Speaking to the Center for Independent Studies in Australia, Niall Fergusson predicts the rapid demise of American hegemony in the world. He explains that many empires did not ebb away but rapidly fell–however, in many cases, it wasn’t really military weakness that did them in, but debt, particularly debt to foreigners. He says America is on the same path. He makes the observation that China, which is rising in power, is quietly reducing its holdings of US debt.
Ferguson is asked during the question period whether he owns gold. He says that one should only have 10% of holdings in gold, for he believes that there will be deflation. Funny, in my reading of his book, The Ascent of Money, and my listening to media appearances, I’ve drawn the opposite conclusion from the evidence that he presents: that there will be inflation. Ferguson, however, makes the point that he is not himself an economist (like that would necessarily help) but an historian. In any case, I hope the leadership and people of the US are listening to his warning. It is perhaps not too late to turn the tide. Ferguson recommends the newly elected Senator Rand Paul as being the only one who has a reasonable plan to help the US to avoid this fall. Please click on the screen snip below to connect to the video at the Australian Broadcasting Corporation website (hat tip The Business Insider).