Michael Hudson on the Iran war, energy weaponization, and the collapse of the Western-led economic order
Glenn Diesen interviews economist and professor Michael Hudson on his YouTube channel.
Summary
Glenn Diesen interviews economist Michael Hudson about the economic and geopolitical consequences of the US-Iran conflict and America's broader energy war strategy. Hudson argues that negotiations between the US and Iran are structurally impossible — not merely difficult — because Congress has prohibited any return of seized Iranian funds, and Iran has been deceived by the US too many times to accept promises without advance concessions. He contends that the coming war will trigger oil prices above $150 per barrel, collapse chemical and fertilizer industries globally, and produce a financial crisis worse than 2008, compounded by the fact that Western economies are already so debt-leveraged that central banks cannot print their way out. Hudson frames the entire episode within a century-long US strategy of controlling global oil supplies to maintain dominance over other nations' economies — a strategy he argues is now being applied simultaneously against Iran, Russia, Venezuela, and China.
Key Takeaways
FULL TRANSCRIPT
Opening: Can the US benefit from high energy prices?
Glenn Diesen: Welcome back to the program. We are joined today by Professor Michael Hudson to discuss how the Iran war is affecting the global economy. I've heard from some people that while energy prices are high, the US could actually benefit from this because other countries would have to pay more money for American energy. This would also mean they would have to pay in dollars, so it would strengthen the petrodollar. On the other hand, I can't help but think that this doesn't sound very sustainable — that with war and energy shortages, it would trigger more of a global depression. So I just wanted to get your overall view on this: how do you see the Iran war affecting the economy?
Michael Hudson: I'm glad you asked the question in the broad sense, because no matter what — even if there were no war at all — energy prices are going to be very, very high at least through the rest of this year. And this is if there's no war, because there's already a long delay.
The real problem is, of course, that there's going to be a war breaking out very soon — probably by Monday, maybe by Sunday. There have been no real negotiations at all. In fact, it is impossible for any of these negotiations to have any effect on the military situation or the peace situation. One of the absolute requirements — a precondition — is that Iran says the United States has to begin releasing some of the bank funds and the money that it has confiscated. Most recently, the stablecoin — many billions of dollars that the United States has intervened and grabbed — which essentially makes stablecoin a very unsafe investment for any country whose government may pursue policies that the United States believes involve too much self-sufficiency, too much autonomy, to tolerate.
The United States cannot possibly agree to return any money at all to Iran because Congress has already said — through South Carolina's Lindsey Graham and also Texas Senator Ted Cruz — "not one penny for Iran," claiming that Iran is a terrorist country for responding to Israeli terrorism by defending itself. The defenders are called terrorists, just as when Ukraine attacks Russia ever since 2022, the Russians are called terrorists for defending themselves. Just as the Palestinians are called terrorists for defending themselves against the Israeli genocide. Just as Hamas is called terrorist and Hezbollah are called terrorists for preventing Israel from bulldozing and destroying the whole south of Lebanon, which was largely Shia — not Sunni, and not the Christian Phalange leadership.
So, given the absolute right-wing neocon anti-Russian, anti-Chinese, anti-Iranian feeling of the Congress, any agreement that Trump's negotiators might achieve with Iran could never be put into practice anyway. And Iran has been lied to so many times by the United States — or the United States has simply gone back on its word, like Trump annulled the Obama administration's atomic weapons contract — that it's not going to make any concession at all until such time as it gets something in return in advance. It's sort of like an author going to a publisher: the advance you get from a publisher is all the money you're really ever going to get in practice. Well, that's what Iran says. They don't expect the United States to live up to any deal. But if Trump can somehow give them some satisfactory negotiated portion of the hundred-billion-plus dollars that it's grabbed illegally from Iran, then it will make some concessions. But the concessions are nothing at all like what Trump has announced.
The stock market illusion and the coming attack
The announcements by Trump and Hegseth have only one purpose: to achieve what they've achieved this morning on the New York Stock Exchange. Stocks are up, bonds are up, prices are up. There's a belief that somehow there's going to be a peaceful negotiation. There's a fortune to be made when the markets open Monday or Tuesday — or whenever the response comes, with the US telling Netanyahu, "All right, it's okay to attack now."
In the last day or two, the war secretary Hegseth has talked to the heads of Oman and Qatar and said, "Well, if you, Oman, don't agree not to join Iran in imposing fees" — which is Iran's means of at least beginning to obtain some reparations for the illegal attacks done against it — "then we're going to let Netanyahu kill you." And apparently the Omani negotiator simply hung up the phone and made a complaint to Trump, saying that when you're negotiating and you say "either you agree with us or we'll kill you," this stops all negotiation.
And that essentially is exactly what the United States has told Iran. If you don't negotiate, as President Trump has said again and again in recent days, "We're going to destroy you like no country has ever been destroyed before." So Iran is all ready for this. It is going to destroy all of the military bases of the United States in the Middle East, including the largest military base in Israel. And you can expect that this is going to be the peak of the war that has been building up ever since Trump took office a year and a half ago.
The economic consequences: depression worse than the 1930s
And of course what this is going to do is create such a shortage of oil, of fertilizer, of sulfur, of chemicals, of helium, that the world is going to be plunged into a depression that is worse than the 1930s. The initial effect, according to ExxonMobil — the old Standard Oil monopolies — is going to push oil prices up to over the $150–$160 a barrel range. This is going to force the closing down of much of the chemical industry throughout Asia, the Global South, and Europe, and it will block fertilizer exports. So this is going to reduce agricultural yields, on top of the fact that this summer looks like it's going to be one of extreme weather. So you can expect food prices to soar and industries to close down.
One effect of the manufacturing and chemical industries closing down is that the demand for oil will decrease — it's called demand reduction — and the price of oil may fall back to maybe $120–$130 a barrel. But there's going to be large-scale defaults and bankruptcy. And that's going to turn what is a technological and direct industrial depression into a financial crisis, because the economies throughout the world — from the United States to Britain to continental Europe — are so heavily debt-leveraged that it takes only a small amount of declining revenue to prevent companies that have been taken over by private capital and other highly debt-leveraged industrial companies from defaulting on their bank loans.
There has been a rising market in collateralized debt obligations. These are the gambles, the casino gambles, that essentially caused the bank crisis and the failures of insurance companies and other players back at the end of 2008. We're in a replay of all of that, but this time there's no way of getting out of the financial depression by having central banks simply create more credit, because there's already so much credit given to these companies that the economies are loaned up. Banks are not willing to continue to lend their industrial customers, their private capital customers, their financial customers, their real estate customers, and their agricultural customers the money to pay the interest. That would be to turn the US and European economies into a Ponzi scheme — you keep lending money and you hope that this money you're lending to creditors is going to keep the real estate market and the stock and bond markets afloat, so that banks don't have to show negative equity on their balance sheets as they were doing at the beginning of 2009.
So you can look at this as a replay. And it's amazing that the markets haven't seen this. You could see it from the very beginning, because when Trump said nothing will happen until Iran agrees to turn over all of its atomic weapons, this is the same pretense that led George W. Bush to go to war with Iraq. There were no weapons of mass destruction. The national security agencies of the US have said Iran has made no move to achieve an atom bomb for the last two decades. So when Trump says all of this is to protect Europe and to protect the world from Iran's atom bomb, this means we are purposely putting in a red herring that cannot be solved — we might as well ask Iran to turn over the flying saucers it allegedly has. It's bizarre. It's not a deal-breaker because there's no deal. It's a deal-preventer from the beginning.
Why sanctions have failed and why time favors Iran
The United States apparently thought that time was on its side, and that the sanctions it had imposed on other countries to block them from trading with Iran would somehow starve Iran into submission. Well, that policy has not worked since 1979 when it was first put in place by the Carter administration, and it's not going to work now. The whole purpose of this red herring is just to prevent any kind of serious negotiation. But America for some reason wanted the illusion that it was trying to negotiate peace, and then it's trying to provoke Iran into making some kind of defensive response against a US probe that is going to be construed as "America's only reacting to Iran's terrorist attack" — by our own bombers, or the Israeli bombers, or whatever the United States has up its sleeve for this Sunday, Monday, or sometime next week.
What's so surprising from a military point of view is that this is the same kind of stalling you had with the Minsk Accords between NATO and Europe, when the Minsk Accords asked for a cessation of hostilities — just as Trump is asking for a month or so cessation of hostilities. Well, in the Minsk Accords, the whole idea was to enable NATO to rearm Ukraine to fight Russia. So the stalling was on the side of the United States and its NATO satellites. But this time, time is not on the US side, because the US has its whole navy all there. It has its refueling airplanes apparently in the Emirates, all ready to take off and fuel the air attacks that are planned. Well, it's obvious that the Iranians have their plans about this. They're ready to retaliate. They have used this time to actually arrange their diplomatic ties with Russia and China and to prepare their military, while the United States Navy and Air Force are baking in the heat of the Middle East. So time is on Iran's side, as it has been for the last few decades. The United States cannot achieve by sanctions anything it hasn't already, because Iran has got used to living with them.
International law, the Strait of Hormuz, and the collapse of the UN system
You're going to have essentially a no-deal. The final demand the US is making is claiming that Iran's attempt to impose transportation fees on ships going through the Strait of Hormuz is against international law. But the big picture for everything we're discussing, Glenn, is that there is no international law. You've already seen that. Last year, you saw American planes bombing Venezuelan fishermen and Colombian fishermen on the west coast of Latin America, saying that for all we know they're carrying drugs. That's against international law. There's zero evidence that they were carrying drugs, because the boats were attacked without warning, without any attempt to say "stop, let us board you, let us look to see whether there are drugs." And in fact, it turned out they were indeed fishermen.
Well, this week, America began to attack Arab and other fishermen in the Strait of Hormuz. For many centuries it was a fishing center — it was a pearl fishing center, a thriving maritime center. There are apparently photographs showing that these were indeed fishermen with fish on their boats. The United States said, "Well, for all we know, they're really laying mines. Maybe these fish were mines made up to look like fish." The claim is that what any civilian is doing might be military — just as Netanyahu has said any Palestinian civilian person may be an enemy, because of what we've done to them. We've made them so angry at us that we've made every Palestinian an enemy. Therefore, we are permitted to kill all Palestinians in self-defense, because they're defending themselves against what we've done to them.
This is the fiction that is framing the whole US side of the discussion, and it's been repeated in much of the European press. The ultimate basis for all of this in international law is the United Nations Charter, but the United Nations is one casualty of the war with Iran and NATO's war against Russia. The United Nations has been unable to impose any of the laws in its charter. It's been unable to have any army of its own, and in fact it's been taken over — or blocked rather — by the United States with its veto power through the Security Council and its European satellites.
So what can the rest of the world do? I'm surprised that just as the stock markets throughout the world don't realize that there is an absolute break, the politicians of other countries throughout the world have not seen that if we're going to have a road to peace, we have to create a new United Nations — not a new charter, but a new organization independent of the United States. Well, the only kind of organization that can have a prototype for this would be one whose leading members are China, Russia, and Iran.
The re-emergence of what Hudson calls the logic of Nazism
I want to point out that the United Nations Charter warned that if Nazism were to reemerge in Japan and Germany, then other countries were permitted to take all necessary measures to stop it. And I assume that any treaty that Iran would sign would have to specify the consequences of Israel attacking one of its neighbors or Iran. Again, it has to stop ethnic and racist genocide. This is not the same kind of Nazism that you find supported by Germany and Britain now in the war against Russia — the racist claim that Slavic speakers are subhuman and cockroaches. This is word for word Netanyahu's claim that the Palestinians and the Arabs are cockroaches. This is the same claim that the Sunni head-choppers in Syria under al-Jolani are claiming under the Wahhabi system: we have to kill all of the non-Sunni people.
You have this US-backed resurgence of everything that at the end of World War II was looked at as the essence of Nazism — the essence of an attack on the principles of civilization itself, as if all human beings, regardless of what language they speak, are human beings. Not that if you speak a different language, you are subhuman. And therefore, international law only applies to human beings, not to people that are under US attack. The US, Germany, the European Union, and Britain have said any country that is under attack is basically immune from protection under international law.
They have this same fanaticism that you had from the Germans in World War II. And if you want to see what would happen under this scenario, look at what happened to all of the Nazis that were hired by the United States in 1945, given protection, sent to Latin America, and essentially steered many of the American client oligarchies and client militaries into the dictatorships that have stunted Latin American development for the last 80 years.
This is essentially what — it's as if the world is now fighting World War II all over again. Once again the European attack on Russia — not this time only by Germany, but pulling along the whole European Union and Britain — and also the US backing of Japan to have new nuclear weapons to re-attack China as it did in the 1930s. All of this, if you look at the alignment, is a replay of World War II, as if the United States and Europe are saying: we've decided that the wrong side won World War II, and we're going to start it over again.
The century-long US strategy of controlling global oil
And in order to achieve this victory over other countries, what you're seeing in Iran is part of the US policy that has been based for a century — as you and I have discussed on earlier shows — on controlling the whole world's oil trade. Because if you can control the world's oil, then you have the power to turn off the electricity, the lighting, the gas, the home heating, the chemicals of other countries that do not trade with you.
The US fight in Iran goes back to the very beginning, 50 years ago, when I was sitting in discussions about all of this when I was working with the Hudson Institute, with the Pentagon and other US agencies. They all had plans for exactly what is happening today in Iran. They had plans to break Iran into five different statelets, starting with Baluchistan — just as is happening today. The US tried to do it through the Kurds; that didn't work. There's some effort to create a crisis in Baluchistan. It didn't work.
So I wanted to put the answer to your question not simply in terms of what is happening this weekend, but what the big strategy is. And when you realize that this strategy has been adopted by the governments of Europe, the governments of the United States and its allies in other countries, then you realize that it doesn't matter what the voters say anymore. The voters in Europe, according to the public opinion polls, are against the war with Russia. They're against the genocide against the Palestinians. They're against the Israeli attacks. And yet Germany and Britain have rules that if you criticize Ukraine — especially if you criticize Israel and defend the Palestinians against this genocidal attack — you can be sent to jail. It's a crime. They've criminalized support for international law as defined by the United Nations rapporteur in her accusations against Israel. They've isolated her personally. They've isolated the judges of the International Court of Justice that have brought essential crimes charges against Israel.
What's happening now is not simply an interruption of the oil trade. It's an interruption of the whole international arrangement of diplomacy that was put in place 80 years ago. The whole world has achieved a breaking point, splitting between the US and Europe on the one hand, and Iran — which has been driven into an alliance with China and Russia — taking the lead on the other. The choice is: what are the other countries, the American satellites that have joined these sanctions against Iran, Russia, and China, going to do? What will the European satellites do? What will the Asian and Global South countries do? That's what is going to require a new form of organization. And this seems to be such a high task that there's a cognitive dissonance about dealing with it. It's just too big a problem to deal with.
Just as looking at the effect of the high energy prices — to get back to your original question — is too structurally disruptive to deal with. Almost all of the economic discussion you're seeing in the European and American press treats this as marginal and temporary, as if you can go back to normal after a few months. And Trump has said in a few months oil prices are going to come down. What is happening is irreversible. Not only is what is happening irreversible, but it has set in motion a whole at-least-half-year, probably multi-year transformation that is going to be irreversible, because it's going to change the whole economic, trade, financial, and military context of the entire international economy.
Swap lines, oil reserves, and the desperation of Western economies
Glenn Diesen: Before you mentioned that time is on the side of Iran, and the US had assumed that time would be on its side — that it could essentially go from this high-intensity war, which became too resource-demanding, and bring it down to low intensity and drag it out. But the gold states appear to be going from bad to worse from day to day. And we heard now about these swap lines being set up. I was wondering how you see this. How would you explain what a swap line is and why it is so significant?
Michael Hudson: Well, you're in Europe, and as I understand it, the European economy is being squeezed just as the US economy is being squeezed. The already-rising oil prices are forcing many families, many wage earners, many employers, and many industries into debt. And the government has been trying to cope with this by giving some subsidies for homeowners and renters and the population at large to be able to live with this.
There's been a wholesale drawdown of US and other countries' petroleum reserves, saying, "Well, maybe we can just run down these reserves — for a rainy day, this is a rainy day." What they don't realize is this is a rainy year, or a rainy two years. It's not a day after which the oil reserves can be filled up. Europe and the United States are following a form of desperation to deal with this. How long can the reserves last? The estimates are 30 to 45 days, and then they run out. And then there's no way of continuing the subsidy of budgets of people who drive cars, who use electricity, of trucks that use diesel fuel, of airlines that use aviation fuel. All of this is going to run out.
So time is on the side of Iran, Russia, and China, and the Western economies are self-destructing — especially in Europe, with Germany, where you have the German leaders and the European leaders in general saying, "We have to be part of this new war. It's the last war we have to win — World War II, for the German-European side. It's the last time we have to fight Russia, because we're getting weaker and weaker, and it's never going to be a less bad time than right now." And so they have to use their national budgets to subsidize a war industry, not their regular commercial industries, not their consumers and wage earners.
And I don't think — this is going to create the same revulsion among voters that it's created in Britain, which seems to be the most desperate economy right now, where you have Britain turning to essentially libertarian, anti-war policies. Just as Germany is trying to ban the Alternative für Deutschland party. Essentially they say any party that is against the war is against civilization. This war to destroy the countries that America says are enemies is a war of civilization. We can ban any political party that is against the war. This is military dictatorship, or an oligarchy — whatever it is, it's not democracy. And yet nobody's really spelling out what this means: how did this takeover occur? How did Europe and other countries — Latin America — come to have presidents and an army and what's called the deep state independently in control of government, where the voters seem to have no ability to say, "Can't there be a plebiscite on whether to have war or not?"
Well, the laws of almost every modern democracy say no — no plebiscite. You can only vote for individuals as head of a party. And these individuals may all have a similar political view about war and peace, and about the economy favoring the financial sector as opposed to the industrial sector. Democracy itself has been closed off as a result of this war.
The common thread: energy wars from Venezuela to Iran
Glenn Diesen: My last question — I want to return to the energy aspect again. If we take a step back and not just look at Iran, this seems to be a common thread in a lot of America's wars lately. For example, Venezuela — before they went into Venezuela, they were quite open that it was not only about Venezuela having to be open for the United States, but it also had to close itself off to countries like China. We then saw the same logic when the US helped to cut off Europe from Russia. Again, the Europeans have some agency — they've done a lot of this to themselves — but the destruction of Nordstream, for example, appears to have been the work of the United States. And we see the same discourse around Iran: many US senators and think tanks are making the point that yes, while there might be a double blockade now, the US still gets its energy, but this is reducing supplies to China yet again. So there seems to be a common thread here about restoring dominance over energy markets. Do you see any cohesive strategy that could succeed, or where are the holes in this strategy?
Michael Hudson: Yes, I spelled out that strategy in articles on my website quite a few times, and the United States spelled it out — I think two weeks into Trump's administration. He said our foreign policy is based on control of oil, and if we can't control the oil of other countries, we will destroy their oil facilities, so that other countries have no alternative but to depend on our weaponization of the international oil trade. That way we can turn off their gas, their oil, their agriculture, and their chemical industry if they do not join the allied side of the US against Russia, China, and any of their supporters such as Iran.
So the United States said: to prevent other countries from being alternative sources of oil — which would break America's ability to weaponize the oil trade and turn off the spigots for the whole rest of the world — you had, as you just pointed out, the destruction of the Nordstream pipeline and the sanctions against trade with Russia. You've had the same problem now with Venezuela. They first imposed sanctions on Venezuela, and then finally they attacked it and conquered Venezuela, and now all of Venezuela's revenue from the oil trade is paid into a bank account in Florida under the personal direction of Donald Trump and his appointees. And that's what the United States wants to do in Iran.
Without Russia, Venezuela, and Iran providing independent supplies of oil, the United States will be able to weaponize the oil trade, just as it weaponized the grain trade in agriculture by imposing sanctions on exports to China after Mao's revolution in the 1950s. Canada broke that attempted cutoff by selling grain to China. The United States is no longer able to achieve foreign dominance by being an industrial power as it was before, or by being a financial power. The only way that the United States can control other countries is by creating chaos — by saying, "We will create chaos in your foreign trade and therefore in your industry," just as Trump did when he imposed his tariff policies. "And we can agree to soften this chaos that we're causing if you'll agree to join our fight against Russia, China, and any country that is growing in a way that uses its economic surplus and its financial surplus to promote its own prosperity instead of transferring this surplus to the United States."
This is essentially the United States as the new robber baron in the world economy, and that is the explicit strategy of US foreign policy. It was all spelled out last December in America's national security strategy report, following up on Trump's announcement a year and a half ago that energy is going to be the key to our foreign policy. It's all there in black and white.
And other countries have somehow lived in the short run — they've thought in the short run. Europe in particular, as we've discussed, has just surrendered to United States demands, and this is crazy. When a country surrenders to US demands for oil or for anything else, the US just ups the ante.
You mentioned earlier that Trump has said the United States can end up as the big winner from this cessation of oil trade. The rest of the world will be in a depression, but we in America are self-sufficient in oil. And we have Venezuela's oil now. We have Canada's oil. We can block trade through Russian oil through the Arctic by invading Greenland, so that countries can't get to the Arctic from the North Atlantic. You had last week Iceland saying, "Well, we've been independent for centuries. Maybe we should join the European Union," and the European Union will defend us against America's attempt to not only take over Greenland but take over Iceland, so that it can control the North Atlantic access to the Arctic through Iceland's vicinity. The whole world is aligning itself for this military conflict all around oil.
Suppressing renewables and the China dimension
And what's happened is that the United States has been using the short-term palliative of selling the oil reserve. The oil reserve has not really kept down the oil price in the United States, because almost every barrel of oil that the US petroleum reserve has sold into the US market — or sold directly to Asian allied countries at a discount — has been matched by US exports of natural gas and oil, the LNG exports. So the US oil companies have made a bonanza by producing low-priced US gas and oil at US costs and prices and selling them abroad.
That's basically what Trump meant, and his policy of trying to maintain this oil lever of control over other countries requires not only blocking other countries' use of alternative sources of oil, but alternative sources of energy — wind power and solar power. So Trump has cancelled almost all of the US investment programs in wind power, because that is a rival to oil in the United States, and he represents the oil industry. He points out that windmill blades are mainly created in China, and China is the beneficiary of wind power — can't have that. Same thing for solar panels: China is the main manufacturer of solar panels. So America is essentially fighting against the climate change efforts by the Paris group and by other groups. It's trying to deter Europe from pursuing solar energy and wind energy. It's trying to lock Europe into dependency on US LNG and oil exports so that it won't have any alternative at all.
Well, of course, China itself has made huge investments in solar energy, especially in its northwestern provinces including Xinjiang. And so the United States is trying to do its usual mischief in China by trying to promote a separatist movement among the Uyghurs. The Financial Times today has a long big read all about how the United States is trying to do that by claiming that this is a fight against Islam — trying to play the race card and the religious card. If we can just divide and conquer, if we can divide populations into different ethnic groups, different religious groups, different political groups, then other countries cannot get their act together and have a coherent response to create an alternative to the US national security strategy — which isn't security at all. It is to prevent any other country from having security, self-sufficiency, and independent autonomy from the United States.
Other countries must remain dependent on the United States for their oil, for their computer technology, for their internet technology, for their arms — including Europe. All of the European arms, largely from the United States, are subject to US repairs, US control, US ability to stop the airplanes with all of the control switches that they have. Europe is completely militarily as well as energy-dependent on the United States. And any attempt to make Europe either independent or able to have free trade with China, Asia, Russia, Iran, or other countries that are not in the US orbit has been opposed by all of the political parties in power.
Can the US succeed, or will the chaos consume it too?
Glenn Diesen: It's interesting to see now that the United States can't really compete in the same way it did in the past — that is, compete economically. We see all this weaponization of dependence. Obviously the energy war strategy being developed is one thing, but there's also these efforts to weaponize and limit access to technologies, which is used against China. Of course, limiting and weaponizing transportation corridors — piracy is now becoming a common phenomenon. Limiting access to banks, the use of the dollar. Even if it'll be successful, it's breaking down the entire international economic system. It's hard to see how the world isn't going to plummet into a crisis as a result of this. Do you have any final thoughts in terms of where this will probably go? Will the US be able to essentially enhance its relative power vis-à-vis the other great powers, or will the chaos it's unleashing essentially consume the US as well?
Michael Hudson: The United States looks at chaos as an opportunity to lock in foreign dependency. If the chaos takes the form of a closedown of European and other industries, then other countries are going to be dependent on the US to somehow rescue them — either by opening the US market to them, by subsidies, or by just imposing their own client oligarchies and client political parties. You can look at the Christian Democrats under Merz as a client party of the United States. You can look at France under Macron as a US client. You can certainly see Britain under Starmer as a US client.
The United States is not averse to seeing this as the end of Western Europe as any possible industrial competitor for the United States. And essentially, it's as if the United States is saying: if our industry is no longer competitive and we're shut down, we're going to make sure that our trading partners are also non-competitive, in order to prevent them from turning to the economies that are still growing with their own self-sufficiency — the trinity of Russia, China, and Iran that's emerging.
So the result is going to be that other countries in the US orbit are going to have to choose. Are we going to be part of the declining US axis, or are we going to try to turn to the part of the world that is not financialized, not under US control, not obliged to turn its economic surplus into US arms purchases for airplanes and missiles that don't work — as we've seen in the fighting against Iran — and keep all of their savings in the form of loans to the US Treasury through their Treasury security investments?
And America's demand that Germany, Japan, Korea, and other countries relocate their heavy industry, manufacturing, chemicals, and computers to the United States — is Europe going to relocate its industry to the United States? It seems so far to have been relocating it into China. Well, the important thing is all of this is being relocated outside of Europe. Europe is in effect committing economic suicide as a result of all this.
To America, this is not chaos. This means that Europe is reduced to the same kind of dependency that Latin American countries have been reduced to ever since World War II and the US support of military dictatorships throughout Latin America — essentially ruled by client oligarchies. For Europe, this requires a political revolution.
The result is not going to be simply a rise in oil prices closing down industry. This closedown, this depression, is going to have the same effect that depressions have historically: a political revulsion, a sense that the current system doesn't work and there must be an alternative.
Well, in the past you could say the Great Depression was pulled out of by World War II. But World War II was a fight of armies, of soldiers. Future wars are not going to be wars of armies. They're going to be air wars. They're going to be fights settled by missiles, bombs, and drones, not by invaders. No country has the armed forces that can ever invade another country again. Invasions don't work. You're seeing the problems even that Russia is having in Ukraine for all this. Invasions don't work. All you can do is destroy other countries — purely destructive war, not invading to create a new government along Western lines, which are now basically the old Nazi lines, as it turns out.
Glenn Diesen: Well, thanks again for your insights. I left a link to your own site in the description, and I would advise everyone to read your articles with increased frequency. So thanks again.
Michael Hudson: Thank you very much for having me, Glenn.