In Empire of Debt, maverick financial writers Bill Bonner and Addison Wiggin provide you with the first in-depth look at how the American character has shifted to accommodate its new imperial role; how we have abandoned the private virtues of personal liberty, economic freedom, and fiscal restraint; and how the government has gained control of public life and the economy.
Empire of Debt
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Many Americans have resisted the notion that their country is an imperial power. The idea seems to contradict the values of the Republic and its Founding Fathers. But in Empire of Debt, prominent financial analysts Bill Bonner and Addison Wiggin argue passionately that not only is the United States an empire, but it is also one whose end is coming soon. Bonner and Wiggin are the brains behind www.dailyreckoning.com, an iconoclastic and irreverent market advisory service that has long raised concerns about American indebtedness and warned of a looming dollar crisis. In Empire of Debt, a sequel to their earlier doom-and-gloom book Financial Reckoning Day, they elaborate on their argument that the U.S. economy is about to implode.
Bonner and Wiggin enumerate a long list of chronic ailments that imperil the American financial system--a massive trade deficit, soaring personal and government debt, a housing bubble, runaway military expenditures. These problems "hardly disturb the sleep of the imperial race," the authors write. "[But] all empires must pass away." Bonner and Wiggin argue that American imperial delusions are similar to the fantasies that fueled the dot-com market mania. They recommend readers buy gold as insurance in the event of a financial crisis. Empire of Debt flounders when discussing how America indebted itself; the authors blame the Federal Reserve Board's low interest rates but gloss over the fact that rates were slashed because the U.S. teetered on the brink of deflation in 2002 and 2003 (a topic they give more attention to in Financial Reckoning Day). As hardcore free-marketeers, Bonner and Wiggin also seem to long for the pre-welfare days of the 1920s but forget how that period's policies led to the Great Depression. That said, Empire of Debt contains many revelations that will open eyes. --Alex Roslin --This text refers to an out of print or unavailable edition of this title.
Review
" The doom mongering is leavened with some waspishly witty writing" ("Daily Telegraph," 6th December 2005)
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106 of 113 people found the following review helpful
By David Ludden
Format:Hardcover
When my grandparents bought their home in the 1930s, they made paying off the mortgage a high priority and celebrated when the house was finally theirs. They worked hard, pinched every penny and took good care of what they had. They kept their house tidy and in good repair; they never used the fireplace because they did not want to get it dirty, and the furniture stayed good as new under its plastic covers. When they died, they were debt free and had money in the bank. It was these virtues--thrift and industry--that built the United States into the most powerful empire the world has ever known, according to Bill Bonner and Addison Wiggin in their new book, Empire of Debt: The Rise of an Epic Financial Crisis.
Bonner and Wiggin view ancient Rome as the classical model of empire. Running an empire was an expensive business; the folks in the homeland needed to be mollified with government handouts (bread and circuses), while a large military had to be maintained in the frontier. Rome used its military power to exact tribute from neighboring states; it was a protection racket, no different from the Mafia. Nevertheless, this scheme generally kept the central state solvent and the territories at peace. The United States is also an empire, Bonner and Wiggin maintain, but it does not follow the classical model. It placates its citizens with massive distributions of government largess while using its powerful military to exert influence and keep peace abroad. However, "[i]nstead of getting paid for providing protection, the United States is on the receiving end of loans from its tributary states and trading partners " (p. 77). This is how the United States became the Empire of Debt.
In Bonner and Wiggin's version of history, the beginning of the American Empire was Wilson's entry of the United States into World War I. Wilson was behaving imperially, according to the authors, because he was using military force in an attempt to influence political events beyond his country's borders. By the Vietnam War, the United States had clearly shifted to imperial mode; although it made no difference to the American homeland who ruled Vietnam, it is nevertheless the role of the empire to "routinely and habitually contest control of periphery areas" (p. 169). Indeed, during the twentieth century the United States got involved in conflict after conflict that was irrelevant to maintaining its security.
What made America a peculiar empire was that it had an agenda for changing the world. It would not play empire by the old rules; instead, it would use its imperial power to remake the world in its own image. Wherever the American empire could exert its influence, it demanded not tribute but rather that its vassal states practice democratic capitalism. At first, this arrangement was profitable to the United States, especially in the case of Western Europe and Japan after World War II. But providing protection is costly, and the homeland, rather than the vassal states, was paying for it. Here the authors also see a parallel between imperial America and that other peculiar empire of the twentieth century, the Soviet Union. They comment that what made the Communists so "obnoxious was not their own goofy creed but their determination to do precisely what [America] wanted to do, remake its adversary into something more like itself" (p. 209). Changing the world is an expensive undertaking, and the Soviet empire was bankrupt before the end of the twentieth century, but was the American empire really in any better financial shape?
Thus is the history of the Western world according to Bonner and Wiggin. But is this interpretation of events reasonable? Is it even plausible? Indeed, there is much to hate about this book. And yet, therein lies its beauty. For Bonner and Wiggin toe no party line; rather, they expose the chicanery and buffoonery of every political persuasion. No matter where you stand on the political spectrum, you are bound to find something in this book to offend you. And this is a good thing, because we all need to be knocked down a peg or two from time to time. Bonner and Wiggin play the role of the little boy in the tale of the emperor's new clothes who is willing to admit that he cannot see the royal robes--the emperor is naked, and the empire is broke.
On page after page, Bonner and Wiggin challenge the conventional wisdom. For example, they dispute the commonly held belief that "democracies are more peaceful than other forms of government" (p. 109). As evidence, the authors point to World War I, which, they insist, "was already a largely democratic war" (p. 112) even before Wilson involved the Unites States in it to make the world safe for democracy. Of the major combatants, only France was officially a republic, but England, Germany, Austria-Hungary and Russia were constitutional monarchies with at least limited popular political participation. Indeed, there is evidence that King George V of England, Kaiser Wilhelm II of Germany and Tsar Nicholas II of Russia, who were all first cousins, worked together to keep their countries out of conflict, but they were overwhelmed by popular sentiment, which "found the prospect of a short, sanitary war charmingly distracting" (p. 115). Furthermore, when the Tsar was deposed in 1917, the democratic Provisional Government kept Russia in the war; it was the autocratic Bolsheviks that withdrew Russia from the conflict. Bonner and Wiggin also challenge the belief that democracy is the best form of government, maintaining that in "a modern democracy, it is relatively easy to stir the masses to absurdity" (p. 164). This is not to say that the authors favor autocratic rule. Rather, they mean that we should think carefully, before imposing democratic institutions on unwilling populations, whether we are really doing them--or us--a favor.
Bonner and Wiggin also see a parallel between the British Empire at the beginning of the twentieth century and the American Empire at the beginning of the twenty-first. A hundred years ago, the British Empire had become moribund and was going increasingly into debt to the then economically vigorous United States, especially to fund its participation in the Great War. (Indeed, the authors suggest that Wilson sided with the British not because they were more democratic but because they owed us more, and Wilson wanted to make sure that debt could be repaid.) Now, the economy of the American Empire has stagnated as it becomes increasing indebted to the new global economic engine, China. There are many reasons why China is growing while America stalls, but one important reason has to do with the fact that "Asian workers are younger and cheaper" (p. 233). As a frequent traveler to China over the last sixteen years, I have witnessed firsthand China's unfolding economic miracle. Its people are young, well-educated and ambitious; they are determined to make themselves wealthy and their country the world's next superpower.
However, the American economy is not simply being bogged down by an aging population; it is also being destroyed by a collective delusion that debt does not matter. As Bonner and Wiggin point out, "America's empire of debt rests on many huge deceptions," such as that "the rest of the world will take American IOUs forever" and that "domestic savings and capital investment are no longer necessary" to maintain the economy (p. 290). Instead of saving, the typical American family takes out home equity loans, thinking that the rising values of their houses means that they are getting richer. Thus, Americans use creative financing and "the savings of poor people in foreign countries" (p. 285) to maintain a standard of living they cannot afford. Nevertheless, this debt will eventually have to be repaid. "For what is a national debt," the authors observe, "but an intergenerational obligation, a burden placed on infants by their parents and grandparents" (p. 200). The revelers may claim that tomorrow will never come, but those who have remained sober (and solvent) can see that there are major problems ahead for the United States.
It may be too late to turn the United States from economic decline; its people seem to lack the willpower and the foresight. However, that does not mean that individual Americans are doomed to financial despondency, as long as they are willing to face certain facts. Bonner and Wiggin emphasize that you always have to work to make money, either by selling your labor or by putting in many hours learning about good companies to invest in wisely. Furthermore, you do not get rich by playing the stock market; instead, the authors argue, "you get rich by buying companies at good prices, holding them for a long time, and not spending your money" (p. 309). This sounds exactly like the kind of advice that my grandparents would have given.
Bonner and Wiggin view ancient Rome as the classical model of empire. Running an empire was an expensive business; the folks in the homeland needed to be mollified with government handouts (bread and circuses), while a large military had to be maintained in the frontier. Rome used its military power to exact tribute from neighboring states; it was a protection racket, no different from the Mafia. Nevertheless, this scheme generally kept the central state solvent and the territories at peace. The United States is also an empire, Bonner and Wiggin maintain, but it does not follow the classical model. It placates its citizens with massive distributions of government largess while using its powerful military to exert influence and keep peace abroad. However, "[i]nstead of getting paid for providing protection, the United States is on the receiving end of loans from its tributary states and trading partners " (p. 77). This is how the United States became the Empire of Debt.
In Bonner and Wiggin's version of history, the beginning of the American Empire was Wilson's entry of the United States into World War I. Wilson was behaving imperially, according to the authors, because he was using military force in an attempt to influence political events beyond his country's borders. By the Vietnam War, the United States had clearly shifted to imperial mode; although it made no difference to the American homeland who ruled Vietnam, it is nevertheless the role of the empire to "routinely and habitually contest control of periphery areas" (p. 169). Indeed, during the twentieth century the United States got involved in conflict after conflict that was irrelevant to maintaining its security.
What made America a peculiar empire was that it had an agenda for changing the world. It would not play empire by the old rules; instead, it would use its imperial power to remake the world in its own image. Wherever the American empire could exert its influence, it demanded not tribute but rather that its vassal states practice democratic capitalism. At first, this arrangement was profitable to the United States, especially in the case of Western Europe and Japan after World War II. But providing protection is costly, and the homeland, rather than the vassal states, was paying for it. Here the authors also see a parallel between imperial America and that other peculiar empire of the twentieth century, the Soviet Union. They comment that what made the Communists so "obnoxious was not their own goofy creed but their determination to do precisely what [America] wanted to do, remake its adversary into something more like itself" (p. 209). Changing the world is an expensive undertaking, and the Soviet empire was bankrupt before the end of the twentieth century, but was the American empire really in any better financial shape?
Thus is the history of the Western world according to Bonner and Wiggin. But is this interpretation of events reasonable? Is it even plausible? Indeed, there is much to hate about this book. And yet, therein lies its beauty. For Bonner and Wiggin toe no party line; rather, they expose the chicanery and buffoonery of every political persuasion. No matter where you stand on the political spectrum, you are bound to find something in this book to offend you. And this is a good thing, because we all need to be knocked down a peg or two from time to time. Bonner and Wiggin play the role of the little boy in the tale of the emperor's new clothes who is willing to admit that he cannot see the royal robes--the emperor is naked, and the empire is broke.
On page after page, Bonner and Wiggin challenge the conventional wisdom. For example, they dispute the commonly held belief that "democracies are more peaceful than other forms of government" (p. 109). As evidence, the authors point to World War I, which, they insist, "was already a largely democratic war" (p. 112) even before Wilson involved the Unites States in it to make the world safe for democracy. Of the major combatants, only France was officially a republic, but England, Germany, Austria-Hungary and Russia were constitutional monarchies with at least limited popular political participation. Indeed, there is evidence that King George V of England, Kaiser Wilhelm II of Germany and Tsar Nicholas II of Russia, who were all first cousins, worked together to keep their countries out of conflict, but they were overwhelmed by popular sentiment, which "found the prospect of a short, sanitary war charmingly distracting" (p. 115). Furthermore, when the Tsar was deposed in 1917, the democratic Provisional Government kept Russia in the war; it was the autocratic Bolsheviks that withdrew Russia from the conflict. Bonner and Wiggin also challenge the belief that democracy is the best form of government, maintaining that in "a modern democracy, it is relatively easy to stir the masses to absurdity" (p. 164). This is not to say that the authors favor autocratic rule. Rather, they mean that we should think carefully, before imposing democratic institutions on unwilling populations, whether we are really doing them--or us--a favor.
Bonner and Wiggin also see a parallel between the British Empire at the beginning of the twentieth century and the American Empire at the beginning of the twenty-first. A hundred years ago, the British Empire had become moribund and was going increasingly into debt to the then economically vigorous United States, especially to fund its participation in the Great War. (Indeed, the authors suggest that Wilson sided with the British not because they were more democratic but because they owed us more, and Wilson wanted to make sure that debt could be repaid.) Now, the economy of the American Empire has stagnated as it becomes increasing indebted to the new global economic engine, China. There are many reasons why China is growing while America stalls, but one important reason has to do with the fact that "Asian workers are younger and cheaper" (p. 233). As a frequent traveler to China over the last sixteen years, I have witnessed firsthand China's unfolding economic miracle. Its people are young, well-educated and ambitious; they are determined to make themselves wealthy and their country the world's next superpower.
However, the American economy is not simply being bogged down by an aging population; it is also being destroyed by a collective delusion that debt does not matter. As Bonner and Wiggin point out, "America's empire of debt rests on many huge deceptions," such as that "the rest of the world will take American IOUs forever" and that "domestic savings and capital investment are no longer necessary" to maintain the economy (p. 290). Instead of saving, the typical American family takes out home equity loans, thinking that the rising values of their houses means that they are getting richer. Thus, Americans use creative financing and "the savings of poor people in foreign countries" (p. 285) to maintain a standard of living they cannot afford. Nevertheless, this debt will eventually have to be repaid. "For what is a national debt," the authors observe, "but an intergenerational obligation, a burden placed on infants by their parents and grandparents" (p. 200). The revelers may claim that tomorrow will never come, but those who have remained sober (and solvent) can see that there are major problems ahead for the United States.
It may be too late to turn the United States from economic decline; its people seem to lack the willpower and the foresight. However, that does not mean that individual Americans are doomed to financial despondency, as long as they are willing to face certain facts. Bonner and Wiggin emphasize that you always have to work to make money, either by selling your labor or by putting in many hours learning about good companies to invest in wisely. Furthermore, you do not get rich by playing the stock market; instead, the authors argue, "you get rich by buying companies at good prices, holding them for a long time, and not spending your money" (p. 309). This sounds exactly like the kind of advice that my grandparents would have given.
526 of 604 people found the following review helpful
Format:Hardcover|Amazon Verified Purchase
Bonner is a very entertaining and witty writer.
But in this book he's saying (over and again) not much more than:
1. Empires are created by vainglorious self-deluded fools.
2. Empires always overreach and go broke and collapse.
3. America is an Empire.
4. America buys more from overseas than it sells there, and that's bad.
5. Americans spend too much and don't save enough.
6. The housing market is a bubble due to pop.
7. Gold is a good store of value.
That's about it, along with some fragments of schoolbook history. Hope I "saved" you some money!
But in this book he's saying (over and again) not much more than:
1. Empires are created by vainglorious self-deluded fools.
2. Empires always overreach and go broke and collapse.
3. America is an Empire.
4. America buys more from overseas than it sells there, and that's bad.
5. Americans spend too much and don't save enough.
6. The housing market is a bubble due to pop.
7. Gold is a good store of value.
That's about it, along with some fragments of schoolbook history. Hope I "saved" you some money!
255 of 291 people found the following review helpful
By Jack T.
Format:Hardcover
I read this tag team of financial prognisticators' first book, Financial Reckoning Day, and LOVED it. Well, loved it in the way you can love a book that tells you history is all for naught and the financial world as we know it is coming to an end (at least they smiled when they said that, in a bemused kind of way).
But it's my understanding these guys wrote that book and some of this one while over in France (they're also the team behind the Daily Reckoning ezine, which I also read). There must be something in the wine over there that makes you see a little more deeply into things than most are prone to here in the States. Or maybe it's the distance from their homeland (they're both American) that gives them perspective.
Because I found Empire of Debt, which I just got and finished, nearly as eye-opening as the discussion they'd already started in the last book. In short, easy credit and wild spending will get us in the end. Already, it's nipping at our heels. Even while most of us, right on up to the powers that be -- who should be exercising a little more caution, but instead happen to be the worse over-spenders of them all -- refuse to pay attention to the message.
But it's there in the history books. And it's in this one, which you could call a kind of history lesson as much as you could call it a forecast for things to come. Great material and well done. Definitely worth a read for anyone (smart) who cares about the future of the world economy.
But it's my understanding these guys wrote that book and some of this one while over in France (they're also the team behind the Daily Reckoning ezine, which I also read). There must be something in the wine over there that makes you see a little more deeply into things than most are prone to here in the States. Or maybe it's the distance from their homeland (they're both American) that gives them perspective.
Because I found Empire of Debt, which I just got and finished, nearly as eye-opening as the discussion they'd already started in the last book. In short, easy credit and wild spending will get us in the end. Already, it's nipping at our heels. Even while most of us, right on up to the powers that be -- who should be exercising a little more caution, but instead happen to be the worse over-spenders of them all -- refuse to pay attention to the message.
But it's there in the history books. And it's in this one, which you could call a kind of history lesson as much as you could call it a forecast for things to come. Great material and well done. Definitely worth a read for anyone (smart) who cares about the future of the world economy.
Most Recent Customer Reviews
5.0 out of 5 stars
Good read
I wish I took their advice and bought a bunch of gold when I read this book back in 2008!!!!!!!!!!!!!!!!!!!!!
Published 2 months ago by Timothy W
5.0 out of 5 stars
Excellent Work!
Customer Video Review
Length:
6:50
Mins
Published on June 3, 2010 by Bernard Chapin
2.0 out of 5 stars
not a real history, nor economics book
This book has some good info and some that is inaccurate.
For example the part about English poor laws is inaccurate. Read more
For example the part about English poor laws is inaccurate. Read more
Published on February 10, 2010 by alibeamish
3.0 out of 5 stars
Accurate predictions. Poor delivery.
I appreciate that the authors were trying to sound the alarm bell on an impending financial disaster but the manner in which they delivered their message was disappointing. Read more
Published on May 27, 2009 by Darren Austin
5.0 out of 5 stars
History may be repeating itself
The authors are either very psychic or lucky guessers. They clearly and correctly forecast the current financial boondoggle. Read more
Published on March 17, 2009 by Jim W. Matheson
5.0 out of 5 stars
Must be read by every head of family!
This book tells the truth about world history and the United States. I couldn't put it down!
Published on March 5, 2009 by John
5.0 out of 5 stars
I Wanted To Read More
My only disappointment with this book was that it ended. I felt like Bonner & Wiggin covered so much ground, but still left me wanting to know more- so I've found that more in... Read more
Published on February 20, 2009 by K. Burns
2.0 out of 5 stars
entertaining but misses the mark
This book attempts to illustrate the associations of empires and does so in an articulate and entertaining fashion. Read more
Published on February 12, 2009 by Gilles R. Maguet
4.0 out of 5 stars
Apt Warning
The authors have a breezy and engaging writing style but make many dogmatic assertions without bolstering their arguments or citing sources of verification. Read more
Published on January 25, 2009 by Jim Wilder
3.0 out of 5 stars
doom and gloom view with a historical perspective
Unlike other doom and gloom books on American economy including "the Demise of the dollar","The Collapse of the Dollar and How to Profit from It", "The Bust Ahead", or "America's... Read more
Published on November 24, 2008 by X. Li
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