Video Infoblog: "It's Getting WORSE And WORSE..." - Richard Wolff
there are very good economic reasons why China and indeed anybody else ought to reduce their holding of the United States Treasury and it's it's very oldfashioned banking wisdom that's why you're seeing it in Belgium that's why you're going to see it in Great Britain which is another one of the major holders of US Government debt you're going to see it because when a country's debt begins to go up and fast that that's when you want to begin to worry are they borrowing at a rate they can reasonably repay you do not want to get stuck with the obligations of a government that cannot pay and let's remember we live in a world where governments past and present have defaulted on their debts this is not an unheard of unknown phenomena and if you add the number of governments who've announced they're going to do that as a way to begin to negotiate iate with those who hold their bonds to repic them to lower the interest rate to lengthen their maturity the various ways One deals with with debt problems well then you know that that's a real problem up until recently the United States was the global Colossus it was growing if not the fastest in the world steadily it was very very wealthy and it didn't have a growing debt that was out of control the last 5 10 years are very different we are now running annual deficits in the trillions T not in the billion in the trillions of dollars excuse me it has become the normal politics of both the Republican and the Democratic party to basically disregard that the only time the deficits and the debt come up is as a way to beat on your opponent in the election so the Republicans attack the Democrats to doing it and the Democrats the Republicans meanwhile they both do it Mr Trump's greatest economic act took place in December of 2017 when he gave corporations and the rich one of the biggest tax cuts in American history thereby worsening the debt Mr Biden comes in and he passes huge bills that's what the Democrats do pumping enormous amounts of money into the corporate sector of this country to stimulate AC ity but he doesn't raise taxes to pay for it so that will have to be paid for by debt you see the picture so the world is watching endless debts so that now the national debt is above the GDP for a year that's typically a measure of uhoh so what you're seeing in China in Japan in Belgium soon in England and elsewhere you're beginning to see people who are simply doing the ageold process of reallocating where they borrow from so all of their debt eggs are not in one basket they don't they that's just prudent Banking and again the United States should face what that means you're right if you do this too long and if too many countries are not only not buying your new debt but unloading your old debt on people who might otherwise have bought your new debt you're in and then you may have to keep your interest rates higher and that will frustrate the problem of of your currency and then you will not be able to sell your exports because your currency is valued too high because your interest rates are too high a normal problem of international finance so yeah the United States is in that position of an accumulating quantity of problems economic problem partly because they have not yet understood that they have to face a changing World economy American politicians think that their job is to be cheerleaders to improve the the feelings of the American people by not telling them the bad news but only telling them the good news I am going to protect jobs by putting tariffs on electric vehicles it's easy to show economically that you're not going to protect jobs by doing that there's no way to know in advance how many jobs you gain you will of course gain some for electric vehicle producers in this country you're protecting them but that's going to cost you other jobs in other Industries and you don't know which of those two is bigger you can't do but they say it they act like they know they buy economists like me who say what has to be said but the truth you know you can't fake it Beyond a certain point we are are losing our economic dominance we have been now for quite some time and that's not going to go away and particularly If you deny it if you don't see how it impacts your Society if you don't take it into account that's what I meant before using the example of the sanctions on Russia they failed be not because the United States has no weapons it does not because Russia isn't vulnerable in ways it is all countries are but you're not going to get the solution you want if you are pretending rather than facing what the realities are I really mean it when I say it's one thing to have gone up with a rising Empire that's what American Business did from the end of World War II to the early years of this Century but we are now in a different phase we're in the phase that every Empire in the world has has seen the downturn after the upturn the downturn the Greek Empire the Roman Empire the Dutch Empire the Ottoman Empire you name it up down down is not fun up is Fun the United States is now on the way down that can end well but you have to face it in order to deal with it that way we're not doing that at least not yet and let me add add another uncertainty to trouble Americans and that has to do with the election last week in France okay we have been hearing over and over again that the world is moving to the right we are told that the elections in Europe and the rise of I don't know Vladimir Putin or Victor Orban or mandra Modi in India and others Xi Jinping in China that these are all signs of a great movement to the right well people begin to think like that that becomes a kind of Common Sense yeah but it's wrong misunderstands what's going on it doesn't understand why those people are in power why votes go the way they do and then eventually something happens and everybody's shaken and begins to realize that the reality is not what they thought it was the French elections this last two weeks are such a moment everybody almost everybody up until June 30th the first of the two-day election sequence in France was talking about the great struggle between the sitting president macron and the rightwing in France under Marina Le Pen the center and the right is center now the election is over what's the number one political party that has the most seats in the parliament of France it's socialists four different parties came together all of whom self-define as socialists okay they're the Govern now they're the dominant party yes they will have to negotiate they don't have a majority on their own which is what everybody's focusing on mistake the important thing is that what you didn't pay any attention to just came away with the largest number of seats 182 seats in a 500 person legislature that's the Socialist block the right wing came in a distant third they didn't even come in second you talked only about about them you never talked about the left and you didn't understand what's going on and then the irony will you pretend none of this happened which is what mainstream media in the United States is mostly doing or will you ask the honest question we didn't understand this really well what are we missing let's figure that out so we don't make more mistakes I that is not rocket science but you live in a time when the the fear and the anxiet xiety about going down which is what's happening is so frightening that you see adults act like little two-year-old children who when they are confronted with a a dog that's barking in a frightening way they put their hands in front of their little faces because if they can't see the dog they imagine it isn't there but we explain to them as they grow older you can put your fingers there the dog is still there you just don't see and they learn that but we're dealing with a world of politicians who don't seem able to learn that hyperinflations when they have occurred and I've studied them a bit in my life almost always require a whole group of factors to come into play you'll see these factors now and then and they don't cause an inflation but when they all happen together it's like a personal crisis you know you you can stand it if your mother is angry at you but if your mother is angry at you and your father and your boyfriend and your sister it's too much right you can only handle so much if there were a continuing decline in the dollar and if you had the tariffs that the Trump political party promises to bring into being yeah you could then have a combination of factors those two by themselves almost uh that could produce a hyp yes it could produce a hyperinflation for which this country has very little preparation it has never seen that when I explain uh I usually use as my example Germany in the early 1920s which is one of the great examples of hyperinflation which I know about because my mother was a child in Berlin at that time and she told us stories about her father coming home from work in the middle of the day for lunch carrying a bag of money he had been paid for the first half of the day and he was giving the bag to my grandmother to use and go shopping quickly he went back to work her job was to go to the store to spend that money because if she didn't by the evening she couldn't buy it would be worth nothing the prices were going up doubling every hour so that it was impossible that's a hyperinflation you need a number of conditions if we have an economic downturn and the government in order to stimulate the economy lowers interest rates and nobody will lend to the United States government and those dollars come back and everybody borrows money to get through the hard times because interest rates have been lower yeah then you begin to collect the conditions which could produce a hyperinflation but remember the United States also has some experience not so much with a hyperinflation but with pre preventing one and maybe I can close today with with just reminding people of a piece of American econ economic history when the United States entered World War II against the German Nazis and the Japanese American economists including some of my teachers went to the then President Franklin Roosevelt and explained to him you're about to go into a war and we are moving resources you know land factories Iron and Steel away from producing consumer goods so that we have them available to produce the the tanks and the guns and the bullet and all the other stuff to fight the war but that means that the supply of consumer goods is going to collapse it's going to be half of what it normally is because the resources have been moved to military if we don't do anything about that if there's a demand for consumer goods that won't change but only half the supply consumers are going to become competitors bidding up the price of scarce consumer goods and that will mean an inflation and that will mean only rich people can afford everything that goes up in price and you don't want an inflation that makes poor and middle inome people bitter and angry and I use as an example the price of milk will go up so that you will not be able to get milk for your children but your Rich neighbor will be able to buy that milk for their cat for their pet cat right so this will destroy the unity that is needed to fight a war so what they did is they said Okay a hyperinflation is not an acceptable risk while we fight a war so we can't have it so what did the United States government do very radical it abolished the market it abolished the money market it said for the following Goods you cannot buy the good with money so don't bother bidding up the price because any storekeeper Who Sold you a quart of milk or a pound of meat or some sugar or some coffee or any of the basics by but charging you a lot we will arrest them and put them in jail we are going to print ration tickets and we're going to distribute them to the population and the only way a storekeeper can sell you anything is to let you pay with a ration ticket a ration coupon and the government handed them out if you had a family with many children you got many coupons for milk if you were an older couple and you had no children you got no coupons for milk coupons were distributed according to people's needs was no inflation they prevented the hyperinflation that they could see coming now again my point you and I can talk about the risks including inflation of the Republican tariff program or of the declining use for the dollar in world affairs but there's no plan that I'm aware of there's no conversation there's no movement to organize what we would do if we were in that situation even though we did that in world World War II to prevent a hyperinflation then it tells you that we are now not facing we are so busy denying the declining position of the United States that we are making catastrophic mistakes about our own economic future but that means to be honest I can't tell you which way the wind is going to blow economically there are too many very profound I've always been an optimist I'm an optimist now I I don't think anything is inevitable I don't think we're we're finished I don't I think there are options I'm depressed to be honest that our leaders are so unwilling to face these realities but I do think that there are options and let me close with this Britain tried to squelch the Challenger it faced it was a colony of Britain the United States is what it became it was a backward small colony of England and then it it decided it wanted its own independence so we had a war I'm an American I was born in Ohio I you know I lived and worked here all my life and we had a war of independence we broke away from the British Empire and we had a war and the British tried to prevent it with the war it failed for them in 1812 they tried again another war that failed for them after that they understood war is not going to hold his history back and they had to face with lots of grumbling the decline across the rest of the 19th century the decline relatively of the British Empire and the emergence of the replacement American Empire but we never went to war with them again and we to this day I don't see any reason why the relationship between China and the bricks on the one hand and the United States and the G7 on the other cannot sit down and work out a way to Live and Let Live on this planet I don't see it it certainly is worth trying the alternative which ends up with nuclear war is no real alternative so why don't we stop wasting time sit down and start working out how to do
