Debt can topple even the most powerful empires.
Whether it’s Rome, Spain, France, Britain, or the Soviet Union, excessive debt has played a critical role in their decline.
The typical pattern in these examples of collapsing empires is:
Stage #1: Empires achieve success and become overconfident.
Stage #2: Overconfidence leads to extravagant spending on luxuries and wars.
Stage #3: Empires finance this lavish spending by going into debt.
Stage #4: The debt grows to an unsustainable level and creates a crushing burden.
Stage #5: Empires finance the debt through taxation and currency debasement.
Stage #6: The populace bears the brunt of debt repayment as empires raise taxes and debase the currency—to the maximum extent—until it causes internal instability.
Stage #7: Empires cannot finance their militaries because of their debt burden. This is usually the tipping point.
Stage #8: Underfunded militaries plus internal instability make empires vulnerable to foreign invasion, domestic revolution, civil war, and other existential dangers.
Stage #9: The empire collapses.
Now, it’s the US Empire’s turn.
The US federal government has the biggest debt in the history of the world. And it’s continuing to grow at a rapid, unstoppable pace.
Annualized interest on the federal debt exceeded $1 trillion for the first time this year and is shooting higher at an exponential rate.
The federal debt’s annualized interest cost is already higher than the defense budget.
It’s on track to exceed Social Security and become the BIGGEST item in the federal budget.
Historian Niall Ferguson summed it up nicely:
“Any great power that spends more on debt service (interest payments on the national debt) than on defense will not stay great for very long.
True of Habsburg Spain, true of ancien régime France, true of the Ottoman Empire, true of the British Empire, this law is about to be put to the test by the US beginning this very year.”
Consider this:
1. The American populace is nearing its breaking point as taxation and inflation rise.
2. Interest on the federal debt exceeds defense spending and is set to become the BIGGEST expenditure, and it will keep growing from there.
As a result, the US Empire is somewhere between Stage #6 and #7 in the empire collapse pattern I described above. It is nearing the point where its crushing debt burden will make it difficult to finance existing military spending.
As we saw in the historical examples, a tipping point is reached once an empire’s debt burden becomes so great that it struggles to pay for its military. It’s like someone waving a big red flag.
The US government will soon have to choose to:
1. Cut defense spending amid the most chaotic geopolitical period since WW2.
2. Default on its promises regarding Social Security, Medicare, Veterans’ Benefits, and welfare generally.
Though it may try, the US government cannot continue to pay for entitlements and defense even if their current levels stay flat into the future. But they won’t stay flat. Both are set to grow significantly in the years ahead.
Tens of millions of Baby Boomers—about 22% of the population—will enter retirement in the coming years. Cutting Social Security and Medicare is a sure way to lose an election.
With the most precarious geopolitical situation since World War 2, defense spending is unlikely to be cut. Instead, defense spending is all but certain to increase.
Former Secretary of Defense Robert Gates recently said: “Barely staying even with inflation or worse is wholly inadequate. Significant additional resources for defense are necessary and urgent.”
The most likely outcome is that the US will try to have its cake and eat it too by paying for both growing defense and domestic obligations via currency debasement. However, it will likely end up just like other powerful collapsed empires that preceded it—with an underfunded military and domestic instability.
The truth is that Trump cannot make America great again any more than Gorbachev could save the Soviet Union. Once an empire struggles to pay for its military, the decline is impossible to reverse.
Consider this.
The Denarius—the Roman silver coin—lost nearly all its silver content between 180 and 280 AD.
The US dollar has lost over 98% of its value against gold since 1971.
Just as the Roman citizens realized their government was defaulting on its promises to them through currency debasement, I am confident that Social Security and Medicare recipients and others who have been promised something from the US federal government will notice they are being paid in debased currency. They won’t be happy.
Just as Roman soldiers realized they were being paid in debased currency, I am confident American soldiers will realize the same thing, and they won’t be happy either.
In short, the US will soon reach the tipping point that has caused the collapse of other powerful empires.
Its crushing debt burden is nearing the point where it will cause the military to be underfunded and internal instability as average citizens bear the brunt of debt repayment through increased taxation, inflation, and broken promises on Social Security and other programs.
Remember, the interest expense is set to exceed Social Security and become the BIGGEST item in the budget. It will only get bigger from there as the debt continues to grow at an unstoppable and exponential rate.
Therefore, I don’t think it will be long before the exploding interest expense crowds out funding for defense, Social Security, and other domestic commitments.
As that happens, I expect the US is headed for a disaster of historical proportions.
I am confident that the collapse of the US Empire, which has been in place since the end of WW2—otherwise known as the US-led world order—could happen a lot sooner than most realize.
The global geopolitical situation was already trending towards a multipolar world order.
The US debt crisis is compounding its geopolitical problems and will accelerate this established trend.
That means we’re likely to see the end of the US-led world order and the emergence of a multipolar world order in the not-so-distant future.
Russia, China, Iran, and other proponents of a multipolar world order are no doubt asking themselves: “Why start a war when your enemy’s debt burden is already leading them to defeat?”
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Via https://internationalman.com/articles/the-looming-debt-crisis-is-america-following-the-path-of-collapsed-empires/
