Quote of the Day by Michael Hudson: Quote of the Day by Michael Hudson: “The economy doesn’t work for you — it works to extract from you.” Why the Super Imperialism author says America shifted from global creditor to debtor superpower
“The economy is not working for you; it’s trying to take advantage of you,” says Hudson. This is a sharp line. But this reflects a larger debate about wealth inequality, rent extraction, financialization, and the long-term direction of the U.S. economy. Hudson is best known for his book Super Imperialism: The Economic Strategy of American EmpireHe spent decades analyzing how the United States went from the world’s largest creditor country to the world’s largest debtor nation after World War II.
His main argument is not about short-term recessionary cycles. It is structural. He argues that modern capitalism increasingly rewards the financial sector over productive industry, turning housing, education, health care, and even infrastructure into tools for rent-extraction rather than wealth creation for ordinary Americans.
Who is Michael Hudson? The Economist Behind “Super Imperialism”
Michael Hudson is an American economist and professor known for his work on debt, financial systems, and economic history. He first came to prominence in the 1970s with his work Super Imperialism, which examined US monetary policy after World War II.
Hudson’s research focuses on financialization, a term used to describe the increasing dominance of banks, asset managers, and financial markets over the real economy. He argues that capital is increasingly flowing into real estate speculation, leveraged buyouts and debt instruments rather than investing in factories, research or infrastructure.
Unlike mainstream economists who emphasize GDP growth and stock market performance, Hudson looks at debt ratios, rent-seeking behavior and balance of payments structures. His work often criticizes Wall Street’s banking practices, Federal Reserve policy, and the global role of the US dollar.
From creditor to debtor country: The main argument of super-imperialism
After World War II, the United States held most of the world’s gold reserves. According to the Bretton Woods system, the US dollar could be converted into gold at $35 per ounce. America was the world’s leading creditor country. This changed in 1971 when President Richard Nixon ended the dollar’s convertibility into gold. The so-called “Nixon Shock” was a turning point in global finance. Hudson argues that this shift has allowed the United States to run permanent trade deficits while maintaining global dollar dominance.
Today, the US’s annual trade deficit exceeds $700 billion. Foreign central banks hold trillions of dollars in U.S. Treasury securities. Hudson claims that this system allows the United States to finance its deficits by issuing Treasury bonds rather than goods. According to him, this regulation increases the domestic debt burden while also benefiting the financial elite.
What does the quote mean?
Hudson’s words focus on the idea of economic extraction. He argues that the bulk of household income goes towards servicing debt and paying economic rent, not building assets.
Consider housing. Median home prices in the United States remain near record levels. Mortgage rates, while volatile, are significantly higher than the extremely low levels seen in 2020-2021. For many families, housing costs now consume more than 30% of income. This income flows to banks as mortgage interest.
Student loan debt is over $1.7 trillion. Credit card interest rates are over 20% on average. Medical debt affects millions of Americans. Hudson sees these trends as evidence of a rent economy, in which financial demands on income rise faster than wages.
In this context, interest payments, rent and monopolistic pricing do not create new wealth. They transfer existing income upwards. This is what Hudson means when he says, “none of them are building your future. They’re serving their future.”
Financialization and wealth inequality
Wealth inequality in the United States remains near historic highs. The top 10 percent of households own roughly 70 percent of total wealth. The stock market has delivered strong long-term gains, but stock ownership remains heavily concentrated among high-income Americans.
Hudson argues that financialization inflates asset prices (real estate, stocks, bonds) and benefits asset owners. Meanwhile, wage growth has often lagged behind productivity gains over the past few decades.
Corporate share buybacks, which have reached hundreds of billions of dollars annually in recent years, are another focus of their criticism. This practice prioritizes shareholder returns over productive investments, says Hudson.
Major breakthroughs in Hudson’s economic thought
Hudson’s early work on international finance helped explain how the United States’ balance of payments deficits became an instrument of geopolitical influence. His analysis of the dollar’s reserve currency status foreshadowed debates that continue today about eliminating the dollar and reorganizing global trade.
He also noted the historical role of debt forgiveness in older economies. Hudson’s study of Bronze Age Mesopotamia documented how periodic debt cancellations prevented social collapse. He contrasts this with modern systems where debts are rarely forgiven and often consolidated.
His critics argue that his views are too critical of markets and underestimate the benefits of financial innovation. Supporters say it offers a necessary corrective to traditional economic models that ignore debt structures.
High inflation, rising interest rates, and increasing federal debt in recent years have intensified debates about economic sustainability. The Federal Reserve’s monetary tightening cycle has increased borrowing costs across mortgages, auto loans and business loans.
As interest payments consume a growing share of federal and household budgets, Hudson’s warnings about debt addiction are resonating more broadly. The question it poses is simple but urgent: Who benefits from economic growth?
If GDP is growing but household debt is growing faster, is this sustainable? If corporate profits rise while wages remain constant, who will capture the profits?
Hudson’s words form the core of a broader critique of modern capitalism. It invites readers to look beyond the headline growth figures and examine the structure of the economy.
Whether everyone agrees with him or not, his analysis has become part of the broader debate about U.S. economic policy, global debt, wealth inequality, and the future of the American middle class.
FAQ:
1: Why is the US national debt so high in 2026?
US national debt exceeds $34 trillion in 2026; annual federal deficits still run into the trillions. Increasing government spending, higher Social Security and Medicare costs, and rising interest payments are the main factors. Interest on the debt alone is expected to exceed $1 trillion this year. As interest rates remain high, borrowing costs increase. This further increases total debt even without major new spending programs.
2: How do high interest rates affect household debt and mortgage payments?
US household debt now exceeds $17 trillion, and average credit card interest rates are over 20%. Mortgage rates remain significantly higher than their pandemic-era lows. This means higher monthly payments for new borrowers and less disposable income for families. Auto loans and personal loans are also more expensive. Rising interest costs are directly squeezing middle-class budgets and slowing consumer spending.
3: What is financialization and how does it affect wealth inequality?
While the top 10% of U.S. households own roughly 70% of total wealth, asset prices have soared over the past decade. Financialization shifts profits to banks, asset managers and shareholders rather than wages. Share buybacks and rising real estate values encourage investors. Wage growth often lags behind productivity. The result is that wealth inequality increases despite overall GDP growth.
4: How did the USA change from a creditor country to a debtor country?
The United States was the world’s largest creditor after World War II and held most of the global gold reserves. Today, the annual trade deficit is over $700 billion and is dependent on foreign buyers of U.S. Treasury securities. The end of the dollar’s convertibility into gold in 1971 changed global finance. Persistent deficits have become structural. The US now finances spending through debt markets rather than a trade surplus.
