Persian Powerplay

Published by Anonymous (not verified) on Fri, 10/01/2020 - 9:30am in



Cross-posted from The Saker:

Introduction: After posting Michael Hudson’s article “America Escalates its “Democratic” Oil War in the Near East” on the blog, I decided to ask Michael to reply to a few follow-up questions. Michael very kindly agreed. Please see our exchange below.

Q1: Trump has been accused of not thinking forward, of not having a long-term strategy regarding the consequences of assassinating General Suleimani. Does the United States in fact have a strategy in the Near East, or is it only ad hoc?

Of course American strategists will deny that the recent actions do not reflect a deliberate strategy, because their long-term strategy is so aggressive and exploitative that it would even strike the American public as being immoral and offensive if they came right out and said it.

President Trump is just the taxicab driver, taking the passengers he has accepted – Pompeo and VP Pence saying “Take us to the Rapture,” along with Bolton’s proteges and the Iran-derangement syndrome neocons – wherever they tell him they want to be driven. They want to pull a heist, and he’s being used as the getaway driver (fully accepting his role). Their plan is to hold onto the main source of their international revenue: Saudi Arabia and the surrounding Near Eastern oil-export surpluses and money. They see the US losing its ability to exploit Russia and China, and look to keep Europe under its control by monopolizing key sectors so that it has the power to use sanctions to squeeze countries that resist turning over control of their economies and natural rentier monopolies to US buyers. In short, US strategists would like to do to Europe and the Near East just what they did to Russia under Yeltsin: turn over public infrastructure, natural resources and the banking system to U.S. owners, relying on US dollar credit to fund their domestic government spending and private investment.

This is basically a resource grab. Suleimani was in the same position as Chile’s Allende, Libya’s Qaddafi, Iraq’s Saddam. The motto is that of Stalin: “No person, no problem.”

Q2: Your answer raises a question about Israel: In your recent article you only mention Israel twice, and these are only passing comments.  Furthermore, you also clearly see the US Oil lobby as much more crucial than the Israel Lobby, so here is my follow-up question to you: On what basis have you come to this conclusion and how powerful do you believe the Israel Lobby to be compared to, say, the Oil lobby or the US Military-Industrial Complex? To what degree do their interests coincide and to what degree to they differ?

I wrote my article to explain the most basic concerns of U.S. international diplomacy: the balance of payments (dollarizing the global economy, basing foreign central bank savings on loans to the U.S. Treasury to finance the military spending mainly responsible for the international and domestic budget deficit), oil (and the enormous revenue produced by the international oil trade), and recruitment of foreign fighters (given the impossibility of drafting domestic U.S. soldiers in sufficient numbers). From the time these concerns became critical to today, Israel was viewed as a U.S. military base and supporter, but the U.S. policy was formulated independently of Israel.

I remember one day in 1973 or ’74 I was traveling with my Hudson Institute colleague Uzi Arad (later a head of Mossad and advisor to Netanyahu) to Asia, stopping off in San Francisco. At a quasi-party, a U.S. general came up to Uzi and clapped him on the shoulder and said, “You’re our landed aircraft carrier in the Near East,” and expressed his friendship.

Uzi was rather embarrassed. But that’s how the U.S. military thought of Israel back then. By that time the three planks of U.S. foreign policy strategy that I outlined were already firmly in place.

Of course Netanyahu has applauded U.S. moves to break up Syria, and Trump’s assassination choice. But the move is a U.S. move, and it’s the U.S. that is acting on behalf of the dollar standard, oil power and mobilizing Saudi Arabia’s Wahabi army.

Israel fits into the U.S.-structured global diplomacy much like Turkey does. They and other countries act opportunistically within the context set by U.S. diplomacy to pursue their own policies. Obviously Israel wants to secure the Golan Heights; hence its opposition to Syria, and also its fight with Lebanon; hence, its opposition to Iran as the backer of Assad and Hezbollah. This dovetails with US policy.

But when it comes to the global and U.S. domestic response, it’s the United States that is the determining active force. And its concern rests above all with protecting its cash cow of Saudi Arabia, as well as working with the Saudi jihadis to destabilize governments whose foreign policy is independent of U.S. direction – from Syria to Russia (Wahabis in Chechnya) to China (Wahabis in the western Uighur region). The Saudis provide the underpinning for U.S. dollarization (by recycling their oil revenues into U.S. financial investments and arms purchases), and also by providing and organizing the ISIS terrorists and coordinating their destruction with U.S. objectives. Both the Oil lobby and the Military-Industrial Complex obtain huge economic benefits from the Saudis.

Therefore, to focus one-sidedly on Israel is a distraction away from what the US-centered international order really is all about.

Q3: In your recent article you wrote: “The assassination was intended to escalate America’s presence in Iraq to keep control the region’s oil reserves.”  Others believe that the goal was precisely the opposite, to get a pretext to remove the US forces from both Iraq and Syria.  What are your grounds to believe that your hypothesis is the most likely one?

Why would killing Suleimani help remove the U.S. presence? He was the leader of the fight against ISIS, especially in Syria. US policy was to continue using ISIS to permanently destabilize Syria and Iraq so as to prevent a Shi’ite crescent reaching from Iran to Lebanon – which incidentally would serve as part of China’s Belt and Road initiative. So it killed Suleimani to prevent the peace negotiation. He was killed because he had been invited by Iraq’s government to help mediate a rapprochement between Iran and Saudi Arabia. That was what the United States feared most of all, because it effectively would prevent its control of the region and Trump’s drive to seize Iraqi and Syrian oil.

So using the usual Orwellian doublethink, Suleimani was accused of being a terrorist, and assassinated under the U.S. 2002 military Authorization Bill giving the President to move without Congressional approval against Al Qaeda. Trump used it to protect Al Qaeda’s terrorist ISIS offshoots.

Given my three planks of U.S. diplomacy described above, the United States must remain in the Near East to hold onto Saudi Arabia and try to make Iraq and Syria client states equally subservient to U.S. balance-of-payments and oil policy.

Certainly the Saudis must realize that as the buttress of U.S. aggression and terrorism in the Near East, their country (and oil reserves) are the most obvious target to speed the parting guest. I suspect that this is why they are seeking a rapprochement with Iran. And I think it is destined to come about, at least to provide breathing room and remove the threat. The Iranian missiles to Iraq were a demonstration of how easy it would be to aim them at Saudi oil fields. What then would be Aramco’s stock market valuation?

Q4: In your article you wrote: “The major deficit in the U.S. balance of payments has long been military spending abroad. The entire payments deficit, beginning with the Korean War in 1950-51 and extending through the Vietnam War of the 1960s, was responsible for forcing the dollar off gold in 1971. The problem facing America’s military strategists was how to continue supporting the 800 U.S. military bases around the world and allied troop support without losing America’s financial leverage.”  I want to ask a basic, really primitive question in this regard: who cares about the balance of payments as long as 1) the US continues to print money 2) most of the world will still want dollars. Does that not give the US an essentially “infinite” budget? What is the flaw in this logic?

The U.S. Treasury can create dollars to spend at home, and the Fed can increase the banking system’s ability to create dollar credit and pay debts denominated in US dollars. But they cannot create foreign currency to pay other countries, unless they willingly accept dollars ad infinitum – and that entails bearing the costs of financing the U.S. balance-of-payments deficit, getting only IOUs in exchange for real resources that they sell to U.S. buyers.

This is the situation that arose half a century ago. The United States could print dollars in 1971, but it could not print gold.

In the 1920s, Germany’s Reichsbank could print deutsche marks – trillions of them. When it came to pay Germany’s foreign reparations debt, all it could do was to throw these D-marks onto the foreign exchange market. That crashed the currency’s exchange rate, forcing up the price of imports proportionally and causing the German hyperinflation.

The question is, how many surplus dollars do foreign governments want to hold. Supporting the dollar standard ends up supporting U.S. foreign diplomacy and military policy. For the first time since World War II, the most rapidly growing parts of the world are seeking to de-dollarize their economies by reducing reliance on U.S. exports, U.S. investment, and U.S. bank loans. This move is creating an alternative to the dollar, likely to replace it with groups of other currencies and assets in national financial reserves.

Q5: In the same article you also write: “So maintaining the dollar as the world’s reserve currency became a mainstay of U.S. military spending.”  We often hear people say that the dollar is about to tank and that as soon as that happens, then the US economy (and, according to some, the EU economy too) will collapse.  In the intelligence community there is something called tracking the “indicators and warnings”.  My question to you is: what are the economic “indicators and warnings” of a possible (probable?) collapse of the US dollar followed by a collapse of the financial markets most tied to the Dollar?  What shall people like myself (I am an economic ignoramus) keep an eye on and look for?

What is most likely is a slow decline, largely from debt deflation and cutbacks in social spending, in the Eurozone and US economies. Of course, the decline will force the more highly debt-leveraged companies to miss their bond payments and drive them into insolvency. That is the fate of Thatcherized economies. But it will be long and painfully drawn out, largely because there is little left-wing socialist alternative to neoliberalism at present.

Trump’s protectionist policies and sanctions are forcing other countries to become self-reliant and independent of US suppliers, from farm crops to airplanes and military arms, against the US threat of a cutoff or sanctions against repairs, spare parts and servicing. Sanctioning Russian agriculture has helped it become a major crop exporter, and to become much more independent in vegetables, dairy and cheese products. The US has little to offer industrially, especially given the fact that its IT communications are stuffed with US spyware.

Europe therefore is facing increasing pressure from its business sector to choose the non-US economic alliance that is growing more rapidly and offers a more profitable investment market and more secure trade supplier. Countries will turn as much as possible (diplomatically as well as financially and economically) to non-US suppliers because the United States is not reliable, and because it is being shrunk by the neoliberal policies supported by Trump and the Democrats alike. A byproduct probably will be a continued move toward gold as an alternative to the dollar in settling balance-of-payments deficits.

Q6: Finally, my last question: which country out there do you see as the most capable foe of the current US-imposed international political and economic world order? Whom do you believe that US Deep State and the Neocons fear most?  China? Russia? Iran? some other country? How would you compare them and on the basis of what criteria?

The leading country breaking up US hegemony obviously is the United States itself. That is Trump’s major contribution. He is uniting the world in a move toward multi-centrism much more than any ostensibly anti-American could have done. And he is doing it all in the name of American patriotism and nationalism – the ultimate Orwellian rhetorical wrapping!

Trump has driven Russia and China together with the other members of the Shanghai Cooperation Organization (SCO), including Iran as observer. His demand that NATO join in US oil grabs and its supportive terrorism in the Near East and military confrontation with Russia in Ukraine and elsewhere probably will lead to European “Ami go home” demonstrations against NATO and America’s threat of World War III.

No single country can counter the U.S. unipolar world order. It takes a critical mass of countries. This already is taking place among the countries that you list above. They are simply acting in their own common interest, using their own mutual currencies for trade and investment. The effect is an alternative multilateral currency and trading area.

The United States is now turning on the screws demanding that other countries sacrifice their growth in order to finance the U.S. unipolar empire. In effect, foreign countries are beginning to respond to the United States what the ten tribes of Israel said when they withdrew from the southern kingdom of Judah, whose King Rehoboam refused to lighten his demands (1 Kings 12). They echoed the cry of Sheba son of Bikri a generation earlier: “Look after your own house, O David!” The message is: What do other countries have to gain by remaining in the US unipolar neoliberalized world, as compared to using their own wealth to build up their own economies? It’s an age-old problem.

The dollar will still play a role in US trade and investment, but it will be as just another currency, held at arms length until it finally gives up its domineering attempt to strip other countries’ wealth for itself. However, its demise may not be a pretty sight.

unsplash-logoFaruk Kaymak

America Escalates its “Democratic” Oil War in the Near East

Published by Anonymous (not verified) on Wed, 08/01/2020 - 12:24pm in



The mainstream media are carefully sidestepping the method behind America’s seeming madness in assassinating Islamic Revolutionary Guard general Qassim Suleimani to start the New Year. The logic behind the assassination was a long-standing application of U.S. global policy, not just a personality quirk of Donald Trump’s impulsive action. His assassination of Iranian military leader Suleimani was indeed a unilateral act of war in violation of international law, but it was a logical step in a long-standing U.S. strategy. It was explicitly authorized by the Senate in the funding bill for the Pentagon that it passed last year.

The assassination was intended to escalate America’s presence in Iraq to keep control of the region’s oil reserves, and to back Saudi Arabia’s Wahabi troops (Isis, Al Quaeda in Iraq, Al Nusra and other divisions of what are actually America’s foreign legion), to support U.S. control of Near Eastern oil as a buttress of the U.S. dollar. That remains the key to understanding this policy, and why it is in the process of escalating, not dying down.

I sat in on discussions of this policy as it was formulated nearly fifty years ago when I worked at the Hudson Institute and attended meetings at the White House, met with generals at various armed forces think tanks and with diplomats at the United Nations. My role was as a balance-of-payments economist, having specialized for a decade at Chase Manhattan, Arthur Andersen and oil companies in the oil industry and military spending. These were two of the three main dynamics of American foreign policy and diplomacy. (The third concern was how to wage war in a democracy where voters rejected the draft in the wake of the Vietnam War.)

The media and public discussion have diverted attention from this strategy by floundering speculation that President Trump did it, except to counter the (non-)threat of impeachment with a wag-the-dog attack, or to back Israeli lebensraum drives, or simply to surrender the White House to the neocon hate-Iran syndrome. The actual context for the neocon’s action was the balance of payments, and the role of oil and energy as a long-term lever of American diplomacy.

The balance of payments dimension

The major deficit in the U.S. balance of payments has long been military spending abroad. The entire payments deficit, beginning with the Korean War in 1950-51 and extending through the Vietnam War of the 1960s, was responsible for forcing the dollar off gold in 1971. The problem facing America’s military strategists was how to continue supporting the 800 U.S. military bases around the world and allied troop support without losing America’s financial leverage.

The solution turned out to be to replace gold with U.S. Treasury securities (IOUs) as the basis of foreign central bank reserves. After 1971, foreign central banks had little option for what to do with their continuing dollar inflows except to recycle them to the U.S. economy by buying U.S. Treasury securities. The effect of U.S. foreign military spending thus did not undercut the dollar’s exchange rate, and did not even force the Treasury and Federal Reserve to raise interest rates to attract foreign exchange to offset the dollar outflows on military accounts. In fact, U.S. foreign military spending helped finance the domestic U.S. federal budget deficit.

Saudi Arabia and other Near Eastern OPEC countries quickly became a buttress of the dollar. After these countries quadrupled the price of oil (in retaliation for the United States quadrupling the price of its grain exports, a mainstay of the U.S. trade balance), U.S. banks were swamped with an inflow of  foreign deposits – which were lent out to Third World countries in an explosion of bad loans that blew up in 1972 with Mexico’s insolvency. This destroyed Third World government credit for a decade, forcing it into dependence on the United States via the IMF and World Bank.

To top matters, of course, what Saudi Arabia does not save in dollarized assets with its oil-export earnings is spent on buying hundreds of billion of dollars of U.S. arms exports. This locks them into dependence on U.S. supply of replacement parts and repairs, and enables the United States to turn off Saudi military hardware at any point of time, in the event that the Saudis may try to act independently of U.S. foreign policy.

So maintaining the dollar as the world’s reserve currency became a mainstay of U.S. military spending. Foreign countries would not have to pay the Pentagon directly for this spending. They simply finance the U.S. Treasury and U.S. banking system.

Fear of this development was a major reason why the United States moved against Libya, whose foreign reserves were held in gold, not dollars, and which was urging other African countries to follow suit in order to free themselves from “Dollar Diplomacy.” Hillary and Obama invaded, grabbed their gold supplies (we still have no idea who ended up with these billions of dollars worth of gold) and destroyed Libya’s government, its public education system, its public infrastructure and other non-neoliberal policies.

The great threat to this is dedollarization as China, Russia and other countries seek to avoid recycling dollars. Without the dollar’s function as the vehicle for world saving – in effect, without the Pentagon’s role in creating the Treasury debt that is the vehicle for world central bank reserves – the U.S. would find itself constrained militarily and hence diplomatically constrained, as it was under the gold exchange standard.

That is the same strategy that the U.S. has followed in Syria and Iraq. Iran was threatening this dollarization strategy and its buttress in U.S. oil diplomacy.

The oil industry as buttress of the U.S. balance of payments and foreign diplomacy

The trade balance is buttressed by oil and farm surpluses. Oil is the key, because it is imported by U.S. companies at almost no balance-of-payments cost (the payments end up in the oil industry’s head offices here as profits and payments to management), while profits on U.S. oil company sales to other countries are remitted to the United States (via offshore tax-avoidance centers, mainly Liberia and Panama for many years). And as noted above, OPEC countries have been told to keep their official reserves in the form of U.S. securities (stocks and bonds as well as Treasury IOUs, but not direct purchase of U.S. companies being deemed economically important). Financially, OPEC countries are client slates of the Dollar Area.

America’s attempt to maintain this buttress explains U.S. opposition to any foreign government steps to reverse global warming and the extreme weather caused by the world’s U.S.-sponsored dependence on oil. Any such moves by Europe and other countries would reduce dependence on U.S. oil sales, and hence on the U.S’s ability to control the global oil spigot as a means of control and coercion. These are viewed as hostile acts.

Oil also explains U.S. opposition to Russian oil exports via Nordstream. U.S. strategists want to treat energy as a U.S. national monopoly. Other countries can benefit in the way that Saudi Arabia has done – by sending their surpluses to the U.S. economy – but not to support their own economic growth and diplomacy. Control of oil thus implies support for continued global warming as an inherent part of U.S. strategy.

How a “democratic” nation can wage international war and terrorism

The Vietnam War showed that modern democracies cannot field armies for any major military conflict, because this would require a draft of its citizens. That would lead any government attempting such a draft to be voted out of power. And without troops, it is not possible to invade a country to take it over.

The corollary of this perception is that democracies have only two choices when it comes to military strategy: They can only wage airpower, bombing opponents; or they can create a foreign legion, that is, hire mercenaries or back foreign governments that provide this military service.

Here once again Saudi Arabia plays a critical role, through its control of Wahabi Sunnis which motivates terrorist jihadis willing to sabotage, bomb, assassinate, blow up and otherwise fight any target designated as an enemy of “Islam,” the euphemism for Saudi Arabia acting as a U.S. client state. (Religion really is not the key; I know of no ISIS or similar Wahabi attack on Israeli targets.) The United States needs the Saudis to supply or finance Wahabi crazies. So in addition to playing a key role in the U.S. balance of payments by recycling its oil-export earnings into U.S. stocks, bonds and other investments, Saudi Arabia provides manpower by supporting the Wahabi members of America’s foreign legion, ISIS and Al-Nusra/Al-Qaeda. Terrorism has become the “democratic” mode of today U.S. military policy.

What makes America’s oil war in the Near East “democratic” is that this is the only kind of war a democracy can fight – an air war, followed by a vicious terrorist army that makes up for the fact that no democracy can field its own army in today’s world. The corollary is that, terrorism has become the “democratic” mode of warfare.

From the U.S. vantage point, what is a “democracy”? In today’s Orwellian vocabulary, it means any country supporting U.S. foreign policy. Bolivia and Honduras have become “democracies” since their coups, along with Brazil. Chile under Pinochet was a Chicago-style free market democracy. So was Iran under the Shah, and Russia under Yeltsin – but not since it elected Vladimir Putin president, any more than is China under President Xi.

The antonym to “democracy” is “terrorist.” That simply means a nation willing to fight to become independent from U.S. neoliberal democracy. It does not include America’s proxy armies.

Iran’s role as U.S. nemesis

What stands in the way of U.S. dollarization, oil and military strategy? Obviously, Russia and China have been targeted as long-term strategic enemies for seeking their own independent economic policies and diplomacy. But next to them, Iran has been in America’s gun sights for nearly seventy years.

America’s hatred of Iran is starts with its attempt to control its own oil production, exports and earnings. It goes back to 1953, when Mossadegh was overthrown because he wanted domestic sovereignty over Anglo-Persian oil. The CIA-MI6 coup replaced him with the pliant Shah, who imposed a police state to prevent Iranian independence from U.S. policy. The only physical places free from the police were the mosques. That made the Islamic Republic the path of least resistance to overthrowing the Shah and re-asserting Iranian sovereignty.

The United States came to terms with OPEC oil independence by 1974, but the antagonism toward Iran extends to demographic and religious considerations. Iranian support of its Shi’ite population and those of Iraq and other countries – emphasizing support for the poor and for quasi-socialist policies instead of neoliberalism – has made it the main religious rival to Saudi Arabia’s Sunni sectarianism and its role as America’s Wahabi foreign legion.

America opposed General Suleimani above all because he was fighting against ISIS and other U.S.-backed terrorists in their attempt to break up Syria and replace Assad’s regime with a set of U.S.-compliant local leaders – the old British “divide and conquer” ploy. On occasion, Suleimani had cooperated with U.S. troops in fighting ISIS groups that got “out of line” – meaning the U.S. party line. But every indication is that he was in Iraq to work with that government seeking to regain control of the oil fields that President Trump has bragged so loudly about grabbing.

Already in early 2018, President Trump asked Iraq to reimburse America for the cost of “saving its democracy” by bombing the remainder of Saddam’s economy. The reimbursement was to take the form of Iraqi Oil. More recently, in 2019, President Trump asked, why not simply grab Iraqi oil. The giant oil field has become the prize of the Bush-Cheney post 9-11 Oil War. “‘It was a very run-of-the-mill, low-key, meeting in general,” a source who was in the room told Axios.’ And then right at the end, Trump says something to the effect of, he gets a little smirk on his face and he says, ‘So what are we going to do about the oil?’”

Trump’s idea that America should “get something” out of its military expenditure in destroying the Iraqi and Syrian economies simply reflects U.S. policy.

In late October, 2019, The New York Times reported that: “In recent days, Mr. Trump has settled on Syria’s oil reserves as a new rationale for appearing to reverse course and deploy hundreds of additional troops to the war-ravaged country. He has declared that the United States has “secured” oil fields in the country’s chaotic northeast and suggested that the seizure of the country’s main natural resource justifies America further extending its military presence there. ‘We have taken it and secured it,’ Mr. Trump said of Syria’s oil during remarks at the White House on Sunday, after announcing the killing of the Islamic State leader, Abu Bakr al-Baghdadi.” A CIA official reminded the journalist that taking Iraq’s oil was a Trump campaign pledge.

That explains the invasion of Iraq for oil in 2003, and again this year, as President Trump has said: “Why don’t we simply take their oil?” It also explains the Obama-Hillary attack on Libya – not only for its oil, but for investing its foreign reserves in gold instead of recycling its oil surplus revenue to the U.S. Treasury – and of course, for promoting a secular socialist state.

It explains why U.S. neocons feared Suleimani’s plan to help Iraq assert control of its oil and withstand the terrorist attacks supported by U.S. and Saudi Arabia. That is what made his assassination an immediate drive.

American politicians have discredited themselves by starting off their condemnation of Trump by saying, as Elizabeth Warren did, how “bad” a person Suleimani was, how he had killed U.S. troops by masterminding the Iraqi defense of roadside bombing and other policies trying to repel the U.S. invasion to grab its oil. She was simply parroting the U.S. media’s depiction of Suleimani as a monster, diverting attention from the policy issue that explains why he was assassinated now.

The counter-strategy to U.S. oil, dollar and global-warming diplomacy

This strategy will continue, until foreign countries reject it. If Europe and other regions fail to do so, they will suffer the consequences of this U.S. strategy in the form of a rising U.S.-sponsored war via terrorism, the flow of refugees, and accelerated global warming (and extreme weather).

Russia, China and its allies already have been leading the way to dedollarization as a means to contain the balance-of-payments buttress of U.S. global military policy. But everyone now is speculating over what Iran’s response should be.

The pretense – or more accurately, the diversion – by the U.S. news media over the weekend has been to depict the United States as being under imminent attack. Mayor de Blasio has positioned policemen at conspicuous key intersections to let us know how imminent Iranian terrorism is – as if it were Iran, not Saudi Arabia that mounted 9/11, and as if Iran in fact has taken any forceful action against the United States. The media and talking heads on television have saturated the air waves with warnings of Islamic terrorism. Television anchors are suggesting just where the attacks are most likely to occur.

The message is that the assassination of General Soleimani was to protect us. As Donald Trump and various military spokesmen have said, he had killed Americans – and now they must be planning an enormous attack that will injure and kill many more innocent Americans. That stance has become America’s posture in the world: weak and threatened, requiring a strong defense – in the form of a strong offense.

But what is Iran’s actual interest? If it is indeed to undercut U.S. dollar and oil strategy, the first policy must be to get U.S. military forces out of the Near East, including U.S. occupation of its oil fields. It turns out that President Trump’s rash act has acted as a catalyst, bringing about just the opposite of what he wanted. On January 5 the Iraqi parliament met to insist that the United States leave. General Suleimani was an invited guest, not an Iranian invader. It is U.S. troops that are in Iraq in violation of international law. If they leave, Trump and the neocons lose control of oil – and also of their ability to interfere with Iranian-Iraqi-Syrian-Lebanese mutual defense.

Beyond Iraq looms Saudi Arabia. It has become the Great Satan, the supporter of Wahabi extremism, the terrorist legion of U.S. mercenary armies fighting to maintain control of Near Eastern oil and foreign exchange reserves, the cause of the great exodus of refugees to Turkey, Europe and wherever else it can flee from the arms and money provided by the U.S. backers of Isis, Al Qaeda in Iraq and their allied Saudi Wahabi legions.

The logical ideal, in principle, would be to destroy Saudi power. That power lies in its oil fields. They already have fallen under attack by modest Yemeni bombs. If U.S. neocons seriously threaten Iran, its response would be the wholesale bombing and destruction of Saudi oil fields, along with those of Kuwait and allied Near Eastern oil sheikhdoms. It would end the Saudi support for Wahabi terrorists, as well as for the U.S. dollar.

Such an act no doubt would be coordinated with a call for the Palestinian and other foreign workers in Saudi Arabia to rise up and drive out the monarchy and its thousands of family retainers.

Beyond Saudi Arabia, Iran and other advocates of a multilateral diplomatic break with U.S. neoliberal and neocon unilateralism should bring pressure on Europe to withdraw from NATO, inasmuch as that organization functions mainly as a U.S.-centric military tool of American dollar and oil diplomacy and hence opposing the climate change and military confrontation policies that threaten to make Europe part of the U.S. maelstrom.

Finally, what can U.S. anti-war opponents do to resist the neocon attempt to destroy any part of the world that resists U.S. neoliberal autocracy? This has been the most disappointing response over the weekend. They are flailing. It has not been helpful for Warren, Buttigieg and others to accuse Trump of acting rashly without thinking through the consequences of his actions. That approach shies away from recognizing that his action did indeed have a rationale—to draw a line in the sand, to say that yes, America WILL go to war, will fight Iran, will do anything at all to defend its control of Near Eastern oil and to dictate OPEC central bank policy, to defend its ISIS legions as if any opposition to this policy is an attack on the United States itself.

I can understand the emotional response of yet new calls for impeachment of Donald Trump. But that is an obvious non-starter, partly because it has been so obviously a partisan move by the Democratic Party. More important is the false and self-serving accusation that President Trump has overstepped his constitutional limit by committing an act of war against Iran by assassinating Soleimani.

Congress endorsed the assassination of Soleimani as ordered by Trump (and his neocon advisor, Secretary of State Pompeo) and is fully as guilty as he is for having approved the Pentagon’s budget. This is due to the Senate’s removal of the amendment to the 2019 National Defense Authorization Act where Bernie Sanders, Tom Udall and Ro Khanna inserted an amendment in the House of Representatives version, explicitly not authorizing the Pentagon to wage war against Iran or assassinate its officials. When this budget was sent to the Senate, the White House and Pentagon (a.k.a. the military-industrial complex and neoconservatives) removed that constraint. That was a red flag announcing that the Pentagon and White House did indeed intend to wage war against Iran and/or assassinate its officials. Congress lacked the courage to argue this point at the forefront of public discussion.


First came the 9/11 attack (Sept 2001).

In the wake of this, Congress passed the 2002 Authorization Act. This authorized the President to move against Al Qaeda.

Fast forward to today: Suleimani and Iran were fighting AGANST Al Qaeda and its offshoot, ISIS/Daesh. Saudi Arabia had asked Suleimani (with U.S. approval) to help negotiate a peace, whereby the Saudi’s would stop backing ISIS. It was an official mission invited by Iraq to negotiate peace between Saudi Arabia, Iran and Iraq.

This infuriated the United States, which wanted a permanent warfare there as an excuse to occupy Iraq and prevent a Shi’ite Crescent linking Iran, Iraq, Syria and Lebanon, which incidentally would serve as part of China’s Belt and Road initiative. So it killed Suleimani to prevent the peace negotiation.

The implication is that the US wants a PERMANENT occupation of Iraq, which is needed to secure the US grab of Iraq’s oil and Syria’s oil, as well as to prevent any non-U.S. oil transit.

The question is, how to get the world’s politicians – U.S., European and Asians – to see how America’s all-or-nothing policy is threatening new waves of war, refugees, extreme weather and the disruption of the oil trade in the Strait of Hormuz. Ultimately, the aim is to ensure neoliberal dollarization is imposed on all countries to subsidize US imperial hegemony.

It is a sign of how little power exists in the United Nations that no countries are calling for a new Nurenberg-style war crimes trial following the assassination, no threat to withdraw from NATO or even to avoid holding reserves in the form of money lent to the U.S. Treasury to fund America’s military budget.

Omid Armin

Real Economy 2020

Published by Anonymous (not verified) on Wed, 08/01/2020 - 9:34am in



A full length interview with Max and Stacy.

Front Running

Published by Anonymous (not verified) on Sat, 04/01/2020 - 2:22pm in


Debt, Interviews


MAX KEISER: Front Running: 2020 with me, Max Keiser, and Stacy Herbert. As we look ahead to all the excitement of the 2020 elections, every episode we dig deep into something new. This time we’re going to look at the wealth tax, Stacy.

STACY HERBERT: That’s right. We’re looking at all the economic policies being presented by the Democratic candidates. Many of them are very radical. Bernie Sanders, says, “Billionaires should not exist.” And to find out whether or not they should. We have guests with us. Dr. Michael Hudson, and Prof. Steve Keen. Steve, we’ll start with you first.

PROF STEVE KEEN: Well, I have a very complicated position on this because part of my research is into Minsky, what’s called the Financial Instability Hypothesis, that explains where the 2008 crisis came from. Out of that, part of what I discovered from the mathematical modeling idea was that there’s a simple relationship between an increase in level of private debt and a fall in the amount of money going to workers.

As you had a rising level of debt, which is what led to a crisis, that rising level of debt meant a rising amount of money going to the bankers. And rather than the capitalists being the ones who paid for it, in fact, it was the workers. There was a falling income going to the workers. Now look at the empirical data, that’s what’s happened as well. The rising level of private debt has meant more money going to bankers, less going to workers, and capitalists fitting in the middle.

MAX: How come this issue is so misunderstood by the Democrats? They seem to be financially illiterate, and this idea, do we need billionaires should be really rephrased as, “Where do billionaires come from?” In other words, how do you get billionaires? Right? And it seems like there’s a lot of area to examine in the banking system, in the central banking system where they seem to have engineered, if you will, using what in economics is called the Cantillon Effect, where the Central Bank prints billions, hundreds of billions, and somehow it never circulates in the economy and it goes to the same people’s pockets all the time. Where do billionaires come from? That’s the question.

STEVE KEEN: One way billionaires come from is getting too much private debt, through private debt bubble that shouldn’t have been allowed to happen in the first place. That’s the sort of billionaire I want to get rid of. And I agree with Bernie, completely on that front. The billionaires you’re talking about, we have economists, mainstream economists who run central banks who didn’t see the crisis coming, still can’t understand why it happened and the way of rescuing it has been to pump up asset values in the belief that they will get what they call the ‘wealth effect,’ which will lead to more consumption.

And the idea is make billionaires even wealthier by making shares more expensive and they’ll spend that money and stimulate the economy. Now, there’s a very good research paper by the strange little organization called the Federal Reserve, which shows there is no wealth effect from shares. You get very little benefit at all out of that. That’s been artificially created well, so those two I’d like to get rid of, but the entrepreneurial billionaires, I have a different feeling.

STACY: I know the two of you talk about debt and debt forgiveness all the time and there’s a notion of odious debt. Is there a notion, could you say of ‘odious wealth’ as well? If it’s being created artificially for a specific class, I mean, the data point up here that since 1989 the net worth of the top 1% in America went up $21 trillion, while the bottom 50% lost 900 billion in wealth. Is that because the bottom 50% are just dumb and they don’t work as hard and the top 1% are just uniquely smart and entrepreneurial and wealth creating? Or is it an odious wealth situation, Dr. Michael Hudson?

DR MICHAEL HUDSON: If there is such a thing as odious debt or bad debt, then there’s such a thing as odious wealth on the other balance sheet. The billionaires’ assets of the 1% are the debts of the 99%. And the question is, should America keep all of these debts on the books? If it keeps the debt on the books, the economy is going to shrink and shrink and shrink for the 99% and the only people who will be growing is the 1% of the creditors.

The issue isn’t it really should you tax billionaires? Should you just wipe out the overhead to get back to America’s ‘golden age,’ which was 1945 when the economy emerged from World War II, virtually debt free? Nobody owed anything. The result was a takeoff, a golden age. Everybody could buy a house, there was industry growing, but nobody including Donald Trump, who says, “Make America Great Again,” says, make America great again by wiping out the debt and starting off with a clean slate.

And that means wiping out this $4.9 trillion of money that is just held in cash, all this cash is somebody else’s debt and all of this debt is strangling the economy. And Steve and I are in agreement that the problem of wiping out the debt is, there’s all this wealth on the other side of the balance sheet. The good thing is that by canceling the debts you cancel out this huge amount of billionaires’ power to take over the government, to replace it and ultimately to become the government. And that’s what you call an ‘oligarchy,’ that you cannot have a democracy and at the same time have so many billionaires holding the rest of the economy in debt.

STACY: There was a time during the financial crisis of 2008 to 2009 when we had Occupy Wall Street, and there was a scene at the Occupy Wall Street in London where these bankers were actually crumbling up money and throwing it at the poor people protesting, essentially. Isn’t that $4.7 trillion just sitting in a bank account collecting 0% interest rate, almost the equivalent. It’s mocking the economy and all the people who are impoverished in this economy.

STEVE KEEN: If there’s money, money should circulate. Circulating money generates economic activity and if you have this money just locked in people’s bank accounts not being spent, that’s a major part of why the economy is in a relative slump.

MAX: Right, they say money is like manure. It should be spread around for it to work effectively.

STEVE KEEN: And what you had is the accumulation of this stuff rather than spreading it around. And that’s the great problem of a capitalist economy. It works best when there’s massive amounts of circulation. When people get wealthy, they lock it away and they hoard, and they hoard their spend lists, most rapidly you have a lower level of economic performance, so that wealth is correlated with low economic performance, not high economic performance.

MAX: Okay, so this is all very interesting in terms of the flow of money, et cetera. Going back to 2008 we had the emergence of the Holder Doctrine from Eric Holder, former Attorney General, who said that banks are strategic to the economy and, therefore, you couldn’t prosecute them. He established a new precedent that banks and the biggest bankers were above the law. It used to be simply ‘moral hazard.’ The Central Bank would say, “Well, if you keep bailing people out they’ll continue to act poorly.” Here they’ve institutionalized what, looking back now on the prosecution and investigation of JP Morgan, is obvious racketeering. They’ve made racketeering in the banking sector legal. Obviously, that’s going to create a concentration of wealth, if I can steal money with no repercussions whatsoever, I’m going to become a wealthy man.

STEVE KEEN: And that’s what’s happened. I mean, the date of 1989 is really indicative here because I’m talking about trends in a pure capitalist economy with no stuff ups by central bankers. But ’87 began the stuff, I suppose, central bankers with the ‘Greenspan put.’ And ever since then they’ve gone in there to rescue the banks whenever they start to fall over, to rescue the financial institutions when they stuff up, the classic, of course, being Long Term Capital Management.

All of this stuff has meant as well as the capitalist system driving inequality, which slows the economy down, the so-called managers, the central bankers in particular, Greenspan and his followers have accentuated the inequality and accentuated stagnation that comes out of that inequality. This wealth is giving us stagnation, not prosperity.

MICHAEL HUDSON: The problem is, what is a capitalist economy? Most people think that a capitalist economy is billionaires using their money to invest in factories and to employ people. But that’s an industrial capitalist economy. And what we have now is something different. We have a finance capitalist economy, and the idea of a finance capital isn’t to make money by employing workers to make more goods to sell at a profit, it’s to make money from money. It’s to make money by buying real estate, stocks and bonds, not factories.

You can make money fastest by closing down the factories, by outsourcing. You make money if you’re a finance capitalist by closing your American factory and moving to China. By taking all of your income and instead of reinvesting it in a factory, you use it for stock buybacks to bid up the price of your stock, or to pay out as dividends to push up the price of your stock.

MAX: How could it be so difficult for the Democrats to make the observation that when the monopolists and the monarchs, the neo-financial monarchs, are strangling an economy, a company or a country, let’s say in the case of Greece. They strangled Greece, they choked it out. As a result, they rewarded the financiers with a bailout, with more hundreds of billions.

Every time they strangle a company or a country to death, they get more capital, they don’t circulate the capital. Why can’t the Democrats, why can’t the opposition make that observation? Why can’t those who are leading the Democratic Party say, “Look, these guys are choking out these economies, these companies, this economy. Here’s how they do it, it’s a crime wave.” How come they don’t take them to court? Why do they pretend that it’s something other than that?

MICHAEL HUDSON: Because the Democratic Party is Wall Street. The Democratic Party is basically the neo-liberal Wall Street party that believes that if you give more money to the billionaires, they’ll spend it into the economy instead of doing what Steve Keen describes them as doing, spending it back into the financial market to keep inflating asset prices. Wealth today isn’t made by saving money, it’s not made by investing in factories, it’s made by buying stocks and bonds that the Federal Reserve inflates in price by this huge 4.6 trillion of quantitative easing that is all spent into the stocks and bonds, not into the real economy.

STACY: That’s why we’re filming here in Brooklyn. Across the bridge you see the financial center, $14 trillion gone into rescuing them, saving those banks. The millennials, the Generation Z, the next generation that’s going to have to pay all these debts that accumulated by these banksters, they live out here and this is the heart of where all these policies of a wealth tax, of Medicare for all, all these UBIs, all these sort of ideas are coming from out here.

MAX: Front Running is a double entendre for this show, because it’s the political front runners as well as what you just described, which is financial front running. The insiders know what the government’s going to do ahead of time with their bailouts and their money printing, and they front run. They get ahead of that trade and they print profits risklessly and then their wealth skyrockets. Then Ray Dalio, hedge fund manager will say, “Oh, the wealth and income gap is so big. Well, how am I going to save my family and friends from the torches.” I say, “Well, why don’t you turn in Jamie Dimon? Why don’t you turn in your fellow kleptocrats, put them in jail and help do something positive for society.”

MICHAEL HUDSON: Let me clarify something that Stacy said. You talked about the current generation having to pay off the depths of their predecessors. They’re not going to pay them off, these debts cannot be paid off. They can go bankrupt, they can starve, they can die sooner, but they cannot pay off the debts. Mathematically, there’s no way of these exponential growth in debts being paid off. In the end, every economy reaches a point where the debts cannot be paid and it is a choice: either it can wipe out the debts and grow again, or it can leave the debts in place and let it strangle the economy. That’s what the Democratic Party and the Republican Party stand for today.

MAX: And on that note that these debts will never, ever, ever, never be paid back. Don’t go away, much more coming on Front Running, stay right there.

=== BREAK ===

MAX: Welcome back to Front Running. Just learned from Dr. Michael Hudson that apparently the debts can never, ever, ever, ever be paid simply because mathematically it’s impossible, Stacy.

STACY: Yes, the debts have been rising exponentially and I think it’s in an interesting way, the context of Front Running is that we have the Boomer generation dying off and the Millennial generation is now a larger generation than the famous and the infamous boomer generation. It feels like they’re asserting themselves through these economic policies. It’s like, “Hey wait, we’re not suckers like Generation X. We’re not going to pay your debt, we’re not going to ride along in your stream of bad debts.” Is a tax something that should be considered or are you just saying wipe out those debts completely?

MICHAEL HUDSON: The only way to do it is to wipe out the debt. Rich people don’t pay taxes, only the poor people pay taxes. Rich people will declare all of this cash is really in Liberia or Panama, or the Cayman Islands and it’s not really in America at all, so it can’t be taxed. The only thing to do is to wipe out the debts, and by wiping out the debts you wipe out this excess wealth.

And does America really want an oligarchy? That’s the issue, do you want a group of billionaires to run your political parties, to control all of your medical care by saying it should be companies that we own, not the public. Do you want to have a group of billionaires saying, “We are the government,” not a democracy, or do you want democracy? I hope to put things in a broader perspective and in proportion. And that’s, the real proportion is a huge top heavy economy whose debt is burdening it down and crushing it. And if you look at Greece, is Greece America’s future? Is Latin America, America’s future? Are we going to end up as broke as these indebted countries?

MAX: On this idea that the rich paying taxes or not paying taxes, of course, the pushback on this is that the top billionaires will say, “Well, most of the taxes that are collected in the country we pay.” But we have to keep in mind that’s on reported income. Most of the income is not reported. For example, if they pay taxes on all income and not just unreported income, you’d have about three and a half trillion dollars in taxes collected last year and probably be closer to eight or nine trillion collected in taxes last year.

MICHAEL HUDSON: Amazing as it may seem, rich people don’t earn income. Billionaires don’t earn income. If you earn income, you pay on it. Billionaires make capital gains and they don’t have to pay taxes on these, especially if they’re offshore. If you look at other national income statistics for real estate, you find the entire real estate industry, all the real estate in America is paid just about zero income since 1945. As Donald Trump says, “I love depreciation.” They have so many loopholes that they have no reportable income. Taxes are not going to do it. You have to go right to the root of things. It’s assets and debts at the balance sheet. And balance sheets is what they should talk about.

STEVE KEEN: And that’s where we can be clever because taxation is the dumb way of trying to get the wealth back from the wealthy who’ve expropriated rather than earned it, as Michael’s been saying. But we’re talking about private debt by the way, let’s be very careful here. It’s the private debt that’s causes us inequality, it’s the private debt that’s stagnates the economy. The government debt as Modern Monetary Theory argues is something which is like… it’s the government’s capacity to create money is mirrored in the amount of debt that it creates.

The government debt is something which is controllable, it’s not the problem. Of course, all the attention of the Democratic Party and the Republicans is on the government debt. But we can use the government’s money creation capacity to give everybody, let’s say an equal amount of wealth. And what that would mean is you actually reduce the debt burden. You can do it in, rather than trying to take it off in terms of taxation, which they can always evade, you could use the government’s money creation capability to give everybody cash, which could be used to pay the debts down and consequently you’d reduce that debt, that wealth concentration.

MICHAEL HUDSON: I don’t want to pay the debt down. I don’t want to make our billionaires into trillionaires. I want to wipe out the debts and wipe out all of this massive capital that is stifling the economy.

STEVE KEEN: That’s the reason why-

MICHAEL HUDSON: It’s assets that are as bad as the debt.

STEVE KEEN: That’s why I say you can do it using what I call a ‘modern debt jubilee,’ which is you use the state’s capacity to create the money you get on a per capita basis, pay the debts down, and that reduces the power of the oligarchy.

STACY: Just for the tax rates just so you understand, last year, 2018 was the first year in US history where billionaires paid a lower tax rate than the average worker. The average worker in America paid 28% state, federal and local tax, and the billionaires paid 23%.

MICHAEL HUDSON: You’re not counting the wage withholding of 16%.

STACY: Exactly.

MICHAEL HUDSON: Only people who earn up to about 110,000 have to pay it. If you earn more than that, you don’t have to pay any wage withholding for social security. Only the lower income people have to pay for social security and medical insurance. It’s even worse than…

STACY: It’s even worse. And speaking of worse, Max, had mentioned Ray Dalio. Ray Dalio, is of course, part of this financialised world. He’s the biggest hedge fund manager in the world. Bridgewater Capital over in Connecticut, not too far from here. He has been writing these series of blog posts over the past few weeks, few months. And I would say that he seems very, very concerned that the pitchforks and the guillotines are going to come out for the billionaires.

And he himself seems to suggest it’s a lot to do with the Federal Reserve giving people like me free money. I get to borrow at less than 0%, nobody else can. That money being given over and over and over and we see around of all this quantitative easing again, it doesn’t go into the economy, it just goes into financiers-

STEVE KEEN: Into the financiers. I’m going to steal one of Michael’s phrases here. And Michael said Greenspan’s helicopter drops the money over Wall Street, not Main Street. It’s the old parasite saying, “If you don’t feed me, I’m going to die.” Well, it’s the host that’s in trouble, not the parasite, right?

MAX: Right. Ray Dalio, is like something out of a Willy Wonka story. He’s trapped in a chocolate factory eating himself to death on free chocolates and this free money-

I think he complains on interest and that-

And complaining about it. And going, “Oh my God, stop forcing this chocolate down my throat, I can’t stand it anymore.” But they don’t attack the origins of the problem, it’s that they are soaking up trillions in free cash and in some cases they get paid to borrow money. I mean, imagine this, somebody down the street here is going to be charged two to 3000% a year annualized rate for a payday loan. Ray Dalio, he shows up to get a loan and they pay him to borrow the money. Anyone who is, “My God, how did I get so rich and well, will I be burned to death?” Well, if there’s justice, yeah.

MICHAEL HUDSON: That’s because he makes loans to the payday loan maker.

MAX: Exactly. There’s a 360 degree of fraud being committed and perpetuated by, again, the root source being the need to keep the central banks happy by allowing them to print in what I call, interest rate apartheid. They simply give money to their friends and everyone else gets choked out.

MICHAEL HUDSON: To paraphrase President Nixon, when the billionaires do it, it’s not fraud.

STACY: Exactly. But you know, Max, brings up a good point there, is he’s talking about interest rate apartheid and the Central Bank policy. The central bankers are not elected, they don’t serve the people. We elect a government to serve us, to represent us, but fiscal policy is not even a thing in America anymore. We don’t have fiscal policy, we only have monetary policy. The monetary policy can only… they can only give money to Wall Street. How do you tell these young voters looking for radical policies and the most they can come up with right now is a wealth tax, what do they do, Steve?

STEVE KEEN: Well, I’m actually against this that we have a quantitative easing for Wall Street. Let’s have quantitative easing for the people. Nobody paid a tax for quantitative easing. Every year the Federal Reserve is buying a $960 billion worth of bonds off the financial sector. Where did the money come from? Double-entry bookkeeping. They simply said, “We’re going to put $1 trillion in your bank accounts, you give us $1 trillion worth of this paper, your bonds.”

And what that meant was the financial sector had a $1 trillion worth of cash. What did they do with it? They buy shares. What happened to the share prices? They go up. People who own the shares get wealthier just because of that accounting trick by the Federal Reserve. They could do exactly the same thing to inject or put money into people’s bank accounts, not into Wall Street. Anybody who gets the money and he’s got debt, the debt is paid down. We could return back to the golden age of capitalism when private debt was about 40% of GDP. This is the period Michael’s talking about from ’45 to about ’65. Low levels of debt, it didn’t matter that you had credit in demand. It didn’t accumulate too much. Plenty of stimulus, plenty of real economy activity, that’s what we needed to get back to.

STACY: In your world here of wiping out the debts or having ‘quantitative easing for the people’ or stuff like that, what happens to a Steve Jobs or Jeff Bezos or the entrepreneurs, or Elon Musk?

STEVE KEEN: They actually might get some more cash. I mean, whenever you attack financial capital, people defend it by talking about the wonderful industrial capitalists.


STEVE KEEN: Now, I am a fanboy of Elon Musk, and I’m happy to admit that. I think he’s done some incredible engineering and has some incredibly gifted ideas. That’s the sort of stuff that society needs. He had to struggle, he managed to get cash out of PayPal, but he was struggling to get financial provisions on many, many occasions. And it’s because financial capital has taken over.

And as another one of the characters I like, an old guy called Karl Marx, once said, he called the financial sector, “The roving cavaliers of credit,” and said, “every now and then the systems let this bunch take over the real economy and they know nothing about the real economy, and should have nothing to do with it.” When finance dominates, capitalism suffers. We need to get back to the rise in capitalism, the entrepreneurial stuff is dominant and that means weakening financial capital.

STACY: That’s a clever sort of magician’s trick. It’s like they confuse the population’s mind of saying, “Oh, Jamie Dimon, and Ray Dalio, these guys are capitalists. These guys are…” But it’s industrial capitalists that are actually always served up. They never mention Jamie Dimon, they’ll mention the Elon Musks. If you tax the wealthy, you’re going to lose the Elon Musks.

STEVE KEEN: Yeah, the shell and pea trick. I mean, we want to get the people who do the entrepreneurial stuff and take the genuine risks and innovate. They’re the ones that we want. It’s not them getting the money in the system. Now it’s the Ray Dalios, well, Dalio is not so bad, but it’s the Jamie Dimons and so on, the whole financial sector. They’re getting the money and we stultify, we stagnate.

They don’t come up with new ideas, they don’t come up with new concepts we all benefit from. They actually stop at getting to the industrial capitalist. We want to give back to the world where the industrial capitalist get the money and the finance sector are the lubricant to the system, they’re not the dominant, the drivers of the system.

MAX: Well, and by that measure the least productive capitalist in society would be Warren Buffet because he does absolutely nothing. He just collects money from the Fed and he buys strategic positions in insurance and banks.

STEVE KEEN: Well, he’s a classic case of somebody who knew that mainstream economic theory was nonsense. Efficient markets hypothesis . . . and said, “if enough people . . . if that’s what you believe, I’m going to become a billionaire.” And he was right, okay? So he’s shown that the face-

MAX: But he’s never invented anything, he’s never produced anything. He simply hoards cash like an old lady in the attic would hoard old telephone books.

MICHAEL HUDSON: He knows that it can’t go on forever. And if you know it can’t go on forever, what do you do? You play for the short run, and that’s the real problem of finance capital. Finance capital, the long run is the short run for the finance capital and it’s every three months. For industrial capital, you actually have to invest something for the longer term, that’s where the risk is. Finance capital doesn’t take risk, it only wants sure things, when you bought the politicians.

STACY: Final point, is the wealth tax going to happen?

MICHAEL HUDSON: It wouldn’t make any difference if it did. Yes it’ll probably be passed and may bring in $10, maybe $15 a year.

STEVE KEEN: Same attitude. The rich are going to evade taxes. We have to be cleverer than that, and we can be clever by using the mechanism that quantitative easing that the Fed use to actually inflate asset process to distribute wealth instead, and reduce the disparity. We can’t do it by taxation.

MAX: What I learned is, don’t look so much at the income statement, look at the balance sheet.

STEVE KEEN: That’s very much-


MAX: That’s the key-

STEVE KEEN: Definitely-

MICHAEL HUDSON: The balance sheet.

MAX KEISER: Thanks so much fellas, and that’s going to do it for this edition of Front Running 2020, with me, Max Keiser and Stacy Herbert. Until next time, bye y’all.

Labour’s 2019 Manifesto: My assessment on BBC Radio 5, 21 NOV 2019

Published by Anonymous (not verified) on Fri, 22/11/2019 - 10:21am in

As an economist, Labour’s 2019 Manifesto strikes me as a sensible, moderate and well-targeted program in view of Britain’s needs and capacities.

Independently of what one thinks of Corbyn and McDonnell (Nb. my friendship and comradeship with both is well known), most people agree that:

  • Exceptional investment in the green transition and technologies, possibly of a level not seen since the post-war reconstruction, is our generation’s duty to the next. A large carbon tax on those who profit from heating up the planet is both fair and logical.

  • Unbearable levels of inequality, and homelessness need to be reversed.

  • The botched privatisations of rail, water, mail and energy call for re-nationalisation.

Labour’s 2019 Manifesto addresses all of these tasks by making the top 5% of the population, who have increased their share of national wealth scandalously during the last decade of deep stagnation, pay a fair amount.

Labour’s 2019 Manifesto is, thus, the most responsible policy agenda that has been offered to voters in a long, long time. A breath of fresh air… as I said earlier today on BBC Radio 5

Sophisticated Heretic – Interview with the Cambridge Union magazine TCS

Published by Anonymous (not verified) on Fri, 22/11/2019 - 9:32am in

Yanis Varoufakis has been adamant that he is not a politician. He might be an economist, though his conversation with Margaret Levi – a Stanford political scientist – at the Cambridge Union last Thursday evening on 7th November 2019 smashed the academic boundary walls of economics in style. His critical principles come from his characteristic cool iconoclasm – he has ‘zero respect for economists’ – but this is a radical spirit that guides his beliefs to a mature and deeply felt complexity.

Varoufakis is impressively historically literate: he folds contemporary political and economic events into their bigger intellectual history. He puts it that the huge discursive power of the medieval clergy has, in a modern context, been seized by economists. The go-to revolving door theory – where industrialists are recycled as industrial-legislators – is reimagined by Varoufakis as the emperor at the confessional ear of the archbishop: their power is co-dependent.

He suggests that the ‘supreme power’ of established economic thought and policy over our collective imagination is analogous to the hold of sacred words on medieval minds. That the people, in their own language, might begin to understand scripture was an unhinging prospect that terrified the Tudor establishment. Varoufakis ascribes the quasi-religious authority of received economic thought to the mystery of its language. He drops into his medieval history, perhaps pointing to role models, the term ‘sophisticated heretics’.

Image Credit: Flickr

I asked him if the left today is open to intellectualism. He thinks the left has always been more welcoming than the right because, ‘all outsiders in human history have been more open to an intellectual reconfiguration and reconsideration of the status quo.’ But – never the politician – he pushes away an uncritical ideological spirit: ‘the left has also been responsible for immense acts of authoritarianism, and closing down debate, as it approached power. Power corrupts, and the left is not immune to that. So I am distinctly aware of the left’s proclivity towards modes of thinking that are just as oppressive as what we have today in the dominant paradigm.’

Toying with this urgent self-awareness, he turns on his new political party in Greece – MeRA, which is under the umbrella of his pan-European movement, DiEM or European Spring: ‘I watch how even small increases in our power, in our percentage in the polls, are always threatening us with a dissolution of friendship, of tolerance, of openness.’ Varoufakis holds up the flag of the Spanish anarcho-syndicalists as he likes its sophisticated symbolism: ‘[it] was black and red: they used to say red for the excitement, the hope, the revolutionary spirit in our heart, and black for the dark side that each one of us has.’

“I am an expert on economic theory,’ he says, ‘[but] that does not mean I am an expert on what needs to happen. That is very difficult.”

I find it difficult to see how these intellectually complex principles translate into his popular democratic movement, especially in the context of disinformation and a resistance to academically-informed discourse. ‘I am an expert on economic theory,’ he says, ‘[but] that does not mean I am an expert on what needs to happen. That is very difficult.’ He clarifies the difference I am trying to define between the academic and the political spheres: ‘In the academic sphere, the beauty of being in a place like Cambridge, is that at the level of research, you put forward your hypothesis, then you meet with your colleagues whose job it is to disprove it. It is only through this test, this trial, that good ideas survive and bad ideas die. This means that the greatest merit of being an academic must be an openness to criticism and a readiness to change your mind, which is exactly the opposite of being in politics. Imagine, instead of having a roundtable of academics where we are testing each other’s theories and trying to disprove them, that we have a roundtable with television cameras, with politicians. Just for a moment fantasise that you are in this conversation and your political opponent says something, and suddenly, you think: my God, that’s a good point! If you say so, you are gone. That really concerns me about politics.’

“Just for a moment fantasise that you are in this conversation and your political opponent says something, and suddenly, you think: my God, that’s a good point! If you say so, you are gone. That really concerns me about politics.”

He says that difference between the academic and the political is a very difficult difference to survive.

One feels that Varoufakis is up for the fight for that survival though. In the spirit of self-criticism, I wondered if he feared the risk as Finance Minister in communicating the complex idea of being at the same time a Europeanist whilst being a radically disruptive force in Europe, the risk of losing control of that narrative to the nationalists and the far right. ‘At every point: I still fear it’. Characteristic of his responses, he reserves political uniformity and gives a double critique of the Syriza project: ‘I think that on the one hand, when it came to the Greek people, we were very successful. Proof of that is that our narrative secured 36% of the vote in the January, and then a few months later, even though the banks were closed (and we were held responsible for that) and all of the media were lambasting us, we took that 36% to 62% of the vote. So, in our communication to the people of Greece, we were spectacularly successful.’ Of course, he checks his triumphalism though: ‘with many Europeans – not all, but many – the systemic media narrative prevailed. I still have to answer questions from journalists: ‘Mr Varoufakis, how dare you go against Europe?’ The answer is I did not.’

I put it to him that Jeremy Corbyn could have taken and led with that risk in the European debate in Britain, and Varoufakis is, for a moment, defensive. ‘He did.’ A quick clarification that he should have been more outright seems underplayed. ‘He showed a very sensible streak by saying: I am highly critical of this EU, but on balance, on the evidence, I think it would be hurtful for most of our people if we left.’ It is an unbrilliant logic that seems to lack Varoufakis’s usual brio, and I am unconvinced that Jeremy Corbyn posed the case for ‘radical Remain’ as well as Varoufakis has it that he did.

He talks me through what comes next for his European Spring movement, and he moves through its failures comfortably, admitting uncomplicatedly that the European Parliament elections this year were not a success for his movement. Varoufakis wants to keep the Green New Deal at the movement’s heart, and it makes sense to promote an issue, international by its very nature, in a political effort aimed at deleting political boundaries along conventional national borders.

This is a reconfiguration informed by his intellectual principles, which recognise the continuity between mathematics, metaphysics, politics, and the lists of other disciplines.

It appears from all of this that Varoufakis is training the modern left, building up its intellectual heft so that, so he says, it is ready for the next crisis. The left failed to enact a genuine paradigm shift after the 2008 financial crash, and Varoufakis seems furious at the wasted chance. He argues, in his conversation with Levi, for an ‘embrace of indeterminacy’. Varoufakis is calling for a sea change in our way of thinking, and it is a radically inspiring call. But, to the end, his principle checks even its own hope, and he questions his whole argument, that a radical departure can come from within the existing system: he is – charmingly – not so sure any more.

“But, to the end, his principle checks even its own hope, and he questions his whole argument, that a radical departure can come from within the existing system: he is – charmingly – not so sure any more.”

[For the TCS site please click here.]

Keiser News Spin

Published by Anonymous (not verified) on Tue, 19/11/2019 - 10:59am in



An interview with Max Keiser on the economic issues of the day:

The new concept of ‘Reform’

Published by Anonymous (not verified) on Tue, 05/11/2019 - 10:13am in


Interviews, eu

In Berlin-Steglitz, last weekend, I spoke at an international financial conference on “The euro at 20: Macroeconomic challenges.”

There were a number of interviews in German (below). Here is the SNA radio interview (english) with Alexander Boos:

German article on US sanctions and Russia

German radio interview

unsplash-logoRoman Kraft

Capitalism, Democracy and Europe – Interviewed for the Great Transition Initiative

Published by Anonymous (not verified) on Mon, 04/11/2019 - 6:47pm in

As harsh austerity and xenophobic nationalism fester in Europe, Yanis Varoufakis discusses his antidote with Tellus Senior Fellow Allen White.

What inspired your career trajectory from academic economist to prominent supranational activist?

I went into politics because of the financial crisis of 2008. Had financial capitalism not imploded, I would have happily continued my quite obscure academic work at some university. The chain reaction of economic crises, financial bailouts, and the rise of what I call the Nationalist International that almost broke financial capitalism, and brought Greece severe hardship, had a profound impact on me.

In the early to mid-2000s, I was beginning to feel that a crash was approaching. I could see that global financial imbalances were growing exponentially and that our generation or the next would be hampered by a systemic crisis.

I left my cocoon writing about mathematical economics and moved from Sydney to Athens at the time Greece was becoming insolvent. I began writing about the current situation and appearing on TV, warning against covering up insolvency with bailouts. Through these appearances as well as writing about government’s role in averting the impending crisis, I drifted into politics.

The second transition, from government to activism, was much simpler. Restructuring Greece’s debt was my top priority as Minister of Finance. The moment the Prime Minister surrendered to the austerity demands of the European Commission and accepted another loan without debt restructuring, resignation became the easiest decision of my life. Once I resigned, I was back in the streets, theaters, and town hall meetings setting up the Democracy in Europe Movement 2025 (DiEM25). I saw activism as the best way to confront the political and banking establishment. Four years later, in July 2019, our Greek branch, entitled MeRA25, entered Parliament with nine MPs. The fight continues.

You are one of the sharpest critics of neoliberalism today. How would you define “neoliberalism”?

To begin, let me challenge the term “neoliberal.” The use of the term in relation to West-Soviet relations was just a cloak under which to hide libertarian industrial feudalism, but neoliberalism has as much to do with financialized capital post-1970s as it does with Cold War geopolitical relations. Similarly—and I know this is a controversial statement—there’s nothing neoliberal about the world we live in today. It is neither new in the sense of “neo” nor liberal in the sense of fostering democratic values. Look at what has been happening in Europe over the last decade. Gigantic bank bailouts are funded through taxation. There is nothing really “neoliberal” about the use of such vast subsidies from the public to finance capitalists.

Even under the government of Margaret Thatcher in the UK from 1979 to 1990, the height of so-called neoliberalism in the UK, the British state grew rapidly, becoming bigger, more powerful, and more authoritarian than ever. We witnessed a state that was weaponized on behalf of the City of London to the benefit of a very small segment of the population. I don’t think we should concede the term “neoliberalism” to the brutish establishment using state power to redistribute wealth from the haves to the have-nots.

How has this “brutish establishment” become so dominant in shaping the global order?

The first two decades after World War II were the Golden Era of capitalism for a very simple reason: Franklin Roosevelt’s New Deal was projected onto the rest of the West under the Bretton Woods system. It was a remarkable, though imperfect, system, a kind of enlightenment without socialism. Structures to restrain financial capital were put into place. Banks could not do as they pleased; that’s why bankers hated the Bretton Woods system. Recall that Roosevelt banned bankers from attending the Bretton Woods conference and subjected them to reserve controls and rules against shifting money across international borders.

The result of the Bretton Woods system was a remarkable reduction in inequality concurrent with steady growth, low unemployment, and next to zero inflation. The system was predicated upon the US’s status as a surplus country, recycling wealth through Europe and Japan in a variety of ways. By the end of the 1960s, however, the Bretton Woods system proved unsustainable. The US began to incur trade deficits with Europe, Japan, and later China at the same time Wall Street, unrestrained by regulatory boundaries, attracted most of the profits from the rest of the world.

Unshackled financial institutions began creating what amounted to private money. Holding an inflow of $5 billion daily for a mere five minutes was enough to divvy it up into derivatives, opaque investment instruments that contributed to the 2008 financial crisis. This and other forms of financial engineering produced huge volumes of private money, the value of which, as in the 1929 crash, eventually collapsed in domino-like fashion. Authorities in Washington, Brussels, Paris, and Athens immediately transferred the resulting losses onto the shoulders of taxpayers, a form of socialism for bankers. I described this colossal mishandling of our financial system in my 2009 book The Global Minotaur, six years before I became the Greek Minister of Finance.

When I became Minister, I believed that a global crisis of capitalism was underway. Imagine, then, my walking into a meeting of the Eurogroup with all the European finance ministers in the room who knew I held this view. I was the red flag in the eyes of the establishment. In the same vein, the German ambassador to Greece and one of the most powerful (and most corrupt) Greek bankers had warned the future, democratically elected Prime Minster that my appointment as Finance Minister would cause them to close ATMs across the country and lead to collapse of the Greek banking system.

Given your experience inside and outside government, do you believe that there is a fundamental tension between capitalism and democracy?

Yes. Compare the character of a democratic election with a general meeting of shareholders of a private corporation. Both are elections, but in the democratic process, the one person-one vote rule applies, whereas in the corporate process, you have one share-one vote, essentially a wealth-based voting structure. My fellow economists, especially the true believers in free markets, love to portray the market as a voting mechanism. It is true that every time you buy a tub of yogurt, you are voting in favor of that brand. The same applies when you buy a Ford as opposed to a Volkswagen. The more money one has, the more votes one casts.

So, if you think of capitalism as a voting mechanism, it is anti-democratic in the sense that money determines power. The evolution of capitalism over the last few centuries is a history of the constant transfer of power to the wealthy, including the power to make decisions that affect the distribution of income.

Over time, power has been redistributed from the political sphere to the economic sphere. Until the early eighteenth century, there was no difference between these spheres. If you were the king or the baron, you also were rich. And if you were rich, you belonged to the nobility. With the rise of capitalism, a lowly merchant could become economically powerful. As the separation of the political and the economic evolved, power gradually transferred to the latter. What we now call democracy is not real democracy given the growing influence of economic power. To be sure, the voting franchise has been extended to all males (from only landowners), to women, and to blacks. A parallel democratization process has not occurred in the economic sphere, where power has become less inclusive and increasingly concentrated.

From the 1870s to the 1920s, democracy gradually became disempowered as the corporate world—a democracy-free zone—emerged. Since the end of the Bretton Woods system in the 1970s, power has migrated to finance. Goldman Sachs suddenly became more important than Ford, General Motors, or General Electric. Even corporations like Apple and Google are increasingly becoming financialized. Apple, for example, is sitting on hundreds of billions of dollars, and it is operating more like a financier than an iPhone producer.

This dynamic guarantees that when we vote, an act of celebrating democracy, we increasingly are participating in a sphere that has become totally disempowered. Capitalism is predicated on defeating democracy, even as the democratic cloak continues to legitimize the prevailing system.

Given this fundamental tension between capitalism and democracy, do you believe the European Union can be reformed? And if so, how?

We must aim for something much closer to a democratic federated Europe than what we have now. The tragedy is that the moment you start making such a case as the only antidote to disintegration, you serve the cause of nationalists, xenophobes, racists, and fascists. In ten years, either we’re going to have a democratic federated European Union, or the political monsters will be victorious.

How do we achieve a future democratic federation? The most urgent and difficult task is to go out into the streets of Athens, Rome, Berlin, Paris, and Lisbon and have a discussion with people about the crisis the EU faces. Many don’t want to hear about Europe’s future anymore. What used to be a very attractive vision of a unified Europe as a larger homeland for all its citizens has become toxic in the minds and the hearts of many Europeans. For them, the democratic European Union has become synonymous with an anti-humanist, even totalitarian, vision. We need to construct a new vision to counteract this kind of thinking.

You have been at the forefront of the recently formed Democracy in Europe Movement 2025 (DiEM25). Tell us about DiEM25’s pan-European mission and strategy.

DiEM25 seeks to put forward proposals that stimulate cooperation that is truly democratic. This will take time and will require recreating European institutions and a political economy that includes a massive Green New Deal or similar strategy. We must spend immediately at least 500 billion Euros annually on green energy, green transport, and a green transition in industry and agriculture. We can do this by creatively harnessing the power of existing institutions. The European Investment Bank, for example, could issue bonds worth half a trillion Euros every year, with that money going toward good-quality green jobs and technologies. The European Central Bank, sitting on the sidelines, could be ready to buy these bonds if needed to keep inflation in check. At the same time, we must engage with a broad spectrum of groups to stabilize Europe and so to bring back hope. With that movement underway, we can then have a discussion about democratic governance of the EU.

I’m an old-fashioned lefty. I don’t believe in destroying institutions. I believe in taking them over and transforming them into true public servants.

What does DiEM25 offer beyond the proposals of parties like Die Linke in Germany, Podemos in Spain, or other Green or Left parties throughout Europe?

Most members of these groups are our friends and comrades. We share a humanist attitude towards life and capitalism. The reason we created DiEM25 is that the major crises in Europe require local and national action as well as pan-European, if not global, action. It makes no sense to prioritize the local and national over the transnational, or vice versa. We must operate simultaneously at all levels.

For example, the design of urban transportation systems must consider the planetary, or systemic, impacts of alternative choices. The problem with national political parties is that they are not very good at such systemic thinking. What we need in Europe is a pan-European movement, which is more than a confederacy of autonomously operating states that make promises to local and national electorates independently of one another and then get together in Brussels to discuss the promises that each has committed to. This model is doomed to fail.

When DiEM25 was inaugurated in February of 2016, we sought to bring together Podemos, Die Linke, and allies from the UK to develop a Green New Deal for Europe. We hoped to unify such movements around a common pan-European program. It didn’t work out that way. Why? Die Linke comprises two distinct groups: one faction believes that the European Union is beyond redemption and should be dismantled; the other believes that the EU is salvageable through democratic activism and social transformation, a view shared by DiEM. This division between supporters of “exit” and “remain” stood in the way of an alliance.

Another impediment to unity was that Podemos and others opposed a European voice in national and local policies and decision-making. What is Podemos going to say, for example, about the level and allocation of investment funds among member states? If a Podemos candidate is elected to the European Parliament, what financial policies will she support? We need clarity and unity on such issues—to have a voice not of a Greek, a German, or a Spaniard, but of a European internationalist. We will continue to struggle to create a unified, coherent agenda for all of Europe. Unity without cohesion is the curse of the left.

Let’s not forget that the historical call was not for workers of each nation to organize within their borders. It was for workers of the world to unite.

Are there lessons to be learned from previous episodes of leftist internationalism, such as the Internationals, for our current time of global mobilization?

There are many lessons. Anybody who doesn’t learn from history is a dangerous fanatic. Lesson number one is that socialist nationalism is the worst antidote to national socialism. Remember what happened in World War I when the German Social Democrats were co-opted into a nationalist agenda and supported the war effort of Germany against the much of Europe. That kind of socialist nationalism will always be gobbled up by Nazism. Anyone who supports a left-wing agenda and at the same time supports a nationalist, populist workers agenda is going to be devoured by fascists. They will end up effectively blowing wind into the fascists’ sails, intentionally or not.

Lesson number two is that Internationals fail if they are just a confederacy of national parties. The moment agendas and organizations are nationally based, as was the case in postwar Communist parties, the international movement will inevitably fragment and collapse. This is why DiEM25 places all its energies into not becoming a confederacy of a Greek DiEM25, a German DiEM25, and an Italian DiEM25. This is not a theoretical matter, but a practical one: transnationality as opposed to confederacy is critical to building a new, progressive political enterprise. Studying the failures of earlier Internationals is fundamental in shaping this strategy.

To be clear, when we created DiEM25, we envisioned a movement, not a party. And it remains a movement, but we decided about a year ago to create our own “electoral wings” in each country. In Germany, DiEM25 created Democratie Europa (“Democracy in Europe”); in Denmark, Alternativet (“The Alternative”). In short, if you are a member of a DiEM25–created party, you also are a member of the larger movement. But you also can be a member of the larger movement without membership in a DiEM25-created party.

In a forthcoming book, you imagine “another world” in 2035 in which global financial capital is essentially demolished. What would this world look like? What would it take to get there?

I begin with the view that the present system is, simply stated, both awful and unsustainable. My story is told from the perspective of 2035, when my characters discover that, back in 2008, at the height of our crisis, the timeline split into two: one that you and I inhabit and another one that yielded a post-capitalist society. It is my narrative strategy for sketching out how post-capitalism could work and feel today had our response to the 2008 been different.

My forthcoming book, entitled Another Now: Dispatches from an Alternative Present, asks the following questions: Could the world be non-capitalist or post-capitalist? Could we see humanism in action? What would it look like? What would socialist corporations look like? How would they function? How would democracy function? What would happen to borders, migration, and defense? I try to create a vision of a liberal, socialist society that is not based on private property but does use money as a vehicle for exchange and markets as coordinating devices. I preserve money and markets because the alternative would be to fall to some fearsome hierarchical control, which, for me, is a nightmare scenario.

A deep transformation of values and institutions is essential to building a world of solidarity, well-being, and ecological resilience—what we call a Great Transition—is more urgent than ever. In a dark time, what basis for hope and advice can you offer fellow internationalists at this critical, historic moment?

We have the tools necessary in order to spend at least five percent of the global GDP on a Great Transition that saves the planet. Technically, we know how to create a new Bretton Woods, a progressive Green New Deal that diverts resources to saving the planet and creating quality green jobs across the globe.

To achieve such a future, we must offer a cautionary note regarding the role of borders. Some on the left are unfortunately moving toward the belief that migrants are a threat to domestic workers. That is a right-wing narrative that is factually untrue. We need to emancipate progressives from the notion that strong borders protect the working class. They do not. They are a scar on the face of the Earth, and they harm labor across the world.

UBI Calculator answers basic income’s big question

Published by Anonymous (not verified) on Wed, 30/10/2019 - 4:54pm in

Conrad Shaw wants America to know about Universal Basic Income, and he has two big projects to help make it happen.