- 2 days ago
THE U.S. EMPIRE JUST HIT A DANGEROUS TURNING POINT Prof. Jeffrey Sachs
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00:00The war has gotten the U.S. and the world into a terrible bind. We face an economic crisis worldwide.
00:07Of course, the way out of this is to stop doing what we were doing, which is attacking Iran, at
00:13least to try to go back to the status quo ante, but in terms of any stated goals by the
00:18United States, which varied over time, and explanation.
00:21Whether it was regime change or unconditional surrender or an end of Iran's nuclear program on American terms or an
00:29end of Iran's missile systems, nothing remotely has been accomplished or will be accomplished.
00:34The United States does not have the power through military force to compel such changes, and the whole war was
00:40based on some.
00:41Failed plan or delusion that a decapitation strike would immediately create a client government in Iran when that failed, basically.
00:49The failure of the whole war was exposed. Iran maintains deterrence. Iran can do grave damage to the Gulf region,
00:57which produces a substantial share of the world's oil.
01:01And Iran can do grave damage to the neighboring countries and to Israel. The United States military understands that. I
01:08think Trump probably understands this well.
01:11So he got us into a colossal mess that's going to cost probably hundreds of billions of dollars one way
01:17or another, and he should get out, but he's a very stubborn person.
01:21So the costs keep racking up rather than being ended by simply ending the terrible mistake that he made.
01:27The government says that the war has cost $25 a billion. Others, retired military folks, have said it's much closer
01:34to $100 billion.
01:36Yeah, it's a preposterous number. It's a lowball number that makes absolutely no sense. We'll find out the right numbers
01:44over time.
01:45But when the first message to Congress came that there would have to be a $200 billion supplemental, and then
01:52when the budget for the next fiscal year went in increasing the defense ask or the military ask,
01:58we don't call it defense anymore. We call it the War Department, the ask of by about another half a
02:04trillion dollars.
02:05It's clear clears throat that the $25 billion is some very strange accounting, but not real.
02:10What? Has been the consequence of the war to American consumers.
02:15Basically, we have a sizable increase of oil and gas prices and all of the products that are produced by
02:21oil and gas.
02:22So a lot of petrochemicals, the fertilizer that farmers depend on and therefore food prices down the road.
02:29This has been a sizable, not devastating shock, but it could become devastating if we have a continuation of this
02:35grave blunder.
02:36Oil prices went from around $70 a barrel, little bit less at some days, a little bit more, to what
02:43is now a little bit over $100 a barrel, about a 50% increase.
02:48But shortages are very real and the prices will continue to rise significantly if the current situation it just continues
02:55with an Iranian and a U.S. joint blockade.
02:58Let's put it that way, of the Strait of Hormuz.
03:00Very little is coming out from the region.
03:03Supplies are shrinking.
03:04Reserves are shrinking of all of the commodities in question.
03:08And prices will rise further.
03:10When it looks like there's some kind of agreement, the spot market price falls because speculators expect a reopening of
03:17the Strait.
03:18When there's a failure of the negotiations such as they are, then the prices tend to rise fairly relentlessly.
03:24So we're in a situation right now of a very serious reduction of world energy supplies that will bite.
03:32They will hurt Americans.
03:33They will hurt people everywhere.
03:35Yes, there will be some offsetting windfalls for ExxonMobil and Chevron, two big backers of the Trump administration.
03:42And partly what we're seeing is the normal Washington policy for sale.
03:47This is Trump, if anything, transactional.
03:49So he caters to the oil and gas industry.
03:53He caters to the Israel lobby.
03:55He caters to Silicon Valley, which is making a ton of money with the new digital killing machines.
04:01And these are his donor base.
04:04And American policy has been sold to them.
04:06And the American people have been sold down the river.
04:10They're going to suffer.
04:11And they are suffering.
04:12And Trump's attitude is, suck it up.
04:14It's not my problem.
04:16I'm a billionaire and my lobbies love it.
04:18So this is where we stand right now.
04:21The president spoke earlier today about a temporary reprieve on the gas tax, which is about a dollar a gallon.
04:28The how cavalier is the government about debt.
04:31Debt?
04:32Oh, what a quaint topic.
04:34We have run up debt now.
04:35That is the part that's held by the public, not by other governmental units, is above 100% of the
04:41gross domestic product.
04:42It doesn't mean we're bankrupt, but it does mean that 3 to 4 percentage points of our unnational income and
04:48roughly now almost a quarter of our total government revenues are going for interest payments.
04:54The interest payments are larger than pretty much all of the discretionary civilian budget now.
04:59So we have increased debt to a level of national income not seen in peacetime history of the United States.
05:05Both parties are culprits.
05:08Ultimately, a corrupt political system is the culprit.
05:11Starting back in the 1970s, the corporate sector effectively lobbied, and the Supreme Court did it, a 2D regulate campaign
05:19finance, to open the spigots so that our government was put up for sale.
05:23And it's bought now, as I said, by Silicon Valley.
05:27It's bought by big oil.
05:28It's bought by the Israel lobby.
05:30It's bought by a number of powerful interests because they put in a huge amount of campaign financing.
05:36But one thing that the big donors say is don't tax us.
05:40So basically, we haven't had a meaningful budget for decades, and we've been accumulating debt, pretty much nonstop, at least
05:47for the last quarter century.
05:49And it's reaching proportions that are absolutely staggering, and we'll pay for it down the road.
05:55But you think Trump thinks about anything more than the next 15 minutes on Truth Social?
06:00I don't see any evidence for that.
06:02What have Clear's throat been the economic consequences of the war in Israel?
06:07Well, one thing is that Israel's economy is basically now a war economy, and Israel, even according to Netanyahu,
06:15is the New Sparta, meaning a state that is just organized for killing.
06:20It's a ruthless state.
06:22Its business is killing.
06:23Its business is spying.
06:25Its business is assassinations.
06:27It's a did we lose you, Professor Sachs.
06:29I'm here, but I don't see what happened.
06:32Oh, you can keep talking, and perhaps your lips will catch up.
06:36Okay, I'm sorry.
06:37So Israel is a military garrison state, and it is making a money by selling its spy systems,
06:43selling its Mossad services, selling its assassination machine.
06:47It's really amazing.
06:48I don't think we've gotten to the depths of how far Israel has fallen from a normal moral
06:53and ethical behavior, but now the entire economy is basically oriented towards war.
06:59So, on the one side, the point is that the stock market of Israel is booming.
07:03This is incredible, and Israeli military companies make money, and give Israel influence in many
07:09parts of the world, precisely because lots of governments want to buy into assassination
07:14services or spying or surveillance activities and so on.
07:18It's grotesque in my view what has happened.
07:21All right.
07:21Of course, for the rest of the economy, hundreds of thousands if not millions of people have
07:27left.
07:27Uh, the tourist sector is destroyed.
07:29The normal economy is destroyed, but Israel's not aiming to be a normal country.
07:34It's aiming to be a war machine right now.
07:37Professor Sachs with us.
07:38I hope I'm back.
07:40Yes, you're back.
07:41All right.
07:42The last thing we heard you say was that there are aspects of the Israeli economy that are
07:46booming because it has become a marketplace for a war-related both licit and illicit like
07:51assassinations of services.
07:53But how about two Israeli consumers and Israeli commercial life taking into account the devastation
07:58caused by Iran's retaliation?
08:01I'm sure that the dislocations to anything resembling normal life are profound.
08:07Basically, hundreds of thousands of people have left.
08:10Any will never come back.
08:12Any Israelis are disgusted by the state of affairs in addition to being taken over by the war industry.
08:18It's been taken over by the most extreme religious zealots who act as if they want to really provoke
08:24the end times.
08:25And so the normal daily life is utterly disrupted, keeping all these reservists in the military
08:31invading one country after another.
08:34Israel's at war all over the Middle East.
08:36It's about 8 million Israeli Jews fighting across Al-Ebanon, Gaza, the West Bank, Assyria,
08:42Iran, Yemen.
08:43Of course, the United States funds a great deal of this.
08:47So that keeps also the Israeli budget propped up.
08:50We should just slam the door and say this is the end of this.
08:53And Israel should get on with the peace and rebuilding its society as a normal society.
08:58I don't know the precise numbers and dislocations that have been involved only.
09:03The general point that the war machine revs, but the rest of the economy suffers.
09:08How has the war affected Iran's economy?
09:10A destruction of infrastructure tolls on the Gulf of Hormuz.
09:14Well, first, we should say a general point, which is that every economy in the world is
09:20hurt by this rise of energy prices and an energy scare, oh my.
09:24Yep, okay, I'm back.
09:26Good, I am.
09:27I hurt by the rise of energy prices and energy scarcity.
09:31It's just like chopping off a limb to the world system by taking down a significant part
09:36of the actual flow of energy resources.
09:38So in this sense, the world as a whole simply has less.
09:42And that is an unavoidable loss everywhere.
09:45Of course, there are some few places that have some windfalls, mainly oil and gas companies,
09:50that doesn't trickle down to average people, but it does fill the coffers of a few major
09:55oil.
09:56Producers around the world.
09:57But generally, this is a hard negative hit to the world.
10:01Now, on top of that are the military costs, which we talked about, and then the damage
10:05from the war itself, the massive destruction of civilian life, of buildings, of downtown
10:11Tehran, of physical infrastructure.
10:13Um, so these are tens or hundreds of billions of dollars of losses, just over a few weeks.
10:19Of course, our leaders treat this all as one big game.
10:22They even Trump said when there was another round of fire that this is a slap.
10:26This is a game for these people.
10:28There, these are psychologically deranged people who think that the killing and the destruction
10:33is just par for the course.
10:35And when certain parts of your financial backers, certain groups are enjoying the windfall, you
10:40don't even notice that yourself.
10:42And since the windfall is, as I said, highly concentrated in Silicon Valley backers, of Trump
10:48and in the oil and gas industry which backs him, he probably feels this is this going great.
10:54How about China?
10:55How has the war affected the Chinese economy, Professor Sachs?
10:59China is oil importer, but a very smart and effective country.
11:03It is the most technologically innovative country in the world right now ahead of the
11:07United States because it's put its head down to get to work to build the best electric
11:12vehicles, to build the lowest cost renewable energy systems, to build the best humanoid robots,
11:17to build the lowest cost 5 grams digital systems, and so forth.
11:21So, China is doing well economically.
11:23Its exports continue to grow.
11:25Its technological advances continue to be very rapid.
11:29Scientists from around the world are picking up stakes and moving to China because there's
11:33a lot of build-out of Chinese research and development.
11:36The universities are booming.
11:38They're hiring scientists from around the world.
11:41And in this context, the oil shock is felt.
11:44But it's certainly no crisis for China.
11:46China built up a lot of oil reserves.
11:49Some amount of oil continues to come through even from Iran and the Gulf, of course.
11:54A lot comes through from Russia and from other Central Asian economies.
11:58And interestingly, China is by far by far the largest investor in wind and solar and hydropower
12:04in the world.
12:04China is installing as much solar power capacity every year as all of the rest of the world
12:10combined.
12:11So, China is going green and digital, building out a new energy system at remarkable speed.
12:17It's becoming an all-electric economy while the United States is doubling down on the 20th
12:23century technology of internal combustion engine vehicles.
12:26China will produce most of the world's electric vehicles in the coming years and within China,
12:31eh?
12:32Majority of the new car sales now, if not mistaken, are electric vehicles and the proportions
12:37continue to soar.
12:38All of this means that, yes, China will feel the squeeze from the reduced oil flows, but
12:43there's no desperation.
12:44And what this will do is accelerate China's energy transformation to nuclear.
12:49Wind, solar, mega-hydro, very smart grids, electrification of transport rather than petrol.
12:56Actually, shipbuilding also is a shifting to green fuels rather than normal fossil fuel-based
13:01shipping.
13:02So, China's using this as actually a spur to what is already the world's fastest energy
13:07transformation underway, what leverage if any.
13:10Does President Trump have with China when he visits on Friday?
13:14None that I can see.
13:15None.
13:16Nothing.
13:17I don't see any of it.
13:19He tried last year a trade war.
13:21It lasted about 24 hours.
13:23China matched the U.S. tariffs and it raised the stakes with restrictions on rare-earth
13:28magnet exports.
13:29The United States backed down.
13:31Of course, then later on the Supreme Court said that Trump doesn't have the authority
13:35to put on those tariffs in the first place, and everybody knows that even if it's forgotten
13:40in Trump's own mind when
13:41He threatens new tariffs every day, and last week another court struck down the follow-up
13:46tariff that Trump set when the first one was struck down by the Supreme Court.
13:51Now, the second one's going to be struck down as well, very predictably.
13:55In other words, Trump is a con-con man.
13:57He's using powers he doesn't have.
14:00He's a bit delusional, going to wars on premises that are absolutely false.
14:04The United States does not produce anything that I can see that China desperately needs.
14:09It used to be thought that the high-end chips were, you know, a kind of decisive make or
14:15break for China, but China itself is telling its companies, by Huawei, you don't have to
14:20buy NVIDIA.
14:21I understand that NVIDIA will be represented on this trip to encourage the Chinese reopen
14:26the markets for purchases of NVIDIA chips.
14:29There is no choke point there.
14:31Is no threat point.
14:32Actually, it would be nice if just for once in his life Trump actually sat down with the
14:37counterpart and discussed the areas of cooperation rather than thinking that he has to hit someone
14:42in the nose first before he talks to them.
14:45But right now he has nothing to hit with.
14:47He has no cards, as he likes to say.
14:50Last question.
14:51How has the war in Iran affected Russia?
14:53Well, Russia has basically enjoyed that windfall of oil profits because oil prices have risen
14:59significantly.
15:00Russia is exporting a lot of oil, especially to Asia.
15:04And so for Russia, this has been probably the one major economy that this is a net-net,
15:09a significant economic positive effect.
15:12Having said that, it's really true that Russia does not want this war and doesn't want this
15:17instability.
15:18Russia is not looking for windfall profits, actually.
15:21Russia is not looking for Iran and there are all the things to make, continue to return to us.
15:21Now likely you are unable to change Nagasaki.
15:21You have a junior challenge.