Prof. Michael Hudson.

Collapse of the
Dollar: Toward Ending the US Monetary
Empire (11 Jun 2021)
all right uh welcome everyone here in the room andto those of us uh those of you
watchingthe webcastuh online uh first of all i'd like tothankprofessor kimchi lao
and lingmanuniversity for graciously hosting us asareplacement location my name
is peterpedii'm an assistant professor at themasters of global political
economyprogramat the chinese university of hong kongour program wasstarted
after the great financial crisisor the gfcand it was formed explicitly to offer
aneducation to help future leaders andcitizens to avoid similar catastrophesso here
i'm not talking about therelatively well-known or much-discussedcauses of the
gfcthings like financializationderegulation orfeckless regulation derivatives
orweapons of mass financial destructioni'm talking about the intellectualcausesso
the intellectual rot that allowedglobal leaders in governmentacademia and business
to believe thatthe marketyou know blessings be upon it the marketisself-regulating
and that self-interestand the invisible hand would protect usall from dangeri'm
talking about economic orthodoxymainstreamneoclassical economics which sadly
to alarge extenthas more in common with dogma thanscienceas david graber wrote
in his review ofrobert zedelski's latest bookquote mainstream economists
nowadaysmight not be particularlygood at predicting financial crashesfacilitating
general prosperityor coming up with models for preventingclimate changebut when
it comes to establishingthemselves in positions of intellectualauthorityunaffected
by such failings theirsuccess isunparalleled one would have to look atthe history of
religions to findanything like itunquote so chk's master of globalpolitical economy
program was institutedto provide a greater diversity ofperspectivesto help the next
generation to avoidbeing suckered by the conventionalwisdomand hence to avoid
future suchcatastrophes likemost pressingly the impending climatecatastrophei
hope everyone can foster withinthemselves a bit of a contrarian orcritical
streakfollowing mark twain's advice which waswhenever you find yourself on the
sideof the majorityit is time to pause and reflectgiven all of this i can't think of
abetter speaker to beintroducing to mgbe students the lyndonuniversity
communitythe hong kong community and medicinesall over the worldthan
professor michael hudson it wasmichael hudson's uharticle in harper's magazine in
2006that warned me about the state of thehousing market in the u.sso that when the
gfc finally hit i wasunsurprisedmichael has long been a critical scholarand a bit of
a contrarian whoseintellectualtrack record looks a lot better than hismainstream
counterpartsthis actually reminds me of a greatscene in the movie the big
shortwhere an angry investor in a fund thathas been all of its moneyshorting the us
housing market asks themanagerdo you think are you saying that youknow better
than alan greenspanuh to which the response was yeah yeahexactly that'sthat's
what i'm saying so this ismichael's first trip to hong kong but hehas a long-running
connection to thecityin the form of a collaboration with oneof hong kong's native
sonshenry c k liu in fact it was throughhenry c.k lewis writings that i
wasintroduced first to professor hudsoni was in the early 2000's i was in lawschool
in new yorkand i naively thought that law andjurisprudence were the
commandingheights of how thehow the world worked but after beingintroduced to
the school of legalrealismi realized that real power couldn't belocated in formal
lawbut in political economy so i foundhenry's writingsand he introduced me to
professor hudsonso i first read uh this book superimperialismand then global
fracture which formedthe uhthe main stay of the talk that michael'sgetting
todayalso updating on dollar hegemony and howit can be superseded and
replacedand then i moved on to other books likethe bubble and beyondkilling the
host both of which cover howin today's world in much of the worldfinance has
takenon a parasitic and economicallydestructive roleuh then his book trade
development andforeign debtis a fascinating work of intellectualhistory ontheories
of international trade andinvestmentand then lastly just to note one moreexample
america's protectionisttakeoff uh is an excavation of theforgottenamerican school
of political economy and19th century debatesover proper labor and the economy
ofhigh wages doctrinewhich although it's covering debatesthat are a century and a
half oldi think is very relevant today and iwould say particularly relevantfor china
today uh well with no furtheradoi'd like to welcome all of you to joinme
inwelcoming michael hudsonwell i feel very honored to be here andi'm grateful to
peter and also forkimchi lau foruh having such an illustrious audienceuh since the
talk is about the ending ofamerican uh hegemony i have tobegin by describing uh
what it is andthe basic theme of my talkis that the precondition for any
countrylooking uh for global dominance or tocreate anempire is the balance of
paymentsuh and the ability to uhdominate and control the world'smonetary
systembecause ultimately money is uh evenmore of a lever than a military forceas
we're seeing today if you can controlthe monetarysystem you can get other
countries intodebtto yourself and if you can get them intodebtthen you can treat
them like theinternational monetary funduh and the european central bank
treatgreeceor latin america or argentina orthe ukraine or russiaif it likes you like
the ukraine nomatterwhat form of government you have it willcall you a
democracy and give youall the money you want if you seek tobecome independent
of american controlif you do not sell your naturalresources to the united statesthen
uh you will be uh deniedof the financial uh basics that you needto create your own
money supplyand to fund your own economic growth soamerican hegemony
enables the unitedstates to stopany other country from growing bypulling out the
connections of itsfinancial system just like it diduh in the case of the soviet union
after1991.basically dollarizationis the ability of the united statesto run balance of
payments deficitswithoutany limit at all and since1951 the united states balance
ofpaymentshas been continually in deficit anyother countryif you run a deficit
would have to raiseits interest ratesimpose austerity and stop its
economicgrowththe united states has not had to do thatlargely because uh it the
thethe rest of the world needs or believesthat it needsthe u.s dollar so the amount of
u.sdollarswhich are u.s treasury obligations theirdebtthe international monetary
reserves ofthe world central banksare the debts of the united
statesgovernmentimagine if you could whenever you wentto the store if you could
simplywrite an iou and get the groceries youneededpay the rent you wanted uh buy
whateveryou wantedand uh other people would hold the iousand they would use
that to think thatthey're wealthy they could trade themwith each other and everyone
wouldaccept thembut you'd never have to pay them offyou'll just write in iouthat's
essentially what the unitedstates is able to dointernationally and the result is
thattheamount of u.s government debt ininternational reservesis 30 times the
amount of the championof china's rmb and three timesthe amount of euros so the
united statescan run a trade deficit and a militarydeficitand just spend money into
uhforeign countries other countriesyou know what happens to them if theyrun a
deficit they have to go to theinternational monetary fundwhich is a small office in
the bases inthe basement of the u.s pentagonand uh the international monetary
fundwill tell people you'll have to sellyour raw materials to united states andother
investorsyou'll have to buy your uh food andagriculturalcrops from the united
states not growthem yourselvesyou will have to become dependent orelse we
willdo we will make you look like we madecubaor iran or venezuela look like we
willuhmake you an outcast of the worldmonetary systemso basically it's your
money or yourlifethat is uh the deal that's being madewhy why doesn't this happen
to theunited statesand the answer is that uh the thedollar's uhunique status here's
what happens theunited stateswill begin spending money on this 800military
basesaround the world and it will uh importuhmanufactured goods from china and
othercountries that it no longer produceswhen it spends these dollars the dollarsare
received by koreaother countries and theythe recipients take the dollars and
theyturn them into domestic currencybecause that's what other countries useand
they get the domestic currency fromtheir central bankso they turn the dollars over
to thecentral bank that now ends up with thesedollarswell what does the central
bank do withit uh until 1971they would buy gold and if they wouldbuy goldthe us
would have less of them uh butnowthe uh foreign central banks don't buygoldthey
don't buy stocks uh or privatesector bondsthey really don't have much of a
choiceuh to do anythingexcept by u.s treasury bonds so theyuh when they buy u.s
treasury bonds withthem uhthey send the money back to the unitedstatesit is
recycled uh back into the u.sgovernmentso the u.s government spends on
militaryaccountthis gets into foreign economies theircentral banks turn them
backin and uh that is uh what has createdthe whole western world into a
dollarareauh everybody using other dollars and forforeign central banksrussia other
countries even china for awhilethese dollars in their reserves enabledthemto
expand their economy to spend abroadand continually growwhat is unique is that
the larger theunited states balance of paymentsdeficit becomesthe more dollars are
spent abroad andrecycle to fund theyou the domestic budget deficit sothe
government doesn't have to borrowfrom the united statesuh citizens uh and
investors it doesn'thave to print the moneyit gets uh the money to fund itsmilitary
spendingwhich is the main factor behind thebudget deficituh from other countries
so othercountriesare actually paying for these 800military basesand are paying for
the u.s encirclementof themwhich uh the u.s will use in case othercountries seek
tomisbehave and withdraw from the dollarareaso this is essentially a way of
makingother countries pay for u.spolicy andwhat does what does the u.s policy
wantit it can then go to other countries andsay we want you to followour neoliberal
policy and the policy isprivatization they have to sell offtheir public domaintheir
public infrastructure theirelectric utilitiestheir raw materials their oilto american
buyers and the hope is thatwhen foreigners buy a u.s treasury bondthey get less
than one percent interestbut when americans by foreign privateinvestorsby foreign
industry the idea is they canmake at least25 percent per yeari did a study of the
balance of paymentsof the oil industryin 1965 and every dollaruh in uh invested in
foreign oilin balance of payments terms wasrecovered within 18 monthsso uh you
have a fifth inin uh one year you recoverall the money and it's a constantdoubling
time the plan of the unitedstates inat that time in the 1960s and theargument put
beforethe oil industry to congress which iactually was hired to writewas uh if we
can uh make so big a profiton other countries pretty soon we willget so
muchinvestment from them that we can affordto spend ouruh money abroad and
maintain ourmilitaryuh control of them so that nobody woulddare withdraw from
the systemso that's basically the system we havetodayand it's counter-intuitive it's
not fairand uh you won't find it in economicstextbooks because economic
textbookssay uh how everything that exists isinevitableand the result of
equilibrium and uh thebest of all possible worlds otherwisewe'd have a different
worldwell it's not inevitable and i'm goingto spend the rest of this
talkexplaininghow we got here uh to this situation soyou knowhow to get out of it
if indeed you wanttouh basically the wholethe problem began in world war one
andintensifiedin world war ii uh world war onewas basically a fight between uh
afinance capitalcountries uh britain and francearming to prevent what they thought
wasa threatand that was a threat of socialismspecifically state socialism of
germanyand central europe uh what made uhgermany and central europe
differentfromuh england the united states and uhand france was that uh there wasa
unity between the government uhheavy industry uh very largely based
onuharmaments and uh building ships and anavyand banking and uh the
differencebetweengerman banking and central europeanbanking and english
bankingwas the difference between short-termand long-term uh the
governmentrepresentativesand the bankers would get together withthe industry and
say how much credit uhdo you need touh to grow when german banks
wouldinvestin a company they uh unlike the britishuh banksthey would not ask all
all yourdividends should be paid out quicklythey'd say don't pay out the
dividendsto investorswe don't want the dividends we want youruh company to
growand to take our gain in the form ofcapital accumulationuh by contrast uh in
1914uh the british financial pressbegan to publish uh warnings saying theythey
fearedengland would lose the war to germanybecause of financingits banks wanted
quick payoutsthe stock market was hit and run it wasbasicallyrife with fraud and
thestock market people would put investorsintoa a company and then just sort of
leaveit therethere was no long-term growth and no uhwork between government
and finance andindustry togetherthat was what they called the freemarket germany
realizedthat to develop it had to do just whatthe united states didand what i
described in america'sprotectionist payoffyou need the government to invest
inbasic infrastructureuh to lower the cost of doing businessthat if uh the
government would run uhyourtransportation system your telephonesystem your
communication systemuh it could provide services at costor at a subsidized basis
or freelyuh public health uh healthcare medicineall of this was viewed as a
capitalistpolicyuh and at that time peoplethought that industrial capitalism
wasgoing to evolve into socialismof one form or another there were manykinds of
socialismthere was state socialism in uh germanyrun by the heavy industry uh
there wasanarchic socialism there was marxiansocialismthere was uh the old-
fashioned uh davidricardo jon stewart milluh land tax uh socialism touh free
capitalism from uh the landlordclassuh everybody before world war
onebelievedthat the tendency in every country wasfor government to play a larger
roleand uh they the general word for this uhwas socialismand uh the main
supporters werecapitalistsbecause the capitalists wanted thegovernment tosubsidize
their development to lower thecost of doing businesslower the cost of living and if
thegovernment would providemedical care a healthy populationthen employers
could pay uh theiruh workforce less becausethey wouldn't have to pay uh for
thework forthe labor force uh paying all thesehigher costswell uh it seemed to be
uh that germanyas an economic system was uh destined todominateuh the uhthe
anglo-american countries and uhwhat that meant was there was a strugglebetween
two different kindsof capitalism uh between industrialcapitalismof the german
model and the financecapitalismof the anglo-american modelwhat changed matters
of course was thatthe united states uhuh entered the war on the side
ofenglandlargely because uh the american uhuh financial system had changed
awayfrom industrializationtowards uh the british system and thedayjust before
america entered the war j.pmorganwent to the white house and convincedthe
president uh wilson that indeed wehad to uhwe had lent so much money uh to
englandto buy armamentsuh that uh if we were going to collectthe money that
england owed us that wesold them on creditwe would have to go to war and make
surethat it won so it would have enoughmoneyto pay the american arms exporters
uh igoover the story in great detail and superimperialismwell the problem uh uh
america didindeed come in to destroy germanyand the problems all beganwhen the
peace occurred the question waswhat were the terms of peace and americadid
something that was very differentfrom european experienceuh when europe uh
went to war againstwhen england went to war againstnapoleonwith its allies and
when it had gone towar with other countrieseuropean countries once the war was
overthe winnerswould typically uh forgive thedebts of uh the support that
they'dgiven each otherand the english imagined that somehowthe americans were
going to act like18th century and uh englishmen wouldhave acted and said
okaywe've won we're all on the same side uhyou don't have to pay usfor all of the
arms uh that we sold youuhbefore we entered the war uh america didagreenot to
make england pay for the uhrifles and the bullets and the airplanesuh that it's uh
contributed during thewar but before america entered the waruh france england and
the allies hadborrow borrowed a huge amount of moneyfrom the americansto uh to
buy the arms to fight germanywell the inter-allied debts were solargeso uh they
were beyond the ability ofgermany to payof england to pay without going
bankruptas it did andin any case uh by 1926 when you had thegreatuh general
strike in englandgermany was obliged to payuh england and france so much money
uhthat uh they could turn around and paythe americans and john maynard
keyneswrote a number of wonderful essays on uhthe uh the treaty of versailles is
aneconomic disaster saying there is no waythese debts can be paidthe allies uh
because of the americaninsistence on being paid for theworld war one debts they
are going tohave to insist on huge germanreparationsuh they uh the reparations
includedtaking awayuh the uh most productive economicallyuh profitable uh
german uh landsbordering france uh taking uh germany'smonetary reservesdriving
it so bankrupt that you had thethe hyperinflation of the 1920suh 21 you had the
collapse of the reichmarkyou had the conditions that ended upproducing
nazismand uh that led out to world war ii welluh by 1931 uh31 after the depression
of 1929 uh itwasobvious that other con that the wholeworld was being torn apartby
america's demands uh the americangovernment'sdemands on european
governments uh toimpose austerity and pay themand so they suspended the inter-
allydebtsand they suspended uh german reparationsuh although the united states
says we'rekeeping these debts on the booksin case we ever want you ever do
getmoney we're going to want whateveruh you have so the result is that uhgermany
uh ended upwith nazism once again uh uhengland and france uh realizedthat uh
there was a fear of germangrowth andthe result was another war betweenengland
france and and germany withamericajoining in and this time the
americanstrategyagainst england was uh very differentfrom what it was in world
war oneuh president roosevelt uh and his uhcabinetdid not like england very much
theythoughtwe can use world war ii as anopportunity to break up the
britishempireand we can pick up the pieces and uh byuhmaking uh england
indebted to us againas we did in world war onewe can make it uh settle the debts
by uhbreaking up the empireand following an american-centered worldthis time
with free trade now that wehave all the goldwell by the time world war ii ended
in1945america had uh not only half of theworld's monetary goldthat is the gold and
central banks butit had the largest industrial capacityin the worldbecause it had
been built up all thisindustrial capacityduring the war to provide uh the armsto
fight germany well by1950 theamerican trade surplus and dominationhad grown so
muchthat it had accumulated about 75 percentthree-quarters of the world's
monetarygold uh the rest of the worldeurope asia latin america were all putuh sort
of on rations and they werebeing uh stifled in their growth whilethe united states
was taking offuh then a great change happenedan about-face for the first time
uhthe uh in 1915 51the united states balance of paymentswent into deficit because
of the vietnamuh because of the korean war uh and thekorean waruh was so
expensive that uh it startedwhat would last for three decades wherethe entireu.s
balance of payments deficit uh wasmilitary in character in the superimperialism i
have a chartand i show the private sector was justexactly in balancein the 1950s the
1960s and onwardthe entire deficit was militaryin character this became even
moreseriousafter 1962 uh in the vietnam waruh what happened was uh after
rooseveltuh died after being re-elected for hisfourth termuh the uh he was replaced
he'd chosenor was forced to choose by thesoutherners who controlled
thedemocratic partyin the united states uh to appoint uhharry truman as president
truman uhuh immediately uh through his support uhbehind uh the british empire
and thefrench empireand uh when uh eisenhower was electedin 1952 uh
eisenhowerdecided to put all of america's supportbehindthe french empire uh
including uhvietnamuh saying that any country that wantedcontrol of its raw
materialsany country that was nationalistic andwanted to control its own
growthwas communist well if that was true ofcourse everybody would want to
becommunist at that timebut uh they confused a nationalistrevolutionuh in vietnam
andother countries with a communistrevolution and begin uh the backing thatin the
1960sunder president kennedy and even morejohnsonuh became uh the enormous
uhbalance of payments outflow during thevietnam waruh every american soldier in
vietnamused one ton of copper per yearthe american strategy was if you canfill all
of the air full of bulletsuh continually there won't be anyonesurvivingto fight you
uh and it was if they werefighting each other with ingots well uhthecosts of
fighting the vietnam warinclude makingmilitary bases over the world
spendingmoney especially spending money inindochinanot only in vietnam but in
laosand uh being french the in uh there wereno theall the banks uh were french and
themoney that was spent locallyin dollars were taken by the vietnamesea central
bank the low ocean cambodiancentral banksand sent to paris because they were
partof the frank areaand uh general de gaulle would then uhvery
conspicuouslyevery month say we've got so manydollars please give us gold for
theseat the time i was chase manhattan banksbalance of payments economistduring
the mid 60s and every friday wewould wait for thefederal reserves uh report that
came outon u.s gold holdings and at that timeevery uh printed dollar bill or
tendollar bill or current printed currencyin your pockethad to be back 25 percent by
gold and sowe looked at the currency uh prettysteady and we looked at thegold
supply dropping and dropping anddropping each monthnot only from general de
gaulle with hisnice speechesbut uh germany that cashed in the goldwithoutmaking
the speeches and we it wasobvious to usthat the united states was going to gooff
goldsurprisingly enough to many of youit was wall street that opposed thevietnam
warfor that reason uh when i joined chasemanhattan bankuh george champion was
the uhchief executive officer of it and uh hewas against thehe said uh america's war
in vietnam isnotfiscally responsible it was pushing thecountry into budget
deficitand balance of payments deficit most ofwall street was against the warthe
people uh the vietnam war and themilitarypolicy of america today is largely bythe
leftthe labor unions supported the war thelabor unionswould have their members
uh when therewere anti-war paradesthe labor unions would try to break themup uh
the labor union leaderscame out in favor of the war saying weneed uh the
employment by the armsuh the labor unions moved as they aretoday to the farright
wing of the political spectrumwall streetmoved to the relative left wing of
thepolitical spectrumand remained there uh for a decade wellfinally uhthe time
came by uh 1971 whenuh america ran out of gold and uhit said we're not going to
sell any moregold at 35uh an ounce uh they closed thelondon gold pool where
they'd been doingall of the sellingand uh went off gold and that created alot of
worryin the government because if uh imagineforever since world war one america
haddominated the world by having most ofthe goldit had the gold and therefore
themonetary base and other countries didn'thave itit thought now what's going to
happen uhthere wereforecasts of it uh running a balance ofpayments deficit and it
said the dollaris going to go down and downthere's going to be hyperinflation
uhwe've lost ituh i didn't think that would happen andi i wasi wrote my book super
imperialism toshow that uhwithout getting gold what were centralbanks going to
dowith all of these dollars that werebeing pumped into the world
monetarysystemwell i said they only have one choicethey're not going to buy u.s
stocksthey're not going to buy u.s companiesthey're not going to buy real estateuh
they're going to buy treasury bondsand uh theinstead of the gold standard we now
havea u.s treasury bond standarduh and i gave a speech at uhuh druxell burnham
for uh for theirannual meetingsaying this and uh uh hermann kahnwho was a
military strategist you mayknow him from the moviedoctor strangelove that was
based on himimmediately hired meand told me that the largest purchaserof the
booksuper imperialism two thousand copieswas the defense department and the
ciaand they looked at it as a how to do itbook uhi had thought that socialists would
readit but the socialistswanted to say america is weak america isweak we've won
it's ended the waruh the defense department uh said my godyou've showed us how
we've pulled thebiggest rip-off in history this iswonderfulthey gave the hudson
institute an 85 000uh grant for me to explain superimperialism to themand i
quickly became the highest paidamerican economistin north america by going
aroundexplaining uh all of thismuch to my surprise i thought somehowsome other
country is going to dosomething about thisuh it was translated into spanish and uhi
know the russians were uh transl wereworking on it but uhwhat happened was that
all of a suddenthe world becamemore dependent on u.s government debtthan they
had become dependent on goldwell now uh you can fast forward this isin 1971 and
2.well in 1973 and 4 you hadwhat's called the oil war it reallywasn't the oil warit
was the grain warthe carter administration and the u.sadministrationwanted said the
but we looked at thetradefigures of the united states and thebasis of america's
foreign tradeuh the strongest sector is agriculturethat's outperformed
industryoutperformed absolutely everythingand they quadrupled the price of
goldand thensaudi arabia and the opec countriesretaliatedby quadrupling the price
of oil andso uh they uh the united states wonderedwhat to douh i was brought
down to the statedepartmentand the us treasury and met with uh theuh heads of
statestandard oil who had joined the treasuryas theirofficials which is appropriate
becauseoil is the balance of payments andand the treasury and that was my
oldfriend and he said we've made a dealwith uh saudi arabia you can
chargewhatever you want for your oilbut you have to take all of your tradesurplus
and you have to reinvest it inthe united states economywe won't let you buy any
americancompany because uhyou're arabs and we're not but you canbuy a million
shares of every country onthe dow jones average you can getminority shares and
the rest you'll buytreasury billsand saudi arabia uh agreed and as theyhave ever
sincethen uh in 1975you had earned 78 i'm sorry you had theiranian revolutionand
uh here's an example of how dollaruh hegemonyuh was used to dominate other
countriesiran like other con under the shah likeother countrieshad borrowed and
denominated its debt indollarsamerica's debt is all owed in dollars soamericaas uh
alan greenspan said can alwaysrepay its debtsbecause it can just print the
dollarsbut if you're a foreign countryif you're turkey or china or hong kongor
koreayou can't print dollars to pay yourdollar-denominated debtnow iran held
dollar reservesu.s treasury bonds and bank accounts sothatit could pay the interest
on the foreigndebts that it had borrowed beforeand uh so in 1978 it sent a note
tochase manhattan where i'd worked sayingplea uh please pay out of our accountuh
they follow what we owe thebondholders chaseuh had changed uh ceos to
davidrockefellerand david rockefeller wanted to do whathe thought was rightwhich
he defined as doing what thetreasury told him to douh by chase manhattan is very
differentfrom citibank at that timeuh citibank was always trying to makemoney for
itselfdavid rockefeller was essentially uh hadthought of becoming treasury
secretarybut wanted to dowhat uh the government told him to dothinking that was
good citizenshipand so he said okay uh we're not goingto uhpay the money out of
the mr khamenei'saccountnow that uh we don't like kameni we likethe shahand that
forced ira iran to default onthe debtand on the terms of the borrowing underthe
shah is if you miss a paymentyou owe the entire principle imagine ifyou took out a
mortgage andyou could pay a little bit every monthbut if you miss a month you
have to paythe entire balancewell obviously iran couldn't and thatbecame
theexcuse that the united states took toisolateiran and the world markets uh
similarthing happened in 1985 with japanamericansuh became very uh worried
about uhall of the automobiles that japan wasmaking and the electronics and the
otherthings soit asked uh japan to please commitsuicidewell japan was quite happy
to do thisbecause afterworld war ii uh when a macarthur came init said we have
two choices uh there's alarge socialist movementin japan they're you know very
good whenthey fight the police they havehelmets on but we have one great allythe
criminal class the yakuzis americaputall of its backing behind the criminalclass
hired them toassassinate the socialists as it does inother countriesand essentially uh
put them in power sothat they were willing to doalmost everything uh the united
statesuh wanted them to douh and uh they uhagreed to uh raise the price of the
yenagainst the dollarso much that uh their uh car industrywent bankruptuh they uh
by 1980 uh1990 sorry they were completely wreckedas they remainwrecked today
uh so uh if you're afriend of the united states you areexpected to uh take one for the
teamand kill yourself kill your economy tohelp the united statesthat's what it means
to be a democracyuhin today's world uh well thenfinally you had 1991 uh with the
uh thefinal stage of stalinismbeing kleptocracy and neoliberalism theunited states
sentthe americans over to help make surethatyeltsin won andas president putin
noted uh russia lostas a result of the neo-liberal uh listenthat was brought there in
1991 it lost22 million peoplemore than it lost in world war ii as aresult of
neoliberal policiesand the uh basic uh basically what hadhappenedin 1980 every
trendin the world economy made an about faceturned around and the result
wasmargaret thatcher in englandand ronald reagan in the united
statesintroducinguh neoliberalism meaning essentiallyfinance capitalism uh not
uhindustrial capitalism uh and thatuh absolutely uh transformed uh mattersand uh
the uh it's obvious that at thatpointthe world was put on a kind of acollision
coursenow the problem uh for the for the worlduh today that thisuh left by uh after
the1997 asia crisis that you all had toexperience here whenyour real estate prices
collapsed andthe collapse wasespecially bad in north koreawhere the americans
used the asia crisisthat was connected to the ruble collapseas a means of coming in
and buyingcontrol by buying the stocksof uh korean and uh otheruh uh chinese
uhand other companies at a great discountuh it was engineered really in theunited
states the question is what doother countries do to uhto stop this neoliberal policy
that isdestroying their economiesand uh how do you stop uh the usmilitary
spendingthat's being used to essentially forceyou into budget deficitsby saying uh
we're go uh we beat russiawe the united states beat russia bybuild our military
build upand our military spending forced russiato uhspend so much to defend itself
in thecold warthat uh it couldn't produce consumergoods and this led to the fall of
uhstalinism in the united states well uhthe problem is how do you uh prevent
theusfrom threatening you militarily andforcing you to divert your economyaway
from your own industrialization touh payfor uh your own military spending
whichis a kind of overheadwell the united states uh can do thisandkeep on
spending uh dollars withoutlimit uh becauseother countries uh have to accept
themuh anduh that's uh their form of savings as imentioneduh so that's led uh china
russiaand other countries to say we don't wantto be in the positionthat iran was in
in 1978we we have to d that we have to breakfree of uhthe dollar area we have to
disde-dollarizeobviously every country needs to tradeor do business with uh
countries usingthe us dollarsbecause that's uh the system that hasbeen created and
is already in placeso china needs to hold heavy dollarreservesrussia needs to hold
dollar reserves butthe first thing they realize iswe need an alternative uh and
thealternativeis uh obviously uh gold uhchina is uhusing its uh balance of
payments inflowsto buy goldrussia is using its uh trade andinvestment surplus to
buy gold and uhthe reasonisthis is not something that's reallyintuitive in 1975uh
herman cohn and i went to the whitehouse and we were uh trying to say thereare
certain advantagesin gold if if you were to get all thecountries in the worlduh to
agree on uhon on something to use people would saywell they're different
thingschina liked silver other things uh butuhherman khan put a map of the world
upand he said what are the countriesuh that uh don't like gold and it was uhtheuh
western europe and the united statescountries with the faith in governmentwhat are
the countries that don't thatuh don't thatlike gold well that's the whole asialatin
america chinait's people who uh didn't really trustthe government uhit's people who
thought we'd better uhuh protect ourselves because uhuh something's going to
happen and uhthe economy is very unstablethe stock market's unstable uh andso
you have the whole rest of the worldoutside of uh the anglo-americanuh western
europe sphere realizing thatwill goldor silver is something that's objectiveand the
good thing is it's limited uh ituh i argued that gold was a peacefulmedalbecause if
you had the pre-1971gold exchange standard when a countrylike the united
stateswould spend militaryfunds abroad it would steadily lose goldand it would
loseits ability to control the worldmonetary systemcountries gaining gold like
chinarussia the shanghai cooperationorganization areaare by shifting to goldyou're
restoring control of the world'suh monetary systemfor yourself now there's a
differencebetween dedolorization and uh actuallyavoiding uh the dollar in
inmaking your currency a reserve currencydedolorizationis looking for an
alternative uh when ithink when uhchina and other countries are and russiaare
talking about dedolorization in thefirst instancewhat they're talking about is
avoidingthe use of the dollar for foreign tradewhat do you do you did you never
everborrow moneyin a foreign currency you only borrow inyour own currencyyou
never denominate uh your imports andexportsin investment in dollars because if
youinvest if youuh make trade agreements in dollars theunited states is already
threateneduh we can unplug you from the uh theswiftthe inter-banking uh
computer system andwe'll pull the plug on your electronicbank transfer system and
you won't beable to operate your financial systemit's like turning off the lights this
isamerica's asymmetrical warfareuh but if you denominate your uhtrade investment
tourism in your owncurrencyand your debt in your own currency thenuh if you're if
the imftries to uh uh mobilize an economicraid on your currency and push it
downuh where you'd have to pay more and moreand more of your currency to raise
thedollarsto pay the dollar debts you're immunefrom this you can simplyuh always
pay your debts in the currencythat you print yourself whether it's uhrmbor hong
kong dollars or any othercurrencyso uh the first step is to avoiding theuse of the
dollarbut uh to make your country a reservecurrencyyou'd have to do what the
united statesdid it made its dollara reserve currency by running thebalance of
payments deficits that italked aboutit was the deficits that pumped thedollars
intothe world central banking system thatenabled the central banks to holddollars
in their foreign reservesand that's what being a reserve currencyis uhi don't see uh
much opportunity forchinato or russia to run a balance ofpayments deficitright now
uh they're accumulating uhdollarsand so how uh if if you were haveuh the rmb or
the ruble asa global uh reserve currencyhow are other people going to get uh
thermbor the rubles if uh you're not spendingit if you're notimporting from them by
running a tradedeficit with themif you're not investing with them andhaving
ainvestment outflow buying control oftheir resources or spendingtourism money or
military money there idon't seeany way of that happening uh in theshort term so all
that you can do tode-dollarizein the uh short termis to cut your currency
independent ofthe us economyunfortunately you have one man who's uhhelping
youwho's doing more than either i'm doingorany uh left winger i know and
that'sdonald trumpuh he he is realizes that othercountrieshesitate to uh break away
from the usdollarthat they hesitate to you need acritical mass of countries to
accepteach other's currency for china toaccept russia's rulesrussia to accept rmb uh
iranuh turkey other countries to do it andsouh donald trump has uh made clear
thatthe united states has to be the winneruh and other countries the loser in
anytrade agreementor financial agreement that's made soit's helpingdrive driving
russia uh into uh thechineseuh uh and uh shanghai cooperationorganizationorbit
uhtrump is also making it clear that wehave no intention of everrepaying any of the
dollars that weother central banks have and if we don'tlike a country that holds
these dollarswe can simply cancel their accounts atthe treasury you can have a
bank accountand if someone the bank president sayswe've justerased your account
now you can't payyour rent with it becausei don't like you uh that's what
americacan doto foreign countries of the treasurylike it did with iran in 1978and
trump has made clear that uh that'sone of his optionsand uh so he's saying you'd
better getyour act togetherand uh become independent of the usdollarbecause
here's what if i don't do it thedeep state behind meuh who run the cia the state
departmentthe treasury they're going to do it toyou uhhe wrote a book explaining
the wholepolicyuh the book was called the art ofbreaking the deal and uhthat's how
trump made his money uh hewasuh he's the biggest real estate crookin new york
and if you happen to travelto new yorkstrike up a conversation with either acab
driver anyone you'll meet you'llmeet somebody who's hadsome economic relations
with trump andtrump's business plan is quite simpleif he may uh uh he makes a
deal with uhsomeone uh a contractor to supply bricksuh uh he'll supply the
bricksuh he'll pay you 10 down you know do itthen the contractor will say
i'mfinished here's the money trump will saywelluh i'll only pay you 50 i don't like
thebricksuh there's one person i know from uh uhfrom uh pennsylvania who sold
him uh30 steinway pianos trump uh uhthen he asked for paymenttrump said well i
really didn't one ofthem was out of tune i'm not going topay you anythingyou have
to sue me in the united statesit takes five years and at least fiftythousand dollarsto
bring any lawsuit uh and the courtsarevery very well they're aboutas crooked as uh
bolivian courts i thinkuh theyuh it's ahell to try to sue donald trump hard notmany
people have uhhave collected uh i gave an archaeologytalk and uhuh at one once
uh a man came up to meand said he was an architect andactually the architectfor
the bathrooms in trump tower and uhhe designed the bathroomsuh they made the
tower he said theybuilt them very shadowlyuh then he sent the bill and trump
saidwell we don't like the designuh we're not going to pay you and thatuh so the
architectuh found out that in under new york lawthe architect has to signoff with
the building department uh thatyes uhthe building's been done and uh hedidn't sign
off and trump was threatenedanduh losing uh 200 million dollars andgoing
bankrupthe was the only person that i know whogot the bill paidbut uh trump also
stiffed the banks thatfinancedthem uh and uh nobody will deal withthemexcept
russian kleptocrats and moneylaunderers which is he found that hecould make a
wholewhole real estate business not inselling to renters you know here if youhave a
developer in hong kongyou're looking for either aapartment buyer or an investor to
buyyour apartmenttrump looked for a foreigner with extradollars that they wanted
to hideand get out of their country in a hurryand most of these apartments wereuh
essentially not for not for livingnot for usingthey were uh a way that money
launderersand kleptocrats could uhsave their money you know the joke aboutuh
people who uhpeople in america buy hundred-year-oldwine orrare wines is a kind
of trophy tocollect and uhsomeone paid uh five thousand dollarsfora big bottle of
riceberg wineand uh they actually tried to celebrateandhave a party and poured it
all out being50 years old or i think that was even 75years oldit was turned to
vinegar and the buyercomplainedto the auction house and said thiswine's turned to
vinegar and the auctionshowsthat mine's not for drinking that's fortrading well
that's whattrump's apartments are for they're notfor living in there forbasically
trading and uh hebecame a television celebrity and waselected president
becausethe democrats under hillary said thiselection isover who is the lesser evil
and theamericans madei think the right choice uh trump wasthe lesser evilthe
alternative was world war three ofcourse it was the lesser eviluh and uh that we're
still living in theaftermath of thatso essentially you have donald trumptrying to
conductamerican foreign policy it's economicpolicyit's monetary policy and
military policyof we win you loseunless you de-dollarize andi tried to make that uh
point anduh uh with all these books uh uha lot of people read them but uh i
icouldn't come near to what donald trumpwas able to doso i i'm sure that i've
moved very fastand i think now we should probablytake some discussion and i can
explainanything that i'veleft out as to what the world need whatyou need to
do[Music]youEnglish (auto-generated)AllSeminarsListenableRelatedRecently
uploadedWatched