Why America Fell So Far … So Fast

Young America

All Empires Crash Soon After They Reach Their Peak

by WashingtonsBlog

Thomas Edison said, “Dissent is the highest form of patriotism.”   And because I love my country, I frequently criticize America’s shortcomings in the hopes of making her better.

But the truth is that the United States is not unusual … it is just like all other empires which have hit their peak and then quickly crashed.

We noted in 2008:

Political insider and veteran reporter Kevin Phillips has documented that every major empire over the past several hundred years has undergone a predictable cycle of collapse, usually within 10 to 20 years of its peak power.

The indications are always the same:

– The financialization of the economy, moving from manufacturing to speculation;

– Very high levels of debt;

– Extreme economic inequality;

– And costly military overreaching.

We wrote in 2009:

In 2000, America was described as the sole remaining superpower – or even the world’s “hyperpower”. Now we’re in real trouble (at the very least, you have to admit that we’re losing power and wealth in comparison with China).

How did it happen so fast?


How Empires Fall

Paul Farrel provides a bigger-picture analysis, quoting Jared Diamond and Marc Faber.

Diamond’s book’s, Collapse: How Societies Choose to Fail or Succeed, studies the collapse of civilizations throughout history, and finds:

Civilizations share a sharp curve of decline. Indeed, a society’s demise may begin only a decade or two after it reaches its peak population, wealth and power…

One of the choices has depended on the courage to practice long-term thinking, and to make bold, courageous, anticipatory decisions at a time when problems have become perceptible but before they reach crisis proportions

And PhD economist Faber states:

How [am I] so sure about this final collapse?

Of all the questions I have about the future, this is the easiest one to answer. Once a society becomes successful it becomes arrogant, righteous, overconfident, corrupt, and decadent … overspends … costly wars … wealth inequity and social tensions increase; and society enters a secular decline.

[Quoting 18th century Scottish historian Alexander Fraser Tytler:] The average life span of the world’s greatest civilizations has been 200 years progressing from “bondage to spiritual faith … to great courage … to liberty … to abundance … to selfishness … to complacency … to apathy … to dependence and … back into bondage”

[Where is America in the cycle?] It is most unlikely that Western societies, and especially the U.S., will be an exception to this typical “society cycle.” … The U.S. is somewhere between the phase where it moves “from complacency to apathy” and “from apathy to dependence.”

In other words, America’s rapid fall is not really that novel after all.

How Consumers, Politicians and Wall Street All Contributed to the Fall

On the individual level, people became “fat and happy”, the abundance led to selfishness (“greed is good”), and then complacency, and then apathy.

Indeed, if you think back about tv and radio ads over the last couple of decades, you can trace the tone of voice of the characters from Gordon Gecko-like, to complacent, to apathetic and know-nothing.

On the political level, there was no courage in the White House or Congress “to practice long-term thinking, and to make bold, courageous, anticipatory decisions”. Of course, the bucket-loads of donations from Wall Street didn’t hurt, but there was also a religion of deregulation promoted by Greenspan, Rubin, Gensler and others which preached that the economy was self-stabilizing and self-sustaining. This type of false ideology only can spread during times of abundance and complacency, when an empire is at its peak and people can fool themselves into thinking “the empire has always been prosperous, we’ve solved all of the problems, and we will always prosper” (incidentally, this type of false thinking was also common in the 1920′s, when government and financial leaders said that the “modern banking system” – overseen by the Federal Reserve – had destroyed instability once and for all).

And as for Wall Street, the best possible time to pillage is when your victim is at the peak of wealth. With America in a huge bubble phase of wealth and power, the Wall Street looters sucked out vast sums through fraudulent subprime loans, derivatives and securitization schemes, Ponzi schemes and high frequency trading and dark pools and all of the rest.

Like the mugger who waits until his victim has made a withdrawal from the ATM, the white collar criminals pounced when America’s economy was booming (at least on paper).

Given that the people were in a contented stupor of consumption, and the politicians were flush with cash and feel-good platitudes, the job of the criminals became easier.

A study of the crash of the Roman – or almost any other – empire would show something very similar.

We pointed out in 2010 that more empires have fallen due to reckless finance than invasion.  (Whichever side of the stimulus-austerity debate you agree with, spending walls of money on things which neither help people or stimulate the economy is idiotic.)

Inequality was – indeed – .   In fact, inequality in America today is twice as bad as in ancient Rome , worse than it was in in Tsarist Russia, Gilded Age America, modern Egypt, Tunisia or Yemen, many banana republics in Latin America, and worse than experienced by slaves in 1774 colonial America.

Finacialization? Yup, we’ve got that in spades …  Economist Steve Keen has also shown that “a sustainable level of bank profits appears to be about 1% of GDP”, and that higher bank profits leads to a ponzi economy and a depression).  But government policy has been encouraging the growth of the financial sector for decades:


Corruption? Check … the government and big banks are all wallowing in a pig sty of criminal fraud.  The economy has been hollowed out due to looting and fraud. And our institutions are .  They are so corrupt and oppressive that people are more afraid of the government than of terrorists.

The bigger the bubble, the bigger crash … and we’ve just come out of the biggest bubble in history.

Costly military overreaching?  Definitely…

The war in Iraq – which will end up costing between $5  and $6 trillion dollars – was launched based upon false justifications. Indeed, the government apparently planned both the Afghanistan war (see this and this) and the Iraq war before 9/11.

It is ironic that our military is what made us a superpower, but our huge military is bankrupting us … thus destroying our status as an empire.

Empires which fight “one too many wars” always collapse:

“Just one more surge!” — The Indus

“Just one more surge!” — The Kushan

“Just one more surge!” — The Scythians

“Just one more surge!” — The Parthians

“Just one more surge!” — The Saffarid

“Just one more surge!” — The Ghaznavid

“Just one more surge!” — The Ghorid

“Just one more surge!” — The Timurid

“Just one more surge!” — The Hotaki

“Just one more surge!” — The Durrani

“Just one more surge!” — The Aryan

“Just one more surge!” — The Persians

“Just one more surge!” — The Sassanids

“Just one more surge!” — The Hephthalites

“Just one more surge!” — The Huns

“Just one more surge!” — The Mughals

“Just one more surge!” — The Arabs

“Just one more surge!” — The Turkic

“Just one more surge!” — The Hazaras

“Just one more surge!” — The Khwarezmids

“Just one more surge!” — The Mongols

“Just one more surge!” — The British

“Just one more surge!” — The British (again)

“Just one more surge!” — The British (Yet again)

“Just one more surge!” — The USSR

“Just one more surge!” — The United States



4 Responses to “Why America Fell So Far … So Fast”
  1. Robert Hall says:

    What precipitated the Boston Tea party, why did the colonists fight so strongly against the Stamp Act? The main reason was that the tax had been passed without their agreement. The British Parliament had passed the Stamp Act and other British taxes ignoring the colonists’ rights. The colonists had no representatives in the British Parliament. Thomas Jefferson blamed King Gorge for ignoring the colonists; ruining trade and making people pay high taxes.
    Sound familiar folks?
    On July 4, 1776, the Congress adopted Jefferson’s Declaration of Independence. The colonies stated that they were no longer a part of Great Britain. A new nation was born.

    We owe our founding fathers nothing less than to act to preserve our right to representative self-governance.

    Lets face it Mr. and Mrs. John Q. public, we have been backed into a corner with no influence on our elected congressional representatives other than our vote. Campaign finance reform has proven to be all smoke and mirrors; lack of term limits constitutes carte blanche long- term incumbent entitlement with ancient and feeble congressional members almost grown to their Washington seats. There are no protections for taxpayers from self-serving elected “representatives”. Most, if not all, of the major failures in our society (the health care mess, the financial collapse, our abominable tax code and immigration policy, the Iraq war etc.) can be traced back to the root cause, failure of congress to act in behalf of the electorate. Effectively the democratic process has been totally corrupted by special interest lobbyists and their employers:
    big banks/finance, big oil/energy, big insurance, big military/industrial, big medical, big pharmaceutical etc…you get the idea and know in your hearts this is so.

    The rigid polarizing actions of congress would suggest to a casual observer that congressional republicans and democrats either evolved from distant branches of the Homo-sapiens evolutionary tree or they are aliens from different planets. Their mindless self-absorbed partisan posturing would be laughable if it were not so destructive with their distortions, outright lies and obvious attempts at self-aggrandizement.

    You may think the current “tea party” and “occupy” movements to be the answer but it will get nowhere unless their movement evolves to an act of insurrection. Our founding fathers envisioned and empowered us for this drastic last resort for restoration of the democratic process with the Second Ammendment The current “tea party” movement has missed or obscured the key issue. It’s not about paying too much tax, but taxation without representation. It wasn’t about sending king gorge five dollars or 500 dollars but regardless of the amount given over, King George refused to act in the interests of his colonial chattel. We are once again collectively regarded as “colonial chattel”. The Occupy” movement has resulted in absolutely zero impact on our intransigent Washington non-representatives” and will continue to be viewed as “feeble” misguided malcontents by the aristocrats
    We need to take action just as the revolutionary French were forced to do when their limits of tolerance were ignored and flaunted by the ruling aristocracy (congress) and were forced to implement “off with their heads movement” More and more of our informed citizens are nor longer voicing their “dissatisfaction” or disappointment, or “frustration” with congress. We are hearing an outpouring of passions framed in “hate” when voicing their feelings toward congress. This is becoming a pivotal point in history and cannot be ignored any longer.
    To paraphrase an old Sunday comic strip sage, “ I had all I can stands, I cant stands no more” Folks, its time to get out the spinach. Its time to start taking back our democracy Lets start by burning down K Street.
    Robert Hall

  2. Sarah says:

    Farrel is encouraging buy and flip to make some bucks. That mindset is part of the problem with the FIRE sector, 10 million people or so lost housing and quite a bit of money and you have “analysts” urging buy and flip again. People need housing, but that doesn’t seem to have an effect on some people with more money, who have housing, but otherwise are driven to make a buck.

  3. Sarah says:

    Turning down the sensationalism a bit we see a large part of the population that have never had “luxury” or even their own homes, and it has been this way for decades. They weren’t a part of the extraordinary wealth transfers of the 80s, when enormous earnings graced an ever smaller number of individuals. Paul Farrell’s role is to be Mr. Gloom and Doom on Marketwatch/Wall Street journal. While entertaining, more obvious solutions and information are withheld. The best chance the masses had at home ownership was probably the late 60s.

  4. Alabama John says:

    Excellent presentation. Thank you!

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