294 - Michael Hudson: Iran, Oil, and Global Depression

37:26Is all that really productivity? So what's lost from this whole discussion is what is productivity? What is a product? And if industrial employment has fallen, and that's what's going down, That's why when President Trump wanted Korea to build a plant here in America, they couldn't find American workers who were skilled at building the technical requirements for the industrial plant that the Korean companies wanted to build. Then some of them were arrested and they were driven back to Korea. Same thing with the Taiwanese. They made an agreement to move their chipmaking to a Western state. They said, we just can't find American labor.

38:20Trump then asked China, what about shipbuilding? Well, America doesn't have any shipbuilding yards or labor trained in this. America doesn't have the labor force to perform the industrial tasks that originally made it such a dominant world power in the century after World War I. So it's lost all of this. So I don't think the employment or the GDP picture is more than an indication of how rich the rentier class is growing, because 40 % of the American population, according to the Federal Reserve doesn't have any savings at all. It's living from paycheck to paycheck and is falling into debt. For most of America, their living standards and what they buy have not gone up.

39:17All this growth has been by the wealthiest financial class. You can call it the 10 % or the 1 % or the 0.1%. It's all been so highly concentrated that it's a very distorted kind of a growth that most societies don't find fair. The idea of most people is that growth should be shared equitably to all of society. That's not happening today because we're now in an oligarchy, not a democracy. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks.

40:07Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required, compatibility and availability varies 18+. Your heart can tell you a lot about your health. Apple Watch Series 12 measures your heart rate every five seconds with the most accurate heart rate sensing in a wearable. So your vitals app, now with heart rate variability, can tell you when something is off. And your readiness score can let you know when to rest and when to push. Hear the story in every heartbeat with Apple Watch Series 12. The features described are for wellness purposes only and not for medical use.

40:41iPhone 11 or later required. Based on Apple conducted study of heart rate accuracy, August 2026. Visit apple.com slash Apple Watch Series 12. I hear what you're saying about the GDP and employment numbers. Are there better publicly available metrics that indicate the trajectory of the economy more faithfully, in your view? No, the government has fought as much against that as possible, because if you had that, the United States would look much less promising than other countries. There's been a whole ideological fight against the role of government in the economy. This is Thatcherism and Reaganomics.

41:30There's no such thing as economic rent. Everybody earns whatever income they make. All income is earned. There's no unearned income. This has been a very highly subsidized economic ideology. You have Nobel Prizes given for that, not for criticizing it. And so there's no vested interest that has tried to say, well, what if we calculated GDP or national production in the same way that China did? How do we compare with that definition? There's no discussion of what is a product? What is national income? And that's because there's no history of economic thought. So student managers from global majority countries, China itself, all over the world, are sent to the United States to study economics degrees, hoping that that will teach them about economics.

42:38Well, it really hasn't worked that way. I had lunch with a professor two weeks ago, who visited me in New York, he was a professor of philosophy and history in Tennessee. And he said one of his students just got a job with a big U.S. venture capital firm. I forget which one. And he said at the capital firm, they said, well, we're glad that you have a degree in the philosophy in the humanities. We don't hire economists. They're not very helpful. And I've heard other investment bankers say, you know, you really don't need an education. All you need is greed. And so it doesn't really help. And those who do come here to study economics degrees, don't study the history of, well, what was Adam Smith and John Stuart Mill and Marx and the whole tradition of classical political economy all about?

43:42How did it conceive of what was the product? How was it the guiding spirit of industrial capitalism that was political, getting rid of the landlord class, getting rid of the monopolies, lowering the cost of doing business and the cost of living in order to make Britain the workshop of the world and then Germany and then the United States. What made them so successful then? And why are we not successful today? What are we doing different? That's not discussed. That's not what economics is all about. It's not about history. It's not about how the real economy works. Granted that you've explained why you don't find these numbers very helpful.

44:29I want to ask a little bit more about the employment figures. And you mentioned that the numbers are very closely connected to immigration, ICE, medical workers. And I had a recent conversation that I found quite compelling where my guest was saying that he believes tech billionaires like Elon Musk are so vocal about immigration and anti-immigration because they wish to distract from the coming job losses that will be coming from gains in AI. or changes in AI where they're heavily invested. And I wanted to know if you think that with regard to employment, you see AI as in the near future drastically increasing unemployment of skilled office-type jobs or any other types of work.

45:27In theory, that's the hope of the employers. They hope that, yes, we can cut our labor force and just fire them all and use a computer to do their job much more easily than a living human being. I don't think that's reasonable. Everybody I know, I mean, we're already having to deal with AI. Whenever we have a complaint to make to a company, we get the AI runaround. It's very hard to get a human being on the phone. People with cell phones. The other day, I lost a call from someone because they said, oh, now there was an AI update on their phone, and they have to decide which decision do they want to make, accept the call or not, instead of just picking it up and saying hello.

46:21The question is, is AI really going to work in saving jobs? And apparently many companies had hoped that it would, had hoped to have a bloodbath for their labor force. But they find AI really causes new problems. It's so much simpler to go to a simple human being, assuming the human beings work there for more than a few months. when my wife will call a company to ask a question about some product or call a health provider, she almost always gets someone who's just recently hired and doesn't really know what's happening. She almost always has to ask for a supervisor now. Well, the supervisor can do things very clearly, But there's a race to the bottom among employers, and the race to the bottom not only involves hiring the lowest price labor you can get without regard for competence or productivity, but the lowest price employee turns out to be a machine, and it makes the consumer do the runaround.

47:42already in the late 1970s, Elvin Toffler was writing about, the futurist was writing about this. And he said, a lot of costs that used to be done by business, by dealing with clients, dealing with customers, is now the work is pushed on to the customer to do. The self-checkout, instead of a person at the checkout counter, when you're going through a checkout counter, and my wife often tells me, wait a minute, I saw what you're charging for this broccoli, but the price on the shelf is this. You're obliged to charge the price that's on the shelf, not the price that's in the computer. And they say, oh, I guess they haven't put the same price in.

48:31She's always having to deal, that's her personality, with get a manager over here to do it. Well, imagine how this is. Sometimes it's very hard to get a manager if you're dealing with an AI machine and the AI machine does all of this mechanical answer and it's the wrong price or the wrong answer. And they'll say, well, do you want to help? Here's the help menu. Go all the way through and do all this work, all this work. This is going to be a real hassle for a lot of people, and I think there's a revulsion. And then, of course, the big question is that AI uses two things. It uses electricity, enormous amounts of electricity that's going to raise electricity prices for most people, and it uses enormous amounts of water.

49:25So where are you going to locate the AI call centers? Well, they thought this problem by putting it in the United Arab Emirates and Saudi Arabia. and Iran than bomb them. So it doesn't look like the United States can move the data centers and the cloud centers to where the energy is cheapest in the Persian Gulf area. And it doesn't look like the Western states are going to be viable locations for these centers and for AI because of the water shortage. And most rural areas also have limited electric capacity problems. And it takes five years to create new electricity utilities, given the regulatory problems.

50:18So there are so many problems with just the technology of AI itself, quite apart from the fact that it's questionable just how well it will work. Like you, I'm not a fan of AI. It's not my department, but it just looks like people's hopes and promises are running ahead of all of the problems it'll cause. And AI is supposed to call the problem is that people want jobs and you have to employ labor, not unemployment. Let's solve it. Let's unemploy labor. Well, the solution to every problem causes a new problem. And I am waiting to see what problems the AI solution is going to cause for the economy.

51:11Thank you for these digressions about AI and unemployment numbers and so on. But we can get back to that original prognostication you made. And I'm wondering, do you think the war with Iran is fundamentally about Iran and the United States? Or is Iran just one theater in a much larger struggle over oil, the dollar, China, Russia, and who controls the world economy? Of course, it's over oil. I have long articles on my website and for Democracy Collaborative on this. The United States wants to exert its economic control over other countries in a coercive way by creating choke points in the world economy.

52:07An early choke point was its agricultural export capacity. It tried to block food exports to China after its revolution. Canada broke the blockade of China. Well, the United States thought that along with Britain and Holland, Dutch oil, we can threaten to turn off the power, the lights, the fertilizer, the chemical industry of other countries that do not submit to U.S. power by monopolizing control of the world oil industry. The oil industry has always been probably the most profitable industry in the United States and certainly the most politically powerful industry. And the attacks on the control of the choke point in oil was no country not under the control of the United States, U.S.

53:22companies, or U.S. proxies. And satellites can be permitted to export oil. And that was why the Persian, the Iranian government, Moushadeh, was overthrown in the 1950s and replaced with the brutal Shah dictatorship until he was overthrown finally in 1979. and the United States declared a war against Iran because the whole neocon plan for conquering West Asia, that is the Middle East, was based on an arc all the way from North Africa and Libya and the Persian Gulf all the way through Iran. And Iran was always viewed as the strongest nation in this region as it had been for centuries, in fact, a few thousand years.

54:33And so Iran was the first enemy of this. Well, then Russia became designated as an energy as NATO tried to expand and wanted essentially to not only destroy the Soviet Union, but to destroy Russia and preferably carve it up. The dream of America was, well, you're going to bring in the neoliberals. You're going to turn over all the property. The heads of every company are going to be given control. Just give them control of the resources. It's true that voters are given vouchers, but what are they going to do with the vouchers? They usually sold them for the price of a vodka, as the saying went.

55:24The oil industry, the mining industry, all of these were privatized. But then after Putin became president, Russia began to reconsolidate. The United States had the dream of carving up Russia into component regions. Well, the United States had planned on breaking up Iran already when I was working for the Hudson Institute back in 1972. 1973, 1974, Herman Cahn outlined plans to the military, saying, well, you know, we can break it into its ethnic divisions. Persia is a multi-ethnic state. And he thought Balochistan on the border, the Balochis that are between Iran and somewhere in Pakistan might be encouraged to have a revolt.

56:23Then the United States turned to the Kurds and gave it a promise of Kurdistan. If you would attack Iran, the whole point of saying we cannot have any power strong enough to be independent of the United States. If they have a strong power, we break it up into many states and let them fight amongst each other. Iran was to be the first model, never took off. Then came Russia. That was the model. We broke up the Soviet Union. Now let's break up Russia. That never came off. And finally, you had Venezuela. As soon as Venezuela voted in a socialist, they isolated Venezuela along similar lines to what they'd done against Cuba.

57:15So, of course, the Iran war is part of the whole U.S. drive saying we must control the international oil industry. And the Secretary of the Treasury, Besant, spelled it all out very explicitly in the speech. He said, we're not only, and he gave the speech after the America invaded Venezuela and seized control of its soil. He said, we're not only going to seize Venezuela's oil. The problem is that Venezuela not only was receiving the benefits of its oil that we want, it was pricing its oil in currencies other than dollars. It was pricing its oil in Chinese currencies, and it was trading with China.

58:04It was trading with countries not under U.S. control and that the United States, in fact, looked at it as ultimate existential enemies in the end. And so Besant said, you know, the first thing we do, we're going to do the same thing with Russia and we're going to do the same thing with Iran. Iran, we're going to take Iran's oil, we're going to price it all in dollars, and we're going to determine just what countries Iran can trade their oil with. I give all the quotations from the speech and the articles that are on my website and on the Democracy Collaborative website all about this. And it was all very explicit policy.

58:54And Besant was not embarrassed at all to saying that when we conquer Iran, all of its oil proceeds are going to be paid into a U.S. Treasury account in our name. And we will decide how to spend this treasury after we reimburse ourselves for all of the cost of conquering Iran that it's cost us, just as all of Venezuela's oil is paid into a U.S. Treasury account that Donald Trump says he personally controls as deciding how much of these oil proceeds from Venezuela's oil are going to be actually given to Venezuela. and how much will Trump charge for the cost of defeating Venezuela. He said, other countries have to pay, reimburse us for the cost of seizing their oil and defending them.

59:51And he then said all the way back in 2018, he said, I think OPEC countries should pay for the cost of our protecting them. And then earlier last year with Venezuela, actually it was earlier this year now, he said, we cannot let Iran have any reparations or payment for tolls in the Strait of Hormuz because we want the tolls. the tolls. We want 20 % of all of OPEC's oil proceeds for our cost of defending them. And this cost, this defending them, is simply a protection racket. It wasn't able to protect Saudi Arabia or Bahrain or the Emirates from having their oil and their natural gas and their helium facilities destroyed by Iran.

1:00:52So the United States is simply acting as if it's the last world colonial power, treating all oil-producing countries as defeated colonies as part of its empire. It confiscated all of the gold reserves of Iraq. It took the gold reserves apparently of Venezuela or had Britain assign the gold reserves that Venezuela held in London, turned over control to the United States Treasury. The U.S. Treasury wants to do the same with Iranian gold reserves. And Russia's foreign exchange reserves were confiscated by the Eurozone Eurobank in Brussels at U.S. request. So all of a sudden, weaponizing the oil trade has led to weaponizing the financial system for payments for this oil trade in a way that has made not only the oil market an unstable source of chaos, but also the whole financial system that people depended upon.

1:02:14The dollarized financial system is no longer viewed as a safe haven. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18+. Your heart can tell you a lot about your health.

1:02:49Apple Watch Series 12 measures your heart rate every five seconds with the most accurate heart rate sensing in a wearable. So your Vitals app, now with heart rate variability, can tell you when something is off. And your readiness score can let you know when to rest and when to push. hear the story in every heartbeat with apple watch series 12 the features described are for wellness purposes only and not for medical use iphone 11 or later required based on apple conducted study of heart rate accuracy august 2026 visit apple.com slash apple watch series 12 at the beginning of your your last response you mentioned strategic choke points and one of the i mean literal strategic choke points that is very much under contention at the moment is the Strait of Hormuz, and we've seen the extent to which it's already affected global energy markets.

1:03:37But I'm wondering, I mean, there's so much talk about it. I feel that a lot of people, they don't really, but a lot of people don't really even know why it's important. And I'm wondering why control over oil flows, specifically in the Strait of Hormuz, is so important to American financial power and military power. It's not the street of her moves at all. It's the law of the sea. The United States has weaponized the law of the sea in violation of all international law of the United Nations. Trump is trying to weaponize the control of the Arctic. The reason that he wanted, immediately upon taking office, He said he wanted to annex.

1:04:28He's going to use Greenland as part of the Western Hemisphere. And then he followed it up by saying, well, in addition to Greenland, I want to go all the way to Iceland. And then one of the Republicans close to him said, Iceland can be, if Greenland's the 51st state, Iceland can be the 52nd state. Now, why is he doing that? Imagine a line drawn. Here's the United States, Canada, Greenland,

1:05:07then all the way to Iceland, then from Iceland to Britain. Controlling these islands, Trump and the military can block off all access of Latin America, Europe, the global south, and Asia. Russia has announced that it's hoping to develop its Siberian oil trade that will go from—it's called the Vostok Group, I guess from Vladivostok. The Vostok pipeline will deliver oil to ships to go up through the Arctic and around to come back, I guess, through the Aleutian Islands between Alaska and Russia down to the East Coast or else that's basically it. so that this will be much easier than using the Panama Canal.

1:06:16And since the United States has just insisted in demanding that China be removed from the Panama Canal because the U.S. wants to control that as a choke point, the United States wants to control every choke point that it can. That was why it started the Panama Canal. That's why Britain was so insistent in controlling the Suez, gaining control of the Suez Canal by foreclosing on loans that Egypt was unable to pay in the 19th century. So Trump's whole play against the otherwise inexplainable wanting Greenland as the 51st state and Iceland as the 52nd is an attempt to close off this excess of foreign countries to Russian oil through the Arctic.

1:07:20And the United States is trying now to get NATO support in militarizing and weaponizing the Arctic against Russia via Norway and the Arctic-NATO -Nordic members. So it's by no means limited to the Strait of Hormuz. Going back again to that original forecast, suppose that oil, refined fuel, these prices remain elevated for another six months, so taking us well through the end of the year. Which countries do you see breaking first, and what does this sort of break look like? Well, the natural tendency is to say the global South countries, but also Korea and Japan. Because as long as Iran remains in control of who can use or what ships are going to be permitted to export oil through the Strait of Hormuz and also on the western side of Saudi Arabia through the Red Sea, They're going to say, well, we're going to give priority to our BRICS member countries.

1:08:46Essentially, you're having China, Russia, and Iran form a triad that is really the BRICS, that is really the dominant force in determining whatever shape there's going to be an alternative to the dollar standard and the dollarized dollar. area. And they're going to say, well, U.S. satellites are going to be at the bottom of the list because of oil. A lot of countries are going to need oil. It's not simply a question of price. There's a world price. That's going to be a common world price. But there's also going to be a just plain oil shortage and unavailability at any price because it's not being produced.

1:09:38or they haven't put the shipping system. It's going to take a while to put the whole export system, the whole refinery system, the whole production system back in place. So you can see that Korea, Japan, probably NATO, Europe are going to be in the secondary position. So they're going to feel the worst of the crunch. That's what American allies are for, to bear the crunch. And America will be very happy to supply these allies with American oil at the cost of American consumers, but to the great profit of the American oil and gas companies. So I'd say the global South countries will have an equally serious financial crisis.

1:10:37You mentioned South Korea and Japan again, and you mentioned them earlier with regard, I think it was to, we were pressuring them over their use of Chinese technology and maybe also Russian energy. But why have we singled out those two countries in particular when other countries like India, for instance, I'm sure are heavily relying on Russian oil and Chinese technology? Well, because we defeated them all in war, there has never been a peace treaty resolving the Korean War. It's an occupied country. The U.S. forces are there. And the U.S. has maneuvered to impose a pro-U.S. government there that's becoming less and less pro-U.S.

1:11:30And the U.S. has viewed first Japan and then Korea as a rival to its own automobile industry, its electronics industry, and its other industries. So that's part of the reason that it wants to prevent any other country from being a rival, and Japan and Korea are sort of natural rivals. And if their supply chains and their markets are shifted away from the United States to the rest of Asia, including China, if they can make a deal with China saying, well, you know,$350 billion that we have to pay in tribute. Trump is now saying we have to just give them the money and he'll invest it in companies of his design and his account keeping.

1:12:31And if there are any profits, we get a small portion of them. But with Hollywood accounting, Trump style, you never know. You know, there may not be any profits with all of the affiliates and everything. So they may say, you know, we have to realize that we may have to get the handwritings on the wall. We may have to give up the American market. What are we going to do? Is there a way that we can make an accommodation with you, with merging our industry, our computer industry? And I know that you would like, you Chinese would like to monopolize this whole trade. But if you can absorb us, Korea and Japan, into the Asian order, then you won't have to worry about this instability that the United States is trying to stir up against you anymore.

1:13:30We're willing to give up the United States because we cannot meet the demands that Donald Trump has made it uneconomic. All the profits from our industry are to be turned over to the United States, and that's an intolerable demand. And the fact is we'll just be voted out of office. And not even the notorious American election interference can protect us from this will of the voters as they become aware of just how demanding the United States has become. So that's going to be one option for Korea. And of course, then, well, Korea and Japan wouldn't be rival to America anymore because they'd give up the American markets thanks to Trump's tariffs.

1:14:24But they'd become a rival to American exports to its allies in Europe and to other countries. And China can say, all right, we'll make sure that—why don't you compete in these other markets? We'll give you support. will supply you with all of the rare earth you need, with the raw materials you need that we are blocking to the United States and its NATO allies, so that you'll be able to have the raw materials that you need for this high technology. And you can certainly sell your Hyundai products, your electronic cars, your computers and other things on the world market, and you can sell some to us too.

1:15:20We can come to some arrangement. That's the kind of world reorganization it's conceivable to have diplomats talking about. Throughout this conversation, you've described this relationship between the United States and other countries, or at least a sort of relationship we would like to have where these other countries are paying us a tribute of some sort. So for instance, you just talked about Japan and Korea, talked about these countries in the Middle East that seek our protection. We've also talked about the United States wanting Canada or Greenland to be the 51st and 52nd states. And then there's Venezuela, whose oil we now have substantial control over.

1:16:12Are there other countries that you think are particularly salient to discuss where the United States is seeking to establish this same sort of tribute model? Well, the whole world is viewed as potential tributaries. That's U.S. policy. And the only way that it can create tributes to create economic gains is it cannot offer a win-win situation like China can offer offer. It can't say, well, we have good industrial technology, especially computer technology, that we can sell you at a more efficient product at a lower price than other countries, because it can't. America's priced itself out of the market because it's a financialized economy.

1:17:02And as I said, its GDP is cost without a product, cost unrelated to the actual cost of production. So the only thing the U.S. can do is threaten to cut other countries off, to sanction them, and to isolate them. But the end result of all this is it's imposing sanctions on other countries. It's imposing sanctions on everyone. and it's isolated itself. That's the logical culmination of Trump's policy, fortress America. We have to be self-sufficient. But how can it be self-sufficient? Because it doesn't have an industrial labor force or plant and equipment or factories or an educational system to train a labor force or a population that's willing to indulge in industrial labor, even at the higher prices that industrial labor can be paid compared to office labor.

1:18:08So it's as if Donald Trump had made a decision in his own mind, well, the military convinced me that I can't conquer the world. I'd wanted to go down as the modern Napoleon, but I guess I can't. And if I can't go down as the president who created the American empire, at least I can go down as a president who destroyed it. And as if he wants to go down in history as saying, the last president of this great American experience from 1776 to 2026 or 28 or whatever came to an end with me. It's like I'm the last Roman emperor. And after me, it's all changed. I was the turning point in history. Maybe that's what he's thinking, because that is the result of what he's doing.

1:19:04And because he is so narcissistic and egotistical that he won't permit any disagreement with his policies. He won't permit any realistic voice of reason to be voiced saying, well, Mr. President here, this is going to backfair on you. There's going to be a blowback. He's convinced that he can write out anything and that he can, once he leads other countries to protect their own sovereignty as to who they're going to trade with, what currencies they're going to trade with, how are they going to keep their international savings and what medium? Gold, RMBs, are they going to keep it in China? How are they going to transact all of their business?

1:20:07Once there's an alternative to the dollar that institutionalizes itself, it becomes its own force of inertia, and there's no way that the United States can be trusted again, quite apart from the moral revulsion that the world is feeling against America's military policy and the bombing that it's done and the instability that it's been creating in losing one war after another after another, that there's just a revulsion by a generation that is irreversible. You began this response by saying that China is able to offer other countries a win-win relationship that the United States can't match. When I was growing up, and I'm sure when most of us were growing up, we were always taught to believe that China was the villain, Russia was the villain, particularly China, and the United States were the good guys.

1:21:12And at least the picture that the United States is the good guys, that's become increasingly difficult and impossible to swallow as I've grown up. I'm wondering, though, how you think about China. Is China actually like the protagonist or one of the protagonists in the world order? And we've kind of always been misled by propaganda in the United States that it's such a villainous land. Well, I gave a speech on this at the Vladivostok meetings two weeks ago on September 1st, where all of this is discussed. And I think the prototype for the discussion that's going to take place now is the argument between John Maynard Keynes of the British Treasury and the United States in 1944, when they were planning how the post-war economic order was going to be organized.

1:22:16And as I said earlier in the show, Britain recognized that after the war, because of the deal that it had to make with a British loan, it was going to have to dissolve empire preference. It was going to be a debtor country, and America would be a creditor country. And Cain said, this is exactly what happened after World War I. America was the great creditor. It insisted on the inter-allied debts. Then the Allies insisted that Germany pay the reparations to the Allies to pay the United States for the debts for the arms that Europe bought before America's entry into the war. And all that ended up breaking down by 1931 and had to be forgiven.

1:23:09Keynes said, how do we avoid this again? So he proposed an international bank. And he said, it's not really an international bank. It's a clearing union. It's a financial regulatory institution that would really be a bookkeeping institution. And it would track the balance of payment surpluses of countries headed by the United States, as everyone expected, and the deficit countries. headed, in Keynes' view, by Britain, but also it was going to be what was called the third world, the South America, Africa, the raw materials and food exporters to the Western industrial core. And Keynes said, at a certain point, all countries are going to reach the point that Europe reached and finally recognized and admitted in 1931, if we don't write down the debts, then there's going to be a depression.

1:24:16He said there is an alternative. When countries are so successful that they're accumulating wealth in the form of creditor claims by the United States on chronic debtor countries that run debts continually, that means that the debts are, we'll count these debts as bad loans if the loans cannot be paid without forcing the country into chronic depression and forsaking its own ability to have economic growth for itself. And so what will happen is that this international clearing union is going to just cancel the financial claims of the chronic creditor countries and the corresponding debts of the chronic debtor countries.

1:25:12And for instance, America's financial claims on Britain, but by extension, America's claims on the global South countries. Well, Now, suppose that this principle, and I think this is a very valid, logical principle, suppose this is discussed by the Shanghai Cooperation Organization, which is really the core of BRICS in terms of actually implementing any kind of an international institution. The United States has sponsored fears. Well, what if China ends up doing just what the United States does? We know it's the leading industrial and now financial power as well. What if it just becomes the new financial monster in the world, trying to gain control of other countries?

1:26:11Well, what China could be asked, will you agree to join the kind of international clearing union that Keynes described? And again, that I described in my flat of a stock speech and in super imperialism. And they can point out to China, it's true that you won't have these financial claims on other countries. On the other hand, what you will have is a thriving Asian market along with a whole global majority market of BRICS countries and maybe even European countries at some point, maybe even America's allies in Asian countries that will join as part of this. You'll be able to gain a peaceful prosperity without the military overhead and without the threat of constant war that the United States is preparing without you.

1:27:20Because now you'll have everybody on your side because you'll say, you know, the loans that we make are not the kind of loans that the United States and Western nations have made. We're not extending loans as a lever to grab control of your natural resources and your land and your public infrastructure to say, well, sell it all off to our investors in payment of your debt. China is starting with its Belt and Road Initiative and with its other investments will make productive loans with a forecast saying, can this loan be repaid out of the economic surplus that it creates for the loan recipient countries?

1:28:11If it's a loan to build their ports or railroads or infrastructure, will this enable their productivity to go up, their factories or whatever we lend for, will their productivity go up enough for them to afford to pay the nominal interest charge that we have and to repay the principal? If we make a wrong, overly optimistic forecast and it can't be paid and the country says, well, we can't pay this loan without cutting back our employment or selling our assets, then the International Clearing Union that China will be a member of will say, well, we'll have to forgive this debt. It didn't work out for both sides as they hoped.

1:29:07That would be the guiding moral philosophy. Well, here you have something that takes the place of the technological determinism that was supposed to guide all of history for the last century. You have, in addition to the materialism, that said, well, history is going to be described by the most productive, efficient, low-priced economies, but where is the moral element of all this if the leading industrial economies end up at the top, and if the cost of impoverishing, the rest of the world won't go along with this. And they say the polarizing effect of the kind of technological determinism that the Western nations are promoting is not a viable solution to us because it deprives us of our national economic and political sovereignty and our fiscal sovereignty.

1:30:20So these are the terms on which we will join your group. But the creditor countries like China will have to take the land, and certainly Iran and Russia, if they say, well, we can't lend you the money, build infrastructure, but we can supply the oil and the food, and raw materials that you need to help you grow. And the gain for the world will be in world peace and avoiding not only the military expenditure on armaments that the whole West is devoting all of its GDP growth to these days, but the threat of war, just outright destruction of the economies that's being threatened by the U.S. belligerence of the Biden and the Trump administrations and presumably whatever is going to be taking their place in the near term future.

1:31:32I'm guessing that you might not think that China is a role model when it comes to, let's say, suppression of free speech and protests and some of its more totalitarian elements. But at least in this way, it's a model as a foil to the United States' belligerence, as you just described it, and that following its model could help with world peace. Well, China's under the same threat that the Soviet Union was under after its revolution. The United States immediately tried to have covert destabilization. Europe had the same constant fight against internal destabilization, false flag operations, Operation Gladio, and much of what's called totalitarian is defense, but there's something way beyond it.

1:32:38The Western idea of totalitarian misses the whole point of what makes Western civilization different from Asian civilization. The Western civilization broke away in the 8th century BC, after the Dark Age ended, the Mesopotamian Bronze Age led to Greece, Rome, and ultimately all of Europe and America. The Western civilizations never had a central emperor or pharaoh or divine king like Babylonia, Egypt, and China had. Western civilization has always been run by an oligarchy. And before that, the whole takeoff of civilization before the first millennium BC was similar in all countries. There was always a guiding ruler whose task was to restore order when it got out of balance.

1:33:51What the Babylonians recognized and the Egyptians recognized and the Chinese recognized was that every country needs credit in order to operate, but one person's credit is another person's debt. And there's always an interruption. There's always something that prevents the debts from being paid. It can be a drought or a flood or a war. And in China, under Confucianism, the job of the emperor was to keep the population satisfied, to keep them from revolting. Because if they're revolting, they're going to run away. they'll go to some other territory. And if there's a revolt, that means the emperor has failed in his duty.

1:34:48The same thing in Babylonia, where it's very clear. Every king, and we've discussed this in our earlier shows, where I've discussed the Babylonian takeoff, the kings always begin their reign saying, you know, there's been a lot of disorder in the last reign. There have been people who have built up debts. There's been inequality. Some people have fallen into bondage. Some other families have lost their land. We're going to cancel everything. We're going to restore a well-balanced economy. And our whole economy has to be well-balanced. every economy tends to get out of balance. There is no such thing as market forces automatically assuring economic balance.

1:35:38Market forces ensure economic polarization once there is a result of credit or a result of monopoly or a result of crime or all sorts of other developments. So the rulers recognized that they had to prevent a domestic oligarchy from gaining control of the policy of Babylonia or Mesopotamia and the rest of the Middle East, or China that had the same kind of debt cancellations, or China that always subordinated the oligarchy and wealth-seeking to the public good. And the whole ethic of archaic society, as anthropologists have shown, such as David Graeber, is mutual aid, that you had to support mutual aid to prevent families from falling into dependency, into bondage, and bondage to an oligarchy that tended to be subject to what the Greeks recognized as wealth addiction, that once people have begun to gain money, there's a kind of money love that's developed.

1:37:08A whole vocabulary was developed in classical Greece about this. to realize that money love and addiction was a problem and the job of a ruler, whether it was an emperor or a pharaoh or a divine king, was to prevent an oligarchy from developing. And in addition to the king that was supposed to rule on behalf of, say, the sun god of justice, you had Nemesis, who was protector of the weak and the poor, punishing arrogance. Arrogance means abusive power, abusive wealth to turn it against the non-wealthy, to turn the other clients or borrowers into dependents and bondservants. So that was the whole ethic throughout all of Asia.

1:38:05And right now, the United States said, And China, by having a strong state that prevents monopolies from developing, that prevents a private financial sector and banking sector from developing and taking over the economy, as we Americans that hope to play a role in, that's an autocracy. Well, the autocracy is doing exactly what industrial capitalism hoped that a strong state would do to promote industrial capitalism, a regulatory state with progressive income tax to prevent an oligarchy from developing, with antitrust regulation, with taxing away land rent and other monopoly rent, with keeping natural monopolies in the public domain to be run as public utilities to benefit the economy as a whole, not for private owners as you have under Margaret Thatcher, who pretty much destroyed the English economy, although it was one-upped on that by Tony Blair of the Labour Party.

1:39:24There's a whole different ethic of Western civilization compared to Asian civilization and archaic, you know, all primitive societies could not afford a wealthy, wealth-addicted oligarchy from developing and impoverishing the rest of the economy or citizens would have simply run away. And that was recognized as a universal problem. Runaways, you had to keep the population happy. Well, the oligarchy in the West has tried to prevent any kind of democratic pressure to preserve a strong enough state to block its abusive power. And when other countries do create such a regulatory framework as China has created and as the whole 19th century seemed to be moving towards socialism before it was a bad term, well, you're now seeing this cultural difference expressing itself as a geopolitical break.

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1:41:19So your vitals app, now with heart rate variability, can tell you when something is off. And your readiness score can let you know when to rest and when to push. Hear the story in every heartbeat with Apple Watch Series 12. The features described are for wellness purposes only and not for medical use. iPhone 11 or later required. Based on Apple-conducted study of heart rate accuracy, August 2026. Visit apple.com slash applewatchseries12. something that struck me one of one of your comments was that the emperor's job was once to prevent revolt and i mean today all you need to do is think a little bit back to january 6th where um our emperor was perhaps uh not just trying not to prevent revolt but encouraging it I was thinking the other day about how, you know, now that drones are so prevalent, let's say there were some big uprising in a city like New York or Chicago.

1:42:19all that would have to happen and I'm sure that this is already a possibility is sending out a few American protection drones that shoot from the sky a few protesters and then that whole rebellion is just quelled immediately and everybody runs home because people are so terrified of something like that. What do you think happens in today's world when somebody like Donald Trump or Xi or Putin no longer has to placate the population at all? Well, you're saying automatic intelligence or drones will do what General MacArthur wanted to do to the bonus marchers who marched on Washington wanting their army bonuses in the depression.

1:43:10and MacArthur wanted to fire machine guns on all of them and kill them all. This policy has been supported. You will never have difficulty finding an armed forces willing to use this kind of tactic. I don't know what the population would do. A lot of people would probably leave the country. America was settled by immigrants who fled the fight for freedom in their own countries to come here because they didn't want to die for it. Well, a lot of Americans might think, well, where am I on the list? Well, I suppose what I'm asking more is, how do you think economic policies would change if this were the case, where Donald Trump, for instance, did not have to worry about unemployment numbers?

1:44:01You'd have crime. The solution to unemployment, crime has gone way up in New York. It's very hard to get on every subway. There are homeless people sleeping, taking up the seats in New York. It's already making cities unlivable in the United States. Most cities in America don't permit homeless camps from occurring. So all I can imagine is robbery, attacks, people going crazy. Well, I mean, that's one of the points, though, is that if you have drones with the capacity to police the streets and shoot people who are committing crimes, that's also blocked. But You also raised a crucial danger that connects to this idea of China as a model.

1:45:01If other countries escape American creditor dominance and then become dependent on China, what is to prevent China from using that dominance against these other countries? How will this dominance be expressed? I don't think China—there's no democracy or representative government can afford a military takeover of other countries. That requires a land army. You can't bomb another country. You can destroy another country, but you can't take control of it, basically. American Venezuela was—that's still going to be up for grabs. And I think Venezuela is hoping on some resolution. So what would Europe be afraid of?

1:45:56I think Europe is almost any country that is dependent for some basic input, a raw material, a computer program, oil or food. of food deficit countries can say, well, we want to shift our land away from plantation agriculture, growing export crops, tropical export crops to Europe, and grow our own grain and soybeans and food supply. So, you know, we won't be dependent on food anymore. All of that was a product of the U.S. domination through the World Bank, blocking our countries from developing family farming along the lines that the United States itself did with its Agricultural Protection Act and all of the Roosevelt's policies that strengthened federal support for American farmers so much.

1:46:54Other countries can begin finally to begin land reform and things like that. Industry is another problem. I'm sure that other countries can say, yes, we want to make sure that we have facilities in our countries so that in emergencies, if there is any problem, we can have always a plan B, always of our own ability, something to fall back on. not just dependent on one country, although obviously China, for the foreseeable future, is going to be the dominant provider of rare earths, of gallium, especially the heavy rare earths, and many other minerals and metals and products that other countries don't want to refine.

1:47:55The great issue we haven't talked about is global warming. The United States is, again, the oil industry runs America's policy when it comes to global warming, and Trump has supported oil and coal against solar energy and wind energy. If America continues to be the big environmental polluter, including the pollution made by its incessant bombing and military activities, then the rest of the world can sort of join in isolating the United States. There's plenty of room, and the United States will resist. There's plenty of room for other countries to pick up the slack that the United States has lost in agriculture, in industry, in technology.

1:48:53And as long as America is a world outlaw when it comes to aggravating global warming and extreme weather by becoming the major polluter, that the other countries will have a lever to help create their own plan B along the lines that I wanted. Well, we're not going to depend on America for such and such a product, cars or whatever they're buying from America, clothing. We can do that for ourselves. So I think there will be an accelerating displacement of imports from the United States by other countries not ever wanting to subject themselves to the kind of dependence that the United States and the West is uniquely imposed.

1:49:50I don't think any other civilization outside the West has ever imposed such kind of an economic dependency. And even Europe has never pushed, has never weaponized world trade and transportation and the monetary system to anywhere near the degree that the United States has done to a quantitative degree, where at a certain point, quantity becomes quality. There's a phase change that the United States has entered that is, I think, morally intolerable for not only the rest of the world, but for the whole principle of civilization. Well, we're getting close to the end of our conversation today. And so I wanted to end on a particular note.

1:50:42The paper, the document that I mentioned earlier, you sent to me before this conversation was titled, Where Does Civilization Go From Here? So what I want to end it with is, I mean, literally asking this question, if some of the things we've been talking about, the Iran war, the debt crisis, the rise of China, if they're really breaking apart this post-1945 world order that we've been living in, what replaces it? What comes next? Well, that's what's to be decided. And when you're asking what will replace it, you're really saying, where is history going from here? Well, for the last two centuries, I think everybody thought of history as being the West.

1:51:33The West is the future. And history is unfolding towards the future. And the future, first of all, was Europe in the 19th century. when its industrial capitalism took off, and then it was the United States after World War I for a century because its population had the highest living standards, were the wealthiest, the best housed, and that seemed to be the model. And what was left out of account was, well, how can the United States or Europe be a model for a country to emulate when what made them so prosperous was their empire, their dominance over subjective protectorates. America didn't have as explicit an empire as Europe had, but it had a financial empire and ruled financially, controlling governments and turning governments and their tax system into collection agents for a cosmopolitan banking and financial class.

1:52:50So people realize, well, wait a minute, this kind of model for where history is leading has led us to a dead end. We've seen where it's led. It's led to polarization for other countries. Not all countries can have an empire. That's because an empire has dependencies. all arrayed around an empire. So it's, you know, what seemed to be the force of materialism, of almost a Darwinian natural selection for, well, who are going to be the richest economies. All of a sudden, you're finally having a reversion to a moral context for all of this. I think in the 19th century, it was called a religious awakening.

1:53:40or a great awakening and had a religious context. Well, we're not in a very religious world anymore, except for religions that want to kill everybody who's not their religion. So we're in a secular world. But the moral principles that civilization should work in a way that treats all humans, all countries, as sovereign countries, not to be interfered with. subject, if there's going to be wars, there have to be rules of war so that you can't bomb civilians, you can't indulge in gratuitous sadism, such as you're seeing today in the newsreels, certainly on the internet regularly for what's happening in many parts of the world.

1:54:33you're having a moral awakening that questions, is getting rich the whole thing? Well, this happened in antiquity, and that's what brought an end to the Roman Empire. There was a revulsion against wealth, not only in Christianity, that said we have to support the poor, we have to elevate them. But Islam was the same way. And in Persia, you had a whole religious revulsion against conspicuous consumption and wealth. And all of a sudden, it became de classe to be an aristocrat, to be wealthy, to be a creditor, to indulge in usury, indulge in commerce. I think that that revulsion against wealth can find its counterpart in a similar revulsion today against the wealthy countries and what they've done to create a travesty of the directionality of history.

1:55:44The directionality of history did not lead to Donald Trump. And it didn't lead to the Biden administration. Trump didn't detract it. Biden and Trump and Obama and the Clintons were all part of this long trajectory. And it's been a false model that has diverged from the promise that industrial capitalism had when it was revolutionary. And it said, everybody should be productive so that it doesn't have a false, needless cost of production by a rent-seeking rentier class. And that was the essence of classical economics. A free market was a market free from economic rent, not for rent extractors, not for landlords and creditors and monopolists to make as much money as they could.

1:56:41So all of that, the idea of what a good society looks like is not going to be the kind of society that academic economists describe. There's something much more than economics, and it's the moral context. And I think that's going to be what the discussion and the politics of most of the rest of the world will be. And I would expect this same politics to be spreading to the United States and even Western Europe, uncivilized as it is, to try to say, well, there is an alternative to the detour that Western civilization took away from the whole start of civilization in Asia before it became oligarchic in character in the West and militarized.

1:57:38and all of that. History has become untracked, but we can retract it, restore it, by combining this moral element of, you want to support the whole population. You want every citizen to be self-supporting. And if for any reason, whether it's disease or injury or whatever loss of family members, it's the job of society, support everyone, mutual aid. Well, that was what Ibn Khaldun, I think it was at the 14th century, wrote about. And he was very influential on the 18th century anthropologists of Scotland, David Hume and all sorts of others. You're having a whole return to putting economics back in the context of social analysis.

1:58:38And that had occurred in the late 19th century in the United States, when most American economists had been trained in Germany. They came back to the United States to teach, especially in the business schools and the state universities. And they realized that the kind of free trade liberal economics taught in the prestige universities, Harvard, Yale, Princeton, wasn't reality economics. And so they joined together and they left the American Economic Association to create the American Sociological Association. But unfortunately, the anti-government, the free market libertarians did to sociology what they have done, the Chicago School did to economics and made it simply an analysis of status, not much more.

1:59:37And the same thing with anthropology. They trivialized it all, not to deal with really how civilization developed, but let's talk about how civilization didn't develop and isolated communities and localities that are left behind. All of this was a kind of westernized view, and all of that now is being seen as very provincial in character and a great step back from what was recognized by the best writers of antiquity, Plato, Aristotle, and by the leading Asian religions. You said that the question of where civilization will go from here is to be decided. But just let's finish with this. Could we make explicit what the most probable trajectories are you see for the United States in particular?

2:00:34It's almost inevitable that countries cannot afford to pay their dollar debts and avoid economic depression, unemployment, and a close down of their industry as the energy crisis and food crisis peak towards the end of the year, no matter what happens in the interim in Iran. There has to be a break from the world order. Other countries are pulling back their gold supply. They're withdrawing. When nations and their central banks are gaining international wealth, they're not using it to buy IOUs from the U.S. Treasury. They're buying gold or they're investing it in each other's currencies. And they're developing new.

2:01:32The end result is to institutionalize this. They're going to need a replacement organization for the IMF to realize that any solution of imposing austerity and economic depression on debtors is unworkable. That's bad economics. You need a different international financial institution along the lines that Keynes supported. The World Bank that has been run so often by American military leaders has to be replaced by an international banking organization, and I think there already is, a BRICS bank designed to promote the economic self-sufficiency and self-dependency of countries instead of dependency on the United States and its client satellite countries.

2:02:34And ultimately, you're going to need to transform the United Nations itself to give it powers that it was never given in 1945 to enforce the United Nations Charter. However, the United Nations doesn't have an army, and the Americans and satellites have veto power over any action by the United Nations, the power to block any world trade organization from penalizing the United States for a flagrant violation of international trade law. There's no way of punishing the United States. There's no international court that has rulings that oblige other countries to impose economic and other sanctions on the United States for its participation in genocide, its illegal wars, its illegal trade policies, all of the violations that it's done against the United Nations Charter.

2:03:45So this may require, it'll certainly require moving the United Nations outside of New York because the United Nations is not letting delegates to the coming meetings next week if the United States doesn't like the politics of these delegates. Trump has ended the United Nations, and the head of the United Nations forecast earlier this year that the UN in New York was going to go bankrupt in August because the United States isn't paying its dues because it doesn't like a lot of members of the United Nations. Well, obviously, the UN didn't go bankrupt, but this is a threat that I think is forcing the removal of the United Nations outside of the United States and outside of the Western Hemisphere for the same reason.

2:04:39Thank you. I'm not sure where it'll be, but there will be a whole restructuring of the institutions that shape world civilization in very much along the line that the United Nations Charter said was the ideal that had been developed by Western civilization, to be sure, ever since the Peace of Westphalia in 1648. Right. Every country has a right to its national sovereignty. And this entails economic self-reliance, economic sovereignty, sovereignty to trade with who you want, to invest your savings with who you want without fear of military attack. and if there is military attack. As I said, subject to rules of war that spare civilians.

2:05:31All of this need, stating it in law was not enough because the law and the courts are simply not obeyed. So there needs to be an actual active political alliance to say here is what we believe to be the direction in which civilization should be moving toward the future. It should be moving along these lines toward the future, and there are moral lines above all, and we will try to have the technology, including information technology, including energy technology, and war making, all subject to this higher moral principle of guiding civilization. That's what other countries are going to call for.

2:06:25There are going to have to be leaders calling for this in every country. And somehow, they always seem to arise when needed. Well, Michael, as always, it's been such an immense pleasure talking to you. And I am looking forward to doing it again soon. And I am sure we will. thank you very much for having me Robinson