NIMA ALKHORSHID: Hi everybody. Today is Thursday, July 24, 2025, and our friends Richard Wolff and Michael Hudson are back with us.
RICHARD WOLFF: Good to be here.
NIMA ALKHORSHID: I want to start with what's going on with a new article in the Financial Times, but before going there, here is what Donald Trump said about BRICS.
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Donald Trump said, "BRICS, it's fading out fast. But BRICS is, they wanted to try and take over the dollar, the dominance of the dollar and the standard of the dollar. And I said, anybody that's in the BRICS Consortium of Nations, we're going to tariff you 10%. And they had a meeting the following day, and almost nobody showed up. They said, leave me alone. They didn't want to be tariffed. That's amazing. No, we're not going to let the dollar slide. If we have a smart president, you're never going to let the dollar slide. If you have a dummy, that could happen, like the last one. If you ever asked him about the dollar slider, he would have no idea. But we can't let that ever happen again."
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NIMA ALKHORSHID: He's not interested in having dollars sliding. Michael, how does this administration behave in terms of blocking or somehow avoiding the sliding of dollars?
MICHAEL HUDSON: Well, Trump has been saying from the time he took office that he wants the dollar to go down. He believes that if the dollar can fall in exchange rate, that's somehow going to help the exports become more competitive and employ more industry. What he neglected to notice was that there isn't any industry to export. We've deindustrialized. So, much of his policy hasn't worked at all.
But in fact, everything he's doing is leading foreign investors to reduce their dollar holdings because they're seeing Trump's policy, the tariff policy, and his recent refusal to prosecute monopolies and to replace the Biden administration. One thing that it did well was prevent monopoly pricing. He's told all the companies, charge whatever you want. We're not going to prosecute you. It's a free market for you.
Well, when there's this much price inflation in the dollar, these sort of traditional money managers think, well, if prices are going to go up steadily in the United States, that's going to reduce the value of our dollar holdings. And we're going to better get out of them now. And there's been a sustained movement out of the dollar by just about everybody, including China, certainly by foreign central banks that are not adding to the dollars. They're very slowly reducing their dollars, some faster than others. And there's a movement into gold.
So the dollar is going down, gold prices are going up, even Bitcoin prices are going up. People are looking for an alternative to the dollar because of Trump's threats. Well, we're thinking of putting tariffs and special fees on foreign investors buying treasury bonds or any corporate bonds or stocks. We're going to charge fees to prevent them from doing that. So everything he's doing has been designed or has the effect of driving down the dollar.
That should not surprise people at all. So what you have in the United States is something that nobody can really make sense of. I've been forecasting interest rates for over half a century, and there's never been a situation where interest rates go up and – usually the effect is to draw foreign capital into the market to make arbitrage gains, but the currency is going down. And that's exactly it.
You have the stock market going up as if somehow the economy is supposed to be prospering, but the dollar is going down and down and down. And that means that not only foreign central banks, but the investment funds, and the money managers who make trillions of dollars, have decided that Trump's policies and the U.S. policies are basically guaranteed to lose your money.
And even if the interest rates go up on treasury bonds, for instance, 4.5%, for the 10-year Treasury bond, if the dollar goes down by 10%, which it has already, and it's still going down, then you're actually losing five percent already on what you've held in the dollars, as this is measured in your own currency. So a European or a Chinese or any other foreign holder of US corporate bonds or treasury bonds is going to take a capital loss as measured in their own currency. They're all trying to avoid this. They see that the tendency of the United States is rising inflation because of the tariffs and the other policies that Trump is imposing, accelerated balance of payments deficit because of his military policies, and a further decline in the dollar, meaning a loss on their investments.
NIMA ALKHORSHID: Go ahead, Richard, your take on that.
RICHARD WOLFF: I would just add that, as always, there are larger social contexts, in a sense, for this as well. You know, many billions of dollars that came in as a demand for dollars, for example, by tourists. All the signs indicate that there's a tremendous fall-off in European, Canadian, and many other tourists who are simply, you know, they see one more picture of masked ICE agents arresting an 80-year-old man at the border who's a longtime citizen and deporting him to Guatemala before they can straighten out, if they can, their mistake. They don't want this experience. And the experience is being repeated over and over again.
The reward for a really disastrous six months of horrible publicity for ICE was a tax bill that gives ICE many billions more dollars to presumably do more of this horrific policy. A Gallup poll this last week indicated a dramatic shift among Republicans in those who were in favor of harsh deportation and those who now say that immigration is a good thing for the United States. This is very, very bad news for Mr. Trump in terms of his signature immigration issue as a way to get support. But it also is a decline in the demand for the dollar.
I have friends in New York City who tell me that fancy housing in the United States used to be a major purchase by foreigners to park their money in the United States. Well, if you understand the logic, the foreigner has to buy dollars with which then to make the purchase of the property here. And if they don't want the property, they don't buy the dollars. And if they sell the property, they then sell the dollars that they got for selling the property. Okay, that's like a diminution in buying, an increase in the selling of the dollar has to be factored into what's shaping the value of the dollar.
And I think what you're seeing in the growth of the BRICS, which Mr. Trump himself glimpses a little bit, is the growth of a block that has less and less interest in holding dollars and more and more interest in replacing them. I don't think they're quite so clear in their minds as to what to replace them with. They're either going to trade in their own currencies or they're going to trade in some new composite substitute currency, you know, something that blockchain or others can handle for them. But this is all bad news for the value of the dollar.
And another way to make Michael's point is to say that a traditional tool of policy is a devaluation of your currency one way or another in order to stimulate exports. Listening to Mr. Trump, I think someone gave him the right idea. If you lower the value, you improve exports. But if you haven't taken into account that the world is not buying most of what you have to sell, that problem negates the benefit you had expected to reach from the devaluation.
And so all of these things are kind of coming together with the decline of the U.S. Empire as the broad conceptual framework to give you these anomalous results, these situations where you have a policy to raise or to sustain the value of the dollar, but instead you see it ebbing away. And just for those who are not familiar with the number, a decline in the value of the dollar, if I understand it, from the date of his inauguration, January 20, to right now, a devaluation of your currency by 8% to 10% in six months is an extraordinary decline. This is not the way currency markets work. They don't bounce around that way. So something significant is going on to give you that kind of a fall even before you ask the question, how do you get that, when the objective officially was to do the opposite, to raise the value.
MICHAEL HUDSON: And the dollar has even fallen more against the Euro, which, surprisingly enough, has gone up. The fact that Trump doesn't understand the point that you've just made, Richard, is sort of clear in the agreement he made two days ago with Japan. Japan announced that it's willing now to import without tariffs, American cars and American rice and food. And when I first read this, I thought, well, there are no details yet. How can Japan let itself be appropriated like that?
And then it occurred to me: yes, they've abolished the tariffs, but the Japanese don't want to buy American cars because the American cars are SUVs. They're big. They're too big for the Japanese parking spaces. They're gas guzzlers and they don't want to buy American rice or other food because they say it doesn't taste as good as Japanese rice. They're very nationalistic, or even as good as Korean rice. So the fact is that Trump believes that somehow the deal that he's made, along with the depreciation and the tariff levies, is going to spur exports, and it isn't.
So what's he going to do if he tries to live up to the speech that he just gave and said, well, we're going to prevent the dollar from going down anymore. Well, last week, Nouriel Roubini, the sort of economic futurist, forecasted that interest rates are going to rise to 8% by 2030. He said the only way that the administration can stop the decline in the dollar is to raise interest rates so much that people are going to borrow inexpensively from Japanese banks for the carry trade and from European banks to invest in the dollar to get higher interest rates. And at 8%, it's going to pay them to buy the dollar. But if you have 8% interest rates, that's going to crash the bond market, crash the stock market, and all of this Ponzi scheme that was introduced since the Obama administration with its quantitative easing is going to be dismantled.
So there's no solution to America's situation. It's in a quandary. It's not a problem that can be solved. Whatever Trump does is going to make things worse. So, as mathematicians say, America is in the optimum position right now. This is as good as it gets. Anything Trump does is going to make things worse. It's a hard time to be president.
RICHARD WOLFF: I think it might be useful as a corrective for people who learned crappy economics. I'm going to give a couple of examples of what I suspect the Japanese are about to do. It basically fleshes out what Michael just said. Let's take rice. I will make you a prediction.
On the grocery shelves across Japan, there will now be two packages of rice where before there was one package. One package will say, this is Japanese or perhaps Korean rice. It is the traditional rice that we love. There'll be a Japanese flag right across the front of it. Next to it will be a package saying, Uncle Sam rice sent to you by Donald Trump. You know, the guy who just hit our country with a tariff, even though we're the most loyal ally he has in Asia.
These are called non-tariff barriers. But as anyone who's ever studied this knows, they can be as or more important than the price variable, right? Now, you have a moment when the whole of Japan has been treated to the notion that their loyalty to the United States has been rewarded by nothing, by being tariffed the way he tariffs everybody else. The same lesson is being learned by Canada, Mexico, and all the others. So, he's going to have a government that gives their people the explanation that the Americans are hurting us economically, which they are. They have their problems, and they're taking it out on us in order to ease their problems.
That's a good reason when you pass the two packages of rice on the shelf to pick the one that enables you to say something. It's like the Canadians who have stopped buying American bourbon, or the Mexicans who are coming up with new ways to use their corn because they don't want to bring in biologically transformed American corn, on and on. This is going on really everywhere, everywhere. Every country's leader now has an excuse, whether they're a good leader or a bad leader, it doesn't matter, an excuse to justify their own economic problems and their own failures to solve those economic problems by blaming Trump and America. And there'll be a grain of truth to it, even if it's wildly exaggerated.
Mr. Trump has declared economic war on the rest of the world at a time when the United States' global position is weaker than it's been in 75 years. This is not a smart move. This is an act of desperation that reminds me of what you learned if you ever take a life-saving course. A drowning person flails around. You have to be very careful when you help a drowning person, lest they pull you under. That's not their intent. But they're desperate. You've got to take that into account.
And I think all of these countries are not only doing what we see on the surface, but they're going to take the steps to make sure that the intent of these agreements they're signing is not realized. And that within a few years, either Mr. Trump will change or Mr. Epstein will sweep him out of office or fill in the blank, he'll be replaced by somebody else who won't do that. That's the logical thing for them to do.
And here's the logical thing for them to do that people are not understanding as well. Foreign companies or American companies that currently locate their production in China or India or Brazil or anywhere else, they are not going to come to the United States because of this. They aren't coming. There is no sign, no sign of any kind of mass movement in this direction. And their reason is very clear. It would be a very stupid, unwise decision.
You don't know. Why would you come to America? I'll give you an example. You're producing rice or anything else in some place in the world. And Mr. Trump said, I'm going to tariff. I'm going to open up the market. Come here to the United States. But you know what I just said. You know that there's going to be selection against American exports. That's a very important reason not to relocate to the United States.
And you don't need that many. You don't want to do it. Mr. Trump can't guarantee anything more than another at most three years. Well, that's how long it would take to move production. So you will have moved it in time for the rationale for moving it to be no longer present. And that would lose you your job as vice president for location in a big company. You're not going to do it. You're not going to do it. And your superiors are going to understand why you don't do it.
MICHAEL HUDSON: Well, regarding foreign leaders that you mentioned, it's not only the leaders. Look at Japan's election last weekend. It was the right-wing nationalist parties that ended up becoming the dominant force in Japan, just as the nationalist parties in Europe are rising. It's unfortunate that the nationalist parties are the right-wing in foreign countries instead of the left-wing.
It shows a success in the United States of supporting the right-wing and just untracking the left wing. But you're having, no matter what, if the leaders do not do what you're pointing out, what is in their political advantage to do, then they're going to be voted out of office by nationalists on an anti-American program. And that's what you're seeing all the way from Japan to the alternative for Deutschland and similar parties throughout Europe.
RICHARD WOLFF: Yeah, the German thing is for me, since I follow events in Germany, particularly amazing to watch.
MICHAEL HUDSON: Yep. Yeah, something has to give. At some point, you're going to have countries acting in their own self-interest. And their own self-interest is going to be: let's somehow figure out a way of going it alone with our closest allies. And the closest allies are economies that are growing the most rapidly. And the most rapidly growing economy is China. So I don't see how America's anti-China, anti-Russia, and Cold War coalition are going to be able to withstand the force of just economic determinism from Europe to Latin America to Africa to Asia.
RICHARD WOLFF: Yeah, and Germany, you know, I shake my head in disbelief. They're about to dismantle their social democracy safety net in order to become a military superpower to fight whom? What? What is this about? And the United States is pulling out of Ukraine. The Germans are replacing them to fight a war that they will lose. This is, you shake your head.
Mr. Merz, there's no future for what he's doing. I don't see why he's doing it. I mean he's an American friend, I understand that. He worked for BlackRock or Blackstone, one of them, and was the head of the German division of that company. But this is crazy. This is so crazy that you kind of wonder how long it will last before the German middle and the German left, both of which are very large, much larger than American media, let you know, before they blow these people away.
And then they're going to have an incentive to move to Europe in just the way Michael hinted. They'll ask very new questions about what the relationship to Russia and China would be. And if you don't believe me that way, let me put it to you another: If the right wing were to win the Alternative für Deutschland, if that were to actually win, they're even more interested in changing the relationship with Russia and China. So this is a dead end for the old traditional politics, which is what Mr. Merz represents.
NIMA ALKHORSHID: Michael, here is the article that I was talking about when these talks started. The article in the Financial Times shows that the foreign holdings of U.S. Treasuries, you look at China, and since 2010, when many believe that the economic war between the United States and China started, you see it shows them steadily going down and reducing. And coming to 2025, it seems it's below the UK. And on the top of the graphs, you see Japan is there, and the blue one that is going up is the United Kingdom. We have another blue one right below that light blue; it's a little darker than the UK one, and it is the Cayman Islands, and it's going up as well.
Your take on the way that China for more than a decade, for 15 years, has been reducing their holdings of the U.S. Treasury?
MICHAEL HUDSON: Well, it's not simply that they're reducing their foreign exchange reserves, it's specifically the United States. And what are they replacing it with? Gold and other currencies of other countries. I want to focus on this Cayman Islands increase and the vast increase in Cayman Islands. The Cayman Islands really doesn't have any money of its own.
I was at Chase Manhattan Bank when the State Department decided in 1965 to try to support the dollar by making America the home of criminal capital throughout the world. I was asked by Chase Manhattan, who is their balance of payments analyst, to calculate what's the volume of criminal capital every year that goes into countries like Switzerland and London and others. And how can we get that? How can we attract that criminal capital? How can we make America the home for drug dealers, for tax avoiders, for dictators who are stealing money? That's how we will finance the Vietnam War, which was still going on, remember, until the 1970s.
And I did a rough analysis, and the government, the Treasury, went to Chase Manhattan and other banks and said, Could you please set up branches in the Cayman Islands? The Cayman Islands had declared independence from Britain, and they very quickly reversed independence so they could be part of the British economy, literally part of Britain, no longer independent, using the stable currency. And so the American banks set up branches in the Cayman Islands. And every three months, the Treasury Bulletin would publish figures for the smaller countries throughout the Caribbean.
And Wall Street firms asked me to begin to calculate the inflows from the Cayman Islands. And almost all the inflows were from foreign branches of American banks to the head offices. So the American banks followed the Treasury request to help finance the dollar by setting up branches and letting other money go through the Cayman Islands with no questions asked. So right now, it's not only a drug dealing capital, it's not only foreign dictators, it's not merely Zelensky's $10 million billion dollars a year that he's taking, it's Bitcoin.
And now I think you're seeing what Trump has… let's say Trump has advisers looking at this chart and they're saying, aha, one way that we can support the value of the dollar is to make a whole new area of financial criminality. Bitcoin and cryptocurrencies for everyone who's a tax avoider, tax evader, and criminal. Everyone who doesn't want the government to know how much income they actually have are going to be putting their money in, well, not only do they no longer have to do it in the Cayman Islands or into other offshore banking centers, they can do it in cryptocurrency. And so by pushing that, what is the cryptocurrency backed by?
It's supposed to be backed by U.S. Treasury securities. There's a lot of it that really isn't. They say it's backed by cryptocurrencies, but most of it's a scam. There are, I think, thousands of cryptocurrency companies, little ones that have taken off. They're hyped up by stock manipulators like Donald Trump for his and Melania's cryptocurrency. Insiders get in at the beginning, push it up, then they all bail out and they leave the holders, the suckers, holding the bag, and the cryptocurrency collapses in price again.
This kind of a scam is one of the main supports for the United States dollar. Well, it beats industrialization. If you industrialize, you're going to raise wages. This doesn't raise wages. This simply takes away the savings of wage earners who've been suckered into buying cryptocurrency.
RICHARD WOLFF: I look at that graph, and I see something that really kind of blows my mind. And it's very useful, the graph, for that reason. First, the Chinese since 2010 have unloaded what looks like, you know, not that much less than a trillion dollars worth of money. If the graph is to be believed, they had one and a half trillion worth of dollars, and now they have, well, a bit more. So three quarters of a trillion dollars, $750 billion.
Well, if the dollar has lost 10% of its value, 8 to 10%, in the six months that Mr. Trump has been president, which it has, then the Chinese, by divesting themselves of $700 billion worth of U.S. dollar treasuries, have avoided losing 8% to 10% of the value of their holdings because they sold before the dollar went down. And in contrast, all of the others, allies of the United States who held on to, or in the case of the rising lines, increased their holdings of dollars in the years leading up to Mr. Trump's presidency have been rewarded for that accumulation of dollars by losing 8 to 10% of the value of what they accumulated.
Therefore, Mr. Trump's government, in addition to the damage done to them by the tariffs, are suffering the damage done to their holdings of dollars, which they have increased. And if you take a look at the number 3 country, the United Kingdom, whose economy is a disaster by their own account, they have spent the last many years not only not developing their own economy, but investing in the dollars held in the U.S. treasuries while the value of the dollar was undone. I mean, you are looking at the United States punishing its allies for being allies.
And you're giving them a bigger and bigger reason to consider joining the BRICS, rethinking and refashioning their relationships with China, Russia, and the rest of the BRICS as a defense against what is happening to their economies through their association with the United States. And that's part of the larger picture called a declining American capitalist empire. That these are the ways that works out. And I think it's important to see the utter damage being done. And so, if yes, the countries that are being hit with a tariff are joining the BRICS, I am not at all surprised.
MICHAEL HUDSON: I think there are a lot of people who see the argument that you and I have been making. And you can see that people have already looked way forward and they began to sell stocks short and bonds short, hoping to make a killing. And yet, they've been sort of premature pessimists. And, obviously, the bond prices and stocks are going up.
So you'd think that being right in the long run may lose money in the short run because, as Keynes said, the market can stay irrational longer than short sellers can stay solvent. If you sell a stock short and it doesn't go down, you have to buy it back at the higher price, and you lose a lot of money. So, the result is an unprecedented volatility, up and down, and up and down. There's an enormous amount of speculative gambling by all of the really big financial institutions. And the result is that last week was the week in which the American banks and companies announced their earnings for the year.
And the earnings for the New York banks, the money market banks, are way, way up all on speculative financial trading, options, and derivatives, and all of this. The American banks that are local banks and don't deal with speculation so much with this outside of the New York area have not made that particularly large earnings. They've been squeezed, if anything. So, you're having the whole transition of the American financial system into finance capitalism, not industrial capitalism. And it's all a kind of gambling of how rapidly the pace of American decline will be along the lines that you and I have been describing.
RICHARD WOLFF: Yeah, and I'd like to point out that it is beginning to have the effects that I think you and I, Michael, and you, Nima, were expecting and were hoping for. You know, when I awoke this morning, the headline that captured me was the announcement in Britain of the formation of a new left-wing British political party to be led by Jeremy Corbyn and a woman named Sultana, both of them former Labour Party members of parliament. Corbyn was the head of the Labour Party and was replaced by Mr. Starmer, who is following Mr. Trump in terms of popularity these days, even without an Epstein story to tell.
It is going to be, I predict, it's going to be one of the positions of this new party to expose the subordination of a declining England to the United States in a way that has to stop. And I think you're going to see an enormous number of British people from all walks of life and all political persuasions who are going to be able to be rallied under that because of the last few years of economic history, culminating in Mr. Trump, who's creating this political possibility.
MICHAEL HUDSON: And if that works out in England, imagine how it's going to work out in other countries. They're going to say, ah, there is a left-wing alternative to the right-wing alternative. So, look at all of the counter-reactions that Trump is inspiring that he obviously did not intend to do, but that's what's happening.
NIMA ALKHORSHID: Richard, we see what's going on between Brazil and the United States as well as the broader picture. Lindsay Graham has announced that they're going to crush the economies of Brazil, China, and India if they keep buying Russian energy and all of this. They're trying to put pressure on Russia. But to put pressure on Russia, they have to go against these three big countries, they're huge in terms of their economy and population. I don't know about the capabilities of the United States at this particular moment that they're in. Is that a viable choice for the Trump administration to go in that direction?
RICHARD WOLFF: No, I don't think so. But I think what you're seeing, and I really don't mean to keep saying this, but the questions lead back to this all the time. Nothing is more typical of a declining empire than for the people who lead it to say to the mass of their constituents, I'm here to reassure you. And by that, they mean to deny the reality of a declining empire. And so we get the intonation of Mr. Trump and of Lindsey Graham and all the others.
We are big, we can do what we used to do: threaten annihilation, threaten to control it, because we had enough control that you could go far enough, even if not quite to what they threatened. And people were afraid, and people made accommodations. It is becoming clearer and clearer to more and more countries and people that the United States is not in that position. In Europe now, it is pretty well understood that the United States is not in a position to provide Ukraine with many, many weapons because it cannot produce them. It can't. At this point, not without exhausting its own stockpiles.
The Europeans have exhausted their stockpiles and they didn't have much. So they are being constructed. This is a reality that no one foresaw. The United States military establishment was represented for the last 50 years as, you know, I remember a table: We spend more on the military than the next 10 countries combined spend on it. But we can't anymore. We can't do it. And this is a terrible, terrible problem.
And so it means that the people who are actually in charge, who actually have the meeting with our military leaders and talk about, can we invade and control Iran?… That's a good example these days. People should understand the importance of Iran is that it is not a big country like China. It is not a big country like Russia. It is a big country, but not that scale. And yet, it now too is no longer willing and no longer feels the need to bend over when the United States threatens militarily.
Bring on your bombing. Come on, you do your bombing. We will survive. And so will our military. And so will our nuclear military. That's what they showed a few weeks ago. This is extraordinarily important because it isn't Russia and China. Or even Indonesia, other bigger countries. It's significantly smaller. And that's a very powerful message.
So when you see Trump sit down with his generals, they explain to him: you can bomb those centers, but it has to be a 10-day war. We can't have a three-year war the way we do with Ukraine. We can't do it. It's not that it's not a good idea. We can't do it. We can't do it. And the Russians, the Chinese, and the Iranians together can produce a resistance we can't handle.
Lindsey Graham doesn't have to have that meeting. He sits in another building and he can act out the fantasy of denial. We're gonna crush them. Until he becomes the president, when they will sit down and say, if you do that, it's over for us. Look at Mr. Trump, he bloviated just like Mr. Lindsey Graham. He was willing to make all these, he can't do it.
And Americans, I know we don't want to face it. I understand it. I even have compassion for it. I do. Who wants to admit all of this? But it is the reality. And not admitting it won't change it. The only way to solve these problems is to sit down with the Chinese and the Russians and work something out. And if you don't do that, you're continuing down this road and you are losing. This is the reality. And that's what we have to face.
And I think people like us in our conversations have to put that forward because I think Americans are so concerned about what's the feeling they have, which I get in the street every day. Everything's falling apart. Everything's falling apart. People understand there's something very bad. The Epstein, you know, we're now all upset about Epstein. You know, sleazy, horrible.
And what we see is not only our government wrapped up in it, but the whole media, the whole circus. This is what this country is doing. As literally everything's falling apart around it. People want an understanding. We actually have the basis of that. That's why this stuff is so important to get out.
MICHAEL HUDSON: Richard, it's almost like you and I are playing a game. The situation is even worse than you say. You mentioned that America doesn't have the weapons for more than a 10-day war. Here's the real problem: the American weapons don't work.
For those who listen to Nima's interviews with his military people that he's been doing, the lesson of the war in Ukraine is that Russia can penetrate the American air defenses. It will. They can shoot down the American missiles. It will. The fighting in Ukraine with American weapons is a counter-advertisement.
It's showing other countries: if you buy our F-16s, if you buy our Patriot missiles, you're going to be spending enormous amounts of money for weapons that don't work against anyone except maybe Libya or Iraq or Palestine, the Palestinian populations, but they're not going to work against sophisticated countries like Russia, China, or even Iran. So the war has almost destroyed, you'd think, the market for American weapons, which is how America had expected to pay for the oil from OPEC. It had expected Saudi Arabia to recycle its money into American weaponry, for Europe to recycle its money into American weaponry, as Trump is insisting that it does.
But there must be people, if not the European generals, then the European politicians on the nationalist right or left who will say, look, why are we buying these missiles that are ineffective for the kind of war that we're talking about against Russia, China, and Ukraine? They don't work. I think the fighting between Iran and Israel has shown that they don't work. America's Iron Dome version, or Trump's Golden Dome, that he says will take a trillion dollars to finance, it won't work against the Russian hypersonic missiles and what apparently are now a new generation of Chinese hypersonic missiles to go along with those of Iran.
So the one industrial sector that America had thought, here we have to buttress our trade, along with our agricultural exports and our raw materials exports and our oil trade, is not working any more than the American auto industry works.
RICHARD WOLFF: For me, these are again, these are the accumulating signs. You spend all this money, but you don't understand the hunger of the people you oppress around the world. And they're going to figure out how to get around your limits. You don't have that pressure. You think you're sitting on top of the world.
You just develop and you're confident somehow that you're alone, that you will not be competed against. It's amazing. You know, they celebrate competition and then don't understand what competition actually can do to the position of somebody who's on top.
You know, I teach in economics that monopolies generate enormous profits that create enormous incentives for others to come along and destroy the monopoly. Monopoly breeds its own negation. Very Hegelian, very Marxian. But you have to have that idea in your mind. Otherwise, you imagine that the monopoly lasts forever.
It never does. Competition destroys itself into monopoly, which then destroys itself into competition. That's the reality. But if you don't see it, then you become what will later be called lazy or unaware. None of that's really quite true. It's getting caught up.
MICHAEL HUDSON: Let's get back to the chart that Nima talked about. What are other countries going to do to escape from this? What's their alternative going to do? Obviously, they're going to create some alternative vehicle just as they've created a different means of payment so they don't have to depend on the SWIFT bank clearing system that enabled the United States to grab Russian money.
Trump has said that any attempt by the BRICS to create alternative vehicles to the dollar is going to be hit by 500% tariffs. These are empty threats. Let them try. The whole world is going to be hit by America saying, the American market is closed to you. You can't export anything to us. You can't buy anything from us. America is isolated.
If Trump meant what he threatened, America will exist all by itself with its own resources. And it has enough natural resources to be independent. It could impose industry, but prices will go up 300, 400, 500% as you have to create a labor force, an industrial labor force that's trained to do this, unlike what most graduates are trained in today's university and schooling system.
So it's, again, the Americans are in a quandary in the sense that they cannot survive not only as an empire, but as a viable economy to avoid being a failed state and a failed economy without being something other than they are. Something that for many countries requires a revolution. I don't see a revolution here. I see various infighting. I see division. I see breakup and dissolution.
But it's not a pre-revolutionary situation until there is an alternative that's put forth for the United States. And the only alternative I can think of is why is China and why are other countries growing and America is not? Why are they industrializing and why did America deindustrialize? There has to be a whole analysis with the scope that you and I are talking about.
It's not only Marx, it's all of classical economics. It's Adam Smith, John Stuart Mill. It's the whole 19th-century idea of how to create a viable industrial economy. All that's been replaced by the American sort of predatory economy. And it took a long time for Britain to come to indeed have a real left-wing leader under Corbyn go it alone, away from being tied up into the British Labour Party, as it became just taken over by the post-Thatcherites, by Tony Blair, etc.
Well, in America, you'd have to have an alternative to the Democratic Party opposing the Republican Party. I don't see that because of the American constitutional two-party system that makes it almost impossible for a third party. So I see the rest of the world being able to solve the problems along the lines that you and I have been discussing for years. I don't see America even beginning to make the preconditions for solving this problem.
RICHARD WOLFF: I wanted to also comment on the dollar because just to remind everyone of a history that I assume many of you know. At the end of World War II, there's this famous conference in the woods of New Hampshire, if I'm not mistaken, Bretton Woods. It's called pretty famous in the history of global monetary affairs. And it had two very sharp economists, probably the greatest at the time, John Maynard Keynes, who represents Great Britain and is there to assert, I think it's fair to say, the importance of Britain in the world at that time. And that led him to propose a global economic arrangement in which the British pound continued to play maybe a bit lesser, but nonetheless, the dominant global currency, which it had been for more than a century at that point.
And there is an unknown Harry Dexter White, by name, an economist, who basically says, no, you're not going to be the global currency. That's now passed to us. We're going to do it. And they fight and they argue and they reach a kind of compromise, but it isn't such a compromise. It really is another step in diminishing the pound, not as much as they might otherwise have wanted to, and elevating the dollar, perhaps not as much as they might have wanted. But the direction was unmistakable, and everybody sees it in the years that follow.
Okay, but let's keep that in mind. What happened to the pound relative to the dollar is now happening to the dollar relative to what comes next. It shouldn't surprise you, it shouldn't amaze you, it isn't the end of the world, none of that. It is a reflection. World War II wrecked the British Empire. They didn't want to face it. They believed they were still the empire, but they weren't.
And within five years, most of the empire led by India was no longer part of the empire. They lost it. And World War II was crucial. They were gone. And the United States, by contrast, emerged unequaled in its power because everybody else had been destroyed by the war. Britain, France, Germany, Japan, Russia, and China, all of them wrecked by the war.
MICHAEL HUDSON: Well, Richard, that's a story that I talked about in Superimperialism. That's the whole center. And before Bretton Woods, the United States had already made a deal with Britain, the British loan, and the condition of the British loan was that they could not maintain the empire's preference. In other words, all the money that India, as you pointed out, and other countries, many global south countries, had built up during the war as part of the Sterling area, had to spend their money under the old rules in Britain.
And that was how Britain had hoped to create a market for its industry, maintaining its role as the workshop of the world. But Britain was forced to end empire preference and let free trade. And the result of the free trade was that India and South Africa and other countries were freed to spend their money on the United States exports. And the result was that the United States increased its ownership of monetary gold from 1945 to 1950, to 80% of the world's gold. That was what broke the British Empire.
And the move to free trade, as the new Foreign Secretary Rubio said, no longer serves the American interest any longer than it served England. It destroyed England's interest. Free trade now, if there really were free trade without tariffs, America would be completely uncompetitive and unable to do all of the tricks and the arm-twisting and regime change and the other special pressure points that Trump and his predecessors have tried to push. The whole world order that was created after World War II is ending, and all that the United States can do is protest against it, trying to stall for time, trying to keep what it has as long as it can to give the really wealthy 1% chance to jump ship and move all their money out of the country along with foreign investors.
RICHARD WOLFF: And the irony is that the graph you showed us, Nima, from the Financial Times, shows that the British, the rich establishment of Britain continues to buy American treasuries, not to develop its own economy, not to develop its own society, not to compensate for the loss of its empire, but by becoming a sad junior investor. They're the limited partners. America's the general partner.
They're the limited partners. They give their money. They get a small cut of the action. That's all that's left to them. But it will fund a very wealthy upper crust of that society who can live off the dividends and be the very rentiers that their most illustrious economics profession made fun of two centuries ago.
MICHAEL HUDSON: Well, nothing's more limited than being a limited partner of the United States. It's sort of like being a limited partner of the New York Yankees under Steinbrenner.
RICHARD WOLFF: Yes. Or a limited partner of the Titanic on a fateful voyage.
MICHAEL HUDSON: Right.
NIMA ALKHORSHID: Thank you so much, Richard and Michael. Great pleasure, as always.
MICHAEL HUDSON: Thank you.
NIMA ALKHORSHID : See you soon.
RICHARD WOLFF: Thank you for having the program, Nima.
Transcription and Diarization: hudsearch
Editing and Review: Harrison Betts
Photo by Patrick Hendry on Unsplash