How Michael Hudson Explains America’s Annual $1.5T Military Expenditures

Posted by:

Date: Monday, 20 November 2023

How Michael Hudson Explains America’s Annual $1.5T Military Expenditures

Eric Zuesse (blogs at

On November 18th, the great economic historian Michael Hudson decimated the Nobel-Prize-winning (neoliberal-neoconservative, or pro-imperialism libertarian) economic theorists, in a conversation with the great geostrategic analyst Alexander Mercouris, by explaining something that all of those (all pro-imperialism libertarian) economic theorists (the mainstream economic theorists and pontificators) don’t even notice (which is why none of those — the most-prestigius economists) foresaw the 2008 economic crash), which is that America now spends, on its military, half of the world’s military expenditures, and also over half of the U.S. federal Government's annually-authorized-by-Congress-and signed-by-the-President-into-law federal budgets. The military contractors that sell to the U.S. Government control the U.S. Government (via corruption), and this control became supercharged when the Soviet Union ended in 1991 and America’s military spending became disconnected from any authentic threat to U.S. national security and so all of its military spending became based upon fraudulent excuses such as ‘WMD in Iraq’. The sheer size of America’s global and national military expenditures is vastly underestimated, under-reported, and under-analyzed, but Hudson connected the dots in order to show how this vastly-out-of-proportion U.S. military came to be, and whom it has actually been benefitting.

However, before I present Hudson’s explanation, anyone who doubts that the summary I’ve just given of what the present situation is, should first click onto those two links (above here) in order to know that it certainly is so, because that reality is what Hudson explains in this interview.

“Restructuring of the Global Economy - Michael Hudson, Alexander Mercouris & Glenn Diesen”

The Duran, 18 November 2023.


MICHAEL HUDSON: Well, you said that the United States has


lost its competitiveness, and actually the United States decided it


didn't want to compete, and this goes back to the Clinton ad Administration. Uh


in the 1990s, uh, the Clinton administration's objective, and that of


the Democratic Party [its megadonor billionaires who control it] was basically a class war against labor, that how do we


lower the wages of labor so that we can increase the profitability. Well, the way


America had of lowering the wages of labor was: Let's uh hire Asian labor,


especially Chinese labor, let's let Chinese uh into a trade relationship with us into the the WTO, and then


instead of having to bid up the price of uh labor in our industrial centers Detroit and uh the South and uh the


Midwest, uh [we — the billionaires] will hire uh products made by Chinese labor that will keep down wages


here, and uh, America can be in a post-industrial economy; and during the


1980s and 90s all of the economic discussion was how do you have a


post-industrial economy. They they didn't want to industrialize, they thought that


industrial labor with blue collar labor uh and in America, uh you're not going to


have uh college graduates uh or even high school graduates wanting to have a


blue collar job. They want a service industry job, they want uh to make jobs


something that's not industrial, a managerial job, so a new phrase came into


being, the professional managerial class, uh uh uh technology uh, and the idea of


uh American uh economic growth from the 1990s on, was instead of producing


manufactured goods, we will develop intellectual uh property monopolies,


especially in information technology [and] in pharmaceuticals, and uh, we will uh


America will make its uh uh economic growth in GDP not by making profits to


employ labor to produce more and more goods and services, but to have monopoly rents for our pharmaceuticals, so we can


make, uh uh pills that cost 10 cents each and sell them for $500 each. We can make


computer programs for uh automatic uh artificial intelligence


and for computer chips uh and for uh all of the information technology we have at


enormous markups, and we can live on our our economic rents, uh live off the fat


of the land as they used to say. We don't have to have blue collar jobs. Everybody can uh work in an office and make money


that way. So, in a way what's happened today is exactly what America [the billionaires who fund Democratic Party candidates] wanted. And


all of a sudden uh they've uh woken up to the fact, and said how can America run


the world and be number one if it doesn't have a manufacturing power, if it's dependent on other countries for


its, uh manufacturing, and now for its technology, uh and if it uh all of this


is financed by running into debt that the economy runs up for uh the military


spending abroad to prevent other countries from competing with the United States when actually it's the United


States that has decided we want you to compete because your production and competition with us is what's winning


the class war against labor, that your competition is what's holding down uh the price of labor so they haven't


really thought what does a post-industrial economy mean? Well, it turns out to be a financialized economy, uh and


uh you have today uh in the, uh, the election uh for


2024, uh, is being prepared uh the uh the bewilderment of the Democratic Party


here. If you look at the GDP, President Biden says you're doing so well, look at


GDP and the vast majority of Americans, according to every poll uh in every part


of the country, says we're not doing well at all, we're doing awful, and uh it turns


out that when you look at what is uh the American GDP, well almost all of it is uh


the growth in prosperity the growth in uh financial uh benefits for the 1%


maybe for the 10% of the population and that the 1% and the 10% has uh increased


its wealth so much since uh the uh 2008 uh led the Federal Reserve to slash


interest rates that uh e the 1% and the 10% gain is larger than the loss for the


90%, so all that the uh President Biden can say is who are you going to believe,


are you going to look at the statistics or are you going to look at your own life and what you have to spend at the grocery store and what you have to spend


on rent and housing, as uh America turns away from a home owner's economy into


a rental economy, is there's a huge concentration of uh uh land and housing


uh in the hands of absentee landlords instead of uh private home buyers who


now cannot afford to buy a home when the interest rates are are soaring to over 7


and a half percent, uh in which case if if you buy a home with a 10 year mortgage, in


only 10 years the bank makes more money for uh for the mortgage than the seller


of the house makes, uh so indeed America's found that yes uh what is the


post industrial economy, it's a financial economy, and a financial economy has


savings on the asset side of the balance sheet, and debt on the uh liability side,


but uh the the savings on the asset side are held mainly by the 1% and the debt


on the liability side is owed by the 99%, so uh when President Biden said and the


economists profession, uh Paul Krugman and the Nobel Prize winners all say well


you don't have to look at debt because we owe it to ourselves, well the we who owe it are the 99% and the ourselves are


the 1% and that's what is uh leading uh the United States to uh be not a very


happy economy these days. ALEXANDER MERCOURIS: What you described — to a British


ear, and you know I am, I live, in Britain, I'm I'm in London — is not completely unfamiliar. I


mean, it's like the kind of cycle that we went through ourselves in Britain. I mean


you had this um system that the British created basically in the late 19th


century: we have commodities flowing in — there’s, I think I think it was Keynes who talked about how if you


were a person of certain affluence in Britain just before the first world War


you could order things from all over the world and they would come to you — and we had a heavily financialized system: we


had the bank of England, we had the city of London, we had um our currency pegged


to Gold, we insisted that people to great extent trade with our currency, we


started to neglect our industrial base and rely increasingly on the profits of


our Empire, and you know the rental systems began to take hold — and one of the things that happened


in Britain is that, of course, wealth gradually began to drain upwards. It was,


it was like you know within the social system you saw, some people in late 19th century early 20th century Britain


becoming incredibly rich and building their houses and buying their


Rolls-Royce Silver Ghosts and sending their children to expensive schools and


living a very agreeable life. But the rest of the country going through a time


of shall we say economic atrophy. And, of course, that happened within a framework


of Empire and a framework of Imperial control, and it seems to me that's one of the


big differences with the United States today, is that at least with the


British they could control it to some extent because they actually had a


proper formal Empire. The United States doesn't have it in exactly the same way,


so you are grafting a late Imperial British


structure without having the mechanics of Empire as well defined as the British


did. Am I getting this completely wrong? HUDSON: No you've got the point, uh the the uh


the explanation of what happened is that Empires don't pay. If you look at the


Britain in the 1930s, uh that was uh uh it certainly was uh solidifying its


Empire with Imperial preference and uh India and other countries had to save all their money uh in England, but all of


the money that Britain made from its Empire ended up being used to pay the


United States. So Britain had a uh a surplus with its Empire and a deficit


with trade with the United States and with U.S. firms. So it turned out that already in the 1930s the United States


was the beneficiary of the Empire, and of course that uh enabled the United States to uh write the rules of World Trade and


the uh uh the International Monetary Fund and the British Loan in 1944 and 45


uh so that England had to basically uh give up its Empire to the United States.


It had to end Imperial preference. It had to introduce free trade and free investment, which meant that India and


the Empire could spend all the money that they made during World War II anywhere they wanted, and


where did they want? Well the only country that had enough uh uh industry to uh give them what they wanted was the


United States. Well the United States is going through what England went through today The Empire really didn't pay and


starting with the uh Korean war in 1951 uh the United States moved from a


position where uh it started in 1950, with 75% of the world's gold held in the


United States. The Korean War pushed the United States into chronic balance of


payments deficit, and I've done the statistics that I've published in Super Imperialism and uh the entire American


balance of payments deficit was military spending abroad to protect the Empire.


The private sector in America was just exactly in balance: trade foreign


investment uh borrowing tourism all of that was balanced. The entire deficit was


military spending uh and uh to sort of uh it felt to lock in the Empire. Well


you you you're seeing that today accelerating and the problem is uh how


can America finance uh uh the military spending abroad? Well ironically the uh


what happened was the military spending in Vietnam and Southeast Asia forced


America off the gold standard as you know in 1971, and what were foreign


central banks going to do with their uh with all of the dollars that were flowing in uh they weren't going to do


what uh General DeGaul and Germany were doing and buying gold. All they could do


was uh say well we have to invest our uh money in secured Securities we'll buy US


Treasury Securities. And so all the money that America spent abroad militarily was


sent back to the United States by by the central banks of Europe uh and other


payment surplus countries to finance the uh balance of payments deficit for the


war [the U.S. wars against the Soviet Union] so in effect the whole international monetary system was based on


IOUs for America's military spending across the world. Well, you can imagine


what's happened today, now that the United States has taken a very belligerent position in the world saying


it's uh uh it's it's our way or we're just going to smash things up. Uh the


United States, this system, has split the world into two opposing camps as I think


you've said on this show. I watch your show regularly, and this is what you've been talking about week after week after


week, how the world is dividing up and what are the dynamics uh of this. …


Hudson then went into the necessary replacement of the IMF, U.N., and of the other Truman-created post-WW-II international structures:



the creation of what really is a new economic order, and that's what we're seeing now, a whole different set of


institutions [and here Hudson is summarizing actually what were the objectives that FDR was aiming for but Truman sabotaged], with the, not as president Xi and President Putin have said, uh


not uh uh unipolar [which America’s billionaires insist upon], but multipolar [which Xi and Putin insist upon]; and multipolar means mutual gain [win-win] … instead of your gain is our loss, a zero sum gain [win-lose: what billionaires encourage the public to favor, such as by means of promoting competitive athletics, the military, etc.] which is the US


unipolar strategy. …


Investigative historian Eric Zuesse’s new book, AMERICA’S EMPIRE OF EVIL: Hitler’s Posthumous Victory, and Why the Social Sciences Need to Change, is about how America took over the world after World War II in order to enslave it to U.S.-and-allied billionaires. Their cartels extract the world’s wealth by control of not only their ‘news’ media but the social ‘sciences’ — duping the public.

Dr. Fikrejesus Amahazion at the XXIX International Rosa Luxemburg Conference in Berlin on January

Dehai Events