"Most People Have No Idea What's Going To Happen" | Richard Wolff's Last WARNING

The problem was Europe had the same depression history as this country did. So what the United States did is cut a deal. We will solve our economic problem by putting Keynesianism on steroids.

The government is going to come in and do what? Save us from the Soviet menace. Build up the military industrial and say to the Europeans, "We'll take care of it.

We'll provide you with the defense umbrella. will divide you with all the support and all you have to do is make sure you crush the socialists and communists at home and you are a good bull work against the Soviet Union. And to that end, here's what we're going to do.

You won't have to cover defense. We're taking care of that with our domestic Keynesian military Keynesianism. and you're going to take the money you would have had to spend to provide the social services that will allow you to compete with what the Russians are offering their people and had been already for quite a while at that time.

So, you're going to compete with them and then we're going to take our National Endowment for Democracy, our CIA, and all the rest and make sure the right politicians willing to commit to this deal sit at the top of the government in France, in Germany, in Britain. And we all know the story of all of the money and the sloshing that was done. That was it.

That was the way we were going to destroy the socialist and communist inside and weaken or destroy if we could the one outside and all of it justifying the massive government spending. But the problem is all of that was paid for to touch on your point by debt. The United States does not like to fight wars with taxes.

It likes to fight wars with money borrowed because if you tax the people, the opposition to the war would be much bigger and much arise much sooner. So you can't do that. You borrow the money.

Here's the irony. The Europeans were major lenders for a while to the United States to fund the Keynesianism that protected them from having to use their money for their own defense. The ironies of how this all fit together are a charming story that's never quite been put down on paper.

What we have now is the collapse of that deal. It's very important historically. The story, it fits together our situation coming out of World War II and working out this way for another lease on life with lots of domestic government spending.

But the problem is so much of it was done on debt. So much of it was done without understanding of the special moment. The United States had no competitor coming out of World War II.

Britain, France, Germany, Italy, Japan, Russia, they were all destroyed. We came out king of the hill. Our economy was in better shape coming out of the war than it was going in.

And no one else could say that. And the result was a very bizarre, unique, special moment that could not possibly last. I think historians will look back, be rather impressed it lasted as long as it did.

But in any case, it is now over. You can't do it. The United States lost the war in Vietnam.

It lost it in Iraq. It's losing it in Ukraine. I mean, look at it.

And these are among the poorest countries on earth to which the US is losing. And the Europeans are left in a way one almost has to sympathize. They're irrelevant.

They've become not the literal opposite of what they were three or four centuries ago. The center of the universe, the apogee of culture, the colonial master, all of that. It's all gone.

Europe is a footnote. living in a world of fantasy where being unable to stop the Russians with the United States. They actually think that they're going to do it without the United States.

These are levels of craziness that are part of the decline, I suspect, of all empires. When they consume themselves, they will do what Roosevelt ended up doing in the 1930s. They'll intervene in the labor market.

There's a minimum wage. We don't care what market forces are. You don't go below that.

And I want to remind people, even the conservatives had those. When the inflation was unmanageable in 1971, Nixon goes on the radio and television, 15th of August, 1971, and says, "I am freezing all wages and prices in the United States. As of tomorrow morning, if you raise your price, Mr Businessman, we're going to come, we're going to arrest you, and you're going to jail.

" Whoa. In other empires, as they declined, they began to appeal to their gods, to their fetishes, to their fantasies because they had nothing practically workable left. We are borrowed up to here with our $35 trillion of national debt.

It's way above our national GDP, which is not supposed to be. That used to be considered a no- no line. Our European allies don't do it as badly as we do it, although they're about to.

Look at the Germans. There's a losing of your mind. Mr Mertz became the new about to become chancellor there.

He ran a campaign on preserving the German commitment to no government borrowing. Within days of the election, he completely reverses himself and now champions the biggest debt expansion in German history to build a military. Who's he going to fight?

The Russians. That's a joke. The Chinese, that's a bigger joke.

The United States, perhaps the biggest joke of all. What? The only people he could use that for are the other Europeans.

And I think somewhere we've seen that picture before. These are behaviors that people like you and me and others in the media are going to have a harder and harder time nailing down because they are the desperate acts of a declining empire that doesn't know where to turn. I think what you're seeing in part, let's start with the tariffs.

There's something that's important about the tariffs that doesn't get the attention it ought to. If I read American politics correctly, then for at least the last hundred years, the Republican party's major mantra has been either we're going to cut your taxes or we're not going to raise your taxes. We are the anti-ax party.

and they go to every part of the population they can to sell that story. A tariff is a tax. That's all it is.

It's a tax on imported objects that are produced elsewhere and sold here. In the early days of American history, these were called import duties because that's what they are. Calling them a tariff.

Here we have an anti-ax party whose major economic weapon as of Mr Trump is a tariff. It's kind of a rem there's more evidence that something is really breaking down because they have to become advocates of the very thing they claimed in principle they were against. Very bizarre.

And the same people out of whose mouth on the 4th of July comes anti-ax BS are now telling you about what a wonderful weapon the tariff is. The reason Mr Trump uses it, by the way, is that Congress gave the president a lot of leeway about doing that. And so he can do it.

And so he can play the role Mr Trump likes to play, you know, the angry god with his weapons. And he couldn't do that with many other weapons because they have to go through the Congress or through various procedures other than him just spouting off on truth social how he's going to do this or that, do it today, cancel it tomorrow, all this bizarre theatric. He's doing it because he can do it with that.

There is no principle behind it. Number one. Number two, tariffs are very old.

There's nothing new. Two countries have been throwing tariffs against each other for centuries. Why do I tell you this?

Because there's an immense literature. I've had to teach courses in international economics. That's where that literature is.

The students spend, you know, 3 weeks going through articles and books, etc. , etc. All right.

Here's what we know. We know that a tariff cannot, you cannot tell people what a tariff will do. The reason is a tariff sets off a whole series of reactions.

You can't know them in advance. In other words, everyone affected by a tariff has to make a choice about how they're going to respond. They will all respond, but how they do it, it's like knowing in advance the chess move.

You have some probabilities maybe, but you never know. The genius is the one who adjusts. So when Mr Trump tells you the tariffs will do X.

This is snake oil. That this is nonsense. He doesn't know what that's going to do.

In his first statements about the tariff, he thought, he kept saying it. The Chinese will pay the tariff. He had to have his advisers, some of whom I know, had to explain to him and he couldn't get it.

No, the tariff is paid by Americans to the American government. The Chinese don't pay any of it. You can imagine a reaction in China that might get yes, you can, but there's no reason to assume it.

For example, one response to a tariff is a retaliatory tariff. Okay? You can't know in advance whether they will do that, and you can't know in advance what products of yours they will impose a tariff.

Again, they don't have to do it across everything. Europe is busy taxing bourbon whiskey and so are the Chinese for obvious political reasons because it impacts Mr Trump's economic base. But we don't know if Canada cannot sell its electricity into the United States.

Well, then they're going to sell it to China. Is that really an advantage? The answer is no.

Is that a possibility? Yes. In other words, the minute you understand what's going on, all you have for Mr Trump and his associates is blather what looks good on the evening news.

We're going to do this and it's going to have that result. That's exactly what he can't do. Nobody can do that.

And even a passing awareness if you're not a paid hustster is you would say, well, this is going to hurt the relationship. It's going to lead to a lot of rethinking and choices among optional and how they all add up and impact on us. The only honest answer is I don't know.

But here's the problem. It is very expensive to move production facilities. They take years to establish and they take almost as much time to relocate.

And it is very expensive. No one no businessman or woman I have ever talked to about this would ever make a decision because country A imposes a tariff. Even more so if that country were to behave in such a way as to say the tariff is temporary.

The tariff is why because who in the that'd be crazy spend billions move your Ford plant from Waka to Cincinnati and then at the end of 3 years discover that the rationale is gone because this crazy president has decided to go bother somebody else with a tariff. you're then out a fortune of money and then you really lose because if you come to the United States, which he always neglects to tell you, you have to pay a lot more money in wages on top of the cost of the move. The intrinsic costs that accountant in a multinational corporation will sit down and tell their CEO, "This is what this is going to cost you.

" And that's one of the reasons the CEOs are very unhappy. I monitor a CEO program at Yale. the way Yale panders to CEOs, it brings them there, puts them in a lovely old colonial building, whines and dines them, and sends them off on their way.

And lo and behold, contributions come to Yale a few months later. But in any case, it's a nice sounding board. I like to pay attention.

They are all afraid of saying anything publicly because Mr Trump is punitive, but with the protection of anonymity, whoop, what they are willing to say to their friends and cohorts at Yale about they are very they don't want any of this. They don't want the uncertainty above all else. They can't make decisions.

And so, by the way, that's one of the reasons we see worries now about recession. That's not about anything other than there's such a massive realization in the corporate sector that we have no idea what this clown is going to do next. We can't make a decide to build a factory, let alone to move one because we can't figure out where that ought to be.

And making a mistake in this environment is deadly. By the way, that introduces another dimension that we haven't spoken about, but which at some point and maybe on a different occasion. The United States is different now from what it has been for a century because we really have an economic competitor.

We never had that. The Soviet Union may have been a military problem, but it was never an economic problem. It was much too small, much too backward, much too weak.

And that's through all the way till it collapsed in 1989. It just wasn't. China is it already is.

And not to speak of the population, not to speak of the bricks alliance it has erected. I mean everything is now qualified by the fact that we the US have something we did not have before which is an entire competitive totality. China and the bricks are over, if you add them up, are over 50% of the world's population.

United States is 4 and a. 5%. You got to keep this somewhere in your head what we are talking about here.

If you add up the GDP of the G7, the US, Canada, Japan, Britain, France, Italy, and Germany, it's about 27 28% of the world's output. If you add up China and the bricks, it's 35%. It's already a bigger economic unit than we are.

every country in Asia, Africa, Latin America, thinking about building a railroad or borrowing money or expanding its medical care. They used to go to New York or Washington or London and get the help they still go and they still propose, but as soon as that's done, they send the same team to Beijing or New Delhi or Sa Paulo and they're bargaining who's going to give me the better deal and they're in a better position than we are to do that. which is why the railroads of Africa are being built by the Chinese and the ports in Latin America and so on.

It's relentless. The decline of this empire and the rise, I don't know if it's going to be a Chinese empire. I don't know if maybe their commitment to multilateralism or nationalism is genuine or not.

How can I know? But the decline of this one unmistakable unless you need to deny it, which you and I know is the air we breathe in this country. The history of capitalism has always produced people who fetishize one or another aspect.

It is a system. It's as important in the reproduction of that system that the production of goods and services happens in certain ways, that the exchange in markets happen, and that money as the kind of lubricant, if you like, plays the appropriate role. All of those things are necessary.

Money, the US dollar, very important. But the system, like all systems, has within it the capacity to adjust if one or not. You know, it's a little bit like doctors explain if you lose your left arm.

It turns out your right arm can do all kind of things and it will your body will kind of adjust. Yes, you will always know you don't have a left arm, but you will be amazed at what your right arm can do or your left eye or your right eye or different parts of you. It's that way.

So, it used to be thought that the great evil of capitalism was the banker or the people with the money. Well, they are important, but they are not the beginning and the end any more than anybody else. No other part is.

It's a system. So, here's the way I understand it. Part of the decline of the empire is a dimminion in all of the signs of empire.

You know, the sign of the British Empire was that the pound sterling was the global currency. We now know that the British Empire is a vague fading memory because nobody cares about the British pound sterling. The British barely do and nobody else.

Britain's decline starts in the 19th century and then is wiped out in World War I and again in World War II. It's giving away bits and pieces of its empire as it goes. You know, at the end of World War II, it's very famous at Breton Woods when all the victory countries got together up there in the woods of New Hampshire to decide on the monetary system.

The British led by canes, you know, at that point the greatest economist in the world, they thought they could reconstruct the pound sterling universe. And Harry Dexter White, the American equivalent, said to them, looked at them and laughed. He said, you know, that's over for you.

The dollar is going to end. And everybody nodded because they all kind of understood without much argument. They were part of that process.

I think the US dollar is shrinking. There's easy ways to show it. You know, if you look 40 years ago, central banks around the world kept dollars and gold as their basic two reserves to back up their own currencies.

And the dollar was often 70, 75, 80, even up above that percent of those reserves. Little bit of gold, lots of dollars, good as gold. Today, that number, it's variously estimated.

No one knows exactly for sure, but it's in the 40 to 50% range. That's a very dramatic d. It's telling you that for the rest of the world, something very big has changed from what it was in 1945 to now.

I mean, it's so big and it's so everywhere and you can see what they're replacing it with. At first, it was the euros. Then it was the euros and the yen.

Now, it's the euros, the yen, and the yuan from China. It's like a subtext translating what we're talking about as a decline. So I see it more as a steady erosion.

One of the major projects of the brick nations, which you can see when you study their reports when they meet is to replace the dollar. There's no question that they're interested in doing that. They are already doing it.

The decision of Saudi Arabia doesn't get all that much attention here, but they are now willing to sell their oil for a whole variety of currencies. Before they insisted on the dollar, each of these decisions by itself is limited. But when you add them up, then it's bye-bye the dollar.

But we are still a very rich country. We are still a very important part. I don't want to overstate it.

I'm saying it's dying. I'm not saying it's dead. We are not Britain.

We are doing what Britain did. We are following a lot more than people willing to admit.