#BookTalk: Super Imperialism – The Origin and Fundamentals of US World Dominance

The period of American economic dominance, which Hudson refers to as the “long (American) 20th Century,” is coming to a close.

Terence McCarthy of Columbia University describes “Super Imperialism” as “One of the most important books of this century. It is the first work to synthesize the new forms capitalist imperialism has assumed since Lenin.”

Most economists and policymakers educated in the past century tend to avoid confronting the harsh truths of imperialism. Michael Hudson stands out as one of the rare independent economic thinkers who challenge us to reexamine familiar questions from surprising new perspectives.

This book traces the origins of America’s political and financial dominance worldwide and presents a highly controversial study of US financial diplomacy. It examines the flaws built into the core of the World Bank and the IMF at their inception, flaws intended to preserve the US’s financial hegemony. Undetected at the time, these problems have since become explicit and obvious as the failure of the international economic system has become apparent.

Hudson makes it clear: the United States has leveraged its monetary power, through the dollar’s global reserve status, to create a unique form of empire. Unlike past empires that extracted wealth through military conquest and control, the U.S. uses its financial system to maintain dominance by exporting dollars through military spending and trade deficits. These dollars accumulate in foreign central banks, which then reinvest them in U.S. Treasury bonds, effectively financing America’s deficits while enabling the U.S. to consume and spend without constraint.

The author argues that US military adventures worldwide and the spending they entail are central to US economic policy. He shows that US military expenditures are not merely geopolitical tools but are central to the global financial system, creating a self-sustaining cycle of dollar recycling.

The US uses a “money-pump” mechanism to run a balance-of-payments deficit, flooding the world with dollars that foreign nations must hold, thereby funding US military endeavors and consumption while undermining their own economic sovereignty.

From the Book

“The IMF and the World Bank were set up to give aid to developing countries, but instead many of the world’s poorest countries have been plunged into insurmountable debt crises.”

“Maintenance of sterling’s 1945 parity, subsidized by the massive British Loan, ended up providing the United States with a net equivalent value in the form of a large share of what otherwise might have been an expansion of British export trade. Stated another way, Britain itself might have obtained a trade benefit equal in magnitude to its dollar borrowings from the United States, if it had set sterling’s exchange rate at its 1949 level.”

“Use of the dollar as the preferred means of settlement followed from its status as a proxy for gold. The IMF’s rules encouraged an accelerated velocity of the dollar in the world economy, but no corresponding acceleration in the velocity of sterling. The latter’s overvaluation, written into the IMF articles of agreement and confirmed by America’s British Loan, had the effect of dislodging sterling and enthroning the dollar.”

“The aim of U.S. policy was to continue running deficits for as long as possible. After all, who could tell how long the U.S. ability to bid up foreign goods and even companies on credit would continue until other countries drew the line and stopped absorbing surplus dollars? The Americans saw that only a world monetary crisis could bring the free ride to an end. It was clear … that such a crisis would hurt them more than the United States. The threat of triggering a world monetary breakdown accordingly became the U.S. bludgeon with which to threaten the world…”

“If the value of one currency after another could be forced up, the dollar would be left in a uniquely abandoned position… remaining low against the revaluing currencies. This would enable the US Government to strike a moral pose that it was not devaluing, while other economies were revaluing their currencies. But if the US itself devalued the dollar, other governments probably would follow, so that the net effect would only be to revalue gold upwards.”