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NY Times is wrong on dedollarization: Economist Michael Hudson debunks Paul Krugman’s dollar defense

Economist Michael Hudson responds to the misleading arguments against de-dollarization that New York Times columnist Paul Krugman made in his attempt to defend US hegemony and the dollar system.

New York Times Paul Krugman dedollarization Michael Hudson

In this conversation with Geopolitical Economy Report editor Ben Norton, economist Michael Hudson responds to the misleading arguments against de-dollarization that New York Times columnist Paul Krugman made in his attempt to defend US hegemony and the dollar system.

Hudson also discussed the ongoing US banking crisis and collapse of four banks in two months in another interview available here.




(The following is a lightly edited transcript.)

BEN NORTON: Hi everyone, I’m Ben Norton and this is Geopolitical Economy Report.

I’m joined by the economist Michael Hudson, a friend of the show, a brilliant economist, the author of many books, and also the co-host of the program Geopolitical Economy Hour here with Radhika Desai.

Today we’re going to be talking about de-dollarization. Michael and Radhika just did a series on the decline in the US dollar system and the move by countries around the world to seek alternatives to the dominance of the US dollar.

Specifically, I wanted to bring on Michael today to respond to articles that were published in the New York Times by the economist Paul Krugman, arguing against de-dollarization, arguing in defense of the US dollar system.

We’re going to look at two articles that Krugman wrote, one in April and the other in May.

Michael, I’m going to start with the article that Paul Krugman published in April, called “International Money Madness Strikes Again“. He has this very dismissive tone in this, saying that it’s “madness”.

And essentially in this article, he creates a straw man, where he says that if you think that the dominance of the US dollar is in decline, that you think that there’s going to be hyperinflation in the United States.

He refers to these people as “Weimarists”, referring to Weimar Germany, where there was hyperinflation in the 1920s.

So he essentially says that if you don’t believe that the US dollar will stay dominant, you believe that it’s going to become toilet paper. It’s a straw man argument.

He also compared the dollar to the British pound. And he said, this is a quote from his article, he says, “In sum, there’s no reason to be terrified of the consequences if the dollar should lose its special international status. But that said, it’s really hard to see that happening in the first place”.

So his argument is that it’s not going to happen, but even if it did happen, it wouldn’t be important, because look what happened in Britain; the British pound was the international global reserve currency, and yet it no longer is, and Britain still is a significant economy, he argues.

So what do you make of Krugman’s arguments?

MICHAEL HUDSON: It’s not a straw man argument; it’s deliberate ignorance. You have to really have tunnel vision and not understand the most basic economic history to make the misrepresentations that Krugman said.

And if I hadn’t met him, and I didn’t know how really stupid he is as a person, I would think he’s deliberately lying, but I have met him and he really is that stupid.

In my [book] Super Imperialism and my book Trade, Development and Foreign Debt, I explained the Weimar inflation.

Every hyperinflation in history has come from an attempt to pay a debt in a foreign currency. When Germany was saddled with reparations debts in the 1920s, it owed dollars and sterling and French francs.

The problem is that the United States and other countries immediately erected tariff barriers so that Germany could not earn the money to pay the foreign debts. The debts were way beyond Germany’s ability to pay because the European governments wanted to punish Germany.

So Germany made an attempt to print Reichsmarks, throw it onto the foreign exchange markets in a desperate attempt to buy the dollars to pay the allies, England, France and other countries, who then would take these dollars and they would pay the inter-ally debts that the United States insisted on for the arms that they had sold Europe before America entered into World War I.

So the hyperinflation collapsed the exchange rate of the German mark. And, as the exchange rate went down, that meant that import prices went way up.

So first of all, the exchange rate went down, then import prices went up and import prices were an umbrella over the general price level.

And then the Reichsbank had to print more domestic currency in order to enable the economy to buy and sell food and other basic needs at the higher prices that were all being forced up as a result of trying to pay foreign currency debts.

Well, the United States doesn’t owe a foreign currency debt. America’s debts are in dollars and it can always print them. It doesn’t have to throw them on the exchange market to buy rubles or yen or other currencies.

So Krugman doesn’t understand the difference between paying a domestic debt and paying a foreign debt. And that’s because he doesn’t understand foreign trade.

If he understood foreign trade and debt, he never could have won a Nobel Prize. A precondition for winning the Nobel Prize is not to understand how international finance works so that you can act to preserve the kind of financial superstition that’s taught in the universities like the University of Chicago.

And under the monetarist views that are taught in Chicago and parroted in the New York Times and the Wall Street Journal and the other major media, the governments print too much money, usually to pay workers or to pay social security or social purposes, and that increases wages and that results in inflation and that makes the currency decline as inflation makes exports less competitive.

This gets the whole system in reverse. The problem doesn’t begin with the government just creating money to spend domestically.

It starts with foreign debt and trying to pay debt beyond the ability of a country to earn the foreign exchange, the dollars, in which its debt is denominated.

And if you don’t understand that, the government should take away Krugman’s PhD on the grounds that he doesn’t know what any European historian would learn or anybody who’s read what I’ve described in Super Imperialism.

I’ve written books about this very phenomenon. Needless to say, I’m sort of the name that must not be spoken when it comes to talking about international financial crises.

So Krugman’s misrepresenting the Weimarist and hyperinflation to begin with because he doesn’t want the government to spend money domestically on social security, on labor, on social spending.

He wants it spent on, as he said again and again, we need the money to spend in Ukraine. We need the money to fight Russia and China. He’s become a neocon, which is why he’s on the editorial page of the New York Times.

And you can just look at whatever he says as the product of an ignoramus who’s become a neocon and is a useful idiot to convince people that, well, we’ve given him the Nobel Prize, sort of like the emperor’s new clothes, to somehow legitimize his wrongheadedness when it comes to how inflation works, how economies work, and how the balance of payments work.

So then we get into what you said, the dollar’s demise. Nobody’s talking about the dollar’s demise because the United States will use dollars and American companies own affiliates all over the world.

And of course they do their own business in dollars. They don’t do it in foreign currency. So nobody’s really talking about that.

What really is happening isn’t simply a currency crisis. It’s not just a problem of not accepting the dollar.

It’s the fact that America grabbed $300 billion worth of Russian foreign exchange reserves and told [America’s] satellite, the Bank of England, to grab Venezuela’s gold stock and turn it over to Mr. [Juan] Guaidó, who America said should be the Venezuelan president.

And the rest of the world, what President Putin calls a global majority, is now realizing, — We cannot do our own trade with each other in dollars because if we trade in dollars, the United States can grab our dollars.

Obviously, Saudi Arabia and the Arab countries are thinking this. They’ve said, — We’d better get out of dollars as quick as possible if America and Israel attack Syria and Iraq, they’re just gonna grab all of our money. Let’s move our money into safety.

So just as in the United States, the large bank depositors are moving their money out of small banks into the big systemic banks like Chase into safety, other countries are moving their money, the governments are moving their money, out of the dollar into their own currencies, developing currency swaps and trying to develop a BRICS bank to finance their mutual trade and investment because the world economy is breaking into two halves.

Well, that’s what Radhika and I have been talking about in our shows with you on the Geopolitical Economy Hour.

We’re talking about how what appears to be a monetary problem, what appears to be a financial problem, is actually the fact that the world is breaking into two different economic systems, finance capitalism in the United States and industrial capitalism evolving into industrial socialism in Eurasia.

And if you don’t realize the context of the balance of payments and trade and how central banks are holding their monetary reserves, [and how] in this context [governments are asking themselves]:

How are they going to develop their economies domestically?

How are they going to develop their economies to keep their economic surplus at home instead of turning it over to the United States like the NATO countries of Europe do?

[If you don’t realize this context,] then you’re really somehow imposing a tunnel vision on yourself and not seeing the political context of the economic picture.

BEN NORTON: Well said. And another point that Krugman made, in this article in April in defense of US dollar hegemony, is that Charles Kindleberger, the famous economic historian of MIT – and, in fact, Krugman studied with Charles Kindleberger – he had argued that there are three main advantages for the US dollar.

And I should point out by the way that Kindleberger, who worked at the US Treasury, was the founder of the academic discipline known as hegemonic stability theory. So he basically is a kind of imperial court economist or court historian, defending US economic hegemony around the world.

But he argued, Kindleberger, who taught Krugman, and Krugman is echoing him, they argue that the US dollar has three advantages:

One, incumbency – simply the fact that so many people are already using it.

Two, US financial markets are open – and Krugman contrasted that to China, which regulates its capital markets.

And then finally, what Krugman referred to as the so-called rule of law. And this is such crude propaganda.

Krugman wrote – I mean, it’s just laughable – but Krugman wrote, “Unless you’re a dictator planning to commit major war crimes, you needn’t fear that the U.S. government will impound your assets”.

So what do you make of Krugman’s argument, citing Kindleberger, that those three main points – incumbency, open financial markets, and rule of law – are what undergird the hegemony of the US dollar?

MICHAEL HUDSON: Well, I’ve met over the years a number of classmates of Krugman in Kindleberger’s class. And one of them told me that he had a conversation with Krugman.

And Krugman said, the one thing we’re told is, don’t discuss money. Don’t discuss the character of money. And so he never did.

Don’t question things that will somehow rattle the status quo narrative. And he’s learned that. It’s true that there’s inertia for using the dollar.

That was America’s great strength, that it’s really hard to replace one financial system and economic system and political system with another.

It takes a huge effort to sort of get over the hump of, okay, we’re actually going to design a different system.

Well, once the United States threatened to cut Russia and other Eurasian countries off from SWIFT, the bank clearing settlement system, Russia and China put money into developing their own alternative systems.

Now they’ve done it. They’ve also developed their own credit card system domestically. So they don’t have to use the dollarized Visa system or Master Card system. They’re now developing another system.

Krugman has adopted the language of President Biden, who says the world is dividing between democracy and autocracy.

So when a Kindleberger or Krugman say, well, China and Russia are run by autocrats, an autocrat is what used to be called a democrat. Somebody trying to develop their act on behalf of their own economy to raise living standards and to raise productivity and to raise basically the economic output.

By democracy, he means what used to be called an autocrat. Democracy is what they have in Ukraine. That used to be called Nazism. And it’s still called Nazism throughout much of Eurasia and the global majority.

So we’re having an Orwellian terminology here and Krugman is trying to convince people to use this Orwellian terminology where countries trying to protect their economy from American financial aggression of cutting off their banking system, cutting off their credit card system, seizing their foreign reserves, imposing sanctions against them, that somehow they’re autocrats instead of trying to defend their economy against American NATO financial aggression.

The other point he makes is that, well, an open economy, people can put all their money into dollars and they can’t put them into China and keep safe. Well, of course that’s the case.

China has no need for the kleptocrats of the world, the drug dealers, the criminals, the warlords, to lend money to China that somehow is going to do them the favor of protecting. The United States did that.

I’ve described in a number of my books how I was working for Chase Manhattan in 1967.

A former State Department person came to me and gave me a document explaining that the United States wanted to become the new offshore banking center, the new flight capital center, saying that, well, what if America could become the Switzerland?

They asked me to calculate how much the United States could get if it provided safety to the world drug dealers, to the world’s criminals, to the world tax avoiders, to the world dictators.

They said, — If we can have the United States set up banks offshore in the Caribbean and other countries, then we can have Chase Manhattan and other banks set up offices in these countries to take the deposits, and then they will take these deposits and they will send them to the head office.

— And that is how we’re going to finance the Vietnam War and foreign military spending.

And that’s exactly what the United States did.

The United States, by having an open economy, has said, — We will protect all of the savings of the criminals of the world, the kleptocrats, the client dictators that we support, the money that President Zelensky of Ukraine keeps, and that’s true.

America is the protector of dictators, not China, and that indeed makes the dollar more attractive to dictators because the United States has criminalized the financial system. It’s criminalized the balance of payments as a means of financing its military spending abroad.

And I quote the documents in the various books that I’ve written. They were handed to me in an elevator, and I gather they’re not really secret, so I was able to discuss them.

And there was a book by Tom Naylor of Canada called Hot Money, where he describes exactly how it was the United States that sent up the offshore banking centers, making America to be the safe haven for criminals throughout the world.

And Paul Krugman says, this is what’s saving the dollar. Criminals are us. If we can attract all the criminal capital to the United States, there’s so much crime that we support by supporting our dictators and calling them democrats, that we can stabilize the dollar by criminalizing the entire dollarized economy.

That’s Paul Krugman’s defense of the dollar in a nutshell. And of course, he’s right when he says that.

If America can criminalize the global economy and destroy any attempt by Russia, China, Iran, the Eurasian countries, Pakistan, India, Saudi Arabia, to be economically independent, if it can insist that there’s only one currency and a unipolar economy, then America will win, and it can reduce the entire world economy to feudalism.

That’s certainly the neocon ideal.

The global majority of the world reject this ideal, but what they’re saying, again, is not fit to be seen in the print of the New York Times or other media. So you’re not getting the context.

BEN NORTON: Now, I want to also briefly respond to Krugman’s follow-up article that he published in the New York Times in May, and it was even more dismissive in tone. The headline is, “What’s Driving Dollar Doomsaying?”

Here, you can see this kind of neoconservative ideology that you mentioned. He blames the increasing discussion of de-dollarization on what he calls “Putin sympathizers, who want us to believe that America will be punished for, as they see it, ‘weaponizing’ the dollar”, he wrote, in scare quotes.

So he is very dismissive of the idea, which is an objective fact, that the US government uses its currency as a geopolitical weapon.

He also ironically blames de-dollarization on the “crypto cult”. And I mean, we’ve been very critical of the crypto Ponzi scheme. The idea that anyone who is critical of US dollar hegemony is a crypto supporter is laughable.

And he blames Elon Musk.

It’s a very similar article, but he makes two other main points I want to ask you about.

The first point he makes is he says, again, US dollar hegemony is not in danger, but even if it were, he says, quote, “the importance of controlling the world’s reserve currency is greatly overrated”.

And then he says, “Why, exactly, should America care whether a contract between Chinese exporters and Brazilian importers is written in dollars as opposed to yuan or reais?”

And he asks how the fact that the US dollar is the global reserve currency benefits the US economy.

He estimated, writing, “considering all this together, dollar dominance is worth more to America than a fraction of 1 percent of GDP”.

What is your response to that argument?

MICHAEL HUDSON: Well, basically he’s criticizing the Biden administration and the entire American government’s policy to say, — Why are you fighting so hard to preserve the dollar centrality if it’s only 0.1%?

— Why did you bomb Libya and steal all of its gold when President Gaddafi said he wanted to have a gold-based currency for the African countries?

— Why did you go to war with them if it’s only 0.1%? Why is NATO going to war with Russia over Ukraine and threatening China for using their own currency if it’s only 0.1%?

— Why is America spending 4% of its GDP on militarily fighting countries that are seeking to become independent of U.S. financial domination if it’s only 0.1%?

What is Krugman missing here? Well, it used to be, when the status quo of beneficiaries met critics, they’d call them commies.

Well, you don’t call them commies anymore because there isn’t any communism really. You call them Putin sympathizers.

But the fact is, the CIA itself calls themselves realists. Are you going to be a realist? And if you say, a realist is a Putin sympathizer, then reality is what Putin is saying.

Then for reality, read Putin’s speeches and especially read the speeches of Foreign Secretary Sergey Lavrov that spells out exactly what the logic is.

This is what the realist school is talking about, and they call themselves the realist school in the United States. They’re the school that are being sidelined by Mr. Blinken and Victoria Nuland and Biden’s foreign state department and CIA group.

But the fact is that the whole rest of the world seems to have a reason for wanting all of their governments to have their own currency.

Well, let’s look at what difference it makes whether China and Saudi Arabia do their oil trade in yen or dollars.

If you’re doing your oil trade and other foreign trade in dollars, then you have to save up dollars to have the money to pay for the oil. You have to have a U.S. bank account. You have to hold U.S. dollars.

And that means you take your domestic currency, your domestic yen or whatever the currency is, and buy dollars, buy dollars, and that supports the dollars exchange rate.

And it provides the United States central bank with the foreign exchange coming in so that it can afford to pay for the military balance of payments costs of keeping military bases all around the yen countries that use the yen or the ruble or other foreign currencies.

So it makes a very big difference. If Saudi Arabia pays for its oil in Chinese yen, then it’s going to have to save in Chinese yen, and it will have to accumulate yen, which indeed it’s doing in its foreign reserves.

And China will hold Saudi Arabian currency in its foreign reserves instead of holding the dollar. So there will be a mutual inflow of savings into each other’s currency in order to finance their own savings investment.

And this inflow will not go into Silicon Valley Bank or Chase Manhattan or other banks to be turned over to the U.S. Treasury as part of its foreign exchange reserves. That’s the difference.

And if you leave gunboats out of the picture, if you look at an economy that exists without military spending, without balance of payments deficits imposed by having 800 military bases all over the world, then you’re missing the quantitative impact of what actually determines exchange rates and currency values and ultimately international economic power.

BEN NORTON: You mentioned a key point, which is balance of payments.

The other point that Krugman made in this article defending U.S. dollar hegemony is, he insisted that the U.S. constant current account deficit, the constant U.S. trade deficit with the rest of the world, is not related to U.S. dollar hegemony.

In fact, what he is essentially doing here is he is arguing against the idea of exorbitant privilege. That’s a term that was created in the 1960s by France’s finance minister [​​Valéry Giscard d’Estaing].

And [d’Estaing] argued that the fact that the dollar is the global reserve currency, and that only the United States can print dollars, gives the U.S. an exorbitant privilege.

Well, Krugman says, no, that’s not true.

Krugman argues that the dollar doesn’t help the U.S. maintain large balance of payments deficits, because if you look at different countries with their current account deficits as a percentage of GDP, technically Britain, Australia, and Canada have larger current account deficits as a percentage of GDP than the United States does.

How do you respond to Krugman’s argument there?

MICHAEL HUDSON: The trick that Krugman uses, and he’s being deliberately deceptive here, he talks about the current account deficit. The current account is not the balance of payments.

The balance of payments has capital account, and it also has transfer payments. And he leaves that out.

What is reported as the current account deficit of trade and services vastly exceeds the actual financial flows.

For instance, the Americans report the trade deficit of oil, huge trade deficit. And yet most oil is imported from U.S. firms.

And yes, it pays a lot for the oil, but very little of this payment for oil is paid in foreign currency, because the firms remit their profits to the United States.

They buy the imported capital goods that they need in the United States. They pay U.S. management in the United States.

I’ve written a monograph on distinguishing the financial flows of the balance of payments from the GDP approach as if all of these things were monetary.

So Krugman deliberately leaves out the fact that America makes an enormous amount of money on capital account.

For instance, the fact that most of the global majorities’ foreign debts are in dollars, not their own currency.

This is why the IMF forces them to depreciate their currency and impose a chronic hyperinflation on Latin American and African debtor countries.

It’s because if you look at the capital account, including the enormous inflow of the world’s criminal capital through the offshore banking centers, then you’re going to understand that the balance of payment is something utterly different than the fictitious picture that Mr. Krugman states.

And you can look very simply. You can look at the Treasury Bulletin, and you can look at U.S. liabilities to foreigners.

Look at U.S. liabilities to their own branches in the Caribbean countries and the other offshore banking centers, and you’ll see an enormous inflow of foreign currency from these offshore banking centers into the dollar accounts of the head offices of these banks.

The statistics are all right there in the Treasury Bulletin.

And when Krugman, instead of looking at the Treasury Bulletin, looks at the Commerce Department’s trade and current account figures, he’s distracting attention from what really is important. Currency values are not determined by trade.

They’re determined by capital investment, by debt service especially, and by capital flight and crime.

And if you don’t realize that capital flight, crime, warfare is the key to the balance of payments, but only goods and services, then you’re under the same illusion that Krugman is in in the American economy, that the financial sector is all about banks lending money to factories to pay workers to produce the goods and services that they buy, leaving out the stock market, the bond market, the real estate market, the commercial banking system, the private capital, and everything else that is a blank area to Mr. Krugman.

BEN NORTON: Yeah, I do have to say it is pretty incredible seeing that this is a Nobel Prize winning economist writing in the New York Times, and he conveniently leaves out any mention of the capital account.

He does not mention the capital account one time in this lengthy article.

Yet anyone who has taken a macroeconomics 101 class knows that the inverse of the current account is supposed to be the capital account. No mention of that.

No mention of all of those dollars being recycled back into the United States.

So while the US maintains this massive trade deficit, those dollars go out in the world, but they’re recycled back into buying assets in the United States, which helps keep the whole bubble afloat.

MICHAEL HUDSON: That’s why he was given the Nobel Prize, because he was able to create a seemingly readable fairy tale about how the economy would work if it didn’t have any money, if it didn’t have any debt, if there weren’t any gunboats, if there were not any crime, if the financial sector did not control the government, but governments were elected to represent the interests of the people in getting better wages and living standards.

If he can somehow provide a readable mythology, like a fairy tale, that seems to make sense, and wouldn’t it be nice if this were true, then you get the Nobel Prize. Then you get applauded, and you get hired by the newspapers that themselves are representative of the financial oligarchy that runs the country.

BEN NORTON: Very well said. Well, a final note to end on here, Michael, is probably the most insipid, frankly stupidest point in Krugman’s article, which really reflects his main talking point, which is simply that the dollar is powerful because it’s powerful.

Krugman wrote, to conclude his article, he wrote, “The bottom line in most of this analysis is that the dollar is widely used because it’s widely used — that all of the various roles the dollar plays create a web of self-reinforcement, keeping the dollar pre-eminent”.

This is a tautology. The dollar is powerful because it’s powerful, and it’s going to always be that way.

This is the ideology of people like Paul Krugman and Charles Kindleberger.

It’s, of course, why they’re elevated in the US media. It’s why they’re given awards and prizes. But it also just shows how vacuous their arguments actually are.

And I think maybe deep down, he probably knows that he doesn’t have much to argue. Because if an undergraduate submitted that argument, I mean, a philosophy professor would rip it to shreds, but maybe an economist, a neoclassical, neoliberal economist would probably take it seriously. They’re the only ones.

MICHAEL HUDSON: Well, what does “widely used” means?

Just ask yourself for a minute, why doesn’t Venezuela use dollars? Why does Russia not use dollars and moved away from it? Or euros? Why did China say we’ve got our moving away from the dollar?

Why did Saudi Arabia make the arrangements with China and other BRICS countries to trade in their own currencies, not dollars?

If you don’t acknowledge the fact that other people have another idea, then you’re very biased.

Why is it that central banks of Russia, China, and all over the world are buying gold in the last, especially in the last few months? Why are countries deciding, we’re going to sell dollars and are going to buy gold?

There must be some logic there. Why doesn’t he explain at least what the logic is?

He can say that there are counter arguments, but you have to acknowledge the fact that other people must have a reason for what they’re doing.

So Krugman is saying that other people have no reason at all for what they’re doing. And when they move out of the dollar, there’s no reason for them to do it.

And obviously, if you read the speeches of what these countries, foreign ministers and central bankers say, they explain just why they’re doing what they’re doing.

And you don’t get a word of that in the New York Times any more than you get a word of what Seymour Hersh wrote about why the United States blew up the Russian Nord Stream gas lines to Germany.

There are certain things that you just can’t discuss in polite society.

BEN NORTON: Well, that’s a great note to end on. I want to thank you, Michael Hudson, a brilliant economist, the author of many books. His website is

And Michael also hosts a regular program here with Radhika Desai, which is Geopolitical Economy Hour.

Michael, thanks so much for joining me.

MICHAEL HUDSON: It’s really good to be here. I love these discussions. Somebody has to talk about them.

BEN NORTON: It’s always a pleasure. Anytime.



  1. JonnyJames

    2023-05-10 at 16:26

    Paul Krugman should be a laughingstock by now. Unlike Dr. Hudson, he failed to warn us about the financial crash of ’08 among other things.

    Krugman is a hack for the the DNC and cheerleader for a corrupt status quo. That’s why he wasn’t fired.

    Thanks Ben and Michael

    • Minsky

      2023-05-13 at 20:02

      Krugman’s views are certainly ‘unrefined’ Keynesianism, to be sure, but Dr. Hudson misreads who he’s arguing against. His target is the Austrian-colored sectors of the American right claiming that de-dollarization will result in hyperinflation, not the far left and its more measured claims about dedollarization’s effects.

      To this extent, Dr. Hudson’s views and Krugman’s arguably overlap quite a bit. They both seem to agree that dedollarization does not necessarily imply a hyperinflationary collapse in the dollar’s exchange rate. They also seem to agree that should the dollar lose its spot as the ‘apex’ reserve currency, it wouldn’t necessarily be a bad thing for either the US or the rest of the world.

      This is why the personal animus on display here is so amusing. It is yet more proof that the far left despises the center-left more than it despises the right.

      • JonnyJames

        2023-05-21 at 11:31

        Sorry, of course I don’t agree. I think you need to re-visit what Hudson has been writing about for many years.

        Krugman adheres to neoclassical economic ideology. His track record is laughable.

        Krugman is another flavor of economic neoliberal, and a shameless apologist for the status-quo. You sound a bit naive: far-left?

        Far-left? For a quick lesson in political spectrum and definition of political terms: take a course in Comparative Politics or go to: Your definitions of “far-left” and “right” are way off base. BOTH the D and R parties are right-wing AUTHORITARIANS.

        Also, tell me how this quote is wrong “the US is an oligarchy with unlimited political bribery” (Jimmy Carter 2015)
        You still believe the myth of US democracy? How quaint.

      • JonnyJames

        2023-05-21 at 11:59

        BTW Minsky, have you read any Steve Keen? How many of prof Hudson’s books have you read? It looks like you are unfamiliar with the larger arguments.

        • Minsky

          2023-05-31 at 22:06

          Longtime reader of both Keen and Hudson. ‘Debunking Economics’ was basically my introduction to the subject, alongside ‘Superimperialism’. Hudson’s trilogy on the history of debt should be required reading in every Intro to Economics class, IMO. And Hudson, Keen, Hyman Minsky and the authors of ‘Capital as Power’, Jonathan Nitzan and Shimshon Bichler, are my favorite economic thinkers. (along with Jaron Lanier, who writes about separate but related topics). I do disagree with Hudson on some things, though. In particular, I’m more skeptical than he is that handing over control over land and banking to the state (a policy which Prof. Hudson explicitly advocates for) would produce something better than we have now. But this disagreement doesn’t diminish his genius in my eyes.

          And on the basic principle that the debt burden society shoulders must occasionally be written down to make it sustainable, I am 1000% in agreement.

          In regards to my comment above, I’m speaking of left/right in a Western context, because Prof. Hudson and Krugman’s work are primarily consumed in a Western context, although Prof. Hudson has cultivated a sizeable following in China. Advocacy for things like taking all banking and land ownership into the public domain, sits on the far left flank of Western politics. But obviously the left/right spectrum differs depending on the cultural context. In China he probably qualifies as center-left.

          His position on the spectrum has no bearing on whether his views are correct, however, as I’m sure you’d agree; I was merely making a remark on the irony that on this particular issue, there’s a lot of agreement between he and Krugman, who are otherwise miles apart on practically everything.

          I actually won’t deny that the US is functionally an oligarchy; I just don’t think handing over finance and land to the US government would fix that. I think it would more likely result in an explicitly totalitarian state, where the government could use its control of your finances to essentially force you to do whatever terrible, stupid thing it wants.

          I’m aware that Krugman is a neoclassical, but he’s a Keynesian neoclassical, (or a ‘New Keynesian’ as they like to call themselves) which means that while he’s wrong about most things, he’s less wrong than the right-wing neoclassicals or Austrian fascists like Hayek, Von Mises or Rothbard, who have a cult following in the US. It was still funny to see Keen run circles around him when they had their blogosphere debate, though.

          • JonnyJames

            2023-06-03 at 10:09

            Fair enough Minsky. We seem to agree that Krugman is less far-right authoritarian than the Hayek/Mises crowd. A matter of splitting hairs, but I consider him moderate right-wing authoritarian, and not far-right authoritarian.

            If the economy is not planned and regulated by public institutions accountable to the public, than it will be planned by the oligarchy on Wall St, as it is now. The status-quo is not tenable, nor sustainable, and makes a mockery of any vestige of “democracy”.

            By default, advocating for Wall St. and not the public (“the government”) you are perhaps unwittingly supporting the position of the Von Mises/Hayek crowd.

  2. Ricardo Costa

    2023-05-10 at 21:54

    Hello, I’m from Brazil, and it was certainly a very enlightening explanation in the face of these confusing narratives disseminated by the conventional media. I will have to study more on the subject. Congratulations on the excellent work Mr. Norton and Mr. Hudson.

  3. Eric Arthur Blair

    2023-05-11 at 15:31

    The Nobel prize for economics is false, fraudulent, bogus, and absolutely nothing to do with Alfred Nobel, who himself wanted to fabricate a fake legacy memory of himself as a benevolent hunanitarian, instead of his factual background as a merchant of death. The economics prize was contrived as an afterthought by the bank of Sweden (Riksbank) and tagged on to the Nobel ceremonies through bribery. Prizes can only be awarded to neoliberal Straussian propagandists, not to serious practitioners of truthful economics. It is about as credible as the Nobel peace prize given to Obama and other warmongers.
    A better term would be the Orwellian *ankers prize for thoughtcrime.
    Paul Krugman has over and over proven himself to be an Orwellian thought criminal *anker.

  4. Eric Arthur Blair

    2023-05-11 at 15:58

    Smellin’ Yellen is of similar ilk and Larry Summers, erstwhile president of Harvard University who egged Clinton on to overturn Glass-Steagal, thus setting things up for the 2008/9 global financial crash, is quite simply a piece of human garbage.

  5. Eric Arthur Blair

    2023-05-11 at 16:01

    I apologise for comparing Larry Summers to garbage.
    It was not my intention to insult garbage using such an odious comparison and apologise to any garbage that may have been offended.

  6. Paul Canosa

    2023-05-11 at 21:12

    It certainly was an illuminating discussion

    What struck me was what Michael said “Every hyperinflation in history has come from an attempt to pay a debt in a foreign currency.”


    “This is why the IMF forces them to depreciate their currency and impose a chronic hyperinflation on Latin American and African debtor countries.”

  7. Eric Arthur Blair

    2023-05-12 at 19:35

    Dear Ben,
    I previously posted the comment below in an unsuitable location, it was actually more relevant to your podcast here:
    but lacking a comments section for that podcast, I am posting the comment here.

    As you are a champion of reasoned, alternative views, I trust you will allow me to disagree with your view that the USD is not going to collapse anytime “soon” and that anybody who claims that is a chicken little alarmist.
    First one must define what “soon” means. You implied the USD could persist as global reserve currency for as long as another 20 years, which I believe has zero chance of occurring. It is impossible however to define precise time lines. I would define “soon” as being sooner than just about anybody (except maybe a few chicken littles?) expects. For example, just about nobody expected the Soviet Union to collapse as soon and as abruptly as it did around 1991. That kind of time line is what I define as “soon”.
    In a previous comment about Lagarde
    I explained why collapse of the USD will be sudden. Such sudden collapse, like a Jenga tower, is almost a law of Nature and of complex human systems, and the examples are countless. But sudden collapse does not necessarily have to happen soon.
    Why do I think collapse of the USD will be soon?
    Firstly because we now see dedollarisation occurring at a rate faster than anybody could have expected just a couple of years ago. However if a few (or even if many) minor economies dedollarise, it will make little difference to the USD as global reserve.
    However dedollarisation by two main blocs will guarantee the death of the vampire, a double blow of decapitation and a stake in the heart.
    They are the oil exporting countries and China.
    Nobody just a couple of years ago could have envisioned Saudi Arabia transacting oil in Yuan, yet this is happening. When (not if) all other oil exporting countries start transacting in non USD currencies, and when the NDB, backed by China,sets up new development funding vehicles, which is happening now, there will be little incentive for countries to hold the USD as reserve anymore. Having USDs will no longer represent something worthwhile like the ability to buy energy. The value of the USD (including treasury bonds, US debt securities) will vanish in a puff of smoke. When that happens, the USA will no longer be able to afford imported fuel. The US has NO affordable native fuel left to power its own agriculture and industry, it only has unconventional oil scams propped up by financial fraud.
    What about China? They are the largest holder of the USD as foreign reserves. Draw-down and devolution takes time. Before recent crazed amplification of US military provocations, China had little to no incentive to dedollarise quickly, being so deeply intertwined with the US economy. Rapid dedollarisation could hurt China’s own economic interests. However now, you can be certain that dedollarisation is now China’s top and most urgent and immediate priority. Why? Because when (not if) the USA and its quisling lackeys abandon their failed Ukraine project, they will (as they have repeatedly threatened) turn their attention to Taiwan, ramping up their naval presence and trying their damnedest to get China to fire the first shot against the gathering USUKA (and NATO?) and Japanese fleets posturing off China’s coast. Repeated wargame scenarios by the Pentagon have shown that China will win any conventional maritime conflict off its coast against the USA. It is the easiest thing to hypersonically sink the US carriers and all accompanying vessels in the blink of an eye. Unfortunately the insane US chickenshit armchair warmongering neoconartists may well respond with the nuclear option, which will mean the end of the world, which prudent actors like Russia and China are keen to avoid. Will the USA succeed in provoking China to fire the first shot in anger? Does China have a more subtle approach which can avoid WW3?
    China can use a Sun Tzu move, they can pull the rug out from under the feet of the US. Just as the (Western) Roman Empire fell largely because of imperial overreach, unaffordable ill advised military campaigns which bankrupted Rome and the debasement of its own currency (salaries of Roman soldiers became worthless, so they deserted and returned home to grow food), thus also can the US empire fall. The key to paralysing the US military and causing them to withdraw will be dedollarisation, such that the USD becomes worthless and the USA can no longer fund their ill advised military provocations. Their soldiers will desert and return home to grow food.
    So rest assured, dedollarisation will occur sooner rather than later.
    When China dedollarises and the value of the Yuan (being based on real world goods and services) skyrockets relative to the debased USD, the USA will no longer be able to afford “cheap” imports from the biggest manufacturer in the world, China. Unaffordable fuel, unaffordable manufactured goods = hyperinflation.
    Like you Ben, I believe cryptocurrencies are a scam. Gold and silver are worthless in a time of hunger and deprivation, a loaf of bread is far more valuable. What is most valuable? Being able to grow your own food.
    Nuff said.

    • JonnyJames

      2023-05-21 at 11:51

      You bring up some great points, however: What will take the place of USD? Also, if China “pulls the rug out” quickly, there will be negative effects on China’s economy. This is tricky stuff, and I don’t have a crystal ball either.

      I recently started reading Hudson’s new book The Collapse of Antiquity. It is fascinating and an eye-opener on what the writers of antiquity thought about debt bondage, concentration of land and wealth, oligarchy etc.

  8. Eric Arthur Blair

    2023-05-22 at 01:31

    I believe prof desai previously mentioned a possible bancor keynesian type supranational currency tied to a basket of commodities and maybe also gold. Others have added the suggestion of tying it to the “triple R” – renminbi, ruble, rupee

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