"What they [the Trump administration] want is they want to have their cake and eat it [too] . . . .They want to devalue the dollar without jeopardizing the exorbitant privilege of the dollar, the reserve currency status of the dollar . . . . Is this far-fetched? No, it's not far-fetched. They may succeed in doing [so] . . . .I'm not saying they will succeed in doing it, but, what I'm saying is that they have a rational plan, a fiendish plan, as they would say in cartoons, but it is not unprecedented.*
"You know, this is why I mentioned the 1970s, 1971, [when] Richard Nixon did exactly the same thing. I mean, in one of his autobiographies, I think he's written more than one, Henry Kissinger, in one of the chapters, just from memory, I read it many years ago. He asks a question in one of the chapters, the chapter title is a question: "Who caused the oil crisis?" And the first sentence is, "We did." And he was very clear on this.
"That myth that it was the Arabs and the OPEC Third World countries that imposed the high prices on America, that's all rubbish. Let's not forget who was in OPEC back then. It was the Shah of Iran, who was on the payroll of the CIA, the Suharto regime in Indonesia, utterly driven by the State Department and the CIA, and Saudi Arabia, which can't move one inch without the OK of Washington DC.
"So why did they create this huge oil crisis then, if Kissinger is right? Remember Richard Nixon sent his Treasury Secretary to the Europeans with a message that 'the dollar, mates, is our currency, and from now on it is going to be your problem.'
"Nothing more aggressive has ever been sent to the Europeans. I don't think J. D. Vance said anything worse than that. Indeed, Paul Volcker, who, much, much later became the president of the Federal Reserve, he was a member of that team and he reports that it was Connally, the Treasury Secretary, who convinced Nixon on the fifteenth of August of 1971, to blow up the Bretton Woods system with the following expression, and this is verbatim because it is etched in my memory when I read it. He said, 'Mr. President the foreigners are out there to screw us, and we must screw them before they screw us.' And two days later he blew up the Bretton Woods system.
"He did it for a very simple reason. Once you have deficits, either you go German, in other words, you tighten your belt, you go austerity, big time, like the Germans would do, or they made us (the Greeks) do, or, Nixon was not prepared to do that to his own people and to his own ruling class, to his own country, or, you boost your deficits, if you are the dominant, hegemonic power, which is exactly what Nixon did, and you make other people pay for it. Essentially the American deficit becomes the magnet that magnetizes into the United States both the net exports of the Germans, the Japanese, and the Chinese, and their money, which goes between New York through Wall Street to get recycled in the form of government debt, shares, and real estate.
"So everything . . . the major shock, the plan to devalue the dollar, the plan to enhance the dollar's hegemony, the plan to damage seriously its most important allies, back then it was Europe and Japan, well, it's more or less the same now, that happened, it included to introduce enormous uncertainty, lots of businesses in the United States suffered, including the markets, the working class was damaged beyond redemption in 1971, '72, '73.
"Remember, American hourly real wages have not recovered to the level that they had in 1973 - to this day - they are lower than they were in 1973. So, you talk about uncertainty, damage, carnage, and all that. Well, Nixon did it. That was the whole point of the Nixon shock. But you know what? It was utterly successful from his perspective.
"Why? Because he managed to create, I'm talking about Nixon now, through his shock, something that has never happened before in human history. Every hegemon, every empire, every large force until 1971, the British Empire, the Dutch Empire, the Spanish Empire, the Portuguese Empire, before that the Roman Empire, every such power that went from being a surplus producer to a deficit producer, lost its power. The United States is the only hegemon whose power has been enhanced by its deficits. And that's due to the Nixon shock.
"So when Trump's men, and a small aside here, when people say that Trump is a very poor excuse for human nature, that he's inarticulate, that he's half-crazy, all that applied to Nixon, right? I mean, was there a man more despicable than Richard Nixon? And yet, the Nixon shock worked. You know, what I find astonishingly ironic, is that all these centrists around the world, in Europe, in Britain, in the United States, who are lamenting the great world that was destroyed by Donald Trump. What world are they lamenting really? The one that was created by madman Richard Nixon's shock. Because everything we have been experiencing recently, taking for granted, globalization, neo-liberalism, financialization, those were the results of a very deliberate plan by Richard Nixon."
-----Yanis Varoufakis, "Yanis Varoufakis Analyzes Donald Trump's Tariff War," Politics Joe, April 8, 2025
*The plan will not succeed. The Nixon shock bought the U.S. empire some time, but Trump backpedaled immediately when the bond market told him there would be no similar result this time around.
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