Michael Hudson: War on Iran Is Fight for US Unipolar Control of World
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From Empire to Exit
By Michael Hudson | June 24, 2025
Why the Global South Is Rejecting America's Rentier Capitalism
June 19, 2025 | By Glenn Diesen
GLENN DIESEN: Hi everyone and welcome. Today we are joined by Michael Hudson, Professor of Economy, to discuss the strategies for the American Empire. Now when we look at empire we tend often to look at military capabilities and deployment but as we know empires also require an economic foundation. So to explore this we're gonna look into one of Professor Michael Hudson's great books, that is Super Imperialism, the economic strategy of American Empire. So I will put a link to the book in the description. So please make sure to have a look and yeah welcome back to the program.
MICHAEL HUDSON: Thanks for having me Glenn.
GLENN DIESEN: And yeah after we address the, we'll look at the economic strategy for the American Empire, would be interesting to get your take on how some of these economic foundations are, well, less stable now than they were when your first version of this book came out. But I thought a good place to start would be how you see the, well, what you name one of the sections of your book, the birth of the American World Order. What is the foundation for the economic strategy of the American Empire?
MICHAEL HUDSON: Well, the Americans never attempted, apart from the War of 1898, they have not attempted military overt colonialism in the sense that Europe did. It has turned out to be financial colonialism and financial imperialism. And the actual attempt to create an empire as such wasn't really implemented until 1944 and 1945 when World War II ended. But the roots of all of it were found at the end of World War I, when the settlement of World War I ended up imposing American demands for repayment of the war debts that the United States had lent to Britain, France, and other allies before the United States had entered the war.
Well, when the war ended, the Europeans expected what would be normal practice and what was the practice after the Napoleonic Wars, for instance, that the Allies would forgive the debts to each other because this was all supposed to be part of the war effort, not only supplying armies, but supplying the funds, the money to buy the arms. But the United States said, well, we agree with you. Of course, we will not think of charging you for all the expenses of the war once we entered it on your side against Germany. But before we entered the war, that was something else. We were a neutral party, and we expect you to pay the war debts that you took on. A debt is a debt.
Well, the Allies then turned on Germany and said, Well, we don't want to have to pay the debts to the United States. Quite frankly, we don't have the money to pay the debts that the United States has calculated that we owed. We'll make Germany pay reparations. And by 1921-22, when all of this was set up, that essentially became the rule.
So I have to say that Europe was somewhat complicit in this. All of the European countries, including Germany, believed that a debt was a debt. And if that was the official debt, if it was the reparations imposed on Germany to pay for the war by the Allies against it, was clearly beyond its ability. All of the parties in Germany, even the Social Democrats and the anti-war parties, agreed that the debts had to be repaid.
Well, we know the result. Germany had only one way to pay because it had lost its main, most productive steel industry, its lands, Alsace de Lorraine. It was financially crippled by the Versailles Treaty. And the only way that it could pay the debts were to throw Reichsmarks, its currency, onto the foreign exchange market to buy the dollars, what ended up the dollars, to repay its debts to the Allies that the Allies simply passed on to the United States as their payment of the inter-ally debts. Well, the result is that Germany had a hyperinflation. The United States didn't want to enable Germany to earn the money to pay the Allies, to pay its, because that would have threatened American industry.
So the United States passed a tariff against importing currencies with depreciating currencies, namely Germany. So Germany was left without any way of paying. What happened was the American investors lent German cities and local states money to borrow. The cities that borrowed their dollars in order to fund their own local budgets turned the dollars over to the Reichsbank. The Reichsbank used these dollars to pay the Allies, and the Allies paid the United States.
So what was established was a circular flow, and it was all based ultimately on the demand for gold. And America's buildup of international power between World War I and World War II all reflected its increasing power of gold against which all of the major currencies were convertible. And during, by the time that Germany collapsed into Nazism, there was a massive flight capital out of Europe to the United States that led to the U.S. gold supply growing even more. So that by the time World War II ended, the United States controlled the great bulk of the world’s monetary gold. And because Europe was devastated, the United States was also in a position to dictate how the international trade and financial system was going to operate upon the return to peace.
And so the United States used its power to create the International Monetary Fund, the World Bank, international trade organizations, and bilateral diplomacy, basically to very quickly absorb what had been the British Empire. The United States had kept the sterling afloat by lending sterling the money to balance its international payments and recover after World War II. But the condition was that Britain had to open the sterling area to let India and other countries that had built up their gold, their sterling balances during World War II to be able to spend these balances, not limited to British industry, but to the United States. And so the United States basically, there were a number of plans to try to, by John Maynard Keynes, to create some assurance that the post-war order wouldn't be so unbalanced that all the gold and all the power would flow to the United States. [Editor's note: The "British empire" remains very much intact.]
The United States rejected them. And they created the IMF and the World Bank basically to serve U.S. national interests. I don't know if you want me to go into the details. For instance, the World Bank was supposed to lend other countries money to develop their economies. But first, Europe and then what are now the Global South countries, they were called developing countries at that time.
But the World Bank policy from World War II ever down to today was not to provide loans for countries to be self-sufficient in any kind of commodities that the United States controlled. And the United States balance of payments since World War II has been, was based very largely on food exports as well as control of the oil industry, as we're seeing today. And so there was no attempt at all by the World Bank to follow the recommendations of its own economists.
The World Bank undertook a series of country studies and every study that it did of Latin America or the Middle East said, well, you have to have land reform. You have to enable farming to do in these countries what the United States did in the United States with its Agricultural Adjustment Act, very strongly organizing government support of farming to support grain to become independent and be able to feed yourself. That was a prime aim of self-sufficiency historically. The United States, the World Bank basically made loans to finance international trade dependency on the United States, and that was where the International Monetary Fund came in. The monetary fund applied the same self-destructive economic philosophy that the United States and Europe had followed after World War I.
Please go to michael-hudson.com to continue reading.
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The British hand:
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