INTRODUCTION
THE BUBBLE EMPIRE, REDUX

What a strange delight! You are reading an updated version of a book we wrote nearly 20 years ago. Here, we have a chance to explain away our errors … and take another swing at the pitch.

Back then, in 2006, we argued that the United States had become, unmistakably, an empire. And that empires are expensive and dangerous. All of them eventually come to an end. And when you finance an empire with debt—our argument was—the end would come sooner rather than later.

That line of thinking still seems correct. The big difference between then and now is largely a matter of tense. Then, it was future. Now it is present. And looking at the big picture, the remarkable thing is how far the empire of debt has already declined. The empire owed “only” $5 trillion in 1999. Now, the total is $34 trillion … and rapidly rising. Annual interest was projected by Bloomberg to cross $1 trillion in 2024.1

And for what?

The US has been slipping in the international ratings for at least 20 years … and by some measures, for more than 50 years. The US share of world GDP, for example, has been cut in half, from about 40% in 1960 to a little more than half that, 24%, today.2 In the same period of time China has risen from 4% to 18% of global output.

In the meantime, America's share of prison inmates has risen. With nearly 2 million people in jail, no other country comes close. China and Russia, said to be “repressive” regimes, actually leave many more of their citizens at liberty than the US. China has more than three times as many people as the US, but fewer prisoners behind bars. Statistically, you're more likely to be locked up in America than in any other advanced country, a percentage close to Cuba and El Salvador. Neither China nor Russia even make the top 10.3

And Americans, alone among people in developed nations, are living shorter lives. The US is now in 59th place, after China, Kuwait, and Albania, in average life expectancy.4

We were right about the direction. And right about the general trend. We were right to anticipate the real estate collapse of 2008, the rise in debt, the decline in US solvency, and a coming financial crisis.

Beyond that, we certainly had no idea that Donald Trump—a person with no “conservative” attachments—would become a Republican president. Nor could we imagine that a virus would cause the shutdown of much of the world economy. Nor that the aforementioned Republican president would go on the biggest spending spree of all time, trying to offset the foregone GDP output with completely fictitious money printed up by the Fed.

But we were right about another major thing we saw coming: inflation. “When the howls from consumers and voters grow loud enough,” we wrote, “the Fed will panic. In desperation, [the Fed chairman] will point south, to Argentina. ‘There … that is our way out,’ he will say.”

That event, which will determine the character of US economic life, probably for an entire generation, is still ahead. And now, dead ahead.

But let us return to our introduction, as we left it, 17 years ago …

Many years ago, when the United States was still a modest republic, US presidents were available to almost anyone who wanted to shoot them. Thomas Jefferson went for a walk down Pennsylvania Avenue, alone, and spoke to anyone who came up to him. John Adams used to swim naked in the Potomac. A woman reporter got him to talk to her by sitting on his clothes and refusing to budge.

But now anyone who wants to see the president must have a background check and pass through a metal detector. The White House staff must approve reporters before they are allowed into press conferences. And when the US head of state travels, he does so in imperial style; he moves around protected by hundreds of praetorian guards, sharpshooters on rooftops, and thousands of local centurions. A report circulated around the internet stemming from an article written in advance of a state visit President Ohama planned to Mumbai in November 2010. The Press Trust of India was quoted as saying that Obama's trip to India would “cost $200 million per day for security and living arrangements, among other things. The story claimed that the president would be accompanied by about 3,000 people, including Secret Service agents, government officials and journalists, and will stay at the Taj Mahal Hotel—the scene of a 2008 terrorist attack.”

Later that day, Rush Limbaugh picked up the story and added some detail on his radio show that Obama's entourage would book “five hundred seven rooms at the Taj Mahal,” and be composed of 40 airplanes, repeating the $200 million a day claim. The Washington Times Obama would “spend enough to bankrupt a small nation.” In England, the Economic Times and The Daily Mail claimed Obama would book the entire 570-room Taj Mahal Hotel for the trip.

Of course, the White House denied the rumors. FactCheck.org further debunked the claims noting the White House does not publish costs of presidential trips for security reasons. FactCheck.org then offered this helpful fact: According to the Government Accountability Office, President Clinton's “trips to Africa, Chile and China in 1998 cost at least $42.8 million, $10.5 million and $18.8 million, respectively—not counting the still-classified cost of providing Secret Service protection. In Africa, Clinton was accompanied by about 1,300 individuals—not including members of the Secret Service—representing the White House, the Department of Defense and other federal agencies. The president visited six countries in 12 days, which means the trip cost $3.6 million per day.”5

Today, the president cavalcades around Washington in an armored Cadillac. The limousine is fitted with bulletproof windows, equally sturdy tires, and a self-contained ventilation system to ward off a biological or chemical attack.

The Secret Service—the agency charged with preserving the president among the living—employs over 7,000 people: 3,600 special agents, 1,600 uniformed division officers, and more than 2,000 other specialized administrative, professional, and technical wonks.6

Everywhere the president goes, his security is handled—by thousands of guards and aides, secure compounds, and carefully orchestrated movements.

In late 2003, when Bush deigned to visit the British Isles, an additional 5,000 British police officers were deployed to the streets of London to protect him. Parks and streets were shut down. Snipers were visible on the royal rooftop.7 After Bush's stay at Buckingham Palace in London, the Queen was horrified by the damage done to the Palace grounds. They were left looking like the parking lot at a Walmart two-for-one sale.8

That was 20 years ago. Since then, it has only gotten worse. When we passed through Dublin in summer 2023, for example, we noticed not just Air Force One on the runway but also Air Force Two. And dozens of black vans. Joe Biden had come to town, bringing the praetorian guard with him.

THE THEME OF THIS BOOK IN A NUTSHELL

Watching the news is a bit like watching a bad opera. You can tell from all the shrieking that something very important is supposed to be happening, but you don't quite know what it is. What you're missing is the plot.

Let us begin by noticing that this is a comic opera that seems as though it might veer into tragedy at any moment. The characters on stage are familiar to us—consumers, economists, politicians, investors, and businesspeople. They are the same hustlers, clowns, rubes, and dumbbells that we always see before us. But in today's performance they are doing something extraordinary: They are some of the richest people on the planet, but they have come to rely on the savings of the world's poorest people just to pay their bills. They routinely spend more than they make—and think they can continue doing so indefinitely. They go deeper and deeper in debt, believing they will never have to settle up. They buy houses and then mortgage them out—room by room, until they have almost nothing left. They invade foreign countries in the belief that they are spreading freedom and democracy, and depend on printing press money to pay for it. They run trillion-dollar deficits, routinely, giving almost no thought to who will eventually pay … or how.

But people come to believe whatever they must believe when they must believe it. All these conceits and illusions that we find so amusing come not from thinking, but from circumstances. As they say on Wall Street, “markets make opinions,” not the other way around. The circumstance that makes sense of this strange performance is that the United States is an empire—whether we like it or not. It must play a well-known role on the world stage, just as you and I must play our roles, not because we have thought our way to them, but simply because of who we are, where we are, and when we are there. 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. They have their parts to play just as we do. Sophisticated people play sophisticated roles. They are no...