Ferguson’s Law: The Financial Time Bomb at the Heart of Cold War 2.0

Ferguson's Law: "Any great power that spends more on debt service than on defense does not stay great for very long." –@nfergus

The US is starting Cold War 2.0 from a position the USSR finished Cold War 1.0 in (debt service > defense); US will NOT lose for lack of USD liquidity. pic.twitter.com/EEWVjP9RBG

— Luke Gromen (@LukeGromen) May 14, 2024

In an ominous echo of the past, the United States stands on the precipice of a financial crisis that could dwarf its geopolitical ambitions. Historian Niall Ferguson’s chilling maxim, “Any great power that spends more on debt service than on defense does not stay great for very long,” rings truer than ever as America embarks on Cold War 2.0 from a precarious position.

The U.S. now finds itself in a financial bind eerily similar to the USSR’s at the end of Cold War 1.0. With debt service costs surpassing defense spending, the implications are dire. This financial strain threatens not just economic stability but also the very foundation of American global dominance.

The risks are manifold: from economic instability and soaring inflation to a diminished capacity for international engagement. The specter of high inflation looms large as the government prints money to cover ballooning debt and defense expenditures. The phrase “It’s never different this time” takes on a new, alarming significance.

What if this time, the combatant with debt service exceeding defense spending faces an even graver fate? The reality is stark: without urgent and decisive action, the U.S. could be heading towards a financial and geopolitical catastrophe. The financial time bomb is ticking, and it’s time to defuse it before it’s too late.

America’s strength on the global stage is under threat, not from external enemies, but from within its financial corridors. The echoes of the past are a warning we cannot afford to ignore. The financial health of the nation is as crucial to its security as any military might, and it’s time to address this looming crisis head-on.

Source:

Bloomberg: The Second Cold War Is Escalating Faster Than the First