective of the Oslo Accords rather than feeding into them can at times aid in refocusing efforts towards the larger struggle and collective betterment, though this is not always a guarantee.

At the root of the issue is the need to operate with a sense of Movement rather than individualism or activism, and always begin from a position of helping the collective cause rather than advancing individual gains. The struggle is hurt by our fragmentation, though it’s important to resist the cynical cooptation of this principle as a means of encouraging tolerance of any and all political lines within our spaces and wider networks (such as normalization of the Zionist entity, including acceptance of the Palestinian “Authority’s” security coordination).

For the purpose is to rekindle and preserve a sense of collective identity and resistance that operates within a genuinely anti-colonial frame, rather than accepting our colonization as an inevitability, or even past event.   

– Omar Zahzah is the Education and Advocacy Coordinator for Eyewitness Palestine as well as a member of the Palestinian Youth Movement (PYM) and the US Campaign for the Academic and Cultural Boycott of Israel (USACBI). Omar is also an independent scholar, writer and poet and holds a PhD in Comparative Literature from the University of California, Los Angeles (UCLA). He contributed this article to The Palestine Chronicle.

Michael Hudson: Podcast with Michael Hudson, Steve Keen, Steve Grumbine

July 17, 2022

Posted with Michael Hudson’s permission

Grambine, Macro and Cheese, July 9 2022. https://realprogressives.org/podcast_episode/episode-180-the-end-of-dollar-diplomacy-with-steve-keen-and-michael-hudson/.

https://realprogressives.org/macro-n-cheese-podcast/
For those who would like to hear the recorded conversation

Michael Hudson [intro/music]

A central tenet of the World Bank from the beginning is to convince countries not to grow their own food, but to create plantation agriculture to prevent family-owned farming of food, to grow plantation export crops and they become dependent on the United States for their grain.

[00:00:22.610] – Steve Keen [intro/music]

If you look at just the shipping involved in international trade, it’s something of the order of 20%, I think, of our carbon production comes out of the entire mechanics of shipping goods around the planet. And we realize we’ve massively overshot the capacity of the biosphere to support our industrial sedentary civilization. So, one way to reduce that is by reducing international trade.

[00:01:35.130] – Geoff Ginter [intro/music]

Now, let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.

[00:01:43.110] – Steve Grumbine

All right. And this is Steve with Macro N Cheese. Another great episode for everyone today. I have two guests, two very good friends, and very happy to have them join me today. Professor Steve Keen and Michael Hudson. You can’t get two better guys than this. And we’re going to have a very action packed conversation.

We’re going to be talking about central banking, the IMF, World Trade Organization, World Bank. And we’re going to be looking at how the US uses the monetary system to bring about its imperial powers that it exerts on the world. And we’re going to look at some of the things that are happening with Russia and Ukraine right now that ship the US control over the global commerce and the behaviors of non US countries.

They’re starting to think for themselves and make some decisions, and we’re watching the facade crack a little bit. Steve Keen, who is the author of the book Debunking Economics and more recently The New Economics: A Manifesto, is joining me, as well as Michael Hudson, who has just recently written the book The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism. So, without further ado, Michael and Steven, welcome to the show, sirs.

[00:03:04.530] – Michael Hudson

Good to be here.

[00:03:05.800] – Steve Keen

Thank you indeed.

[00:03:06.960] – Grumbine

So the reason why I brought us together, you guys are both phenomenal on your own, but together, I think that we can maybe tackle this. As an MMT advocate, I find myself friends with an awful lot of people, and you gentlemen have been doing this for a long time, and I know that you have some pushback within the MMT community.

In particular, this concept of “imports are a benefit and exports are a cost.” This is a core MMT staple. And some of the concerns that came out as a result of the Covid crisis showed us the resource based failures of a global supply chain and how some of the aspects of our financial system and the shipping of real resources from areas that had high Covid, how it impacted our abilities to take care of life on life’s terms.

It also became quite clear that the US hegemony over the world using dollar diplomacy is starting to show cracks in the foundation as well, as we watch Russia thumb its nose at US sanctions. So, getting into this, Steve Keen, I know that you have taken some issue with Warren Mosler’s prescription that imports are a benefit and exports are a cost.

Taking Warren’s position on this, I believe Warren is saying exports are real goods and services we’re sending out, whereas imports we’re handing pieces of paper to people. And this is a win for the importing nation. And we’ve seen the power of the US dollar and the ability to basically create colonial outposts, colonized communities living and dying off of US dollars. So there’s a power dynamic as well. What is your pushback with Warren’s import/export model?

[00:05:03.270] – Keen

There are quite a few elements to it. First of all, the idea that exports are a cost and imports are a benefit. One term that I’ve seen one Modern Monetary Theory advocate used to explain is to say, the opportunity cost is all theirs. In other words, they have therefore gone by sending a good to us like an automobile to the buyer in return for currency.

They’re doing without the opportunity of the vehicle. And when you take a good look at the manufacturing side of things, the reality for most firms is they have diminishing marginal cost and excess capacity. So the standard thing when you’re competing in a domestic market is you have spare capacity you’re not using, but you can’t get enough demand domestically.

Now, I know MMT can say that should be handled by the government using additional spending power and creating the spending power to absorb the excess capacity. But they don’t at the moment. So what tends to happen instead is that countries will use export-oriented industrialization to use their additional capacity more effectively, which is what’s led to the industrialization of China and in many ways the de-industrialization of America.

Personally, I don’t think the opportunity cost is the right way to think about international trade at all. It’s a neoclassical way of thinking. It assumes neoclassical conditions about production which are empirically false. I don’t think anything in MMT should be based on bad foundations and I think that is a bad foundation.

Then when you see the discussions about monetary sovereignty and saying that countries who don’t have to issue debt in the currency which is not their own currency, they have monetary sovereignty, those who have to issue debt in a currency which is not their own don’t have monetary sovereignty. One way you end up in not having monetary sovereignty is running large balance of trade deficits and not being the reserve currency of the planet.

So I think the advice that exports are a cost and imports are a benefit doesn’t make sense for countries which have been running a trade deficit, are importing more than they’re exporting, so they’re using their own pieces of paper fundamentally, initially, but if they keep on doing it, they’ve got to start using American pieces of paper, and then they’re in deep trouble. So I just think it’s a nice slogan, but I think it’s a bad idea.

[00:07:20.250] – Grumbine

So it makes sense to me given the nature of the pandemic. You and I spoke, I guess it was almost two years ago, about supply chains and pandemics, and we talked at length about how the iPhone is made in some 37 different countries – and countries that were isolated due to the pandemic. It also impacted production in general. Right now I’m in Information Technology, and I work with Cisco, and Cisco being the backbone of the entire Internet globally.

They have lead times even today of up to a year for some of the equipment, partially because of semiconductor shortages. But this is a piggyback to that in that there is the accounting identities of trading paper for goods and services, but then there is the actual functional output of that. And for countries like the United States, we do have Most Favored Nation status in the sense that we are the primary world reserve currency.

And I think part of that has to do with the fact that the price gas and gas purchases are done through US dollars as well. But overall, I think that we have to be aware that we’re not being a very good partner on the planet in general. A lot of the power plays the United States uses to be able to get those goods and services into the US Is done through warfare and sanctions, as we’ve seen all around the world. We use them to great harm in the global South.

However, we saw Russia here recently thumb their nose at us and say, the only thing we’re really lacking is high tech products, and we got China that can hook us up with that. All you’ve done is accelerated our departure from a dollar denominated world, which I guess brings us to you, Michael. Your book talks extensively about this. Can you help piggyback off of what Steve said regarding the supply chains and the impact of that import/export dynamic with what’s going on right now with Russia, China and Ukraine?

[00:09:34.590] – Hudson

Well, MMT has not spent much time talking about the balance of payments. It’s basically a theory of the domestic economy. The problem of the whole discussion that just took place is that trade is not the most important element of the balance of payments. For the United States, the trade balance has been just about in balance for almost 50 years, 70 years, actually.

What’s in balance is America’s military spending abroad. That’s the deficit that is pumping dollars into the world economy. But now to get back to Steve’s point, realizing that we’re dealing with trade, only a small portion of the balance of payments, Steve’s point is, let’s ignore all the other elements of the balance of payments – the debt service and the capital accounts and others.

If you import more than you export, and you have to actually pay cash for the imports and get cash for the export, then you have to borrow money. And once you borrow money, because most trade is denominated in dollars, this means you have to borrow US dollars. You don’t buy imports with your own currency. Now, MMT is all about how sovereign governments can create their own money and create their own currency, but they can’t print their foreign currency.

That’s the problem with having more imports than exports. And once you begin to borrow dollars, you have to pay interest on it. And all of a sudden, they’re running a deficit, it’s going to reduce your foreign exchange rates. Well, let’s look at what’s going to happen this summer as an example. We know that energy prices, oil prices are going way up.

And President Biden just says they’re going to be with us for a very long time because his major contributors are the oil companies, and he’s promised them that he’s going to enable them to make super profits to help raise the Dow Jones average. And the other element is food. Well, America is going to make a killing on oil exports because the United States controls the world oil trade.

The United States is also a major agricultural exporter, and it’ll make a killing because NATO has imposed sanctions on Russia, preventing Russia from exporting oil and food – it’s the largest grain exporter – into the economy. So you’re going to have South America, Africa, and the global South countries all of a sudden running big deficits.

Well, at the same time, there’s an enormous deficit of debt service that they owe to finance all of the trade deficits that they’ve been running ever since they followed neoliberal ideals to open their markets to depend on foreign food and basically US manufacturers. The Federal Reserve has just begun to raise interest rates. And the result of raising interest rates has been the dollar is going way up against the Latin American currencies, the African currencies, the South African rand, the Brazilian currency.

So you’re going to have the global South being in an absolute currency squeeze this summer. What are they going to do? Well, President Putin has said, well, we’re going to offer an alternative in the form of the BRICS bank. Well, it’s true that a bank can’t create foreign currency. The BRICS bank can enable countries to run a deficit in two ways.

Number one, the bank can be fueled by each member giving, say, a trillion dollars or some kind of proportional currency to the bank. So currency swap agreements, just like the United States has been negotiating for the last 50 years. You can all have a currency swap. Also, the BRICS bank can create its version of Special Drawing Rights – IMF SDRs – or what John Maynard Keynes proposed in 1944: “bancors.”

It can create paper gold of its own and distribute to countries. Well, the problem is, Putin said, we’re willing to sell your grain and oil and to take your currency in exchange, but we don’t want to save your balance of payments simply so that now you can afford to pay the debt service that you owe to US dollar bond holders, bank holders, and the IMF and the World Bank that got you into the mess you’re in to begin with.

So the problem is the stability of insulating your trade from the foreign exchange going up and down requires a split of the world into two different economic zones: US/NATO, the white people’s economic zones, and let’s call it the nonwhite economic zones. And remember, the Ukraine say that Russians are not white and racially different. Basically, the Nazi ideology is that any country that’s not neoliberal is not white.

So you’re going to have the world splitting, and we’re really talking about how to create a monetary system for the world splitting. I want to get back to one other thing Steve said about the opportunity cost. If imports are a great advantage to the United States, is it worth having American corporations move to low wage labor abroad, shifting the production abroad so that America is deindustrialized?

Has that been an advantage? Or let’s look at it from Russia’s point of view. Until this last spring, Russia was importing food, cheese, raw materials. And because of the sanctions, Russia has had to all of a sudden develop import substitution. It’s producing its own cheese. It produced its own agriculture that’s thriving.

And President Putin has said that Russia is going to spend more and more of its oil export receipts on funding import-replacing industry. Well, that sounds like a good idea, because we’re really talking about independence. And the balance of payments ultimately determines a constraint on domestic policy. I think that’s what Steve was talking about for opportunity costs.

You can’t just look at the flows on a balance sheet: “Well, we’re getting something for nothing.” If you import more than you export, you’re running up foreign debt, and you’re becoming more and more dependent on foreign countries who are acting in their own interests, not your own interests. So you have to put this whole discussion in the political context.

[00:16:15.210] – Grumbine

So I would see this as a national security issue in that with these essentials – Fadhel Kaboub talks about the spectrum of sovereignty: energy sovereignty, food sovereignty, technological sovereignty, the ability to live without external supports. And each country has varying levels of that. And so each country would have to be looked at differently just based on what they’re even capable of producing.

I guess my question to you, as we think about countries in the global South that have had the kiss of the IMF on them and the debt peonage that they have been laboring under. In Africa, Sankara’s speech talking about “I can either pay you or I can feed my people.” You can see the role that US interests through the IMF have had to import their goods and services into our country.

They don’t have a choice. They are basically colonial states that have the US thumbprint on them. So the United States has exerted this imperial power in this geopolitical nightmare. We are watching them break away from that today.

[00:17:34.050] – Hudson

But you’re leaving one of the real villains in the piece, and that’s the World Bank.

[00:17:38.290] – Grumbine

Oh, yes.

[00:17:39.020] – Hudson

A central element of the World Bank from the beginning is to convince countries not to grow their own food, but to create plantation agriculture, to prevent family-owned farming of food, to grow plantation export crops, and to become dependent on the United States for their grain. Well, if imports are a benefit and imports mean that the United States can put a sanction on you and starve your people like the United States tried to do in China in the 1950s, do you really want to become import dependent on food?

Let’s compare the World Bank to the Chinese Belt and Road and the BRICS bank that’s proposed. The World Bank would only make foreign exchange loans. That meant it would only make loans to countries who would invest in infrastructure that would help its exports. Well, imagine how this works for agriculture.

If you were going to develop your agriculture in the global South countries, you’d do pretty much what the United States did in the 1930s that had the most rapid increase in productivity of any industry in the last few centuries. And that was because the government took the lead in agricultural extension services, seed testing, educating farmers as to seed variety, setting up local farm management organizations.

Before the time that Cargill and Archer Daniels Midland became the great intermediaries in promotion of domestic self-sufficiency for farms, the World Bank wouldn’t make any loans at all for this, even though the World Bank local commissions and reports all said that this is what they need. The World Bank was almost always headed by someone very close to the US Military, starting with John J. McCloy at the beginning and going through McNamara and all of the subsequent Pentagon people who were put in charge of the World Bank.

And above all, they wanted to continue to base America’s export boom in agriculture and to make other countries food dependent. And that is one of the things that has led them into debt. So if you have a country like Chile that has the richest land in the world because it has the richest supply of guano deposits in the world. It also has the most unequal land distribution in Latin America – latifundia and microfundia – not any kind of balanced food production.

So that all of Chile’s exports and copper, by specializing, have been overwhelmed by the costs of importing food that it could have grown all by itself. So the idea of free trade is shaped by what will the international organizations controlled by the US give credit for, ends up to create underdevelopment and dependency instead of development. And that developmental aspect is a different story from MMT money creation. And we’re talking about something else that is part of a much bigger system.

[00:20:43.410] – Grumbine

Steve, based on what Michael just said, I know that you are concerned with the environment and bringing production back home. And around the world, people that are not hip to the US empire are trying to convince countries to look at building bonds between each other to create trade zones that mitigate some of the US power over dominating their countries.

We’ve got a very tiny window to solve climate crisis as well. So all these things are converging at one time trying to deleverage US interests from the world interests and watching as the nonwhite countries are banding together and the white countries are banding together. And it seems like the opportunity to save ourselves from extinction is passing before our very eyes.

In the vein of what he just said, how do we marry some of the ideas that we have, the climate crisis with the geopolitical crisis that we’re battling here?

[00:21:49.110] – Keen

Well, the large part of it is that the focus of neoclassical economics has always been on specialization and doing it with so-called comparative advantage. And what that gives you is an incredibly fragile system, as we’ve seen with Covid, because if you actually distribute production across the planet and you have a long supply chain, then of course that can collapse in an instant with something like Covid coming along.

And equally, if you have a famine, if the major food baskets get wiped out by a famine or a war. We’ve got the war already. The famine may well come by a drought and a crop failure as well. Then suddenly you can’t feed your people and you have no domestic alternative. So I think we have to get away from the focus on efficiency and even in that sense, the gain of swapping paper for goods, which is part of the MMT slogan.

Start thinking: no, we need to be resilient and capable of handling a range of different disturbances which could come our way. And on that basis you need to have your production local.

[00:22:47.310] – Grumbine

So within that space mitigating some of the travel carbon footprint expenses that clearly solves one problem. But where you had smokestacks to create basic amounts of goods and services in one country, now you’re building smokestacks across the globe and I don’t see any meaningful effort to green technology to make those things happen.

I am curious what decentralizing production does in terms of the carbon footprint and how developing local supply chains will in turn impact our ability to stave off climate crisis.

[00:23:30.090] – Keen

Yeah, if you look at just the shipping involved in international trade. It’s something at the order of 20%, I think, of our carbon production comes out of the entire mechanics of shipping goods around the planet, and we realize we’ve massively overshot the capacity to support our industrial sedentary civilization. So one way you can reduce that is by reducing international trade.

I think that’s what’s going to start happening, partly because you have the example of Cisco. You suddenly wait a year to get a piece you used to wait two weeks for because of the breakdown of the supply chain. The same thing will become even, I think, even more extreme when climate change forces us to drastically reduce our production levels.

If you don’t have the domestic production capability, you’re going to lose the possibility of those goods. And in some cases, we have to drastically reduce our consumption of a range of goods. Automobiles is an obvious instance of that. But in others, we want to continue – and food production is one of those. Clearly, you want to produce your food locally.

So, again, I think we’ve been very blase about the physical side of production, and that’s what I would like MMT to start looking at. And in that context, I think it might change the attitude about imports and exports.

[00:24:57.730] – Intermission

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[00:25:49.010] – Grumbine

Michael, in the Russia example, where in one fell swoop they get cut off from the SWIFT system and the US is beating their chest, “We’ve got Putin on the run.” It doesn’t look like Putin is on the run at all right now.

[00:26:02.900] – Hudson

I’m glad you’re bringing up the NATO war against countries resisting neoliberalism, because you use the word “green.” And the European Greens basically are advocating two fuels of the future: coal and cutting down the forests. Germany, by blocking Russia’s gas, they are essentially replacing Russian gas and oil with Polish and Ukrainian coal – and digging down the forest.

I’ve walked very often through German villages, and most houses have whole stacks of cut-down lumber that they essentially burn in their fireplaces for heat. You’re having an enormous deforestation and replacement of gas with coal. And the Green Parties are the advocates for the major polluters in the world, and they’re the advocates for global warming.

And that’s because they’re part of the Cold War attack on Russia. And they say it’s worth having global warming as long as we can fight against countries that resist neoliberalism and resist the American European takeover. So you want to realize the politics – that the Greens of Europe are not friends of the environment.

Now, to get back to your question about the isolating of Russia. Isolating Russia hasn’t isolated it at all. It’s driven Russia together with China, in the first instance, and then China and Russia together have joined with India, Iran, Syria, they’re now joining with Brazil and Argentina all to create an alternative economic order and social order and political order.

And the political order is basically based on the main distinction between the non-neoliberals and the neoliberals, and that is: who will control the money supply. And China is the prime example. Instead of private banking creating the credit to create loans basically for financial reasons, China will create credit to spend into the economy the way that MMTers hope to see credit created.

Namely, spend to hire labor, to make new means of production, hopefully in an environmental way, as opposed to the commercial banks that look at “how do we make money in the short term?” Well, you make money in the short term by cutting down the forest of the Amazon. You don’t look at global warming.

And already you’ve had the heads of American oil companies and investment firms say “what do we care about global warming ten years in the future? We care about the next three months’ earning statement, and the next year. Ten years from now, the sea levels go up. We can deal with it then.” So you’re dealing with two different economic philosophies and as the world divides into these two different economies, this is an important element.

And as Steve just pointed out, neoliberal economics doesn’t take into account the environment because that’s long term. Economists call that exogenous, meaning it’s outside our tunnel vision. And the question is whether you’re going to look at the world economy as the overall system interconnected, which is what Steve and I do, or whether you’re going to say we’re going to just cut the financial sector apart and only look at the corporate and financial sector of how to make money quickly.

That’s really the difference. So obviously Russia was not really troubled very much by being cut off – or even by being isolated. What America is doing is driving Russia together with all of the countries that have refused to condemn it. And America basically is creating an iron curtain, locking these countries – isolating them from Europe and the United States – going their own way, which I don’t think Russia and China are unhappy to see occurring.

[00:29:54.480] – Grumbine

I completely agree with that. The idea that the US thinks they are going to knock these giants down and they’ve just said we’re going to invest in our own country. Instead of being a cooperative society, we see this as a combative society. We decided we have to fight them and create cold wars to isolate them so we can catch up.

But you nailed it with the concept of the private short-term thinking that private collateral, banking, loans, filling short-term needs because we can’t see out as far as those folks because they aren’t living and dying the same capitalist way that we do things here in the United States. They have invested in the public purpose.

China has got the ability to do just about everything. Do you think it’s going to take us getting our proverbial asses handed to us by the rest of the world to wake up? Do you think we’ll ever wake up? Or this is just the way it will always be, at least until tsunamis take us out?

[00:30:56.870] – Hudson

Who is the we? Who’s going to wake up? When you say we, it’s as if you mean American citizens in the population. But we are not the government who makes the policy. We are not the Davos Group and the campaign contributors. Their “we” are the oil industry, the big agricultural monopolies, the other monopolies, and Wall Street. That’s the finance, insurance and real estate sector [FIRE].

And they are going to just continue doing what they want. And you’ve seen from the recent Supreme Court rulings in the United States that the government is not permitted to enforce any climate preservation rules. That has been ruled unconstitutional unless Congress can pass environmental law. And in order for Congress to pass a law, as opposed to just an executive branch joining the environment, you have to have 60 out of 100 votes.

American dual politics doesn’t permit either party to get 60 votes unless there’s a landslide. And the only party that has a prospect of getting 60% would be the Republicans. So basically, even if the people wake up, the government people and their campaign contributors are just going to continue to make money to live in the short term. That’s what differentiates neoliberalism and socialism.

[00:32:17.630] – Grumbine

Very well stated. To me, I think of this as war. Murder. I don’t think of this as some polite gentleman’s disagreement. I see this as wanton death and destruction, all in the name of profit. How do we stop this? Can we stop this? Congress is bought and paid for. Our government, our Supreme Court doesn’t represent the people, and the President has proven to be a feckless neoliberal as well.

I see nothing to feel any sense of hope, and I’m not sure that hope is a requirement. It seems like the only alternative we have is in the street, is to become ungovernable, is to get rid of a government that is no longer representative of the people.

[00:33:04.010] – Hudson

[laughs]  Well, Steve’s gone to Thailand and I’m dealing mainly with China. That’s how we’ve coped. [laughter] Neither of us are going to be President of America.

[00:33:15.690] – Keen

No. The American political system is almost designed to stop anything being done. I was involved in the Australian election recently, as you probably remember. And though my party did extremely badly and money still was obviously vitally necessary to get a political profile, even in countries with good electoral systems, Australia does have a good electoral system, and America has got the best electoral system money can buy, and that’s a disaster.

It’s hard to get away from money enabling parties to have political position to be seen in the media. And that’s actually a great reason for MMT: create money for publicly financed election campaigns rather than having it out of private pockets. But given that, you have an electoral system where you don’t actually vote for anybody, the electoral college piece of nonsense, which itself is crazy.

Every state has got a different system, which is crazy. You don’t have the central bureaucracy handling the voting system, which is crazy. And you have gerrymandering because the boundaries are decided by local political groups, which is crazy. So the extent to which America needs to reform its political structure to approximate a democracy is ridiculous. And that’s partly why money interests can so easily dominate what happens in the American political sphere. And right-wing religious ideology as well.

[00:34:43.950] – Grumbine

Absolutely. The Calvinistic bullshit in this country is over the top. But there’s a tone policing aspect to this. I think there are people out there who don’t understand that this election system that we have in the United States isn’t getting us what we want or need. They think they just need to phone bank harder, vote harder.

Fact is, in my 53 years, I have not seen any meaningful legislation passed. I do not consider the ACA meaningful legislation. I’ve seen a lot of bad legislation pass that hurts us. And this is not really intended to be an America-centric show, except that America seems to be the big bully. It’s creating a lot of the problems. It’s got its own citizens in hell and it’s trying to create hell on earth for the rest of the world.

I spend a lot of time trying to get this information out the door. It’s very important information, but it’s only important in the sense that it’s good to know. I don’t see any of it amounting to a movement, a passing of legislation. We can tell people that if we don’t consider the economy in the world as a superorganism and degrowth, we don’t have anybody thinking this way.

[00:36:00.090] – Keen

There is actually – I don’t know the name of it, but I do know that there’s a political group in America which is campaigning to have Australia’s electoral system adopted by America. Have it include an electoral commission that determines borders between one electorate and another, a single centralized system that counts the votes rather than the crazy range of stuff you have at the state level.

And controls on the size of electorates so they can be no more than 20% larger or smaller than a target – and they should be 10%. And then preferential voting so you don’t just vote for one candidate, like if you vote for the Greens in America, you guarantee the Republicans win the election because the Green votes are taken away from the Democrat.

So have preferential voting, which means you can actually put the party you prefer first and know that the party that’s your fallback will actually get the vote if your first party doesn’t get up. So all these sorts of reforms. I know that there are people who are campaigning about it because the frustration that you’re expressing is very widely felt in America. But of course, try getting that through a Republican-dominated Congress. It ain’t going to be easy.

[00:37:01.170] – Grumbine

No. It does leave you wondering if this is not just political theater. I talked to Warren the other day and Warren asked the question to me. He said, “you ask, are they doing a good job? And I answer back, well, for whom?” Somebody’s doing okay right now. It just isn’t the regular people in society. Somebody’s doing great, though. And I don’t see a path. As much as I want to, I see no path forward.

I don’t want to feel this way, but I don’t see a path forward. Michael, with your international perspective, I guess my question to you, given the fact that you’re focusing on China and you see the US through the lens that we’ve just discussed, do you see an ending to this that is positive for the world, that gets us to a successful conclusion, meaning we survive? Do you see any hope whatsoever in changing that narrative? And if not, what’s next?

[00:38:01.530] – Hudson

There’s no path forward in the way that we’ve been talking about because the suggestions that Steve makes cannot be legislated by Congress. They are limited by the Constitution. And in order to do what Steve recommends – very good ideas – you would need a new Constitutional Convention. The right-wing, the polluters, the monopolists, the bankers, have been preparing for a Constitutional Convention for about 30 years, and it wouldn’t be very nice.

[00:38:32.370] – Grumbine

Yep.

[00:38:32.370] – Hudson

Our Constitution in America was written for the slave owners to permit any states to block any federal power because they worried that the federal power might try to free the slaves. Well, now that element of the Constitution, of state’s rights, is enabling the oil industry, the polluting industry, the banks, the credit card companies to essentially prevent any solution along any lines except those of the ultra right-wing.

But the problem goes beyond America and beyond Europe. Western civilization took a wrong track about 3000 years ago. The Near East and almost all of Asia had a tradition of canceling the debts when they threatened the economy. In Japan, you had revolutions, you had the Near East rulers canceling the debts. That’s what my books are about.

And you had essentially the jubilee years throughout the Near East. And this promotion of economic growth and in effect, prosperity, was always run by a central ruler. There had to be a ruler, the job of divine kingship or undivine kingship, throughout the Near East, Asia, all the way to China. And India. All of these cultures sought to prevent a commercial class and a financial class from emerging and taking over.

And the merchant class was realized as playing an important role, but it was not allowed to dominate society. But around the 8th century BC, when Syrian traders began to move into the Aegean and Mediterranean to Greece and Italy. There weren’t any kings. The west didn’t have kings. They had local chieftains who were a Mafia-type society.

And the result is that ever since Greece and Rome, you had a completely different set of laws and legal philosophy than what you had in the Near East and Asia. You had pro-creditor laws making what is called the security of contracts and the irreversibility of land being forfeited to creditors. And the result is you had creditors oligarchy evolving.

So when President Biden said the current war of NATO against Russia and China is a war of democracy against autocracy, what it means by democracy are Western civilization’s oligarchies. There haven’t been any democracies, really – maybe very briefly in Athens – but the Western cultures are all oligarchies. What he calls an autocracy is a government strong enough to prevent a financial oligarchy from developing and taking over the land and taking over politics and making its own laws for itself.

And it’s a civilizational difference. And both Steve and I have spent a lot of our time talking about how the Western economies cannot evolve further without a debt write-down, without writing down the debts that are of the 99%, they’re owed to the 1%, the oligarchy that’s controlling all of Western politics. Asia has a way to go a different way.

China doesn’t have a financial oligarchy because it treats money and credit as a public utility through the Bank of China. And so the Bank of China, as we said, makes loans to actually develop the economy. And that’s what Russia says it’s going to begin doing, not to create a financial class to make money at the expense of the 99%. So we’re dealing with a civilizational problem.

And the question is, which form of civilization? Can you rescue Western civilization from the wrong track? Well, only by creating an alternative on the right track and leaving Western civilization and say, well, you’re missing out on the development. Do you want to continue in poverty or are you going to have a revolution?

[00:42:31.650] – Grumbine

You’ve seen yellow and blue profile pictures for everybody totally sympathetic to Ukraine. And our government saying “we are not going to abandon them no matter what.” Biden has signaled that we have unlimited money to give to Ukraine, and he can’t possibly write down $2 trillion in student debt. This weird split dichotomy of truth and lies passes right by the average person.

With what you just stated, which side is going to win? Sadly, the bad guys seem to always win. I rarely see the good guys win. Who is “the good guys”? In full disclosure, I’m a socialist. We don’t even have a left party in the United States. There’s no appetite for that kind of thing in the United States. And those of us that want it are the minority. How do you envision this playing out?

[00:43:26.670] – Hudson

I thought I just said it: a different civilization going its own way.

[00:43:31.740] – Grumbine

Well, what you said was the question of good and evil, basically, which one is going to win? I’m asking you, how do you see it playing out? Because the US can’t continue doing what it’s doing and grow. You need the debt jubilee. We’ve chosen not to. Asia has those systems built and they have choices. So the question I’m proposing, given that, do you see any chance of the US coming to grips with itself? Or do you see this being a one-way trip to destitution?

[00:44:03.570] – Hudson

The latter.

[00:44:05.010] – Grumbine

Fair enough.

[00:44:05.830] – Hudson

That’s all I can say. There is no sign at all of a change. The fact that Steve and I can be on your show – we are not published in the major magazines anymore. We’re not on the major network shows. What you call the bad guys always call themselves the good guys. What you call evil calls itself good. So the question is, what kind of good guys you’re going to have?

The good guys that want to blow up the world and impoverish society, which is what neoliberalism says are the good guys or the good guys for the 99%, which America says are autocracies that we have to fight?

[00:44:41.830] – Grumbine

Yeah.

[00:44:42.670] – Keen

I think I might put a bit of a perspective. People often say, “what’s your alternative?” And what they really mean is “what’s your alternative that I’m going to like?” And I think there is an alternative, but as people feel, “I don’t like it” then other people won’t like it as well. And that is that given the scale of the environmental crisis we’re facing and the fact that it’s coming far sooner than we’re being led to believe, because courtesy of believing their classical economists on it.

When it hits, the countries that are most likely to survive will hold together are those that the West calls authoritarian. And the defining feature of those cultures when you’ve actually been inside them, is that, yes, there is a very strong state and yes, it tends to get its own way and people do what they’re told to some extent, but it’s because at the same time they know they’ve benefited from that state.

So back in China, when you talk to people in China, they will be critical of the Communist Party and say at the same time, the industrialization since then has been incredible and their lives have improved radically over that period of time. I know people who were literally in Mao suits in 1969 who are having a very comfortable retirement when they faced far worst terms back under the old strictly communist regime.

But what you have with a country like that is if China decides it has to radically ramp up renewable energy resources, also install nuclear if necessary, it’s going to do it and not face the opposition the German Greens give to new nuclear power stations, for example. So the capacity to have a top down society is more likely to be then you’re going to survive the crisis that comes forward from climate change.

I can’t see countries that call themselves democracies succeeding in that situation because they will not be able to agree on the level of cutback that’s necessary and who it gets imposed upon. We’re a more centralized society. We’re more successful at doing that and more likely to hold together during the downturn the climate will cause.

[00:46:40.110] – Hudson

You need a strong enough government to check the power of an oligarchy and to prevent a creditor landowner oligarchy from developing. And libertarians, while pretending to be for liberty, they’re for a centrally planned economy, but a centrally planned economy by the oligarchy, by the financial sector, and by the real estate owners. So every economy is planned. And the question is, who’s going to do the planning?

[00:47:05.190] – Grumbine

Yes. And with that in mind, I want to read to you some stuff that came out of this NATO 2022 Strategic Concept – just so that people understand exactly how bad it is. Document defines Russia as the most significant and direct threat to the allies’ security while addressing China for the first time and the challenges that Beijing poses towards allies’ security interests and values.

Documents also state that climate change is a defining challenge of our time. Strategic Concept is updated roughly every decade as NATO’s second most important document. It reaffirms the values of the alliance, provides a collective assessment of security challenges, and guides the alliance’s political and military activities. Previous version was adopted at the NATO Lisbon Summit in 2010.

Point I’m making is they’re bringing more countries in and now setting up China and Russia as the bad guys. This has been going on for a long time, I guess Reaganism with the Cold War. And you brought it up, I think it’s worth mentioning, towards the end of the Chinese Revolution and the US efforts back then to do these same things to China then.

All these institutions, World Bank, IMF, the Peace Corps, all these different NGOs, these were brought out as a direct counter to Russia’s communism and a fear that communism would spread to the global South to prevent them from getting in bed with the Russians. But our country, the United States in this case, has been instrumental in setting up these shadow organizations to prevent any kind of socialism or people-led initiatives around the world.

And it seems like this is going to become the next war. If it’s not going to be just another Cold War, it’s definitely going to be some war because they are lining up the Axis and allies already. I guess. Take us out on this note.

[00:49:13.290] – Keen

I think I take it over a different angle and say that the global politics we’ve had over the last 80-100 years, actually, since the dominance of America, which we pretty much say from the end of the Second World War, has been completely oblivious to the impact we’re having on the planet. The biosphere itself. And the biggest political player on the planet is the biosphere.

And that’s going to start determining what the wars are in future. And I don’t think any country in the world is prepared for that battle. China has maybe probably the most effective capacity to respond to the challenges that are coming this way, but there’s no way America or Russia or anywhere in Europe are aware of the threats they face.

This is a warfare against an implacable foe which we’ve created by destroying the sustainability of the biosphere, by expanding human industry to three to four times the scale that the planet could actually support. That’s the real war that is coming our way.

[00:50:08.600] – Hudson

And Steve, you mentioned how global shipping and trade adds to the global warming. Obviously, the military spending is a huge, huge factor. So the Americans and the Green Parties of Europe are on the wrong side of history. They are doing just the opposite of preserving de-development. They are the advocates of more and more global warming. So literally, you have a group, a bloc, wanting to destroy the environment and a bloc trying to protect itself from the Western destruction.

[00:50:40.830] – Grumbine

Yeah, very scary. And then we’ve got a lot of folks that think that they’re going to appeal to their greater sense of reason to get them to suddenly stop all this, vote their way to a Green New Deal, and it’s all just going to go away. Gentlemen, thank you so much for this time. I really appreciate it. It’s rare to have two such phenomenal guests at once, so I really do appreciate this immensely. Michael, tell us where we can find more about your work.

[00:51:07.230] – Hudson

Well, on my website, michael-hudson.com, and on my Patreon account. Steve also has a Patreon account. He got me onto Patreon. And the books that I describe what we’re talking about are available on Amazon. The Destiny of Civilization and Super Imperialism.

[00:51:27.450] – Grumbine

Very good. Steve, I know we got you on Patreon, but tell us a little bit about your books and where we can find more of your work.

[00:51:33.710] – Keen

Okay, well, again, my main recent book is The New Economics: A Manifesto, and that’s published by Polity press. So you can get it through Polity or you can get it through Amazon. There’s more than one way to get a hold of it. And the main thing I’m doing is developing the software package to enable us to think about the economy the way we should think about it, which is dynamically, non equilibrium, monetary and so on.

And that’s Minsky, which people can find at SourceForge, the open source software package site, SourceForge. Search for SourceForge and Minsky together and you’ll find it. But those are my main two things. I’ve also opened up a substack account recently – profstevekeen.substack.com – mainly because Patreon loses a lot of customers by stuffing up their credit cards. So Patreon, Substack and Minsky.

[00:52:18.030] – Grumbine

Very good. All right. And with that, my name is Steve Grumbine. My special guests, Steve Keen and Michael Hudson. This is the podcast Macro N Cheese. We’re out of here.

Hezbollah’s power card over Israel’s gas tyranny

July 17 2022

Photo Credit: The Cradle

The Lebanese Resistance has drawn a red line: they will not allow Israel to extract oil and gas until the issue of contested gas fields is resolved and Lebanon is free to extract its own.

How close is the Levant to war? Hezbollah’s leader says it all comes down to whether Lebanon is permitted to extract its own energy resources to end the country’s economic crisis. And not in the far future, but right now.

By Abdel Bari Atwan

In his speech last Wednesday, which coincided with the arrival of US President Joe Biden to occupied-Palestine, Hezbollah Secretary General Hassan Nasrallah may have set the “zero hour” for the next and imminent war with Israel.

“The Lebanese have only two months to take advantage of the golden opportunity available to extract gas and oil in the Mediterranean, otherwise the cost will be very high after that.”

This was one of the few times Nasrallah has gone on the offensive, and he made clear the resistance was prepared to liberate Lebanon’s gas and oil wealth. His speech came two weeks after Hezbollah sent three drones over the Israeli-erected gas platform in the Karish gas field – opposite the Lebanese-Palestinian maritime border – and transmitted photos of the platform to an operations room somewhere in southern Lebanon.

Why now? Nasrallah is well aware that the US and its European allies are being defeated in Ukraine, in a war that can be prolonged painfully and can bog down western attentions for the indefinite future.

This represents a truly golden opportunity to liberate the Lebanese wealth buried in the depths of the Mediterranean, and to employ the capabilities of the resistance to achieve this lofty goal. ‘Martyrdom in a war of dignity and honor is nobler than death by starvation.’ It’s a sentiment the Lebanese can understand better than most these days.

***

Lebanon is not on the path to collapse; it has already collapsed as a state. The Lebanese can no longer find bread, and they have lost hope in securing their fuel, electricity, medicine and basic primary services needs, while their children are facing starvation, disease and siege.

Lebanon is currently begging the International Monetary Fund (IMF) to obtain a humiliating loan of $3 billion which is not enough to solve any of its problems. Meanwhile, there are $600 billion worth of gas and oil reserves off Lebanon’s coastline that can solve all its crises, pay off all its debts, and make Beirut more prosperous than any oil-rich Arab capital in the Persian Gulf.

In his speech, Nasrallah stressed that all options are open to confront the Israeli enemy on land, sea and air, and revealed that Hezbollah is monitoring all gas and oil platforms along the occupied Palestinian coast.

This monitoring, it transpires, may have taken place to prepare for a foreign aggression targeting the resistance and Lebanon. According to Axios, in late June, intel experts from 30 countries, including Israel, Saudi Arabia, Bahrain, the UAE and Qatar, met under the auspices of the US State Department, to formulate ways to target Hezbollah.

Unlike most Arab leaders, the Israelis take Nasrallah’s words very seriously. He is the rare regional leader who does not fear war, has the ability to ignite it if warranted, and has won every war in which he engaged: starting with the liberation of southern Lebanon from the Israeli occupation in May 2000, to the Israeli aggression in July 2006, to the war against ISIS in Syria and Iraq in the last few years.

The Israelis, who have long mocked Hezbollah’s oft-repeated threat to “retaliate in the appropriate place and at the appropriate time” against Tel Aviv’s repeated aggressions against Syria and Lebanon, have still not responded to Hezbollah’s dispatch of three drones that flew over the Karish gas platform on 2 July.

The Israelis have swallowed the insult, because they are well aware that whoever sent the drones is eagerly awaiting Tel Aviv’s response, and has prepared to confront them with tens of thousands of precision missiles and armed suicide drones.

Without doubt, the Lebanese resistance is able to disrupt Israel’s extraction of oil and gas in the Mediterranean, at a time when the world, and Europe in particular, is facing a severe crisis in securing energy supplies. It is also capable of striking deep inside Israel and destroying most of its infrastructure, including water, electricity, airports, and all its critical military targets.

***

During Israel’s month-long aggression against Lebanon in July 2006, Nasrallah imposed the formula of bombing “Haifa, and beyond Haifa.” The phrase has stuck, and essentially means that Hezbollah can reach beyond targets that Israel cannot yet fathom.

This equation still exists, and since 2006 it has been updated by adding Umm al-Rarashash (Eilat) and Dimona in the Negev to it. The fresh new formula that Nasrallah announced in his last speech by threatening to “hit Karish, and beyond Karish, and beyond beyond Karish,” will increase the Israelis’ anxiety and fear, because missiles and drones are waiting for the green light to start a regional war from Lebanon.

For a year now, Lebanon has been plunged into darkness and has been waiting for the fulfillment of false US promises to allow it to be supplied with electricity from Jordan and gas from Egypt. We do not think that it will wait in humiliation for months or years for a loaf of bread, for there is no death after death.

In response to the Hezbollah drones, Israeli Defense Minister Benny Gantz threatened to reoccupy Tyre, Sidon and Beirut.

“Let him try,” as Nasrallah said, and he will certainly find what he does not expect. Lebanon today is different from Lebanon forty years ago. The Lebanese have nothing left to lose but hunger, poverty, suffering, and the corruption of the political elite allied to the United States. On the other hand, there is a lot that Israel will lose.

The views expressed in this article do not necessarily reflect those of The Cradle.

Michael Hudson interviewed by Ben Norton (Multipolarista) Update with transcript

June 30, 2022

Economist Michael Hudson on inflation and Fed plan to cut wages: A depression is coming

Transcript:

BENJAMIN NORTON:

Hey, everyone, this is Ben Norton, and you are watching or listening to the Multipolarista podcast. I am always privileged to be joined by one of my favorite guests, Michael Hudson, one of the greatest economists living today.

We’re going to be talking about the inflation crisis. This is a crisis around the world, but especially in the United States, where inflation has been at over 8%. And it has caused a lot of political problems. It’s very likely going to cause the defeat, among other factors, of the Democrats in the mid-term elections in November.

And we’ve seen that the response of the US government and top economists in the United States is basically to blame inflation on wages, on low levels of unemployment and on working people.

We’ve seen that the chair of the Federal Reserve, Jerome Powell, has said that inflation is being caused by wages supposedly being too high. We’ve also seen that the top economist and former Clinton administration official Larry Summers has claimed that the solution to inflation is increasing unemployment, potentially up to 10%.

So today I’m joined by economist Michael Hudson, who has been calling out this kind of neoliberal snake oil economics for many years. And Professor Hudson has an article he just published that we’re going to talk about today. You can find this at his website, which is michael-hudson.com. It’s titled “The Fed’s Austerity Program to Reduce Wages.” and I’m going to let Professor Hudson summarize the main points of his article.

Professor Hudson, as always, it’s a pleasure having you. Can you respond to the decision by the Federal Reserve to increase interest rates by 0.75%? It doesn’t sound like a lot – it’s less than 1% – but this was the largest rate hike since 1994.

And now we’ve already seen reports that there’s going to be a depression. The Fed chair is blaming this on wages. Can you respond to the position of the Fed and the inflation crisis in the US right now.

MICHAEL HUDSON:

For the Fed, the only two things that it can do is, number one, raise the discount rate, the interest rate; and number two, spend $9 trillion buying stocks, and bonds, and real estate mortgages to increase real estate prices, and to increase the amount of wealth that the wealthiest 10% of the population has.

To the wealthiest 10%, especially the 1%, it’s not only inflation that’s a problem of wages; every problem that America has is the problem of the working class earning too much money. And if you’re an employer, that’s the problem: you want to increase your profits. And if you look at the short term, your profits go up the more that you can squeeze labor down. And the way to squeeze labor down is to increase what Marx called the reserve army of the unemployed.

You need unemployment in order to prevent labor from getting most of the value of what it produces, so that the employers can get the value, and pay that to the banks and the financial managers that have taken over corporate industry in the United States.

You mentioned that while the Fed blames the inflation it on labor, that’s not President Biden’s view; Biden keeps calling it the Putin inflation. And of course, what he really means is that the sanctions that America has placed on Russia have created a shortage of oil, gas, energy, and food exports.

So really we’re in the Biden inflation. And the Biden inflation that America is experiencing is the result basically of America’s military policy, its foreign policy, and above all, the Democratic Party’s support of the oil industry, which is the most powerful sector in the United States and which is guiding most of the sanctions against Russia; and the national security state that bases America’s power on its ability to export oil, or control the oil trade of all the countries, and to export agricultural products.

So what we’re in the middle of right now isn’t simply a domestic issue of wage earners wanting higher salaries – which they’re not particularly getting; certainly the minimum wage has not been increased – but you have to put this in the context of the whole cold war that’s going on.

The whole US and NATO confrontation of Russia has been a godsend, as you and I have spoken before, for the oil industry and the farm exporters.

And the result is that the US dollar is rising against the euro, against sterling, and against Global South currencies. Well, in principle a rising dollar should make the price of imports low. So something else is at work.

And what’s at work, of course, is the fact that the oil industry is a monopoly, that most of the prices that have been going up are basically the result of a monopolization, in the case of food, by the marketing firms, like Cargill and Archer Daniels Midland, that buy most of the crops from the farmers.

The irony is that while food prices, next to oil prices, are the major factor that is soaring, farmers are getting less and less for their crops. And yet farmers’ costs are going up – up for fertilizer, up for energy, up for other inputs – so that you’re having enormous profits for Archer Daniels Midland and the food monopolies, of the distributors, and enormous, enormous gains for the oil industry, and also of course for the military-industrial complex.

So if you look at what’s happening in the overall world economic system, you can see that this inflation is being engineered. And the beneficiaries of this inflation certainly have not been the wage earners, by any stretch of the imagination.

But the crisis that the Biden policy has created is being blamed on the wage earners instead of on the Biden administration’s foreign policy and the basically the US-NATO war to isolate Russia, China, India, Iran, and Eurasia generally.

BENJAMIN NORTON:

Professor Hudson, I want to talk about the increase in interest rates by the Fed. There has been a lot of attention to this, although, again, it’s 0.75%, which is not that big. But it’s of course going to have an outsize impact on the economy.

In your article, again, this is your column at michael-hudson.com, “The Fed’s Austerity Program to Reduce Wages,” you talk about the Fed’s “junk economics,” and you say that the idea behind raising interest rates by 0.75% is that:

raising interest rates will cure inflation by deterring borrowing to spend on the basic needs that make up the Consumer Price Index and its related GDP deflator. But banks do not finance much consumption, except for credit card debt, which is now less than student loans and automobile loans. Banks lend almost entirely to buy real estate, stocks and bonds, not goods and services.

So you argue that one of the effects of this is that it’s actually going to roll back homeownership in the United States. You note that the rate of homeownership has been falling since 2008.

So can you expand on those arguments? What will be the impact of the increase of the interest rates by the Fed?

MICHAEL HUDSON:

Well, in order to get an economics degree which is needed to work at the Fed or at the Council of Economic Advisors, you have to take economics courses in the universities, and all of the textbooks say just what you quoted me as saying they say.

The pretense is that banks actually play a productive role in society, by providing the money for factories to buy machinery, and build plants, and do research and development, and to hire labor; and that somehow the money that banks create is all lent out for industrial economy, and that that will enable companies to make more money that they’ll spend on labor; and of course, as they spend more money on labor, that supports to bid prices up as the reserve army of the unemployed is depleted.

But that’s all a fiction. The textbooks don’t want to say that banks don’t play a productive role like that at all. And the corporations don’t do what the textbooks say.

If you look at the Federal Reserve balance sheet and statistics that it publishes every month, you’ll see that 80% of bank loans in the United States are mortgage loans to commercial real estate and mostly for home real estate. And of course the home mortgage loans have been nothing, like under 1% for the last 14 years, since 2008.

Only the banks and the large borrowers, the financial sector, have been able to borrow at these low rates. Homeowners all along have had to pay very high rates, just under 4%, and now it’s going above 4%, heading to 5%.

Well, here is the situation that the Federal Reserve has created. Suppose that you’re a family right now going out to buy a home, and you find out that in order to borrow the money to buy the home – because if the average home in America costs $600,000 or $700,000, people haven’t saved that much; the only way you can buy a home is to take out a mortgage.

Well, you have a choice: you can either rent a home, or you can borrow the money to buy a home. And traditionally, for a century, the carrying charge for financing a home with the mortgage has been about the equivalent of paying a rent. The advantage is, of course, that you get to own the home when it’s over.

Well, now let’s look at what’s happening right now. All of a sudden, the carrying charge of mortgages have gone way, way up. The banks are making an enormous gap. They can borrow at just around 1%, and they lend out at 4.5%. They get a windfall gain of the markup they have in mortgages, lending to prospective homeowners.

And of course, the homeowners don’t have enough money to be able to pay the higher interest charged on the mortgages that they take out. So they are not able to buy as expensive a home as they wanted before.

But they’ve been a declining part of the population. At the time Obama took office, over 68% of Americans owned their own home. Obama started the great wave of evictions, of 10 million Americans who lived in homes, essentially to throw them out of their homes, especially the victims of the junk mortgages, especially the lower income and racial minorities who were redlined and had to become the main victims of the mortgages.

America’s homeownership rate is now under 61%. What has happened? You’ve had huge private capital firms come into the market thinking, wait a minute, we can now buy these properties and rent them out. And we can buy them for all cash, unlike homeowners, we’re multibillionaires, we Blackstone, BlackRock.

You have these multibillion-dollar funds, and they say, well, we can’t make much money buying bonds or buying stocks that yield what they do today, now that the Federal Reserve has ground down interest rates. What we can do is make money as landlords.

And so they’ve shifted, they’ve reversed the whole shift away from the 19th-century landlordism to an economy based on financialization, and the wealthy classes making money on finance, to go back to making money as landlords.

And so they are buying up these homes that American homeowners can’t afford to buy. Because when you raise the mortgage rate, that doesn’t affect a billionaire at all. Because the billionaire firm doesn’t have to borrow money to buy the home. They have the billion dollars of their own money, of pension fund money, of speculative money, of the money of the 1% and the 10% to spend.

So what you’re having by increasing the interest rates is squeezing homeowners out of the market and turning the American economy into a landlord-ridden rental economy, instead of a homeowners economy. That’s the effect.

And it’s a windfall for the private capital firms that are now seeing that are making money as landlords, the old fashioned way, it worked for 800 years under feudalism. It’s coming back in style.

BENJAMIN NORTON:

Professor Hudson, you point out in this article at your website that more than 50% of the value of U.S. real estate already is held by mortgage bankers. And of course, that percentage is increasing and increasing.

Now, you, Professor Hudson, have argued a point that I haven’t seen many other people make, although it’s an obvious, correct point, which is that there has actually been a lot of inflation in the United States in the past several years, but that inflation was in the FIRE sector: finance, insurance, and real estate.

We see that with the constant increase in real estate prices; they go up every single year; rent goes up every single year. The difference now is that there’s also a significant increase in the Consumer Price Index.

And there is an interesting study published by the Economic Policy Institute, which is, you know, a center-left think tank, affiliated with the labor movement; they’re not radicals, they’re progressives. And they did a very good study.

And they found – this was published this April – they found that corporate profits are responsible for around 54% of the increase of prices in the non-financial corporate sector, as opposed to unit labor costs only being responsible for around an 8% increase.

So they showed, scientifically, that over half of the increase of prices in the non-financial corporate sector, that is in the Consumer Price Index, over half of that inflation is because of corporate profits.

Of course, that’s not the way it’s discussed in mainstream media. That’s not the way the Fed is discussing it all. We see Larry Summers saying that we need to increase unemployment. Larry Summers, of course, was the treasury secretary for Bill Clinton.

He’s saying that the U.S. has to increase unemployment; the solution to inflation is increasing unemployment. Even though these studies show that over half of inflation in the Consumer Price Index is because of corporate profits.

I’m wondering if you can comment on why so many economists, including people as revered as Larry Summers, refuse to acknowledge that reality.

MICHAEL HUDSON:

Most economists need to get employment, and in order to be employed, you have to give a picture of the economy that reflects how well your employer helped society at large. You’re not allowed to say that your employer is acting in ways that are purely predatory. You’re not allowed to say that the employer does not earn an income.

You talked about corporate profits and the classical economists. If you were a free-market economist like Adam Smith, or David Ricardo, or John Stuart Mill – these are monopoly rents. So what you call corporate profits are way above normal corporate rates of return, normal profits. They’re economic rents from monopoly.

And that’s because about 10 or 15 years ago, the United States stopped imposing its anti-monopoly laws. It has essentially let monopolies concentrate markets, concentrate power, and charge whatever they want.

And so once you’ve dismantled the whole legal framework that was put in place from the 1890s, from the Sherman Antitrust Act, down through the early 20th century, the New Deal, once you dismantle all of this state control, saying – essentially what Larry Summers says is, we’re for a free market.

A “free market” is one in which companies can charge whatever they want to charge for things; a free market is one without government regulation; a free market is one without government; a free market is a weak enough government so that it cannot protect the wage earners; it cannot protect voters. A “democracy” is a country where the bulk of the population, the wage earners, have no ability to affect economic policy in their own interests.

A “free market” is one where, instead of the government being the planner, Wall Street is the planner, on behalf of the large industries that are basically being financialized.

So you’ve had a transformation of the concept of what a free market is, a dismantling of government regulation, a dismantling of anti-monopoly regulation, and essentially the class war is back in business.

That’s what the Biden administration is all about. And quite frankly, it’s what the Democratic Party is all about, even more than the Republican Party. The Republican Party can advocate pro-business policies and pro-financial policies, but the Democratic Party is in charge of dismantling the legacy of protection of the economy that had been put in place for a century.

BENJAMIN NORTON:

Yeah, and this is an article in Fortune that was originally based on an article in Bloomberg: “5 years at 6% unemployment or 1 year at 10%: That’s what Larry Summers says we’ll need to defeat inflation.” That’s how simple it is, you know, just increase unemployment, and then inflation will magically go away!

Now, I also wanted to get your response, Professor Hudson, to these comments that you highlighted in a panel that was organized by the International Manifesto Group – a great organization, people can find it here, their channel here at YouTube. And they held a conference on inflation. And you were one of several speakers.

And you highlighted these comments that were made by the Fed chair, Jerome Powell. And this is according to the official transcript from The Wall Street Journal. So this is not from some lefty, socialist website. Here’s the official transcript of a May 4 press conference given by the Fed chief, Jerome Powell.

In this press conference, he said, discussing inflation, he said, in order to get inflation down, he’s talking about things that can be done “to get wages down, and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially.”

So this is another proposal. Larry Summers says 6% unemployment for five years, or 10% unemployment for one year. The Fed chair, Jerome Powell, says the solution is “to get wages down.” I’m wondering if you can respond to that as well.

MICHAEL HUDSON:

Well, the important thing to realize is that President Biden re-appointed Jerome Powell. President Biden is a Republican. The Democratic Party is basically the right wing of the Republican Party, the pro-financial, the pro-Wall Street wing of the Republican Party.

Why on earth, if the Democrats were different from the Republicans, why would would Biden re-appoint an anti-labor Republican, as head of the Federal Reserve, instead of someone that would actually try to spur employment?

Imagine, here’s a party that is trying to be elected on a program of, “Elect us, and we will create a depression and we will lower wages.” That is the Democrat Party slogan.

And it’s a winning slogan, because elections are won by campaign contributions. The slogan is, “We will lower wages by bringing you depression,” is a tsunami of contributions to the Democratic Party, by Wall Street, by the monopolists, by all the beneficiaries of this policy.

So that’s why the Supreme Court ruling against abortions the other day is a gift to the Democrats, because it distracts attention from their identity politics of breaking America into all sorts of identities, every identity you can think of, except being a wage earner.

The wage earners are called deplorables, basically. And that’s how the donor class thinks of them, as sort of unfortunate overhead. You need to employ them, but it really it’s unfortunate that they like to live as well as they do, because the better they live, the less money that you will end up with.

So I think that this issue of the inflation, and what really causes it, really should be what elections are all about. This should be the economic core of this November’s election campaign and the 2024 election campaign. And the Democrats are leading the fight to lower wages.

And you remember that when President Obama was elected, he promised to increase the minimum wage? As soon as he got in, he said the one thing we cannot do is raise the minimum wage. And he had also promised to back card check. He said, the one thing we must not do is increase labor unionization with card check, because if you unionize labor, they’re going to ask for better wages and better working conditions.

So you have the Democratic Party taking about as hard a right-wing position as sort of Chicago School monetarism, saying the solution to any any problem at all is just lower wages and somehow you’ll be more competitive, whereas the American economy is already rendered uncompetitive, not because wages are so high, but because, as you mentioned before, the FIRE sector, the finance, insurance, and real estate sector is so high.

Rents and home ownership, having a home is too expensive to be competitive with foreign labor. Having to pay 18% of GDP on medical care, privatized medical care, prices American labor out of the market. All of the debt service that America has paid is pricing America out of the market.

So the problem is not that wages are too high. The problem is that the overhead that labor has to pay in order to survive, for rent, for medical care, for student loans, for car loans, to have a car to drive to work, for gas to drive to work, to buy the monopoly prices that you need in order to survive – all of these are too high.

None of this even appears in economic textbooks that you need to get a good mark on, in order to get an economics degree, in order to be suitably pliable to be hired by the Federal Reserve, or the Council of Economic Advisers, or by corporations that use economists basically as public relations spokesmen. So that’s the mess we’re in.

BENJAMIN NORTON:

Professor Hudson, in your article at your website, michael-hudson.com, you have an important section about the quantitative easing policies. We were talking about how there has been inflation in the past decade, but then inflation was largely in the FIRE sector, pushing up, artificially inflating the prices of real estate and stocks.

You note that:

While home ownership rates plunged for the population at large, the Fed’s “Quantitative Easing” increased its subsidy of Wall Street’s financial securities from $1 trillion to $8.2 trillion – of which the largest gain has been in packaged home mortgages. This has kept housing prices from falling and becoming more affordable for home buyers.

And you, of course, note that “the Fed’s support of asset prices saved many insolvent banks – the very largest ones – from going under.”

I had you on to discuss, in late 2019, before the Covid pandemic hit, we know that the Fed had this emergency bailout where it gave trillions of dollars in emergency repo loans to the biggest banks to prevent them from from crashing, trying to save the economy.

I do want to talk about this as well, because sometimes this is used by right-wingers who portray Biden hilariously as a socialist. You were just talking about how the Democrats have a deeply neoliberal, right-wing economic program.

But of course, there is this rhetoric that we see from Republicans and conservatives claiming that Biden is a socialist. They claim that the reason there is inflation is because Biden is just printing money and giving money to people.

Of course, that’s not at all what’s happening. What has happened is that the Fed has printed trillions of dollars and given that to stockholders, to big corporations, and to banks.

And this is a point that I saw highlighted in that panel I mentioned, the conference on inflation that was organized by the International Manifesto Group. A colleague of yours, a brilliant political economist, Radhika Desai, she invited everyone to go to the Fed website and look at the Fed balance sheet.

And this is the Fed balance sheet from federalreserve.gov. This is the Board of Governors of the Federal Reserve System website. And it is pretty shocking to see this graph, which shows the total assets of the U.S. Federal Reserve.

US Federal Reserve assets balance sheet 2022

Back in 2008, the Federal Reserve had around $900 billion in assets. Now it’s at nearly $9 trillion in assets.

And we can see, after the financial crash, or during the financial crash, it increased to around $2 trillion. And then around 2014, it increased to around $4.5 trillion. And then especially in late 2019 and 2020, it skyrocketed from around $4 trillion up to $7 trillion. And since then, it has continued skyrocketing to $9 trillion in assets.

Where did all of that money go? And what was the impact on the economy, of course?

MICHAEL HUDSON:

Well, the impact on the economy has been to vastly increase the wealth of the wealthiest 1% of Americans who own most of the stocks and bonds.

Sheila Bair, the former head of the Federal Deposit Insurance Corporation, pointed out that a lot of this $8 trillion is spent to buy junk bonds.

Here’s the problem. The problem really began with President Obama. He inherited a system where you had the largest wave of commercial bank fraud in American history.

As my colleague Bill Black at the University of Missouri at Kansas City has pointed out, everybody knew that there was a bank fraud on. The newspapers referred to junk mortgages and “NINJA” borrowers: “no income, no jobs, no assets.”

So banks had written mortgages way above the actual value of homes, especially to racial and ethnic minorities, without any ability of the borrowers to actually pay.

And then these banks had packaged these mortgages, and sold them to hapless pension funds, and other institutional investors and to the European banks that are always very naive about how honest American banks are.

You had this whole accumulation of what the 19th century called fictitious capital. Mortgages for property that wasn’t worth anywhere near as much as the mortgage is for.

So if the mortgage was defaulted, if homeowners had jingle mail – in other words, you just mail the keys back to the bank and say, ok, take the house, I find I can buy a house now at half the price that Citibank or one of these other banks lent out.

Well, normally you’d have a crash of prices back to realistic levels, so that the value of mortgages actually reflected the value of property, or the value of junk bonds issued by a corporation reflected the actual earning power of the corporation to pay interest on the junk bonds.

So by the time Obama took over, the whole economy was largely fictitious capital. Well, Obama came in and he said, my campaign donors are on Wall Street. He called in the Wall Street bankers and he said, I’m the guy standing between you and the crowd with the pitchforks, the people who voted for me. But don’t worry, I’m on your side.

He said, I’m going to have the Federal Reserve create the largest amount of credit in human history. And it’s all going to go to you. It’s going to go to the 1% of the population. It’s not going to go into the economy. It’s not going to build infrastructure. It’s not going into wages. It’s not going to reduce the price of homes and make them more affordable to Americans.

It’s going to keep the price of these junk bonds so high that they don’t crash back to non-fictitious values. It’s going to keep the stock market so high that it’s not going to go down. It’s going to create the largest bond market boom in history.

The boom went from high interest rates to low interest rates, meaning a gigantic rise in the price of bonds that actually pay interest that are more than 0.1%.

So there was a huge bond market boom, a huge stock market, a tripling of stock market prices. And if you are a member of the group that owns 72% of American stocks, I think that’s 10% of the population, you have gotten much, much richer.

But if you’re a member of the 90% of the population, you have had to go further and further into debt just in order to survive, just in order to pay for medical care, student loans, and your daily living expenses out of your salary.

So if American wages were at a decent level, American families would not be pushed more and more into debt. The reason the personal debt has gone up in the United States is because families can’t get by on what they earn.

So obviously, if they can’t get by on what they earn, and they have to borrow to get by, they are not responsible for causing the inflation. They’re being squeezed.

And the job of economists, and of Democratic Party and Republican politicians, is to distract attention from the fact that they’re being squeezed and blame the victim, and saying, you’re doing it to yourself by just wanting more money, you’re actually creating the inflation that is squeezing you.

When actually it’s the banks, and the government’s non-enforcement of the monopoly policy, and the government support of Wall Street that is responsible for what is happening.

BENJAMIN NORTON:

Very, very well said.

Professor Hudson, I should have highlighted another part of this graph here. This is, again, this is at the Federal Reserve Board website. It’s even more revealing when you look at the selected assets of the Fed, and you see that all of these assets basically are securities, securities held outright by the Fed.

We see that around 2008, the Fed had less than $500 billion in securities. And you have this policy of quantitative easing. And since then, basically all of the increase has been in securities. Of the roughly $9 trillion in assets the Fed holds, about about $8.5 trillion is in securities.

US Federal Reserve assets securities balance sheet 2022

I’m wondering if you can compare this to central banks in other countries. We’ve seen, for instance, that the Western sanctions on Russia were aimed at trying to destroy the Russian economy.

President Biden claimed they were trying to make the ruble into rubble. In fact, the ruble is significantly stronger now than it was before the sanctions. To such a degree that the Russian government and Russian national bank are actually trying to decrease the value of the ruble, because they think it’s a little overvalued; it makes it a little harder to be competitive.

So how does this policy of the US Fed having $8.5 trillion worth of securities compare to the policies of other central banks?

You have experience working with the Chinese government as an advisor. Do other governments’ central banks have this policy?

And and that $8.5 trillion in securities, what are those securities? Even from the perspective of these neoliberal economics textbooks that you were talking about, that people are taught in universities, this seems to me to be totally insane. I don’t see how there is even an academic, neoliberal textbook explanation for this policy.

MICHAEL HUDSON:

Very few people realize the difference between a central bank and the national treasury. The national treasury is what used to perform all of the policies that central banks now do. The national treasury would be in charge of issuing money and spending it.

Central banks were broken off in America in 1913 from the Treasury in order to shift control of the money supply and credit away from Washington to New York. That was very explicit.

The original Federal Reserve didn’t even permit a Treasury official to be on the board of directors. So the job of a central bank is to represent the interest of the commercial banks.

And as we just pointed out, the interest of the commercial banks is to produce their product: debt. And they create their product against existing assets, mainly real estate, but also stocks and bonds.

So the job of the central bank here is to support the financial sector of the economy, and that sector that holds wealth in the form of stocks, bonds, and loans, and especially bank bonds that make their money off real estate credit.

Same thing in Europe, with Europe’s central bank. Europe is going into a real squeeze now, and has been going into a squeeze ever since you had the Greek crisis.

In Europe, because right-wing monetarist designed the euro, part of the eurozone rule is you cannot run a budget deficit, a national budget deficit of more than 3% of gross domestic product.

Well, that’s not very much. That means that you can’t have a real Keynesian policy in Europe to pull the economy out of depression. That means that if you’re a country like Italy right now, and you have a real financial squeeze there, a corporate squeeze, a labor squeeze, the government cannot essentially rescue either Italian industry or Italian labor.

However, the European central bank can, by the way that it creates credit, by central bank deposits, the European central bank can vastly increase the price of European stocks, bonds, and packaged mortgages. So the European central bank is very much like the commercial bank.

China is completely different, because, unlike the West, China treats money and credit as a public utility, not as a private monopoly.

And as a public utility, China’s central bank will say, what are we going to want to create money for? Well, we’re going to want to create money to build factories; we’re going to want to create money so that real estate developers can build cities, or sometimes overbuild cities. We can create money to actually spend in the economy for something tangible, for goods and services.

The Chinese central bank does not create money to increase stock market prices or bond prices. It doesn’t create money to support a financial class, because the Communist Party of China doesn’t want a financial class to exist; it wants an industrial class to exist; it wants an industrial labor force to exist, but not a rentier class.

So a central bank in a Western rentier economy basically seeks to create credit to inflate the cost of living for homebuyers and for anyone who uses credit or needs credit, and to enable corporations to be financialized, and to shift their management away from making profits by investing in plant and equipment and employing labor to produce more, to making money by financial engineering.

In the last 15 years, over 90% of corporate earnings in the United States have been spent on stock buybacks and on dividend payouts. Only 8% of corporate earnings have been spent on new investment, and plants, and equipment, and hiring.

And so of course you have had the economy deindustrialized. It’s this idea that you can make money financially without an industrial base, without a manufacturing base; you can make money without actually producing more or doing anything productive, simply by having a central bank increase the price of the stocks, and bonds, and the loans made by the wealthiest 10%.

And of course, ultimately, that doesn’t work, because at a certain point the whole thing collapses from within, and there’s no industrial base.

And of course, when that happens, America will find out, wait a minute, if we close down the economy, we’re still reliant on China and Asia to produce our manufacturers, and to provide us with raw materials, and to do everything that we need. We’re really not doing anything but acting as a world – well, people used to say parasite – as a world rentier, as getting something for nothing, as a kind of financial colonialism.

So America you could look at as a colonial power that is a colonial power not by military occupation, but simply by financial maneuvering, by the dollar standard.

And that’s what’s being unwound today as a result of Biden’s new cold war.

BENJAMIN NORTON:

Professor Hudson, you criticized the strategy of simply trying to increase the interest rates to bring down inflation, noting that it’s going to lead to a further decline in homeownership in the United States. It’s going to hurt working people. I think that’s a very valid criticism.

I’m curious, though, what your take is on the response of the Russian central bank to the Western sanctions. We saw that the chair of the Russian central bank, Elvira Nabiullina, she – actually this is someone who is not even necessarily really condemned a lot by Western economists; she is pretty well respected by even, you know, Western neoliberal economists.

And she did manage to deal with the sanctions very well. She imposed capital controls immediately. She closed the Russian stock market. And also, in a controversial move, she raised the interest rates from around 9% up to 20%, for a few months. And then after that, dropped the rates.

MICHAEL HUDSON:

A few days, not a few months. That was very short. And now she has moved the interest rates way down.

BENJAMIN NORTON:

Back to 9%.

MICHAEL HUDSON:

She was criticized for not moving them further down.

BENJAMIN NORTON:

Yeah, well go ahead. I’m just curious. So she immediately raised it to 20%, and then has dropped the interest rates since then. I’m curious what you think about that policy. Yeah, go ahead.

MICHAEL HUDSON:

There is very little that a central banker can do when the West has declared a war, basically, a war on a country that is completely isolated.

The response has come from President Putin and from Foreign Secretary Lavrov. And they pointed out, well, how is Russia going to going to trade and get what it needs. And this is what the recent meetings of the BRICS are all about.

Russia realizes that the world is now broken into two halves. America and NATO have separated the West. Basically you have a white people’s confederation against all the rest of the world.

And the West has said, we’re isolating ourselves from you totally. And we think you can’t get along without us.

Well, look at the humor of this. Russia, China, Iran, India, Indonesia, and other countries are saying, hah, you say we we can’t get along without you? Who is providing your manufacturers? Who is providing your raw materials? Who is providing your oil and gas? Who is providing your agriculture, and the helium, the titanium, the nickel?

So they realize that the world is breaking in two, and Eurasia, where most of the world’s population is concentrated, is going to go its own way.

The problem is, how do you really go your own way? You need a means of payment. You need to create a whole international system that is an alternative to the Western international system. You need your own International Monetary Fund to provide credit, so that the these Eurasian countries and their allies in the Global South can deal with each other.

You need a World Bank that, instead of lending money to promote U.S. policies and U.S. investments, will promote mutual gains and self-sufficiency among the countries.

So already, every day in the last few weeks, you have had meetings with the Russians about this, who said, ok, we’re going to create a mutual trading area, starting among the BRICS: Brazil, Russia, India, China, and South Africa.

And how are we going to pay? We can’t pay in dollars, because if we have money in a dollar bank, or a euro bank in Europe, they can just grab the money, like they grab Venezuela’s money. They can just say, we’re taking all your money because, essentially, we don’t want you to exist as an alternative to the finance capital world that we are creating.

So essentially, Russia, China, and these other countries are saying, ok, we’re going to create our own international bank. And how are we going to fund it? Well, every member of the bank will contribute, say, a billion dollars, or some amount of their own currency, and this will be our backing. We can also use gold as a means of settlement, as was long used among countries.

And this bank can create its own special drawing rights, its own bank order, is what Keynes called it. It can create its own credit.

Well, the problem is that, if you have Brazil, for instance, or Argentina, joining this group, or Ecuador, that sells almost all of its bananas to Russia, how is it going to get by?

Well, if there is a BRICS group or a Shanghai Cooperation Organization bank, obviously the Western governments are not going to accept this.

So Russia realizes that as a result of Biden’s Cold War Two, there is going to be a continued rise in energy prices. You think gasoline prices are not high now? They’re going up. You think food prices are not high now? They’re going up more.

And Europe is especially the case, because Europe now cannot buy Russian gas to make the fertilizer to make its own crops grow.

So you’re going to have a number of countries in the Global South, from Latin America to Africa, being squeezed and wanting to trade with the Eurasian group.

And the problem is Russia says, all right, we know that you can’t afford to pay. We’re glad to give you credit, but we don’t want to give you credit that you’re going to simply use the money you have to pay your dollar debts that are coming due.

Because one of the effects that I didn’t mention of the Federal Reserve raising interest rates is there is a huge flow of capital from Europe and England into the United States, so that if you’re a billionaire, where are you going to put your savings? You want the highest interest rates you want. And if the United States raises interest rates, the billionaires are going to move their money out of England, out of the euro, and the euro is going back down against the dollar. It’s almost down to a dollar a euro.

The British pound is heading downwards, towards one pound per dollar.

This increase in the dollar’s exchange rate is also rising against the currencies of Brazil, Argentina, the African countries, all the other countries.

So how are they going to pay this summer, and this fall, for their food, for their oil and gas, and for the higher cost of servicing their dollar debts?

Well, for Eurasia, they’re going to say, we want to help you buy our exports – Russia is now a major grain exporter, and obviously also an oil exporter – saying we want to supply you and give you the credit for this, but you’re really going to have to make a decision. Are you going to join the U.S.-NATO bloc, or are you going to join the Eurasian bloc?

Are you going to join the White People’s Club or the Eurasian Club? And it really comes down to that. And that’s what is fracturing the world in these two halves.

Europe is caught in the middle, and its economies are going to be torn apart. Employment is going to go down there. And I don’t see wages going up very much in Europe.

You’re going to have a political crisis in Europe. But also you’ll have an international diplomatic crisis over how are you going to restructure world trade, and investment, and debt.

There will be two different financial philosophies. And that’s what the new cold war is all about.

The philosophy of US-sponsored finance capitalism, of making money financially, without industrialization, and with trying to lower wages and reduce the labor force to a very highly indebted workforce living on the margin.

Or you’ll have the Eurasian philosophy of using the economic surplus to increase productivity, to build infrastructure, to create the kind of society that America seemed to be growing in the late 19th century but has now rejected.

So all of this is ultimately not simply a problem of interest rates and central bank policy; it really goes beyond central banks to what kind of a social and economic system are you going to have.

And the key to any social and economic system is how you treat money and credit. Is money and credit going to be a public utility, or will it be a private monopoly run for the financial interests and the 1%, instead of a public utility run for the 99%?

That’s what the new cold war is going to be all about. And that’s what international diplomacy week after week is trying to settle.

BENJAMIN NORTON:

Very, very well said. And I really agree about this increasing kind of bipolar order, where the US-led imperialist system is telling the world they have to pick a side. You know, as George W. Bush said, you’re either with us or you’re against us; you’re with us or you’re with the terrorists.

That’s what Biden is saying to the world. And we see the West has drawn this iron curtain around Russia. And now they’re threatening to do the same around China.

Now, of course, the difference is that China has the largest economy in the world, according to a PPP measurement. It’s even larger than the US economy. I don’t know how they can try to sanction the Chinese economy, considering China is the central factory of the world.

But this is related to a question I had for you, Professor Hudson, and this is from a super chat question from Manoj Payardha, and it’s about how Chinese banks say they’re not ready yet to develop an alternative to the SWIFT. He asked, how will the Third World pay Russia for resources?

And we’ve seen, maybe you can talk about the measures being implemented. India has this rupee-ruble system that they’ve created.

But I want to highlight an article that was published in Global Times. This is a major Chinese newspaper, and this is from April. And it quotes the former head of China’s central bank, who was speaking at a global finance forum in Beijing this April.

And basically he said, we need to prepare to replace Swift. He said the West’s adoption of a financial nuclear option of using SWIFT to sanction Russia is a wake up call for China’s financial development. And he said, “We must get prepared.”

So it seems that they’re not yet prepared. But this is something that you’ve been talking about for years. Or maybe you disagree and maybe you think they already are prepared with the SWIFT alternative?

MICHAEL HUDSON:

Well they’re already using an alternative system. If they weren’t using an alternative system – Russia is adopting part of the Chinese system for this – they wouldn’t be able to have banks communicate with each other.

So, yes, they already have a rudimentary system. They’re making it a better system that can also be immune from U.S. computer espionage and interference. So yes, of course there’s already a system.

But I want to pick up on what you said about Biden, how Biden characterizes things.

Biden characterizes the war of the West against Eurasia as between democracy and autocracy. By “democracy,” he means a free market run by Wall Street; he means an oligarchy.

But what does he mean by autocracy? What he means by autocracy, when he calls China an autocracy, an “autocracy” is a government strong enough to prevent an oligarchy from taking power, and taking control of the government for its own interests, and reducing the rest of the economy to debt peonage.

An “autocracy” is a country with public regulation against monopolies, instead of an oligarchic free market. An “autocracy” uses money and credit, essentially, to help economies grow. And when debts cannot be paid in China, if a factory or a real estate company cannot pay debts, China does not simply say, ok, you’re bankrupt, you’re going to have to be sold; anybody can buy you; the Americans can buy you.

Instead, the Chinese say, well, you can’t pay the debts; we don’t want to tear down your factory; we don’t want your factory to be turned and gentrified into luxury housing. We’re going to write down the debt.

And that’s what China has done again and again. And it’s done that with foreign countries that couldn’t pay the debt. When a debt that China has come due for China’s development of a port, or roads, or infrastructure, it says, well, we understand that you can pay; we will delay payment; we will have a moratorium on your payment. We’re not here to bankrupt you.

For the Americans, to the international funds, they’re saying, well, we are here to bankrupt you. And now if we lend you, we the IMF, lends you money to avoid a currency devaluation, the term is you’re going to have to privatize your infrastructure; you’re going to have to sell off your public utilities, your electric system, your roads, your land to private buyers, mainly from the United States.

So you have a “democracy” supporting bankruptcy, foreclosure, financialization, and privatization, and low wages by a permanent depression, a permanent depression to keep down wages.

Or you have “autocracy,” seeking to protect the interests of labor by supporting a living wage, to increase living standards as a precondition for increasing productivity, for building up infrastructure.

You have these two diametrically economic systems. And, again, that’s why there’s a cold war on right now.

BENJAMIN NORTON:

And there’s another super chat question here, Professor Hudson. You mentioned the International Monetary Fund, the IMF. We have talked about that many times. This is from Sam Owen. He asked, why do countries continue to accept bad IMF loans when they have such a poor track record? Is it just the US government meddling in the national politics? Are there cases of good IMF loans?

MICHAEL HUDSON:

Well, what is a country? When you say a country to most people, people think, ok, let’s talk about Brazil; let’s talk about all the people in Brazil; you have a picture in the mind of the Amazon; you have a big city with a lot of people in it.

But the country, in terms of the IMF, is a group of maybe the 15 wealthiest families in Brazil, that own most of the money, and they are quite happy to borrow from the IMF, because they say, right now there’s a chance that Lula may become president instead of the neo-fascist Bolsonaro. And if Lula comes in, then he is going to support labor policies, and he may stop us from tearing down the Amazon. So let’s move our money out of the country.

Well, normally this would push the exchange rate of the cruzeiro (real) down. So the IMF is going to make a loan to Brazil to support the cruzeiro (real), so that the wealthy 1% of Brazil can move their money into dollars, into euros, into foreign currency and offshore bank incentives, and load Brazil down with debt, so that then when there is an election, and if Lula is elected, the IMF is going to say, well, we don’t really like your policies, and if you pursue a pro-labor, socialist policy, then there’s going to be a capital flight. And we’re insisting that you pay all the money that you borrowed from the West right back now.

Well, that’s going to lead Lula either to sit there, follow the IMF direction, and let the IMF run the economy, instead of his own government, or just say, we’re not going to pay the foreign debt.

Well, until now, no country has been in a strong enough position not to pay the foreign debt. But for the first time, now that you have the Eurasian group – we’ll call it BRICS, but it’s really Eurasia, along with the Southern groups that are joining, the Global South – for the first time, they can say, we can’t afford to stay in the West anymore.

We cannot afford to submit the economy to the IMF demands for privatization. We cannot submit to the IMF rules that we have to fight against labor, that we have to pass laws banning labor unions, that we have to fight against laborers’ wage, like Western democracies insist on. We have to go with the Chinese “autocracy,” which we call socialism.

And of course, when America accuses China being an “autocracy,” autocracy is the American word for socialism. They don’t want to use that word. So we’re back in Orwellian double-think.

So the question is what, will the Global South countries do when they cannot afford to buy energy and food this summer, without an IMF loan? Are they going to say, ok, we can only survive by joining the break from the West and joining the Eurasian group?

That is what the big world fracture is all about.

And I described this global fracture already in 1978. I wrote a book, “Global Fracture,” explaining just exactly how all of this was going to happen.

And at that time, you had Indonesia, you had Sukarno taking the lead, the non-aligned nations, India, Indonesia, were trying to create an alternative to the financialized, American-centered world order. But none of these countries had a critical mass sufficient to go their own way.

Well, now that America has isolated Russia, China, India, Iran, Turkey, all these countries, now it has created a critical mass that is able to go its own way. And the question is, now you have like a gravitational pull, and will this Eurasian mass attract Latin America and Africa to its own group, away from the United States? And where is that going to leave the United States and Europe?

BENJAMIN NORTON:

And we saw one of the clearest examples yet of this bipolar division of the world between, you know, the West and the rest, as they say, with this ridiculous meeting that was just held of the G7.

Of course, the G7 are the white, Western countries. And then they’ll throw in U.S.-occupied Japan in there, to pretend they’re a little more diverse.

But we saw that the G7 just held a summit, and basically the entire summit was about how can we contain China? How can we expand the new cold war on Russia into a new cold war on China?

And here’s a report in BBC: “G7 summit: Leaders detail $600bn plan to rival China’s Belt and Road initiative.” Now, I got a chuckle out of this. The idea that the US government is going to build infrastructure in the Global South, I mean, it’s pretty laughable.

It’s also absurd considering that China’s Belt and Road Initiative, which involves over half of the countries on Earth, is estimated at many trillions of dollars in infrastructure projects. So the US and its allies think that they can challenge that with $600 billion in public-private partnerships.

I should stress, of course, what they announced is going to be a mixture of so-called public initiative and then contracts for private corporations.

So it’s yet another giveaway to the private sector, in the name of building infrastructure.

But I’m wondering if if you can comment on the G7 summit that just was held.

MICHAEL HUDSON:

Well, nothing really came out of it. They all said that they could not agree on any more sanctions against Russia, because they’re already hurting enough. India, in particular, stood up and said, look, there’s no way that we’re going to join the sanctions against Russia, because it’s one of our major trading partners. And by the way, we’re getting a huge benefit from importing Russian oil, and you’re getting a huge benefit by getting this oil from us at a markup.

So the G7 could not get any agreement on what to do. It is already at a stalemate. And this is only June. Imagine the stalemate it’s going to be in September.

Well, next week, President Biden is going to Saudi Arabia and saying, you know, we’re willing to kill maybe 10 million more of your enemies; we’re willing to help Wahhabi Sunni groups kill more of the Iranian Shiites, and sabotage Iraq and Syria. We’ll help you back al-Qaeda again, if you will lower your oil prices so that we can squeeze Russia more.

So that’s really the question that Saudi Arabia will have. America will send give it more cluster bombs to use against Yemen.  And the question is, is Saudi Arabia going to say, ok, we’re going to earn maybe $10 billion less a month, or however much they’re making, just to make you happy, and so that that you will kill more Shiites who support Iran?

Or are they going to realize that if they throw in their lot with the United States, all of a sudden they’ll be under attack from Iran, Russia, Syria, and they’ll be sitting ducks? So what are they going to do?

And I don’t see any way that Biden can actually succeed in getting Saudi Arabia to voluntarily earn less on its oil prices. Maybe Biden can say it’s only for a year, only for one or two years. But as other countries know, when America says only for a year or two, it really means forever. And if you don’t continue, then somehow they have a regime replacement, or a regime change and a color revolution.

So Biden keeps trying to get foreign countries to join the West against Eurasia, but there is Saudi Arabia sitting right in the middle of it.

And all that Europe can do is watch and wonder how it’s going to get by without without energy and without much food.

BENJAMIN NORTON:

Yeah, in fact, Venezuela’s President Maduro just confirmed that the Biden administration has sent another delegation basically begging Venezuela to try to work out some deal because, of course, the U.S. and the EU have boycotts of Russian energy.

So it’s really funny to me that, after years of demonizing Venezuela, portraying it as a dictatorship and all of this, the U.S. had to decide, well, the war in Venezuela is not as important as the war on Russia right now; so we’re going to temporarily pause our war on Venezuela to stick the knife deeper into Russia.

But on the on the subject of the the G7 meeting, this was the hilarious comment made by the European Commission President Ursula von der Leyen, in an article in Reuters titled “Europe Must Give Developing Nations Alternative to Chinese Funds.”

So echoing the same perspective that we hear from Biden, U.S. government officials constantly say that the US needs to challenge China in the Global South. So Europe pledged €300 billion – however, once again, important asterisk – “in private and public funds over five years to fund infrastructure in developing countries.”

So once again, we see another neoliberal private-public partnership. It’s going to be another public giveaway to private corporations.

And “she said that this is part of the G7’s drive to counter China’s multitrillion-dollar Belt and Road project.”

Now, this is really just tying everything together that we have been talking about today, Professor Hudson – in your article “The Fed’s Austerity Program to Reduce Wages,” you conclude the article noting that the depression that people in the United States are on the verge of facing because of these neoliberal policies – telling workers in the U.S. that they need to decrease their wages and be unemployed in order to stop inflation – you point out that:

Biden’s military and State Department officers warn that the fight against Russia is just the first step in their war against China’s non-neoliberal economy, and may last twenty years. That is a long depression. But as Madeline Albright would say, they think that the price is “worth it.”

And you talk about the new cold war against the socialist economy in China and the state-led economy in Russia.

So you predict not only a depression is coming. We have seen that in mainstream media outlets. Larry Summers said, you know, a depression could be coming for a few years. But you say, no, not only is a depression coming; it’s going to be a long depression. We could be seeing 20 years.

And basically the U.S. government and other Western leaders, as we see Ursula von der Leyen from the EU, they’re basically telling their populations, tighten your belts; we have decades of depression coming, because we have collectively decided, as Western leadership, that we are going to force the world through a long depression economically, or at least forced the West through a long economic depression, in order to try to halt the rise of China and Russia.

They’re basically telling their populations, suck it up, tighten your belts for decades, because in the end, the price is worth it in order to prevent the collapse of our empires.

MICHAEL HUDSON:

That’s right. When they’re talking about private-public initiatives, they’re talking about Pentagon capitalism. That means the government will give trillions of dollars to private firms and ask them to build infrastructure.

And if they build a port or a road in a Global South country, they will operate this at a profit, and it will be an enormously expensive infrastructure, because to make financial money off this infrastructure, you have to price it at the cost of production, which is Pentagon capitalism, hyper inflated prices; you have to pay management fees; you have to pay profits; you have to pay interest rates.

As opposed to the Chinese way of funding as equity. The Western mode of funding is all debt leverage. China takes as collateral for the infrastructure that it pays, an equity ownership in the port or whatever infrastructure in the Belt and Road that it’s building.

So you have the difference between equity ownership, debt-free ownership, where if it can afford to pay, fine; if it doesn’t make an income, there are no dividends to pay.

Or you have the debt leverage that is intended that the government cannot pay it, so that the government that will be the co-signer for the debt for all of this infrastructure will somehow be obliged to tax its whole population to pay the enormous super-profits, the enormous monopoly rents, the enormous debt charges of von der Leyen’s Margaret Thatcher plan.

Von der Leyen thinks that she can do to Europe and to America what Margaret Thatcher did to England. And if she does, then then America and Europe deserve it.

BENJAMIN NORTON:

And Professor Hudson, as we start wrapping up here, I know you have to go pretty soon, just a few short questions here at the end.

I’m wondering if what we’re also seeing is not only this fundamental crisis in the Western neoliberal, financialized economies, but it’s also this bubble that has burst, or at least this phase that is over.

At least this is my reading, I’m curious if you agree. In the 1990s, the peak of, you know, the so-called golden age of neoliberalism; we had Bill Clinton riding this wave, and it was the “end of history,” in Francis Fukuyama’s nonsense prediction and all that.

How much of that was not only based on this exorbitant privilege, as the French call it, of the dictatorship of the US dollar – we talked about that based on your book “Super Imperialism,” how the US was given this massive global free lunch economically because of dollar hegemony – but how much of it was not just that, but also the fact that in the 1990s and the first decade of the 2000s, the US and Western Europe had access to very cheap consumer goods from Asia and very cheap energy from Russia?

To me, it seems like those two factors are some of the most important reasons why this golden age of neoliberalism in the ’90s and early 2000s was even possible.

It was on the back of low-paid Asian workers, and based on this idea that Russia would permanently be, what Obama called it: a gas station.

Well, we’ve seen that, one, East Asian economies have lifted themselves up of poverty, especially China has ended extreme poverty and raised median wages significantly.

And now, of course, the West has sanctioned itself against buying Russian energy, massively increasing the cost of energy around the world.

So do you think that that bubble, or that brief moment of the end of history, the golden age of neoliberalism, that can never come back?

Because unless the West can succeed in overthrowing the Russian government and imposing a new puppet like Yeltsin, and overthrowing the Chinese government, it seems like that that the golden in the 1990s is never going to come back.

MICHAEL HUDSON:

Well, you’ve left out the key element of the golden age: that is military force, and the willingness to assassinate any foreign leader that does not want to go along with US policy.

BENJAMIN NORTON:

Of course.

MICHAEL HUDSON:

You’re neglecting what America did to [Salvador Allende]; you’re neglecting how America took over Brazil; America’s meddling and control, and in Europe, the wholesale bribery and manipulation of Europe’s political system, to put in charge of the [German] Green Party a pro-war leadership, an anti-environmental leadership, to put in charge of every socialist party of Europe right-wingers, neoliberals.

Every European socialist and labor party turned neoliberal largely by American maneuvering and meddling in their foreign policy.

So it’s that meddling that was intended to prevent any alternative economic philosophy from existing to rival neoliberalism.

So that when you talk about the end of history, what is the end of history? It means the end of change. It means stop; there will be no reform; there will be no change in the neoliberal system that we have locked in.

And of course, the only way that you can really end history is by what Biden is threatening: atomic war to blow up the world.

That is the neoliberal end of history. And it’s the only way that the neoliberals can really stop history. Apart from that, all they can try to do is to prevent any change that is adverse to locking in the neoliberal order.

So the “end of history” is a declaration of war against any country that wants to go its own way. Any country that wants to build up its own economy as a way that will keep the benefits of its economic growth in its own country, instead of letting it go to the global financial class centered in the United States and Britain.

So we’re talking about, neoliberalism was always a belligerent, implicitly military policy, and that’s exactly what you’re seeing in the proxy war of US and NATO in Ukraine today.

BENJAMIN NORTON:

Yeah, very well said. That’s the other key ingredient: overthrowing any government that is a challenge, that shows there is an alternative, to try to prove the maxim that “there is no alternative.”

MICHAEL HUDSON:

Yes.

BENJAMIN NORTON:

Here’s an interesting comment from Christopher Dobbie. He points out that in Australia, the average age for their first homeowner was 27 in 2001; now it’s 35, and increasing more and more by the year.

Now, in the last few minutes here, Professor Hudson, here’s another brief question that I got from someone over at patreon.com/multipolarista – people can go and support this show. One of my patrons asked this question: who who is hurt most by the Fed or other central banks raising interest rates? People, average consumers, or companies?

And obviously, you talked earlier about how the US Federal Reserve is different from other central banks, but it’s kind of an open question. Who is hurt more by raising interest rates?

MICHAEL HUDSON:

Well, companies are certainly hurt because it means that any possibility of getting productive credit is raised. But they’re also benefited, because if interest rates raised go up high enough, then it will not pay corporate raiders to borrow money to take over and raid companies and empty them out, like they did in the 1980s.

So everything cuts both ways. Raising the interest rates have given commercial banks an excuse to raise the interest charges on credit card loans and mortgage debts.

So raising interest rates, to the banks, have enabled them to actually increase their margin of monopoly profits on the credit that they extend.

And that certainly hurts people who are reliant on bank credit, either for mortgages or for consumer debt, or for any kind of loans that they want to take out.

Basically, raising interest rates hurts debtors and benefits creditors.

And benefiting creditors very rarely helps the economy at large, because the creditors are always really the 1%; the debtors are the 99%.

And if you think of economies, when you say, how does an economy benefit, you realize that, well, if the economy is 1% creditors and 99% debtors, you are dealing with a bifurcation there.

And you have to realize that the creditors usually occupy the government, and they claim we are the country. And the 99% are not very visible.

Democracy can only be afforded if they population’s voting has no effect at all on the government, that it’s only symbolic. You can vote exactly which oligarch you want to rule your country. Ever since Rome that was the case, and it’s the case today.

Is there really any difference between the Republicans and Democrats in terms of their policy? When you the same central bank bureaucracy, the same State Department blob, the same military-industrial complex, the same Wall Street control, what does democracy mean in a situation like that?

The only way that you can have what democracy aims at is to have a government strong enough to check the financial interests, to check the 1%, acting on behalf of the 99%. And that’s what socialism is.

BENJAMIN NORTON:

Very well said.

Here is another brief question from patreon.com/multipolarista – people can become a patron and help support the show over there.

This question, Professor Hudson, is about the proposal of an excess profits tax as an alternative to try to contain inflation. What do you think about the proposal of an excess profits tax?

MICHAEL HUDSON:

Well, only the little people make profits. If you’re a billionaire, you don’t want to make a profit; you want to essentially take all of your return in the form of capital gains. That’s where your money is.

And the way you avoid making a profit is you establish an offshore bank or creditor, and you pay out all of your profits in the form of interest, which an expense. You expense all of what used to be, what really is, income. And you show no profits at all.

I don’t think Amazon has ever made a profit. You have huge, the biggest corporations, with all the capital gains, have no profits. Tesla is a gigantic stock market presence, and it doesn’t make a profit.

So the key is capital gains, is financial gains, stock market gains, gains in real estate prices, unearned income. That’s what the free lunch is.

You want to prevent profits being paid out in the form of interest. So I would vastly increase profits, by saying you cannot deduct interest as a business expense. It’s not a business expense. It’s a predatory parasitic expense. So you’re going to have to declare all of this as profit, and pay interest on it.

Pricing your output from a foreign offshore banking center, so that you don’t seem to make any profit, like Apple does, pretending to make all its money in Ireland, you can’t do that anymore. You’re going to have to pay a real return.

So the accounting profession has made profits essentially tax free. So the pretense of making money by taxing profits avoids talking about capital gains and all of fictitiously low profits that are simply pretended not to be profit, like interest, depreciation, amortization, offshore earnings, management fees.

All of these should be counted as profits, and taxed as such as they were, I’d say back at the Eisenhower administration levels.

BENJAMIN NORTON:

And finally, the last question here, Professor Hudson, someone asked about the U.S. government pressuring countries in Africa not to buy Russian wheat. And the U.S. is, of course, claiming that this wheat is supposedly stolen from Ukraine.

This article, this headline at Newsweek, it summarizes pretty well: “U.S. Warns Starving African Nations to Not Buy Grain Stolen by Russia.” Again, that “stolen” is alleged by the U.S.

But you actually have a really good column about this over at your website, which again is michael-hudson.com: “Is US/NATO (with WEF help) pushing for a Global South famine?

I know this could be a long point of discussion; it could be the entire interview. And I know you have to go soon. But just concluding here, I’m wondering if you could comment.

The United Nations itself has warned that there could be a famine, especially in Global South nations.

What do you think the role of these neoliberal policies and Western sanctions are in fueling that potential crisis?

MICHAEL HUDSON:

Well, the wealthiest families in the world used to go every year, now they go every few years, to Davos, to Klaus Schwab’s Davos World Economic Forum. And they say, the world is overpopulated; we need about 2 billion human beings to starve, preferably in the next year or two.

So it’s as if the wealthy families have got together and say, how can we thin out the population that really we, the 1%, don’t need?

And in all of their policies, it is as if they’ve decided to follow the World Economic Forum and deliberately shrink the world population, especially in Africa and Latin America.

Remember, these are white people at the World Economic Forum, and that is their idea of how to retain equilibrium.

They’re always talking about “equilibrium,” and equilibrium is going to be for countries that cannot afford to grow their own food, because they have put their money into plantation crops and cotton to sell to the West, instead of feeding themselves – they’re just going to have to starve to contribute to world “equilibrium.”

BENJAMIN NORTON:

And while we’re on the subject of the World Economic Forum, I guess I should just briefly add – we’ve talked about this a little bit, but I just feel remiss not mentioning it – it’s interesting to see how right-wingers have seized on the World Economic Forum and begun criticizing it a lot.

Obviously, it’s worth criticizing. It’s a horrible neoliberal institution that represents the Western capitalist class. But we’ve even seen, you know, Glenn Beck, the right-winger, former Fox News host, he published a book about the Great Reset and the World Economic Forum.

I’m just wondering really quickly if you could respond to the idea that the World Economic Forum is like some “socialist” organization. Obviously, it’s the exact opposite.

But what do you say to these conservatives who have a right-wing critique of the World Economic Forum, and think it’s like secretly socialist, and Biden is a socialist.

MICHAEL HUDSON:

They look at any government or managerial power as socialist, not drawing the distinction between socialism and oligarchy.

The question is government power can be either right-wing or left-wing, and to say that any government power is socialist is just degrading the word.

However, as I mentioned before, almost all of the European “socialist” parties are neoliberal. Tony Blair was the head of something that called itself the British Labour Party. Gordon Brown was the head of the British Labour Party.

You can’t be more neoliberal and oligarchic than that. And that’s why Margaret Thatcher said her greatest success was creating Tony Blair.

You have the same thing in France; the French “socialists” are on the right-wing of the spectrum. The Greek “socialist” party, on the right-wing of the spectrum.

You have “socialist” parties around the world being neoliberalized.

So what does the word socialism mean? You want to go beyond labels into the essence.

And the question is, in whose interest is the government going to be run for? Will it be run for the 1% or the 99%?

And the right wing wants to say, well, the 1% can be socialist, because they’re taking over the government and that’s the big government, and we’re against it.

Well, the right-wing is taking over the government, but it’s not really what the world meant by socialism a century ago.

BENJAMIN NORTON:

Yeah, very well said. I just always laugh when I see these right-wing critiques of the World Economic Forum. I mean, the World Economic Forum is the embodiment of capitalism. It is the group of the elite capitalists who get together to talk about how they can exploit the working class and help monopolize the global economy on behalf of Western capital.

So with that said, there still are many questions, but I know you have to go, and we’re already at an hour and a half.

I do want to thank everyone who joined. We’re at 1200 viewers right now, so it has been a really good response.

Professor Hudson, you’re very popular. You should do your own YouTube channel. Maybe we can talk about that, because every time I have you on, it’s always an amazing response that I get. And hopefully we can do this again more in future.

Aside from people going to your website, michael-hudson.com, is there anything else that you want to plug before we conclude?

MICHAEL HUDSON:

Well, the book that I just wrote, “The Destiny of Civilization,” is all about what we’ve been talking about. It’s about the world’s split between neoliberalism and socialism. So that was just published and is available on Amazon. And I have two more books that are coming out very shortly.

BENJAMIN NORTON:

Yeah, for people who are interested, I did an interview with Professor Hudson here at Multipolarista a few weeks ago about his new book, The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism.”

And of course, anyone who wants to support this show, you can go to patreon.com/multipolarista. And as always, this will be available as a podcast, if you want to listen to the interview again. I’m certainly going to listen to this discussion again. You can find that anywhere there are podcasts.

Professor Hudson, it’s always a real pleasure. Thanks so much for joining me.

MICHAEL HUDSON:

I enjoyed the discussion.

BENJAMIN NORTON:

And like I said earlier at the beginning, for me, I truly think it’s always a privilege, because I do think you’re one of the greatest living economists. So I always feel very privileged to have the opportunity to pick your brain about all of these questions.

And I want to thank everyone who commented, who watched, and who listened. I will see you all next time.

Billionaire Najib Mikati named Lebanese PM for the fourth time

Mikati will now be tasked with forming a new government, a process experts believe will take weeks, if not months

June 23 2022

(Photo credit: AP)

ByNews Desk- 

Billionaire tycoon Najib Mikati was re-elected as Prime Minister of Lebanon on 23 June, after winning 54 votes out parliament’s 129 seats.

He will continue in a caretaker role until he can form a government, an often drawn-out and complicated affair due to Lebanon’s deep political divisions.

After winning the votes, Mikati spoke from the presidential palace in Baabda, calling on all of Lebanon’s political factions to put aside differences in order to work towards a solution to the economic crisis, and urged parliament to cooperate on approving the legislation needed for securing a grant from the International Monetary Fund (IMF).

“We are facing the challenge of either complete collapse or gradual salvation,” Mikati said.

President Michel Aoun then asked him to form a new government, a task analysts fear could take weeks, if not months, despite the country’s severe economic meltdown.

By convention, Lebanon’s prime ministerial position is reserved for a Sunni Muslim, the presidency goes to a Maronite Christian and the post of speaker to a Shia Muslim.

His reelection immediately followed the Lebanese president’s launch of parliamentary consultations for the election of a new prime minister.

Mikati’s name was put forward with a few other candidates, including Lebanon’s former ambassador to the UN, Nawaf Salam, who was supported by a number of independent candidates, the Phalangist Kataeb party, and the bloc led by the head of the Progressive Socialist Party (PSP), Walid Jumblatt.

A number of political forces in the country refused to back either Mikati or Salam, including the Strong Republic bloc, consisting of the Saudi-backed Lebanese Forces (LF) leader, Samir Geagea, and his allies, as well as MP Jamil Sayyed and the head of Aoun’s Free Patriotic Movement (FPM), Gebran Bassil.

According to the vote count, Nawaf Salam received 25 votes, Raoua Khallab and former Prime Minister Saad Hariri received one vote each, and 48 refrained from naming anyone.

Hezbollah and the Amal Movement, who had initially supported Mikati in his election in 2018, launched their support behind the re-elected prime minister.

“Our position is simple… and Lebanon needs a government that can manage its affairs,” the head of Hezbollah’s parliamentary bloc, Muhammad Raad said, adding: “Crises require realism, providing all opportunities and removing obstacles to form a government to deal with deadlines and developments.”

This is Hezbollah’s second political victory since the general elections last month, after having backed Speaker of Parliament Nabih Berri.

Berri was reelected as Speaker of Parliament on 31 May, a position he has held since 1992.

Mikati, who last year was named in the Pandora Papers, has been leading negotiations with the IMF in order to secure a bailout package to revive Lebanon’s devastated economy, which deteriorated rapidly after the country’s financial collapse in 2019.

On 8 April, the Lebanese government reached an agreement with the IMF after accepting a series of economic and banking sector reforms put forward by the organization.

Despite this, officials have pointed out that the recovery plan will be a difficult process, as disagreements still exist between commercial banks, the central bank, and the government.

Lebanon’s Economy Minister Amin Salam revealed on 27 April that the country’s efforts to secure the $3 billion IMF grant could be undermined by divisions over how to deal with massive losses in the financial sector.

Ukrainian troops burn wheat and grains as they leave Mariupol

6 Jun 2022

Source: Agencies

By Al Mayadeen English 

The sea port of Mariupol has witnessed a blazing fire that left all grains unfit for consumption.

Ukrainian troops leave Mariupol but first, they set fire to tons of grain

Despite the looming danger of global food shortage, Ukrainian troops set fire to tons of grain in storage facilities in Mariupol hoping to impact food security in the Donetsk People’s Republic. 

Yan Gagin, the adviser to the chairman of the Donetsk People’s Republic (DPR), said “There is a large amount of grain on the territory of the Mariupol port, this is both corn and wheat. Judging by the smell and appearance, it is unsuitable for further use… And this is due to the fact that the enemy, retreating from the port, set fire to the granaries so that this grain would not go to the Donetsk People’s Republic, so that it would be impossible to use it in any way.”

According to Sputnik, firefighters have been trying to contain the fire for several days within the Mariupol grain storage facility -which could contain up to 57,000 tons of grain-, thus spoiling all grains and leaving them unfit even for cattle consumption. 

Recently, wheat and grain exports have become a global concern as many countries have either banned exports or limited and taxed wheat exports, due to national and global food security threats. According to the International Monetary Fund (IMF), slower growth and faster inflation threaten the global economy amid the conflict in Ukraine.

“The conflict is a major blow to the global economy that will hurt growth and raise prices,” an article was written by Alfred Kammer, Jihad Azour, Abebe Aemro Selassie, IIan Goldfajn, and Changyong Rhee said. 

While countries like Egypt, Lebanon, and Turkey are all threatened by wheat prices and limitations of exports, Ukrainian troops have chosen to burn food instead of allowing the DPR to consume and export the grains. This further plays a role in the climate crisis tragedy as it increases carbon emissions and

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