Sign New York Banking IOU Later

Industry sign banking new york iou later

dr. Michael Hudson is a renowned economist he's a Wall Street analyst he's a professor and he's an economic adviser to countries he's also the author of super imperialism the economic strategy of the American Empire recently he's been outspoken on the global currency tensions what some are calling a currency war and this will be a key issue for world leaders at the g20 summit which is coming up in South Korea so we wanted to get his input I want to thank you for joining us dr. Hudson now we recently saw last month g20 leaders come to some kind of an agreement on not competitively devaluing their currencies with details to come later at this g20 summit but with no details and with no real way to enforce this do you think it will be possible for them to reach a deal and would it even matter there's no possibility of any agreement when the United States is declaring a financial war on other countries the United States is going to China and saying we want you to commit economic suicide just like Japan did we want you to follow the same thing we want you to revalue your currency we want you to squeeze your companies we want you to go bankrupt so we can make a profit at your expense we want you the Chinese to allow our banks to gamble on your currency and make it a huge gain on foreign exchange speculation so that our banks can get out of the problem that we've got them into will you please help us by going bankrupt for our benefit well you can imagine what the Chinese are saying they're laughing they're thinking you know are you guys joking countries don't work like that so the American policy is not only to devalue the dollar but to flood the global economy with money and this means that other economies are facing an onslaught of American money coming in to buy their land their buildings their real estate their companies their currency and essentially you have America's financial system and the banks acting is an army to raid foreign currencies you don't have a deal unless you have penalties for breaking an agreement if you don't have a penalty for breaking in there is no agreement all there is is yet another broken promise that's unfortunately how the United States has been conducting diplomacy for the last 50 years deals it for other people to follow not the United States it puts itself over and above the agreements the g20 reached this deal though by giving more voting power to emerging nations you know clearly there's been the shift in the balance of power in the world that is starting to be reflected in global governing bodies giving a country a voice in the IMF is like telling an ambassador you can go to Times Square and you can get a microphone and you can yell to Times Square it doesn't make any difference at all the IMF philosophy is a very Pro US philosophy only United States has veto power within the IMF the philosophy of the IMF is that in order to increase the economic surplus you have to reduce living standards and you have to essentially impose austerity what about the g20 then where does that fit in it doesn't have a body of theory that is based on economic austerity for the rest of the world and a free lunch for the United States US President Barack Obama will meet with Chinese leader who Jintao on the sidelines of the summit and one of the main issues the US has been pressing for is for China to revalue its currency saying that it's been undervalue its currency to boost exports can the u.s. even make this argument the big fiction is that the United States balance of payments is caused by trade the deficit is caused by a capital outflow of money managers here putting their money abroad and the military deficit China says look we've been financing your budget deficit with our two and a half trillion dollars of foreign exchange you're spending your budget deficit on military bases to ring us around to take aggressive action against us to put your spy planes where they bump into our spy planes to interfere in our waters you want us to pay for your military budget to threaten us to make us do what you want us to do you must be crazy what leverage does the US even have it's the largest debtor nation in the world China is the largest creditor nation in the world the US relies on China to finance its 14 trillion dollar debt how does President Obama have any leverage well that's the problem Obama doesn't really have any leverage at all because he needs the favor from China and from other countries from Brazil from Russia from India of saying please accept our IOUs our paper dollars even though we have no way of paying for it and even though we can never pay off these debts please accept them and let us buy out your real estate and your companies with dollars that we'll never repay that's what he's asking for there's not very much leverage in that position and when the question is how you can wrap it in a nice way and America can talk let's about talk about how we can have equilibrium and other countries can save it you're not in equilibrium yourself you America are the cause of our disequilibrium why don't you do what you've told us to do the IMF tells other countries raise your interest rates if you have a deficit so off your industry privatize it if you have a deficit China is treating the US dollar reserves that has like a hot potato how do they get rid of them they've wanted to do two things first of all they wanted to reciprocate and buy US companies just as US wanted by China the US says we will not let you buy filling stations here or refineries you can't buy in America we can buy in you you can't buy in America you have foreign takeovers all the time of US companies but their European takeovers or their takeovers buy by friendlies so obviously America views China as a potential enemy which is what it is on the Pentagon's list of strategic enemies so why should China finance America's military spending around it that's what the dollars are with are being thrown off America is throwing off these dollars in Iraq in Iraq in Afghanistan in Japan in its bases around the world that's what the deficit is and that's what the US isn't talking about that's what they're talking about in China because when I go to China and talk to the officials that's what we talk about is the u.s. hypocritical well in its dealings with China when it doesn't even talk about quantitative easing while it's printing trillions of dollars the u.s. is benefited from what is in effect a double standard because of the dollar standard the u.s. debt is other people's asset when you when you spend more than you get then other countries end up with the dollars the United States is the only country which is run a balance of payments deficit and is not raised its interest rate and has not raised its taxes now this is something that you also dealt with in your book super imperialism that the u.s. has been able to get other countries to finance its debt to essentially finance its Wars the 50% of its discretionary budget that is devoted to defense how has the u.s. maintained this it happened largely by inertia after World War two the United States had most of the world's gold and by 1950 the United States had 80 percent of the world's gold stock so the the dollar was as good as gold other countries begin to accumulate dollars because until 1971 they could exchange them for gold once the United States stopped converting the dollars into gold people really didn't have enough of a foreign currency to hold and therefore in reserve there's no way in the world that America can ever pay the foreign government debt that it owes because it's running a military deficit a capital account deficit and a trade deficit so what is the point of any country holding more dollars in the central bank if it can never get paid and there's a basic mathematical principle a depth that can't be paid won't be so other countries are trying to prevent getting more dollars and they're trying to circumvent the dollar that's why in the last month China has negotiated currency swaps with Turkey India Brazil Malaysia Russia that's what the meetings in Yekaterinburg were last year in Russia to make the BRIC countries with their associated country such as Iran in the Shanghai Cooperation Organization operate without using the dollar so the effect of meditative easing by the Fed is to turn the dollar into a pariah currency that everybody's trying to avoid because nobody wants them you can't use them to invest in the United States because of the nationalism here other countries don't want ours what is the point of accepting more dollars so then what is the future of the US dollar as the reserve currency it means that it's finished other countries and basically all the countries at the g20 meeting that are coming up in Korea realized that the dollars era is over the question is how do you bury it in a way that is polite you want to do it slowly you don't want to do it suddenly but very politely they'll to the US your time is over and what does this mean for the future of the US as a global power it will slowly shrink because how can it weigh support its military bases abroad if nobody will accept its dollars how can it import from other countries that people won't accept dollars in excess of what the United States earns the United States won't be able to in buy other bonds or invest in other countries abroad because the countries will not let other Americans or other investors using dollars buy their domestic currency to pay for exports or to pay sellers of these companies so essentially the dollar will be a paper currency that can't be used so the irony of this is that the Federal Reserve in order to save banks that got into trouble by running crooked dishonest operations to save these banks they're sacrificing America's position in the world and when does this all come to a head in Korea j-20 meetings I want to thank you so much for talking to us about this well it's been a real pleasure thank you very much for having me on your show