Time to put on my myth busting cap again.  This time, it looks like the USA is turning into Rome.  But probably not.  This is a comparison we almost always hear from hyperinflationists, those making ridiculous claims about the USA being bankrupt or those who are excessively worried about the influence of the government in the USA.  And maybe some of this is justified to a certain degree.  After all, it was largely government ineptitude that led to the decline of the Roman Empire.

Before any discussion about the Roman Empire begins, we should put things in perspective.  The rise and fall of Rome was a spectacular historical progression.  Although the fall of Rome is often described as some sort of event, the truth is that the rise and fall of Rome occurred over the course of 1,000 years with the final 200  years broadly being seen as the period of decline.   The USA has only existed for 235 years and has only been a superpower for about 100 of those years.  This doesn’t mean we have 765 years left to party, but some perspective is appropriate.  The tendency to view the fall of Rome as an event and not a gradual progression is highly misleading.

There are, in my opinion, three major differences between the Roman Empire and the USA.  They are:

    • The USA is not colonizing the world.
    • The USA is a very stable political environment.
    • The USA’s economic dominance continues.

Manifest Destiny is long gone….

The first point is one of the most important.   Any empire that overextends itself is bound to run into any multitude of problems trying to maintain stability outside of their direct sphere of influence.  At their peak, the Romans had conquered all of Eastern Europe, much of Western Europe, a large portion of northern Africa and much of the Middle East.  This was no small feat back in the days before cars, phones and internet.  Coordinating such a vast empire must have been a logistical nightmare.   And that’s exactly what it proved to be.  Not unlike the British Empire, this proved an impossible task as cultures clashed, coordination become increasingly difficult and authority from Rome diminished on the fringes.

Some people claim that the USA’s large military and policing of the world are somehow comparable to this.  But the reality is that we haven’t colonized any part of the world since 1959 when Hawaii became the 50th state.  It’s true that the USA went through a period of “manifest destiny” in which we essentially established what is now know as America, but those days are long gone.  We’re not in the business of colonizing the world or ruling foreign lands.  Yes, we are probably overextended on the military front and I am not sure why we often feel the need to police the world, but this is dramatically different than what the Roman Empire did through directly conquering and establishing their own leadership in other parts of the world and then attempting to maintain direct control over those regions.

Political Stability

The leading cause of the decline in the Roman Empire was political instability.  The Roman Empire was actually only one period of Roman prosperity.  Rome was many different styles of government over time with the Monarchy and then the Republic leading to its great rise and the Empire leading to its great decline.  The Empire led to considerable division within the Empire itself with the leadership, at times, being distributed across many different Emperors.  There was no real unification, but rather separate rulers as time went on.   The Roman Empire was generally fragmented between East and West and this lack of unification led to instability as time went on.

The United States is in no way comparable to the Empire of disunity or rule by Emperors.  We are and have always been a Constitutional Republic.  This form of government has proven remarkably stable with time.  And while we might see increasing disagreement among the various political parties within the USA, the foundation of our Republic is strong and stable.  There is no first or second triumvirate, no Brutus stabbing Caesar in the back, no overthrow of one government for another….There is only a stable progression of leadership chosen by the people and for the people.

Economic Prowess

I know it’s not popular to cite the continuing economic dominance of the USA, but the reality of the matter is that the USA is still the dominant economic power throughout the world.  Despite China’s incredible growth, the USA is still the largest economy in the world.  Our GDP per capita is almost 6 times China’s.  Nominal GDP is 23% of ALL world output.  If you combined ALL of the BRIC nations you’d still have an economy smaller than the USA’s.  We export more goods and services in the course of a year than the entire nominal GDP of Russia.

Now, clearly, the U.S. economy is in stall speed currently.  I am not trying to downplay the obvious rut the economy is in.  But let’s not be overly dramatic here.  The USA is still comprised of incredibly innovative and productive corporations and a people who seek the very best living standards in the world.  And while we might be a bit off track currently, I don’t see the trend in innovation and output collapsing any time soon.  I know it’s not popular to be optimistic about the future of this country, but let’s maintain a little perspective here.  The obvious direction from being #1 is becoming #2, but that doesn’t mean the American society is going to be overrun by vandals overnight to the point where it becomes a mere shadow of what it once was.

In short, the USA might be on decline (though I don’t really think so).   But one thing we’re not is the Roman Empire.  The comparisons are apples and oranges.


Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  1. Good stuff. I might also add that the USA is monetarily sovereign. The Roman Empire was not.

    • No so! The Romans had all those silver mines in Spain and controlled the supply of money that way. … They also debased that currency for years by continually shaving down the coins and mixing them cheap ores.

        • What if the currency *is* the metal? Normally we think of the gold standard as dollars or pounds backed by the rare metal.
          But in the Romans’ case, the currency was the metal. And the Romans owned the metal to the extent that they had mining right and could take it from users via taxes.
          Isn’t that our our dollars work — the government prints the money, owns the money and can take it from you at their discretion.

          • No, because you’re still constrained by the ability to mine and mint coins in this case. The U.S. is never operationally (the “operative” word here) constrained in its ability to create its currency, since 99% of it is in digital bits; the Romans were.

          • You’re still constrained in your ability to make the currency. Being sovereign in a currency means having no constraint in the ability to produce it.

          • Probably more importantly, Rome was a solar powered economy in an era before modern economic growth. It makes monetary sovereignty way less interesting.

    • Roman empire was monetary sovereign, they deficit-spent the money into the system and the unit of account was more important than the commodity-material (specially in late stages), they never, ever, ran out of money. Hell, these units were even used after the empire ceased to exist well into the middle ages.

      Also I agree that “the fall of the Roman empire” is very misleading, actually the fall of the empire was a very complex social dynamic that run well over centuries and it didn’t fall just like that overnight. A part of it never ceased to exist in fact (the oriental empire) and transformed into something else through the middle ages.

      • The very last vestige of the Roman Empire still exists today. It is called The Catholic Church.

  2. i would argue that based on military bases around the the US is are “colonizing” – or at least overextending ourselves. Rome was also drastically changed by immigration which the US is experiencing.

    • I personally think that’s a stretch. It’s one thing to try to rule over an area and establish your government as the driving force there. It’s another to maintain military bases in other countries that can be brought home with a phone call. The same Iraq comparisons were made after WW2 during the rebuilding and in Japan. I totally agree that our military is overextended, but that’s pretty different than establishing new colonies with the US govt in charge….

      • The U.S. is an empire. It offers military protection in exchange for a country’s agreement to buy the U.S.’s debt. While the U.S. may not be raping a conquered country’s resources so to speak, it is expressing control over others.

        As for the economy, the past thirty years of growth has been dominated by credit growth pulling forward future demand. That’s demand that already exists, but is brought forward to present a picture of growth. You take away government debt growth and there is no economic growth to speak of. It’s not sustainable for an empire. Today’s environment is no different than South Sea and Mississippi company bubbles for Britain and France.

      • I think the USA is more like the British Empire of the 1920s than the Roman one of 2000 years ago. If you recall your history, WW I weakened the British Empire, and WW II killed it. After WW II, a rising power called the USA replaced the British Empire as world dominator. The USA is currently a global empire in a very weakened state, but it is still very much a going concern, much like the UK in the 1920s. A rising power called China is waiting in the wings to replace us as Dominator of the World. All this requires is some cataclysmic event to bring an end to the US Empire and allow other powers to pick up the pieces. That event does not have to be a world war either. If Iran becomes a nuclear weapons power, and is able to use its leverage to redenominate Mideast oil into something besides dollars (gold for instance), the USA will be in very very deep trouble. Our ability to buy oil in our own currency is the only thing keeping us afloat right now, and more than anything else it is our military dominance that gives us the ability to maintain this arrangement. It is imperative that we squash any threat to our dominance like a bug.

  3. Great article.
    Two things I would add:
    1. The Romans ran out of soldiers. Their birthrates in their 200 years of decline plunged and they simply ran out of men to man the legions, so much so that the Northern tribes simply overwhelmed their meager defenses at the end.
    2. The decline was a good thing. Rome was a dominion society with a few people at the top ruling large numbers of people, many of them slaves. There’s been a lot of research lately that indicates the so-called Dark Ages were a centralized period rich in political, cultural and economic advances that flowered in later ages.

    • Point 1. Yes, and even worse, they were forced to recruit and bribe former enemies to become soldiers. In the early days, there were plenty of volunteers, not so many towards the end.

    • Actually Late Roman army was substantially larger (400,000 men) than the one during the “Golden” age of Augustus (around 180,000)

  4. “And while we might be a bit off track currently”

    All I can think of is that ridiculously melodramatic “It’s halftime in America” commercial hahah!

    Interesting read as usual though!

  5. “We are and have always been a Constitutional Republic….”

    The Constitution has been in a constant state of revision, and this is the second republic, which came about as a result of a murderous civil war.
    The second republic itself has recently brought into being some pretty incredible laws which allow a level of control of the citizenry that is unprecedented outside of wartime.
    This is not so say America is no longer a Constitutional Republic, just that the constitution is only a piece of paper, the real drivers of law are the courts, and there interactions with presidential power. And since on security issues the courts and the whitehouse are in broad agreement, congress is reduced to rubber stamping on defence and security (homeland) issues. this is not what was envisioned by the founders.

    • I find puzzling the ‘very stable over time’ claim of Cullen, after acknowledging that the Roman empire (and that was only a fraction of the Roman dominance period as he says) ran through the centuries.

      Strikes me as a short term bias, because: a) USA has run through deep turmoil periods (including a civil war) in its short history; b) it has a short history… too., so talking about how stable it is is non-sense (Roman dominance ran through centuries without significant economic & political cycles at all.)

      Also while I respect what northamericans have archived the american exceptionalism is tiring sometimes, USA miracle was never isolated, it was created by merchantilistic policies and an enormous capital import from Europe (human capital, but also goods and knowledge, which was originated mostly in Europe) and it didn’t even exploited until late XIX cent. (again, huge migration). And that with an huge paradise full of resources to exploit (compare that to the already crowded Europe in late XIX) and “freedom” (to conquer and kill natives).

  6. Thank you for this excellent synopsis. Very well written. You’re right, not many parallels. People know about Rome only through the title of Gibbon’s book about decline and fall, which is now considered outdated. Rome was at its greatest extent around 50 BCE to 50 CE, so the “decline” occurred over 400 to 500 years, as you point out. Most people didn’t see much change in their lifetime. Even today there is widespread diagreement among historians. Peter Wells’ “Barbarians to Angels” claims Romans slowly assimilated into barbarian culture without realizing it was happening. Goldsworthy’s “How Rome Fell” is more conventional, but still hardly the event everyone thinks they understand. My takeaways: Respect for Roman power and culture slowly died, so the Roman model of conquer and assimilation while retaining some aspects of conquered people’s culture stopped working. The wealthy/senators became increasing irrelevant, as political decisions were often made by the military, including who was Emperor. Living standards slowly decreased; recession and scarcity were common. Borders that were defensible in 200 BCE were indefensible by 200 CE as barbarian power increased. Rome didn’t get the military strength that they were paying huge sums for. And on and on.

    Not much in common. If the US is going downhill for the next 100 years, we probably won’t know it except via hindsight.

    • “Respect for Roman power and culture slowly died, so the Roman model of conquer and assimilation while retaining some aspects of conquered people’s culture stopped working. The wealthy/senators became increasing irrelevant, as political decisions were often made by the military, including who was Emperor. Living standards slowly decreased; recession and scarcity were common.”

      I think a similar process is going on with the Americans, don’t you think? Here sentence by sentence:

      1. Around 9/11 the whole world felt with America, but since then Bush went his lying and arrogant ways. The U.S. is not anymore seen as a leader of a free world, but as a lawless empire, behaving like a typical banana repiblic in many ways. Infrastructure reaches third world levels, more than 45 million people on food stamps etc. Talk about “installing democracy” in illeagally overtaken countries is seen as hilarious and hypocritical outside of the U.S.

      2. U.S. senate has become increasingly irrelevant as well, as it is being purchased on a daily basis by the elite. Constitution is being trampled from the top down, wars are fought at will, money for the military-industrial complex is an open spigot. See this for an example:

      3. Living standards for the median U.S. citizen have started to decrease. In many ways they have not really improved since the 1970s. The current balance sheet recession will run for another 7-8 years at least. If the solution is to accumulate more debt as it is currently (and there is no economic boom somewhere else like Japan enjoyed over the last 20 years), then it can last even longer. See for example:

  7. TPC,

    “The leading cause of the decline in the Roman Empire was political instability”. You are deadly wrong. (just 1st apologize I’m not a native English).

    What cause the decline/fall of the Roman Empire has nothing to directly deal with politics. The GRE was centrally controlled by Rome, the richest part of the country. But for Rome continue to sustain their level of life, they need money (gold at that time). This is the reason why they conquer the large majority of Europe at that time. But as they conquer more, they also need more military power to protect their border, more administration to control the provincies, and of course more gold to paid for all that. So they conquer more. At one point, the farest parts of the empire runs their government under Rome control but with an increasing autonomy. At one point, the growth rate was just simply unsustainable to maintain all this system, which begin to weakens. (1) the farest get their autonomy (2) the military force was unable to maintain the stability at the border (invasions from Germans).

    That is to say that what make GRE to collapse was just this inherent dynamical structure, disequilibrium and imbalance. Some kind of bubble if you prefer.

    The problem right now in Western is the dynamical structure of economy. Go back to productivity. Gains are about 2% each years (average since Industrial Revolution). This means one can produce the same with 2% less capital/labour; or to maintain labor force we need to expand sales by 2%. Every years. As a consequence, we had agricultural revolution, industrial revolution, electrical revolution, energy revolution, web revolution alongs the time.

    So we CANNOT go out of this mess just by MMR nor austerity. We must find a real new revolution by innovation (of any kind) to sustain our way of life. Who is better positioned for that? I don’t know. But we need to put any patriotism aside and read the tape.

      • Interesting piece. British empire seems a better comparison. I disagree with colonial expansion being always a negative, at least in pure economic terms. Imagine if the British spent all that money fighting wars and never reaped the economic benefits. USA has a BATMAN approach to policing the world, mistakenly thinking they have Bruce Wayne’s unlimited wealth.
        Adam Smith’s idea that free trade produces ‘better or equivalent’ benefits than colonization might work. But Developing countries tend to have a ‘Us first, you a-hole colonialist’ policy, not free trade; like 50% profit sharing on oil, or NATIONALIZATION at massive discount. Much Govt by liberating 3rd world locals with promises of freedom has led to govt by corrupt rich more oppressive than colonialists… Leading to more waste of USA & NATO military money in Afghan, Libya
        It is the Fall of Batman and Bruce Wayne…not the fall of British Empire or Rome….Our western democrat minds are not far above Hollywood’s comic book movies!

  8. It took weeks to months to travel or send a message from one end of the Roman Empire to the other. This means there was far more local control then without a 10th Amendment than there is now in the US with one and I see that as the central difference. Many things that took a century then could be telescoped into just a few years or less now.

    Entitlements and reality TV are bread and circuses.

  9. I was disapointed when I saw that piece by Doubleline. As much as I love my financial porn Zero Hedge addiction I don’t ever want to see one of my investment managers being celebrated and lauded on that site. EVER. I like stip clubs but I don’t want to see my daughters teacher there.

    I reviewed the presentation a couple of times and it was disapointing.

    • ” I like stip clubs but I don’t want to see my daughters teacher there.”

      Stealing this.

    • VII: I missed the presentation, but just went over the slides — it looks to me like it’s more of a ‘catchy title’ than alluding to the meat of the presentation. ZH and BI just took the title and ran with it. There’s nothing about currency debasement for instance…

      Part one is debt growth, wage disparity public/private, Labor Force composition, budget outlays etc…

      Part two is total return by f/i sector, look-back at rates/commodity prices and inflation expectations…

      Part three is EuroZone Rates, UnEmp, GDP, debt schedule (how much comes due THIS year) and an interesting expected “workers per retiree” out to 2050. (guess who’s in the best shape – and by far?)

      Last parts go thru the housing market, defaults and severities in RMBS and DBLTX composition.

      another great presentation imo.

      • Jwswede,

        I actually sat through the whole webinar – the Rome motif relates primarily to military spending. The US is Rome in the sense of being the greatest military power in the world in terms of spending which is described on Slide 9. We account for approximately 35% of the world’s spending on the military. Next closest is China at 1/6th our level.

        The decline of Rome analogy is in reference to the decline of Rome as a military power and the vacuum that resulted. As the US cuts its budgets, the one area that can be beaten down is the military budget, hence the idea that our military hegemony will start to sunset as we attack our long-term budgetary disequilibrium. Military first, entitlements second.

        Given how much of my net worth he manages, I am always fascinated by the depth, breadth, and political incorrectness of his approach to the world and money. He certainly says things that you just don’t hear from the average Wallstreet money manager which might explain why he is such an exceptional generator of bond alpha.

      • @ jswede-

        I liked what Conventional Wisdum said about politically incorrectness and Alpha. That was spot on…I hope he doesn’t let what his philosophical views distract him from what will make money. I’ve seen that creep in. Bill Gross took the bond vigilante thing and let it cloud his returns. That’s all really. But..the 2008 dates on the private/public was a little squishy.(disclaimer..i dont’ have a daughter…just thought it was a better analogy then my son…and I stopped going to those clubs along time ago. Any money i have goes to my family)

  10. This is where the Austrians have the upper hand.

    Colonizing is probably a better investment than bombing and not colonizing. The US’ $4.2T wars have simply been a bad investment and lend themselves to a very real criticism of fiat money. It makes wars too easy.

    Would people have accepted a 60% tax rate to fight these wars? No chance. But, governments can fight them without any genuine consent of the people. The gold standard is more a moral argument than an economic one. And the issues here really point to why it’s a coherent moral argument. The economics of it are more complicated.

  11. I don’t think the U.S. is Rome. I think civilization overall, though, is similarly unsustainable. I think we’ve reached a point where economic growth, as we measure it, no longer makes our lives better (excluding the very poor). The environmental damage of exploding global population, use of fossil fuels, industrialized farming, etc. is now making our lives worse rather than better. The barbarians are at the gate, but this time the barbarians are catastrophic climate change and the diseases of civilization/pollution.

  12. Respectfully disagree:

    “The USA is not colonizing the world.” – sounds right.

    “The USA is a very stable political environment.” – not sure. look at the t party and the “occupy” movement.

    “The USA’s economic dominance continues.” – not sure for how long, and there is no such thing as “USA’s economy”. What is US economy? Ford, Google, or GE, or Apple? All globalized.

    • “The USA is a very stable political environment.” – not sure. look at the t party and the “occupy” movement.

      I’m way more scared of money in politics and income inequality than Occupy.

  13. You should have simply said that the US is not the Roman Empire and left it at that. The more you wrote, the less convincing you sounded.

    All three of your “major differences” are historically false in the Roman case and arguably false in the American.

    A better point would be this: how did the eastern part of the empire last so long? Considering that American power (military, economic, political, cultural) is currently declining in relative terms, and will likely continue to do so at a far faster rate than Rome’s, are there lessons to be gleaned in their example so that we can better manage our own situation?

      • In the end Cullen’s article can be summorized as:

        “Don’t worry, there is no fundamental problem with the U.S.”.

        It is not dissimalr from: “Don’t worry of high stock P/Es. If held for the long term, stocks always beat bonds and protect from inflation and make you rich”.

        He is in the want-to-believe camp.

        But he is wrong. The U.S. is a constitutional republic only on papaer. De facto it is a corporate empire / kleptocracy / plutocracy / oligarchy / etc. – whatevery you prefer, choose one. And because it is economically and politically (military) so powerful, it has contributed to corrupting the whole world in that direction.

        So the only thing Cullen is correct is that the Roman Empire took so long to fall. But not everything is fundamentally right within the U.S. And the above described corruption is tightly linked to the flawed and amoral FRB monetary system (now everywhere in the world). The so marvelled monetary soveregnity of the U.S. is used primarily to keep this status quo and protect the (important) banks from failure.

        If you do not beleive me, ask the average American: an overwhelming majority senses that the country is moving in the wrong direction. They just cannot figure exactly why.

  14. Myth?

    Hey! As long as most voters have beer in the fridge, gas in their truck and a ball game on TV – No Worries. They – through their voting will finish it.

    Bread & Circuses!

    Yes indeed.

    • The “gas in the truck” will prove to be the problem as oil supplies are flat to declining, and foreign demand is accelerating upward.

  15. GDP is growing due primarily to the growth of the money supply, which is related to the growth of debt.
    GDP is simply money supply times money velocity.

    The current money velocity is 1.6.
    Ten years ago it was 2.0.
    Without an increase in mnoney supply( Dde primarily to unfunded debt), we would be in a significant recession.
    Don Levit

    • Don, you actually ALMOST have it, though I’m pretty sure you’re coming at it from the wrong angle, and with a wrong premise. In the US, the Federal Government has no such thing as unfunded debt. You do realize this part, right?

  16. US is not a Roman Empire because it doesn’t loot its conquests and so the population has to pay for them out of their own wealth.

  17. “The USA is not colonizing the world.”

    Yes, it is, only it is doing so via ccrporate structures and treaties, through entities which it largely controls, such as the World Bank and the IMF, and via such tactics as “regime change,” wars for resource control, and the like. See Michael Hudson’s writings. It also has military bases in almost every country of the world to ensure compliance. How would the US react to a Chinese or Mexican or Brazilian or Russian military base in Florida? Despite certain changes in the modalities of conquest, is most definitely a colonizing power, and it views itself explicitly as the inheritor of the British empire. See this:

    In that document, Kennan states:

    The USA is a very stable political environment.

    Yes and no. It has largely turned into an oligarchy which sits over a highly-indebted and madia-driven population. That is not really a recipe for stability. The US is now legally a quasi-fascist state, and Constitutional guarantees have been ignored. The lack of change is entirely superficial.

    The USA’s economic dominance continues.

    True enough, but the decline is evident if you look at the difference between the end of WWII and today. The US is clearly in decline.

    In our day, events unfold with incomparably greater speed than in the days of the Roman Empire. The reasons for this are obvious. The rate of change in the ancient world cannot be compared to that of the modern world.

  18. The US is – most definitely – colonizing the world. Never heard of a thing called PETRODOLLAR ? Or a thing called US Army ? And it’s precisely the giant US army that’s the largest danger for the stability of the US Empire.

  19. The US is colonizing the world. It’s just a different form of colonization than what we normally associate with the word, perhaps imperialism is a better term. It’s still economic exploitation and attempted subjugation of foreign peoples to our will. Instead of directly, we tend to do it through proxy, coopt a local elite, stage a coup, and they do our bidding for us, you know, let our corporations into the place, have the IMF make them do a structural adjustment, things like that. That’s been done at least a couple dozen times since WWII.

    • Correct- just like the new normal depression- just because you can’t see soup kitchen lines, doesn’t mean we don’t have them… they are just invisible now with food stamps and other gubment programs that make this a stealth depression.

  20. The Roman Empire has always fascinated me so in turn I have a few thoughts.

    Most of the land in the western half of the Empire in the 4th century was controlled by perhaps a few dozen senatorial families. The eastern Empire had landed wealth that was dispersed amongst a greater share of the population, and one of the reasons I believe the eastern half continued for so much longer.

    Even while these incredibly rich senators benefited tremendously from the Roman system – particularly the Roman army – which defended their land, they showed no interest in paying taxes. So most taxes were then foisted onto the peasant class (~80% of the population).

    It’s funny in a sad sort of way, because in the later Empire when the government was starved for money when it needed raise fresh armies after the inept Valens lost the entire eastern field army to Goths at the battle of Adrianople, the frontier system disintegrated. The barbarians moved in and appropriated at a minimum 30% of the senatorial landed wealth. If the senators contributed just slightly more to the government they probably would have been able to hang on to the great bulk of their wealth.

  21. Pierce:
    When you say that the U.S. has no unfunded debt, I disagree.
    From a budget perspective, for example, in order to redeem the Treasury interest in the Social Security trust fund, general revenues must be raised AS IF THE TRUST FUND DID NOT EXIST!
    The very act of requiring general revenues to redeem this debt shows clearly this is a pay-as-you-go trust fund with no store of wealth.
    One more example with Medicare Part D.
    Each year, the government pays 75% of the premiums with general revenues, with an immediate budget expense.
    How can one rationally say that Medicare Part D is fully funded?
    Don Levit

    • Don, where do US dollars come from? The Federal Government can never run out of dollars, so the whole premise of having a trust fund, or medicare fund, where the government has set aside dollars is, on its face, an obvious political ruse. Obviously that’s the cynical take. The other take is perhaps the structures in place are to ensure, as best they can, that politicians not take the entitlements away from current and future generations by “stashing away” dollars. The fact of the matter is, the government does not, and does not need to, stash away dollars any more than a referee needs to stash away points for later in a basketball game.

      • ‘Don, where do US dollars come from? The Federal Government can never run out of dollars,’

        True. But in 1971 it nearly ran out of gold as it was printing too many dollars. The world wanted gold not dollars. Nixon said ‘nah, we’ll just default world, unlucky’.

        So, now we have the world again pissed with America, but this time the only option left to the Treasury is to create ever more dollars from thin air (that is where they come from isn’t it?). Don’t worry about deficits, they don’t actually exist. Everything is free when you have the ability to create your own currency of course.

        And we all know where that ends up don’t we?

        • I don’t know why I continue to engage you, but here goes:

          No one ever said deficits don’t exist. They exist, and they matter.

          Money is an abstract concept, as shown throughout history, that relies upon common acceptance by a people for the extinguishing of obligations/debts. I don’t know why you cannot accept this. Gold has been used by various cultures to serve this purpose, but so have cowry shells, large immovable stone blocks, salt, cigarettes, tally sticks, knotted cords, cuneiform marks on clay tablets, etc. etc. Money, at its core, is an IDEA. It is a way to represent, to enumerate, the debits and credits–the obligations and entitlements–that drive every human interaction and, ultimately, human culture.

          The US Dollar, the UK Pound Sterling, the Japanese Yen, are all just expressions of the unit of account we have chosen to use to facilitate the truck and trade of our respective, productive, societies. It would seem you want money, to have some sort of permanence…to have some sort of “store of value”. That the work you did 30 years ago, stored in an incorruptible stone, should entitle you to the same (or more?) goods and services now that it did then. Well, guess what? For the bulk of humanity, the skills and labor they performed 30 years ago are no longer worth much now. Economies change, they are dynamic, they generally expand (and sometimes contract) and the shifting forces of market demand mean that economic participants must be adaptable and the economic lifeblood, the unit of account, must facilitate this dynamism. Gold does not.

          A fixed (or nearly fixed) amount of a unit of account throws a wrench into the gears of a dynamic economy. This has been shown time and time again (see the 5 Depressions in the 1800s, not to mention the Great one). And if that weren’t enough, it entrenches the upper class even more than they are today. How? You only allow the economic pie to grow at the rate we extract your precious rock out of the ground. The wealthy remain wealthy, and you have to strip the wealth out of their, or their progeny’s, cold dead hands. Why should human innovation and social progress be throttled by the success or failures of the miners of the world?

          • I agree with everything you say.

            I do not argue for a return to any sort of gold standard, I believe we are headed towards a freegold international system, as discussed in detail on various blogs, notably Fofoa.

            My issue is that you guys don’t seem able to grasp that continued creation of new base money to replace credit money that should be defaulting permanently increases the monetary base, and this will continue, as the US is unwilling to live within its means (i.e. budget deficits will keep expanding).

            Dollar collapse (or hyperinflation) is the usual result of such policies, throughout history.

            I also do not agree that savers (not investors, but savers) should be forced to hold anyone else’s debt (which includes fiat currency) as their savings. More are moving towards gold. Eventually gold will be seen as the only safe store of value for savers.

            Those are my views for what its worth. If those views give you reason to laugh, well, that’s your problem rather than mine!

        • As long as we can continue to buy oil with those dollars we can be like Alfred E Newmann “What! Me worry?”

  22. Hadn’t seen this post until now.

    CR, I think you are ignoring the presentation and focusing too much on e title of the presentation to the detriment of your readers. After I went through the presentation, which i think is a great one, I thought the title of the presentation was a poor choice and it seemed to apply more to what is going on in Europe as can be seen in one of the slides with a map o Europe.

    Thumbs down!:-)

    • CR, you posted today a 2/13 BI sensationalistic post which came out before the JG presentaion slides were available (they were available, since yesterday, i saw them yesterday night) do your readers a favor and post/comment on the JG presentation.

  23. Pierce:
    So you are saying that Part D is fully funded, not only for the current year, but for all years into the future, and for as long as the program is available.
    Due to the supposed umlimited supply of dollars, is a cash-based federal budget an old-fashioned accounting measure that should be simply washed away in a tide of red ink?
    Do we even need a budget based on cash revenues abnd cash expenses?
    Don Levit

    • no one is saying budgets don’t matter, they do. We cannot spend willy nilly. No MMT/MMRer would ever say that. Taxes matter for the regulation of the money supply. But the accounting measures currently employed by the US Government are, indeed, misapplied. I’d suggest you look into the sectoral balance equations over in the blog section of to get an idea of where we think government budget planning should begin.

    • Oh, and “supposed” is the wrong word. There is, literally, an unlimited supply of dollars. The Federal Government can issue them at will. They are like points at a basketball game, or ideas in your head, or … you get the idea. Please see my response to Gary_UK above about the nature of money.

  24. Wisdom does not call America home in the 21st century. People become the ideals they aspire. The vision the American people have has changed greatly in the last 100 years or 50 years. We lack the belief system for greatness.

  25. I think it’s still worth reflecting on the relative youth of the US in world historical terms. The US has barely begun the process of becoming an actual society.

  26. The parallel to the British Empire whose global dominance the US directly inherited, is more interesting.

    Along with similarly extended political and economic interests and global cultural and military (especially naval) reach, it did have actual occupied colonies. However these were largely an economic asset and either heavily settled by anglophones (Canada, Australia – which now count as staunch US allies) or, prior to WWI. politically still quiescent (eg India).

    Domestically, it was politically stable, and less polarized than the US at present.

    Economically, it was still the dominant technological/industrial, commercial and financial power, although in the first areas under strong challenge from Germany, with even greater US potential, much as the US faces now from China and other rising producers.

    Had the leadership in Germany and Britain had the foresight to limit competition to the economic level, and perhaps collaborated to forestall military conflict, European dominance might have endured for some time. Instead, Britain, enmeshed in a larger, dysfunctional system, saw its power drained within a few years of its peak, in the period abruptly inaugurated in 1914.

    The causes: reckless militarism, mindless colonial adventurism, fanatical nationalisms, and binding alliances making the more advanced societies liable for the actions of the most regressive – have some echoes in recent US actions and entanglements.

    But, aside from regressive political arrangements, the systemic challenges to the developed countries and the world as a whole: economic/financial/trade imbalances, resource limits, threats to the global environment, are very different – and if anything will demand greater leadership, unity, political resolve and vision than that which might have extended the British Imperium, and more importantly, spared much of the ‘Old World’ from holocaust.

    • The comparison to the British Empire before WW2 is more apt, imo.
      It’s interesting that the the British in the 19th Century and the U.S. in the 20th Century seemed to almost stumble into empire — the British in India got drawn in protecting business interests the same way the U.S. has been drawn into the Middle East.
      The British and the Americans have certainly colonized their respective worlds with their culture and legal systems. But the British people emigrated — to Canada, South America and Australia, etc. — to the extent the Americans have not. But certainly our business leaders and religious missionaries have evangelized American values overseas, and I mean that in a good way.
      British values benefited India in much the same way that American values benefited Korea. Places that have not accepted American influence, like the Muslim world, have regressed and become miserable places for their citizens.
      There was a good point elsehwere in this thread that the Americans have policed the world in exchange for the rest of the world buying our bonds and using our dollars.
      Personally, I think we’re a bit overextended militarily at the moment, especially with our shift toward confronting China in the Pacific. I think a period of entrenching at home and picking and choosing where we assert our interests would be a better strategy for promoting America.
      Great topic.

  27. I looked through the entire presentation on BI, and I didn’t see much in the way of data from the actual Roman Empire. How can you compare the USA to the Empire without direct comparison data? Typical BI story if you ask me.

  28. Technology has accelerated the time it takes to concentrate power, money and corruption. What took Rome 5 centuries to accomplish it has taken us 2.