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In theory, the global financial system is supposed to help every country gain. Mainstream teaching of international finance, trade and “foreign aid” (defined simply as any government credit) depicts an almost utopian system uplifting all countries, not stripping their assets and imposing austerity. The reality since World War I is that the United States has taken the lead in shaping the international financial system to promote gains for its own bankers, farm exporters, its oil and gas sector, and buyers of foreign resources – and most of all, to collect on debts owed to it.

Each time this global system has broken down over the past century, the major destabilizing force has been American over-reach and the drive by its bankers and bondholders for short-term gains. The dollar-centered financial system is leaving more industrial as well as Third World countries debt-strapped. Its three institutional pillars – the International Monetary Fund (IMF), World Bank and World Trade Organization – have imposed monetary, fiscal and financial dependency, most recently by the post-Soviet Baltics, Greece and the rest of southern Europe. The resulting strains are now reaching the point where they are breaking apart the arrangements put in place after World War II.

The most destructive fiction of international finance is that all debts can be paid, and indeed should be paid, even when this tears economies apart by forcing them into austerity – to save bondholders, not labor and industry. Yet European countries, and especially Germany, have shied from pressing for a more balanced global economy that would foster growth for all countries and avoid the current economic slowdown and debt deflation.

 

Imposing austerity on Germany after World War I

After World War I the U.S. Government deviated from what had been traditional European policy – forgiving military support costs among the victors. U.S. officials demanded payment for the arms shipped to its Allies in the years before America entered the Great War in 1917. The Allies turned to Germany for reparations to pay these debts. Headed by John Maynard Keynes, British diplomats sought to clean their hands of responsibility for the consequences by promising that all the money they received from Germany would simply be forwarded to the U.S. Treasury.

The sums were so unpayably high that Germany was driven into austerity and collapse. The nation suffered hyperinflation as the Reichsbank printed marks to throw onto the foreign exchange also were pushed into financial collapse. The debt deflation was much like that of Third World debtors a generation ago, and today’s southern European PIIGS (Portugal, Ireland, Italy, Greece and Spain).

In a pretense that the reparations and Inter-Ally debt tangle could be made solvent, a triangular flow of payments was facilitated by a convoluted U.S. easy-money policy. American investors sought high returns by buying German local bonds; German municipalities turned over the dollars they received to the Reichsbank for domestic currency; and the Reichsbank used this foreign exchange to pay reparations to Britain and other Allies, enabling these countries to pay the United States what it demanded.

But solutions based on attempts to keep debts of such magnitude in place by lending debtors the money to pay can only be temporary. The U.S. Federal Reserve sustained this triangular flow by holding down U.S. interest rates. This made it attractive for American investors to buy German municipal bonds and other high-yielding debts. It also deterred Wall Street from drawing funds away from Britain, which would have driven its economy deeper into austerity after the General Strike of 1926. But domestically, low U.S. interest rates and easy credit spurred a real estate bubble, followed by a stock market bubble that burst in 1929. The triangular flow of payments broke down in 1931, leaving a legacy of debt deflation burdening the U.S. and European economies. The Great Depression lasted until outbreak of World War II in 1939.

Planning for the postwar period took shape as the war neared its end. U.S. diplomats had learned an important lesson. This time there would be no arms debts or reparations. The global financial system would be stabilized – on the basis of gold, and on creditor-oriented rules. By the end of the 1940s the United States held some 75 percent of the world’s monetary gold stock. That established the U.S. dollar as the world’s reserve currency, freely convertible into gold at the 1933 parity of $35 an ounce.

It also implied that once again, as in the 1920s, European balance-of-payments deficits would have to be financed mainly by the United States. Recycling of official government credit was to be filtered via the IMF and World Bank, in which U.S. diplomats alone had veto power to reject policies they found not to be in their national interest. International financial “stability” thus became a global control mechanism – to maintain creditor-oriented rules centered in the United States.

To obtain gold or dollars as backing for their own domestic monetary systems, other countries had to follow the trade and investment rules laid down by the United States. These rules called for relinquishing control over capital movements or restrictions on foreign takeovers of natural resources and the public domain as well as local industry and banking systems.

By 1950 the dollar-based global economic system had become increasingly untenable. Gold continued flowing to the United States, strengthening the dollar – until the Korean War reversed matters. From 1951 through 1971 the United States ran a deepening balance-of-payments deficit, which stemmed entirely from overseas military spending. (Private-sector trade and investment was steadily in balance.)

 

U.S. Treasury debt replaces the gold exchange standard

The foreign military spending that helped return American gold to Europe became a flood as the Vietnam War spread across Asia after 1962. The Treasury kept the dollar’s exchange rate stable by selling gold via the London Gold Pool at $35 an ounce. Finally, in August 1971, President Nixon stopped the drain by closing the Gold Pool and halting gold convertibility of the dollar.

ORDER IT NOW

There was no plan for what would happen next. Most observers viewed cutting the dollar’s link to gold as a defeat for the United States. It certainly ended the postwar financial order as designed in 1944. But what happened next was just the reverse of a defeat. No longer able to buy gold after 1971 (without inciting strong U.S. disapproval), central banks found only one asset in which to hold their balance-of-payments surpluses: U.S. Treasury debt. These securities no longer were “as good as gold.” The United States issued them at will to finance soaring domestic budget deficits.

By shifting from gold to the dollars thrown off by the U.S. balance-of-payments deficit, the foundation of global monetary reserves came to be dominated by the U.S. military spending that continued to flood foreign central banks with surplus dollars. America’s balance-of-payments deficit thus supplied the dollars that financed its domestic budget deficits and bank credit creation – via foreign central banks recycling U.S. foreign spending back to the U.S. Treasury.

In effect, foreign countries have been taxed without representation over how their loans to the U.S. Government are employed. European central banks were not yet prepared to create their own sovereign wealth funds to invest their dollar inflows in foreign stocks or direct ownership of businesses. They simply used their trade and payments surpluses to finance the U.S. budget deficit. This enabled the Treasury to cut domestic tax rates, above all on the highest income brackets.

U.S. monetary imperialism confronted European and Asian central banks with a dilemma that remains today: If they do not turn around and buy dollar assets, their currencies will rise against the dollar. Buying U.S. Treasury securities is the only practical way to stabilize their exchange rates – and in so doing, to prevent their exports from rising in dollar terms and being priced out of dollar-area markets.

ORDER IT NOW

The system may have developed without foresight, but quickly became deliberate. My book Super Imperialism sold best in the Washington DC area, and I was given a large contract through the Hudson Institute to explain to the Defense Department exactly how this extractive financial system worked. I was brought to the White House to explain it, and U.S. geostrategists used my book as a how-to-do-it manual (not my original intention).

Attention soon focused on the oil-exporting countries. After the U.S. quadrupled its grain export prices shortly after the 1971 gold suspension, the oil-exporting countries quadrupled their oil prices. I was informed at a White House meeting that U.S. diplomats had let Saudi Arabia and other Arab countries know that they could charge as much as they wanted for their oil, but that the United States would treat it as an act of war not to keep their oil proceeds in U.S. dollar assets.

This was the point at which the international financial system became explicitly extractive. But it took until 2009, for the first attempt to withdraw from this system to occur. A conference was convened at Yekaterinburg, Russia, by the Shanghai Cooperation Organization (SCO). The alliance comprised Russia, China, Kazakhstan, Tajikistan, Kirghizstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. U.S. officials asked to attend as observers, but their request was rejected.

The U.S. response has been to extend the new Cold War into the financial sector, rewriting the rules of international finance to benefit the United States and its satellites – and to deter countries from seeking to break free from America’s financial free ride.

 

The IMF changes its rules to isolate Russia and China

Aiming to isolate Russia and China, the Obama Administration’s confrontational diplomacy has drawn the Bretton Woods institutions more tightly under US/NATO control. In so doing, it is disrupting the linkages put in place after World War II.

The U.S. plan was to hurt Russia’s economy so much that it would be ripe for regime change (“color revolution”). But the effect was to drive it eastward, away from Western Europe to consolidate its long-term relations with China and Central Asia. Pressing Europe to shift its oil and gas purchases to U.S. allies, U.S. sanctions have disrupted German and other European trade and investment with Russia and China. It also has meant lost opportunities for European farmers, other exporters and investors – and a flood of refugees from failed post-Soviet states drawn into the NATO orbit, most recently Ukraine.

To U.S. strategists, what made changing IMF rules urgent was Ukraine’s $3 billion debt falling due to Russia’s National Wealth Fund in December 2015. The IMF had long withheld credit to countries refusing to pay other governments. This policy aimed primarily at protecting the financial claims of the U.S. Government, which usually played a lead role in consortia with other governments and U.S. banks. But under American pressure the IMF changed its rules in January 2015. Henceforth, it announced, it would indeed be willing to provide credit to countries in arrears other governments – implicitly headed by China (which U.S. geostrategists consider to be their main long-term adversary), Russia and others that U.S. financial warriors might want to isolate in order to force neoliberal privatization policies.[1]I provide the full background in “The IMF Changes its Rules to Isolate China and Russia,” December 9, 2015, available on michael-hudson.com, Naked Capitalism, Counterpunch and Johnson’s Russia List.

Article I of the IMF’s 1944-45 founding charter prohibits it from lending to a member engaged in civil war or at war with another member state, or for military purposes generally. An obvious reason for this rule is that such a country is unlikely to earn the foreign exchange to pay its debt. Bombing Ukraine’s own Donbass region in the East after its February 2014 coup d’état destroyed its export industry, mainly to Russia.

Withholding IMF credit could have been a lever to force adherence to the Minsk peace agreements, but U.S. diplomacy rejected that opportunity. When IMF head Christine Lagarde made a new loan to Ukraine in spring 2015, she merely expressed a verbal hope for peace. Ukrainian President Porochenko announced the next day that he would step up his civil war against the Russian-speaking population in eastern Ukraine. One and a half-billion dollars of the IMF loan were given to banker Ihor Kolomoiski and disappeared offshore, while the oligarch used his domestic money to finance an anti-Donbass army. A million refugees were driven east into Russia; others fled west via Poland as the economy and Ukraine’s currency plunged.

ORDER IT NOW

The IMF broke four of its rules by lending to Ukraine: (1) Not to lend to a country that has no visible means to pay back the loan (the “No More Argentinas” rule, adopted after the IMF’s disastrous 2001 loan to that country). (2) Not to lend to a country that repudiates its debt to official creditors (the rule originally intended to enforce payment to U.S.-based institutions). (3) Not to lend to a country at war – and indeed, destroying its export capacity and hence its balance-of-payments ability to pay back the loan. Finally (4), not to lend to a country unlikely to impose the IMF’s austerity “conditionalities.” Ukraine did agree to override democratic opposition and cut back pensions, but its junta proved too unstable to impose the austerity terms on which the IMF insisted.

 

U.S. neoliberalism promotes privatization carve-ups of debtor countries

Since World War II the United States has used the Dollar Standard and its dominant role in the IMF and World Bank to steer trade and investment along lines benefiting its own economy. But now that the growth of China’s mixed economy has outstripped all others while Russia finally is beginning to recover, countries have the option of borrowing from the Asian Infrastructure Investment Bank (AIIB) and other non-U.S. consortia.

At stake is much more than just which nations will get the contracting and banking business. At issue is whether the philosophy of development will follow the classical path based on public infrastructure investment, or whether public sectors will be privatized and planning turned over to rent-seeking corporations.

What made the United States and Germany the leading industrial nations of the 20th century – and more recently, China – has been public investment in economic infrastructure. The aim was to lower the price of living and doing business by providing basic services on a subsidized basis or freely. By contrast, U.S. privatizers have brought debt leverage to bear on Third World countries, post-Soviet economies and most recently on southern Europe to force selloffs. Current plans to cap neoliberal policy with the Trans-Pacific Partnership (TPP), Transatlantic Trade and Investment Partnership (TTIP) and Transatlantic Free Trade Agreement (TAFTA) go so far as to disable government planning power to the financial and corporate sector.

American strategists evidently hoped that the threat of isolating Russia, China and other countries would bring them to heel if they tried to denominate trade and investment in their own national currencies. Their choice would be either to suffer sanctions like those imposed on Cuba and Iran, or to avoid exclusion by acquiescing in the dollarized financial and trade system and its drives to financialize their economies under U.S. control.

The problem with surrendering is that this Washington Consensus is extractive and lives in the short run, laying the seeds of financial dependency, debt-leveraged bubbles and subsequent debt deflation and austerity. The financial business plan is to carve out opportunities for price gouging and corporate profits. Today’s U.S.-sponsored trade and investment treaties would make governments pay fines equal to the amount that environmental and price regulations, laws protecting consumers and other social policies might reduce corporate profits. “Companies would be able to demand compensation from countries whose health, financial, environmental and other public interest policies they thought to be undermining their interests, and take governments before extrajudicial tribunals. These tribunals, organised under World Bank and UN rules, would have the power to order taxpayers to pay extensive compensation over legislation seen as undermining a company’s ‘expected future profits.’”[2]Lori M. Wallach, “The corporation invasion,” La Monde Diplomatique, December 2, 2013, http://mondediplo.com/2013/12/02tafta . She adds: “Some investors have a very broad conception of their rights. European companies have recently launched legal actions against the raising of the minimum wage in Egypt; Renco has fought anti-toxic emissions policy in Peru, using a free trade agreement between that country and the US to defend its right to pollute (6). US tobacco giant Philip Morris has launched cases against Uruguay and Australia over their anti-smoking legislation.” See also Yves Smith, “Germany Bucking Toxic, Nation-State Eroding Transatlantic Trade and Investment Partnership,” Naked Capitalism, July 17, 2014, and “Germany Turning Sour on the Transatlantic Trade and Investment Partnership,” Naked Capitalism, October 30, 2014.

This policy threat is splitting the world into pro-U.S. satellites and economies maintaining public infrastructure investment and what used to be viewed as progressive capitalism. U.S.-sponsored neoliberalism supporting its own financial and corporate interests has driven Russia, China and other members of the Shanghai Cooperation Organization into an alliance to protect their economic self-sufficiency rather than becoming dependent on dollarized credit enmeshing them in foreign-currency debt.

At the center of today’s global split are the last few centuries of Western social and democratic reform. Seeking to follow the classical Western development path by retaining a mixed public/private economy, China, Russia and other nations find it easier to create new institutions such as the AIIB than to reform the dollar standard IMF and World Bank. Their choice is between short-term gains by dependency leading to austerity, or long-term development with independence and ultimate prosperity.

The price of resistance involves risking military or covert overthrow. Long before the Ukraine crisis, the United States has dropped the pretense of backing democracies. The die was cast in 1953 with the coup against Iran’s secular government, and the 1954 coup in Guatemala to oppose land reform. Support for client oligarchies and dictatorships in Latin America in the 1960 and ‘70s was highlighted by the overthrow of Allende in Chile and Operation Condor’s assassination program throughout the continent. Under President Barack Obama and Secretary of State Hillary Clinton, the United States has claimed that America’s status as the world’s “indispensible nation” entitled it back the recent coups in Honduras and Ukraine, and to sponsor the NATO attack on Libya and Syria, leaving Europe to absorb the refugees.

 

Germany’s choice

This is not how the Enlightenment was supposed to evolve. The industrial takeoff of Germany and other European nations involved a long fight to free markets from the land rents and financial charges siphoned off by their landed aristocracies and bankers. That was the essence of classical 19th-century political economy and 20th-century social democracy. Most economists a century ago expected industrial capitalism to produce an economy of abundance, and democratic reforms to endorse public infrastructure investment and regulation to hold down the cost of living and doing business. But U.S. economic diplomacy now threatens to radically reverse this economic ideology by aiming to dismantle public regulatory power and impose a radical privatization agenda under the TTIP and TAFTA.

ORDER IT NOW

Textbook trade theory depicts trade and investment as helping poorer countries catch up, compelling them to survive by becoming more democratic to overcome their vested interests and oligarchies along the lines pioneered by European and North American industrial economies. Instead, the world is polarizing, not converging. The trans-Atlantic financial bubble has left a legacy of austerity since 2008. Debt-ridden economies are being told to cope with their downturns by privatizing their public domain.

The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions. American intransigence threatens to force an either/or choice in what looms as a seismic geopolitical shift over the proper role of governments: Should their public sectors provide basic services and protect populations from predatory monopolies, rent extraction and financial polarization?

Today’s global financial crisis can be traced back to World War I and its aftermath. The principle that needed to be voiced was the right of sovereign nations not to be forced to sacrifice their economic survival on the altar of inter-government and private debt demands. The concept of nationhood embodied in the 1648 Treaty of Westphalia based international law on the principle of parity of sovereign states and non-interference. Without a global alternative to letting debt dynamics polarize societies and tear economies apart, monetary imperialism by creditor nations is inevitable.

The past century’s global fracture between creditor and debtor economies has interrupted what seemed to be Europe’s democratic destiny to empower governments to override financial and other rentier interests. Instead, the West is following U.S. diplomatic leadership back into the age when these interests ruled governments. This conflict between creditors and democracy, between oligarchy and economic growth (and indeed, survival) will remain the defining issue of our epoch over the next generation, and probably for the remainder of the 21st century.

Endnotes

[1] I provide the full background in “The IMF Changes its Rules to Isolate China and Russia,” December 9, 2015, available on michael-hudson.com, Naked Capitalism, Counterpunch and Johnson’s Russia List.

[2] Lori M. Wallach, “The corporation invasion,” La Monde Diplomatique, December 2, 2013, http://mondediplo.com/2013/12/02tafta . She adds: “Some investors have a very broad conception of their rights. European companies have recently launched legal actions against the raising of the minimum wage in Egypt; Renco has fought anti-toxic emissions policy in Peru, using a free trade agreement between that country and the US to defend its right to pollute (6). US tobacco giant Philip Morris has launched cases against Uruguay and Australia over their anti-smoking legislation.” See also Yves Smith, “Germany Bucking Toxic, Nation-State Eroding Transatlantic Trade and Investment Partnership,” Naked Capitalism, July 17, 2014, and “Germany Turning Sour on the Transatlantic Trade and Investment Partnership,” Naked Capitalism, October 30, 2014.

 
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  1. More like Dollar Supremacism

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  2. “Austerity” is such a misused word these days. What the Allies did to Germany after Versailles was austerity, and everyone paid dearly for it.

    What the IMF and the Western Banking Cartel do to third world countries is akin to a pusher hopping up addicts on debt and then taking it away while stripping them of their assets, pretty much hurting only the people of the third world country; certainly not the WBC, and almost certainly not the criminal elite who took the deal.

    The Austerity everyone complains about in the developed world these days is a joke, hardly austerity, for it has never meant more than doing a little less deficit-spending than in prior periods, e.g. UK Labour whining about “Austerity” is a joke, as the UK debt has done nothing but grow, which in terms understandable to simple folk like me means they are spending more than they can afford to carry.

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    • Replies: @jacques sheete

    What the IMF and the Western Banking Cartel do to third world countries is akin to a pusher hopping up addicts on debt and then taking it away while stripping them of their assets, pretty much hurting only the people of the third world country; certainly not the WBC, and almost certainly not the criminal elite who took the deal.
     
    That's true and the criminals do similar asset stripping to their own as well, through various means.

    It's always the big criminals against the rest of us.
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  3. ” The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions ”

    In the whole article not a word about the euro, also an instrument of imperialism, that mainly benefits Germany, the country that has to maintain a high level of exports, in order to feed the Germans, and import raw materials for Germany’s industries.

    Isolating China and Russia, with the other BRICS countries, S Africa, Brazil, India, dangerous game.
    This effort forced China and Russia to close cooperation, the economic expression of this is the Peking Petersburg railway, with a hub in Khazakstan, where the containers are lifted from the Chinese to the Russian system, the width differs.
    Four days for the trip.
    The Berlin Baghdad railway was an important cause for WWI.
    Let us hope that history does not repeat itself in the nuclear era.

    Edward Mead Earle, Ph.D., ‘Turkey, The Great Powers and The Bagdad Railway, A study in Imperialism’, 1923, 1924, New York

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    • Replies: @jacques sheete

    The Berlin Baghdad railway was an important cause for WWI.
     
    Bingo.


    Stopping it was a huge factor. There was no way the banksters of the world were going to let that go forward, nor were they going to let Germany and Russia link up in any other ways. They certainly were not about to allow any threats to the Suez Canal nor any chance to let the oil fields slip from their control either.

    The wars were also instigated to prevent either Germany or Russia having control of, and free access to warm water ports and the wars also were an excuse to steal vast amounts of wealth from both Germany and Russia through various means.

    All pious and pompous pretexts aside, economics was the motive for (the) war (s), and the issues are not settled to this day. I.e., it's the same class of monstrously insatiable criminals who want everything for themselves who're causing the major troubles of the day.

    Unfortunately, as long as we have SoB's who're eager to sacrifice our blood and treasure for their benfit, things will never change.
    , @ThreeCranes
    Germany loans money back to the poorer nations who buy her exports just as China loans money to the United States (they purchase roughly a third of our Treasury bonds) so that Americans can continue to buy Chinese manufactured goods.

    The role to be played by the USA in the "new world order" is that of being the farmer to the world. The meticulous Asians will make stuff.

    The problem with this is that it is based on 19th century notions of manufacturing. Technique today is vastly more complicated than it was in the 1820's and a nation must do everything in its power to protect and nurture its manufacturing and scientific excellence. In the United States we have been giving this away to our competitors. We educate their children at our taxpayer's expense and they take the knowledge gained back to their native countries where, with state subsidies, they build factories that put Americans out of work. We fall further and further behind.
    , @SolontoCroesus

    ” The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions . . . This effort forced China and Russia to close cooperation, the economic expression of this is the Peking Petersburg railway, with a hub in Khazakstan, where the containers are lifted from the Chinese to the Russian system. . .
    The Berlin Baghdad railway was an important cause for WWI.
    Let us hope that history does not repeat itself in the nuclear era. ”
     
    China Pushing Billions Into Iranian Economy as Western Firms Stall
    https://www.usnews.com/news/world/articles/2017-11-30/china-pushing-billions-into-iranian-economy-as-western-firms-stall

    China is financing billions of dollars worth of Chinese-led projects in Iran, making deep inroads into the economy while European competitors struggle to find banks willing to fund their ambitions, Iranian government and industry officials said. . . .

    Iranian officials say the deals are part of Beijing's $124 billion Belt and Road initiative, which aims to build new infrastructure - from highways and railways to ports and power plants - between China and Europe to pave the way for an expansion of trade.

    A source in China familiar with the CITIC credit line, which was agreed in September, called it "an agreement of strategic intent". The source declined to give details on projects to be financed, but Iranian media reports have said they would include water management, energy, environment and transport projects. . . .

    The Chinese funding, by far the largest statement of investment intent of any country in Iran, is in stark contrast with the drought facing Western investors since U.S. President Donald Trump disavowed the 2015 pact agreed by major powers, raising the threat sanctions could be reimposed.
     
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  4. Another excellent article.

    The U.S. response has been to extend the new Cold War into the financial sector, rewriting the rules of international finance to benefit the United States and its satellites – and to deter countries from seeking to break free from America’s financial free ride.

    Nah, the NY banksters wouldn’t dream of doing such a thing; would they? ;)

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  5. skrik says:

    This is not how the Enlightenment was supposed to evolve

    What I said, and beautifully put, the whole article.

    World War I may well have been an important way-point, but the miserable mercantile modus operandi was well established long before.

    An interesting A/B case:

    a) wiki/Anglo-Persian Oil Company “In 1901 William Knox D’Arcy, a millionaire London socialite, negotiated an oil concession with Mozaffar al-Din Shah Qajar of Persia. He financed this with capital he had made from his shares in the highly profitable Mount Morgan mine in Queensland, Australia. D’Arcy assumed exclusive rights to prospect for oil for 60 years in a vast tract of territory including most of Iran. In exchange the Shah received £20,000 (£2.0 million today),[1] an equal amount in shares of D’Arcy’s company, and a promise of 16% of future profits.”

    Note the 16% = ~1/6, the rest going off-shore.

    b) The Greens in Aus researched the resources sector in Aus, to find that it is 83% ‘owned’ by off-shore entities.

    Note that 83% = ~5/6, which goes off-shore. Coincidence?

    Then see what happened when the erstwhile APOC was nationalized; the US/UK perpetrated a coup against the democratically elected Mossadegh, eventual blow-back resulting in the 1979 revolution, basically taking Iran out of ‘the West.’

    Note that in Aus, the democratically elected so-called ‘leaders’ not only allow exactly this sort of economic rape, they actively assist it by, say, crippling the central bank and pleading for FDI = selling our, we the people’s interests, out. Those traitor-leaders are reversing ‘Enlightenment’ provisions, privatising whatever they can and, as Michael Hudson well points out the principles, running Aus into debt and austerity.

    We the people are powerless passengers, and to add insult to injury, the taxpayer-funded AusBC lies to us continually. Ho, hum; just like the mainly US/Z MSM and the BBC do – all corrupt and venal. Bah!

    Now, cue the trolls: “But Russia/China are worse!”

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    • Agree: jacques sheete
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  6. The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions.

    US banking oligarchs will expend the last drop of our blood to prevent a such a linking, just as they were willing to sacrifice our blood and treasure in WW1 and 2, as is alluded to here.:

    Today’s global financial crisis can be traced back to World War I and its aftermath.

    Excellent.:

    The principle that needed to be voiced was the right of sovereign nations not to be forced to sacrifice their economic survival on the altar of inter-government and private debt demands…Without a global alternative to letting debt dynamics polarize societies and tear economies apart, monetary imperialism by creditor nations is inevitable.

    This is a gem of a summary.:

    The past century’s global fracture between creditor and debtor economies has interrupted what seemed to be Europe’s democratic destiny to empower governments to override financial and other rentier interests. Instead, the West is following U.S. diplomatic leadership back into the age when these interests ruled governments. This conflict between creditors and democracy, between oligarchy and economic growth (and indeed, survival) will remain the defining issue of our epoch over the next generation, and probably for the remainder of the 21st century.

    Instead, the West is following U.S. diplomatic leadership back into the age when these interests ruled governments.

    It’s important to note that such interests have ruled (owned, actually) imperial Britain for centuries and the US since its inception, and the anti-federalists knew it.

    Here is a revolution as radical as that which separated us from Great Britain.

    You will find all the strength of this country in the hands of your enemies…[ed comment: the money grubbers]

    Patrick Henry June 5 and 7, 1788―1788-1789 Petersburg, Virginia edition of the Debates and other Proceedings . . . Of the Virginia Convention of 1788

    The Constitution had been laid down under unacceptable auspices; its history had been that of a coup d’état.

    It had been drafted, in the first place, by men representing special economic interests. Four-fifths of them were public creditors, one-third were land speculators, and one-fifth represented interests in shipping, manufacturing, and merchandising. Most of them were lawyers. Not one of them represented the interest of production — Vilescit origine tali.

    - Albert Jay Nock [Excerpted from chapter 5 of Albert Jay Nock's Jefferson, published in 1926]

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  7. Biff says:

    The golden rule is one thing. The paper rule is something else.

    May you live in interesting times.

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  8. Jake says:

    “After World War I the U.S. Government deviated from what had been traditional European policy – forgiving military support costs among the victors. U.S. officials demanded payment for the arms shipped to its Allies in the years before America entered the Great War in 1917. The Allies turned to Germany for reparations to pay these debts.”

    The Yank banker, the Yankee Wall Street super rich, set off a process of greed that led to Hitler.

    But they didn’t invent anything. They learned from their WASP forebears in the British Empire, whose banking back to Oliver Cromwell had become inextricably entangled with Jewish money and Jewish interests to the point that Jews per capita dominated it even at the height of the British Empire, when simpleton WASPs assume that WASPs truly ran everything, and that WASP power was for the good of even the poorest WASPs.

    Read More
    • Replies: @Wally
    said:
    "The Yank banker, the Yankee Wall Street super rich, set off a process of greed that led to Hitler."

    If true, so what?

    That's a classic example of 'garbage in, garbage out'.

    www.codoh.com
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  9. Joe Hide says:

    To Michael Hudson,
    Great article. Evidence based, factually argued, enjoyably readable.
    Replacements for the dollar dominated financial system are well into development. Digital dollars, credit cards, paypal, stock and currency exchange online platforms, and perhaps most intriguing… The exponential rise of Bitcoin and similar crypto-currencies.
    The internet is also exponentially exposing the screwing we peasants have been getting by the psychopath, narcissistic, hedonistic, predatory lenders and controllers.
    Next comes the widespread, easily usable, and inexpensive cell phone apps, social media exposures, alternative websites (like Unz.com), and other technologies that will quickly identify every lying, evil, jerk so they can be neutrilized / avoided

    Read More
    • Replies: @Anonymous
    Optimistic to be sure, but the designers of the internet intended the direction of the web to be something a bit more complicated than giving you the answer to anything.

    It's a well worn cliche, but the griminess of Oceania's telescreens is only one way to manage a state. Get rid of a negative perception and the flock will follow mostly in peace. You say we have social media revelations, cheap hand phones, apps, media objectivity and alternatives. Not necessarily.

    We have plenty of porn, things to buy, and no privacy - no real security in the sense that so-called authority has total awareness of everything about you, 24/7 public surveillance and open financial/health records.

    Social media is designed to use and influence you, not inform you. Listening devices for services as an appliance aren't dramatically more intrusive than your daily posts on social media. We do have plenty of authors, including Hudson, who get a kind of truth to you. They might seem outrageous, they'll call the whole thing a scam, but it won't make a difference.

    Hudson included, why would you necessarily believe anything you read, knowing just a little of how and why it is produced?

    What'cha gonna do now? Run around the neighborhood and tell everyone to stop paying their usurious school loans? Do remember that the central theme is that resistance is useless because you don't know any better and you should be afraid. Besides, it's the thought of resistance that counts.
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  10. “Textbook trade theory depicts trade and investment as helping poorer countries catch up, compelling them to survive by becoming more democratic to overcome their vested interests and oligarchies along the lines pioneered by European and North American industrial economies.”

    I must be old; the economic textbooks I had did explain the benefits of freer trade among nations using Ricardo and Trade Indifference Curves, but didn’t prescribe any one political system being fostered by or even necessary for the benefits of international trade to be reaped.

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  11. to be honest, this way of running things only need to last for 10-20 more years before automation will replace 800 million jobs. then we will have a few trillionaire overlords :) unless true AI comes online. by that point nothing matters as we will become zoo animals.

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  12. @The Alarmist
    "Austerity" is such a misused word these days. What the Allies did to Germany after Versailles was austerity, and everyone paid dearly for it.

    What the IMF and the Western Banking Cartel do to third world countries is akin to a pusher hopping up addicts on debt and then taking it away while stripping them of their assets, pretty much hurting only the people of the third world country; certainly not the WBC, and almost certainly not the criminal elite who took the deal.

    The Austerity everyone complains about in the developed world these days is a joke, hardly austerity, for it has never meant more than doing a little less deficit-spending than in prior periods, e.g. UK Labour whining about "Austerity" is a joke, as the UK debt has done nothing but grow, which in terms understandable to simple folk like me means they are spending more than they can afford to carry.

    What the IMF and the Western Banking Cartel do to third world countries is akin to a pusher hopping up addicts on debt and then taking it away while stripping them of their assets, pretty much hurting only the people of the third world country; certainly not the WBC, and almost certainly not the criminal elite who took the deal.

    That’s true and the criminals do similar asset stripping to their own as well, through various means.

    It’s always the big criminals against the rest of us.

    Read More
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  13. @jilles dykstra
    " The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions "

    In the whole article not a word about the euro, also an instrument of imperialism, that mainly benefits Germany, the country that has to maintain a high level of exports, in order to feed the Germans, and import raw materials for Germany's industries.

    Isolating China and Russia, with the other BRICS countries, S Africa, Brazil, India, dangerous game.
    This effort forced China and Russia to close cooperation, the economic expression of this is the Peking Petersburg railway, with a hub in Khazakstan, where the containers are lifted from the Chinese to the Russian system, the width differs.
    Four days for the trip.
    The Berlin Baghdad railway was an important cause for WWI.
    Let us hope that history does not repeat itself in the nuclear era.

    Edward Mead Earle, Ph.D., ‘Turkey, The Great Powers and The Bagdad Railway, A study in Imperialism’, 1923, 1924, New York

    The Berlin Baghdad railway was an important cause for WWI.

    Bingo.

    Stopping it was a huge factor. There was no way the banksters of the world were going to let that go forward, nor were they going to let Germany and Russia link up in any other ways. They certainly were not about to allow any threats to the Suez Canal nor any chance to let the oil fields slip from their control either.

    The wars were also instigated to prevent either Germany or Russia having control of, and free access to warm water ports and the wars also were an excuse to steal vast amounts of wealth from both Germany and Russia through various means.

    All pious and pompous pretexts aside, economics was the motive for (the) war (s), and the issues are not settled to this day. I.e., it’s the same class of monstrously insatiable criminals who want everything for themselves who’re causing the major troubles of the day.

    Unfortunately, as long as we have SoB’s who’re eager to sacrifice our blood and treasure for their benfit, things will never change.

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  14. The golden rule is one thing. The paper rule is something else.

    May you live in interesting times.

    The golden rule is for dreamers, unfortunately. Those who control paper money rule, and your wish has been granted; we live in times that are both interesting and fascinating, but are nevertheless the same old thing. Only the particular particulars have changed.

    Read More
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  15. Essentially, the anti-EU and anti-euro line that Professor Hudson has being pushing for years, which has now morphed into a pro-Putin line as the anti-EU faction in the US have sought to use Putin as a “useful idiot” to destroy the EU. Since nobody in Europe reads these articles, Ii doesn’t really matter and I certainly don’t see any EU leader following the advice of someone who has never concealed his hostility to the EU’s very existence: note the use of the racist slur “PIIGS” to refer to certain EU Member States. Thus, Professor Hudson is simply pushing the “let Putin win in Ukraine” line dressed up in fine-sounding economic jargon.

    Read More
    • Replies: @Wally
    Indeed, Putin should be praised & supported.

    But where is the proof that ‘Russia & Trump colluded to get Trump elected’?
    You also ignore the overwhelming Crimean support for returning to Russia.

    And you won’t like this at all:

    Trump Declares “National Day for the Victims of Communism.”
    https://www.whitehouse.gov/the-press-office/2017/11/07/national-day-victims-communism

    hence, the Liars of the scamming “Holocau$t Industry” go crazy:
    https://www.salon.com/2017/11/07/trumps-national-day-for-the-victims-of-communism-is-opposite-of-holocaust-statement/
    , @pogohere
    If you want to drill deeper into the history of the formation of the EU, I suggest you read Joseph P. Farrell's The Third Way, The Nazi International, European Union and Corporate Fascism.

    In it he traces what he asserts is the influence of the "Madrid Circular," a document circulated in 1950 by the German Geopolitical Center in Madrid which outlines a plan to create what looks remarkably like what was actually created in the following decades: a cartelized EU industrial sector ruled by an unelected bureaucracy accompanied by an elected parliament with no actual power. The legal structures were anticipated by Germans in the 1940s who continued to hold high office after the war and sat at the table drafting the structure underpinning the EU.
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  16. Since nobody in Europe reads these articles, Ii doesn’t really matter

    None of it rally matters anyway, no matter how valid. To paraphrase Thucydides, the money grubbers do what they want and the rest of us are forced to suck it up and limp along.

    and I certainly don’t see any EU leader following the advice

    I doubt that that’s Hudson’s intent in writing the article. I see it as his attempt to explain the situation to those of us who care about them even though our concern is pretty much useless.

    I do thank him for taking the time to pen this stuff which I consider worthwhile and high quality.

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  17. Anonymous says: • Disclaimer

    That sounds good but social media is the weapon of choice in the EU too. Lot’s of kids know and love Hudson. Any half capable writer who empathetically explains why you’re getting fucked is going to have some followers. Watering, nutrition, weeding. Before too long you’ll be on the Eurail to your destination.

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  18. Wally says: • Website
    @Jake
    "After World War I the U.S. Government deviated from what had been traditional European policy – forgiving military support costs among the victors. U.S. officials demanded payment for the arms shipped to its Allies in the years before America entered the Great War in 1917. The Allies turned to Germany for reparations to pay these debts."

    The Yank banker, the Yankee Wall Street super rich, set off a process of greed that led to Hitler.

    But they didn't invent anything. They learned from their WASP forebears in the British Empire, whose banking back to Oliver Cromwell had become inextricably entangled with Jewish money and Jewish interests to the point that Jews per capita dominated it even at the height of the British Empire, when simpleton WASPs assume that WASPs truly ran everything, and that WASP power was for the good of even the poorest WASPs.

    said:
    “The Yank banker, the Yankee Wall Street super rich, set off a process of greed that led to Hitler.”

    If true, so what?

    That’s a classic example of ‘garbage in, garbage out’.

    http://www.codoh.com

    Read More
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  19. nickels says:

    This is not how the Enlightenment was supposed to evolve

    In fact, this is exactly how it was supposed to work.
    The wave of liberal democracies was precisely to overturn the monarchies, which were the last bulwark protecting the people from the full tyranny of the financiers, who were, by nature, one-world internationalists.

    Read More
    • Replies: @jacques sheete

    In fact, this is exactly how it was supposed to work.
    The wave of liberal democracies was precisely to overturn the monarchies, which were the last bulwark protecting the people from the full tyranny of the financiers, who were, by nature, one-world internationalists.
     
    I've long suspected as much.

    Same with nationalism...a great way to consolidate little states and other political entities so they could be controlled with bought and paid for stooges. The stooges could also initiate war for profits between the now much larger nations.

    Now that they've done their job and handed control over to the bankers, we hear talk of "independence" for every political group imaginable. Helps keep folks disunited and prevents governments from actually doing anything for the masses, as if they would in any case.

    The big money crowd knows how to manipulate and win either way. I wish I had some solutions to the problem, but the only hope for us peasants appears to be to stay out of any fights the money bag gangs start and hope they slit one another's throats instead and leave the rest of us in peace. I know, none of that is likely.

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  20. The real problem with this is that any form of monetary arrangement involves an implied trusteeship, with obligations on, as well as benefits for, the trustee.

    The US is so abusing its trusteeship through the continual use of an irresponsible sanctions regime that it risks a good portion of the world economy abandoning its system for someone else’s, which may be perceived to be run more responsibility.

    The disaster scenario would be the US having therefore in the future to access that other system to purchase oil or minerals, and having that system do to us what we previously did to them — sanction us out.

    The proper use by the US of its controlled system thus should be a defensive one — mainly to act so fairly to all players that it, not someone else, remains in control of the dominant worldwide exchange system. This sensible course of conduct, unfortunately, is not being pursued by the US.

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  21. joe webb says:

    there is fuzzy, and then there is very fuzzy, and then there is the fuzziness compounded many-fold. The latter is this article.

    Here from wiki: “…
    “… Marx believed that capitalism was inherently built upon practices of usury and thus inevitably leading to the separation of society into two classes: one composed of those who produce value and the other, which feeds upon the first one. In “Theories of Surplus Value” (written 1862-1863), he states “…that interest (in contrast to industrial profit) and rent (that is the form of landed property created by capitalist production itself) are superfetations (i.e., excessive accumulations) which are not essential to capitalist production and of which it can rid itself.”

    Wiki goes on to identify “rentier” as used by Marx, to be the same thing as”capitalists.”

    What the above quotation says is that capitalism CAN rid itself of genuine rent capital.

    First, the feudal rents that were extracted by landowners were NOT part of a free market system. Serfdom was only one part of unfree conditions. A general condition of anarchy in rules and laws by petty principalities characteristic of feudalism, both contained commerce and human beings. There was no freedom, political or economic.

    The conflation (collapsing) of rents and interest is a marxist error which expands into complete nonsense when a competitive economy has replaced feudal conditions. ON top of that, profits from a business, firm, or industrial enterprise are NOT rents.

    Any marxist is a fool to pretend otherwise, and is just another ideological (False consciousness ) fanatic.
    ——
    Not Surprising here that so many Unz Review folks fall into this marxist trap: intellectual and political, and economic.

    As for machinations of States with regard to national agendas, this is no surprise, and has nothing to do with capitalism, socialism, or whatever. It has to do with Politics, International, which then points to the urgencies of freeing ourselves from globalism, International Finance, and the EU, Nato , etc.

    International Capitalism of course is championed by the dominant powers of the time, what Anglo-European Liberals want. International Capitalism in the Chinese model could happen, in which capitalism would die and be replaced by Oriental Despotism. Another story.

    To claim as does Hudson, that all the spendthrift countries…like Greece, Italy, Spain, and the Latin American co-free spenders, and especially Ireland with its 92 national IQ, are Oppressed by Rentiers is crap.

    The stories of advanced Socialism in Greece and other countries… out of this world pensions, and welfarism…are true. These countries all have lower IQs, except maybe for Italy but which does have low IQ folks in the South of Rome area who correspondingly have their hands out for free money .

    To claim that money lent by countries and companies or even banks, who have collected money from people who actually work, and businesses that live in a competitive environment is absurd.

    Maybe the argument of Hudson can be extended to White Privilege, that all White money is the product of Exploitation and Rentier economic relations. Of course, besides the political ramifications of such idiocy, the economic results would be defaults on a massive scale from the Colored countries, the La Dolce countries, and lumpen elements in general. How about your mortgage payment too ? Black Lives Matter would like a piece of Hudson’s action.

    Idiocy and ideological fanaticism here in Hudson.
    Joe Webb

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  22. nsa says:

    Joonomics 101 needs to be studied by every student of the dismal science, including the eminent Professor Hudson. Joonomics 101, in its essence, describes the modern system of capital creation and allocation prevalent in North America. Jooies, lacking any sense of decency or civic responsibility, gain control of the financial system and its production of fiat money. Motivated by greed alone, the jooies then create a tsunami of fiat money and credit out of thin air and ladle it out to their jooie relatives and their jooie friends and any goy useful idiots needed to keep the jooies in control. The fiat money and credit is then used to buy real assets and various income generating investments. Eventually, some of the fiat money and credit trickles down to the masses of goy asses, who service their jooie masters with their labor and usurious debt repayment. Every university should include a Joonomics 101 course in their curriculum………

    Read More
    • Replies: @jacques sheete
    I think you nailed it.

    Those who control credit can make or break whole nations by manipulating their economies at will.

    It happened to Germany after WW1 and to the US (the Great Depression) and the recent housing bubble just to name a few "biggies."

    The fiat money and credit is then used to buy real assets and various income generating investments.
     
    This is used to drive up prices and create a bubble. The credit is withdrawn, prices collapse, and the properties sold at fire sale prices. Farmers lose their farms, homeowners lose their houses, businesses go under...They sell in a buyer's market (sorry for the understatement). And I've been told that debt is good...Paul Krugman sez so, and I'm an ignoramus!!!

    Another method used is exemplified by the experience of the Japanese in California at the outbreak of WW2...Their possessions were confiscated and you-know-who grabbed the bulk of it for pennies on the dollar. Adding insult and injury to both the general American taxpayer and the Japanese-American taxpayers, you can bet that any compensation received by the Japanese-Americans was paid for by other productive Americans aka, tax slaves, and was probably minimal and accompanied by relatively high "processing fees."
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  23. Wally says:
    @Michael Kenny
    Essentially, the anti-EU and anti-euro line that Professor Hudson has being pushing for years, which has now morphed into a pro-Putin line as the anti-EU faction in the US have sought to use Putin as a “useful idiot” to destroy the EU. Since nobody in Europe reads these articles, Ii doesn’t really matter and I certainly don’t see any EU leader following the advice of someone who has never concealed his hostility to the EU’s very existence: note the use of the racist slur “PIIGS” to refer to certain EU Member States. Thus, Professor Hudson is simply pushing the “let Putin win in Ukraine” line dressed up in fine-sounding economic jargon.

    Indeed, Putin should be praised & supported.

    But where is the proof that ‘Russia & Trump colluded to get Trump elected’?
    You also ignore the overwhelming Crimean support for returning to Russia.

    And you won’t like this at all:

    Trump Declares “National Day for the Victims of Communism.”

    https://www.whitehouse.gov/the-press-office/2017/11/07/national-day-victims-communism

    hence, the Liars of the scamming “Holocau$t Industry” go crazy:

    https://www.salon.com/2017/11/07/trumps-national-day-for-the-victims-of-communism-is-opposite-of-holocaust-statement/

    Read More
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  24. @jilles dykstra
    " The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions "

    In the whole article not a word about the euro, also an instrument of imperialism, that mainly benefits Germany, the country that has to maintain a high level of exports, in order to feed the Germans, and import raw materials for Germany's industries.

    Isolating China and Russia, with the other BRICS countries, S Africa, Brazil, India, dangerous game.
    This effort forced China and Russia to close cooperation, the economic expression of this is the Peking Petersburg railway, with a hub in Khazakstan, where the containers are lifted from the Chinese to the Russian system, the width differs.
    Four days for the trip.
    The Berlin Baghdad railway was an important cause for WWI.
    Let us hope that history does not repeat itself in the nuclear era.

    Edward Mead Earle, Ph.D., ‘Turkey, The Great Powers and The Bagdad Railway, A study in Imperialism’, 1923, 1924, New York

    Germany loans money back to the poorer nations who buy her exports just as China loans money to the United States (they purchase roughly a third of our Treasury bonds) so that Americans can continue to buy Chinese manufactured goods.

    The role to be played by the USA in the “new world order” is that of being the farmer to the world. The meticulous Asians will make stuff.

    The problem with this is that it is based on 19th century notions of manufacturing. Technique today is vastly more complicated than it was in the 1820′s and a nation must do everything in its power to protect and nurture its manufacturing and scientific excellence. In the United States we have been giving this away to our competitors. We educate their children at our taxpayer’s expense and they take the knowledge gained back to their native countries where, with state subsidies, they build factories that put Americans out of work. We fall further and further behind.

    Read More
    • Replies: @jacques sheete
    Some good insights there!!
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  25. @jilles dykstra
    " The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions "

    In the whole article not a word about the euro, also an instrument of imperialism, that mainly benefits Germany, the country that has to maintain a high level of exports, in order to feed the Germans, and import raw materials for Germany's industries.

    Isolating China and Russia, with the other BRICS countries, S Africa, Brazil, India, dangerous game.
    This effort forced China and Russia to close cooperation, the economic expression of this is the Peking Petersburg railway, with a hub in Khazakstan, where the containers are lifted from the Chinese to the Russian system, the width differs.
    Four days for the trip.
    The Berlin Baghdad railway was an important cause for WWI.
    Let us hope that history does not repeat itself in the nuclear era.

    Edward Mead Earle, Ph.D., ‘Turkey, The Great Powers and The Bagdad Railway, A study in Imperialism’, 1923, 1924, New York

    ” The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions . . . This effort forced China and Russia to close cooperation, the economic expression of this is the Peking Petersburg railway, with a hub in Khazakstan, where the containers are lifted from the Chinese to the Russian system. . .
    The Berlin Baghdad railway was an important cause for WWI.
    Let us hope that history does not repeat itself in the nuclear era. ”

    China Pushing Billions Into Iranian Economy as Western Firms Stall

    https://www.usnews.com/news/world/articles/2017-11-30/china-pushing-billions-into-iranian-economy-as-western-firms-stall

    China is financing billions of dollars worth of Chinese-led projects in Iran, making deep inroads into the economy while European competitors struggle to find banks willing to fund their ambitions, Iranian government and industry officials said. . . .

    Iranian officials say the deals are part of Beijing’s $124 billion Belt and Road initiative, which aims to build new infrastructure – from highways and railways to ports and power plants – between China and Europe to pave the way for an expansion of trade.

    A source in China familiar with the CITIC credit line, which was agreed in September, called it “an agreement of strategic intent”. The source declined to give details on projects to be financed, but Iranian media reports have said they would include water management, energy, environment and transport projects. . . .

    The Chinese funding, by far the largest statement of investment intent of any country in Iran, is in stark contrast with the drought facing Western investors since U.S. President Donald Trump disavowed the 2015 pact agreed by major powers, raising the threat sanctions could be reimposed.

    Read More
    • Replies: @jacques sheete

    China Pushing Billions Into Iranian Economy as Western Firms Stall
     
    Hmmm, I wonder if that's why Iran is an "existential threat" to Israel, the only entity in the world that counts, especially since the place was founded by "victims." ;)
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  26. @nickels

    This is not how the Enlightenment was supposed to evolve
     
    In fact, this is exactly how it was supposed to work.
    The wave of liberal democracies was precisely to overturn the monarchies, which were the last bulwark protecting the people from the full tyranny of the financiers, who were, by nature, one-world internationalists.

    In fact, this is exactly how it was supposed to work.
    The wave of liberal democracies was precisely to overturn the monarchies, which were the last bulwark protecting the people from the full tyranny of the financiers, who were, by nature, one-world internationalists.

    I’ve long suspected as much.

    Same with nationalism…a great way to consolidate little states and other political entities so they could be controlled with bought and paid for stooges. The stooges could also initiate war for profits between the now much larger nations.

    Now that they’ve done their job and handed control over to the bankers, we hear talk of “independence” for every political group imaginable. Helps keep folks disunited and prevents governments from actually doing anything for the masses, as if they would in any case.

    The big money crowd knows how to manipulate and win either way. I wish I had some solutions to the problem, but the only hope for us peasants appears to be to stay out of any fights the money bag gangs start and hope they slit one another’s throats instead and leave the rest of us in peace. I know, none of that is likely.

    Read More
    • Replies: @nickels

    but the only hope for us peasants appears to be to stay out of any fights
     
    Indeed. Every time I get riled up and want to stand up for justice I realize every side is corrupted and sit back down.
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  27. @nsa
    Joonomics 101 needs to be studied by every student of the dismal science, including the eminent Professor Hudson. Joonomics 101, in its essence, describes the modern system of capital creation and allocation prevalent in North America. Jooies, lacking any sense of decency or civic responsibility, gain control of the financial system and its production of fiat money. Motivated by greed alone, the jooies then create a tsunami of fiat money and credit out of thin air and ladle it out to their jooie relatives and their jooie friends and any goy useful idiots needed to keep the jooies in control. The fiat money and credit is then used to buy real assets and various income generating investments. Eventually, some of the fiat money and credit trickles down to the masses of goy asses, who service their jooie masters with their labor and usurious debt repayment. Every university should include a Joonomics 101 course in their curriculum.........

    I think you nailed it.

    Those who control credit can make or break whole nations by manipulating their economies at will.

    It happened to Germany after WW1 and to the US (the Great Depression) and the recent housing bubble just to name a few “biggies.”

    The fiat money and credit is then used to buy real assets and various income generating investments.

    This is used to drive up prices and create a bubble. The credit is withdrawn, prices collapse, and the properties sold at fire sale prices. Farmers lose their farms, homeowners lose their houses, businesses go under…They sell in a buyer’s market (sorry for the understatement). And I’ve been told that debt is good…Paul Krugman sez so, and I’m an ignoramus!!!

    Another method used is exemplified by the experience of the Japanese in California at the outbreak of WW2…Their possessions were confiscated and you-know-who grabbed the bulk of it for pennies on the dollar. Adding insult and injury to both the general American taxpayer and the Japanese-American taxpayers, you can bet that any compensation received by the Japanese-Americans was paid for by other productive Americans aka, tax slaves, and was probably minimal and accompanied by relatively high “processing fees.”

    Read More
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  28. @ThreeCranes
    Germany loans money back to the poorer nations who buy her exports just as China loans money to the United States (they purchase roughly a third of our Treasury bonds) so that Americans can continue to buy Chinese manufactured goods.

    The role to be played by the USA in the "new world order" is that of being the farmer to the world. The meticulous Asians will make stuff.

    The problem with this is that it is based on 19th century notions of manufacturing. Technique today is vastly more complicated than it was in the 1820's and a nation must do everything in its power to protect and nurture its manufacturing and scientific excellence. In the United States we have been giving this away to our competitors. We educate their children at our taxpayer's expense and they take the knowledge gained back to their native countries where, with state subsidies, they build factories that put Americans out of work. We fall further and further behind.

    Some good insights there!!

    Read More
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  29. @SolontoCroesus

    ” The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions . . . This effort forced China and Russia to close cooperation, the economic expression of this is the Peking Petersburg railway, with a hub in Khazakstan, where the containers are lifted from the Chinese to the Russian system. . .
    The Berlin Baghdad railway was an important cause for WWI.
    Let us hope that history does not repeat itself in the nuclear era. ”
     
    China Pushing Billions Into Iranian Economy as Western Firms Stall
    https://www.usnews.com/news/world/articles/2017-11-30/china-pushing-billions-into-iranian-economy-as-western-firms-stall

    China is financing billions of dollars worth of Chinese-led projects in Iran, making deep inroads into the economy while European competitors struggle to find banks willing to fund their ambitions, Iranian government and industry officials said. . . .

    Iranian officials say the deals are part of Beijing's $124 billion Belt and Road initiative, which aims to build new infrastructure - from highways and railways to ports and power plants - between China and Europe to pave the way for an expansion of trade.

    A source in China familiar with the CITIC credit line, which was agreed in September, called it "an agreement of strategic intent". The source declined to give details on projects to be financed, but Iranian media reports have said they would include water management, energy, environment and transport projects. . . .

    The Chinese funding, by far the largest statement of investment intent of any country in Iran, is in stark contrast with the drought facing Western investors since U.S. President Donald Trump disavowed the 2015 pact agreed by major powers, raising the threat sanctions could be reimposed.
     

    China Pushing Billions Into Iranian Economy as Western Firms Stall

    Hmmm, I wonder if that’s why Iran is an “existential threat” to Israel, the only entity in the world that counts, especially since the place was founded by “victims.” ;)

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  30. Too late now! Note the date.:

    Let us make war against an intolerable political system and its parasitical membership…

    Let us make the greatest war of all upon those who now own and control $14,640,022,403.95 of gold, which rightfully belongs to the American people, but which is now owned and controlled by the money changers the administration has invited from Europe to preside over the destiny of America. It is time that the American people aroused themselves to the danger which is threatening our nation, not from without but from within and in the very heart of the Government.

    - Hon. J. Thorkelson, If We Must Fight Let Battle Be Here!, Social Justice , May 29, 1939, p. 18

    http://www.unz.org/Pub/SocialJustice-1939may29-00018]

    It appears to me that the EU has been undermined from within, or better, the the EU was established to do the undermining…

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  31. Anonymous says: • Disclaimer
    @Joe Hide
    To Michael Hudson,
    Great article. Evidence based, factually argued, enjoyably readable.
    Replacements for the dollar dominated financial system are well into development. Digital dollars, credit cards, paypal, stock and currency exchange online platforms, and perhaps most intriguing... The exponential rise of Bitcoin and similar crypto-currencies.
    The internet is also exponentially exposing the screwing we peasants have been getting by the psychopath, narcissistic, hedonistic, predatory lenders and controllers.
    Next comes the widespread, easily usable, and inexpensive cell phone apps, social media exposures, alternative websites (like Unz.com), and other technologies that will quickly identify every lying, evil, jerk so they can be neutrilized / avoided

    Optimistic to be sure, but the designers of the internet intended the direction of the web to be something a bit more complicated than giving you the answer to anything.

    It’s a well worn cliche, but the griminess of Oceania’s telescreens is only one way to manage a state. Get rid of a negative perception and the flock will follow mostly in peace. You say we have social media revelations, cheap hand phones, apps, media objectivity and alternatives. Not necessarily.

    We have plenty of porn, things to buy, and no privacy – no real security in the sense that so-called authority has total awareness of everything about you, 24/7 public surveillance and open financial/health records.

    Social media is designed to use and influence you, not inform you. Listening devices for services as an appliance aren’t dramatically more intrusive than your daily posts on social media. We do have plenty of authors, including Hudson, who get a kind of truth to you. They might seem outrageous, they’ll call the whole thing a scam, but it won’t make a difference.

    Hudson included, why would you necessarily believe anything you read, knowing just a little of how and why it is produced?

    What’cha gonna do now? Run around the neighborhood and tell everyone to stop paying their usurious school loans? Do remember that the central theme is that resistance is useless because you don’t know any better and you should be afraid. Besides, it’s the thought of resistance that counts.

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  32. nickels says:
    @jacques sheete

    In fact, this is exactly how it was supposed to work.
    The wave of liberal democracies was precisely to overturn the monarchies, which were the last bulwark protecting the people from the full tyranny of the financiers, who were, by nature, one-world internationalists.
     
    I've long suspected as much.

    Same with nationalism...a great way to consolidate little states and other political entities so they could be controlled with bought and paid for stooges. The stooges could also initiate war for profits between the now much larger nations.

    Now that they've done their job and handed control over to the bankers, we hear talk of "independence" for every political group imaginable. Helps keep folks disunited and prevents governments from actually doing anything for the masses, as if they would in any case.

    The big money crowd knows how to manipulate and win either way. I wish I had some solutions to the problem, but the only hope for us peasants appears to be to stay out of any fights the money bag gangs start and hope they slit one another's throats instead and leave the rest of us in peace. I know, none of that is likely.

    but the only hope for us peasants appears to be to stay out of any fights

    Indeed. Every time I get riled up and want to stand up for justice I realize every side is corrupted and sit back down.

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  33. Che Guava says:

    Very educational and astute article, Mr. Hudson (although I was aware of much, you make connections I did not know of). In particular, knew that Japan was making a lot o from Korean and Vietnam wars, (also the theft of any gold around in China, what was left after the rape of Korea, in many other places also under our occupation), but that is the past and fixed present, but ignored by USA

    Probably too late to expecting replies from this, and am not respcting economics as an academedic discipline, but you are a cut above.

    Four questions to you as an economist, and a joke, not against you, I think you willing on or two of interest.

    i. The international debt bubbles, isn’t the bursting inevitable?

    ii. Are cryypo-currency systems bubbles, like Tulipomania?

    As far as I can seeing, both rhetorical, in the case of the latter, perhas not.

    iii.If there is supposed to near-zero inflation in so many places for many years, how do so many places (London, NY, Sydney, many others in that world) make living impossibly expensive, rental a cruel joke, and to buying impossible? I am reading about it.

    iv. Again, if there is supposed to be near-zero inflation, why is my reading on govt. budgets and costs figures ramping through orders of magnitude since the low-inflation trend was to starting?

    Serious questions, Mr. Hudson, and not meant to be cheap.

    On my light but serious note, we count in ten to the fourth power. I was also learning ten to the third, for science and eng. as all do now. My overseas was billion is ten to the twelfth, as in all European systems.

    After the 2008 handouts to shitty capitalists, the actor Russel Crowe was to saying, Instead of that, why not give x dollars to everybody’.

    He was ridiculed for it, but except for USA people (who may be excused on this point, everyone to joining in the attack was just displaylng their own lack of knowledge.

    I was checking, Crowe was quite correct on the x, in x dollars, as long as one is to recall the true definition of ‘billion’ as ten to the twelfth.

    Shame on the many non-USA commentators who were dumping on him for that. He was recalling early education, they were not,

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  34. pogohere says: • Website
    @Michael Kenny
    Essentially, the anti-EU and anti-euro line that Professor Hudson has being pushing for years, which has now morphed into a pro-Putin line as the anti-EU faction in the US have sought to use Putin as a “useful idiot” to destroy the EU. Since nobody in Europe reads these articles, Ii doesn’t really matter and I certainly don’t see any EU leader following the advice of someone who has never concealed his hostility to the EU’s very existence: note the use of the racist slur “PIIGS” to refer to certain EU Member States. Thus, Professor Hudson is simply pushing the “let Putin win in Ukraine” line dressed up in fine-sounding economic jargon.

    If you want to drill deeper into the history of the formation of the EU, I suggest you read Joseph P. Farrell’s The Third Way, The Nazi International, European Union and Corporate Fascism.

    In it he traces what he asserts is the influence of the “Madrid Circular,” a document circulated in 1950 by the German Geopolitical Center in Madrid which outlines a plan to create what looks remarkably like what was actually created in the following decades: a cartelized EU industrial sector ruled by an unelected bureaucracy accompanied by an elected parliament with no actual power. The legal structures were anticipated by Germans in the 1940s who continued to hold high office after the war and sat at the table drafting the structure underpinning the EU.

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  35. H.S. says:

    Mr Hudson,

    ”The sums were so unpayably high that Germany was driven into austerity and collapse. The nation suffered hyperinflation as the Reichsbank printed marks to throw onto the foreign exchange also were pushed into financial collapse. The debt deflation was much like that of Third World debtors a generation ago, and today’s southern European PIIGS (Portugal, Ireland, Italy, Greece and Spain).”

    Will ”German imperialism” also apply to Quebec resources (cheap labor, lands, water, minerals, uranium, military bases to continue the invasion of Eurasia), given that they are currently using Quebecers to ”establish liaisons” between the US and Europe?

    Also, can’t Quebec be used to establish a kind of ”peace platform” between the Anglo-US world and Europe, e.g. to counter to counter the language barriers between both ”worlds”?

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    Quebec, Canada is known for it's FIRE sector and defense contractors - a great place for a "peace platform." Quebec was also a newscycle comedy routine for fleeing-of-Trump Americans. They went right back into the same set up they left, proving you can't just run away to Canada anymore.

    In Quebec, where the impetus (and funding) is as relentless as anywhere else in the US, the peace-focus will be on the man in the street and his victimhood assembled on the sand castles of prejudice. Pay no attention to the gore in the background. An insidious polycephaly that exists under your fingertips and is relentlessly shielded from your mind. You'll never know any better and that is peace, doubleplus-good peace if you prefer.

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  36. Anonymous says: • Disclaimer
    @H.S.
    Mr Hudson,

    ''The sums were so unpayably high that Germany was driven into austerity and collapse. The nation suffered hyperinflation as the Reichsbank printed marks to throw onto the foreign exchange also were pushed into financial collapse. The debt deflation was much like that of Third World debtors a generation ago, and today’s southern European PIIGS (Portugal, Ireland, Italy, Greece and Spain).''



    Will ''German imperialism'' also apply to Quebec resources (cheap labor, lands, water, minerals, uranium, military bases to continue the invasion of Eurasia), given that they are currently using Quebecers to ''establish liaisons'' between the US and Europe?

    Also, can't Quebec be used to establish a kind of ''peace platform'' between the Anglo-US world and Europe, e.g. to counter to counter the language barriers between both ''worlds''?

    Quebec, Canada is known for it’s FIRE sector and defense contractors – a great place for a “peace platform.” Quebec was also a newscycle comedy routine for fleeing-of-Trump Americans. They went right back into the same set up they left, proving you can’t just run away to Canada anymore.

    In Quebec, where the impetus (and funding) is as relentless as anywhere else in the US, the peace-focus will be on the man in the street and his victimhood assembled on the sand castles of prejudice. Pay no attention to the gore in the background. An insidious polycephaly that exists under your fingertips and is relentlessly shielded from your mind. You’ll never know any better and that is peace, doubleplus-good peace if you prefer.

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  37. So this is a very good article that I think has a lot of good stuff in it. However, I disagree that the development of the United States, Germany, or even places like Japan did not have modern macro-development based on public support of the economies. Anything which needed macro-support, mainly railroads or ports and such, have all almost been nationalized, don’t exist, or are cartelized. Murray Rothbard goes into great detail about how particularly American train companies ran their routes horrendously and based on political favors. Now there are next to no commercially viable railroads in the United States which don’t have express subsidies from the state. It’s all backwards in that railroads grew as the economy grew and not the other way around with railroad’s growing the economy.

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