NIMA ALKHORSHID: Hi everybody. Today is Thursday, September 18, 2025, and our friends Michael Hudson and Richard Wolff are back with us. Welcome back.
RICHARD WOLFF: Glad to be here.
NIMA ALKHORSHID: Michael, you told me that you watched my talk with Scott Ritter about the defense budget, and all of that. What's your point on that?
MICHAEL HUDSON: Well, he picked up on my point that I've been making fifty years ago, that there's a great difference between the balance of payments effect of America's military spending and other countries.
Ever since the Korean War broke out in 1950, the entire balance of payments deficit for the United States, from the 50s, 60s, and the 70s, has been military spending abroad. The private sector trade and investment are exactly in balance over all these years. I published all of these statistics first for Arthur Andersen and then in my book Super Imperialism. And immediately, when my book Super Imperialism came out, Herman Kahn hired me for the Hudson Institute and said the largest buyers of the book were the State Department and the military — the CIA and the military. Immediately, the military gave a contract to the Hudson Institute for me to explain how going off the gold standard essentially enabled the United States to fund its balance-of-payments deficit, meaning its military spending abroad, by pumping dollars into the global economy and having these dollars end up in foreign central banks and be recycled.
Well, what that means is that America's whole military spending for the last fifty years depends upon the dollarization system in other countries, using dollars as their monetary reserves in place of gold, and instead of their own currencies. That means that, as they move away from the dollars, there's no way that the United States can finance its eight hundred military bases abroad and its military spending. Russia doesn't have this problem. The military generals don't study the balance of payments. And many of them are right-wingers that have a sort of crude monetarist Chicago School neoliberal view of money, without understanding that money is debt. And, specifically, monetary reserves are not only America's treasury debt, but the monetization of America's military spending.
Now, what Scott pointed out is that Russia doesn't have this problem. China doesn't have this problem because they're not trying to create a foreign empire. They're not trying to put military bases in other countries where they have to somehow spend their domestic currency, and buying local currencies, to do whatever military operations do there. So they don't have the constraints that the United States have. And that's what's essentially leading the United States to say: we're not only at war with Russia and China militarily, we're at war with them financially. We don't want the BRICS — China, Russia, Iran, and their other countries — to have an alternative of not using the dollar so that the dollars that we spend abroad for all these military operations are going to be somehow recycled to the United States.
That's why you're having Trump try to browbeat India, Japan, Korea, and Europe into somehow promising to recycle all the dollars to the United States. Why is he doing this? It's not simply to pay tariffs so that the Treasury will have more money and can cut taxes on the wealthy even more. It's so that the dollar will not be forced down so that there will be a huge inflow to support the dollar, basically, despite Trump's hope of devaluing the dollar slightly, slowly downwards — as if that's going to make American exports more competitive. The whole fight over the dollar isn't really about U.S. exports being more competitive because the United States doesn't have much industry to export. It's really about the balance of payments, which is primarily military in character — not the trade deficit, not the investment deficit.
The government used to realize that. But again, Trump and his team just think of sort of running a protection racket: Either you spend your money to the United States — $350 billion from you, Japan, you promise to send here to invest — another $350 billion from you, Korea — or we're just going to raise tariffs and deny you the U.S. market. The American strategy — and it's a military strategy as well as an economic strategy — imagines that other countries need the American market, and they don't have a choice but to support the dollar, and by supporting the dollar, supporting America's ability to wage war and have military operations abroad.
They don't realize that this is the whole thing. And yet this protection racket has essentially overplayed its hand. And last week, Korea said: Wait a minute. You just told Japan to pay you $350 billion, and you get all the profits from what they spend in — you get 90% of the profits and give us 10% — if there are any profits at all, you know, from the way you arrange it with your Hollywood-Pentagon bookkeeping.
You need America's market; we can deny it, and that's chaos for you.
Well, it's not really chaos. They tried the same thing with China last week, and China protested and said — I'm sorry, they tried it with Korea last week — Korea protested and they said: We're not Japan. We don't have $350 billion. We're much smaller. And you're blocking our automobile exports from the U.S. market. We just can't pay.
And then, Howard Lutnick, the Commerce Secretary, said: The Koreans either accept the deal, or pay the tariffs. Black and white: pay the tariffs, or accept the deal.
Well, yesterday, Korea's foreign minister went to China. And there's not a word in the paper about what they're discussing. But you can just imagine. Korea realizes that Trump is going to insist: We need your money to continue our military spending abroad and to finance our budget deficit. We're going to close the market to you. And Korea finally is saying, well — for Hyundai and for Samsung, all of its computer industries — what if we don't have the U.S. market? Do we have a Plan B? And I suspect they're talking about China. And they're talking to China. And they're saying, well, you know, if we walk away from the U.S. market, we'll walk away from that factory in Georgia. Obviously, there's such a reaction in Korea that we can't afford it. If we walk away, can you figure out a way that we can work our industrial capacity in partnership with you as part of your Chinese new prosperity sphere?
And by the way, if we do that, will you help back us up when we tell the Americans to leave their military bases here? We don't want their military bases if they're going to hold us up and essentially declare: We're treating you like a defeated power. Like we defeated you in 1951. There's never really been an end to the Korean War. We're still fighting you, just like we're still fighting World War II against Japan. You don't have a choice.
If Korea and Japan, and India all make a choice to say, well, we cannot afford access to the U.S. market on these terms. We can use the $350 billion — or Japan can use the same amount — we can use that $350 billion to subsidize our own industry and keep our employment and support our workforce, while we transition radical change, from orienting our trade with the United States and Europe, to orienting it with our new Asian partners.
That's what it all is. And that commercial balance-of-payments consideration is a fundamental military consideration at the root. And that's what really frightens the United States. It was the Vietnam War that forced the United States off gold in 1971. Its spending in Vietnam depleted the gold stock by spending so many dollars abroad that General de Gaulle, in France, and Germany, just cashed them in for gold. And America finally just stopped the drain.
Well, now it's other countries that are preventing the United States from solving this drain problem by saying we're not going to accept any dollars that are just the monetization of your military spending to surround us with military bases. We're going to stop the financial bloodstream that's funding your whole new Cold War. And this goes beyond the investment in missiles and the investment in boats. Other countries are not going to fight a war by invading any other country. And America cannot control another country, not even Ukraine, without troops invading it. And the cost of a military invasion, an infantry invasion, is very different from the domestic cost of sending missiles. China and Russia, Iran have no intention or ability to mount an army to send into other countries. All they have is missiles, basically. And that's what the next few years of war are going to be all about.
NIMA ALKHORSHID: Yeah. Go ahead, Richard.
RICHARD WOLFF: Okay, another way of saying this is that the United States cannot afford the empire. The problem is, it can't do it. In the early decades after World War II, the balance of payments — correct me if I'm wrong, Michael — saw export surplus from the United States, generating the capital and the money with which then to finance the seven or eight hundred bases around the world. And so you had the rest of the world dependent on exports from the United States, having to pay for them in the money that was then used to subordinate them militarily to keep this game going.
By the 1970s, this game was over because the Germans, the Japanese, and the Europeans had recovered from the war, as we knew they would. That's what they were doing in the decades from 1945 to 1975. In that thirty-year period, the United States lost its preeminent position in the world economy as an exporter. It would either have had to stop because it could no longer finance its military adventures abroad by its export surplus, or it would have had to do what Michael so nicely described. It would have to have found another way, another way, and the dollarization making all oil contracts denominated in dollars — and hyping the threat of the Soviet Union, which the Europeans are copying today because they don't know any other politics — this enabled them to then create the deficit program. They would make the United States a net importer, switch its own production out of the country, no longer needing these exports, no longer being able to afford them (they weren't profitable enough to produce in the United States), and you replaced all the workers, either with machinery and with automation, or by exporting the jobs.
So, your end result was the story Michael just told. You could continue to finance your global military adventures, but now you finance them by means of imposing, if you like, on the world the need to hold reserves for their currency because the agreed relationship among currencies was gone. That's what we had coming out of the Bretton Woods, and that's what we ended when Nixon took us off the gold standard in 1971. So then, you have Michael's story.
But let me do something we don't do enough of. Let me tell you a little bit on this program about the limits to all of this. In order to sustain, now, when you have no exports and when the ability of the United States to import is shrinking every day, because the mass of our people is simply too poor — I mean, the statistic came out this week that the top 10% (if I have it right), the top 10% of the income distribution accounts for 50% of the consumer demand in our society. Alright, that's another way of saying that the bottom 90% are piss poor. They can't afford anything. Right?
Well, given that we depend on imports, that's not a good basis for the future. We're not running; we're not going to be able to run the kinds of deficits that we used to. That's my guess, at this point. Alright, what then is going to sustain the story Michael told? How are we going to pay for all of those bases? We don't have the exports to do it, and we're not running the kinds of deficits, nor is the rest of the world eager to accumulate dollars in the way that they were before — and that was true before BRICS became important. The decline of the dollar as a reserve currency is at least thirty years old. The Chinese once had $1.2 trillion. They have $750 billion. I know these are big numbers, but that's a big decline. It's not surprising, but it's a big decline.
So for me, I'm beginning to wonder, how long can you keep this up? And when you add the degree to which military payments in this country are a Keynesian support of aggregate demand in our society, then you see he can't afford a military, but he can't afford not to have the military. And I suspect that's the reason why Mr. Trump, who comes into office promising to stop the endless wars, has neither stopped them, nor has he been able to avoid proliferating more war. He attacked Iran, and he's busily now provoking Venezuela, and taking extraordinary steps to do it. And giving carte blanche to Mr. [Benjamin] Netanyahu is extraordinary.
You know, we wonder, why would the government do these extraordinary things? And in a way, Michael's story gives the beginning of an answer: that there's more going on here than macro-management. That's important. And there's more going on than the balance of payments. That's important. There's also managing the military — the budget and the activity — when you're so badly out of whack, you can't beat the Russians in Ukraine. That's what's obvious. It's obvious to the whole world. They can't let go. What's the matter here? Even in Vietnam, they understood: we've been defeated. And the Americans withdrew, and the Communist Party of Vietnam took over, and has remained the government ever since. That's thirty-five years ago, right? That is extraordinary. What is it now? Maybe more than that. Fifty years ago.
Then they were defeated in Afghanistan, and they withdrew. Mr. Biden, in the end, did what the previous presidents couldn't dare do, which is to say: this is hopeless. And so they're losing. You know, Harper's Magazine just came out this last week, and on the front page is the lead story of the magazine, which — here's the title: Why does the American Military Keep Losing All the Wars? Wow, you're now even able to ask, in a public way, the forbidden question. And if the rest of the world is worried about the United States economically, we have to remember it was also worried about it militarily, and that danger is receding, as we see what's going on in the world. The desperation inside the United States, the fascistic turn that we are assaulted with every day is a reflection of all of these dead ends confronting the people who run this system.
MICHAEL HUDSON: Richard, there's a common denominator that links the dynamics you've just meant, and that's oil and foreign investment in oil. Much of the build-up of the reason that there was a gold inflow to the United States from 1945 to 1950 when the Korea War broke out was not simply U.S. exports, it was the sale of oil by the American oil industry that was in control of the world's oil. And for the last hundred years — and I've made this point before on our show, Nima — the cornerstone of America's control of money, and the balance of payments and military coercion, has been oil, along with food and agriculture, because if you have the ability to monopolize oil, you have the ability to cut off other countries' industrial potential — just like depriving Germany and Europe of Russian oil and gas has ended Germany's and Europe's industrial potential.
Now, that explains a number of things that you've seen recently. Not only has America continued to do everything that it can to isolate foreign purchases of Russian oil — the same thing with Iranian oil, it's tightened all of the sanctions against it. And the reason that Iran was overthrown in [1953] was largely because it wanted to nationalize the oil and the Americans and British together — it was a British-Iranian oil company at that time — felt they were losing control of the oil leverage.
Well, fast forward to today, you're seeing in the nightly news, every night here has been taking off with Venezuela. Why Venezuela? It's not really drugs. Just like Israel claims that all Palestinians are Hamas, the United States claims that all Venezuelans — their fishermen, their population — are drug dealers. Well, the reason that the news leads off with blowing up a fishing boat every night, or another boat that has no seeming connection to drug dealing at all, is the United States is trying to create a narrative that this fight against Venezuela is a fight against drugs.
It's a fight not only to regain control of Venezuelan oil, but, more specifically, to prevent China's recent negotiations with Venezuela to invest in developing Venezuela's enormous oil reserves under Lake Maracaibo. And imagine what the United States is worried about. Not only is China making itself independent of America's allies' supply and control of the oil industry from Russia, but now China can get its oil from Venezuela itself; and the fight in the Middle East, using the alliance of Israel with the Wahhabi jihadists, to create a disaster, there is to prepare the war for controlling Iraqi, Syrian, and, most of all, Iranian oil.
The United States still dreams of reestablishing its diplomatic, economic, political, and military control of other countries by controlling oil and food — that's the other basic means of control: that America can impose sanctions on its food exports to starve other countries into submission to its policy, as it tried to do against Mao after the 1945 revolution, until Canada broke the blockade.
Well, right now, you're seeing China voluntarily shift its imports for soybeans away from the United States to Brazil, to buy its soybeans there. And China has, until this year, accounted for 50% of all soybean production in the United States — and it's 70% of soybean production in the case of North Dakota. All of a sudden, there's zero demand from China for soybeans. And yet you have a perfect storm for American agriculture. You have the corn and soybean crop — a bumper crop this year because of the extreme weather — all of this crop is piling up. There's nowhere to sell it. They don't have enough storage capacity to put the soybeans and corn in silos. There's a huge market now in big plastic bags to begin storing them in. This is a disaster, and the farmers are pressuring Trump to say, you know, you've got to be able to reestablish our market next year. We've been dependent on soybeans, and what can we shift to? We can't shift to corn. People are not buying our agricultural exports anymore.
So not only has America lost its ability to use food, like it's used oil, to starve other countries, denying them American exports, but it's lost its agricultural sector. And the result is that land prices are collapsing in North Dakota and other areas. They're falling because the farmers are not able to meet their debts. For the last 150 years, all of the financial crises in America, Europe, and the Northern Hemisphere have occurred in the autumn, in September and October. And there's a reason for that. It was called the autumnal drain. It's when farmers would have to borrow the money to move the crops to sell them for markets. Well, right now, that autumnal drain threatened to lead to a break in the chain of payments. Insolvencies, arrears, bankruptcies, and foreclosures, that's what they're talking about now in the American Northwest and Midwest: foreclosures on agricultural land that doesn't have a customer. And there's nothing that Trump can do about this now because the shift is irreversible.
Now that China is making a deal with Brazil, saying we cannot rely on America's soybean exports any longer because Trump has weaponized every element of foreign trade. He's weaponized the oil trade. He's weaponized the agricultural food trade to try to make other countries dependent enough to shake them down for his protection racket. Well, we don't need the American market. Thank heavens we have you in Brazil! So, the Brazilian farmers are reorganizing, replanting their agriculture, to shift into soybeans. Once they do this, if Trump goes back and tells China, okay, you know, you can depend on us again for our soybean exports, China is going to say, well, wait a minute, we're not going to double-cross Brazil, where we've just made an agreement to trade with them and to trade in our own currency, not trade in dollars, but trade in our currency. Once we've made this shift, and the whole national economy (Brazil) has been shifting to dependence on our market, we're not going to turn on a dime, like you do in the United States, and just say, okay, we're going to change and have a new market.
A change is irreversible. You can imagine how the threat of America losing the ability to use food — soybeans, grain, wheat — and oil because of the moves by China and other countries to become alternative suppliers to the United States means that America's lost the two leading elements, not only of its exports, but of foreign investments in oil and farmland that American investors have controlled. They've lost the ability to support the dollar. And by not supporting the dollar, it means not providing the foreign exchange that the United States needs in order to maintain its military presence abroad, that remains as heavy a drain today as it was during the Vietnam War that forced the dollar off gold to begin with.
So, when you put the military strategy and imperial strategy in the context of the balance of payments, you find the great constraint that confronts the United States. And that's what my book Super Imperialism was all about. And as I said, the major audience was not foreign readers wanting to fight against imperialism. It was the Defense Department, State Department, and CIA that used it as a how-to-do-it book: this is how you have to look at the context of America's military and non-military diplomacy.
NIMA ALKHORSHID: Richard, before going to your comment, one other aspect of what Michael said is Donald Trump imposing tariffs on steel and aluminum that raise industrial costs, destroy jobs, and weaken America's manufacturing capabilities.
RICHARD WOLFF: Yes, and that's a perfect segue. I want to take us to a slightly different aspect of this problem. It has now become clear, with each passing day — and Michael has given us the context — what the purpose is, on the one hand, of raising tariffs and, on the other hand, of using them as bargaining chips to get other countries to agree to invest money in the United States.
For example, in the last two or three days, there has been a flurry of statements coming out of England because Trump is visiting England, Britain, and big boasting of huge amounts of money — hundreds of billions of dollars that the British are going to invest in the United States, and vice versa — okay, a very interesting story. But let's take a look at what the reality is. Number one: The purpose of the tariffs was to do something that now the country is desperate to do. I want to underscore this because I don't think it's very well understood: We are watching a Republican president leading a Republican party that, for a hundred years, has been the carrier of the notion that taxing is bad and the government shouldn't tax anybody, that we are in favor of private enterprise, not state enterprise, and the government should not — blah, blah, blah, blah. And what is he doing? Imposing an enormous tax on the American economy. That's what tariffs are: they are a tax.
So, we should wonder what would make ideologically driven conservative business people who hate to pay taxes, who have been supporting the Republican Party for a century to keep their taxes down, and have had that work well for them — why would they suddenly reverse everything and impose an enormous tax? Answer: they're desperate. They have no other way to go. Their borrowing is out of control — let's remember, in 1970, the total debts of the United States were a few hundred billion dollars. Today, it's $37 trillion. That's an increase that dwarfs production and prices — nothing goes like that. We have borrowed crazy. Why? Because we had already reached difficulties, that meant the government, to finance itself, couldn't tax the rich who controlled politics and wouldn't permit it, and had pushed the tax burden onto the mass of people so much that by the 60s and 70s we had tax revolts: that's what they were called — in California, all over the United States.
And then began the solution. When the politicians cannot dare tax their donors, and can no longer tax the people, what do they do? They borrow, as if it were a magic alternative. And who do they borrow from? The corporations and the rich who lend the government the money they did not have to pay in taxes. This is "Schweinerei," the Germans would say. This is pure fakery.
But now we get to where we are today. We've borrowed so much playing this absurd game. We got the rest of the world to get in on this, holding their wealth in the form of U.S. treasuries, and so on, that we have gotten to the point which was already reached under the short tenure of Elizabeth Truss in England, where the capital markets say: We're not lending to you anymore. You're not a reliable borrower. You have gone so far in your borrowing that we can see you're getting close to that political point where your own people will not allow their taxes to be used to pay interest on debt, rather than to feed their children. And in that game, it's the creditor who loses. We don't want to lose.
Alright, so what is the U.S. going to do? Tariff. It will, in fact, put a tax; it'll put it on businesses — because most of the tariffs are paid by businesses that import into the United States — and they will say to those businesses: It's your job, you have to pay for this. It's your job to figure out whether you can squeeze the foreigners to lower their price to offset the tariff, or you squeeze the American consumer via inflation, and solve the problem that way. But we, the government, are no longer squeezing the masses. You (irony: you, the business community), are doing it through inflation. That's the effort.
Now you understand why Mr. Trump is eager to do the tariffs, but because they are resisted and because they are not generating anywhere near enough money to deal with this problem, he has the second half of it: He'll bargain away the tariff that wasn't doing the job anyway if you promise to move capital into the United States. Hence, Michael is quite right. It's a protection racket: You have to help us because we are a flailing, declining empire, and the only way we can continue to protect you — that's what they say to the Europeans — you've got to help us. You've got to give us all this money.
Keir Starmer, yesterday, in a spectacle as pathetic as any I've ever seen, boasts that the United States has committed to investing [$]150, or maybe even [$]250 — it's a little fuzzy, [the] numbers — of money over the next ten years in Britain. And he says with real pride: it's going to produce, we hope, 7,900 jobs.
So, I looked at the statistics. What's the job story in England between August of 2024 and August of this year? They lost 127,000 jobs. He's boasting of something that can't offset even 10% of the decline of the British Empire — and it's coming over ten years! That's an admission of failure that's been dressed up as an achievement.
Last point. If the rest of the world — to quote Michael — is being charged an entrance fee to sell their stuff in the United States — and that's what a tariff is, you got to pay this if you're going to sell stuff in the United States — that's hurting the exporters around the world because their market is going to shrink. That's elementary. They're screaming bloody murder to their governments, who are therefore desperate to give them something to support this craziness that's hurting them. And what do they give them? They give them these announcements: The United States will invest, if we invest in the United States. And that's the bigger story. Suppose that works? Suppose that these leaders in Europe and beyond do, in fact, deliver hundreds of billions of dollars of capital investment in the United States? Frankly, I don't see it. I see the United States becoming less attractive as a place to make investments, with [the passing of] each day.
But let's assume I'm wrong; the money comes. Then, in those countries, austerity is already being imposed on the people in every one of the European countries. Now, only the rate of doing that is different, not the phenomenon. In that country, it will be possible for the radical left opposition — and for that matter, perhaps also the right opposition — to say what we would say here: We have leaders who have arranged that the money that might have been invested to create jobs in our country has, instead, been shipped over to that other country. And why? Because it has been smacking us with tariffs.
This is impossible. You will not survive politically when that is the program that you are effectively running.
MICHAEL HUDSON: Well, Richard, let me give a particular example of the point that you just made that ties that together. I think an example can sort of walk the audience through. Your first point was the tariffs are a tax on consumers. Quite right. Well, what does America import that affects the farmers? Let's go back to the farm example, because that's where everything converges, more or less. America imports an enormous amount of fertilizer, including from Russia, but it also imports farm machinery. And one of the problems is that the collapse of the soybean market means a collapse of the income and the ability to buy new farm machinery for companies, like John Deere and Company — that has just laid off, I think, over 1,000 or 2,000 workers because the farmers don't have enough money to buy new harvesting equipment. They're trying to buy old harvesting equipment.
Much of this harvesting equipment is not only produced here by John Deere, but it's produced in Germany. And America also imports harvesting equipment from Deere's rival companies, also in Germany. Well, all of a sudden, they find their costs are going way up, as a result of the inability to get energy and steel. So, they are exporting, trying to supply the market here with the products that they produce in Germany.
And imagine the surprise that these companies suddenly have, that are saying this is a threat to their making any profits at all this year on their imports, because not only is the United States charging the 15% tariff on imports from Europe, but it's saying you are liable for the 50% tariffs because you're making your machinery out of steel, and out of aluminum — and we're trying to support the American steel industry, and the aluminum industry, because that's the only labor union that I can get that actually is going along with my pretense that my policies for the wealthiest 10% are really the policies for labor. I need to make a narrative symbolic act. And so, my symbolic act is going to sacrifice an all-American industry that makes its products out of steel and aluminum.
Well, you can imagine what this crazy political ploy has done. It means that Deere and Company, and other German exporters, all of a sudden, find that when they're trying to provide the harvesting equipment that American agriculture needs, all of a sudden, the price has gone way, way up. And you pointed out, well, can they get around this by investing in the United States? Well, if they invest in the United States, they're still going to have to import many of the parts that they use from other countries, because America doesn't have the supply chain that's necessary for all of the different things that go into harvesting equipment, just like automobiles. All of that, these tariffs have stifled the profitability of imports by companies, by raising the price so high that, as you say, either the companies absorb the cost, in which case they don't make profits, and yet having a corporation is all about making a profit.
So, there's a limit to what you can do. They'll just stop producing, as Deere has stopped producing in some of its plants; or they pass it on to consumers, and the consumers are squeezed. The farmers are squeezed because not only is farm income going way down, as a result of Trump's crazy weaponization of agricultural exports — when there is an alternative now that did not exist in the 1940s — but they're broke and they can't afford to borrow from the banks because the banks say: Well, you know, what are you going to pledge as collateral? Your collateral is your farmland, and the farmland prices are going down, and you're already fully mortgaged.
By the way, Treasury Secretary [Scott] Bessent earns $1 million a year in rent for one of his landed properties in North Dakota, that's used largely for producing all of this. This was accused of being a conflict of interest by Congress, and he has to sell this land by mid-December into a collapsing market. Well, you can imagine how happy he is. At least the Federal Reserve cut its interest rates the other day.
And the newspapers all said: Gee, with interest rates going down half a percent, that's going to lower the mortgage rates for housing and for equipment purchases. But that's a fantasy. Short-term rates went down yesterday — yes, by a quarter percent — long-term rates went up, because they said this is going to be inflationary. For the short term, you could lower the interest rates, but we're not going to buy long-term bonds because living in the short run is going to lead to a huge inflation, just as you described, Richard — the inflation from cutting taxes on the rich, and stifling the rest of the economy by tariffs, and all of the other things that Trump's doing — ending government support of all of the social programs and the medical programs and the educational programs that it's been doing. You're finding the American economy is turning into something just like you've described in the German and European economies. It's almost economic suicide, except they don't know that it's suicide. There's a narrative that's being created of junk economics that pretends that all of this is going to work out. And it's a cover story, trying to cover up the actual dynamics at work, which we've been talking about for the last hour.
RICHARD WOLFF: I also think — you know, I don't want to over-push it, but I do think that there is a self-delusion going on here — that the top 10% of the people play the stock market, they own the most of the shares, they are the CEOs, they're related to them, and all of that; and for them, they hold on to a lot of their wealth. It's the other 90%. And that's why you get more and more of that old notion of a split economy, you know, that 10% of us live in a world of fancy restaurants and plenty of food, and all the rest; and the rest of us are the ones that are traumatized every time we go to the grocery store by what we can no longer afford.
Here's a statistic to think about. Compared to the year 2020 — so five years ago — the price of beef in the United States has risen by more than 50%. You know, hamburgers are like a basic part of an American diet, at least for those people who can afford meat. Think about what it means that the cost of the hamburger has gone up 50%, more or less, since the year 2020. You're seeing a division, which explains our politics, but it's a division that I don't think is sustainable — neither by the ideology here, which keeps promising that this situation will continue, even though the foundation of it, as we're trying to show, is harder and harder. And I see some of these policies as a kind of wild Trump-type — if I can use the football metaphor — of the Hail Mary pass. You're going to attack Iran? Maybe you can win. Maybe Iran disappears. Maybe the West can snatch all of the oil in Iran — and blah, blah. Until the Russians point out, you know, we have a deal with the Iranians. If you really come here, we're going to have to fight with you. And one thing we can assure you, you'll never get that oil.
What do we do?
Well, we go and fight against Mr. [Nicolas] Maduro, who can't defend himself, at least not in the conventional sense. And we keep provoking, you know. We become judge, jury, and executioner of the hapless Venezuelans who take a boat ride 1,000 miles from the United States and get incinerated, with the whole thing being handled by the President — with no evidence at all that these people were doing something illegal for which even the punishment isn't execution, and yet they were executed for the crime for which that's not the punishment that's legally — I mean, okay, these are fairly desperate acts.
And hoping that the Israelis will somehow be able to pull the rabbit out of the hat of the Middle East and become an acceptable dominant power? Really, you have got to believe in lots of magic to line up your policies in that way.
MICHAEL HUDSON: You mentioned how the American economy is being squeezed by these, and a desperate thing. Part of the desperation is when you cut your policies into segments and not look at the interactions. One of the big factors in rising prices that Americans have to pay, in addition to the food that you've just mentioned, and the hamburgers, is electricity. And that's gone way up, largely because Trump is pandering to his MAGA crazies, who insist that there's no such thing as global warming. So again, Trump said: If we're going to put all of our faith in controlling the world of the oil industry, I'm going to support the oil industry, and my MAGA base, by saying, stop all of the investment that we're doing in wind power and solar power. So, he's withdrawn the American government support for wind power, which had been increasing it, and he's also ending the support for solar power because China has a great scientific advantage in producing solar power.
And the result is that opposing — global warming is a big factor in disrupting the economy, but also Trump's support for trying to increase the artificial intelligence monopoly is projected as being largely responsible for an enormous increase in electrical usage. This is going to raise electrical prices. And already, the electric utilities in this country are raising their prices because one of the Trump policies — to please his 1% constituents, which we didn't mention — is the electric subsidies that he's been giving. It costs basically ten years to go through all of the public filings that you have to do, in order to get a new electric utility built to supply the energy for not only the rising computer and artificial intelligence industry, but for just the normal growth in electric utility, that's especially coming from air conditioning to cope with global warming that's increasing because Trump has withdrawn from the Paris Agreement and all the other agreements to try to stop global warming. Everything he's doing is to exacerbate the cost-squeeze and the shortfall of things we need.
Well, electricity doesn't play much of a role in the Consumer Price Index. Neither does rent: that's not much in the Consumer Price Index. Or health care. All these things that are squeezing the budgets of the Americans that you just described are excluded from the statistics that the government's talking about — thinking if you just don't describe them, maybe we can convince people of our cover story.
And it's as much of a fantasy as the American hot war against Russia, saying, well, we're really winning in Ukraine because Russia's economy is falling apart. It's not falling apart because it's a self-sufficient economy. It produces all of its own needs, instead of becoming import-dependent, thanks largely to the American sanctions that it's imposed. By imposing sanctions on the rest of the world, America has enabled other countries to respond out of the need to become independent of the U.S. market.
So Trump has essentially created a situation where the rest of the world is independent. And as Trump copes with this, by making even more demands that are unrealizable in practice, the more he's isolating the American and European NATO countries and their allies from the whole rest of the world. So, we're seeing all of the convergence of all of these bad policies to support special interests — to support the oil industry, to support Wall Street, to support the banking industry, to support labor unions that support Trump — all of this is basically falling apart. And it's causing the American economy to fall apart, slowly — a slow crash, but a crash that cannot be reversed without a radical change, not only in the economy, but in the whole Constitution, and the whole way in which the legal system and political system are responsible for this mess.
RICHARD WOLFF: And last irony: As you can no longer blame the immigrants — since you've effectively stopped the inflow and reversed it to an outflow — you must find a new comparable scapegoat. And if you watch the internal closing-down of criticism that extends even to late-night comedians, you can see that building up the domestic left becomes the new scapegoat to justify why all of those things done by ICE to the immigrants didn't work. There's no huge resurgence of investment here. Not at all. There's no resurgence of manufacturing. Not at all. It's all smoke and mirrors and scapegoating, because that's the sum total of where his first eight months have gotten him.
NIMA ALKHORSHID: Yeah. Thank you so much, Richard and Michael, for being with us today. Great pleasure, as always.
RICHARD WOLFF: Talk to you again next week.
NIMA ALKHORSHID: Yeah, thank you.
Transcription and Diarization: scripthub.dev
Editing: Kimberly Mims
Review: ced
Photo by Doncoombez on Unsplash