May 16 (Special for OrinocoTribune.com)—The US oligarchy became wealthy by exploiting the labor and natural resources of peoples and lands across the Americas, Africa, and Asia. In our millennium, Venezuela’s assets were seized by an empire in decline. As its economy continues to weaken, the US lashes out with increasingly desperate policies of economic “sanctions” against those that try to break out of its orbit. In the process, it drives its enemies together.
“Ironically, America’s attempt to isolate other countries is turning into an attempt to isolate itself,” said economist Michael Hudson recently. One of the best-known economists in the US, Hudson wrote the influential and popular 1972 book Super Imperialism: The Economic Strategy of American Empire. He has worked as a Wall Street analyst, as an economic advisor to the United Nations and the governments of China, US, Canada, Mexico, and Iceland, and has written a dozen subsequent books. On May 5, Hudson appeared on Max Blumenthal and Ben Norton’s Moderate Rebels podcast and made numerous observations about Venezuela’s economy.
US is the “democratic center of the world”
Hudson commented on the seizure of Venezuelan assets through the recognition of the illegitimate parallel government of Juan Guaidó by the US and its allies: “America is really the democratic center of the world,” said Hudson ironically. “As the democratic center, because we’re the democracy we get to say who is the president of any country in the world, and we have found a nasty little opportunist [Guaidó]… And we have decided he is the head of it and we’re giving all of Venezuela’s gold supply to him, even though the Venezuelan people didn’t elect him. Well, Chileans did not elect Pinochet either.”
“As the ‘democratic center of the world,’ America gets to designate the heads of any given country, by military force when necessary,” added Hudson cuttingly. “So of course, the gold supply was simply grabbed by England—which again is a small branch, totally dependent on the United States—and grabbed the gold. They grabbed all of Venezuela’s holdings, its oil company’s distribution network and gas stations in the United States [CITGO].”
Venezuela’s economic problems did not begin with socialism or with “sanctions,” noted Hudson, but with the country’s historic neocolonial relationship with the US, enforced dependency on oil as a primary export, and private capital flight.
“Venezuela was tied in a knot long before Chávez,” noted Hudson. “The United States backed a series of dictators, ever since Perez Jiménez [and Juan Vicente Gomez before him] in the 1950s, who essentially drew up international loan contracts, not only pledging sovereign debt to whoever the bondholders were, but collateralizing Venezuela’s debt with all of its oil reserves, and all of the holdings of its oil company, including the US affiliates… Venezuela is still suffering from the era of colonialism that America is trying to blame on Chávez and his successors, and on socialism, instead of on the American assassination teams and killer squads that put in the dictators that pledged all of Venezuela’s oil reserves to the foreign bondholders.”
Venezuelan economist Pasqualina Curcio has estimated that the transnational private sector has moved about $350 billion out of Venezuela, assets that are now locked up in tax havens.
Modern Monetary Theory
In short, Modern Monetary Theory (MTT) holds that governments can create fiat currency in order to finance their budget deficits. It is the “now obvious idea that governments do not have to borrow from bondholders in order to finance their budget deficits—they can simply print the money,” summarizes Hudson, “and the effect of printing the money is no more inflationary than borrowing from billionaires.”
“The key is the balance of payments effect,” explained Hudson. “No country can go broke if its debts are denominated in its own currency. Venezuela can print all the domestic currency it needs to pay its debts to keep the economy going. But it can’t print dollars. Only the United States government can create dollars, and in as much as Venezuela’s foreign debt is in dollars, that is beyond the ability of its government and treasury to print.”
“Any country can move away from the dollar as long as they are part of a system that has a critical mass,” Hudson detailed. “So the great threat to the dollar hegemony is that China, Russia, Iran, and the Shanghai Cooperation Organization countries are going to be a critical mass that Venezuela, much of Latin America, Africa, and the rest of Asia can all join.”
“The fact is, if you rely on the dollar, you’re probably going to get screwed,” summarized Hudson. “Because with the dollar… the US can grab your bank account at any point. They can grab your gold reserves at any point.”
Michael Hudson is no lone wolf. He has been called, for example, “the best economist in the world” by Paul Craig Roberts, former head of the Office of Economic Policy at the US Department of the Treasury and former editor at The Wall Street Journal. Hudson is currently president at The Institute for the Study of Long-Term Economic Trends (ISLET) and Distinguished Research Professor of Economics at the University of Missouri, Kansas City, in the US.
The IMF is a small room in the Pentagon’s basement
In addition, Hudson made some scathing comments about the Bretton Woods system instituted in 1944—the DC-based World Bank and International Monetary Fund (IMF)—that has dominated the international economy since World War II.
“The IMF was created as an arm of US foreign policy,” noted Hudson, “and it still is an arm…There’s a mentality that the IMF has: it’s a pro-creditor mentality, and it’s dominated thoroughly by the United States, in a cold war modality. That is why Russia and China are seeking to create their own international bank. And the even more vicious arm of American imperialism, probably the most deadly, is the World Bank, which is enormously destructive.”
In March, 2020 the IMF refused a relatively small loan to Venezuela, claiming that President Maduro “lacked recognition,” even though the vast majority of UN states and the UN itself considered him as the country’s leader. In late 2019, long after the imposter Juan Guaidó declared himself president in a Caracas plaza, a large majority of UN member states (105) elected Venezuela—Maduro’s Venezuela—to the UN Human Rights Council. More recently, the IMF refused to honor Venezuela’s Special Drawing Rights.
“The World Bank and the IMF have always been probably the most viciously pro-rentier, anti-progressive institutions in the world,” Hudson continued. “And as such, they are guided by essentially America’s deep state, as an arm of subjugating other countries, preventing their self-sufficiency. The idea is, if you can impoverish them, you will somehow lead to a regime change and put in a client oligarchy that will be willing to make their economy dependent on the United States. That is the US foreign policy in a nutshell since 1945.”
Featured image: Celebrated US economist Michael Hudson referred to Juan Guaidó as a “nasty little opportunist” during a recent interview. File photo.
Special for Orinoco Tribune by Steve Lalla