Economist Michael Hudson sees worst recession in 90 years ahead

Economist Michael Hudson predicts the global economy is facing its most severe downturn since the 1930s Great Depression, driven by a "systemic fracture" of the post-war economic order. The combination of energy supply chain disruptions from the conflict in Iran and surging U.S. interest rates creates conditions for a collapse that Hudson believes is now unavoidable.

"Whatever happens, the world will have the worst depression since the 1930s," Michael Hudson said in a recent interview with geopolitical commentator Glenn Diesen. "There is no way of avoiding it."

The core of the crisis stems from both physical and financial shocks. Key commodity supply chains, including fertilizer and helium, are already disrupted. Simultaneously, the foundation of the post-2008 financial boom has evaporated, with 30-year mortgage rates surpassing 5 percent and the 10-year U.S. Treasury yield rising to 4.5 percent.

Hudson argues the end of the zero-interest rate era will pop a financial bubble built on cheap debt, leading to a cascade of defaults. He describes the situation as a "systemic fracture" where the underlying logic of U.S.-centric global trade and finance is disintegrating, rather than a typical recessionary cycle that implies a future recovery.

Oil Control Strategy Extends to Final Mideast Link

According to Hudson, the military action against Iran is a continuation of a long-standing U.S. strategy to control global energy supplies and exert leverage over other nations. He points to previous actions in Iraq, Libya, and Venezuela as part of a consistent, bipartisan policy to bring key oil-producing regions under American influence. Iran, he stated, is the "last piece of the puzzle" in this strategy.

"The real purpose of the war is not about nuclear weapons," Hudson said, noting that the goal is to control Iran's oil. He argues this allows the U.S. to weaponize energy access, forcing allies and rivals alike to operate within a system it dominates.

Supply Chain Fracture Threatens Food and Tech Sectors

The conflict's impact extends far beyond oil, creating critical shortages in other essential commodities. Hudson highlighted that fertilizer exports from the region are blocked just as the global planting season begins, threatening agricultural yields and food security, particularly in Africa and parts of Latin America. "The world is now entering the planting season, and the fertilizer is cut off," he warned.

This supply shock is also derailing the expansion plans of major technology companies. The seven largest U.S. tech firms, which have driven stock market gains, depend on massive, cheap energy supplies for their data centers. Their plans to build infrastructure in Gulf states like Saudi Arabia and the UAE are now under threat, as Iran views this U.S.-aligned expansion as a security risk.

Europe Faces De-Industrialization on Energy Woes

Hudson offered a particularly grim outlook for Europe, which he believes is facing economic self-destruction by following U.S. sanctions policy. Germany's GDP has been in decline since it cut off Russian energy supplies in 2022, and Hudson sees the rest of Europe following it toward de-industrialization.

He noted that Ukraine has cut gas pipeline supplies to Hungary, a NATO member, an act of economic warfare that the alliance has implicitly accepted. The United Kingdom, having already de-industrialized and with its North Sea oil reserves dwindling, is also in a precarious position with little to export to pay for essential imports. "Europe seems to be committing economic suicide," Hudson said.

The most dangerous aspect of the current crisis, Hudson concluded, is the lack of a clear alternative. While the U.S.-led order is breaking down due to its own policies, there is no replacement for the international monetary system, multilateral institutions like the UN, or a framework for international law. "Nobody is talking seriously about what you're going to replace it all with," he said. "And that's what makes the current situation so dangerous."

This article is for informational purposes only and does not constitute investment advice.