The Duran Podcast - Trump tariff weapon. Russia economic growth

Episode Date: January 30, 2025

Trump tariff weapon. Russia economic growth

All right, Alexander, let's talk about the U.S. economy. Maybe you can also talk about Trump's plans for the U.S. economy. Tariffs. I think that's obvious now that Trump is talking more and more about tariffs. This definitely looks like it's part of his big picture plan for the U.S. economy. And we're starting to see how Trump is going to use tariffs to also get policy. through, for example, what happened with Colombia the other day and the deportation of of Colombians back to Colombia that were in the United States. And Colombia denied one of the

planes or denied the planes to land to Colombia. And Trump used tariffs to get Colombia to agree. Anyway, just it shows that he is relying or will rely a lot on tariffs for the, for the US economy or the tariff threat in order to push through whatever policy he wants to get done. What are your thoughts on the US economy and tariffs? I think before we talk about tariffs, which is an important story, actually. I think a few things need to be said about the economy, the Biden economy, that Trump has inherited, because we have this constant narrative, which is still being plugged, that the U.S. economy under Joe Biden did incredibly well, that it's booming, that it's got an economic growth

rate, you know, multiple times faster than anyone else is, that the US economy is doing really, really, really well. And of course, that, if it really true, would beg the question of why in that case change something that is working so wonderfully. The thing to say straight away, is that the US economy is performing well by comparison with the European economy, which is performing disastrously. But because you are doing better than an economy that is doing disastrously, it doesn't actually mean that your economy is doing that well. The story of the Biden administration is absolutely out of control.

spending. Dr. Rasmus has calculated $3.6 trillion of stimulus spending through the entire period of Biden's rule. No, one was a trillion dollars a year in stimulus spending, which has produced growth that is no better than its historic average. You did a huge surge in deficit. You've seen a huge surge in GDP to, a debt to GDP ratio. So, you know, the US has now got well above 100% debt to GDP. And in fact, the other thing is that one wonders to what extent the growth that we have seen is any way simply a reflection of the stimulus and of the inflation that the stimulus has itself caused? In other words, if you are understating inflation, which I think most people believe

the Biden administration was doing, and if you are spending a huge amount of money and you are adding an enormous amount of debt, then that will goose up your GDP figures, even if your economy is stagnant or even declining. And I think that is the actual position, because bear in mind, it's now universally acknowledged that throughout the four Biden years, real wages fell. And it makes absolutely no sense, to me at least, to argue that the economy can have been growing in the way that people say if real wages were falling. People don't become poorer in a successful, prospering economy. They become richer. So the whole narrative, like every other narrative that the Biden administration spun through the period of its existence, is a completely wrong one.

Now, that calls for a change. And I think that this is why Trump won the election last year, because Americans clearly didn't see any sign that the economy was actually booming in the way that they were being told. It calls for a change, and it calls for a completely different change of approach. Now, if you go into the details of what Biden was trying to do, he was engaging in all this enormous stimulus spending. It was basically supporting various interest groups within US society and also focusing on developing certain industries, Chips Act, the Green Development Act, whatever it was called, none of which worked. He just threw money at the problem. But none of that actually achieved any actual result. Chips, the United States has not undergone a chips revolution. With green technologies, the Chinese have, if anything, extended their lead there. So what Trump is doing is he says he's drawing a line through all of that.

He said, this isn't working. The stimulus spending is absurd. He's going to do something completely different. He's going to return to the economic models of the past, the American system as it used to be called, whereby you have a completely free open economy within the United States. You let business and industry sort out their own problems. You do carry out some infrastructure spending. You focus on important things like AI, for example. And you enable this enormous economy, which is the United States, to develop on the basis of its own market and its own enterprises shielded by tariffs, which you can then use proactively also to promote American interests, which is what this business with Colombia was all about.

It was a useful demonstration to Trump for how it works. Because, of course, Colombia, to a great extent, depends on the US economy. They wanted to, they were trying to push back on the repatriation of migrants. The Biden administration, any other administration, would have caved instantly when the Colombians started to reject the planes. Along comes Donald Trump. He puts 25% tariffs on Colombian goods and the Colombians cave. So he's just demonstrated again how used against certain countries within America's evolving economic sphere, this policy can be made to work. Again, if you go back, to American economic policies before the Second World War, this event with Colombia would

not have seemed so unusual. The key word that you said is certain countries. Certain countries. It can't work against everybody. Yeah. It can't work against, you know, it can't work against China, it can't against Russia. But it can work against countries that form part, if you like, of the greater American, economic space. If I can use it, you use that kind of word. Okay, before we talk about the Russian

economy, I want you to talk a little bit about the Russian economy in this video as well. I just have one question when it comes to the example, the use case of what we saw with Columbia, because that's what we saw. For the first time, we saw Trump actually throw out, like you said, he threw out

this terror for warning and Colombia back down. So now Trump's going to, his administration's going to register that, and they're going to say, okay, it worked. What are countries in the U.S.'s sphere of influence, the countries that aren't the big powers? Yes. You know, China, Russia, obviously, they're not in the U.S. sphere of influence. But what does Colombia do?

What does Panama do? What, you know, Canada is a big country. How do they handle this? I mean, how would you tell them to handle the situation of what we saw go down in Colombia? What do they need to do? Because what I see going on, not only in Europe, I actually saw it in Colombia as well. But when I was thinking about this, I was thinking, okay, this is more about the European Union and the leaders in Europe. But now I see that Colombia has the same problem is that their diplomatic skills under four years of Biden or with,

four years of Biden have atrophied. Yes. You know, you see a lot of world leaders now, small countries, bigger countries, not at the level of India or China or Russia, but their leaders, they don't know how to engage with the big country in the neighborhood or when any type of problems come up with that big country that they were so aligned with in their minds. They thought that we're friends, we're buddies, we're in this together.

Well, that's not the case. They're realizing that's not the case. Biden misled you, obviously. And now you're dealing with the new administration that sees things differently. But it looks like their skill set when it comes to diplomacy and engaging with other countries, especially the hegemon in your neighborhood,

is not there. One cannot underestimate the effect that this is going to have in Latin America. Bear in mind, Latin America has had this long, very complicated history with the United States, which has often been seen as, you know, the overwhelming, overpowering hegemon

that has dominated Latin America. And it's fair to say that until the 1980s, the Americans controlled Latin America very tightly. I mean, this continued well into the Reagan years, as I very well remember. I mean, a few places Cuba managed to gain. Brazil was always a bit difficult to control completely because it was so big.

The Americans basically ran things in Brazil through the 60s and early 70s. Mexico always a particularly complicated relationship with Mexico as well. But overall, the Americans were very much in control of events in Latin America right up until the 1980. Then the Cold War ended, America began to think less of spheres of influence and started to embrace globalism. It began to lose control.

Its control of Latin America began to become diluted. And Latin American countries began to go their own different ways. And Brazil, of course, joined Britain. And Colombia, by the way, is also planning to join Bricks. I mean, it's a Bricks partner country, just saying. And they've been engaging in all kinds of economic policies. They've been looking to develop trade with China. And now, suddenly, the Americans come back and they say, look, we've scrapped this whole idea

of globalization. We're coming back. reestablishing our sphere of influence and yes, you're going to be within it and we're going to use the same tools to make sure you stay in it that we did before. And of course, the Latin Americans now are going to have a choice because do they go along with that, which would mean putting aside all of the things that they've been doing since the 90s. They're slightly more independent approaches and accept that the United States is is the giant in the neighborhood and that it makes absolutely no sense ultimately to try to do

things against the United States. Or do they, on the contrary, say to themselves, well, because the Americans are coming back and in the way that they're coming back, we need to work harder to try to forge these new relationships with the other powers, China especially perhaps, because they can provide us with some degree of economic protection from what the Americans are doing. Now, I don't know what the Latin American countries are going to do. I think it's going to depend an awful lot on particular countries and particular governments. But I have to say something, and it's a bleak thing to say, China is far away. America is still overwhelmingly the dominant economy and country in the Western Hemisphere.

would have thought that when, you know, push comes to shove, the Americans always will have the greatest weight in this region. And you're quite right. The diplomacy, the diplomatic ability of these countries to severely atrophied. They perhaps stop taking the Americans as seriously, as they once did. They're going to have to get on a very strong. steep learning curve, understand that talking to Trump and Rubio is going to be absolutely essential if they're going to navigate their way forward, and that in spheres of influence, sometimes countries that form part of spheres of influence can actually use that successfully to their own advantage by cutting deals with the head.

If I can use that, you know, the local great power, which ultimately work to their advantage as well. So we'll see what they do. I have to say, I don't think Latin American diplomacy is particularly sophisticated, but there are very, very many clever people in Latin America, and we'll see what they can come up with. Yeah, it seems like the president of Mexico has a better handle on this than most leaders. She seems to be able to play off of what Trump is saying very well. Exactly.

And of course, but Mexico once again is a big, it's a much bigger country. Absolutely, but Buckele in El Salvador has had a very, very apparently friendly call with Trump. And, you know, that's a small country. So you can weave and maneuver and you can do so quite well. if you know how. All right. The Russian economy, is it collapsing yet? Well, we're going through, you know, chapter 537 of the Russian economy on the brink of collapse or House of Cards story.

We've been hearing that for so, well, throughout this period, the sanctions began. And, of course, it extends far back beyond it. The latest one is that Putin, in order to finance the war, but somehow to fool everybody by keeping a very low budget deficit, but Russia's budget deficit last year, by the way, was 1.7% of GDP, which is very low, basically. Anyway, well within the Maastricht criteria, if I can say. And Putin supposedly is financing the war by strong-arming Russia's banks to grant cheap loans to the Russian military-industrial complex. Debt growth, therefore, has been out of control.

This is going to lead to a financial crisis in Russia at some point, which will bring the entire economy collapsing, like a house of cards, probably into hyperinflation as well. Now, there have been articles about this. It all originated with some research done by an American economist, who I believe previously worked for Morgan Stanley, Craig Kennedy. And it's also been picked up by Martin Sandrew in the Financial Times, and you see it in all sorts of other places. There is absolutely no reality to.

this claim. It is, again, a misunderstanding completely of Russian economic structure and Russian statistics. Briefly, what we saw in Russia, starting from the summer of 2003, was a huge investment boom. Now, this is not an investment boom, which is focused on the military industrial complex, which is funded overwhelmingly from the state budget. People could try and claim otherwise are simply wrong. This is an investment boom which has affected mostly, if overwhelmingly, the civilian economy, including mortgage lending, but also industry spending, which has been made possible, by two things. Firstly, high demand because of increased wages, increases in real wages,

which has to some extent been a product of the war, but also space opening right across the economy as a result of sanctions, which has meant that imports from the West have fallen, which means that Russian corporates are now aggressively looking for ways to use up the space created by the disappearance of Western competitors to try to develop their own products and to take them to the Russian market. So they have been borrowing to carry out investment. Now, that has, in turn, created a measure of overheating because the industrial part of the manufacturing part the economy has been growing so fast that it's coming up against supply bottlenecks, labor, materials, machinery, that kind of thing.

And that has been putting pressure on prices. So the central bank and the Russian government have been doing the diametric opposite for Craig Kennedy and Martin Sandu and people like that say. They have been trying to reduce bank lending and lower credit growth in order to take the investment boom off the boil so as to bring down inflation, end overheating and move the economy back towards a more balanced growth position. So far from banks being coerced to lend money to the military industrial complex, what is on the contrary happening is that the government is trying to slow down loans, the granting

of loans to civilian industry, to reduce generation of loans, in order to try, in fact, to slow the investment group, boom, slow the economy in order to bring inflation down. And the latest data suggests that it is succeeding and succeeding very well. By the way, the latest data shows something else which perhaps is quite revealing, which is that in 2024, energy receipts had fallen to 28% of the federal budget. Now, they'd always been about 25% of the total Russian consolidated budget, which includes the federal budget, but also the budget of all of the regions. But if you're talking about specifically the federal budget, the federal budget had historically depended for about half its funding on oil and gas receipts. It's now, it's now, it's

fallen to 28%. This is largely, this is a product of two things. Firstly, the fact that the Russian economy has been growing so fast that tax receipts from the civilian economy have been growing and are making, replacing, if you like, oil and gas receipts as part of the budget. But also, Russia carried out a big tax reform about a year ago. which means that taxes have become more balanced in Russia. And the result is that more of the economy is now being taxed than had previously been the case. And that is showing in the budget figures. Not only are we not heading for a financial crisis, we see an economy that is on very, very solid financial ground,

and which is becoming, in some respects, more typical of an economy, of a developed economy, which is what it actually is. It's starting to resemble increasingly in its tax structures and its overall structures. I'm going to say U.S. economy, as it was, say 40, 50, 60 years ago. Yeah, I wonder why the collective West media can't see this. Why they keep on going on and on about the Russian economy collapse. I was going to ask you, just a side note, I was going to ask you as you were explaining the Russian economy.

My next question was going to be, well, what if Putin really is juicing the books? But you're saying this is not happening. No, it's not happening. It's just not happening. I mean. I mean, if I can say, I mean, why can't they admit? Well, we can't agree. First of all, you're absolutely right in making the point that people, governments,

all over the world do, do use the books. And I'm not saying that the Russians never do. I don't get the sense that they do it very much, though, because, again, bear in mind the Russians have the Soviet experience behind them and the 1990s experience behind them. So they are afraid of doing those sort of things. things because when they did them before, they lost control of the economy because they lost understanding of where the economy was heading.

And I think that Putin himself has a particular aversion to doing things like that. But anyway, that's the first thing to say. Why in the West can they not understand this? It's very simple. Back in the late 80s, 90s, they all in the West, they all in the West. West accepted this thesis that Russia is this gas station masquerading as a country, a one-dimensional economy ruled by a kleptocracy. And it's such an attractive belief for Western policymakers and economic commentators to hold onto that they can't give up on it. They continue to.

to act and pretend as if it is how it actually is. When of course in reality it is not. And that's that I think is ultimately the problem. All right, we will end the video there at the durand. Dot loggs.com. We are on Rumble Odyssey, pitch, telegram, rock, fit and X. Go to the Duran shop, pick up some merch like what we are wearing in this video update today. The link is in the description box down below.

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