Empire of Debt

1. Empires Evolve: Institutions Degrade Faster Than Ideas

In America, all the restraints, inhibitions, and modesty of the Old Republic have been blown away by the prevailing winds of the new empire.

The Drift from Republic to Empire. The United States, initially a modest republic, has transformed into an empire, marked by a shift from restraint and modesty to conceit, deceit, debt, and delusion. This evolution mirrors historical patterns, where institutions degrade faster than people's perceptions of them. The Constitution, once a binding document, has become elastic, allowing the government to wield unchecked power.

The Illusion of Continuity. Despite the radical changes, many Americans cling to outdated notions of the nation's character, failing to recognize the extent to which imperial ambitions have reshaped their society. This disconnect between reality and perception creates a dangerous vulnerability, as the nation operates under a set of assumptions that no longer hold true. The American people are now hollow dummies.

Echoes of Rome. History offers valuable lessons, particularly from the Roman Empire, where institutions also degraded faster than people's ideas about them. The U.S. is repeating the same mistakes. The old virtues were replaced with new vices. By examining Rome's trajectory, we can gain insights into the potential consequences of America's imperial path.

2. Imperial Finance: Tribute or Debt?

Rome made its empire pay by exacting a tribute of about 10 percent of output from its vassal states.

The Traditional Model. Historically, empires have sustained themselves through tribute extracted from conquered territories, ensuring that the homeland prospers at the expense of its vassals. This system, while often brutal, provided a clear financial foundation for imperial power. The homeland is supposed to make a profit; it is supposed to grow richer compared to the vassal states.

America's Perverse System. The United States, however, has adopted a unique and unsustainable model of imperial finance, relying on debt rather than tribute. Instead of extracting wealth from its vassal states, it borrows from them, creating a system where the homeland becomes increasingly indebted to the periphery. This reliance on foreign lending leaves the U.S. vulnerable to the whims of its creditors, who can destabilize the economy by withdrawing their support.

The Illusion of Prosperity. The U.S. system of imperial finance creates the illusion of prosperity in the homeland, but this prosperity is built on a foundation of debt, not genuine wealth creation. This dependence on foreign capital undermines the nation's long-term economic health and reduces its ability to compete in the global marketplace.

3. The Perils of Self-Deception in Empire Building

Primitive people play primitive roles. They are no less intelligent than the rest of us, but they would be out of character if they began doing calculus.

The Need for Imperial Conceit. Empires require a degree of self-deception to function effectively. Citizens of the imperial power must believe in their own superiority and the righteousness of their cause, even when those beliefs are demonstrably false. This conceit allows them to justify their dominance over other nations and to pursue their imperial ambitions with unwavering conviction.

The Hollow Dummy. To fulfill their imperial mission, homeland citizens must become what George Orwell called "hollow dummies," blindly accepting the narratives and justifications offered by their leaders. This requires suppressing critical thinking and embracing a system of shiny vanities and illusions. An imperial people must believe that they deserve to be the imperial power—that is, they must believe they have the right to tell other people what to do.

The Price of Delusion. While self-deception may be necessary for empire building, it comes at a steep price. It distorts reality, blinds citizens to the true costs of their imperial ambitions, and ultimately leads to unsustainable policies and inevitable decline. The invasion of Iraq was based on the same sort of thinking: that even the grubby desert tribes want to be just like us.

4. The Cycle of Empires: From Zenith to Ruin

All empires must pass away. All must find a way to destroy themselves. America found debt.

The Inevitable Decline. History teaches that all empires, regardless of their power or glory, are destined to decline and fall. This cycle is driven by a combination of internal factors, such as corruption, economic mismanagement, and moral decay, and external pressures, such as the rise of rival powers and barbarian invasions.

America's Chosen Path. The United States, like all empires before it, is on a path toward self-destruction. The traditional method of empire finance is so simple even a Mongol barbarian could master it. Nations are conquered and forced to pay tribute. The homeland is supposed to make a profit; it is supposed to grow richer compared to the vassal states.

The Role of Debt. America has found its own unique way to hasten its decline: debt. By accumulating massive levels of public and private debt, the U.S. has created a financial house of cards that is vulnerable to collapse. This reliance on debt undermines the nation's economic stability and makes it increasingly difficult to sustain its imperial ambitions.

5. The Allure and Trap of Military Expansion

Empires are almost always at war—for their role is to “make the world safe.”

The Siren Song of War. Empires are almost always at war, driven by a desire to expand their territory, protect their interests, and project their power. This constant state of conflict drains resources, distorts priorities, and ultimately weakens the empire from within.

The Illusion of Security. While military strength may provide a sense of security, it often comes at the expense of economic and social well-being. The United States, with its vast military budget, has neglected its domestic needs and become increasingly reliant on foreign powers to finance its military adventures.

The Perils of Overextension. The United States, with its military bases scattered across the globe, has overextended itself, stretching its resources and manpower to the breaking point. This overextension makes the nation vulnerable to attack and undermines its ability to respond to crises at home.

6. The Fatal Combination: Easy Money and Imperial Ambitions

Expensive foreign wars, expensive bread, expensive circuses—these are, of course, what bankrupted almost every empire from Rome to London.

The Lure of Easy Money. Empires are often tempted to debase their currencies or engage in other forms of financial manipulation to fund their ambitions. This easy money creates a temporary illusion of prosperity, but it ultimately leads to inflation, economic instability, and a loss of confidence in the empire's financial system.

The American Experiment. The United States, with its independent central bank and its vast financial resources, has been particularly susceptible to the allure of easy money. The Federal Reserve's loose monetary policies have fueled asset bubbles, encouraged excessive borrowing, and undermined the value of the dollar.

The Inevitable Reckoning. The combination of easy money and imperial ambitions is a recipe for disaster. As the empire's financial foundations erode, it becomes increasingly difficult to sustain its military commitments and domestic programs, leading to a crisis of confidence and an eventual collapse.

7. The Illusion of Control: Central Banks and Economic Destinies

Every central banker in the world has taken the devil’s bait, creating money, out of thin air, as if no one were looking.

The Hubris of Central Planning. Central banks, like the Federal Reserve, operate under the illusion that they can fine-tune the economy through monetary policy. This hubris leads them to manipulate interest rates, inflate the money supply, and interfere with the natural forces of the market.

The Devil's Bargain. By creating money out of thin air, central bankers undermine the value of savings, distort investment decisions, and create asset bubbles. These actions may provide a short-term boost to the economy, but they ultimately lead to long-term instability and financial ruin.

The Unintended Consequences. Central bankers, despite their best intentions, are often unable to foresee the unintended consequences of their actions. Their policies can have far-reaching and unpredictable effects, destabilizing the global economy and undermining the foundations of the empire.

8. Globalization's Uneven Harvest: Asia's Rise, America's Fall

The main beneficiaries of the present gush of globalization are the Asians.

The Promise of Globalization. Globalization, in theory, should benefit all participants by allowing them to specialize in what they do best and trade with one another. However, in practice, the benefits of globalization have been unevenly distributed, with some nations prospering while others decline.

Asia's Competitive Advantage. Asian economies, with their low labor costs, high savings rates, and disciplined workforces, have been particularly well-positioned to take advantage of globalization. They have become the world's leading manufacturers and exporters, accumulating vast amounts of wealth in the process.

America's Declining Fortunes. The United States, on the other hand, has struggled to compete in the globalized economy. Its industries have aged, its workers have become overpaid, and its consumers have grown accustomed to spending more than they earn. As a result, the U.S. has become increasingly reliant on Asian lenders to finance its consumption and its wars.

9. The Essential Investor: Contrarianism and Subversion

The way people have always made money is by buying low and selling high.

The Wisdom of Contrarianism. In a world of mass delusion and herd mentality, the essential investor must adopt a contrarian mindset, questioning conventional wisdom and seeking opportunities where others see only risk. This requires independent thinking, a willingness to go against the crowd, and a deep understanding of market cycles.

Subverting the Narrative. The essential investor must be willing to subvert the prevailing narratives and challenge the assumptions that drive market trends. This requires a healthy dose of skepticism, a distrust of authority, and a commitment to independent research.

The Value of Private Knowledge. The essential investor relies on private knowledge, not public information. This means conducting thorough research, understanding the fundamentals of a business, and developing a unique perspective that is not influenced by the noise and hype of the market.

10. The Price of Empire: A Nation's Soul in Debt

The entire homeland economy now depends on the savings of poor people on the periphery to keep it from falling apart.

The Moral Cost of Debt. The reliance on debt has not only undermined America's economic stability but has also eroded its moral character. The pursuit of easy money and instant gratification has led to a decline in thrift, self-reliance, and other traditional virtues.

The Loss of Independence. As the nation becomes increasingly indebted to foreign powers, it loses its independence and its ability to chart its own course. The United States, once a beacon of freedom and self-determination, has become a pawn in a global financial game.

The Inevitable Reckoning. The empire of debt cannot last forever. Sooner or later, the piper will have to be paid. The question is not whether the reckoning will come, but when and how. The longer the U.S. delays the inevitable, the more painful the adjustment will be.

Last updated: April 4, 2025