Nima Alkhorshid: Hi, everybody. Today is Thursday, September 17, 2026, and our dear friends Richard Wolff and Michael Hudson are here with us. Welcome, Richard, Michael.
Richard Wolff: Glad to be here.
Nima Alkhorshid: Let me start here with this map. What's going on so far ? You know, as you know, the case of the Strait of Hormuz continuing with the same sort of conditions that we had. The strait is somehow closed. And today, what is the another major issue is here in the Babel Mandap in this part. And Yemen, as you know, is capturing Yemenis and Sala in Yemen. They're forcing the Saudi-backed forces PLC out of Yemen, or they're capturing the western part of Yemen.
Majority of the people are in the western part of Yemen, and the land is better than the eastern. Eastern is in this part. In the eastern part, you see the desert close to Oman. And in the western part, you see the land is better, the agriculture is better. Even here in the middle, you see the fight is going on in Mareb. And what is important in Yemen is that they captured all these islands in the Red Sea and they're controlling the line, the line here. Consequently, they're totally controlling Babel Mandab as we talk.
The other point was Saudi Arabia, after begging Donald Trump, after talking with GCC countries in the region, MBS went to Egypt and he's asking for help from Egypt: interceptors, missiles they need. And maybe Egypt would bring—would send some forces to Saudi Arabia to help them. But the problem is here. The Suez Canal here is, you know, within the range of the missiles and drones of Yemenis. If Egypt does something, it means that Yemen can hit targets here in the Suez Canal.
Since the difficulties of today's, when it comes to Donald Trump begging or asking Zelensky not to attack Russian, you know, diesel facilities—as you know, Russia has the blockade here in the Black Sea on Ukrainian ports and in Odessa. So basically, looking at the West Asia, looking at the conflict between Ukraine and Russia, it's all about worsening the situation with the energy market. And this is what Donald Trump is dealing with and is trying to resolve. I don't know if he's gonna—is gonna do something about it.
Michael, what is your understanding ? Because the other important point was yesterday that the US—the US House passed Lindsay Graham sanctioning Russia and Iran Act of 2026. This is—they—it was 262 to 159 vote, and sending legislation to the president Trump for his signature. Basically, putting sanctions or putting more sanctions on the two countries, Iran and Russia, and on the other hand, begging. Okay, do what's going on. Richard, let's start with you. What is your understanding of what's going on and the complexity of the issue, as I've mentioned, in each and every corner of West Asia, in Eurasia, between Russia and Ukraine, and the new sanctions on Iran and Russia ? Go ahead.
Richard Wolff: Okay, there are a number of things that jump right into my mind that make no sense. And so for me, they become provocations to ask other questions. So let's begin, for example. President Trump has, in effect, criticized Zelensky for sending missiles to destroy refineries in Russia that convert oil into diesel fuel. And he's done that. Why ? Well, it's very obvious. Diesel fuel is now costing $6.50 a gallon here in the United States, which is about twice what it used to be a few months ago. And devastating for agriculture, for the trucking industry that uses diesel as its basic fuel.
But it makes no sense because the only way Ukraine can ever launch long-range missiles is by using American technology controlled by American personnel in Ukraine. So, the President of the United States is speaking to the President of Ukraine, but he controls what Ukraine can do anyway. Therefore, what is he doing ? He just gives an order. He has no business giving a public—there's no point in this. It's ridiculous. It makes no sense.
Well, then you understand there's a pretense in the United States that Ukraine is an independent actor here, which it isn't. It is a symbolic actor. You have to play the game in international affairs of taking Ukraine seriously, but no one really does that. So, this is Mr. Trump pandering to the American public.
All right. That then suggests that the United States has made the decision to do certain things that it feels entitled or safe to do because it can be attributed to somebody else. In other words, they can talk about diesel being expensive because Zelensky is doing something in Russia, which in fact he could control in five minutes if he wished to. He doesn't. He wants to damage Russia and he wants to get away with it, and he thinks this is going to do it, which for his own public here, it probably will, since the Democrats are as hostile to the Russians, if not more, than the Republicans are.
That then brings me to the second example of the United States wanting to do something it cannot afford to be responsible for. And there, the clue, in my judgment, was the decision announced yesterday that the president is about to authorize the shipment, if I have it correctly, of 40,000 tons of the biggest bombs that American airline planes can drop—the 2,000 pounds of explosive per bomb, and shipping them to whom ? To Israel. Why ? Because the Israelis are going to be the bad guys here. The Israelis are going to drop these bombs all over—fill in the blank, I don't know exactly—Iran, but it may not just be Iran. It may be other things.
But then the United States will be out of the responsibility for that too, which will be a war crime and a horror show of the sort that the Israelis have become the global specialists in doing this kind of genocidal damage. And it will look good here in the United States because the President will be punishing the evil Iranians. And we all know that story is being peddled.
And therefore, I'm guessing this is going to be the final effort to pull out of Iran without appearing to have been forced out. They will do unspeakable damage. They will knock Iran back out of its dominant position more or less. They don't know yet how that will work. Nobody knows how well defended the Iranian missile capability really is. We know it's better defended than they thought it was because look at the damage they've already done.
My last point: I do believe that the importance of the Iranian capacity to fight back against the United States, to deny the United States and Israel the victory they tried to get in June of last year and then tried again ever since February of this year, that I believe is a world historical event. And I believe you're already seeing it because of the leaked information that in Washington there are meetings being held at the Pentagon and elsewhere in order to seriously consider withdrawal of the American military presence from the Middle East because it's too vulnerable, it has been too badly damaged, and they therefore have to acknowledge with or without the bombs they're sending to Israel that the time may have come to withdraw.
Now, if you're denied the United States and you inherited a global colonial position from the collapse of all the other colonialisms, the British, the French, the Dutch, the Belgian, the Japanese, even the earlier American, if 1945 brought all of the colonized world—center and periphery, as the thinkers like Samir Amin and others have helped us to understand over the last 75 years—if the United States inherited this global single colonial superpower position, which it did, then what Iran has accomplished is the end of that position.
It has shown now that the United States cannot play the role it thought it could, that it inherited not just all of the empires, but it inherited what remained of the power of Russia once the Soviet Union fell apart. It was now the global hegemon, the unipower, the unipolar. Iran has taught the world, no, it isn't, and we're forcing it to withdraw. And what we are doing to that empire in the Middle East can and will now be unleashed everywhere else. And the way that that's going to happen is by the alliance of China, Russia, to backstop the Irans of the world when they confront the United States, to show the world that they can now do that. And they couldn't do that before.
And the irony of ironies is that the Cold War was a theatric in which a dominant United States acted as though it were in danger from the Soviet Union. It never was. The Soviet Union was always much too poor, much too behind. It had nuclear weapons, no question. But useless. What's it going to do ? If it dared use them, it would be obliterated.
What we have now is a radically different situation. But the irony is the march against colonialism has now come up against a singular colonial power for 75 years. And just as before, the localized anti-colonialism eventually defeated the British, the French, the Germans, the Portuguese, the Spanish. Now we have a unified world, mobilized above all by China and Russia, leading the global south to challenge the remaining colonial hegemon to finish colonialism once and for all.
Michael Hudson: Well, I agree with the point that Richard made that the press has not made, that the whole purpose of sending all of these bombs to Israel is not to bomb Gaza or the rest of the Palestinians, but to use against Iran.
But there's an added twist to all this. Trump keeps repeating something that he's been saying for eight years now: that he wants to make OPEC pay for all of the cost of the U.S. occupation, past and present, of the Near East, and for all of the military protection that's been threatening the Middle East so far. And he is—I think his main concern with Iran is: okay, even if you bomb Iran, how are you going and prevent it from being able to impose tariffs on the transport fees on the Strait of Hermuz ? How is the United States going to be able to replace it and ask for and essentially demand these ? Which Trump earlier has said he wants 20% of the value of all oil sent through the Strait of Hermuz. Has he just forgotten that ? Or is that part of his long-term plan into which his attack on Iran is based?
And this whole preoccupation with him of wanting other countries to pay for the U.S. military subjugation of them has come up again in the last week with South Korea. And I want to introduce that as what his modus operandi is. We've discussed before, Trump has insisted that South Korea pay the United States a tribute of $350 billion for the United States to agree to lower the tariffs, illegal tariffs to be sure, but to lower the tariffs on Korean imports from 25% to 15%.
Well, that was an agreement from last year. But in the last week, especially in the Financial Times, it's been pretty much ignored in the other press, Korea has pointed out: well, wait a minute, we're going to be entering a period of very high oil and gas and diesel prices for all of this. How can we afford to pay you $350 billion for all of this?
The Koreans have also told Trump, you know, we've tried, we've gone to a number of our companies and said, you know, what plans do you have ? Could you agree to make to invest in the United States and make a profit ? Well, right across the board, the Korean companies have said there is no way that we can make a profit on investing in the United States. It's going to be a pure loss. Well, the question is whether Korea's $350 billion tribute, and Japan's $650 billion tribute to the United States is larger than the whole profits that either country can make on its exports to the United States.
Well, Trump replied and came right out and said: well, you know, it's not really tribute, it's reimbursement to us for paying the cost of occupying you and protecting you and Japan. And so he's now trying to make other countries pay the cost of the military, U.S. military spending all over the world. And the Koreans say, well, the one thing we can do is build ships. We can agree to build ships, but you really don't have any shipyards in the United States. You're not an industrial country anymore. We're an industrial country. We have the labor, we have the machinery world set up to do that.
So there's—what is happening now is Trump is driving away all of his closest allies. And he's doing to Korea and Japan exactly what the United States did to Germany in cutting off German access to Russian gas and oil. And the question is: how long can this tension prevent an outright political break ? And I'm sure that's a discussion that is happening. And decades past, when I visited Japan, they always said they had a plan B. And the Plan B is: what if we have to break away from the United States and trade with China and seek our fortune in making an agreement with that?
Trump has also insisted that the Korean firms like Samsung adopt the United States automatic intelligence technology and the monopolies. Well, that's going to drastically increase the cost of production for Korea. So you're having the United States trying to impose monopoly pricing on other countries, forcing the price of energy way up because of the war in Iran, making demands for reimbursing the United States for its military spending abroad. I think that the effect of this is driving these countries away and speeding the party destined. Trump's actions are going to end up isolating the United States from the rest of the world. The sanctions that he's imposing on Russia and everyone else is creating such tension.
And I'm sure that he's just pretending that he told Zelensky not to bomb Russian refineries. He obviously told Zelensky, we are sending you exactly the satellite guidance so that you can hit the refineries. Trump believes that the United States—even if the United States economy is hurt—look at what's going to happen when oil prices go up. World oil prices are going to go up. But in the United States, the cost of production for oil and gas won't go up. This is going to mean a bonanza for American gas companies, American oil companies. It's going to make the oil sector incredibly profitable here. And it's the oil sector, of course, that's a major contributor to Trump and the Republican campaign.
So I think I want to take all of that into account. Trump's not trying to help the United States economy. He's trying to help his campaign contributors among the richest sectors of the United States able to make the contributions that the oil industry makes, the information technology companies make, and so forth. And that's creating—that overreaching is creating a blowback that's driving them all away.
Richard Wolff: If I could add a little bit, early in my career, the first book I ever published was based on my doctoral dissertation. And that was a study of British colonialism in the East African country of Kenya. And as part of that work, I spent a long time in the British Museum and in the colonial office in London studying the records that had been kept by the British administration in the early years of the colony, used to be called the East Africa Protectorate, established by the British. So we're talking the end of the 19th and the early 20th century.
One of the things you quickly discover if you read the colonial reports is the analogy to exactly what Michael just said. It was constantly reiterated to the local officials of British colonialism, the people stationed in Nairobi and the other towns and cities of Kenya, that the colony was to pay for itself. Or to use Michael's language, your job was to find something that the Africans could be forced to grow or to raise—agriculture being the land, it was the only resource they felt they had. They were to produce an agricultural product that would be sold to British companies who would make enough money off of it to cover the taxes that had to be paid so the colonial administration would be paid out of taxes on Kenya and not be a drag on the financial capabilities of the British government in London.
They wanted, in short, their colonialism to pay for itself. And that included the naval resources, the military, armed resources, and everything else that the British did—build a railroad, develop telegraph and telephone. All the rest of it was to be paid for by the local colonial people and the work they did, which would then be handled by the British trading houses.
And that's really, that's what Michael is saying. Mr. Trump, there's nothing original about it. Mr. Trump is trying to get the colonial empire to pay for itself, including all the policing that the military of America have to do. And in this, he is carrying out the colonial mandate of the last several centuries. He's trying to make that happen. And since he can't do it indirectly the way they used to, he's doing it directly. Give me tribute. Literally, pay me money. I don't care where you get it from. Go out there, do your business, but you've got to pay us. For us to dominate you is expensive, and you're going to have to pay for your own domination.
It's really no different from a capitalist employer hiring the workers who generate a surplus, which the employer uses to pay the supervisors that force the workers to make the surplus. The workers' surplus is paying for their own oppression by the supervisors, their surplus funds. That's Marx's insight in Volume 1 of Capital, and it's applicable above all to the colonial enterprise.
The United States can't afford it anymore. That's the underlying impossibility. They can't afford even to maintain, let alone expand what they're doing. That's why, you know, where are they going to go ? They're going to go to Greenland, right ? There's nobody there. You know, they're going to go to Canada. They're going to take over everything. And this endless threatening, you must give us money, you must give us, what is this ? This is the attempt to hold on to your global hegemon position without paying for it.
And that's not going to happen anymore because the resistance is too big and has now behind it the number one manufacturing power in the world, China, and the number one military power in the world, which is arguably Russia. And therefore, the United States has stymied it. It can't. It's going to try. It's going to do everything in its power.
We're already seeing the United States decide that it will be complicit with genocide if that's what's necessary to hold on. It's not that they agree with Israeli policy. They don't. But they don't think they have a choice. So they can allow, you know, selected politicians to say to Mr. Netanyahu, you mustn't do it. But it's the same theatric as telling Mr. Zelensky, you mustn't do it. You're enabling them to do it. Who do you think you're fooling by suggesting they don't do what you're enabling them to do ? If you don't want them to do it, don't enable them. They're caught in their own impossibility, and that itself is a sign of the end of the empire.
Michael Hudson: That's exactly what's happening, Richard. I agree wholeheartedly. The question is: how ever since World War II, there's been a revulsion against colonialism. And that's part of the UN Charter: that these are independent countries now and they have sovereignty. The United States is trying to impede this sovereignty by just what you've selected.
So the question is: where is the rest of the world in this protesting all this ? And how there has to be some structure of international institutions to replace those that the United States created to administer all of this, including it's paralyzed the United Nations, it's paralyzed the World Trade Organization. Trump has withdrawn from all of the climate moves to prevent global warming and extreme weather. The United States is a rogue country all by itself. I mean, it's truly the, if not the indispensable nation, the unique nation, immune from all of this. How are other countries going to be able to break away from all this by providing an actual institutional alternative?
Richard Wolff: Well, I think what's beginning to happen, and I understand I am about to say something that's a bit speculative. I can't predict the future any better than anybody else can, which is to say I can't do it because nobody can. Having said that, I think what's going on has enormous historical parallels. I'm going to give you two examples.
Number one, the head of Venezuela, Mr. Maduro, was the head of a sovereign country, independent in the world, a member of the United Nations, etc., etc. A powerful country invaded, snatched this man and his wife from their bed in the middle of the night, killing, I don't know, 100 Cuban soldiers and so on, guarding them. This is a threat to every sovereign in the world. You either do what the United States says, or this is what is very likely going to happen to you.
And Mr. Maduro is sitting in a prison not very far from where Michael and I live. It's in Brooklyn, I believe, somewhere where they're keeping him, without any, you know, had no legal representation that I'm aware of. I mean, he's arrested without—it's outrageous what is being done here in terms of the sovereignty that is the struggle, Michael is right, of every global South country since World War II. You can't do that without consequence. Only in the United States is it imagined. And this is the mistake always made by people like that.
It's what Hitler does when he crosses all the borders in Europe. He mobilizes Europe against him. And the Germans pay that price ever since what they did and what the attitude is towards Germans and towards the German government. They just—I mean, to give you an example, they've just embarked on the biggest rearmament since Hitler. And the rest of Europe is figuring out that won't be much use against the Russians, but it would be quite effective against the French or the Italians or the Scandinavians. And who did Hitler go after ? The French, the Italians, and the Scandinavian.
I mean, stop. The United States is violating the law, and that's not just some abstract principle. That's what is governing much of the mentality of people that are otherwise allies of the United States, but as Michael says, are being driven away. It's hard to be the ally if you can imagine yourself in Mr. Maduro's shoes.
The second example is the wanton killing of those people in the fishing boats, which continues. I believe the number is now under 250 people have been killed, many more, in these boats. This is a flaunting of the notion we are powerful and we're going to use. Look, the rest of the world has to understand that this puts them in danger. They have to worry about a United States willing to behave in what Michael calls rogue fashion, because it is willing to do that. Its complicity with Israel teaches its willingness to be complicit in genocide. And what does that mean ? What are you going to do?
Michael is upset. They haven't done more. I agree with it. It's terrible that they haven't done more, but it's not an argument that it isn't happening. It's not happening where it can be seen for obvious reasons. Who wants to be seen if Maduro is what happens to you?
So it's all being done quietly. And you have to read, you have to read the final statement of the Shanghai Cooperative Organization three weeks ago. Read that statement. In that statement, signed by Mr. Modi, who is the head of the largest country on earth, radically shifting from his position earlier this year. In February, he went to Israel, addressed the Knesset, the Israeli parliament, and when the United States and Israel invaded Iran, India didn't say hardly anything.
Now, eight months later, Mr. Modi, who is like every other third world country, wondering which way to go in the U.S. versus China situation, goes to a meeting from which the United States is excluded and signs a final statement that denounces the Israeli-American invasion of Iran, expresses condolences to the Iranian people for the assassination of the Ayatollah. Whoa ! What ? A Hindu is commiserating with the Muslim community about the murder of one of their religious leaders. You've got to be very blind not to understand the wind is shifting. All at once ? No.
Am I denying that the BRICS is a very heterogeneous, full of contradictions ? No, of course it is. What the hell would we expect ? Unanimity ? That's not going to happen. But the irony is much of the diversity comes to a stop at the United States border. The United States, they can all agree on, is the problem for them now, because they already believe that. They already believe. How you say it, when you say it, what maneuvers you go through—lots of disagreement. But is the United States the benevolent bringer of democracy ? Oh, stop. Nobody believes that anymore. Even the Americans don't believe that anymore.
Michael Hudson: Well, Richard, what you've just been saying ties into your initial comment about forecasting the future. I want to elaborate on that. For a hundred years after World War I, everyone thought that America represented the future. America was a model. Even when Russia agreed to let the Americans come in and wreck their economy with neoliberal reforms, they thought that somehow that would make them more like America, not realizing that America didn't want to make other countries like in a successful future, but they wanted to make them dependent and destroy them.
So what you're having now, I think instead of looking at America as a guide to the future, they are looking for guidance is what do we do that will be different ? What went wrong with the United States in how it's gone and what our relation with the United States has been ? How do we prevent the dependency situation, the demand for tributes ? How do we resist the United States incursion into our economy ? I don't see how this can be done without isolating themselves from the United States and imposing the kind of sanctions on the U.S. economy and all kinds of political sanctions as well that will really be a break.
And so that's why we've said before here that in that sense, and I think you agree with that, this is really, if this is a struggle for the future and what it'll be, it's really a civilizational struggle. How is the world going to be organized ? Other countries cannot afford to let it be organized on the tribute-paying, exploitative plans that the United States wants to impose on all of the rest of the world, starting with its closest allies, Europe, Korea, and Japan. So this is the big question. How will the future be different from what the United States created?
Richard Wolff: Yeah, and I think that the answer to that question is why I pay attention to the BRICS, not some kind of romantic notion that this is the global south. That is not that. It is a heterogeneous, conflict-ridden response. So it's not either a unified story or doing nothing. It is the complicated mixture of both of those things. And we shouldn't be surprised by it.
The United States was, in a way, a model for a while. And part of that was genuine, and part of that was fakery. And that's normally how these things go. There's lots of self-delusion along the way by all the different players. Washington is awash today with people who are self-deluded about the power the United States has. As Michael has reminded us repeatedly, it's the power to do damage. It's the power to hurt, to punish, to destroy. That's not a very positive image for the world.
If there's a difference between so-called hard power and so-called soft power, what the United States may have is hard power, but it has expended all of its soft power. It is not chic to be American associated in a large part of the world anymore. Every day, there are more and more people for whom America represents less rock and roll and blue jeans and all of that, and more and more complicity with Israel in Gaza or, you know, playing games with fishermen in boats. That is horrific to anybody who has even the vaguest idea of what law, law-abiding behavior, is supposed to be.
Well, the United States says it's in favor of a rules-based international order, something, by the way, you don't hear so often anymore because it's so patently untrue. You're not interested in rules-based order. Stephen Miller, who passes for the intellectual guide of Mr. Trump, is being quoted everywhere for having said the world is governed by brute strength, not by rules of order. Okay, kudos to him. He's able at least to say it.
But you pay a price when you say that. Just like Hitler paid a price when he said what he was going to do and went ahead and tried to do it. He was defeated by the Russians. And once that defeat got underway, convoluted and terrible that it was, damaging more to the Russian people than to the Germans at the time that Hitler was defeated. But it was the beginning of the end for him. That defeat ramified. He was no longer invincible. The United States is no longer invincible. Iran has proven it. And that's why it's historic. It is the historic moment. It's as historic now as the defeat of the Roman Empire by the so-called Wendels of continental Europe way back in the early centuries after Christ.
Michael Hudson: Well, I think that what made BRICS possible is really Russia, China, and now Iran. And no matter what, the core of whatever BRICS can agree upon is going to be made by these three countries. And I think they will be designing because they're the critical mass. And what prevented any group of the BRICS, like the non-aligned nations of the 1950s, from developing was they didn't have the critical mass. The critical mass is China and Russia. And now it's Iran joining them all for having the hard line. So that's part of it.
And secondly, if you're looking at what's going to be the core of this resistance, well, then we're back about talking about business interests. And I think the attempt by Trump to impose American monopoly, especially for information technology, on other countries, is going to be driving other businesses aside. And as we all are in agreement with, it's business that basically dominates the government in today's oligarchic world.
So I think that when Trump insisted that Korea adopt the American information technology instead of the more efficient, low-priced Chinese technology, that's going to spread to all the other countries. All of a sudden, it's becoming very clear that they may feel that they can stay apart and reject what Israel's doing, America's doing, even the war in Iran. But they can't reject the tentacles of the United States trying to control, trying to monopolize every sector of their economy and control the world's sea trade, the freedom of the seas, and control government.
So I think these business interests are going to be, if anything, strengthening and almost defining the characteristics of this world that is going to take a different structure. And I think the structure other countries are going to take will be just as you've seen in China, the same structure that industrial capitalism, the classical political economy, took of avoiding the rentier class, avoiding monopolies, avoiding the rent-seeking by the financial sector, the real estate, landlord sector, and the monopoly sector.
I think you're going to—it's as if the world's made a long detour for the last century, and I think they're going to go back. And China has independently recreated the whole strategy that Adam Smith, John Stuart Mill, and Marx all expressed with their value, price, and rent theory is an analytic guide for what's happening. And I think their desire of other countries to cut their cost of production. And that's what industrial capitalism is all about. That's going to be the operative intensive form pushing governments to break. What do you think of that?
Richard Wolff: Yeah, I think that's a continuation. I agree with you. I think there's a continuation of a recognition that the United States has been outmaneuvered, that the model represented by China, this combination of a half-public, half-private ability with a guidance of the Communist Party and the state, making sure that the growth objectives that govern the totality are dominant, that the private investment plans have to fit in, otherwise they're not allowed. If the private people go off in their own direction to maximize their private profit and it doesn't cohere with the larger plan, they punish Jack Ma. He disappears for five years until he can be readjusted and reinserted into the Chinese economy. It's incredible to watch. This is a new kind of model.
And I think there's even proof from Mr. Trump for what we are arguing. If I heard him correctly yesterday, he made a public statement in which something like the following came out of his mouth. This is a rough paraphrase. It doesn't matter that the rest of the world doesn't want to trade with us. If there's a trading deficit relationship, we'd be better off having nothing to do with them. We don't need them. We don't want that.
Well, now put that together with Canada, the single most important trading partner of the United States, an ally, sharing thousands of miles of unguarded border. And they are busy trading elsewhere, selling their energy to China, buying their equipment from Europe. They are moving, they are maneuvering with Mr. Carney around the United States to lessen their dependence on an unreliable trading partner. This is Mr. Trump transforming the loss of the Allies politically, which he's accomplished, now happening economically. We're in the middle of that, and he's already working to make that appear to be a desirable outcome of his genius policy.
I understand why he does that. That's a political politician's theater. But I don't think we are not required to be fooled by this. This is bullshit designed to make a bad situation look as though it's something we wanted all along. It's what children do in the playground when they're confronted with awkward moments. And that's what we have as our leadership.
But it is in its own oblique way an admission that that's where we're going to the very isolation rogue status that Michael referred to a few minutes ago. Of course, understood in a different framework, but nonetheless, it's an admission. We are not having trade relationships anymore. We are going to be hermetically sealed from the rest of the world. We're going to recreate our manufacturing base, even though that's going very slowly. We're going to do it somehow, and we're going to do it without interaction with the rest of the world, except for the Western Hemisphere, where we will find all the materials we need and we will force that to be delivered to us. That's the strategy.
Michael Hudson: Well, it was America's trade relationships that enabled it to become the creditor power that it was between World War I and World War II. And without that, what does it have ? It really only has military power. So other countries will have to somehow find a way of resisting. I'm not sure what China and Russia are discussing with Iran as to how they can shoot down any of the Israeli airplanes that are going to carry these heavy bombs, but they must be very heavy bombers, and I'm sure that the radars are going to be able to show them what's coming. Maybe NEMA has followed some of this.
Nima Alkhorshid: Let me think what's going on between Iran and China and Russia, basically with the new sanctions on the two countries, Iran and Russia, they're trying to find some sort of solution for that. And it all brings all of them together, in my opinion, to strengthen the ties. They have the connection, they have the land connection, they have the sea connection, and they have all of that. But before wrapping up, let me just bring a video of the chair of Federal Reserves and Mark Warsh. He was asked by a reporter yesterday about the interest rate. Here is what he said.
Elizabeth Schulzy (clip): Thanks so much, Elizabeth Schulzy with ABC News. Big picture. I wonder if you could tell us just what will this move today actually do for American consumers ? And I have to ask: what is your message here to President Trump, who has repeatedly called to cut interest rates, not raise them?
Kevin Warsh (clip): I've got nothing for you on a discussion with the president.
Nima Alkhorshid: Here is what the Iranian, the head of Iranian parliament, you know, posted yesterday. Let me just bring—he brought this formula, I'm sure, and both of you know what's going on with this formula. And the formula is the interest rate based on inflation and growth, as you know, the you know, as they call it, the class, the classic Taylor rule. And he added something to it, which is so important here. And he added two parts: this is the first part and the second part. And it says the alpha and better or greater than zero. And this, the first part, SOH, is a straight of Hormuz. The second part is the bubble mandap. And it says, you know, it says R, even R isn't neutral. And it's the straight of Hormuz risk premium. And we said it. It's, you know, by increasing, he basically is mentioning trolling Donald Trump.
He's saying that it doesn't matter if you increase the interest rate. You know, it doesn't that much changes, because the problem, the economic problem, is geopolitical. It's not something related to the interest rate in the United States. What is your understanding of that, Richard, and how is that going to be resolved with the situation that Donald Trump is and Iranians are using trolling Donald Trump?
Richard Wolff: Well, at the risk of being mechanical in my thinking, I immediately go to what I learned from Hegel and Marx. We are watching a government caught in a contradiction. In order to try to deal with the inflation which threatens coming out of the geopolitical problems with oil, they need to raise interest rates. On the other hand, to raise an interest rate could be the tipping point over into a recession, which carries all kinds of other political problems. And they have no way to resolve that contradiction. It isn't resolved if you don't raise interest rates, and it isn't resolved if you do.
What Mr. Trump wanted would be disastrous for the inflation effort. What they've done is try to hold back on the inflation and run a risk with—ironically, I mean, I can go into this if you want—raising an interest rate can also be inflationary. If the rising interest rate is passed on by borrowers who have to pay it and therefore raise their price, it'll prove to have been a disaster because it didn't stop the inflation, but it did hamper real purchases. Okay, then you get the worst of all of both contradictions rather than choosing between them.
But the dilemma for capitalism is that it's at this point. Just when it needs it least, it has to take steps that are crazy. The president has just announced that the new annual budget that goes into effect in a couple of weeks. It starts 1st of October, the fiscal year in this country. He has proposed an increase of $600 billion in the defense budget, and that doesn't even take into account some of the outlays for selling arms to Ukraine and supporting Israel.
And there's no comparable rising revenue source. The tariffs don't produce enough, and they're in dispute from this Supreme Court anyway. So that means there's a big increase in our deficit.
Interest rates—just total interest costs just surpassed total outlays for defense in the American federal government budget. If you raise interest rates, the amount of money you have to spend on interest goes up. And given the size of the interest, of the increased deficit, if you're going to raise defense spending by $600 billion, what you're doing is putting the government into ever greater debt stress.
In other words, the rising interest rates worsen the situation that will cause rising interest rates. This is an impossible dead end for this country. It's already carrying debt that makes people want more interest to cover the risk of lending to a country like this. And you're making it worse, much worse. What is that doing ? You know, it means that the people who lend to the government are going to hesitate more and more, which forces the interest rate up more and more, which the government can't afford.
No wonder it wants South Korea to kick in $350 billion. It's in trouble. It needs help. And turning to use the colonial leftover to give it that help, that's what it's doing. And if it can't get it by administering the colonial power, if it has to work through the comprador local agents of Western imperialism, then it will by imposing tribute on them, if it can do that. Imposing tariffs on them, if it can do that.
And then it has to worry that their reaction will be: wait a minute, if they're Canada, they'll make deals with somebody else. And if they're South Korea, they'll say, we can't do it. We can't do that. We can't give you the tribute you want. How far—because that's what the South Koreans are doing—how far are you going to push us to get this money?
Knowing that the further they get pushed, the more the balance shifts. In what Michael said earlier, the question lurking in the background: maybe it's time to do what the Russians did: announce that they're not Europeans, they're Asians. And for South Korea, it would be: we're not the ally of the United States, we are now a genuinely independent agent, and then they will become good BRICS members, very eager to have another place to build their international future.
Michael Hudson: I think that will involve making some agreements with other Asian countries, including China. If you're going to shift away, you need another center, and that will be very interesting.
Yeah, you're right when you say that higher interest rates increase the cost of doing business, but I'm not sure businesses are going to be able to raise the prices accordingly because the higher interest rates mean that the wage earners are going to have to pay much more of their wages for interest, and that's going to shrink the market. So, what I see is a shrinkage of the market here, shrinking and shrinking, and as you said, a recession or really a depression. That's what Trump has left the economy in. It's going to be a shrinking home market, and because of that, a shrinking economy.
Richard Wolff: And if Trump allows that to unfold in that way, then no matter what happens in November, in two months when we vote, there will be a reaction against Mr. Trump, the likes of which we have not seen in the United States. There will be a level of revulsion that will leave him with five or ten percent of the vote and the rest of the population enraged.
And the way to understand that is possible is that you already see that in Europe. I mean, if only we had a third party. Yeah, well, you know, that election a couple of Sundays ago in Zachsen Anhalt in Germany, the Americans haven't paid attention to that, but 44% of the people went with alternative for Deutschland. That's the right wing. And if you add together the Die Linker Party and the Zara Wagenkocht, who used to be the leader of the Die Linker Party, but now has her own operation, well, that was in the neighborhood of 13, 14%. Okay, there it is. That's the majority of the German voting. 44% on the right, 14%, 15% on the left. The middle is fractured.
And by the way, the middle includes the Socialist Party that used to be the number two party, and the Christian Democrats that used to be the number one party. Those two together, you know, are under a quarter of the population, whereas more than half want. And by the way, the position of these in general is not in support of the war in Ukraine by the Germany, and that's the most important supporter of the war in Ukraine on the side of Ukraine now that the United States has withdrawn.
And all of them are in favor of, quote, resetting the relationship with Russia, which is a polite way of saying bringing back the oil and gas from Russia, which they want to buy to stop the deindustrialization. It's probably too late, but it shows you that the German public, and by the way, the popularity of Mr. Burnham in England, of Mr. Macron in France, and of Mr. Mertz in Germany is abysmal. Nobody wants these people anymore. They are considered the old, now dead consensus of the Cold War.
You know, it's the Europeans who are able to see increasingly that the demonization of Russia is a crazy projection. What has happened since Russia collapsed has been the expansion of NATO eastward, not Russia westward. All the evidence is that the danger to Europe is from the West taking advantage of Russia's internal turmoil, not the other way around. It's a pure projection onto imagining what Russia might want to do if it behaved the way NATO, in fact, did.
It's classic, but it's not working as a long term. For the short term, yes. Conjuring up a demon Russia, they've been doing that for 75 years, if not longer, in Europe.
But when it finally comes to Chav, Napoleon invaded Russia, they beat him. Kaiser Wilhelm invaded Russia, they beat him. Adolf Hitler invaded Russia, they beat him. This is not looking good as a strategy to mess with Russia. And I think they're learning that in the Ukraine.
Nima Alkhorshid: Thank you. Thank you, Richard, Michael, for being with us today. Great pleasure, as always. See you next week.
Richard Wolff: See you next week.