At the center of my conversation with Professor Michael Hudson was a challenge to one of America’s most sacred assumptions — that its global dominance rests on military strength and economic superiority. According to Professor Hudson, this belief is not just outdated; it is dangerously misleading. The real vulnerability of the United States is not its national debt, which is endlessly debated in Washington, but its balance-of-payments deficit and reliance on foreign exchange. The empire does not produce enough to pay its way in the world. Military spending may project power, but it does not solve that problem — it disguises it.
This contradiction is now being exposed. President Trump’s foreign policy, often dismissed as chaotic, has inadvertently revealed how the system actually works. Tariffs, sanctions, threats against allies, withdrawals from international institutions — these are not signs of strategic confidence. They are symptoms of a power structure that can no longer rely on consent and must increasingly resort to coercion. The spectacle of initiatives like a self-styled “Board of Peace” only underlines how hollow the performance has become.
The global response has been swift, if uneven. Washington’s aggressive posture is pushing countries across the Global South — and increasingly parts of Europe — to look for alternatives to U.S.-dominated economic frameworks. Professor Hudson made a crucial point here: tariffs do not create industrial power. They never have. Every successful industrial economy, from the United States itself to Germany, relied on infrastructure, public investment, and strategic coordination. Punitive trade policy without productive investment is not an industrial strategy — it is economic theater.
That theater masks a deeper structural problem inside the American economy. The United States has evolved into a high-cost, low-value system dominated by rent extraction rather than production. Privatized natural monopolies turn healthcare, education, housing, and energy into financial assets instead of public goods. The result is an economy that grows wealth at the top while becoming increasingly unaffordable for everyone else. Michael framed this not as a failure of capitalism, but as a familiar historical phase — one where rent-seeking overwhelms productive investment, until political pressure forces reform.
The geopolitical implications of this model are profound. The United States is no longer trying to outcompete China economically. It is trying to contain China by controlling energy flows, financial channels, and market access. Sanctions on oil exporters, pressure on allies to redirect investment, and an expanded interpretation of the Monroe Doctrine that now stretches across oceans all serve the same goal: force global capital to circulate through the U.S. system, whether it is productive or not.
Europe, meanwhile, finds itself caught in the middle. NATO, Michael argued, functions less as a defensive alliance than as a mechanism for political subordination and arms sales. Democratic choice is constrained by security dependency, while European industry is discouraged from engaging with China and nudged instead toward deeper reliance on the U.S. economy. Even energy policy has become a geopolitical weapon, reshaping European competitiveness in ways that benefit Washington more than Brussels.
What makes this moment unusual is not that power is being exercised — empires always do that — but that the narrative is breaking down. At Davos, figures like Canadian PM Mark Carney now openly acknowledge the exploitative nature of the global system they once defended. The irony is impossible to ignore: the architects of the old order are suddenly horrified by the consequences of their own design.
The interview ended not with a conclusion, but with an understanding. The post-war economic architecture built by the United States — through institutions like the IMF and World Bank — was designed to absorb empires, manage exchange rates, and keep capital flowing in America’s favor. That system is now being abandoned in favor of something far more blunt: tariffs, sanctions, and force.
History suggests this approach will not restore dominance. It will accelerate fragmentation and, ultimately, the decline of the U.S. empire.
○ Professor Michael Hudson's site: https://michael-hudson.com/
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