Michael Hudson was one of the first to suggest that the U.S. proxy war against Russia was also a war on Europe, particularly Germany. From Hudson at unz.com:
In his latest essay, Professor Hudson digs deeper into Germany’s suicidal economic/financial policies; their effect on the already falling euro – and hints at some possibilities for fast integrating Eurasia and the Global South as a whole to try to break the Hegemon’s stranglehold.
That led to a series of email exchanges, especially about the future role of the yuan, where Hudson remarked:
“The Chinese whom I’ve talked to for years and years did not expect the dollar to weaken. They’re not crying about its rise, but they are concerned about flight capital from China as I think after the Party Congress [starting on October 16] there will be a crackdown on the Shanghai free-market advocacy. Pressure for the coming changes has been long building up. The spirit of reform to rein in ‘free markets’ was spreading among students over a decade ago, and they have been rising in the Party hierarchy.”
On the key issue of Russia accepting payment for energy in rubles, Hudson touched upon a point rarely examined outside of Russia: “They don’t really want to be paid just in rubles. That’s the one thing Russia doesn’t need, because it can just print them. It only needs rubles to balance its international payments to stabilize the exchange rate – not to push it up.”
Which brings us to settlements in yuan: “Taking payment in yuan is like taking payment in gold – an international asset that every country desires as a non-fiat currency that has a value if one sells it (unlike the dollar now, which may simply be confiscated, or ultimately left abandoned). What Russia really needs are critical industrial inputs like computer chips. It could ask China to import these with the yuan Russia provides.”
Keynes is back
Following our email exchanges, Professor Hudson gracefully agreed to answer in detail a few questions about the extremely complex geoeconomic processes in play across Eurasia. Here we go.
The Cradle: The BRICS are studying the adoption of a common currency – including all of them and, we expect, the expanded BRICS+ as well. How could that be practically implemented? Hard to see the Brazilian Central Bank harmonizing with the Russians and the People’s Bank of China. Would that involve only investment – via the BRICS development bank? Would that be based on commodities + gold? How does the yuan fit in? Is the BRICS approach based on the current Eurasia Economic Union (EAEU) discussions with the Chinese, led by Sergey Glazyev? Did the Samarkand summit advance, practically, the interconnection of BRICS and the SCO?
Hudson: “Any idea of a common currency has to start with a currency-swap arrangement among existing member countries. Most trade will be in their own currencies. But to settle the inevitable imbalances (balance-of-payments surpluses and deficits), an artificial currency will be created by a new Central Bank.
STRAIGHT LINE LOGIC 