"US Dollar Hegemony Ended Abruptly Last Wednesday" (Hudson interviewed by Flowers):
"MF: You’ve been writing about this happening. You’ve written that the de-dollarization has been happening relatively quickly in recent years. So, are we now we’re now just seeing the end result of that? I mean, people said it could happen quickly. Is that exactly what we’re seeing right now?
MH: Yes, and nobody expected that it would happen this quickly. Nobody expected that it would be the United States itself that ends de-dollarization. People thought that, well, most of the sales of my book describing this super imperialism were bought by the Defense Department and they looked at it as a how -to-do-it book. And I was brought down to the White House and the Defense Department to explain to them how imperialism works.
I had expected that maybe China, Russia, and other countries would say, “We don’t want to give America free rides.” And yet it was the United States itself that broke all of this, by grabbing Russia’s reserves right after it grabbed Afghanistan’s and Venezuela’s reserves.
Nothing like this has happened in modern history, even in the 19th century wars. In the Crimean War in the mid-19th century, Russia, England and Germany, everybody kept paying the debts to the countries they were fighting against because the idea is that debts were sacrosanct. And now, all of a sudden, not only are debts are not sacrosanct, but countries can just grab foreign savings. I guess the problem began after the Shah of Iran fell and the United States grabbed Iran’s money and refused to let it pay its bond holders and started the whole war against Iran for trying to take control of its own oil resources. So, all of a sudden, the United States grabbing this has ended what everybody thought was an immutable morality.
MF: So that was in 1979 that the Shah fell in Iran and, and over the last number of decades, the United States has been increasingly using economic warfare against countries through what people call sanctions, but they’re actually, illegal unilateral coercive measures, has that been kind of driving and setting the stage for what is happening today?
MH: Yes, the International Monetary Fund has operated, basically, as an arm of the Defense Department. It’s been bailing out dictatorships, bailing out Ukraine, lending money to countries whose client oligarchies America wants to support, and not lending any money to countries that America doesn’t want to support, like Venezuela. So, its job is basically to promote neoliberal policies, and to insist that other countries balance their payments by undergoing a class war against labor.
The conditionality that the IMF insists upon for foreign borrowing is that countries devalue their currency and lower their wage rates and pass anti-labor legislation. Well, when you lower the currency’s exchange rate, what do you really lower? Food prices are set in dollars internationally, raw materials prices are, and prices for machinery and many goods. The only economic variable devalued is domestic labor (and domestic rents). The IMF has been using this kind of junk-economic free-trade policy as a means of keeping the wage rates in the Global South down. You could say it’s a financialization of an ultimately military conflict to promote neoliberal ideology.
MF: And you mentioned the lowering wages and things like that. And this is actually done because it’s favorable to US investors and US business, right? I mean, the World Bank actually has an index, the cost of doing business index, that helps inform large corporations about laws that countries pass that make them more favorable to businesses to come in.
MH: It’s even worse than that. The central aim of the World Bank is to prevent other countries from growing their own food. That is the prime directive. It will only make loans for countries to earn foreign currency and it has insisted ever since about 1950 that countries that borrow from it must shift their agriculture to plantation export crops to grow tropical crops that cannot be grown in the United States for environmental and weather reasons. And the countries must not grow their own food and must not undertake Land Reform or small family-based farming. So, it insisted on foreign-owned agribusiness in large plantation agriculture. And what that means is that countries that have borrowed for agricultural loans have not been loans to produce their own food. It’s been to compete with each other producing tropical export crops while being increasingly dependent on the United States for their food supplies, and for their grain. And that’s part of the corner they painted them into that is going to be creating such a world famine this summer."
and:
"MF: So, let’s get a little bit into where things are headed with this new situation, a rapidly changing situation. It may be hard to say what’s happening, but you talked about a food crisis this summer. Can you talk a little bit about more about that and does the conflict in Ukraine feed into that?
MH: Well, as President Putin and Lavrov have said, the fighting in Ukraine isn’t really over Ukraine at all. It’s a fight over what shape the world will take and whether the world will be unipolar or, as it now appears, multipolar. The US, for the last year before it began to escalate attacks on the Russian-speaking Ukraine, was trying to block Europe from, and especially Germany, from buying Russia gas and oil.
There are three pillars of American foreign policy that base American power. The first pillar is the oil industry. That’s the most powerful industry next to banking in the United States. And United States throughout the 20th century, along with Britain and France, have controlled the world oil trade.
That has benefited the United States in two ways. Number one, we are a major oil exporter because we have a big oil and gas industry. But, number two, our US companies control the foreign oil trade. So that if some country, say Chile or Venezuela, does something that the United States doesn’t like, like growing their own food or pursuing a socialist policy, the United States can simply cut off their oil and sanction them. Without oil, they don’t have energy to drive the cars or power their factories or drive their GDP.
So, the American war in Ukraine is really a war against Germany. Russia is not the enemy. Germany and Europe are the enemy and the United States made it very clear. This is a war to lock in our allies so they cannot trade with Russia. They cannot buy Russian oil. They must be dependent on American oil for which they will have to pay three or four times as much. They will have to be dependent on American liquefied natural gas for fertilizer. If they don’t buy American gas for fertilizer, and we don’t let them buy from Russia, then they cannot put fertilizer on the land and the crop yield will fall by about 50% without fertilizer.
So, the, the war in Ukraine was to make Russia look so bad by defending itself against the attacks by the Ukrainian right wing in the Russian-speaking areas that the US has said, look at how bad Russia is. You’ve got to forego buying oil and gas or grain or titanium or palladium or anything else from Russia.
And so, the effect of this war has been to lock the NATO countries into dependency on the United States because the great fear of the United States in the last few years is that as America is de-industrializing, these countries are looking to the part of the world that’s growing, China, Central Asia, Russia, South Asia. And the United States feared losing control of its satellites mainly in NATO, but also in South America. So, it sanctioned and blocked their ability to buy non-US energy. They’re blocking their ability to buy non-US food, blocking their ability to invest in or use their surplus to get prosperous by investing in China, Russia, or Eurasia.
So, this is basically a war of America to lock in its allies. Well, the result is that oil prices, now that you can’t get Russian oil, are going to go way, way up, and that is going to create a crisis for many of the Global South countries that are oil deficit countries. The fertilizer companies in Germany have already been closing down because they say, without Russian gas, we make our fertilizer out of gas, and if we can’t get Russian gas, we can’t produce the fertilizer that. So, world fertilizer prices are going way up.
Russia is the largest grain exporter. And now that grain exports are being blocked by the sanctions, the question is, what are North Africa and the Near East going to do that have been depending very largely on Russian grain exports? Their food prices are going to go way up.
You can imagine just from seeing what’s happening in the United States when gas prices go up here, food prices go up here, not only does it put a squeeze on individual family budgets, but throughout the world, it puts the squeeze on the balance of payments of other countries. And so, they’re desperate. How are they going to pay the higher prices unless they borrow even more money from US banks? And of course, that’s another arm of US policy. The US banks hope to make a killing in making loans at rising interest rates to third world countries.
And of course, arms exports. NATO in the last few days has agreed to make American arms exports to increase their purchase of arms. So, the stock market has been soaring in the last few days. They say this, the world famine, the world crisis is a bonanza for Wall Street. The oil company stocks are going way up, the military, industrial stocks, Boeing Raytheon way up, the bank stocks. This is America’s great power grab, and it realizes, when it can create a crisis and tell the Global South or poor countries your money or your life. This is how most of the great property grabs and conquests have been made throughout history.
MF: And just this week at the NATO meetings, President Biden basically said food prices are going to go up in the United States and Europe as a result of what’s happening. And that’s just the price we have to pay.
This is to say to the rest of the world, you know, we’ve got you completely, I don’t know how to put it, what phrase to use, but you don’t have any choice, your money or your life. We’ve got you trapped. And he’s crowing over the fact that this resulting inflation is exactly what was intended by the war in Ukraine that has led to the isolation of Russia and other countries following a non-US policy." MH: Well, what he should have said, this is the price they have to pay us. That’s how the stock market took it. When he said this is the price we have to pay, this is the price consumers have to pay to the American oil companies, to the American Agricultural food distribution companies. It’s the price other countries have to pay to the United States."
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