How the Great Deceleration Drains the Engine That Powers the Empire
A Word the War Party Cannot Afford to Hear
There is a comfort the empire takes in its own size. It looks upon its fleets and its bases, its eleven carrier groups and its garrisons scattered across a hundred lands, and it concludes that a thing so vast cannot be in danger. Strength is assumed to be self-evident, the way a mountain is assumed to be permanent. But a mountain is only rock that has not yet been worn down, and a colossus is only as sound as the foundation beneath its feet. The question I want to put before you is not whether the empire looks strong. By every conventional measure, it does. The question is whether the economic ground on which it stands is being quietly hollowed out beneath it, and whether the day is coming when the colossus discovers, as colossi always do, that it has been standing on nothing for longer than it knew.
I have written before about what I call the Great Deceleration, the slow draining of the savings, the capital, and the productive vitality that once made the American economy the wonder of the world. That diagnosis was offered for the household and the citizens. But the same economic law that governs a family governs a hegemon, and what is true of the economy is doubly true of the empire that economy is made to carry. For an empire is not a thing apart from its economy. It is the most expensive luxury an economy can buy, and it is purchased, always and everywhere, out of the same finite pool of real resources from which everything else must come.
You Cannot Project What You Have Not First Produced
Begin with the law itself, because everything follows from it. Power, in the end, is a thing produced before it is projected. The carrier does not spring from the will of the admiral; it is wrought from steel that was mined, smelted, machined, and assembled by men who had to be fed and housed and trained while they did it, using tools that someone had to build first, in factories that someone had to save up to construct. Behind every weapon stands a long chain of real capital, and behind that capital stands the one thing the modern empire has been consuming most recklessly of all: savings deferred consumption, the seed corn that a people sets aside today so that it may build tomorrow.
This is the deepest of the Austrian Economics insights, and the one the warfare state would most like you to forget. A nation cannot project abroad what it has not first produced at home, and it cannot produce without first having saved.
When net saving falls to a whisper above zero, as it has, the pool of real resources from which both butter and guns must be drawn has been thinned to fragility. The empire may go on spending. But it is no longer spending out of abundance. It is spending out of the seed corn, and a granary that is being eaten is not a granary that is being filled, however impressive the feast may look from the table.
The Inflation Tax and the Hidden Treasury of Empire
How, then, does an empire whose savings have collapsed continue to field the most expensive military in the history of the species? The answer is the answer Mises gave a century ago, and it has not changed. It does so by counterfeit.
Under hard money, a government can wage war only by taxing its people openly or borrowing from them visibly, and both are unpopular enough to act as a natural brake upon imperial ambition. Mises argued that without the power to inflate, most modern total wars would have collapsed within months for sheer want of funds. The citizen, presented with the bill, would have refused to pay it. Central Bank exists, among its other functions, to spare the war party that inconvenience. Through credit expansion the state finances what the taxpayer would never knowingly approve, and the cost is hidden in the slow erosion of the currency, the silent siphoning of wealth from everyone who holds dollars into the hands of those who spend them first. This is the inflation tax, and it is the true treasury of empire the one revenue the people cannot vote down because they are never asked. But here is what must be understood, and it is the whole burden of the Great Deceleration applied to the imperial case: inflation finances power; it does not create it. The printing press can conjure the dollars to pay for the fleet. It cannot conjure the steel, the engineers, the fuel, the savings. Those must be pried out of the real economy, and every dollar of them is a dollar withdrawn from the capital formation that would have made the nation genuinely stronger. The empire funded by inflation is not adding to its strength. It is substituting the appearance of strength, bought on credit, for the substance of strength, which can only be saved into being. This is not growth.
It is the same substitution we see in the wider economy, where debt is asked to do the work that capital once did. The empire has simply made the substitution on a planetary scale.
The Ultimate Malinvestment
And what is purchased with this hidden treasury? Here the Austrian Economics verdict is most severe, and most easily verified by anyone willing to look. Military production is the purest malinvestment a society can undertake.
Consider what a missile is, economically. It is a good of the first order, as the Austrians would say a thing meant to be consumed, not a thing meant to produce. A tractor builds the wealth of tomorrow; it plows fields that feed cities for a generation. A factory compounds; a railroad compounds; an honest tool in honest hands compounds. But a missile produces nothing. In the best case it sits idle in a silo, depreciating, guarded at expense, until it is scrapped. In the worst case it is fired, and it converts a quantity of irreplaceable capital into a crater. The tank, the bomber, the carrier these are not seeds. They are the burning of seeds for the light and heat of a single night.
A nation that pours its scarce savings into such things is not investing. It is performing the most elaborate consumption ritual ever devised and dressing it in the language of strength. And because the warfare state breeds a crony partnership between the government and the arms manufacturers, the ritual becomes self-perpetuating: the contractors lobby for the aggressive posture that guarantees the contracts, and the contracts demand the posture, and round it goes, each turn drawing more capital out of the productive economy and converting it into things that, by design, create no future wealth at all. The empire is not merely failing to build. It is systematically directing its remaining capital toward the one category of spending that guarantees it will have less to build with tomorrow.
The Exorbitant Privilege Is a Suppressed Interest Rate
For decades this could be hidden, and it was hidden by the same mechanism that hides every imbalance: the suppression of the price that would otherwise have screamed the truth. In the wider economy, that price is the interest rate, held artificially low, punishing the saver, flattering the borrower, making ventures look sound that are sound only under the anesthesia of cheap credit. In the imperial economy, the mechanism has a grander name. They call it the exorbitant privilege the world’s willingness to hold dollars, to lend to the empire at rates no other debtor on earth could command, to absorb the inflation the empire exports.
But the exorbitant privilege is nothing more than a suppressed interest rate written across the whole world, and it does exactly what every suppressed price does. It conceals; it does not cure. It has allowed the empire to run deficits that would have bankrupted any ordinary nation, to station legions abroad that no honest tax could fund, to believe that the ordinary arithmetic of saving and spending had been repealed on its behalf. Low real rates did not solve the empire’s problem. They postponed its arrival and disguised its approach. And a privilege is not a law of nature. It rests on the confidence of foreigners, and confidence, once it begins to go, goes the way the man in the old proverb went bankrupt: gradually, and then suddenly.
The Ratchet That Cannot Be Loosed
There is a further cruelty in the design, and the Austrian-influenced historian Robert Higgs named it the ratchet. Every crisis is the occasion for the state to seize new powers, new spending, new claims upon the citizen’s purse and liberty. And when the crisis passes, as crises do, the powers do not pass with it. The wartime apparatus is not dismantled; it is repurposed, redirected toward the next emergency, sustained by a permanent class whose livelihood depends upon its continuation. The budget ratchets upward and will not ratchet back.
Apply this to the deceleration and you see the trap close. A healthy economy facing strain can retrench, can cut its luxuries, can let the savings rebuild. But the imperial budget is precisely the luxury that cannot be cut, because an entire architecture of interests, bureaucratic, industrial, and political, exists to ensure it never is. So, the one expenditure most certain to consume capital without creating it becomes the one expenditure most immune to reduction, even as the capital base that must bear it grows thinner year by year. The empire has built itself a commitment it cannot honor and cannot abandon. That is not strength. That is a man chained to a weight as the tide comes in.
Coasting on the Capital of the Dead
Put the pieces together and the shape of our moment becomes plain. Savings drained to historic lows. Debt expanded far past the growth of the economy itself, a permanent operating condition rather than a passing response to need. Capital formation decelerating, productivity weakening, real income gains slowed to a crawl. And upon this thinning foundation, an imperial burden that ratchets only upward, financed by an inflation the citizen never consented to and concealed by a privilege that depends on a confidence not yet, but not forever, intact.
The empire today is doing exactly what the wider economy is doing. It is coasting. It is living on the accumulated capital of earlier and more frugal generations, the immense inheritance of a century of genuine production, and mistaking the act of spending that inheritance for the act of having earned it. The bases were built when America saved. The fleets were laid down when America produced more than it consumed. The technological edge was forged in a society that still believed in deferring gratification. We are not adding to that capital. We are drawing it down and calling the drawdown power. The colossus still stands at its full height. But it stands increasingly on the achievements of the dead, and the living are not replacing them.
An Empire Cannot Defy Economic Law Forever
Here is the conclusion, and it is unavoidable, and it is the same conclusion the data forces upon us in every other domain. An economy cannot grow strong by consuming what it has not first saved. It cannot build wealth by borrowing faster than it produces. And no empire, however vast, can suspend these laws on its own behalf, for an empire is not exempt from arithmetic; it is arithmetic’s most extravagant subject.
What is being postponed today will be paid for tomorrow. The longer the imbalance persists, the more dependent the whole structure becomes upon continued intervention, continued inflation, continued borrowing, continued faith and the more violent the adjustment when reality at last reasserts itself, as reality has never once failed to do. The empire may yet appear resilient by the conventional metrics for some years more. But resilience built on debt, suppression, and eroded savings is not strength. It is delay. And the bill for the delay compounds in the dark.
The Sword and the Ledger
Now I must speak as what I am, which is not a strategist nor a prophet of decline for its own sake, but a citizen of the empire commanded by his Lord to tell the truth about the violence his nation funds and blesses. For there is a mercy hidden inside this hard accounting, if we have the eyes to see it.
The same economic law that condemns the warfare state is, rightly understood, an invitation to lay it down. The capital being burned in the silos and the carrier decks is capital that could build, could heal, could feed, could be returned to the hands that saved it. The peace the Gospel commands is not only the higher moral path; it is, as it happens, the only path that does not end in the reckoning the ledger is preparing. “All who draw the sword will die by the sword,” our Lord told Peter and the modern empire has discovered a new way to perish by the sword, which is to bankrupt itself buying swords it can never afford and dare not use. Mises saw the economic truth and Christ proclaimed the deeper one, and at the crossroad the two roads meet: the warfare state is a furnace for consuming the very wealth that makes a people free, and a nation cannot purchase security by setting fire to its own granary.
“He makes wars cease to the ends of the earth,” sings the Psalmist, “he breaks the bow and shatters the spear.” Perhaps, in His mercy, He is permitting the empire to learn through the slow tuition of the ledger what it would not learn from the pulpit: that strength is saved into being, not printed; that power projected without production is a debt against the future; and that the truest defense of a people is a free, productive, and honest economy, ruled by no warfare state and chained to no ratchet of perpetual conflict.
Let us be the people who say so before the reckoning comes. Let us refuse the flattering measure of the colossus and tell the truth that sets a nation free: that what cannot be afforded forever will not be afforded forever, and that the time to lay the sword down is always now.
Praise Be to God.
